Zillow Said What? Here's Zillow's End-Of-The-Year Take On Home Sales

US housing market update from Zillow December 2022

Zillow has something to say about the housing market, and it is a message reinforced with data accumulated by its massive real estate marketing machine. It's also supported by data from other sources too.

While many social media commentaries proclaim falling home prices and declining home sales, Zillow's data is clear about what is happening. Zillow is not my only source of data on the housing market, but I like to review its findings each month as Zillow is always quick to report and often months ahead of many other real estate market data portals.

Long-time readers of our blog know that we obtain housing data from numerous sources on the internet to provide a broad, unbiased view of housing market conditions, so if this is your first visit to the Tallahassee Real Estate Blog and think that I'm giving credence to Zillow or its business model, that is not the case, it is just Zillow's turn in our reporting cycle.

Today's Zillow Housing Market Update paints a clear picture that refutes what many mainstream and social media pundits have to say about the real estate market.

Homebuyer Activity Continues To Slow

This graph reports Zillow's estimated number of unique properties sold each month, and it shows a 14-month trend has formed.

Zillow's count of all US home sales December 2022

The blue bars plot the number of homes sold, while the yellow bars plot the year-over-year change in sales. When the yellow bars rise about the horizontal axis, unit sales grew. When the yellow bars fall below the horizontal axis, unit sales fell.

Sales through October show that for fourteen straight months, home sales declined in the US. Year-over-year sales are an important metric because it removes the influence of seasonality by comparing the same months each year. For example, the number of homes sold in October 2022 was 24% fewer than the number of homes sold in October 2021.

Though this graph only contains data since 2009, it's important to point out that the peak of home sales seen on the graph is far lower than the number of homes that were sold during the housing bubble formation back in 2004 through 2006. I point this out as a reminder to our readers that recent years were not filled with the irrational exuberance that propped up the market more than fifteen years ago.

So why have home sales slowed for fourteen straight months?

Mortgage Interest Rates Impact Home Affordability

This graph plots the average 30-year fixed mortgage interest rate since 1971, where the most recent months shed light on one reason for the decline in home sales.

Average monthly mortgage interest rates December 2022

When I was preparing this graph in early December, I checked the Mortgage News Daily website, and it reported that the current rate was 6.37%, while the one-year-ago rate was 3.25%. Interest rates are nearly double a year ago, but we've seen a 13% decline over the past thirty days.

Rising mortgage interest rates have cooled buyer demand, but can we solely blame the decline in home sales on the rise of mortgage interest rates? Here's something you don't hear from most people reporting on the housing market: Interest rates did not move above 3.3% until January of this year, yet year-over-year home sales started to slide back in September of 2021 (and those sales were fueled by sub-3% mortgage interest rates in August 2021).

Home sales started to slide when mortgage interest rates were at record lows, so we cannot solely blame the current housing market woes on mortgage interest rates. In fact, home sales fell for six straight months where mortgage interest rates were below 4%, so there has to be more to declining home sales than just an increase in mortgage interest rates.

Readers who remember the housing collapse in 2006 might be concerned that the supply of homes for sale is rising out of control. That happened in 2006, as builders were in full production mode while buyers were expelled from the market when the government changed lending requirements. Declining demand and rising supply created the bubble that sent home prices plummeting. Is that what we should expect in 2023?

The next few graphs reveal another primary cause of declining home sales and expose the potential answer for the stability of home prices.

