The real estate market has been slowly improving since it reached record lows in 2008 and 2009. Existing-home sales rose 2.1% in October and the national median price for an existing home is 11.1% higher than it was one year ago. According to the Federal Reserve's beige book, the housing industry has experienced substantial improvement and has been a bright spot for the economy this year.
Still, not all housing markets have rebounded as quickly as others. In some parts of the United States, homebuyers are finding that they are at an advantage -- demand for houses are low and supply is high. Houses in these markets are often on sale for months and are usually bought for well below their asking price. In other areas, home sellers have a leg up because of unusual demand. Their homes tend to sell for much higher than the asking price.
Real estate Web site Zillow has created an index to determine which U.S. markets favor buyers and which favor sellers. Zillow compiled the index by looking at how long homes were on the market and by using sale-to list price ratios.
The results showed a clear divergence in buyers' and sellers' markets throughout the United States.
Stan Humphries, chief economist of Zillow, tells The Daily Ticker that he was surprised to find that California dominated the list of sellers' markets.
"Of the top 30 markets in terms of ones that are most favorable to sellers, the hottest markets right now, 24 of them were in California," he says.
The West and Southwest are the best markets for home sellers, partially because of the tech boom but also because of the extreme price adjustments that hit the area in 2009. "Those have been very hard hit markets," says Humphries, "and some of these homes have seen value declines of over 50% from their peaks, so affordability has been reset enormously which has actually drawn demand back into the marketplace."
This affordability is coupled with a limited supply of housing because of negative equity in the area. Negative equity prevents some sellers from putting their homes up for sale even when there are buyers in the market.
The top 10 seller's markets are:
1. San Jose, Calif.
2. San Francisco, Calif.
3. Sacramento, Calif.
4. Las Vegas, Nev.
5. Phoenix, Ariz.
6. Riverside, Calif.
7. Los Angeles, Calif.
8. San Diego, Calif.
9. Seattle, Wash.
10. Washington, D.C.
Buyers' markets tend to be found in the Midwest and mid-Atlantic regions of the U.S. Humphries says cities like Cincinnati, Cleveland, Chicago, Baltimore, and Pittsburgh are advantageous markets for home buyers.
Homes in these areas typically take over four months to sell and are discounted by 4%-6% from their listing prices.
"You definitely did not see affordability reset in some of these Midwest and mid-Atlantic markets," explains Humphries. "I think the other factor is that they don't tend to pull in the additional cohort of buyers that's made of international buyers or second home and retiree buyers."
The top 10 buyer's markets are:
1. Chicago, Ill.
2. Cleveland, Ohio.
3. Philadelphia, PA.
4. Cincinnati, Ohio.
5. New York, NY.
6. Pittsburgh, PA.
7. Baltimore, MD.
8. St. Louis, Mo.
9. Columbus, Ohio.
10. Charlotte, N.C.
Existing home sales for November will be released on Dec. 20 at 10 a.m. ET and are expected to show a modest increase.
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