By Holly Henbest, Realtor
The last few years have been a hectic ride for the real estate market. High demand and low inventory brought us record-breaking pricing and sales results. As we start this fall season, we are seeing a return to some normalcy with the real estate market.
The last two years were really like the ultimate Catch-22 of real estate issues and the good news is that in this new climate, there is some newfound freedom. The biggest Catch-22 was that we had a lot of people who wanted to move, but they were afraid to list their house for sale, because they were worried they wouldn’t find a home to buy. This was a realistic concern, as there wasn’t enough inventory on the market to choose from and when a home hit the market, it was typically a bidding war.
Now sellers feel the freedom to list their home for sale and have the confidence that they will find a home to buy because now there is more inventory to select from. During the last two years, I’ve said so many times, “If everyone that wanted to move would just list their house for sale, then we could shuffle everyone around to where they want to be.” Now we can do that. If you want to move, now is a great time because you have options of homes to buy.
Here is some data to show the change from August 1, 2021, to August 1, 2022.
• Active Listings – 17,957 versus 7,105 last year
• Under Contract Listings – 8,058 versus 11,044 last year
• Monthly Sales – 6,171 versus 9,139 last year
• Monthly Average Sales Price per Sq. Ft. – $285.93 versus $250.59 last year
• Monthly Median Sales Price: $452,500 versus $400,000 last year
There were also people who wanted to move, but due to COVID concerns they hit the pause button on their real estate goals. Now in a post-COVID restrictions world, a lot of people are ready to re-visit their real estate goals and get on with things.
As we start the fall and look back at our summer months, there are some key factors to consider. You’ll read a lot of headlines and hear stories about how bad the market was in July. It’s true, sales were down, and inventory was up in July, but there are several reasons why this should not cause alarm bells to go off the way we’ve seen them represented in the press.
The key factors are summer travel and weather. We’ve been living in a COVID world for the last two years and this summer was the first summer we could travel with more ease. If you’re on social media, you probably noticed more people traveling not only within the country, but abroad. Personally, I’ve seen more pictures of Europe on Instagram than I’ve ever seen before. When people are traveling, they aren’t looking at houses.
July has always been the biggest month for people to leave Arizona and vacation elsewhere. Not only is it hot, but school is out for nearly every school district. Some districts start at the beginning of August, and some go through June, so July is the one month that nearly everyone is out of school.
When it’s hot, people are less inclined to look at houses, nor do they want to move and pack boxes, so the summer has always seen waning of activity. It was just more pronounced this summer compared to the previous two years when no one left town and even more pronounced as the pent-up demand to travel strongly hit this summer.
Another post-COVID impact to our market is weddings. How many people do you know that put their wedding plans on hold? How many weddings have you seen in your social media feed these last few months? Weddings mean more housing demand as households are being created. All the plans that were on hold for two years are now happening at a rapid-fire pace to make up for that lost time.
We’re always asked, but don’t people want to move before school starts? The answer is no. Most people who move locally move within their school district and, again, they prefer to go on vacation in the summer rather than move when it’s 110 degrees. We typically see the start of the new school year as a sort of New Year’s resolution time. Once the kids are back in school, then families look at their goals for moving and what they want to accomplish prior to the holidays. For those that want to change school districts, we often find that they’ll prefer to move at the end of the school year and commute to their old school district for a short time.
You may also be thinking, “but what about all those relocation buyers?” Yes, we continue to see a high influx of buyers coming to Arizona from other states, but those buyers are also wanting to finally travel and go on summer vacations. Plus, as much as we are a high demand destination, the reality is that the bulk of our buyer population is local. Additionally, historically we see a significant increase in demand from relocation buyers during the late fall to spring season.
While there are many layers to what causes an impact to our real estate market, there has been a lot of press and big headlines about interest rates. It’s an easy target for the press to highlight. The increase in interest rates has played a role, but interest rates are still attractive and while they’ve impacted the purchasing power for buyers, the change in market demand does not fall solely on interest rates. Our personal experience is that most buyers understand interest rates fluctuate and while what they could have afforded a few months ago is less now, they still want to buy.
While the climate of our real estate market is changing, so is our actual Arizona climate. As our temperatures start to lower in the fall, we should see continued increases in buyer activity. Personally, I’ve always said our strongest real estate season is from 100 to 100, that means from when our temps dip below 100 degrees in the fall to when they hit 100 degrees in the summer.
The future remains bright for the Arizona real estate market. Our prices indicate a lot of stability; inventory allows buyers more options, and we continue to be a top relocation destination. We also have a strong labor market and more businesses relocating to Arizona.
There are many factors and many layers, but I hope this provided some added insight to what is happening in our real estate market. If you have questions about your neighborhood or home, please reach out to me at firstname.lastname@example.org or 480-266-8785.
*Data provided by the Cromford Report.
Holly has been a Desert Ridge resident since 2000 and has been a Realtor since 2006. She is the leader of The Henbest Team with Realty One Group. Holly is ranked in the top ½ of 1 percent of Realtors in Arizona and is a certified luxury marketing expert. She has been ranked #24 in the Top 50 Realtors by the “Phoenix Business Journal” for the past several years and recognized by “So Scottsdale!” magazine as a Real Estate Superstar for 2019, 2020 and 2021. She’s also been the #1 ranked realtor at Realty One Group/North Scottsdale for the past several years. Learn more at henbest.com.