Are you a NIMBY or a YIMBY?
Two terms have gained prominence over the past few years. NIMBY (Not In My Back Yard) and YIMBY (Yes, In My Back Yard) are labels that classify housing market activists into one of two camps
Will Assumable Mortgages Save Housing?
Will assumable mortgages save housing? Home affordability is becoming one of the hottest topics in the economy, but I was recently asked if assumable mortgages might bring some relief to homebuyers. This video shares what I think about how mortgage assumption will impact housing.
Renter Nation Says Goodbye To The American Dream!
It's the beginning of a generational shift in the housing market that will greatly reduce homeownership and push the US towards becoming a renter nation, one in which Wall Street is in control of both home prices and rents
The Truth About Foreclosures - Mortgage Pipeline Update
The best way to start to analyze the potential for mass foreclosures is to break down the current mortgage pipeline to observe forming trends.
Home Prices Are Doing What?
The hype-headlines are scary, exclaiming falling home prices and the coming housing market crash. Here's what the housing market facts reveal:
Will NINJA Loans Bring Down The Housing Market?
Housing Crash Coming? If you remember back to the housing bubble, we saw the growth of "NINJA" loans, as they were a segment of the home sales explosion.
Google Knows. The Surprising Real Estate Market Forecast You Won't Believe!
Is it possible to forecast home sales in the US housing market with a search on Google? I had this thought about Google and a google housing market forecast as I was reexamining our search engine optimization efforts.
Economic Outlook For The Housing Market
Joe Manausa gives an update on the economic outlook for Tallahassee and the US housing market. Includes housing market forecast, housing market activity, and new construction analysis, and reveals how Tallahassee compares with the overall US housing market.
Will New Construction Bottleneck Cause A New Housing Bubble?
Are you concerned that the bottleneck of builder homes under construction will cause a new housing bubble as they are finally completed?
6 Housing Market Rumors Debunked (1 Confirmed)
7 different housing market rumors are perpetuated as “FACT” in various forms of "hype." Discussion of this "housing market news" has been ongoing for years, so today, I want to put them all to rest.
Who To Blame For Soaring Home Prices
There is a huge shortage of homes in the US, and there is only one culprit to blame, and I’m going to tell you who it is!
What You Don't Know About Home Prices!
Home prices are gaining traction as topics in both the mainstream media and social media, but there are three common misconceptions about the change in house prices that are unanimously reported as unquestionably true.
Is The Supply Of Homes For Sale Finally Rising?
Is The Supply Of Homes For Sale Finally Rising? Is the US housing market heading for a crash? Will home prices fall? Follow the metrics that clearly show what to expect from home prices and the supply of homes for sale in 2022 and beyond.
Zillow Exposes Mainstream Media On Home Prices
Zillow serves up the data that exposes the poor reporting of the mainstream media on Zillow home prices and that conditions are not what they seem.
House Prices - Inflation Adjusted Home Prices
Just How High Are Today's House Prices? The price of houses in the US has risen to a toxic level, and many are wondering how they will be able to afford to live in their local communities
Podcast: Housing Myths Dispelled
Home Building Hero David Belman and Joe Manausa discuss many of the "myths" that have been published in the media about the housing market.
USA Today Misleads Readers About Home Prices
USA Today Misleads Readers About Home Prices - Median Home Price: The USA Today Network has been misleading readers, using the median home price change suggesting that houses are getting cheaper and a real estate crash is upon us. Is this poor journalism or is there something more to it?
Home Affordability Crisis - Major Housing Market Shift
Home affordability is plummeting, and this home affordability forecast explains why real estate prices are becoming less affordable with each passing month.
Are We Overbuilding Again?
I've been asked recently for my opinion on the number of homes being built in the US. Specifically, people are wondering if the ghost of 2006 has come back to bring more homes to the market than what can be consumed?
Housing - Do You Follow Your Gut (Or Analytics) In Housing?
I think the signs in the housing market are loud and clear, yet most real estate reports I read or view are missing the most critical factor in housing today.
Home Ownership Is Radically Different For Millennials
This is a simple millennial housing case study that will clearly show that the millennials will face a housing market like no other generation going back to post-World War II.
When Will Home Prices Fall?
Are Home Values About To Crash AGAIN? Now that we've seen about three years' worth of skyrocketing home prices, prudent buyers with memories are asking when home prices are going to start falling again.
How Often Do Home Prices Fall?
Are home prices falling? Will house prices fall soon? Home prices are soaring, buyers are having to pay above most sellers' asking prices, and the housing market feels just like a feeding frenzy during Shark Week on the Discovery Channel.
What Do Low Mortgage Interest Rates Really Mean?
Every article or video about mortgage interest rates conveys that rates are low, but do you really know what it means?

Why The Inventory Of Homes For Sale Is Not Growing

Zillow reports the number of unique listings active in each given month since the beginning of 2019, and what they are reporting is very different than what we saw in 2006.

Zillow's inventory of US homes for sale December 2022

In the graph above, the blue field plots the number of homes available each month, while the red line measures the year-over-year change in inventory. Look where the red line crosses the dashed-blue line in August 2019 and August 2022, when the market shifted from inventory growth to inventory reduction and then back to inventory growth.

I have seen a lot of discussion about the anticipation of inventory growth. However, the 1% rise in listings is a minuscule amount, considering there were more than four million listings during the housing bubble years, yet today we're barely above one million homes.

Those who expect the inventory to rise rapidly as sales plummet are not accounting for the source of new listings. With new construction inventory far lower than historical norms, we must rely on discretionary sellers to fulfill our inventory needs.

The problem with expecting inventory growth is that most discretionary sellers are discretionary buyers too. When a buyer opts out of the market due to affordability, it also means a discretionary seller is leaving.

Thus a buyer leaving the market results in a seller leaving the market in more than 50% of the cases. The move-up and move-down buyers have slowed, so inventory growth is not as many have anticipated.

Another View Of The Inventory Of Listings

This graph shows a different view of the number of listings over the past four years that sheds light on the volume reduction in inventory.

graph of US home sales by month and year ending December 2022

The black line in the graph above plots the number of listings that entered the market each month this year. Note that there are only (slightly) more listings than last year; the number of homes for sale remains 1% lower than last year, 14% lower than two years ago, and a whopping 36% lower than three years ago. It's important to remember that those years were inventory deficient as well.

Today, the number of listings is far lower than in recent years, and all four years shown were sellers' markets, where the number of listings was far too few for the demand in the market. Demand will have to go far lower to create the supply and demand dynamic that will cause home prices to fall for an extended period. There will be markets with declining home prices because they have declining populations. Still, most US housing markets have a supply void that has slowed buyer activity, even when mortgage interest rates were below 3%.

