Now, more than ever, I’m constantly being asked about the current real estate market. Everyone is hearing something different depending on the source of the information. Some signs of a cooling market continue to persist in the Phoenix area real estate market, according to the latest ARMLS data from Phoenix Realtors.
Why does that matter: After over two years of watching our inventory plummet and home prices shoot up, buyers have been waiting a long time for some relief.
Yes, but: Costs for borrowers have increased, thereby squeezing homebuyer budgets and causing sales to slow way down, according to a recent Phoenix Realtors analysis.
What’s happening: “We’re returning to a more normal, stable market with more even supply and demand,” said Andrea Crouch, president of Phoenix Realtors.
- At the moment, buyers have more homes to choose from and competition has softened. But the jump in mortgage rates has kept some potential buyers out of the market, Crouch said.
Of note: In 2020, Phoenix households needed an income of at least $41,855 annually to spend 30% of their monthly earnings on a typical home mortgage payment, Zillow found.
- Here in 2022, you needed to earn at least $85,618.
- A monthly mortgage payment is considered reasonable if buyers spend no more than 30% of their earnings on housing.
The numbers: Home inventory jumped 136.7% compared to this time last year, per Phoenix Realtors’ market activity report for the week ending Sept. 24.
- Meanwhile, homes under contract are down 61% year-over-year.
- The median sales price increased still 10.6% year-over-year, but it’s dropped in recent months.
- For example, in May, the median sales price was $510,000 and in August it was $475,000.
Sellers aren’t seeing full price or above asking price offers on their homes now either. On average, homes sold for 98.1% of the list price in August 2022.
- At this time last year, homes were selling for 101.6% of the listing price.
- About half of Phoenix-area sellers lowered their asking price in July. This hasn’t happened in what feels like forever!
We are seeing homes sit on the market longer, as well. In August 2022, homes sold in 41 days on average, compared to 28 days in August 2021.
What’s next: The housing market is experiencing a CORRECTION — NOT a crash, Crouch said.
- This winter, Crouch expects to see even more listings, along with more cautious buyers.
~ Patti Crowley