Dennis Carr

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Arizona Homes: The Phoenix Metro Market Report 5-24-2024

Posted On: May 24th, 2024 6:19PM

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Concise Daily Market Snapshot

The table below provides a concise statistical summary of today's residential resale market in the Phoenix Metropolitan Area. 
The figures shown are for the entire Arizona Regional area as defined by ARMLS. All residential resale transactions recorded by ARMLS are included.
 
All dwelling types are included. For-sale-by-owner, auctions, and other non-MLS transactions are not included. Land, commercial units, and multiple dwelling units are also excluded.

 
Due to the increased number of homes on the market coupled with the slower rate of sales, we are seeing Days of Inventory at levels not seen since 2016. Interestingly enough, prices have not been affected thus far. There are two reasons for this: 1) Higher prices are being supported from the top three inward bound migratory cities where home values are much higher than greater Phoenix. Buyers from Seattle, Los Angeles, and the San Francisco Bay Area are transferring their home equity to the local market. These buyers are willing to pay a premium; especially for renovated homes in great areas. 2) While inventory has risen, historically it is still low. In addition, much of the inventory is 'frozen' by owners locked in at 3-4% fixed-rate mortgages. These sellers will sell if they get a premium, yet will take their properties off the market and/or rent them out for cash flow if their home does not sell. Often these homes are in need of updates, stay on the market longer or don't sell at all.
 

Questions You May Have About Selling Your House

 

There’s no denying mortgage rates are having a big impact on today’s housing market. And that may leave you with some questions about whether it still makes sense to sell your house and make a move.

Here are three of the top questions you may be asking – and the data that helps answer them.

1. Should I Wait To Sell?

If you’re thinking about waiting to sell until after mortgage rates come down, here’s what you need to know. So are a ton of other people.

And while mortgage rates are still forecasted to come down later this year, if you wait for that to happen, you may be dealing with a lot more competition as other buyers and sellers jump back in too. As Bright MLS says:

“Even a modest drop in rates will bring both more buyers and more sellers into the market.”

That means if you wait it out, you’ll have to deal with things like prices rising faster and more multiple-offer scenarios when you buy your next home.

2. Are Buyers Still Out There?

But that doesn’t mean no one is moving right now. While some people are holding off, there are still plenty of buyers active today. And here’s the data to prove it.

The ShowingTime Showing Index is a measure of how frequently buyers are touring homes. The graph below uses that index to show buyer activity for March (the latest data available) over the past seven years:

You can see demand has dipped some since the ‘unicorn’ years (shown in pink). That’s in response to a lot of market factors, like higher mortgage rates, rising prices, and limited inventory. But, to really understand today’s demand, you have to compare where we are now with the last normal years in the market (2018-2019) – not the abnormal ‘unicorn’ years. 

When you focus on just the blue bars, you can get an idea of how 2024 stacks up. And that gives you a whole new perspective.

Nationally, demand is still high compared to the last normal years in the housing market (2018-2019). And that means there’s still a market for your house to sell.

3. Can I Afford To Buy My Next Home?

And if you’re worried about how you’ll afford your next move with today’s rates and prices, consider this: you probably have more equity in your current home than you realize.

Homeowners have gained record amounts of equity over the past few years. And that equity can make a big difference when you buy your next home. You may even have enough to be an all-cash buyer and avoid taking out a mortgage altogether. As Jessica Lautz, Deputy Chief Economist at the National Association of Realtors (NAR), says:

“ . . . those who have earned housing equity through home price appreciation are the current winners in today’s housing market. One-third of recent home buyers did not finance their home purchase last month—the highest share in a decade. For these buyers, interest rates may be less influential in their purchase decisions.”

Bottom Line

If you’ve had these three questions on your mind and they’ve been holding you back from selling, hopefully, it helps to have this information now. A recent survey from Realtor.com found more than 85% of potential sellers have been considering selling for over a year. That means there are a number of sellers like you who are on the fence.

But that same survey also talked to sellers who recently decided to take the plunge and list. And 79% of those recent sellers wish they’d sold sooner.

If you want to talk more about any of these questions or need more information, contact a real estate agent.

 

How Many Homes Are Investors Actually Buying?

 

Are big investors really buying up all the homes today?

If you’re trying to find a house to buy, this may be something you’re wondering about. Maybe you’ve read about it or seen reels on social media saying investors buying all the homes is making it even harder to find what the average buyer is looking for. But spoiler alert – there’s a lot of misinformation out there. To clear things up, here’s the scoop on what’s really happening. A lot of the big investor activity is actually in the rearview mirror already.

The Wall Street Journal (WSJ) explains:

“Investors of all sizes spent billions of dollars buying homes during the pandemic. At the 2022 peak, they bought more than one in every four single-family homes sold, though more recently their activity has slowed as interest rates rose and supply became tighter.”

The key here is investor activity has slowed significantly, and even during the peak of investor buying, 3 out of every 4 single-family homes purchased were by regular, everyday buyers – not investors. And of the investors who bought over the past few years, most weren’t the big investors you may be hearing about. The vast majority were small mom-and-pop investors – people like your neighbors who own only a couple of homes, maybe even just their main residence and a vacation home.

But let’s focus on the giant, mega-investor firms since that’s what is being talked about so frequently on social media right now. Mega investors are those who own 1,000+ properties. You may be surprised to see that, according to the Wall Street Journal, they don’t buy all that many homes (see graph below):

This graph tells us two things. First, institutional investors were never buying a large percentage of available homes. During the peak in 2022, they bought about 2% of available single-family homes. Second, that percentage has gotten even smaller recently (so small the number rounds down to 0%).

In an effort to understand why that percentage is trending down, private lender RCN Capital asked investors about the challenges they’re facing. Here’s what Jeffrey Tesch, CEO of RCN Capital, found out:

“Investors are already facing many challenges in today’s housing market – rising prices, limited inventory, and higher financing costs.”

Understanding these challenges is important because they show big, mega investors aren’t taking over the housing market.

So, don’t fall for everything you hear. They aren’t snatching up all the homes and making it impossible for regular people to buy. 

Bottom Line

Big investors aren’t buying all the homes out there. If you've got questions about what you're hearing about the housing market, chat with a local real estate agent. They can help you understand what's really going on.


 

 
 
As of 5/23/2024
30-year fixed: 7.17% 
15-year fixed: 6.70%
30-Year Mortgage Rates increased slightly since this time last week.

“Some lenders advertise much lower rates than others. Other lenders can be "out of the market" at times. Our index attempts to capture the most prevalently quoted conventional conforming 30-year fixed rate for a loan scenario with at least 20% down and no major loan level price adjustments.”

Mortgage News Daily website ~

 

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Dennis Carr - Realtor, GRI
Licensed in AZ and CA

480.825.2870
 
Are You Thinking of Selling or Buying?

Thank you for reading the Arizona Metro Market Report. I hope this newsletter provides value and helps you stay informed about local real estate trends.

The Phoenix metro real estate market continues to be one of the most attractive locations within the United States. An exodus from Seattle, Los Angeles, San Francisco, and cold climates to the Northeast 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.

If you are considering buying or selling in Arizona and would like to discuss this possibility without being pressured, contact me so I can learn more about your timeline and real estate goals. Together, we will drill down and identify what's most important to you. Planning ahead and implementing a strategy for success is the most engaging and effective way to create the outcome you deserve.

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