Before we get into the Phoenix Real Estate Market Report for July 2022, I have a commentary written by Tina Tamboer. Tina is the Senior Housing Analyst with the Cromford report. She was nice enough to let us use her summary of the Greater Phoenix Metro area as a backdrop for what is happening in Phoenix this month. Here is her commentary…
????️ The Greater Phoenix Metro Summary Analysis Real Estate Market Report
Seller Market is Officially Over! Here’s What to Expect.
How Some Sellers Are Winning Against Interest Rates
???? For Buyers:
Welcome to a balanced market*, how quickly the tables have turned! While seller markets are ideal for the not-so-perfect home, balanced markets are ideal for the not-so-perfect buyer. This means that buyers who have been recently rejected due to lower down payments, non-conventional financing, or need for closing cost assistance will find sellers are now willing to work with them in this new environment. Supply across all price points is up, with 53% of active listings added by new home developers and investors. Builders especially are dropping prices and offering unique buyer incentives to compete. Experts don’t know how long this period will last as it depends on what interest rates do over the next few months, but home buying just became fun again.
*The market is considered in balance when the contract ratio is between 30-60. Calculated by dividing what’s under contract (8,680) by what’s active (15,033) and multiplying by 100, the contract ratio as of July 7th, 2022 is 58.
???? For Sellers:
The proverbial “Dump Your Junk” season is over, that loving phrase the industry uses when demand is significantly higher than supply and even the smelliest dilapidated property gets multiple offers over asking price. That is no longer the case as of this writing. Get ready for longer marketing times, multiple price reductions, Realtor® tours, price opinions, staging, repairs, seller-paid closing costs and price negotiations. The extreme seller market is over.
It’s no surprise that the market has been shifting since February, with the primary influence being large mortgage rate increases. However, over the past 6 weeks mortgage rates have been particularly volatile, fluctuating from 5.1% to 5.8% within 3 weeks only to drop to 5.3% over the next 2 weeks, and then back up to 5.8% a week later. History tells us that buyers do not like sharp, rapid fluctuations in mortgage rates. It causes buying activity to freeze until a level of stability and certainty can be achieved. This market is no different, contract activity has dropped 28% in the last 6 weeks. The number of listings under contract at this time of year should be around 10,000, putting today’s count of 8,680 well below normal.
In the meantime, a 220% increase in supply over the past 15 weeks has put pressure on sellers to compete. With cash buyers offering significantly below list price recently, attention is back on traditional buyers, many of whom have been priced out of the market due to affordability. Price reductions have gone up 500% since March, but have done little to increase demand as mortgage rate increases offset their effect and continue to keep payments high.
But not all is lost! Cue the interest rate buy-down, a seller concession tool that has been collecting dust, unneeded, for well over a decade. The reason price reductions have had little effect on affordability is a $10,000 price reduction only saves a buyer $53 on their mortgage payment at 5.8%. However, for a similar cost a seller can buy down a buyer’s mortgage rate and save them $100’s on their monthly mortgage payment, either permanently or temporarily depending on the plan; thus putting their property at a higher competitive advantage than just a straight up price reduction.
Price reduction vs. rate buy-down options:
$475,000, 10% Down
to 3.8% for 1st year
then 4.8% for 2nd Year*
|Estimated Cost to Seller||$0||$15,000||$12,825**||$9,405***|
|Estimated P&I Payment||$2,508||$2,429||$2,243||$1,992|
|Monthly Savings to Buyer||$0||$79||$265||$514|
*Conditions apply. Talk to a lender.
**Approx. 3% of loan
***Approx. 2.2% of loan
Below you will find the statistical breakdown and more for the Phoenix area Real Estate Market Report June 2022.
View All Current & Past Phoenix & East Valley Real Estate Market Reports
???? Below is a snapshot of Phoenix’s Real Estate Market Statistics for June 2022
????️ What are the Average Temperatures in Phoenix?
Phoenix’s coldest month is January when the average temperature overnight is 43.4°F. In July, the warmest month, the average daytime temperature rises to 104.2°F. If you would like to see specific homes as they come on the market, click here to get email updates.
???? A look at Phoenix’s current Sales Price. Real Estate Market Report for July 2022
In June, Phoenix’s Median Sales Price was $440,000 from last month’s $450,000 and the prior months’ $450,000, $430,000 and $427,500. As inventory levels return to a “balanced market”, buyers today have more homes to choose from. This means that we are no longer in a Seller’s market. Sellers will see very few offers over list price, fewer offers waiving appraisals, and offer to pay any gap in contract price versus appraised value. We are seeing significant price reductions as sellers listed at the price they wanted, but when buyers didn’t put in offers, sellers have been forced to reduce the price if they want to sell the property. Several cities in the Phoenix metro market are now a buyer’s market. We expect Phoenix to be a buyer’s market by the end of July.
If you are in the process of Buying or Selling a Home, Click on the highlighted link to see a number of interesting articles.
❓ What does this mean if you are a Buyer or a Seller?
Real Estate Market Report
As the chart above shows the Phoenix housing market Inventory remains at historic low levels. Buyers should be prepared to jump on any listing that fits their needs. With inventory at these lows, make sure you make your offer as clean as possible (no contingencies). Based on Tina’s comments above, you may have to pay over the list price to get the deal.
Sellers should expect multiple offers due to this low inventory level. We are seeing many more multiple offers as inventory drops. Know the market value of your home. When you start getting offers above list price and potential market price, be cognizant of a potential appraisal issue or look for offers with appraisal waivers/contingencies.
If you would like to see specific homes as they come on the market, click here to get email updates.
????️ What is the annual rainfall in Phoenix?
The driest month in Phoenix is June with 0.09 inches of precipitation, and with 1.07 inches March is the wettest month.
????️ Homes For Sale in Phoenix AZ
Below are Homes that have come on the market in the last 7 Days around the Median price range. Also below the pictures, you will see a Chart of all the Phoenix homes by price and Type: Below are all the homes available in the city of Phoenix by Dollar amount and type:
???? Below you will see the links for the other cities in the East Valley:
View All Current & Past Phoenix & East Valley Real Estate Market Reports
Contact the Shirley Coomer Group at Keller Williams Realty Sonoran Living