Entry-Level Prices Continue to Soar while Top of the Market Stabilizes

Entry-level home buyers continue to face stiff competition as bottom-tier home values rise 8 percent. Buyers looking for more expensive homes will find more to choose from.

- Entry-level home values rose twice as fast (8 percent) over the past year as top-tier home values.

- The number of expensive homes for sale has dropped slightly, but there are far fewer entry-level homes on the market, falling 9 percent year-over-year.

- Nationally, home values rose 5.4 percent over the past year, to a median home value of $186,100. Rents rose 2.9 percent to a Zillow Rent Index of $1,407.

News provided by

Zillow

Jun 24, 2016, 08:00 ET

SEATTLE, June 24, 2016 /PRNewswire/ -- The bottom third of the housing market has grown increasingly competitive, with fewer price cuts on listed homes and faster growing home values than more expensive homes, according to the May Zillow^® Real Estate Market Reportsⁱ.

Home values for the most expensive homes on the market, which at one point in February 2014 were growing at an average of 7 percent annually, have stabilized. Those homes have been gaining value at about 4 percent each year since the beginning of 2015.

Home values at the bottom of the market continue to grow at about 8 percent a year.

The stark differences between the top and bottom of the housing market shed light on the two very different experiences home buyers will face in most markets this summer. Buyers looking for the most expensive homes will find slashed prices, more options and less competition. It's a much different story for entry-level buyers, who will be up against rising prices, low inventory and tough competition, with homes selling over asking price in many of the nation's hottest housing markets.

Over the past 18 months, the percent of listings with a price cut among the most expensive third of homes has slightly increased, while the percent of listings with a price cut among entry-level homes have decreased. Since the beginning of 2015, top-tier homes have had the most price cuts – another sign that top-tier buyers are having an easier time shopping for homes in the current market.

The rental market is also stabilizing at the high end. A recent Zillow analysis found that rents aren't rising as quickly for apartments in more expensive zip codes.

"The top of the market is starting to stabilize, and people are beginning to take notice," said Zillow Chief Economist Dr. Svenja Gudell. "Buyers looking for entry-level homes are having bidding wars in many markets, while it's not uncommon for high priced homes to stay on the market a few months longer. The housing market is much more forgiving for current homeowners looking to move into a bigger, more expensive home. These buyers can be a bit more selective, and may even get a good deal."

Buyers looking for a home at the top of the market will have more to choose from than those looking for a home in the bottom third of the market, which are often sought after by first-time homebuyers. The number of homes for sale at the top of the market has remained flat over the past year, while inventory in the bottom-third is down almost 9 percent. Some markets are worse than others; in Portland, there are almost 40 percent fewer entry-level homes for sale than a year ago.