Will New Construction Bottleneck Cause A New Housing Bubble?
Are you concerned that the bottleneck of builder homes under construction will cause a new housing bubble as they are finally completed?
Google Knows. The Surprising Real Estate Market Forecast You Won't Believe!
Is it possible to forecast home sales in the US housing market with a search on Google? I had this thought about Google and a google housing market forecast as I was reexamining our search engine optimization efforts.
Zillow - Surprising Home Sales Report
Zillow has something to say about the housing market. Zillow's data suggests something else is happening. And it’s not just Zillow.
The Truth About Foreclosures - Mortgage Pipeline Update
The best way to start to analyze the potential for mass foreclosures is to break down the current mortgage pipeline to observe forming trends.
Renter Nation Says Goodbye To The American Dream!
It's the beginning of a generational shift in the housing market that will greatly reduce homeownership and push the US towards becoming a renter nation, one in which Wall Street is in control of both home prices and rents
Market Equilibrium, How The Balance Has Changed In Real Estate
The way we estimate housing market equilibrium has changed, and with it, the way the market is evaluated must change.
What You Don't Know About Home Prices!
Home prices are gaining traction as topics in both the mainstream media and social media, but there are three common misconceptions about the change in house prices that are unanimously reported as unquestionably true.
New Home Construction Report
Kevin Erdmann Housing Update September 2022 - Explains the new home construction pipeline and what to know about the number of homes being built in the US.
Home Prices Are Doing What?
The hype-headlines are scary, exclaiming falling home prices and the coming housing market crash. Here's what the housing market facts reveal:
REDFIN Reports Falling Home Prices?
Does the latest Redfin real estate report show home prices falling? I reviewed the Redfin real estate data, but did I find home prices dropping?
House Prices - Inflation Adjusted Home Prices
Just How High Are Today's House Prices? The price of houses in the US has risen to a toxic level, and many are wondering how they will be able to afford to live in their local communities
USA Today Misleads Readers About Home Prices
USA Today Misleads Readers About Home Prices - Median Home Price: The USA Today Network has been misleading readers, using the median home price change suggesting that houses are getting cheaper and a real estate crash is upon us. Is this poor journalism or is there something more to it?
Economic Outlook For The Housing Market
Joe Manausa gives an update on the economic outlook for Tallahassee and the US housing market. Includes housing market forecast, housing market activity, and new construction analysis, and reveals how Tallahassee compares with the overall US housing market.
Podcast: Housing Myths Dispelled
Home Building Hero David Belman and Joe Manausa discuss many of the "myths" that have been published in the media about the housing market.
Are Wages Keeping Up With Rising Home Prices
Home prices are rising. Mortgage interest rates are rising. Are people earning enough money to buy homes today, or is the home affordability crisis getting worse?
Zillow Exposes Mainstream Media On Home Prices
Zillow serves up the data that exposes the poor reporting of the mainstream media on Zillow home prices and that conditions are not what they seem.
Housing - Do You Follow Your Gut (Or Analytics) In Housing?
I think the signs in the housing market are loud and clear, yet most real estate reports I read or view are missing the most critical factor in housing today.
6 Housing Market Rumors Debunked (1 Confirmed)
7 different housing market rumors are perpetuated as “FACT” in various forms of "hype." Discussion of this "housing market news" has been ongoing for years, so today, I want to put them all to rest.
Is The Supply Of Homes For Sale Finally Rising?
Is The Supply Of Homes For Sale Finally Rising? Is the US housing market heading for a crash? Will home prices fall? Follow the metrics that clearly show what to expect from home prices and the supply of homes for sale in 2022 and beyond.
Who To Blame For Soaring Home Prices
There is a huge shortage of homes in the US, and there is only one culprit to blame, and I’m going to tell you who it is!
When Will Home Prices Fall?
Are Home Values About To Crash AGAIN? Now that we've seen about three years' worth of skyrocketing home prices, prudent buyers with memories are asking when home prices are going to start falling again.
Home Ownership Is Radically Different For Millennials
This is a simple millennial housing case study that will clearly show that the millennials will face a housing market like no other generation going back to post-World War II.
Are We Overbuilding Again?
I've been asked recently for my opinion on the number of homes being built in the US. Specifically, people are wondering if the ghost of 2006 has come back to bring more homes to the market than what can be consumed?
Home Affordability Crisis - Major Housing Market Shift
Home affordability is plummeting, and this home affordability forecast explains why real estate prices are becoming less affordable with each passing month.
Why It's Alway About Supply And Demand In Real Estate
It's all about supply and demand. The real estate supply and demand dynamic tells us everything we need to know to forecast home sales in any given area.
Building Permits Reveal Major Housing Crisis
How do we know there is a major housing crisis brewing? Look no further than building permits! This video examines building permits in detail, as the issue of home affordability is going to become one of the most prominent topics for many years in the national media.
Interesting Employment Dynamic Impacts Home Sales
Home sales in the United States are vibrant, and we can look to the economy as a big reason homes are selling. I have found a pocket of data on the Federal Reserve Economic Data website that explains the vitality of the US housing market.
How Low Mortgage Interest Rates Are Shaping The Real Estate Market
Historic low mortgage interest rates are redefining the housing market and we will see the impact of today's mortgages last long into the future.
How Often Do Home Prices Fall?
Are home prices falling? Will house prices fall soon? Home prices are soaring, buyers are having to pay above most sellers' asking prices, and the housing market feels just like a feeding frenzy during Shark Week on the Discovery Channel.
What Do Low Mortgage Interest Rates Really Mean?
Every article or video about mortgage interest rates conveys that rates are low, but do you really know what it means?
Homeownership Rate Crash #shorts
60 Second Video: Homeownership is going to decline over the next 30 years, as home affordability hits the worst levels seen since the end of World War II. This is a generational shift in the housing market

New Inventory Still Slowing

This graph plots the number of new listings entering the market each month for the past four years, and today is slower than ever.

