If you are considering selling your home in Arizona, it’s important to understand the current market.
Here is a glimpse at what we are seeing happening.
For the fourth quarter of 2022, the price reductions just keep coming! Last week when mortgage rates hit 7% the greater Phoenix housing market reacted with 4,427 price reductions.
24% of those listed inventory on the MLS.
At least 50% of those who dropped their price, dropped it by $12,000 or more.
The Arizona market active listing inventory is up 169.8% with active listings coming in at 20,372. This is as of October 7, 2022!
The median days before the excepted contract is about 30 to 45 days, and 50% of the listings that went under contract in the month of October has been active for more than 30 days.
We currently have about a 77-day supply of homes. Therefore, if no new listings were to come on the market, at the current annual rate of sales we would run out of inventory after 77 days.
In September, we saw 1372 closings involving seller concessions or closing cost assistance to the buyer, equating to 23% of the MLS sales.
The median concession was $7000.
This is a 334% increase from last June, when the count was only 316 sales involving concessions.
Sellers are assisting with closing cost assistance more and more. This will be expected to continue to rise into the fourth quarter as mortgage rates continue to stay high and will certainly end up cycling demand for the time being. Aside from paying the buyer’s closing cost for the title insurance, prepaid taxes, insurance, lending fees, and other closing costs, seller-paid concessions can also be used to buy down a buyer’s mortgage rate if applicable. This has been beneficial for some buyers to ease the pressure of their monthly mortgage payments.
What does all this mean for sellers?
The fourth quarter is expected to be a test for sellers, as mortgage rate hikes have reduced contract activity to levels we have not seen since 2008.
It would be a great time to hunker down and wait if you do not have to sell immediately. We are starting to see sellers waiting to sell, as reflected in the lowest counts of new listings coming on the record market here going back to 2001 in the state of Arizona.
Inventory is still very low, as AZ sellers are simply not wanting to sell property that has a low-interest rate just to absorb a higher interest rate. Many will rent for a year or two if they must sell. Fewer listings are a glimmer of hope for existing properties on the market.
If new listings are trickling in and buyer contracts are trickling out, the overall supply does not spike and cost further downward pressure on pricing. Thus, keeping the market in a delicate balance for now. And again…. “for now” we see hope, but there are a lot of factors that are involved in the market.
Prices hit their peak in May, shortly after mortgage rates hit 5% and before they peaked at over 6% in June. Once that occurred, fire demand dropped dramatically and the reflection and prices started to show a trend downward. Now rates are near 7% and sales price per square footage is down 9.6% over the course of the last four months.
This currently measures less than 1% higher than January 2022 and represents the elimination of appreciation from January through May 2022. While this is disappointing to those who purchased this year in that timeframe, 66% of active sellers in the multiple listing service have on their home for two years longer or more.
As of September 2022, we still have 40.3% appreciation based on square foot measures and the median sales price is 112,000 higher, indicating most sellers have enough equity to shoulder the added cost to sell in this marketplace if they must for now!
Going into 4th quarter, just expect marketing times to increase, as they typically do this time of year! Sit still and be calm. From October through December, active days prior to the contract is known to rise anywhere from 45 to 56 days historically, with 50% of listings going longer.
If you are considering selling and unsure if now is the right time, I invite you to reach out and see what your home is currently worth, and how we can work to market it to sell it faster.
Realtor, ARMLS, WeServ
Realty One Group
· Data pieces from Arizona Cromford Report