High-Prices Houses Adversely Impacted by COVID-19

Zillow analysis shows that new listings for high-priced homes dropped the fastest once COVID-19 impacted the market, with affordable listings being less affected. 

The report found expensive homes—ones that make up the top-fifth of the market—saw listings fall 51.4% year-over-year by April. Listings for the most-affordable homes, which typically see the tightest inventory, fell 32.1% annually. 

However, the share of new for-sale listings overall has improved, rising 5.9% from the prior week. New listings for the most-expensive homes were up 8% after falling for most of March. 

"Many sellers with the flexibility to delay or temporarily remove listings have opted to do so, perhaps waiting out the uncertainty. Now that more buyers are in the market, those sellers are wading back in, joining those who had remained motivated to sell for any number of life reasons and adapted with virtual tools and social distancing," said Skylar Olsen, Senior Principal Economist at Zillow. "We have not yet seen prices affected, though we expect them to fall modestly on a national level as the pandemic plays out."

Despite the increases, the rate of new listings is more typical for December than Spring, Zillow said. Total inventory is down annually 16.7%—the largest yearly drop since the COVID-19 pandemic began. Inventory is also down 1.6% weekly for the week ending on May 3. 

Zillow, however, expects a moderate 2-3% decline in home prices through the end of 2020. The median list price of homes on the market was $320,466 as of May 3—0.4% higher than a year ago. 

Two months ago, list prices were up 3.3% annually. Fewer high-end listings and fewer new listings overall are contributing to the relative softness in list prices.  

The National Association of Realtors, though, revealed single-family home prices rose annually 96% during Q1 2020 in nearly all of the markets studied. 

The report found that 174 of 181 of the nation’s metro areas studied reporting sales price elevations. This increase is a 2% uptick compared to Q4 2019. For an idea of those exact price comparisons as a point of reference, the median price for an existing single-family home in the United States during 2019 was $254,900, while the median price in Q1 2020 was $274,600—a rise of 7.7%.

Of the metros studied, 46—most of which were located in the western and southern regions of the United States—experienced an increase in home prices in the double-digits. Among these top performers were Boise City, Idaho; Eugene, Oregon; and Colorado Springs, Colorado—exact percentages being 18.1%, 14.5%, and 14.4%, respectively.