Metropolitan Area	Zillow Home Value Indexⁱⁱ (ZHVI)	Top Tier % ZHVI Change	Middle Tier % ZHVI Change	Bottom Tier % ZHVI Change	Top Tier YoY % Inventory Change	Middle Tier YoY % Inventory Change	Bottom Tier YoY % Inventory Change	Zillow Rent Indexⁱⁱⁱ (ZRI)
United States	$ 186,100	4.0%	5.4%	7.9%	-0.5%	-9.7%	-8.9%	$ 1,407
New York/Northern New Jersey	$ 386,000	5.1%	3.5%	3.0%	1.3%	-7.5%	-12.2%	$ 2,422
Los Angeles-Long Beach-Anaheim, CA	$ 571,200	6.8%	6.1%	7.2%	-3.0%	-9.7%	-17.9%	$ 2,559
Chicago, IL	$ 197,300	2.2%	3.1%	4.8%	-5.9%	-23.3%	-15.3%	$ 1,650
Dallas-Fort Worth, TX	$ 187,900	9.5%	12.5%	21.6%	-10.1%	-34.9%	-32.1%	$ 1,535
Philadelphia, PA	$ 208,000	2.0%	3.4%	3.4%	-5.0%	-12.6%	0.7%	$ 1,576
Houston, TX	$ 172,000	2.4%	8.2%	13.6%	n/a	n/a	n/a	$ 1,586
Washington, DC	$ 369,000	1.7%	2.3%	4.0%	-3.3%	-10.3%	-18.3%	$ 2,122
Miami-Fort Lauderdale, FL	$ 234,300	6.1%	10.3%	12.5%	14.3%	12.6%	3.5%	$ 1,880
Atlanta, GA	$ 165,900	6.5%	7.8%	10.0%	-2.8%	-18.3%	-14.5%	$ 1,305
Boston, MA	$ 392,400	5.3%	5.7%	5.0%	-1.0%	-23.6%	-34.5%	$ 2,288
San Francisco, CA	$ 810,000	8.9%	9.0%	9.3%	11.8%	-2.5%	-9.5%	$ 3,381
Detroit, MI	$ 126,500	4.4%	6.0%	9.4%	-13.7%	-26.9%	-14.0%	$ 1,179
Riverside, CA	$ 308,100	3.8%	7.4%	10.0%	-1.5%	-11.9%	-6.1%	$ 1,730
Phoenix, AZ	$ 220,400	4.7%	8.9%	11.4%	2.8%	12.6%	2.8%	$ 1,290
Seattle, WA	$ 388,000	12.2%	11.9%	11.5%	-18.3%	-20.8%	-29.2%	$ 2,007
Minneapolis-St Paul, MN	$ 226,000	3.3%	5.8%	6.6%	1.5%	-5.9%	0.7%	$ 1,537
San Diego, CA	$ 511,200	4.5%	6.4%	9.2%	13.5%	13.1%	0.1%	$ 2,401
St. Louis, MO	$ 142,400	5.9%	5.5%	4.8%	-6.9%	-16.8%	-10.2%	$ 1,143
Tampa, FL	$ 166,700	7.0%	9.5%	12.2%	-4.4%	-9.0%	-21.4%	$ 1,325
Baltimore, MD	$ 250,900	1.2%	2.1%	1.9%	-7.7%	-12.6%	-13.1%	$ 1,735
Denver, CO	$ 335,400	8.2%	13.1%	17.7%	-2.0%	12.9%	-1.3%	$ 1,999
Pittsburgh, PA	$ 130,400	4.3%	4.6%	4.9%	7.8%	-7.2%	14.8%	$ 1,129
Portland, OR	$ 326,800	14.3%	14.8%	15.9%	-16.6%	-37.6%	-39.3%	$ 1,752
Charlotte, NC	$ 161,200	5.0%	6.3%	6.4%	-0.9%	-27.3%	-18.9%	$ 1,246
Sacramento, CA	$ 339,900	6.2%	7.6%	13.5%	-6.8%	-19.7%	-20.5%	$ 1,659
San Antonio, TX	$ 151,700	5.5%	7.3%	9.2%	n/a	n/a	n/a	$ 1,316
Orlando, FL	$ 185,400	4.4%	7.6%	10.3%	-3.4%	-15.1%	-26.9%	$ 1,365
Cincinnati, OH	$ 143,400	3.3%	4.7%	3.9%	-10.2%	-29.8%	-22.3%	$ 1,241
Cleveland, OH	$ 128,300	3.0%	4.1%	1.5%	-12.2%	-22.8%	-22.0%	$ 1,141
Las Vegas, NV	$ 202,400	5.3%	7.7%	7.7%	7.9%	-10.6%	-7.8%	$ 1,238
Columbus, OH	$ 156,400	2.7%	4.9%	7.2%	-4.4%	-15.9%	-16.9%	$ 1,290
Indianapolis, IN	$ 129,800	-1.8%	-3.3%	n/a	-18.2%	-29.0%	-13.7%	$ 1,192
San Jose, CA	$ 958,100	8.5%	11.2%	10.7%	5.7%	7.7%	6.0%	$ 3,512
Austin, TX	$ 251,300	7.0%	9.0%	11.6%	n/a	n/a	n/a	$ 1,711
Virginia Beach, VA	$ 213,400	1.7%	1.7%	1.8%	1.5%	1.9%	-0.2%	$ 1,414

About 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 the best local professionals who can help. In addition, Zillow operates an industry-leading economics and analytics bureau led by Zillow's Chief Economist Dr. Sviienja 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. Zillow also sponsors the biannual Zillow Housing Confidence Index (ZHCI) which measures consumer confidence in local housing markets, both currently and over time. Launched in 2006, Zillow is owned and operated by Zillow Group (NASDAQ: Z and ZG), and headquartered in Seattle.

Zillow and Zestimate are registered trademarks of Zillow, Inc.

ⁱ The Zillow Real Estate Market Reports are a monthly overview of the national and local real estate markets. The reports are compiled by Zillow Real Estate Research. For more information, visit www.zillow.com/research/. The data in Zillow's Real Estate Market Reports are aggregated from public sources by a number of data providers for 928 metropolitan and micropolitan areas dating back to 1996. Mortgage and home loan data are typically recorded in each county and publicly available through a county recorder's office. All current monthly data at the national, state, metro, city, ZIP code and neighborhood level can be accessed at www.zillow.com/local-info/ and www.zillow.com/research/data.
ⁱⁱ The Zillow Home Value Index (ZHVI) is the median estimated home value for a given geographic area on a given day and includes the value of all single-family residences, condominiums and cooperatives, regardless of whether they sold within a given period. It is expressed in dollars, and seasonally adjusted.
ⁱⁱⁱ The Zillow Rent Index (ZRI) is the median Rent Zestimate^® (estimated monthly rental price) for a given geographic area on a given day, and includes the value of all single-family residences, condominiums, cooperatives and apartments in Zillow's database, regardless of whether they are currently listed for rent. It is expressed in dollars.

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