Graph of new listings in the US for December 2022

Even as many national news media report that home prices will crash and burn, we see the inventory drop. The only way we'll see major price declines is for supply to outrace demand, but this graph clearly shows that supply is dropping in line (or even faster) with demand.

As of today, it is safe to report that there is no sign of a growing-supply problem. Instead, the lack of supply will put further pressure on home prices.

Median List Price Cooling

This graph plots the median prices at which homes across the US were listed and sold.

Zillow's measure of the median home list price December 2022

The blue field in the graph shows the median list price, while the red line shows Zillow's estimate of the median home sales price during the same period.

The blue field shows a seasonal pattern on the median list price, with prices starting low at the beginning of the year, moving higher during the summer, and then falling slightly towards the end of the year. I'm seeing reports of "list prices dropping." Of course they are! The median list price falls at this time every year! Where were those reports in each of the last five years when asking prices declined in the latter part of each year?

This graph reveals two things. First, home prices generally rise, so it makes sense that end-of-year asking prices are higher than at the beginning of the year. Second, sellers who tried too high of an asking price earlier in the year ultimately reduce their prices to get sold before the end of the year. Remember, a homeowner can ask any price they like, but to get sold, they have to meet the market at the right price.

The red line shows there is no actual inner-year cycle for prices; home prices generally rise. The median home sales price had been rising faster for the past few years, but the declining number of sales has flattened to where prices are growing at more "normal" rates (the average home price growth over the past 80 years is 5.2% annually).

Additionally, one must remember that with higher rates, home affordability falls. Does the slowing growth rate of the median home price mean that home value growth is receding, or does it mean that buyers are purchasing cheaper homes?

