Whether buyers or sellers have the upper hand in home sales negotiations this spring will depend on which part of the country their deal takes place, according to the latest market analysis report released Thursday by Zillow.
A look at buyers' and sellers' markets around the country shows that the better job market in the West is drawing more buyers and driving up competition for homes in more economically stable cities, thus giving sellers the upper hand in home sales negotiations in western metro areas. Meanwhile, leverage for buyers is strongest in cities in the East and Midwest, where less competition for homes will likely give them more room for bargaining on prices.
According to Zillow, the best market for buyers is Cleveland, followed by Philadelphia, Tampa, Chicago, and Pittsburgh. Buyers should also have the upper hand in Cincinnati, New York City, Detroit, Baltimore, and Saint Louis.
One notable East Coast exception to the buyers' market is Washington, D.C., which came in eighth on Zillow's list of cities in which sellers have the upper hand in home sales.
The most seller-friendly markets this spring, according to the report, will be in the West—particularly along the West Coast—where robust demand, a sense of urgency among buyers, and limited supply are causing rapid home value appreciation, said Zillow's chief economist, Stan Humphries. "In the East, housing markets are appreciating a bit more slowly, and homes are staying on the market longer, which helps give buyers the upper hand," he said.
San Jose and San Francisco lead the top sellers' markets, followed by San Antonio, Los Angeles, Seattle, and Riverside, California. Denver, D.C., Sacramento, and Dallas-Fort Worth round out the top 10 sellers' markets.
The schism in leverage, according to Humphries, may actually be a good sign of overall economic recovery nationwide. "As we put the housing recession further in the rear-view mirror," he said, "the broad-based dynamics that applied during those days, when all markets were reacting similarly to nationwide economic conditions, are fading."
Zillow's data on median home sales bear out Humphries' optimism. The number of homes listed for sale on Zillow.com was up 5.5 percent in February, and the firm's Home Value Index last month was up 5.6 percent from the previous February. Meanwhile, Zillow expects home values to rise another 3 percent through next February.
"Real estate has always been local," Humphries said. "And as the spring market gains momentum, this old adage will only become more pronounced."