Zillow (NASDAQ: Z) (NASDAQ: ZG) says new listings of homes at the top of the market are down precipitously from this point last year.
The online listings company said in a May 8 report that offerings in the top one-fifth of their individual markets were down 46%. They make up 25% of the overall market. Meanwhile, listings for homes in the bottom one-fifth were down 32% from last year and account for 17% of the market.
While that decline is less than the 51% year-over-year drop for the top end of the market recorded in mid-April, those homes still represent the most depressed segment of the market. And that's in a pandemic-stricken market where active listings are below 1 million, the lowest since Zillow began tracking the data in 2013.
That could be the result of homes coming off the market while sellers wait for a recovery and also because of the lack of buyers with the financial security to buy in those price ranges.
Reading the tea leaves about market resilience
"Determining the kind of homes being listed this season can offer some early clues as to the resilience of the market and any potential future impacts on home prices as the enduring impacts of the coronavirus unfold," the Zillow report said. "The early differences emerging show that sellers are balancing their decision to sell differently at different price points."
The balancing factors could include the possibility that owners of high-priced homes are more likely able to wait for a better price and that those higher-end homes may require more professional preparation and face-to-face selling than is available in a stay-at-home environment.
When wallets and doors can open
A May 12 update from Zillow said that it's expected April sales will have been off by 44% from February when those numbers come in and that it expects house prices this coming October to be about 2.7% less than they were in February, before the pandemic struck.
That said, "It is unclear just how much the current crisis will ultimately impact prices," the May 8 report said. "It's reasonable to expect prices may fall somewhat, though the economic push-pull of both a supply shock and a demand shock may provide some insulation."
"Much will depend on how quickly and in what fashion the market reopens, and whether sellers and buyers can reasonably participate again, both financially and logistically," the report added.
The reality of affordability
That reality also is reflected in a May 12 report from the National Association of Home Builders (NAHB). The report found that 56% of shoppers actively seeking to buy a home have been trying unsuccessfully for three months and that 40% of that group pin their lack of success on affordability. The rest cite dissatisfaction with neighborhood choice or home features.
But, the timing is crucial here. As the NAHB said in a related blog post, "The online survey was in the field from March 17 through March 28, the early stage of the COVID-19 crisis in the U.S. About 12 million people filed for unemployment benefits in the two weeks immediately after data collection closed. For this reason, we assess that responses in this quarter's report mostly reflect people's views prior to the full impact of stay-at-home orders and social distancing restrictions imposed by local and state governments."
Now those unemployment filings are three times that, and attention is turning to signs of market recovery that bring with it a few predictions: that sales will recover in the summer after a lost spring and that price gains will be minimal after months and years of steady climbing prior to the pandemic.