6 Tips For Selling A Home In 2022
This ain't your grandpa's real estate market, the process for selling a home and getting top dollar have changed so much. It starts with knowing the best way to sell your house. There are home selling tips and tricks you can use.
Selling A Home In A Strong Sellers Market | AVOID This MISTAKE!
If you are getting ready to sell a home, you must avoid making a horrible mistake that I'm seeing every single day. As we continue in the midst of the strongest seller's market on record, one might assume that a home seller can do no wrong.
7 Critical Stages In Selling Your Home
The process for selling a home has changed greatly since the world went digital, but now after a historic sellers' market, today's home selling plan requires adjustments compared to the last few years.
How To Use Price Per Square Foot When Valuing A Home
Price per square foot is a measurement of a home's value, but the price per square foot alone is not an effective way to determine the price a home will sell in today's housing market.
Biggest Change In Selling A Home Since The Printing Press
Here is the biggest change in selling a home since the printing press was invented. Looking for selling a home process? This is the must-do process to sell a home.
Selling A Home In 2022? The Most Important Question You Must Ask
There is one singular issue that stands above all others when selling a home in a strong sellers' market. In this video, I walk you through the question and best answer to the most important question you should ask when selling a home.
Get More Money For Your Home
In order to understand how to get more money from a house sale, one must learn about the neighborhood stalker.
Real Estate Negotiation Strategies For Each Market Condition
If you mishandle the negotiation on a home, several things will possibly happen, and all of them are bad. First and foremost, you’ll leave money on the table through either the sales price or the terms that are negotiated. Today, buyers are losing out on homes they want to buy and it’s often due to poor positioning in the negotiation. And while we are in the midst of a historic sellers’ market, I’m seeing sellers leave money on the table even when they have multiple offers! #realestatenegotiation #homenegot
Home Selling Tip: Don't Price Your Home On The 9s!
One of the most important steps in your marketing strategy when selling a home is setting the initial asking price for the home. While I have discussed this in previous videos, today I’m going to discuss a technique that I refer to as pricing on the 9s. It works to reduce the buyer pool for the home seller and reduce’s the seller’s chances of getting top dollar for the home. It is a terrible tactic and works against the seller. If you watch this short video, you’ll understand exactly why it hurts home selle
How Much Margin For Negotiation Should I Include In My Asking Price?
I was recently asked "How much margin for negotiation should I include in my asking price?" This is a common question from experienced home sellers. They have sold homes in the past and understand the negotiation process involves a game of give and take, so doesn’t it make good sense to start with a little wiggle room in your price so that you can give it to the buyer to secure a sale? Here's what you should know. I explain EXACTLY how much margin for negotiation you should add to the price of your home t
10 Home Inspection Issues And Tips
Moving from one home to another has enough stress and chaos built into the entire affair, and the home inspection is often the biggest stressor. Here's how to avoid home inspection stress!
Home Staging Advice For Sellers
Do you wonder how to net more money selling your home? This is one of my top home selling tips. Today's video is everything you need to know about staging your home in order to NET the most money from your sale. ?? Here's a link to our FREE Home Sellers Checklist mentioned in the video: https://www.tallahasseechecklist.com/home-seller-checklist-downloadzh61xghm
What Does A Transaction Coordinator Do?
When you are selling a home or buying a home, a critical member of your support team is your transaction coordinator. Here's what to expect!
Real Estate Appraisal Versus Fair Market Value Of A Home?
What is the difference between a real estate appraisal and the fair market value of a home? If there is one practice that confounds both home buyers and home sellers alike it's the fact that the majority of real estate transactions close at the mercy of an appraisal conducted for a purpose that most consumers do not consider. Understanding these differences will save you money when it comes to buying or selling a home, and it will help you appreciate the need and value of a real estate appraisal. But here’s
First Right Of Refusal Meaning Explained
What is a right of first refusal? What does first right of refusal mean when dealing with a real estate contract? Accepting real estate contingencies without understanding them often causes home sellers problems. I have shared a real-world example of how we handled a first right of refusal real estate contract negotiation, and the decision-making process used to put the home seller in the best situation possible. Pay close attention to this short video and you’ll have a better understanding of the right to
Why It's Alway About Supply And Demand In Real Estate
It's all about supply and demand. The real estate supply and demand dynamic tells us everything we need to know to forecast home sales in any given area.
How To Sell A Home That Needs Repairs
How To Sell A Home That Needs Repairs - If you want to know how to sell a fixer upper house fast, then there are some fundamentals of selling a fixer-upper that you should understand. Ideally, in real estate sales, when selling a home, you should bring a house to market-condition before you sell your house fast in order to attain top dollar during the sale. But ideal situations are not always possible. If you follow the tips and advice in this video, you will know how to sell a fixer-upper house fast and in
What Is Pre Marketing In Real Estate When Selling A Home?
What is pre-marketing in real estate when selling a home? When your home hits the market and it "goes live," how many buyers will be standing in line to get in? Will it look like an Apple store on the day the new iPhone is released? If not, why not? ... it's all in the video ??????
What Is A Seller's Market In Real Estate?
You might have heard that we have a huge seller’s market right now in real estate. Do you know what that means? This real estate frequently asked question comes up from time to time when somebody is buying a home or selling a home. They want to know if its a buyer’s market or a seller’s market. Is now a good time to buy a home in the Tallahassee real estate market? I have prepared this short video to demonstrate the conditions that make this a seller’s market, and then we’ll show you the numbers and how we
How Digital Has Changed How We Sell A Home Today
Time to sell a home? The digital age has had a huge impact on what homeowners must do to get top dollar when selling their home. In this video, Joe Manausa explains why and how things have changed, and then lays out the plan for what home sellers must do.
5 Ways To Handle The House In A Divorce
If there is one thing that I see divorcing couples doing wrong more often than not, it is the decision on how to handle the house where the couple has lived. While I am not a lawyer and I'm not dispensing legal advice, take it from somebody who has helped hundreds of divorcing couples, there is a right way (and FOUR wrong ways) to handle the house in a divorce. Tell your attorney that you want to do it right!
Four Smart Ways To Use A Real Estate Contract Assignment
Contract assignability allows buyers to give or sell their rights to another buyer, and that creates opportunity. Tune in to discover four reasons to assign a real estate contract (including contract assignment profits)
Ugly Real Estate Listing Pictures | Real Estate Photography Tips
I’ve got some funny, ugly real estate listing pictures to share with you today, along with some simple real estate photography tips. Take a humorous look at some of the WORST pictures I have seen used when marketing a home ... not the way to sell your house!
How Long Does It Take To Sell A Home In 2021?
How long does it take a home to sell in 2021? I've been asked this question a lot recently, and it made me realize a full explanation was in order. Why? Because if you understood how to sell a home for top dollar, you would know that it is a trick question. Trust me on this. Invest the few minutes it takes to watch the video and you'll have a better understanding of selling a home than do most people in the real estate industry (and I'll prove it!).
What Is A Swimming Pool Worth?
What Is A Swimming Pool Worth? Recently, a customer buying a home asked me a simple question. She inquired “how much does a pool add to the value of a home?” Pretty simple question, right? Well, by the end of this short video, you’ll know the not-so-simple answer (and why this is so important).
Real Estate Is Local - What This Means!
If you plan on buying a home, or selling a home, you’ll want to understand the local nature of real estate and use it to your advantage.
How HGTV Is Like Meth For Homebuyers
This is what I have observed regarding the HGTV impact on buying a home and selling a home.

Zillow Expects US Home Price Growth To Slow Down

This graph is Zillow's estimate of the median home price, measuring the typical home price for single-family homes, condominiums, and co-ops in the United States. It reflects the typical price of homes in the 35th to 65th percentile. In other words, it approximates the median by swiping the middle third of the market and analyzing it over time.

