The other day I had a conversation with someone who mentioned in passing that we’re in the midst of a buyers’ market. Except, we’re not. Not in the Phoenix real estate market. And certainly not at lower price points.
Overall, there’s roughly a 3.5 month supply of single family detached homes for sale in Maricopa County. But that doesn’t really tell the whole story.
In the sub-$100K market, there are just over 4,700 homes for sale. More than 2,700 homes have closed escrow in the past 30 days. So in that price range, we have 1.6 months of inventory – massively into sellers’ market territory, given a “neutral” market is at the four- to five-month mark.
Between $100,000 and $200,000 it’s much the same – 5,000 homes for sale, about 2,600 sales the past month and 1.9 months of inventory.
We get a little closer to a buyers’ market in the $200,000 to $300,000 range – just under 1,000 sales, just under 2,500 homes for sale and 2.61 months of inventory.
Inventory levels rise once you look between $300,000 and $400,000 but, still, with 3.5 months of inventory (389 sales, 1,376 active listings), it’s still a sellers’ marker albeit a fairly soft one.
It’s not until the band between $400,000 and $499,000 when the inventory level finally gets as high as 4.74 months – and that’s still by most measures a “neutral” market.
So, the natural question comes, where does the idea of a buyers’ market come from?
Other than the usual cocktail party chatter, there’s the national media which reports what is happening nationally without the slightest clue of what’s happening here in Phoenix.
Numbers-wise, there also is the issue of home values which have remained flat to down in most areas for a considerable amount of time. Intuition would tell you a true sellers’ market would result in higher prices but that hasn’t been the case, not for the past two years of what has been a neutral-to-sellers market.
As I’ve said many, many times, lowball offers aren’t going to succeed here. There’s no reason for a seller – whether a lender or traditional owner – to consider them, not when there’s such a thin supply of homes. It may be endlessly thin, if that makes sense, with new bank owned homes replacing the ones that sell, but there’s no glut.
And without that glut and with brisk sales, the Phoenix real estate market is anything but a pure buyers’ market where a home buyer can write their own price.