The US housing market has tilted in favor of buyers for the last several years, but there are a growing number of markets where there is likely to be less competition and sellers more willing to make a deal, according to a new report by the listing site Zillow.
“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,” said Zillow senior economist Aaron Terrazas in a statement.
The top ten buyer-leaning markets included a mix of large and mid-sized metros, as well as a sprinkling of hot previously prohibitive markets, like Boston, MA, Seattle, WA, Las Vegas, NV, and Portland, OR.
While homes in Las Vegas have yet to fully recover their values since the housing crash a decade ago, prices in Seattle, Portland, and Boston have risen above their pre-crisis peaks.
To determine which markets are the most buyer-friendly, Zillow considered three criteria — the likelihood price cuts, mortgage affordability relative to the past, and the projected pace of rental price appreciation over the next twelve months.
Price cuts indicate that homes are sitting on the market longer, which means the local market is less competitive and bidding wars are unlikely.
Zillow determined a metro’s mortgage affordability rate assuming a median-priced home purchase, with a 20 percent down payment and a 30-year fixed mortgage. Traditionally, affordability exists when no more than 30 percent of a household’s income goes towards housing costs.
And although national rental price appreciation has slowed in recent months, some renters could put buying plans on the back burner due to rising interest rates. Demand drives up rents, and the potential for rising rents is a fair indication of when it may be a favorable time to buy.
Rounding out the top 10 were Orlando, FL, Dallas, TX, Charlotte, NC, Columbus, OH, Sacramento, CA, and Minneapolis, MN.
With a median home price of $486,600, Seattle was the priciest of the top markets but also had the highest share of price cuts at 11.6 percent. Nearly 29 percent of a household’s income will go toward housing costs in Seattle — a hair below the 30 percent affordability rule.
On the other hand, Columbus was the most affordable with a median home price of $184,200 and a mortgage affordability rate of just over 14 percent. Some 4 percent of listings saw a price cut.
Four of the top 10 buyer-leaning markets were located on the west coast — home to some of the highest home prices in the country. Boston was the only northeastern market to make the list.