It is normal for the market to swing back and forth from a slight buyer's market to a slight seller's market and back. These slight swings normally result in a marketing time for a home being somewhere between 30 and 60 days and most sellers receiving around 95% of list price for their home. Unfortunately, we have not seen a "normal" market since late 2003 or early 2004. Wild swings in the market make it very volatile and difficult to predict. We have just had a dramatic up tic in the housing market because of an ever shrinking number of homes for sale and excessive demand due to very low interest rates and extreme investor activity in the Greater Phoenix market. In addition, the almost total lack of new build activity has put further pressure on the already low supply of available homes.
The resulting dramatic upward shift in pricing (almost 30% higher since last August) is starting to have the results predicted in previous issues. The rising prices have cause three basic actions to take place.
- Investors have started to slightly pull back from buying homes in Arizona. It is very subtle but perceptible.
- More and more homeowners are now able to sell their homes at a profit or at least with some equity and see the opportunity to make the move they have been contemplating for 8 years.
- New home builders, because of the elevated values are again entering the market.
The indicators I am seeing that support these conclusions are as follows:
- Inventory and time on the market are increasing every so slightly.
- New builders that 3 months ago would only sell 3 homes a month are now accepting some contracts with contingencies on the sale of a home.
- More and more sellers are having to offer small concessions in price and/or closing costs to get their homes sold.
- The overall frenzy on every listing is slowing somewhat. That is not to say that you can come back and buy a home a week later but at least it is possible it will still be available tomorrow.
I have been working the Avondale, Goodyear, Litchfield Park area for over 25 years and have personally witnessed these pendulum swings and "normal" markets many times. This appears to be the pendulum swing that slowly but surely swings back towards the "normal" market. Having worked here for so long and living in Rancho Santa Fe, I am personally interested in maintaing the values in the community and have the EXPERIENCE and SKILL to market homes in a "normal" market. The market isn't coming to a screeching halt and then violently going crazy as it has since 2004. Just a nice easy slowing. So what does this mean to you as the home buyer or seller.
As a buyer
- You can probably get an FHA offer accepted now. Which has been very difficult to do since the beginning of the year.
- You may not have to bid over the list price and pray that an appraisal comes in at value.
- The seller may actually be willing to pay your closing costs or lower the price slightly (but still probably not both)
- I still would not wait until the weekend to look at a home or make a decision. There are still plenty of buyers out there.
As a seller:
- Your home will probably not sell at $10,000 over list price in 5 hours.
- Condition and pricing are even more crucial. If a home is not sold in two weeks, it is likely overprices or has some condition issues.
- You may have to be a little more flexible on price, terms, or occupancy to get it sold.
- You have to make the home easy and appealing to show eliminating all of the obstacles that have traditionally kept homes from selling.
- You may have to fix the "laundry" list of minor repairs the buyer is asking for.
As the market approaches "normal", you need an agent with years of experience operating in a normal market to price, market, negotiate and close your home without any problems. That is not to say that we cannot also do the "specialty" sales such as 1031's, estate, short sale or REO transactions. Most agents who were not in the business in 2000 have very little experience in marketing property that is not "as-is", settling occupancy date conflicts, or having the resources to handle the inevitable laundry list of minor repairs that most homes need.