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FINALLY- we get back to truly awesome weather 70's and 80's as far as the eye can see. And the sunsets in the fall... to die for!! (I took this one from my front yard)
It's that time of year again and there are LOTS of events i.e. Bentley Scottsdale Polo Championship this weekend, on Saturday 10/25. Realty Executives is the exclusive Real Estate sponsor and we hope you will come join us for the fun. Tickets are still available at www.thepoloparty.com.
THE MARKET IS SHIFTING!
Somewhere in the last month, the market got a little funky. On the weekend of 9/4, I put 3 listings into escrow. One of them fell apart a short time later and now it's a struggle to get another buyer. Another deal I put together for a buyer also fell apart and I’m not alone. Lots of other places aren't selling or are falling out of contract too. I’ve watched this waning buyer-sentiment grow and have confirmed it with several of my fellow agents. Recently able to put some meat behind it.
About a week ago, a client had an offer that was about $10K lower than the previous offer that fell out of contract. When I gauged the market to see what was happening, I realized that almost NOTHING was selling! The most recent, closed comparable sale was another listing I sold the month before! I advised him to bend a little to get *this* sale to work, which he was willing to do. After all that, the buyer flaked anyway after waffling for a week! We're revising our strategy...
THE HARD DATA
My go-to source for this info is always the Cromford Report. There, of the last 18 posts in October, 10 were about how the market is deteriorating (seller's perspective). Looking a little closer, the Cromford Market Index for single family homes (this is the chart at the top of every email newsletter I send) is down nearly 10 points from 8/30 (148.4) to 10/16 (138.0) and appears to be falling about 1.5% per week.
In another place, almost all of the cities in the top 17 largest report are trending down, except 2- Fountain Hills & Cave Creek. All the cities are still at or above 100 (normal/average), except Buckeye. Watch the progression from June to now:
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WHY IS IT CHANGING??
In a nutshell, buyer demand is the same or slightly worse and listing inventory is up- across the board. Listings were up by 4.5% (8,750) in the 28 days before 10/1. on 10/1 & 10/2 alone, there were 1,155 new listings!
My favorite, recent chart shows where the action (sales) is to paint a good picture: (YoY Percentage Change in Dollar Volume by Price Range):
The volume of closed sales are UP in all price ranges with double-digit gains from September 2014-September 2015, EXCEPT for homes below $150K and above $1.5M. Here's how it breaks down:
- The biggest declines are in these ranges: 1) $0-150K -26%, 2) $1.5-2M -24% 3) $2M+ -62% (luxury slip could be attributable to lower stock market??)
- The biggest gains are from: $500K-$1M, with the $800-1M market up 96% year over year!!
OTHER POINTS TO NOTE
The silver lining: Higher values are the biggest opportunity for sellers right now. One of my biggest wins this year was an appraisal on on a home that I was able to get under contract in 3 days at asking price in late August. The problem is that the most recent, comparable sold home closed for $23K below my contract sales price! I was able to get the appraisal value up $10K from the last closed comp. My seller was able to net the extra cash AND set the bar for values in her neighborhood.
Luxury Sales: in short, some areas are still doing well (based on the supply of inventory):
Doing the best (with under 365 days of listing inventory): includes Arcadia (85018), Central/Old Town Scottsdale, (85251/85254/85260/85250), McCormick/Scottsdale Ranch (85258), East Shea Corridor (85259) & PV (85253) make up the top 1/3 of zip codes with this inventory- in pink.
- So-so (365-600 days): includes the Biltmore (85016), DC Ranch/Pinnacle Peak (85255) and North Scottsdale (85266)- in white.
- Not so well (600+ days): includes North Scottsdale (85266), N. Central Phoenix (85012), Carefree (85377) & Cave Creek (85331)- in blue.
I want to point out the last little comment that accompanied this chart was:
"56% of million dollar sales are in just 3 ZIP codes - 85253, 85255 and 85262, which have moderate days of inventory at 342, 405 and 514. We again note among these 3 that the closer the area is to the airport, the stronger the market is for sellers."
This is a recurring theme and has been since the market started it's legitimate recovery in about 2012 (Buyers take note!).
The market is drifting from Seller territory to NEUTRAL territory. I repeat- it’s is NOT falling off a cliff. These little corrections happen constantly- the market moves up and down along the index line as that delicate dance between Supply and Inventory goes on. We’ll reassess as time goes on and plan for each individual's situation.
Buyers: absorb all of the new inventory and afford to get a little choosy and maybe even be brave enough to take a chance and ask for what you want. You still need to be aware of your area and price range. Not everyone is going to have an easy time of just picking and choosing what they want. I'd say, if you're buying under $150K (if you can find something you like) or over $2M, go for it!
The 10 spec homes priced at/above $2M in about 0.5Mi of me (85253) are not moving very quickly... The one that sold took an 18% haircut from it's original list price! Another active listing has just shy of 1,000 days on market and has dropped 31% from its original list price. There are 5 still under construction or nearing completion. They're probably facing an uphill battle unless things change in a hurry, which is always possible...
Sellers: be nice to Buyers and put a little effort into your home before you list it. The “shiny penny” will always stand out from the crowd. See any of the myriad of articles and videos I've created over the years that show you exactly how to dress up your home for success!
That’s it! Please be sure to check out our complete breakdown of the CFPB's new TRID guidelines (AKA: Know before you owe!) that started on 10/3! Call with any questions and we look forward to hearing from you soon!
Have a great month!