Zillow's Graph Of The Median Home Price December 2022

If you look closely at this graph, you'll see that Zillow has reported home values from 2000 through October of next year because their dataset includes past data plus a forecast that home values will rise 1.2% over the next twelve months. Just as a reference to how conservative Zillow's estimate has become, it estimated 17.3% annual growth back in January (ten months prior).

Zillow’s Home Value Index provides a great perspective on the toxic decline in home affordability. Zillow estimates the median home price has risen more than 91% since February 2012 (an annual growth rate of 6.3%). When we compare the slope of home price growth over the past two years to the slope of price growth during the housing bubble, it is a disturbing image.

CoreLogic Is More Bullish Than Zillow

CoreLogic Is More Bullish Than Zillow

While preparing this report, I found the graph above on Twitter and added it for perspective. Corelogic believes home prices will grow by more than 4% over the next year, a level greater than three times the Zillow forecast.

One must remember that the supply and demand dynamic for homes is the key driver for the change in home prices. Today's abysmally low supply of homes has caused home prices to soar, and as we will see in our next graph, home prices are growing in 99.7% of the markets in Zillow's report.

Year-Over-Year Home Price Growth Continues

With so many people claiming (or perhaps hoping for) falling home prices, I'm wondering if they are even monitoring what is going on across the US. This graph reports all metropolitan markets where the year-over-year change in home prices grew by 25% or more!

graph of top 50 markets for home price growth

Of the 893 cities reported by Zillow, 890 posted growth in home prices for the past twelve months. Only three markets reported declines:

  1. Boise City, ID Down 3.2%
  2. Fairbanks, AK Down 6.8%
  3. Minot, ND Down 8.1%

Overall, Zillow reports the year-over-year home price in the US has risen 13.5% since October 2021, but I'm sure some of our readers will want to say, "that's not what I'm hearing elsewhere," so let's dig a little deeper into why we're seeing so many reports of falling home prices.

Month-Over-Month Home Prices Growing In Two-Thirds Of US Markets

This graph reports the US markets where the month-over-month change in home prices was the highest.

graph of top 50 markets for home price growth last month

Of the 893 cities reported by Zillow, 761 (85.2%) posted growth in home prices for the past month, while 132 markets (14.8%) reported declines. Perhaps this is why we're inundated with reports of declining home prices.

If you have seen some of my recent reports on US home prices, then you know that it is common for the median home price to stagger step higher throughout the year (or stagger step lower in a declining market). We really can't call price change trends after a few months because if we did, we would have reported declines in each of the past five years (years when the median home price soared).

It is clear that the rate of growth for home prices is coming down, but it is too early to say that we expect home prices to fall annually in most US housing markets. With 99% of markets reporting annual gains and 85% showing monthly gains, the market is clearly appreciating.

Rental Rate Growth Is Cooling Too

The final graph in today's Zillow Housing Report measures what Zillow refers to as the "typical observed market rental rate" and, like its Home Value Index, takes a swipe from the middle of market rents to approximate the median rental rate over time.

Zillow's measurement of the change in rental rates December 2022

The blue area measures the rental rate index each month (median rent), while the red line plots the year-over-year percentage change each month.

After peaking at more than a 17% annual growth rate in February, rents have "only" grown by 9.6% over the past twelve months.

Just as the inventory of homes for sale declined, so too has the number of homes for rent. People who must move today have no good choice between buying versus renting a home. The cost for each has exploded higher, though each is rising slower than the rates observed at the beginning of the year.

In October, the median rental rate of $2,040 was nearly 10% higher than the median rental rate of $1,861 recorded in October 2021. This is important to understand because it is not just home prices that have become unaffordable, so too have rental rates. I often receive comments from viewers on our YouTube Channel saying they are waiting for home prices to fall. I certainly understand the sentiment, but I have to wonder, where are they living while they await home price declines?

Are they waiting in a rental property where their lease renewal will be 10% higher this year after rising even greater last year? Or are they waiting in a home they own? If they are right and home prices drop, won’t the home they own drop too? This means they’ll sell cheaper to buy cheaper! So what’s the point in waiting? That’s the trouble with trying to time the housing market; either way, you’ll pay more.

The fact that both rents and prices are moving higher together confirms that the supply of homes in the US is insufficient to house our growing population. Overall, when supply is insufficient to fulfill demand, prices rise. Until we see significant output from US home builders, we should continue to anticipate rising prices (and rising rents). There will be markets where the supply of homes outpaces demand, but overall, the US housing market remains undersupplied.

Home Affordability Crisis Continues

Home affordability is a pressing issue today. When people get priced out of the "for sale" market, they can no longer turn to the "for rent" market, as they will be priced out of that too!

When home prices crashed after the housing bubble, rents kept moving higher. That was a sign that we failed to interpret correctly, as it was a signal that despite the large inventory of homes for sale, there were not "too many" homes built in America.

The plummeting demand in the for-sale market that created the inventory imbalance was manufactured by government involvement that took away loan options for nearly all but the wealthiest of borrowers. Loan qualification standards were pushed far higher than ever in the past by a government intent on slowing a perceived "out of control" housing market.

