In spite of many headlines and social media trolls suggesting a massive housing crash, the market is simply correcting for the extreme growth we’ve experienced over the last two years. Let us remind you that the housing market, just like all other financial markets, fluctuates over time. It’s typical and expected for it to go up AND down.
When the housing market has a negative trajectory it can be very emotional as most people have the majority of their net worth tied up in their home. It’s important to remember though, that while your “zestimate” may be declining, unless you have to sell your home for less than what you paid for it, then you aren’t actually losing any money. Seeing your home value decline isn’t fun, but the vast majority of homeowners have a monthly payment they can easily afford and enough equity to weather the storm unless it significantly strengthens.
Across the valley we now have just under 3 months of housing inventory. This measure reflects the number of days it would take to sell all the homes available if no other listings were added to the market. This is exponentially higher than the anemic days of inventory we had just 6 months ago, but it’s not unhealthy. In fact, the inventory looks much like 2016 and 2017 which were fairly balanced markets and interest rates were over 5%.
The climbing interest rates have an impact on both supply and demand. Atypical for the Arizona housing market, listings are being added at a slower pace this Fall. It appears that sellers may be starting to appreciate the low rates of their existing mortgage and staying in place rather than selling. Conversely, affordability is a major concern for buyers who now have significantly more bargaining power which isn’t good for home prices.
A note for investors, if you have cash to spare now is the time to hunt for some deals. Many people amassed their portfolio of cash flowing properties in the years after the great recession of 2008. This is a time where there are deals to be had for those looking to deploy some money into real estate long term. We have an upcoming workshop for new investors on October 25th. Reach out to me directly if you would like to attend.
Lastly, we never promised you sunshine and butterflies everyday in real estate, but we do promise to shoot you straight and give you the information in a way that is accurate and digestible. If you ever have specific questions or topics you’d like us to cover please shoot me an email directly at [email protected].
Lindsay Fricks
Team Lead, Lindsay Fricks Group at NORTH&CO.
Source: The Cromford Report, Oct 2022
