Slowing Market in Phoenix, AZ

6 Replies

I'm looking for any opinions and feedback on my market evaluation. (FYI I am a resurrecting real estate investor trying to re-enter the real estate game. I moved 3 years ago from Hawai) I live in the north central Phoenix area and have been watching the trends in the market here over the past 9 months.  I think a sidewards-trending market is developing in our Valley. Phoenix is certainly not in a RE slump--my current residence went up $45k since we bought it last year. However, I confidently state that the market also hasn't been hot since around the middle of this summer. Now some might blame it on weather, but I think it's quite clear that when you look at listings, they are sitting longer, experiencing price cuts, and inventory is building. In my opinion, a sideways market here is great because you can work creative deals as sellers will become motivated. I have done a couple of creative financing deals in the past, so the prospects in PHX have me getting excited. Anyone familiar with our area want to comment, for or against my view of our market?

From what I've seen, it's the ebb and flow of the market. It swells up around February/March and runs hot until around mid-to-late summer then begins to die down again. Just my opinion from watching things since early 2016/late 2015. I wouldn't necessarily say the market is slowing just yet. Houses are still getting flipped. It may just be that buyers are looking for newer/remodeled homes rather than the old ones that need work. The new construction market (at least in my area) is booming so I may be seeing things from a different lens than most, but I believe things will pick back up next year as they seem to normally do.

I watch this every day, here are some numbers that may help you: as of this morning there are 18,825 Active listings on MLS and a additional 9,676 in pending our under contract status. I thought I would break this down a little more, 6,932 of those 18,825 have been on the market for over 90 days and 3,415 have been there for over 180 days. Just my opinion here but 18,000 listings is not a large about especially in the 5th largest city in our country. I agree with Bob that Q4 is a time for buyers and not sellers, Q1 turns it all around and people start to look again and with a lower inventory then prices would increase. I will also say that prices in the past few years increased dramatically, but they were really low to start with so a sideways turn should be expected. One reason some of these have been on the market for so long is that people have put a unrealistic price on their homes hoping to cash out, if they do that then the home will sit for a long time. If they have an appraiser give a realistic value of their home they usually will move faster. My experience is that if I take a listing and it has a higher than appraised value the home will sit for 4 months easy however the opposite is true. I recently had an appraiser give a comp value on a home and we listed it for that price and we had it sold above appraised value in 2 days with a COE of 4 weeks plus I had 2 more offers. I hope this made sense, it is early and I have not had my first cup of coffee.

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Originally posted by @Patrick Murphy :

I watch this every day, here are some numbers that may help you: as of this morning there are 18,825 Active listings on MLS and a additional 9,676 in pending our under contract status. I thought I would break this down a little more, 6,932 of those 18,825 have been on the market for over 90 days and 3,415 have been there for over 180 days. Just my opinion here but 18,000 listings is not a large about especially in the 5th largest city in our country. I agree with Bob that Q4 is a time for buyers and not sellers, Q1 turns it all around and people start to look again and with a lower inventory then prices would increase. I will also say that prices in the past few years increased dramatically, but they were really low to start with so a sideways turn should be expected. One reason some of these have been on the market for so long is that people have put a unrealistic price on their homes hoping to cash out, if they do that then the home will sit for a long time. If they have an appraiser give a realistic value of their home they usually will move faster. My experience is that if I take a listing and it has a higher than appraised value the home will sit for 4 months easy however the opposite is true. I recently had an appraiser give a comp value on a home and we listed it for that price and we had it sold above appraised value in 2 days with a COE of 4 weeks plus I had 2 more offers. I hope this made sense, it is early and I have not had my first cup of coffee.

 I am a 20 year Realtor, and investor in the Valley and want to add to Patrick's point.... our market here sits at a neutral point at about 25K active listings.  We saw this go dramatically above in the 2005-2008 time frame, and we all know how that went.  A good rule of thumb is to watch that number.  As Patrick mentioned, we are at 18K.  This still assumes that there is room for growth in this market.  As we see that number approach the 25K mark, it may be a different story.

NOW, that doesn't mean that there will be patches or areas that sit stagnate while other areas thrive.  That is true in any market.  However, I wouldn't jump to any conclusions.

The other poster is also correct.  We see a slowing around this time through the new year because no one wants to move around the holidays.  However, that brings opportunity for you as Sellers wanting to sell this time of year tend to be more motivated.  

Best of luck to you.

25% seems very high, I searched how many homes went off the market (expired listing), 226 failed to sell in the time of the Right to Sell contract and 269 homes were canceled in the past 30 days. Now it could be for a number of reasons they were canceled or expired. However 497 listings expired or canceled is about 2.5%, I can only speak of the verified data that is out there. These numbers also do not include any For Sale By Owner (FSBO) listings. These numbers are coming from the MLS in Phoenix and do not show a prediction of the future, it is just current data. If you would like to discuss please feel free to call me or email me. Look up Patrick Murphy Realtor in Phoenix. I own a lot of investment properties here in Phoenix and on the Rim, I am a licensed Broker here in AZ. I work heavily with income property owners and investors. Remember Forbes magazine announced Phoenix as the 4th fastest growing city from 2015 to 2016.

If you want an overall picture of the Greater Phoenix market, I recommend attending the monthly AZREIA meeting at Celebrity Theatre. Alan gives a market update every month that's pretty insightful. 

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