Loan qualification standards are not an issue today. The entirety of the housing crisis lies on the inventory side, so local governments must work to solve the lack of shelter problem. The rise and dominance of the NIMBYism movement must be quelled, and we need to find solutions to increasing the number of properties to house our growing population. The problem is simple to define but very difficult to cure. It will take a level of leadership that most elected officials do not possess.

You can do your part to fix our housing problems. Reach out to your local elected officials and tell them that you are not OK with soaring home prices and rents. Let them know it is purely a supply-side issue, one that requires a different plan of attack if we are to cure the shelter imbalance in America.

If you have thoughts on the limited housing supply in America, please share them in the comments section below.

9 Tips For Buying A Home In A Bidding War
Follow these 9 home buying tips to get your offer approved ahead of other buyers. These 9 tips for buying a home today will help you overcome multiple offers on a home.
Buy A Home Now Or Wait For 2023?
Are Home Prices Dropping? Will Rising Mortgage Interest Rates Bring Falling Home Prices? If you have been waiting for falling home prices, this is a very important video for you. Do you buy a home now or wait for 2023?
How To Get A Good Deal On A Home
Watch this short video before you buy a house to ensure you know whether to buy a home now or wait! This is the smart way to get a good deal on a house today.
Don't Lose Your Real Estate Contract Binder Deposit
As you prepare to buy a home, you'll want to follow this advice for home buyers. These real estate tips will help you ensure your real estate contract binder deposit is not forfeited to the seller due to mistakes made along the way.
Should You Get A 40-Year Mortgage?
Before you decide upon a specific mortgage amortization on a home loan, take a look at this quick case study that compares a 15-year loan with a 30-year loan and a 40-year amortized loan.
What are closing costs when buying a home?
If you are planning to buy a home now, or in the next few months, there are some fees and expenses you’ll need to pay in addition to your down payment that you should know about. Other than your down payment, all money you spend when you buy a home are called “closing costs,” and you should know about them ahead of time. Even experienced buyers can be surprised at all the costs that are associated with buying a home today. This short video will cover what you need to know so that you can (one, be prepared,
How Much Should You Put Down On A House?
Need some downpayment advice? Want to know what to put down on a house? There are issues you might not have considered when determining a home down payment, but my home buying tips include a side-by-side comparison of some options that will help you make the best decision.
Don't Buy A Home Without Seeing This First!
If you plan to buy a home now or in the next few months, let me tell you about a critical document that you absolutely must get from the seller before you start spending any money on inspections or repairs. The document that I’m addressing is the SELLERS PROPERTY DISCLOSURE, and you should not just HOPE that the seller will include it in the marketing documents. Instead, demand to see this document with a current signature and date from the seller on the day the contract is executed. As you will discover in
10 Mistakes Homebuyers Make In The Home Mortgage Process
10 Mistakes Homebuyers Make In The Home Mortgage Process | Home Buyer Tips - If you are getting ready to buy a home and you are financing your purchase, I am going to cover a list of ten things you are going to want to avoid until after you have closed on your home. The home mortgage process is very structured, loaded with rules and guidelines that you must follow in order to be approved. Remember, a bank is going to lend you hundreds of thousands of dollars, so it's not too shocking that they want you to f
Need To Move? Buying vs. Renting Today
Wondering whether to buy a house or rent a house in 2022? I have created a simple real estate case study to help you make your next move confidently
Is Home Ownership A Hedge Against Inflation?
Could homeownership today still be a smart hedge against inflation? This is a study of real estate during inflation.
How To Buy Your First Home - Step By Step
How To Buy Your First Home - Step By Step - The home buying process from start to finish. Walkthrough the entire homebuying process, great for first time homebuyers and anyone buying a home this year. This is Home Buying 101.
How Often Do Home Prices Fall?
Are home prices falling? Will house prices fall soon? Home prices are soaring, buyers are having to pay above most sellers' asking prices, and the housing market feels just like a feeding frenzy during Shark Week on the Discovery Channel.
How To Use Price Per Square Foot When Valuing A Home
Price per square foot is a measurement of a home's value, but the price per square foot alone is not an effective way to determine the price a home will sell in today's housing market.
What To Offer On A Home In A Sellers Market
We are experiencing the strongest seller's market on record, so you have to be prepared to make the right kind of offer if you want to buy a home today. And it's not all just about how much to offer, there is so much involved when making the "RIGHT" offer in a seller's market. I have shared my experience of selling thousands of homes in a seller's market, both with working for buyers and with working for sellers. I have shared 3 important home buying tips to enlighten you on what matters most to sellers so
Why It's Alway About Supply And Demand In Real Estate
It's all about supply and demand. The real estate supply and demand dynamic tells us everything we need to know to forecast home sales in any given area.
Top 10 Tallahassee Neighborhoods
If you want to know where homebuyers chose to live in 2021, then this video was produced specifically for you. Follow along as I share the top-ten selling communities in Tallahassee in 2021, with insight on what it costs to live in each neighborhood as well as the number of homes that sold.
10 Home Inspection Issues And Tips
Moving from one home to another has enough stress and chaos built into the entire affair, and the home inspection is often the biggest stressor. Here's how to avoid home inspection stress!
