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Cities with already high housing costs are seeing home values rise even faster during the spring housing market, according to an analysis by Zillow.
Seasonal home growth is highest in West Coast tech hubs as buyers compete for extremely limited inventory, with San Jose home values growing by 3.3 percent to $1,613,738 on the Zillow Home Value Index during March. San Francisco, Seattle, San Diego and Los Angeles followed with monthly value growth of 2 percent or more, according to Zillow.
Those five cities are among the most expensive of the 50 largest housing markets in the United States, meaning they likely have a large number of homeowners who feel locked into their lower interest rates and do not feel they could afford to buy another home under today’s high prices and high rates, according to Zillow.
They also have high competition, with regular bidding wars and low inventory.
One thing expensive coastal metros and relatively affordable midwestern cities have in common is fewer days on the market for listings. While listings in Seattle had a median of six days to pending, listings in Chicago had a median of seven days to pending, as did listings in Detroit, while St. Louis listings took five days to turn pending.
“Shoppers in the market today should expect competition, especially for attractive listings on the lower end of the price range — a rare opportunity these days,” said Skylar Olsen, Zillow’s chief economist. “That’s kept prices ticking upward in most areas, despite affordability challenges.
“There are places where new construction relieved some pressure, and where homeowners are less locked into their mortgage, but not in the nation’s most expensive metros. In costly areas, homeowners hold extensive mortgage debt at previously low rates, and the pressure is dialed up even further.”
Monthly home value growth has been comparatively subdued — but still fairly strong — in Southeastern markets, Zillow found, with New Orleans, Tampa, San Antonio, Orlando and Jacksonville all experiencing monthly growth of 0.5 percent or under during March.
Zillow’s report attributes this subdued growth to inventory recovering to pre-pandemic levels in some of these cities, aided in part by new construction giving more options to homeowners looking to upgrade. This has helped ease compeition and bring price appreication under control, according to the report.
