Zillow has recently released new data regarding changes in home price declines in the U.S. housing market for the month of March. This article will delve into the data released by Zillow, focusing on the interesting trends that emerged. Particularly, we will explore how home prices declined in some of the biggest states in the US housing market, with a particular focus on California and Florida.
National Trends in March
According to Zillow, the seasonally adjusted home price index showed a 0.4% appreciation rate on average across America in March. This is the first month in the last six where home prices went into positive territory. However, this does not necessarily mean that the housing crash is over in America. Similar periods in the spring and summer of 2007 saw prices going up before they really started dropping in 2008 when the crash got bad.
State Trends in March
While national home prices went up, this was not the case for every state in America. Zillow’s home value growth data showed that some states had flat or declining prices. States in red like Alabama, Arkansas, Kansas, and Michigan saw prices go up by a decent amount in March. In contrast, states in blue like Florida, Arizona, California, and Nevada saw prices either flat or went down.
California’s Price Declines
California, in particular, saw home price declines for nine straight months, with the price declines being fairly evenly distributed across the state in metros like Riverside, LA, and San Francisco. The historical price growth graph shows how we are now experiencing a contraction period in California after a huge run-up in prices in 2022, where prices were growing by 2-3% per month.
Florida’s Home Price Declines
Florida is another state worth paying attention to with home price declines. Most metros actually experienced a price decline in March, with Cape Coral being hit the hardest with a 0.7% decline on the month. Annualized, this is close to 8-9%. Furthermore, the decline in Cape Coral looks very similar to what occurred in 2005-2006, at the beginning of the last crash. This could be the start of another big bust occurring in Southwest Florida.
Affordability Rules in Recession
The data indicates that affordability will rule the day throughout this recession and housing downturn. Affordable markets are going to handle the crash better, while expensive markets will hit harder. This is clear when looking at the top 10 cities that had the biggest increase in prices in March and the cities that had the biggest home price declines. The cities where prices are still going up have a consistent trait among them – affordability.
Analysis of the Data
It is important to note that Zillow’s home value data does what’s called a seasonal adjustment on their data. In the months of March, April, and May, it is normal for sellers to list their prices higher and for prices to go up more. What Zillow does is adjust it down for the seasonality in the spring, whereas they adjust prices up for the seasonality in the fall. The data point called house payment as a percentage of median income, shows how expensive it is for locals to buy a house.
In conclusion, Zillow’s new data shows that home prices declined in some of the biggest states in the US housing market for the month of March. Affordability is key in this recession, with affordable markets faring better than expensive markets. While the data is important, it’s crucial to note that Zillow’s data is seasonally adjusted, which can skew the numbers. It is important to be aware of market conditions when buying or selling a home, especially during a recession. If you’re looking to sell your home contact Spectrum Houses for a fair cash offer.
- Is it a good time to buy a home in California or Florida? While home prices have declined in both states, affordability is still a major concern. It may be a good time to buy a home in areas where prices have declined, but it’s important to consider the overall affordability of the area.
- Will home prices continue to decline? It’s difficult to predict the future of the housing market, but it’s important to keep an eye on market trends and be aware of local market conditions.
- How does seasonality affect home prices? In the months of March, April, and May, it is normal for sellers to list their prices higher and for prices to go up more. What Zillow does is adjust it down for the seasonality in the spring, whereas they adjust prices up for the seasonality in the fall.
- What is the importance of affordability in a recession? Affordability is key in a recession, with affordable markets faring better than expensive markets. When people are losing their jobs and have to pay nearly 50% of their income for their mortgage payments and taxes, it becomes a decision of where they can afford to buy a house, rather than where they want to buy a house.
- How can I stay informed about the housing market in my area? Spectrum Houses can provide real-time data on home prices, inventory, price growth, and affordability ratios in your state, metro, or even down to your ZIP code. It is important to stay informed about market conditions when buying or selling a home.