This week in Phoenix real estate…nothing like raising the interest rate by 2% to grab the attention of the Phoenix real estate market. The Mortgage Bankers Association index of 5.36 is 2.03 points higher than it was on January 1. For the median home price (currently $470K) that equates to an increased monthly payment of about $540. Ouch.
Of course that’s just the index. You better sit down for this. Current home buyers are starting to see quoted rates in the 6%’s. Inconceivable**!!!
As painful as that sounds, this is a healthy direction for our real estate market. Demand is now squarely in the balanced range and inventory is starting to increase. We are up 29% in active listings compared to last month, and a whopping 40% bump up from this time last year. Hallelujah!!
You will notice this as you’re out shopping for a home, not so much because there are SOOOOO many house to choose from, but because buyers actually have houses to choose from. We now have 24 days of inventory, up from 17 a month ago. That’s still well below the balanced level of 120-135 days of inventory, but the increase in inventory is escalating.
It’s hard to say if we will see a balanced market this year or even next year, but current conditions are still going to be a shock for sellers who’ve been drunk with power for the last 8 years. Back in the good old days of 2014, the last time we had a balanced market, homes were on the market for 2-3 months, not 2-3 days. Appreciation was around 4-5%, not 30%. The final sales price was 2-3% below the list price, not above it. Needless to say, multiple offers were not the norm.
Things are shifting rapidly for sellers. It’s still a seller’s market, but expectations need to be dialed way back. My seller accepted an offer yesterday BELOW the asking price! For real. Homes are sitting on the market for 2, sometimes 3 weeks. And savvy sellers are reducing prices 50% more frequently than this time last month as they realize that a 4% increase over last month’s pricing just ain’t cutting it.
Times, they are a-changin’.
**And yet realistic. A 3% interest is the gift that needed to stop giving.