The greater Phoenix housing market has been a buyer’s market for over 8 months. Buyer markets are infrequent and typically do not last – many just weeks. So far, this one has proven to be slow moving but persistent.
As they say “What is good for the duck hunter is not good for the duck.” For buyers (the duck hunters) more supply than demand has given them choices. The only sticking point being interest rates. But those stubborn rates are causing downward pressure on pricing which is good for the duck hunters, bad for home sellers (the ducks). As the Cromford report explains:
“There are three main measures that affect housing affordability: mortgage rates, home values, and income. In the past when home values rose too fast for incomes to catch up, it was mortgage rates that adjusted and brought payments back into range, but in this cycle rates have proven to be an unreliable, volatile ally. The housing industry has been waiting three years for mortgage rates to decline and save the day, and as more time goes by without relief, the more pressure there is on home prices and incomes to adjust in order to increase demand. It is finally happening… We have not seen such a favorable situation for buyers since March 2009.”
But sellers are reacting to this market too.
“Meanwhile, more sellers have decided market conditions are too unfavorable for them and are taking a pause. While supply is still up 45% from last year, the last 7 weeks have seen a 3.4% decline. New listings added to the MLS every week has dropped 39% over the last 2 months, and are now at the second lowest level historically (2023 was the lowest year for new listings). Weekly listing cancellations are up 38% over last year, and expired listings in the last week of May were up 84%. In the past, cancelled and expired listings were re-listed right away and didn’t affect the total count, but this time sellers are taking a longer break and sometimes opting to rent their homes instead.”
Make no mistake, supply is still holding steady and outpacing demand, but at least supply has stopped increasing. However, there is a specific segment of the market that is particularly discouraging for sellers – condos and mobile homes. “While the market is nowhere near as cold as it was between 2006 and 2009, we are recording several indicators that tell us it is worse for condo and townhouse sellers than at any time since June 2011, some 14 years ago… Although they are fewer in number, mobile and manufactured homes are doing even worse than condos… This reinforces the impression that it is the low-end of the market where sellers are struggling the most.”
A final note to buyers: with supply fixed at the moment, if rates do drop, we will likely see a surge in activity which will begin to consume the existing supply. Demand is elastic and can move swiftly. These windows of opportunity typically don’t last. The last similar opportunity was March of 2009. Consider buying in the next 3-6 months.
A final note to sellers: While price is a trailing indicator and the market moves before pricing does – this mix of supply and demand has been established for months now. Therefore, as the Cromford Report points out, it is unlikely we will see anything other than further price declines over the next three months. In a market that favors the duck hunters: price to today’s market rather than yesterday’s; focus on condition; and hire an agent skilled at marketing and negotiating and who has been through a buyer’s market or two. Many agents have only known seller markets. These tips are your best defense against the hunter.
Russell & Wendy Shaw
(mostly Wendy)