Whether you are already a homeowner or you are looking to become one, recent news headlines on home prices may leave you with more questions than answers.
Talks of a recession, inflation, and layoffs in a few sectors are countered with positive job growth, tempered energy costs, and for real estate, a return to a more balanced market.
The mood swings of 2022 took us on a ride that began with unprecedented demand and quickly rising home values, taking an about-face in the second half of the year with softening prices and lackluster buyer and seller enthusiasm. This was mainly due to a sharp rise in mortgage rates and the reality of inflation eating away at purchasing power and consumer confidence.
The question that is on many minds may be: What can we expect for the next few months with home prices? We are already starting to see that the trend of month-to-month depreciation seen from August through November may already be at its turning point, and many forecasters agree that we should not expect to see a continued decline in home prices.
For most Phoenix area cities, the buyer’s market of November/December 2022 appears to be short-lived, as we quickly moved into a balanced market where supply versus demand favors neither buyers nor sellers. According to data provided by The Cromford Report, by mid-January, most cities in the Valley have all switched from a buyer’s market into a balanced market, with areas like Chandler, Scottsdale, and Paradise Valley already in a seller’s market.
Some outskirt cities are still in clear buyer’s markets but are not far behind from becoming balanced markets as well — this includes cities like San Tan Valley, Goodyear, Maricopa, and Buckeye.
Continued migration into our state, particularly into the Phoenix area, has fueled a growth in demand for housing; add that to typical seasonal demand, and we are seeing an increase in sales activity of more than 25 percent in just the first month of 2023. That is a welcome change for thoseconsidering selling, but the environment also has some positive news for buyers. Buyers can experience the best selection of homes seen in years, and new lending programs help to offset the higher mortgage interest rates, giving them time to refinance to a better rate if and when rates come down.
Historically, looking at closed sales, prices have been a trailing indicator of market direction — meaning that by the time a trend shows itself, it is already one to two months behind. The numbers to watch instead include active listings and listings under contract. With listings under contract on their way up and active listings in a downward trend, those waiting for a bottom may have already missed their mark, and with a healthier, more balanced market settling in, this may be a great time to consider that move!
It is important to note that individual communities and neighborhoods are sub-markets that can vary significantly; in order to determine if selling or buying is the right move for you, feel free to contact Christine Anthony, an experienced real estate agent who is familiar with the local market.