Homebuyers continued to scuffle intensely last month over homes on the market, despite the fact those same homes became demonstrably tougher to afford.
The monthly mortgage payment on a typical home jolted upward nearly 12 percent from March to April alone and is more than 50 percent more expensive than it would have been a year ago, Zillow’s research team found in a recent report.
Despite this, enough buyers remain on the market that they often find themselves pitted against each other in bitter competition.
“Nearly half of homes are selling above their list price, and April sales happened as fast as we’ve ever recorded,” Nicole Bachaud, a Zillow economist, said in the report. “It may very well be that fewer people are trying to buy, but with bidding wars continuing to drive up prices on limited inventory, those in the market today likely won’t feel much relief.”
These buyers have continued to bid up home prices, which are now 21 percent higher than they were at the same time last year. The value of the typical home has now reached $334,000, according to Zillow Research.
The typical home in April went pending after only seven days, tying record highs from each of the previous two months. Two Aprils ago — in the midst of the last springtime seller’s market of the pre-pandemic era — a home usually went pending after 24 days.
Sale-to-list-price data is not yet available for April. But in March, nearly half of homes sold for more than what the seller initially asked. The same time last year, 38 percent of homes went for above asking price.
In some of the hottest West Coast home markets — including San Francisco, San Jose and Seattle — more than three-in-four homes sold for above list price in March.
As a result of all this competition, buyers on a budget now have little choice but to look further down the market for their next homes.
A year ago, buyers who could afford to pay $1,500 a month for the principal and interest on their loans could have ended up in a house worth $340,000. But after a year of price appreciation and rate hikes, the same monthly payment would secure them a home that last year would have sold for only $228,000.
Still, there are signs that market competition may be shifting gradually away from the interests of sellers, the report said.
The number of homes for sale at any given time rose for the second consecutive month in April. Inventory remained down nearly 20 percent from its levels the previous year, a sign of just how quickly homes have been getting scooped up after being listed.
Because of these conditions, Zillow’s economists have lowered their expectations for home-price growth over the next year.
In March, they forecasted prices would grow by nearly 15 percent year-over-year. In April, they had moved that expectation down to less than 12 percent.
While lower, price growth this fast would still represent one of the hotter markets in recent memory.
These same economists also expect the number of home sales to drop more than 6 percent from their 2021 levels by the time this year is in the books. The predicted total amounts to 5.7 million home sales in 2022.
Still, buyers may have to wait a while to feel the full effects of a less competitive market, Bachaud said.
“We do expect the market to begin rebalancing this spring as rising costs keep enough would-be buyers on the sidelines for inventory to begin catching up with demand, but we have not yet reached that point,” Bachaud said in the report.