Is the market going to crash?
Spoiler alert! The market has changed again! Let’s examine a few different things as we get to the biggest talking point of if the market is going to crash. And talk about the Phoenix market update for this month.
Interest rates changed everything.
What we saw last year was unheard of. Interest rates more than doubled. It always effects things when rates go up, but to double in just months threw the market into a frenzy. We went from about 5000 homes for sale to over 20000! And we ended up seeing demand (sales per month) lower than even in the worst of times during 2008 (just under 4500 per month) which had dropped from record highs above 9000 consistently. Damn you, interest rates! And perhaps more importantly, the rise in rates and the continued appreciation caused so many buyers to be priced out of the market, let alone freaked out by what was going on.
Did we crash? Did we see a correction?
There is no question the appreciation levels that were being seen changed drastically from expected 20+% to basically 0. But keep in mind we still appreciated in the early months and year over year as a whole probably ended up just above positive! Listings (homes for sale) sat longer. Multiple bids vanished. Above list price offers went away. Sellers paying closing costs came back and we entered “buyer markets” in many areas. Real estate and lending powerhouses shut down. It was an interesting time. Our definitions of either might be different so let’s just say the market changed. 🙂 What I am confident in saying is we are now in a balanced market (and have been) and how we got here is crazy, but the journey isn’t the concern. Where we are now is. And where we are headed.
So, what is next for Phoenix real estate?
As of about the last week in December we started to see an uptick in buyer demand. I am guessing because rates have been coming down and are more stable. The market likes stability. I believe the demand will continue to rise and I think supply will decrease. Thus creating a more seller-favored market. Obviously, many things can change this: interest rates going back up, economy changing, etc. But keep this in mind–historically when we are in a recession interest rates go down. When rates go down, demand goes up (usually). Keeping Current Matters provided that proof to us here.
So what is next for the Phoenix real estate market?
I think with the SuperBowl and our very active January-April season with the Waste Management Open, Barrett Jackson Auto Show, Arabian Horse Show, Spring Training Baseball, etc–our demand will keep picking up. I think demand will be better than Q4 (average) which will help bring our supply down and our market will lean more seller-favored.
Want to know if you should buy or sell in the Phoenix area?
Let’s discuss the specific area that you are thinking of moving to in Phoenix, or home you are thinking about selling in Phoenix. Each area and situation is different and buying or selling may not be for you! I look forward to hearing from you. And in the meantime go here to search for a new home in the Phoenix area! Or to find out more about North Phoenix’s latest events go here. And as always if you are looking for the latest Phoenix market update don’t hesitate to reach out!