Still Waiting for that crash? Tick Tock. Where is it? Oh that’s right, it’s behind us!
I am still super surprised at the amount of people waiting for the housing market crash in the Phoenix metro. The crash you were all manifesting already happened. Last year prices fell over 15% between May and December. That, my friends, is a crash. It didn’t take as long or look as bad as you may have expected. In fact, it was probably over before you even realized it was happening.
Since the bottom in December 2022, median sales price is up over $20k, homes selling over ask are up 19%, seller concessions to buyers are down 10%, homes are selling at 97.7% of asking price and days on market are down to 21 days before accepted contract. Why, you may be asking? Homes coming to market are at a record low pace for the last 23 years this has been tracked in MLS. The general consensus is that many sellers are sitting on interest rates below 4% which makes upsizing or even making a lateral home move a very expensive prospect. With active homes continuing to dwindle we are seeing upward pricing pressure once again and the buyers’ negotiation power quickly diminishing.
Anyone want to sell out there but feeling like they can’t handle the 6+% interest rates that most qualified buyers can expect right now? Yeah… me too! There are still a few lending programs that can help you reduce your payment for the first 2-3 years of ownership. These are called temporary rate buydowns, or often referred to as a 2:1 or 3:2:1 buy down. Essentially you negotiate with the seller to cover the rate reduction for the first 2 or 3 years of the loan. For example, if you were quoted a rate of 6.5% by your lender today, a 2:1 buy down would calculate your year 1 payment at 4.5%, your year 2 payment at 5.5% and then it would float up to your permanent rate of 6.5% for years 3 to 30 of the loan. Since many believe rates will come down in the next two years this could be a great way to sell now and manage your monthly payment.
On the topic of rates… Nobody knows where rates are going and depending on what you read they may be going down but nobody is really certain if or when that will happen. There are so many things that affect rates and nobody has been able to predict it accurately. The only thing we know is that rates do not stay high or low for very long before moderating. However, inflation is still not coming down and unemployment isn’t rising as fast as the Fed would like so it seems like they’re going to keep their heel on the throat of the economy for at least the next 6-9 months.
As you know, I don’t have a crystal ball and neither does anybody else. I do my best to stay on top of the trends and keep you informed on what’s happening in the Phoenix Metro. If you liked what you learned here today, it would be an honor if you would share it with someone else who may find value. As always, I am here to serve you and would love the opportunity for any introductions to anyone else I can help.
Lindsay Fricks
“It’s never just a house.”
