THE HOUSING MARKET TODAY AND WHAT IT MEANS FOR SELLERS AND BUYERS
The housing market we’re in right now is very different from the one we’ve experienced over the last few years. The market has cooled, inventory has surged, and buyers have become far more cautious. So, where have all the buyers gone, and how can both buyers and sellers best position themselves in this market?
THE DISAPPEARING BUYER
With home prices soaring since 2020, up 56 percent, and rising interest rates, affordability has become a challenge for many buyers. The average rate for a 30 year fixed mortgage is between 6.5% and 7%, roughly double the rockbottom rates we witnessed during the pandemic. Those low rates fueled a wave of frenzied activity, but now, many buyers have pulled back. The same $400,000 loan that cost roughly $1,600 per month in 2021 can now cost closer to $2,500.
The number of homes for sale has surged. In May, active listings in the Phoenix Metro area jumped to nearly 25,000 — the highest level we’ve seen since 2014 and 51%more than a year ago. Meanwhile, sales have remained flat, dipping slightly by about 1% year-over-year.
With supply rising sharply and demand leveling off, the strong seller’s market of a couple of years ago has quickly shifted to a buyer’s market. Today, more listings are sitting longer, price cuts have become common, and negotiations now favor buyers, who hold the upper hand.
Investors and second homeowners, especially Canadians, have also started to sell and Mesa has always been a top location for the second home market, adding to the already increased supply.
These changes, combined with broader economic factors, have made many buyers cautious about entering the market. Most are still holding out for interest rates to drop — a shift that has yet to happen.
WHAT THIS MEANS FOR SELLERS
If you’re selling in today’s market, preparation is absolutely key. Your home needs to stand out from the competition, which could mean doing some minor upgrades and making repairs so buyers can see it is wellmaintained and movein-ready. Simple cosmetic fixes like fresh paint, updated landscaping for great curb appeal, and a deep cleaning can make a huge difference in how quickly your home sells.
Staging can be a gamechanger as well. It allows your home to make a strong first impression in online photos, which is where nearly every buyer’s search begins. Those images often determine whether a buyer chooses to schedule a showing or simply scrolls past to the next listing.
Sellers need to be realistic about pricing right from the start. Well-presented, move-in ready homes that are priced appropriately have a much better chance of selling. However, properties that are overpriced just sit on the market with frequent price reductions.
Today more than ever sellers need to work closely with an experienced local agent to set a competitive price and highlight a home’s best features. Helping a home show well can justify its price and draw buyers who have an abundance of choices. In today’s market, marketing is more important than ever, and a top agent brings the expertise, tools, and strategy needed to give your home maximum exposure.
Sellers should also be open to offering concessions. In a buyer’s market, incentives like covering closing costs, buying down the buyer’s interest rate, or including a home warranty can make your listing stand out.
WHAT THIS MEANS FOR BUYERS
For buyers, this shift in the market means opportunities that haven’t been available in years. Today, buyers can be more selective, take their time, and compare properties to find exactly what they are looking for. Buyers are able to negotiate on price, concessions, and repairs, making this an ideal time for buyers.
While rising interest rates have certainly impacted affordability, buyers still have options when it comes to making a move. New loan products, rate buydowns, and adjustablerate mortgages can help reduce borrowing costs in the short term.
With many buyers sitting on the sidelines, this is your chance to get ahead of the crowd. If interest rates drop, those buyers will quickly return to the market, driving up demand, reducing available inventory, and potentially sparking bidding wars that push prices higher.
Buying now, while we’re in a buyer’s market, gives you the time to find the right home, negotiate terms, and secure a great price. Then, when rates eventually come down, you can refinance to a lower rate — knowing you’ve already locked in a lower purchase price.
Waiting too long could cost you more in the long run. Please reach out if you would like more information on positioning yourself to buy now.
THIS IS A RESET NOT A CRASH
Economists agree that Phoenix is going through a normal market reset following the pandemic-driven surge. Despite increased supply and recent price adjustments, the median sales price is only slightly down year-over-year. The Phoenix area remains one of the fastest growing metros in the country, thanks to strong job growth and a favorable climate that continues to attract new residents. Even as prices adjust in the short term, the longterm outlook for this market remains firmly pointed upward.
For more information about today’s market conditions, or to learn how you can best position yourself as a buyer or seller, don’t hesitate to reach out. I’m always here to help.