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“How’s the market these days?” is a question we are asked over and over in our industry. Some agents opt to take the easy road by answering that question with a blanket statement like, “It’s great!” or “It’s crazy!” In reality, as any good agent would know, there is no blanket answer for that question right now. The answer to that question very much depends on the position of the person asking. The answer can actually differ widely depending on whether the person posing the question is a potential buyer or seller.
So, what has the market in Maricopa County looked like over the past couple of months? Well, it’s not too incredibly different from how it has looked for the bulk of 2021. Supply is down, demand is up, and we are far from balanced. It’s a simple as that.
Per ARMLS, “During most years, active listings decline in November and December, and this year was no exception… sales volume was slightly lower this year, remembering last November’s sales were the highest in ARMLS history. With extremely low supply and above-average demand, prices continued to surge, with the median sales price up 28.1% year-over-year and 1.5% month-over-month.” You may be wondering what these metrics mean for the future of our market in the Valley of the Sun. Michael Orr of the Cromford Report sums it up by saying, “We remain convinced that prices will rise again over the next month and unless the situation changes significantly the same can be said for the next 6 months.”
At this point, you might be wondering if the seller market is our new normal? According to Tina Tamboer of the Cromford Report, the Phoenix metro area has been in a seller market more often than not over the past 21 years. She states, “Over the past 21 years, Greater Phoenix has been in a buyer market for a combined total of 43 months (3.6 years), a balanced market for 55 months (4.6 years) and a seller market for 155 months (12.9 years). This is important to discuss because the longer seller markets last, the more human beings change their definition of what “normal” looks and feels like. “Normal” for Greater Phoenix is not a balanced market, it’s a seller market. So, when national analysts suggest the housing market will cool off in 2022, many (if not most) local housing analysts believe it will remain a seller market, but a weaker one. Prices don’t decline in seller markets, but listings may stay active for a few more days before accepting a contract. A full price offer may be enough to win a home. Buyers may have less pressure to waive appraisal and repairs.”
One of the reasons demand has been so high is the presence of ultra-low mortgage rates. Will these stick around? The short answer is: probably not. In fact, we have already seen them rise from an average low of approximately 2.67% last year to around 3,12% recently. Per Sam Khater, Freddie Mac’s chief economist, “While house price growth is slowing, prices remain high due to solid housing demand and low supply. We expect rates to continue to increase into 2022, which may leave some potential homebuyers with less room in their budgets on the sideline.”
So, back to that age old question, “How’s the market these days?” If you are a seller that already owns another property or has a foolproof plan on where you are going or what you are doing after you sell, it’s incredible! In this market, you would be hard pressed not to get top dollar for your home. Depending on your price range, you may still get over asking price for your home if you are priced competitively.
If you are a buyer, or small time investor, this market can be a bear! With inventory at all time lows and demand above normal, properties can be hard to find and even harder to secure in this market. Unfortunately, large investment companies aren’t making things easier either as they often swoop in with cash offers that make for hard competition for a borrower. The Scottsdale Association of REALTORS® recently published an article stating that the largest buyer of homes in Maricopa County in 2021 was Progress Residential, an investment company that uses a computerized property-search algorithm and swift all-cash offers to gobble up “entry level” homes. It’s not all bad for buyers though. Interest rates are still considerably lower than the current rate of inflation which hit 6.8% in November, and buyers can still purchase homes and gain equity quickly.
One of the biggest benefits to buyers these days are knowledgable, professional real estate agents. Oftentimes, by the time a property appears on Zillow or Realtor.com, it is already under contract. By using the services of a good REALTOR®, buyers have the inside scoop on properties that have been listed as Coming Soon, which aren’t syndicated to 3rd party sites, as well as upcoming and “pocket” listings. In a society that has been accustomed to educating themselves via the internet, buyers that choose to work with an agent have an advantage over their competition.
Sellers, too, benefit from working with a professional REALTOR®. Real estate agents can help field questions about the home and help decipher which offers would be best to consider. It can get overwhelming for many sellers when they have to field multiple offers. Agents that are well-versed in the real estate contract, high level negotiations, and what is happening in the real estate market in your area are a valuable resource for getting the best deal to the closing table.
If you are looking to buy or sell a home in the coming year or if you are just interested in knowing more about the market or what your home could be worth, don’t hesitate to reach out to us. We have a team full of hard-working, honest real estate agents that are always ready and willing to help you. More information about our team can be found here: https://azarchitecture.com/agents-staff/
While 2021 was a bit “crazy” for some of us, we look forward to helping more people understand the market and achieve their real estate goals 2022! Cheers to a New Year!