Buyer’s Market Arrives for the Holidays
Slowly but surely the market has eroded for most sellers in the last eight months. The overall market is now a “buyers market”. While there are pockets that still decidedly favor sellers (Fountain Hills, Chandler) most of the valley is balanced or favoring buyers. While sellers rightfully blame low demand (courtesy of rates hovering at 7% or higher) the truth is supply is more to blame. As the Cromford Report shares, “The overall number of active listings (excluding UCB and CCBS) has grown 34.7% over the past year. This increases to 36.9% if we eliminate out-of-area listings…The number of active listings without a contract has climbed from 15,574 at the beginning of February to 21,368 today. That is an increase of 37% and it means buyers have far more homes to choose from and are therefore less likely to choose the one you are selling. Sellers have to compete with each other and this is leading to frequent and substantial cuts in their list prices. They are also competing with a good supply of new built homes, which are only lightly represented in the 21,368 count. New homes are getting an unusually large share of the contracts signed in 2024”.
Why are new builds currently providing so much competition for the resale market? Again, interest rates (along with newer styles and features). Builders are offering bundled loans at lower rates (i.e. they buy loans in bulk to provide more competitive rates) The resale buyer is buying at market rates, not so with new builds. This is putting pressure on resale sellers to price correctly from the start and present the home in its best condition to compete.
How long will this buyer’s market last? Who can say? Factually, buyer markets are rare in Greater Phoenix. As the Cromford Report further points out: “While the last one was in 2022, it only lasted 4 weeks. Before that, 2014 fell just short of reaching a buyer’s market, but maintained a slight buyer’s advantage for 4 months. Before that, the last buyer’s market was in 2010, which also lasted 4 months. This time around, it depends on whether mortgage rates stagnate or decline once again.”
Therefore, the answer to how long this will last is: it depends. Whatever the market brings, we will be here to advise you on the strategies that work in the market we find ourselves.
Russell & Wendy Shaw
(Mostly Wendy)