By Holly Henbest, Realtor
There is a reason that there are so many successful real estate reality television shows. Real estate is full of drama. You’ve got all kinds of personalities, inspection issues, gorgeous upgrades, and most importantly – a huge investment and typically one’s biggest asset being bought or sold.
It’s no wonder with all the drama of real estate, that when we start to see the numbers shift as it relates to homes sold, price per square foot or days on market, that the drama is exacerbated. So today I want to share some reality and hopefully take away some of the drama of what is actually happening in the market.
Seller’s Market, Buyer’s Market, Balanced Market
Last year we we experienced the end of the frenzied seller’s market in and around July. We then felt the slump of a buyer’s market in November and December. In January we saw buyer activity increase significantly and we are now officially in a seller’s market and most areas in Maricopa County have been in a seller’s market since March. If you’ve been following my articles over the last eight months, the predictions were realized and are now evidenced in the data. The slump of our market was very short lived and was not a crash.
Crash or No Crash
The Cromford Report stated: “What we have witnessed over the past 12 months is not a crash, but a normal correction. Market dynamics remain surprisingly healthy after this short correction and with tight inventory still declining, we are likely to see prices continue to rise going forward.” (The Cromford Report is considered the premier residential real estate economic analyst provider for Greater Maricopa County).
History Didn’t Repeat Itself
For those of you who owned a home from 2008 to 2011, perhaps every time you see an adjustment in activity in the market your reaction may be to assume it’s going to be a repeat of the scenario we experienced from 2008 to 2011. Let us shout from the rooftops as loud as we can that there was no crash, yet there were headlines everywhere warning that a crash was coming. The headlines were wrong, and the data is clear. While we did see a reduction in the average price per square foot, our average price per square foot is now back to where it was last September, and it’s continuing to improve. From March 2023 to April 2023 it increased 2.5%.
What Is Normal?
We haven’t been in a “normal” market since March/April of 2019 (pre-COVID). During the last few years we’ve lost patterns of seasonality, and demand peaked due to changes with people working and schooling from home and the ability to work from anywhere in the country. Because of the “COVID era” and total lack of “normal” trends, it will be hard to track patterns of seasonality again for a few years, but it’s important to note that our market is currently healthier than it was in March/April of 2019. While we’re technically in a seller’s market, it’s important to note that it’s not a frenzied seller’s market. We’re really just in a normal market. We have good demand, and supply remains low, but overall it’s healthy and normal.
The big story now is interest rates. Interest rates have increased, and that has slowed down how many people want to sell their home because they like their current interest rate. However, it doesn’t seem to be slowing down the buyers any longer, and buyers have now adjusted their expectations. We have more buyers than sellers – hence, the seller’s market. If you would like to sell your home but you’re sad to leave your low interest rate mortgage and exchange it for a higher interest rate, then be sure to talk with a Realtor and a lender for some advice on how to solve that problem. Buying down the rate has become incredibly common, and your equity in your home may be such that putting it towards a new home coupled with buying down the rate could net you a better situation than you might expect. Many sellers are sitting on a lot more equity than they may realize.
While we all enjoy a good real estate reality television show, try to remember that all the drama of catchy news headlines doesn’t translate to the reality of the market. Stability, normalcy, and balance may not be sexy headlines, but the reality of a good and normal market is a great place to be.
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.