Such is the state of the mainstream media, not to mention the its-a-great-time-to-buy ethos of the National Association of REALTORS, that it’s often difficult to determine whether the proclaimed recovery of the Phoenix real estate market is more hype than reality.
Here are a few signs that would lead one to believe what we’re seeing is legit …
1. Inventory’s still really low. We’re actually back down below 11,000 detached homes for sale in Maricopa County even though this is the time of year when listings start sprouting like weeds. Don’t get the wrong idea – new listings are coming on daily, but they’re being absorbed almost as quickly.
2. Builders are getting cocky. REALTORs and new home builders tend to have a rather tenuous relationship.
When the market’s strong, such as in 2004 and 2005, builders start reducing the commissions they pay agents because they figure we’re irrelevant to the conversation (not to mention, it’s easier for a builder when a buyer walks in without individual representation.) When the market comes apart as it did from 2007 through late 2011, at least in the builder world, commissions get ratcheted higher and higher as the companies try all they can do get agents to bring clients in the front door.
Now? It only was a matter of time since new construction started taking off last February and March … this morning, word came down that Lennar homes has slashed the commission it’s offering to agents bringing buyers. Gutsy play for a company reportedly on the verge of bankruptcy four years ago.
3. Price changes are real. Last September I talked to one potential seller about a property in Stetson Hills that clearly comped out at $109,000. Today? If we put the home on the market, it will be in the $140,000 range. Prices jumped that far that fast.
Granted, not all areas are experiencing similar 30 percent jumps in value. But for pockets of the Valley where the market likely overcorrected, the changes are the real thing. Calls often come from investors who purchased one home in an area they decided they want to invest in only to discover they’re already priced out of the cash flow they saw when they purchased a year ago.
Chuck D generally is right when he told you don’t believe the hype. In the Phoenix real estate market, though, you just might want to.