Real Estate Negotiation Strategies For Each Market Condition
If you mishandle the negotiation on a home, several things will possibly happen, and all of them are bad. First and foremost, you’ll leave money on the table through either the sales price or the terms that are negotiated. Today, buyers are losing out on homes they want to buy and it’s often due to poor positioning in the negotiation. And while we are in the midst of a historic sellers’ market, I’m seeing sellers leave money on the table even when they have multiple offers! #realestatenegotiation #homenegot
Four Smart Ways To Use A Real Estate Contract Assignment
Contract assignability allows buyers to give or sell their rights to another buyer, and that creates opportunity. Tune in to discover four reasons to assign a real estate contract (including contract assignment profits)
What Does A Transaction Coordinator Do?
When you are selling a home or buying a home, a critical member of your support team is your transaction coordinator. Here's what to expect!
Real Estate Appraisal Versus Fair Market Value Of A Home?
What is the difference between a real estate appraisal and the fair market value of a home? If there is one practice that confounds both home buyers and home sellers alike it's the fact that the majority of real estate transactions close at the mercy of an appraisal conducted for a purpose that most consumers do not consider. Understanding these differences will save you money when it comes to buying or selling a home, and it will help you appreciate the need and value of a real estate appraisal. But here’s
What Is A Real Estate Hot Sheet?
What Is A Real Estate Hotsheet? - When agents are new to the real estate industry, they are trained to monitor the " MLS Hot Sheet" every morning in order to stay informed of the inventory changes. So what is a real estate hot sheet, and can non-Realtors get access to it? ?? Link to the current real estate Hot Sheet: https://www.TallahasseeHotSheet.com Up until now, the hot sheet was proprietary information only available to paid members of the MLS. But recognizing that inventory is so low in the Tallahass
Who is responsible for determining the value of the home you want to buy?
If you are planning on buying a home now, or within the next three to six months, you are going to have all sorts of questions pop up for which you’ll want answers. Among the most important of these will have to do with figuring out what a home is worth. As a matter of fact, I was recently asked this question “Who is primarily responsible for determining the market value of the home you want to buy?” Questions about valuation are very common from buyers of all experience levels because nobody wants to overp
What Is The Definition Of Distressed Property?
What Is The Definition Of Distressed Property? I received this question from "Rich" who asked: Joe, what is your definition of a "Distressed Property" - foreclosure, disrepair, time on market, location? That's a great question because we have a ton of people who have registered to receive our regularly updated list of distressed properties for sale in Tallahassee, so I know the topic is very popular today. In fact, it’s not uncommon for people just entering the market to buy a home to be focused on distress
Why Use A Buyer's Agent For New Construction?
Why Use A Buyer's Agent For New Construction? - I was recently asked about the benefits of having a buyers agent for new construction. Specifically, she asked why she should use a buyer's agent for new construction? My short answer is that you should always hire a well-trained advocate to help you buy any real estate, including new construction homes. This video though will specifically address several benefits of having your own advocate when purchasing a brand new home, whether it has already been built
What Is A Seller's Market In Real Estate?
You might have heard that we have a huge seller’s market right now in real estate. Do you know what that means? This real estate frequently asked question comes up from time to time when somebody is buying a home or selling a home. They want to know if its a buyer’s market or a seller’s market. Is now a good time to buy a home in the Tallahassee real estate market? I have prepared this short video to demonstrate the conditions that make this a seller’s market, and then we’ll show you the numbers and how we
What Is A Swimming Pool Worth?
What Is A Swimming Pool Worth? Recently, a customer buying a home asked me a simple question. She inquired “how much does a pool add to the value of a home?” Pretty simple question, right? Well, by the end of this short video, you’ll know the not-so-simple answer (and why this is so important).
How Many Times Will A Home Seller Counter Offer?
This real estate frequently asked question is from a recent home buyer. If you are about to buy a home in Tallahassee Florida or beyond and you’re trying to better understand how the real estate negotiation process will work, then understanding how to better control the negotiation is going to keep some of your hard-earned money in your pocket!
What You Should Know About School Zones When Buying A Home
What You Should Know About School Zones When Buying A Home - Buyers always ask about school zones, even when they do not have school-aged children. They understand that homes in the highest-rated school zones often fetch the most money, so they believe they are putting themselves in the best position for a future sale by purchasing a home in an acceptable school zone today. Unfortunately, this logic is flawed. If you are buying a home with no need for a school yet plan on including your opinion of the publi
Real Estate Is Local - What This Means!
If you plan on buying a home, or selling a home, you’ll want to understand the local nature of real estate and use it to your advantage.
20 Percent Down On A Home?
Learn how to decide how much you should put down on a house. Here is some down payment advice that might help you keep some cash in your pocket.
How HGTV Is Like Meth For Homebuyers
This is what I have observed regarding the HGTV impact on buying a home and selling a home.

There are a lot of people who endorse Joe for the job of selling your home, from Barbara Corcoran (Star of ABC's Shark Tank) to Preston Scott (host of Tallahassee's top daily "Audio Magazine," as well as the thousands of happy customers Joe has helped in the past. Listen why!

Post a Comment

(850) 366-8917