Two-sided Coin of a Market
We are a little more than mid-way thru the year and while temperatures are rising in Greater Phoenix, the same cannot be said of home prices. Unlike the weather, the market is not responding universally. Luxury has done well – rising on average 4.4% this year. For that you can thank the Stock Market. However, for the sub-luxury market the opposite has been true – prices have generally drifted downward. As the Cromford Report states:
“June sales prices for properties under $400K were down an average of 4.5% from last year. The $400K-$600K range was down 2.4%. Mid-range prices from $600K-$1.5M were flat within 0.1%-0.8% over last year, and higher-range prices over $1.5M where buyers negotiate harder on price are up 4.4% on average in appreciation…As with all things, there are exceptions to the rule, but the weakest part of the market is the low-end while the strongest remains the highest price sectors.
For the cities with the highest proportion of luxury homes, pricing has generally out-performed the rest of the valley, Single-family detached homes in Scottsdale have risen 4.3% over the past year. Cities dominated by the mid-range have struggled to stay above water. Chandler for example is down, but only just, at 0.1%. The cities with a predominance of entry-level homes are usually faring less well. Avondale for example is down 5.3% for single-family detached homes compared to a year ago.”
While luxury sales are a seasonal business (as those who can escape the summer heat, do) the average seller competes all year long for buyers. Sellers, unable to reach pricing goals, are pulling their homes off the market and not immediately relisting. In fact, cancelled listings were up 46% in June compared to last year and expired listings up 79%. Additionally, new listings coming to market have slowed. This resulted in an 8% drop in overall supply in the last 5 weeks. Yet even with that, supply is still up 41% – which is why the market is still favoring buyers over sellers. At some point lowered prices combined with lower supply – even without lowered interest rates – will stimulate the market. We will report it as soon as we see it.
Russell & Wendy Shaw
(Mostly Wendy)