Highlights from this report:
- Some real estate markets in the U.S. are shifting in favor of buyers.
- The trend is most noticeable in western markets, including California.
- San Diego, Seattle and San Jose are the most obvious examples.
- But it’s also happening in cities like Denver and Dallas, to a lesser degree.
We previously reported that some cities across the country are beginning to shift toward being a buyer’s market. In those areas, housing inventory is on the rise and home sales have slowed, giving buyers more leverage and more options.
A new report out this week showed that San Diego, Seattle and (to a lesser degree) Denver are among those housing markets that are beginning to favor buyers over sellers. This is good news for anyone planning to buy a home in Denver, San Diego or Seattle in 2019 or 2020.
Denver, San Diego and Seattle ‘Shifting in Favor of Buyers’
In April 2019, the real estate information company Trulia published a report showing how some real estate markets across the country now have more “buyer friendly” conditions than in the past.
San Diego, Denver and Seattle were listed among the housing markets where conditions are beginning to favor buyers over sellers.
According to that report:
“… price cuts are increasingly common, and homes are more likely than in prior years to sell below their original list price. This national trend is also playing out locally, with the most expensive neighborhoods … shifting most in favor of buyers.”
The company’s research team also created a chart that showed which real estate markets are currently shifting toward buyers the most.
Definition: A buyer’s market is one where there is sufficient supply relative to demand, and where homes tend to stay on the market longer. Sellers are often more motivated and flexible in such areas. Price reductions are more common as well, when compared to a seller’s market.
A year ago, most metro areas across the United States were shifting in favor of sellers. In those days — and for several years prior — it was common for sellers to receive multiple offers soon after listing their homes.
But much has changed. In 2019, half of those metro areas have begun to swing in favor of buyers.
Western Markets Lead the Change
Among other things, Trulia’s research showed that many of those housing markets that are undergoing a shift in 2019 are located in the western half of the United States — and on the West Coast, in particular.
“This shift toward buyers is most pronounced along the West Coast, where home values have both long been high and have risen by about 50 percent over the past six years,” the authors stated.
San Diego, San Jose and Seattle were all singled out as moving toward “buyer’s market” territory. Several other California cities appeared high on the list as well. Denver, Colorado was one of the only non-California cities to make an appearance in that category.
Housing Inventory Growth a Driving Factor
There are many factors causing the housing market shift in places like Seattle, San Diego, San Jose and Denver. Inventory growth is arguably the most influential of these factors.
In the above-named real estate markets (and in many others nationwide), housing supply has increased since 2018. While supply levels are still below what is considered to be “balanced,” there is a definite growth trend as more homes come onto the market.
All of this bodes well for home buyers who are planning to make a purchase later in 2019, or in 2020. In these areas, buyers will have more properties to choose from compared to recent years.
Seattle Progresses Toward a Buyer’s Market
According to Trulia’s research, the Seattle housing market has made a significant shift toward favoring buyers over sellers — more so than other metro areas across the country.
The author’s stated:
“Seattle’s progression towards a buyer’s market shows up in each of the balance-of-power indicators. The median number of days a listing spent on the market before selling jumped from 55 days in January 2018 to 70 days in January 2019, up 27.2%. The share of listings with price cuts more than doubled over the same period…”
These are clear indicators of buyer pullback. Two or three years ago, homes listed for sale in Seattle were being snapped up within days of the original listing. Bidding wars often erupted, as buyers sought to outmaneuver one another. But that has all changed.
Homes in Seattle are also taking longer to sell today than in the past. Back in January 2018, properties listed for sale in the area spent a median of just 12 days on the market, before going under contract. As of January 2019, the median days on market had risen to around 45 days.
The median days on market for the Denver, San Diego and San Jose housing markets has also increased significantly over the past year or so.
San Jose Home Prices Pumping the Brakes
In San Jose, California (another one of the “shifting” real estate markets singled out in the Trulia report), home-price appreciation has slowed considerably.
During the 12-month period from July 2017 to July 2018, home values in San Jose rose by a staggering 24% according to Zillow. But that was then and this is now. In mid-April 2019, the company wrote: “San Jose home values have gone up 1.3% over the past year and Zillow predicts they will rise 1.2% within the next year.”
This is one of the most extreme examples of a slowdown in price growth. But similar trends are playing out in many other housing markets on the West Coast, and also in places like Denver.