Buyers Gaining Negotiating Power in Some Surprising Markets

It's been a long wait, but new Zillow research reveals hot markets where competition is letting up just in time for buyers to get ahead of rising rents and mortgage rates.

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Zillow

Oct 30, 2018, 08:00 ET

SEATTLE, Oct. 30, 2018 /PRNewswire/ -- After years of competitive bidding wars and rising prices, a Zillow® data analysis shows it might finally be a good time to buy a home in many U.S. markets.

Zillow researchers looked at three factors to determine which of the largest U.S. housing markets are becoming more buyer-friendly and found that some previously prohibitively competitive markets – including Seattle and Las Vegas – have turned into the best places for buyers this winter.

The three buyer-boosting metrics we considered are:

An increase in the share of listings with a price cut. Price cuts indicate homes are sitting on the market longer – which means more options for buyers, less competition for homes and more room for buyers to negotiate. Many recently white-hot markets have seen large jumps in the share of for-sale listings with a price cut.
Projected increase in rent appreciation over the next year. Rent appreciation has slowed recently, but as mortgage affordability deteriorates due to rising mortgage rates, rents could begin to increase again as some would-be buyers put their buying plans on hold. We know that nearly half of renters consider buying while they're looking for a home,ⁱ and the potential of rising rents also factors in to when it's a good time to buy.
Affordability relative to the past. We looked for markets where mortgage affordability is poor – but not worse than it was historically. With interest rates on the rise, and mortgage affordability already closing in on its historic norm, prepared buyers may want to enter the market before housing payments become historically unaffordable.

Based on those factors, these are the best places for buyers this winter:

Orlando
Boston
Seattle
Las Vegas
Charlotte
Columbus
Portland
Sacramento
Minneapolis
Dallas

"The housing market always lets up a little in the fall, when kids are back in school and the home shopping season wraps up for the holidays," said Zillow Senior Economist Aaron Terrazas. "But this fall and winter are shaping up to be more favorable for those buyers who have struggled to get into the housing market for several years amid red-hot competition. Mortgage rates are rising, but will climb much further in 2019 and early 2020. As purchase affordability deteriorates, expect rents to pick back up as some would-be buyers put their plans on ice. Renters who were thinking of buying and decided to hold off may want to take another look this winter, as a steady clip of mortgage rate increases chips away at affordability and more homes become available on the market."

Metropolitan Area	Change in Listings with a Price Cut	Projected YOY Rent Change	Affordabilityⁱⁱ	Median Home Value
Orlando, FL	6.8%	1.4%	20.2%	$231,000
Boston, MA	3.9%	3.1%	25.8%	$458,000
Seattle, WA	11.6%	3.3%	28.6%	$486,600
Las Vegas, NV	9.8%	-0.1%	22.5%	$273,800
Charlotte, NC	4.2%	2.9%	15.1%	$199,400
Columbus, OH	4.0%	1.9%	14.1%	$184,200
Portland, OR	4.6%	3.7%	26.1%	$391,400
Sacramento, CA	5.3%	-0.1%	28.8%	$400,600
Minneapolis, MN	1.9%	1.5%	16.7%	$263,300
Dallas, TX	2.5%	1.4%	16.7%	$233,200
Kansas City, MO	2.5%	3.2%	13.8%	$185,500
Chicago, IL	3.2%	1.2%	15.6%	$222,200
San Diego, CA	10.0%	0.9%	37.9%	$589,200
Cincinnati, OH	2.4%	4.1%	12.5%	$164,500
Tampa, FL	5.9%	-0.3%	18.7%	$208,400
Austin, TX	-0.6%	1.5%	19.3%	$300,600
Atlanta, GA	3.2%	0.7%	15.2%	$209,700
Philadelphia, PA	-1.3%	1.6%	16.1%	$229,300
Washington, D.C.	0.5%	0.7%	19.4%	$401,000
Miami, FL	5.5%	0.7%	24.9%	$278,400
Houston, TX	6.8%	-0.3%	15.1%	$200,900
San Jose, CA	8.8%	0.3%	53.5%	$1,288,700
Baltimore, MD	0.6%	1.1%	16.0%	$265,600
Los Angeles, CA	6.5%	0.3%	45.0%	$647,100
Denver, CO	-1.1%	3.4%	25.3%	$398,400
Phoenix, AZ	0.3%	0.2%	20.2%	$258,300
St. Louis, MO	0.6%	0.9%	12.6%	$163,100
Detroit, MI	2.1%	0.3%	12.9%	$157,200
San Francisco, CA	5.4%	0.0%	44.9%	$961,200
Riverside, CA	5.9%	-0.5%	28.3%	$362,000
San Antonio, TX	-3.2%	0.5%	15.4%	$187,800
Cleveland, OH	1.5%	0.3%	12.7%	$142,700
Pittsburgh, PA	0.7%	0.5%	11.7%	$142,300
Indianapolis, IN	1.6%	0.1%	12.5%	$157,200

Zillow

Zillow is the leading real estate and rental marketplace dedicated to empowering consumers with data, inspiration and knowledge around the place they call home, and connecting them with great real estate professionals. In addition, Zillow operates an industry-leading economics and analytics bureau led by Zillow Group's Chief Economist Dr. Svenja Gudell. Dr. Gudell and her team of economists and data analysts produce extensive housing data and research covering more than 450 markets at Zillow Real Estate Research. Zillow also sponsors the quarterly Zillow Home Price Expectations Survey, which asks more than 100 leading economists, real estate experts and investment and market strategists to predict the path of the Zillow Home Value Index over the next five years. Launched in 2006, Zillow is owned and operated by Zillow Group, Inc. (NASDAQ:Z and ZG), and headquartered in Seattle.

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ⁱ According to the 2018 Zillow Group Consumer Housing Trends Report, 46 percent of renters consider homeownership while they're looking for a new place to live.
ⁱⁱ Mortgage affordability is the portion of the monthly median household income that goes toward a monthly mortgage payment for a median-priced home, assuming a 20 percent down payment and a 30-year fixed mortgage.

SOURCE Zillow