Is this the beginning of a Market Shift or just a glorified Summer Lull?
Time will tell, but any relief from historically low active housing inventory levels is welcomed by Home Buyers. It’s possible that the low water mark is behind us, having came in March when Maricopa County saw less than 2,500 Active Homes. Since that time, we’ve come up about 35%, which sounds drastic, but we are nowhere near the number of homes needed to satisfy demand. That would mean close to 20,000 homes.
What I am noticing is the number of offers per listing. Back in February – May, we routinely were seeing 25-40 offers within the first 24-48 hours, but that figure has tempered a bit. Now it’s more commonly 4-10 offers, which is still plenty of selection for a seller. The market 90-days ago was operating at an unsustainable pace and everyone knows that.
A new baseline was set in the market… when buyers were offering $50K – 100,000 OVER appraised value, that brought prices up quickly, but at a pace also not ever-lasting. We are now seeing less full appraisal waivers and offer prices closer to the list prices, albeit still over in most cases.
Why is this?
Summertime in Phoenix means it’s hot… that leads to many heading out of town, whether it be a full on family vacation or shorter weekend camping trips. These travel plans tend to disrupt the process of moving.
Also, many buyers decided they were tired of being a part of the circus and renewed their lease. After getting outbid a dozen times, sometimes it’s time to take a break. Buyer fatigue is real and many will re-enter the market once things cool down.
Is this just locally?
This is not just happening in Phoenix, but many metros across the country; California, Washington, Illinois, New York, Texas, Colorado, etc. We are seeing this theme in the national real estate headlines almost daily.
What will this do for the Market Moving Forward?
Hopefully it will allow for more people to make a move using a contingency where they purchase their next home contingent upon the closing of their existing. This was a frequent practice over the past several years, but then dried up in the last 12-months. So many have sat on the sidelines awaiting this feasibility to return.
A healthy market allows for some negotiation and is not one-sided all the time. It’s a market so it should ebb and flow.
What does this mean for Sellers?
It means we need to be aware of the surrounding competition and keep realistic expectations. Just because something happened a certain way 2-months ago doesn’t mean that’s how it always is. It’s still a fantastic time to sell and should remain so for a while, but we could be headed back toward a more normal sort of pace and process. For everyone’s sanity, I hope so.
**Data collected by Justin Schlegel through the Arizona Regional Multiple Listing Service for Active Detached Homes in Maricopa County**
