Real Estate Market Update for December 2018

Greater Phoenix Demand Down 16% in Q4

Seasonally, This is the Calm Before the Storm for Buyer Activity

For Buyers:
Remember when you wouldn’t eat your dinner as a kid and your parents would serve it to you for breakfast or lunch until it was gone? Okay even if you can’t relate, you can imagine a kid’s disappointment in having to see the same thing day after day until they reluctantly eat it. Buyers may be feeling the same way this month as existing inventory has gotten stale and very little new inventory has been added in the first weeks of December. It’s down a whopping 26% from last December with nearly every price range under $1.5M participating in the de- cline. This reluctance to list in December has offset the 16% decline in listings under contract and the market has managed to maintain a seller market, albeit a weaker one. In the meantime, existing sellers are dressing up their leftovers with incentives. Seller-assisted closing costs have risen on sales between $175K-$300K and price reductions were up 25% in the first week of December compared to last year.

For Sellers:
Seasonally, this is the calm before the storm in terms of buyer activity. Every year, listings un- der contract drop sharply in the latter half of December before reaching their lowest point on January 1st. Conversely, between January and April buyer contract activity will sharply accel- erate. How much it will increase this year remains to be seen depending on interest rates and other lending factors. The past 3 years has seen contracts rise roughly between 70-90% in the first 4 months. Despite this expectation, sellers need to be prepared to compete more in 2019 than they had to this year. The first 4 months are also typically strong for new listings to enter the market. Even though 2019 looks like it will start off with a seller’s advantage, it will be much weaker than last year. The market appears to be resisting higher prices for homes that don’t live up to buyers’ expectation of value for their money.

Commentary written by Tina Tamboer, Senior Housing Analyst with The Cromford Report ©2018 Cromford Associates LLC and Tamboer Consulting LLC

November Real Estate Market Update - 2018

New Listings Up 18% in October between $250K-$400K 

The 4th Quarter is Seasonally the Best Time to be a Buyer

For Buyers:
Seasonally the 4th Quarter is the best time to be a buyer and this year is no exception. Typi- cally buyer contract activity is at its strongest from March through May and weakest between November and January. Buyers who were out-bid by competing offers last Spring will have a different experience now. October saw 18% more new listings hit the market between $250K-$400K compared to last October while buyer contracts are about the same within the same price range. There was only a 1% increase in new listings in the lower price range between $200K-$250K but a 12% drop in buyer contracts which caused overall supply to rise another 11%. The market is still a seller’s market, but more seller competition for fewer buyers trans- lates into more price reductions and seller concessions until the Spring “Buyer Season” is up- on us once again.

For Sellers:
The market may be softening between $200K-$400K (which accounts for over 56% of MLS sales), but that doesn’t mean sellers are getting a raw deal. Monthly average sale prices per square foot in this price range have appreciated 5% since October last year and nearly 19% in last 5 years. Under $200K, the appreciation rate is 9.5% in the past year and 44% in 5 years. $400K-$800K has appreciated 6% in the last year and 14% in 5 years and the annual average sale price per square foot* over $800K has appreciated 3% in the last year and 10.5% in 5 years. What’s happening underneath that contract price, however, is an increased cost to sell at “top dollar”. That cost can take the shape of longer days on market with multiple price re- ductions, repairs, needed upgrades to the home prior to list and closing cost assistance.


*Annual averages are used in the higher price ranges to mitigate the sharp price fluctuations that affect this market.

Commentary written by Tina Tamboer, Senior Housing Analyst with The Cromford Report ©2018 Cromford Associates LLC and Tamboer Consulting LLC