Last month we covered the remarkable shift the market has taken recently, shifting from a neutral market over to an overheated sellerâ€™s market.Â The shift occurred in reality much sooner than it has taken to show up in the minds of both buyers and sellers.Â However, the shift HAS occurred creating the best selling environment for sellersPhoenixhas seen since 2006.
What is behind this shift?Â The short answer is â€œlimited supplyâ€.Â The supply has tightened severely and no easy fixes for additional supply are on the horizon to ease the problem.Â In fact, January had the lowest number of new listings for a January in the Greater Phoenix area since this statistic began being monitored in 2001.Â Ditto for February.Â Even 2005 â€“ the pinnacle of the frenzied seller market â€“ had more new listings than 2012.Â Plus, there are other factors missing in the current supply of homes pipeline that were present in 2005 â€“ builders and for-sale-by-owners.Â Both of those are missing in the 2012 marketplace.Â As previously discussed, builders have only just begun to trickle back into the market as the cost to build couldnâ€™t even come close to the pricing of the distress sales. Foreclosed homes (REO) are being added to the MLS at the slowest rate in 5 years.Â Even trustee sales, which used to rarely sell at action and therefore ended up on the MLS, are now being sold to investors instead. In fact, 2 out of 3 homes at trustee sales are going to private purchasers leaving very few to show up on MLS. The only segments of the market that are not reflecting these severe imbalances on supply are the 55+ communities and the luxury market.
This imbalance in supply and demand is finally having an impact on prices.Â Until the traditional seller and builders come back in to the market, there are no factors at play to ease the supply shortage.Â Therefore, sellers, at long last, can once again sell as they face little competition.
The real question is when should a seller sell in a rising market?Â Long-term predictions have failed miserably in the last 8 years, so we are loathe to break out our crystal ball.Â What does seem clear is that if you have been putting off selling because you have been waiting for values to rise or because you believed there were no buyers for your home â€“ now is the time to sell.Â The economy, interest rates, financing, builders and lending policies can all throw a damper on the real estate market.Â At the moment, none of these factors are impacting the strength of the sellerâ€™s market.Â Now may be the time to act.
As always, our thanks to the genius Mike Orr for the insightful numbers provided; and to you our friends and clients, we thank you for your continued loyalty.