What is an ibuyer? An ibuyer is a company that buys homes quickly and directly from sellers. This typically comes at a much higher cost for the seller when adding up fees and discounts based on inspections. Soon after purchasing, ibuyers often put the same property on the market for a much higher price than they purchased it for. Often the home is put back on the market with minimal to no upgrades. This corporate model of buying homes is risky, as evidenced by Zillow's attempt and subsequent exit from the ibuying business last year. Offerpad is a local ibuyer companyand evidence shows they are now facing a major challenge. The ratio of active-to-under contract homes they own has increased dramatically over the last couple of months. As the chart shows, they now have 242 Active properties on the market vs 71 Under Contract. This ratio has reversed since just 3 months ago. It seems likely that they will be reducing the prices of their homes for sale in order to close the gap between active and under-contract homes. Perhaps their business model can handle the radical shift in the market we are experiencing. As of this writing, their stock is priced at $2.95 per share vs $6.3 per share back in March. It will be interesting to see how they perform over time as active listings continue to rise while pending sales decrease.
Fewer contracts and closings combined with an equal or greater number of new listings coming to market will result in an increase in active listings. Active listings are up over 100% since two months ago, while home price decreases are up 75%. The momentum has shifted, and if this historical pace of increasing active listings continues, we will see a buyer's market in the Phoenix Metro by Sept/Oct.
The Average Homeowner Gained $64K in Equity over the Past Year
If you own a home, your net worth likely just got a big boost thanks to rising home equity. Equity is the current value of your home minus what you owe on the loan. And today, based on recent home price appreciation, you’re building that equity far faster than you may expect – here’s how it works.
Because there’s an ongoing imbalance between the number of homes available for sale and the number of buyers looking to make a purchase, home prices are on the rise. That means your home is worth more in today’s market because it’s in high demand. As Patrick Dodd, President and CEO of CoreLogic, explains:
“Price growth is the key ingredient for the creation of home equity wealth. . . . This has led to the largest one-year gain in average home equity wealth for owners. . . .”
Basically, because your home value has likely climbed so much, your equity has increased too. According to the latest Homeowner Equity Insights from CoreLogic, the average homeowner’s equity has grown by $64,000 over the last 12 months.
While that’s the nationwide number, if you want to know what’s happening in your area, look at the map below. It breaks down the average year-over-year equity growth for each state using the data from CoreLogic.
The Opportunity Your Rising Home Equity Provides
In addition to building your overall net worth, equity can also help you achieve other goals like buying your next home. When you sell your current house, the equity you built up comes back to you in the sale. In a market where homeowners are gaining so much equity, it may be just what you need to cover a large portion – if not all – of the down payment on your next home.
So, if you’ve been holding off on selling or you’re worried about being priced out of your next home because of today’s ongoing home price appreciation, rest assured your equity can help fuel your move.
Bottom Line
If you’re planning to make a move, the equity you’ve gained can make a big impact. To find out just how much equity you have in your current home and how you can use it to fuel your next purchase, connect with a trusted real estate advisor.
National Housing News: click the image below to read the full article.
As of 6/23/2022 30-year fixed: 5.72% 20-year fixed: 5.24% 15-year fixed: 4.8% Rates largely remained the same since last week.
Scottsdale Phoenix Paradise Valley Cave Creek Carefree Fountain Hills Mesa Tempe Chandler Gilbert Glendale Peoria
Dennis Carr - Realtor, GRI Licensed in AZ and CA 480.825.2870
Thinking of Selling or Buying?
Thank you for reading the Arizona Metro Market Report. I hope this newsletter helps you stay informed about local real estate trends.
The Phoenix real estate market continues to be one of the most vibrant in the United States. An exodus from Los Angeles and Seattle has helped fuel the growth. In spite of historically high prices in Arizona, the cost of housing continues to be a bargain for many out-of-state buyers. While the market still favors sellers there has been a recent shift that is helping buyers with more opportunities.
If you are considering purchasing in Arizona and would like to discuss the possibility of buying or selling without being pressured, contact meso I can learn more about your timeline and real estate goals. It is more important than ever to plan ahead and develop a strategy for success.
