Quick note – if you prefer to get your news from the mainstream media who either are reporting on national trends or who are using data that’s a couple of months old, by all means, skip this post. This is more for those who want to know what’s happening right now, not the type of folks who are waiting for values to rise another 30 percent in the next three months because the 25 to 30 percent increase we saw this summer wasn’t enough.
Snarky? Slightly. But there are moments in time when we all could use a figurative slap to the head. And this is such a moment here in the Phoenix market.
On Sunday, there were just over 9,000 single family detached homes for sale in the Phoenix real estate market – that’s a 25 percent increase off the lows we saw at the start of the summer. (Right now, the number’s at 8,991 – let’s still call it 9,000 for the sake of simplicity.)
This increase has had next to nothing to do with the mythical shadow inventory or second wave of foreclosures allegedly lurking out there. Lender owned and HUD homes represent just under 10 percent of the total inventory, short sales are about 8 percent. Of the 13,230 pending listings more than half are short sales and around 9 percent are bank owned homes.
In short, that means the most aggressively priced homes – the distressed listings – are the ones selling. And while there are realistically priced homes on the market – not just properties at market value but slightly above depending on the area and competing listings on the market – there’s increasingly little room to push prices upward.
What has driven the rise of prices in Phoenix was extreme scarcity combined with pent-up demand. That demand is still strong below the $125,000 mark – trying to get a property for that price or lower with an FHA loan remains a quixotic effort at best – but the extreme scarcity is becoming less extreme.
In other words, the window of opportunity to take advantage of minimal supply and remaining demand is closing as inventory rises. While homes will not be impossible to sell as they were back in 2007, for instance, but they aren’t going to move as quickly and likely will be the subject of fewer multiple offer situations. Fewer multiple offers means fewer buyers climbing over each other to purchase and a reduced acceleration in values.
When the market jumps ahead double digits, it’s easy to forget normal appreciation is 3 to 5 percent a year. On a $200,000 house, that’s an increase of $6,000 to $10,000 in any given year … an amount that easily can be made up for in seller-slanted market conditions such as we have now, for the time being.
This isn’t the time to be penny wise and pound foolish. If you want to sell, sell. Don’t sit around waiting for 2005 prices to return as if such a thing is right around the corner when, in fact, it’s years and years away. At best.
Want to know what I can do to get your home sold? Head over to ExpiredtoSoldAZ.com for information on my marketing plans and 60-day listings.