Is now a good time to move?
Is now a good time to make a move? In this month’s real estate market update we address the reality of the current market so you can make a decision that is good for you and your family.
This is John Schloz with this month’s market update.
Overall, the Phoenix area is in a seller’s market - there is more buyer demand than available homes. However, buyer demand is significantly lower than normal. A good measure of buyer demand is listings under contract. For at least a year, we’ve had fewer buyers in escrow each week than at any time in the last 15 years.
Buyer activity started dropping last year when interest rates started rising from 3% to 4, 5 then 6%. Higher interest rates greatly affect affordability and buyers have put themselves on the sidelines until rates come down. More on that later.
Though buyer activity is 15 - 16% below normal, seller activity is nearly 50% below normal valley wide. We’ve seen over 25% fewer new listings this year vs last year and the fewest numbers of new listings in at least the last 23 years.
Many sellers purchased or refinanced their homes at interest rates between 2 and 4 percent and a move, with new financing, may double their interest rate for a new purchase, keeping sellers who don’t need to move on the sideline.
The market has been in a sort of holding pattern with low market activity but good opportunities for sellers - as long term appreciation has built a lot of equity for current homeowners and there is good opportunity for buyers, with less competition and sellers still offering significant help with buying down interest rates.
So when will interest rates drop? Or will interest rates drop?
It depends on the economist you ask. Here’s what a few of them say:
We really don’t know where interest rates are headed. What we do know is we’re in a steady market today with opportunities for both buyers and sellers.
If rates fall, expect buyer activity to pick up.
If inventory doesn’t go up with it, we may see a frenzied market like we did in 2020 and 2021.
Though we can’t predict the future, we can work with what we know now - so if it’s time to make a move, let’s talk - and find your opportunity in today’s market
I am John Schloz with HomeSmart