There are opportunities in EVERY market.

Think everyone lost during the Great Recession? Think again. Hedge funds and small-budget investors made out like bandits, even as many people lost the shirts off their backs. That said, there are opportunities to be had in the market today too. As of October 1, 2016, here's where the opportunities abound for sellers and buyers alike in Metro Phoenix.

Take a look at these fairly simple charts published by the Cromford Report on 10/2 (YoY Active Single-family Listings) & 10/3 (YoY Pricing Strength):

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If I match the colors of these 2 charts by lining up the price ranges and look at them from a seller's perspective, a clearer picture starts to emerge... Green = Sellers Rejoice; Yellow = Caution Sellers; Red = Beware Sellers; White = Neutral/normal. If we line up the colors and look for matches...

[gallery columns="2" link="file" size="medium" ids="5396,5397"]

There are Opportunities for:

  • Sellers with homes with homes under $200K. There aren't enough homes like these to go around (Low inventory + Pricing Growth = Good potential for Sales & Profits)
  • Sellers from $275-400K. Inventory isn't growing in a market that was already short on supply & pricing is fairly stable. (Low inventory + Stable Pricing = Good Potential for Demand Increase)
  • Buyers seeking homes from$1.5-2.0M. There are TONS of options AND pricing is on the down swing. (High Inventory + Pricing Decline = LOTS of choice & Lower Prices)
  • Sellers with homes worth $2M-3M. Even though there's plenty of supply, the pricing is strong and seemingly still growing (for now). From $2-3M, there is only a modest increase in listings and a 10% jump in pricing. (Flat Inventory + Pricing Growth = Potential for Profits, IF demand stays stable)

There may be Opportunities for:

  • Buyers seeking homes from $200-275K. Inventory is growing (more choice) and though pricing is up a little, it's well within the historical range of "normal" (0-4%).
  • Buyers seeing homes from$400-500K. Inventory is substantially up and pricing is flat to slightly positive.
  • Buyers seeking homes from $600K-1M. Inventory is growing, but pricing strength is flat to negative. If we don't see some slowing in listing volume, that segment will end up out of balance.
  • Buyers seeking "undesirable" homes. You know what I'm talking about, the ones in major disrepair, with significant deferred maintenance or simply just extremely dated (not even close to being featured on HGTV as an "after"). "One man's trash is another man's treasure...", but only if the buyer has an appetite (or stomach) for it. I've seen some pretty phenomenal deals out there that fit the bill over the last 6 months.

How to Cash In

To spell it out more clearly, read (if you haven't already) a few blogs I wrote earlier this year:

If you're buying a home using financing, check with your lender and make sure your pre-qualification letter is ready. This is a prequal letter- not the goofy one that your bank sends on their letter head. The one you need looks like this:

AAR Buyer Pre-qualification Form REQUIRED: AAR Buyer Pre-qualification Form

Sellers, I can't stress enough that assuming "my house is fine as it is" rarely works out in your favor with most buyers. This is especially true if you're in a price range with lots of stiff competition, unless your home has very similar attributes of other recently sold homes and you plan to list at about the same price point. You need to be really honest with yourself and no- listing at 10% above the most comparable home sale doesn't count. Go see some of the competition before you assume "we're good!"

What to Expect

Expect more of the same. Remember these charts I posted earlier this year?

20160101-2015SupplyListings

Phoenix Active Listing Counts

Even though the current inventory growth is pretty cyclical, we started the year with inventory out of balance with supply at several price points. Although we had a strong spring & summer, it appears the market is headed back to (or never left) unbalance in some of those price ranges. As of 9/2/16, here's what things look like:

09/02/16 Analysis of Single-family Metro Phx Houses

Chart, numbers, blah, blah, blah. Let me cut to the chase: the price ranges that have red & blue bars (pending & sold listings) as tall as the green ones (active listings) are good for sellers. It's pretty solid up to about $250K. The price ranges with tall green bars and very short red or blue bars (or virtually no bars at all), are so good for sellers.

Above $500K, there are substantially more active listings than pending and sold listings. The chart gives a visual of what I said, though it's not as easy to see above $1M because the numbers are small and not well represented on the chart.

The Cromford Report "Market Summary" on 10/2/16 reiterated a lot of what I wrote above and have been saying for roughly the last year. Here are a few snippets:

  • "This is the time of year when supply becomes more freely available and we need to watch carefully how the supply builds for the different price ranges."
  • "Overall the market is firmly in the seller's control except for the luxury market and above $1 million, location and date built (or remodeled) become the key issues."
  • "A strong trend is emerging which favors new homes over re-sales. To a lesser extend, smaller attached homes are growing market share at the expensive of larger detached homes. Convenience and style are gradually becoming more important than living space and privacy. This reflects the gain in influence of millennials and the slowly declining importance of baby boomers. The latter are impacting the market by downsizing and retirement lifestyle decisions."
  • "We have a healthy market with low distress levels and gradual improvement in access to financing. Unless there is a sudden reduction in demand, perhaps due to big changes in population growth rates, 2017 is likely to continue to reflect these trends."

Consider yourself "informed"

Please reach out to me with any questions or if you're ready to take the plunge- sell or buy. I'm here to help!

 

Related info:

Endangered Species: Cheap Houses in Metro Phoenix

September 2016: Phoenix Market Summary

Home Inspections: What Every Buyer Needs to Know