Supply continues to be the story in the valley (or lack thereof).\u00a0 But it really is a tale of two cities \u2013 if the cities were price points \u2013 the 200K range vs. all other price ranges.\u00a0 Single family ![\"\"](\"https:\/\/nohasslelistingblog.com\/wp-content\/uploads\/2018\/02\/Travis-graphic-for-February-2018-300x236.png\")
homes under 200K seem to be the wooly mammoth quickly headed for extinction.\u00a0 Understandably entry level buyers and their agents are bemoaning the lack of inventory in that coveted price range.\u00a0 Perhaps there is a need for a bit of a reality check. Phoenix is the 5th largest city in the US. The rankings currently are:<\/p>\n
Phoenix has enjoyed a reputation of \u201caffordable housing\u201d due to its large land mass.\u00a0 Whenever more houses were needed, builders had plenty of land to build them.\u00a0 A steady source of new supply kept pricing low.\u00a0 This brought about the \u201cdrive until you qualify\u201d phenomena as the valley expanded ever outwards. Builders are happy to build but land, labor and material costs make them unable to bring single family housing to the market in the price range most needed. When we look at the valley in the context of cities such as New York or Los Angeles \u2013 do most buyers in those cities expect single family housing to be available at 200K?\u00a0 No. \u00a0So it may be that we simply are struggling to come to grips with our big city status.<\/p>\n
In any case, let\u2019s take a look at where we stand in the early stages of 2018.\u00a0 The year began with 14% fewer homes for sale than in 2017.\u00a0 We are currently seeing a slight improvement over 2017 for the number of homes entering the marketplace (up 1.4%) \u2013 but it is early and the improvement is very small.\u00a0 To quote Michael Orr of the Cromford Report:<\/p>\n
\u201cSo the good news for buyers is that we do have slightly more homes coming onto the market. The bad news is that this is not enough to ease the supply shortage. In fact it is not even enough to compensate for the higher sales rate in 2018 over 2017. Closings are so far up 3.2% year over year so a 1.4% increase is less than half what is required to replace homes sold.<\/p>\n
Looking specifically at Greater Phoenix we have 6,859 listings with a list date of Jan 1 through Jan 21, 2018. Compared with last year we have seen<\/p>\n
So perversely, but not unexpectedly, we are getting the largest percentage increases at the high end of the market where more supply is not really needed. Below $200,000, where supply is already extremely thin, the new listing flow has dropped even further from last year’s rate\u2026.<\/p>\n
However the 2% of the market over $1 million benefits from having 12% of the active listings – six times its fair share. Consequently buyers have a much easier time if they are planning to spend $1 million or more and sellers are rarely in control of the negotiations. This is why you see some spectacular price cuts in the high-end market and a sales pricing trend that is flat to slightly lower. We should emphasize that this applies to the re-sale market and not the new home market\u2026\u201d<\/p>\n
If you are a seller \u2013 the price point you are in will affect your \u201chome selling experience.\u00a0 Typically, the lower the seller is on the pricing scale \u2013 the higher the odds of multiple buyers competing for your home.\u00a0 When demand is out of balance with supply, in favor of sellers, multiple offers occur and there is upward pressure on pricing.<\/p>\n
This would all appear to be good news for sellers, right?\u00a0 Well yes, but a strong seller market can hide mistakes that cost sellers thousands of hard earned equity. \u00a0For example, sellers can decide to \u201cgo it alone\u201d by either selling the home to a friend or neighbor or to a \u201cwe buy houses company\u201d.\u00a0 To many that looks like success \u2013 one buyer and the home is sold without placing it on the market.\u00a0 To us in the business, that looks like a disaster. How can you know for certain what a \u201ccompetitive\u201d offer is without competition? Any home has a range of value.\u00a0 What pushes homes to the top end of that range?\u00a0 Competition.\u00a0 Capitalism is based on that very concept.\u00a0 Competition (thru marketing) is how we as agents create bidding wars for the home.<\/p>\n
Sadly it isn\u2019t enough to create the competition, once created one must know how to handle it.\u00a0 How an agent handles multiple offers separates the men from the boys.\u00a0 This again is where thousands can be made or lost.\u00a0 Make sure that whomever you hire knows how to get the highest and best out of each offer and to successfully exploit that competition.<\/p>\n
It is important to note that supply and demand imbalances will correct with time. In fact, we are already seeing lowered demand than last year. The cycle basically goes like this: tight supply increases pricing; increasing prices dampen demand; lowered demand creates more supply; more supply lowers prices.\u00a0 So the pendulum of supply and demand (and thereby pricing) self corrects with time.\u00a0 When will that correction begin and supply begin building?\u00a0 We don\u2019t know but we will be watching for it and will keep you alerted to any shifts. Wondering about something we didn\u2019t address here?\u00a0 Contact us. \u00a0As always, we are happy to answer your specific concerns.<\/p>\n
Russell & Wendy Shaw<\/p>\n
(Mostly Wendy)<\/p>\n","protected":false},"excerpt":{"rendered":"
Supply continues to be the story in the valley (or lack thereof).\u00a0 But it really is a tale of two cities \u2013 if the cities were price points \u2013 the 200K range vs. all other price ranges.\u00a0 Single family homes under 200K seem to be the wooly mammoth quickly headed for extinction.\u00a0 Understandably entry level […]<\/p>\n","protected":false},"author":2,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[3,4],"tags":[],"class_list":["post-776","post","type-post","status-publish","format-standard","hentry","category-home-values","category-market-stats"],"_links":{"self":[{"href":"https:\/\/nohasslelistingblog.com\/index.php?rest_route=\/wp\/v2\/posts\/776","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/nohasslelistingblog.com\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/nohasslelistingblog.com\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/nohasslelistingblog.com\/index.php?rest_route=\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/nohasslelistingblog.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=776"}],"version-history":[{"count":2,"href":"https:\/\/nohasslelistingblog.com\/index.php?rest_route=\/wp\/v2\/posts\/776\/revisions"}],"predecessor-version":[{"id":779,"href":"https:\/\/nohasslelistingblog.com\/index.php?rest_route=\/wp\/v2\/posts\/776\/revisions\/779"}],"wp:attachment":[{"href":"https:\/\/nohasslelistingblog.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=776"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/nohasslelistingblog.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=776"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/nohasslelistingblog.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=776"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}