Home sellers located in many Western metro areas are in a good position to benefit from locally strong demand and will likely hold the advantage in real estate negotiations, Zillow reported Wednesday. Interestingly enough, six of the top 10 sellers’ markets listed by Zillow are California-based, one of the hardest hit markets in the housing crisis.
This coincides with a report released Tuesday by Pro Teck listing the top 10 best performing metros with regard to many real estate indicators. Several California metros topped that list as well.
Zillow studied data such as actual sales prices compared to asking prices, number of days on Zillow and the percentage of homes currently listed with a price cut to establish its list of top sellers’ and buyers’ markets.
In the Zillow study, rising home value is not necessarily the main indicator of a sellers’ market. Quick turnover and fewer price cuts were two of the main factors used to determine the list.
Conversely, potential homeowners with the greatest conditions are in the Midwestern and Mid-Atlantic metros such as Chicago, Cleveland and Philadelphia. These metros should expect price cuts exceeding 5% in some areas and listings are expected to remain active for more than 100 days in many cases.
In an ideal buyers’ market, for-sale homes remain on the market longer and prices are reduced often, granting more negotiation power for the buyer.
“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 Stan Humphries. “But much of that strength is driven by investor interest, as many distressed and non-distressed homes are purchased and transformed into rentals. This investor activity is contributing to very low inventory levels, which increases demand and helps drive up prices, particularly for less expensive homes in these markets.”