West, Southwest Metros Offer Sellers Strong Opportunities; Buyers’ Best Bets Are in Midwest, Mid-Atlantic
Noted 19th-century author Horace Greeley once famously urged Americans to “go west” in search of prosperity. But today, potential home buyers looking to score the most prosperous deal possible on their terms in any of the country’s 30 largest metros would do well to consider buying farther east.
According to Zillow’s most recent analysis of the best markets for home buyers and sellers, conditions in Midwestern and Mid-Atlantic metros including Chicago, Cleveland, Philadelphia and Baltimore offered buyers the most leverage over sellers when negotiating a home sale. The list of metros where sellers largely have the upper hand is dominated by the West and Southwest, including San Francisco, Sacramento, Las Vegas and Phoenix.
Zillow analyzed data on actual sales prices compared to asking prices, the number of days listings spent on Zillow and the percentage of homes on the market with a price cut, and ranked the 30 largest metro areas in the country to determine whether buyers or sellers have more negotiating power in a given market. In this analysis, a sellers’ market is not necessarily one where home values are rising, but rather one in which homes are on the market for a shorter time, price cuts occur less frequently and homes are sold at prices very close to (or greater than) their last listing price. In buyers’ markets, homes for sale stay on the market longer, price cuts occur more frequently and homes are sold for less relative to their listing price, giving buyers more negotiating power.
Interestingly, our overall list of top metros for sellers was dominated by California communities. Of the 142 total metro areas nationwide analyzed by Zillow in this study, 24 of the top 30 sellers’ markets were located in the Golden State. Five of the remaining six metros rounding out the top sellers’ rankings were in Arizona or Nevada.
“Many of the strongest sellers’ markets are in areas that were hardest hit by the housing bust, places like California, Nevada and Arizona, which may seem counter-intuitive,” said Zillow Chief Economist Dr. Stan Humphries. “But much of that strength is likely driven by investor interest, as many distressed and non-distressed homes are purchased in bulk and transformed into rentals. This investor activity is contributing to very low inventory levels, which increases demand and helps drive up prices for all homes in these markets.”
Top 10 Sellers’ Markets
Top 10 Buyers’ Markets
|1.||San Jose, Calif.||1.||Chicago, Ill.|
|2.||San Francisco, Calif.||2.||Cleveland, Ohio|
|3.||Sacramento, Calif.||3.||Philadelphia, Pa.|
|4.||Las Vegas, Nev.||4.||Cincinnati, Ohio|
|5.||Phoenix, Ariz.||5.||New York, N.Y.|
|6.||Riverside, Calif.||6.||Pittsburgh, Pa.|
|7.||Los Angeles, Calif.||7.||Baltimore, Md.|
|8.||San Diego, Calif.||8.||St. Louis, Mo.|
|9.||Seattle, Wash.||9.||Columbus, Ohio|
|10.||Washington, DC||10.||Charlotte, N.C.|
Further analysis and an interactive chart of the results of the latest study can be found on the Zillow Research Blog.
This study was completed using data from Zillow’s third quarter 2012 market reports.