What a strange, strange market we are in right now in the Phoenix metropolitan area.
Above is a photograph of my new listing at 18630 N 42nd Avenue in Glendale. Listed at $99,000, it lasted on the market only three days, had two dozen showings and a half-dozen offers submitted. Because of the demand, my sellers were able to counter with an as-is addendum – having never occupied the place, they really aren’t sure what issues it may or may not have.
And, because of the demand, the buyers more or less are stuck going with what the sellers and I demand.
At the same time, this fully remodeled condominium in the heart of Scottsdale continues to sit on the market. Agents show the property at least once every two days and have since the day I put it on the market in January. And yet, here we are, still waiting for the right buyer to come through.
That bifurcated market of which I’ve spoken in the past remains fully in effect.
Price point, as much as anything else, is dictating whether a home sells or sits.
As of the moment, there are 18,033 single-family detached homes for sale in Maricopa County. That’s about double where inventory levels were a year ago.
For one thing, rising prices have tempered demand a bit. In March, there were 4,800-odd closed sales of detached homes in the Arizona Regional MLS. Last year, there were a thousand more for the same month. At 2,980 closed sales this month, a lot of work remains to get anywhere close to last year’s 6,200 and change.
Second, interest rates are a bit higher than they were. While this impacts affordability, however, rates still remain very low in a historical context.
And lastly, sellers finally decided to put their homes on the market … at the wrong point in time.
There’s an old Wall Street maxim to do the opposite of whatever the public at large does because, while individuals are smart, people as a mass are stupid. (For reference, see Kardashian, Kim and moon, blood).
As a whole, sellers in the Phoenix area saw the double-digit appreciation and, forgetting the lessons of seven years ago, decided to keep gambling on increases rather than taking their new-found equity off the table and sell.
That’s how inventory doubles. That’s how values flatten.
Of course, this long-developing trend could change at any point. But it’s going to take some dynamic to change. Either buyers need to jump into the market in the $175k to $200k range instead of $100k to $125k, helping clear some inventory, or values are going to need to pull back to bring equilibrium back to supply and demand.
Until that happens, we’re going to be about this stagnant.
Unless you’re selling a $99,000 house, that is.