San Francisco and San Jose, Calif. top Zillow's list of the best markets for sellers. Buyers in Baltimore and Miami will have the most negotiating power when shopping for a home however, according to a new analysis.
Denver, Seattle and Sacramento, Calif. join the two Bay Area metros on the list of markets that favor sellers. Homes in these five metros stay on the market for an average of just 54 days and rarely feature slashed prices; bidding wars are common in these hot housing markets.
West Coast powerhouse markets like Seattle, Denver and Portland have been driving the housing market over the past year. Strong job growth is attracting newcomers, causing demand for homes to skyrocket. Portland and Seattle have experienced extremely high home value growth over the past year, with Portland leading the nation for the past 12 months. In 2016, Portland home values grew 14 percent and Seattle home values grew 12 percent.
Buyers will face less competition and have more bargaining power in Baltimore, Miami, Philadelphia, Chicago and Houston, which are Zillow's top five markets for buyers -- homes in these metros stay on the market for an average of 103 days. Six out of the 10 top buyers' markets have home values appreciating more slowly than the home values in the nation as a whole. In Philadelphia, home values grew less than 5 percent in 2016, and less than 4 percent in Baltimore.
To determine which markets favor buyers and sellers, Zillow looked at the length of time a home stays on the market and the percentage of listings with a price cut. In buyers' markets, homes are on the market longer and price cuts occur more frequently. Homes in a sellers' market sell quickly and have fewer homes with a price cut.
"The overall recovery has been more robust in many coastal markets, especially on the west coast, with fast home value appreciation, strong job growth and solid income gains," said Zillow Chief Economist Dr. Svenja Gudell. "Many of these markets are also experiencing above-average housing demand coupled with limited inventory, putting sellers in the driver's seat. On the flip side, a number of markets nationwide continue to struggle with slower job growth, weaker home value appreciation and higher rates of negative equity, giving buyers more negotiating power.
Despite unfriendly market conditions for buyers, especially in the nation's hottest markets, experts predict things will change in the near future -- the majority of experts surveyed in a recent Zillow survey said they expect the overall housing market to switch from a seller's market to a buyer's market in 2018 or 2019 as the market begins to slow. Zillow expects national home values to slow down from a nearly 7 percent appreciation rate to 3.5 percent by the end of 2017.