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Friday, August 18, 2017

Market Slowing, but still on the Rise

 

In today’s real estate market, buyers are thinking and saying the following: 

  • There are a lot of homes to choose from on the market.
  • I am going to wait, prices are going down.
  • This seller will drop the price because their home has been on the market a long time. 

Sellers are thinking and saying the following:

  • Why is my house taking so long to sell, when my neighbor’s or co-worker’s home sold in one day?
  • My neighbor’s house sold for this much in one day; surely mine will sell for more than my neighbor’s.
  • Buyers have been willing to pay over list price and not ask for concessions or repairs in recent months.  I am going to stay firm on my price and not offer any concessions or repairs. 

It is difficult to get buyers and sellers to come to a meeting of the minds when it comes to buying and selling a home.  This degree of opposite perceptions has to change or the market is going to screech to a halt. The market has cooled down since the summer when buyers did not have a lot of inventory to choose from and plenty of competition wanting the few homes that were available.  In the summer market, buyers were willing to pay above asking price and many times created bidding wars to successfully purchase a home.  At the same time sellers experienced quick sales and often had several offers to choose from.  Everyone has a friend or neighbor that sold in record time for prices far higher than expected.  Sellers are still under the perception that they should get the same appreciation that they experienced over the summer and are unwilling to price their home to sell in this shifting environment.  When sellers begin to think like buyers and position their price with that in mind we will see their homes begin to sell.   

 

Jay Butler director of the Arizona Real Estate Center at Arizona State University believes, “This is still an expanding market minus the hype involved in it.  It would be hard from an economic standpoint to sustain the kinds of growth rates we have seen for the last year and a half given our income levels.”

  

One clear indication that the market is shifting is an increase of inventory of homes offered on the market.  Another is that sellers are making price adjustments, lowering their asking price when the market doesn’t respond with offers or showings. By comparison, during the summer frenzy you never saw price reductions.  Some sellers actually increased the listing price in the frenzy. 

 

Another occurrence you did not see during the summer was open houses. In the current market there are open house signs on every corner.  The number of days that homes are on the market is increasing as wellNew home builders are beginning to offer incentives again–such as free pools and credits for upgrades–to move inventory.  Some are even selling to investors again. 

 

Home prices in the Valley are not dropping, they just are not appreciating at the crazy speed they were in the frenzy times. 

“The softening in sales is classic economics at work”, said R.L. Brown, of the Phoenix Housing Market Letter. “Nothing has changed except prices reached a point beyond where consumers are willing to pay it. What we are seeing now is that period where the adjustment will begin.  Those that have to sell will become more and more realistic about their prices.  At a point in time when they have reached market reality, their properties will sell.  Until they do, they won’t sell.”

 

“The population growth, which of course is the feeder of all things in this state from the economy to the housing market, continues unabated.  For Arizona, times are good.  Tourism is up, so are tax collections.  That’s all positive for the housing market in the normal flow of business.”

 

 

The experts believe the market is in great shape.  It is important to keep a close pulse of the market, especially when it is shifting dramatically.  The sellers market is shifting to a more normal market. Buyers are more sophisticated and a seller who needs to sell must keep this in mind and position their home to pop out from the many now on the market.  The only things a seller has control of are the condition of the property, the terms and the price.

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