By Holly Henbest, Realtor
Although we aren’t yet experiencing the crisp coolness of fall weather, we are experiencing some typical seasonality changes in real estate.
Most people assume that summer is a great time to buy, sell, and move, but if you live in Arizona, it’s just about the worst time. July is one of the toughest months for real estate because more Arizonans go on vacation that month than any other month, and for good reason – it’s hot. In general, the summer months are not the best time to move, unless you have to move, because generally inventory is lower and again, it’s hot. Hot for looking at homes, packing up your home, and moving into a new home.
When we start to see the kiddos heading back to school and pumpkin spice lattes in our future, then we know the fall selling season is upon us. This year was like no other. Literally the week that school started our call volume increased with more people deciding it’s time to move. Why is that? There are really two reasons. One, if you have kids and they are heading back to school, you have time to think. You’re not juggling as much and have a few hours each day to maybe start de-cluttering. Two, regardless of if you do or don’t have kids, this is a time of year that people start to think about their goals and what they want to accomplish before the year is over and where they want to live to celebrate the upcoming holiday season.
As we get deeper into September, we’re likely to see an increase in inventory and buyer activity for those reasons, plus we typically see a boost in buyer activity when temperatures drop below 100 degrees. It’s basically the trifecta – temperature drop, kids in school, and end of year/holiday goals.
So, if you’re thinking about buying or selling, this can be a great time. If you’re buying, you’re likely excited to see an increase in inventory. If you’re selling, you’re excited to see an increase in buyer activity and an increase in inventory so that you can also find your next home. A lot of people who want to sell have been sitting still because they are worried that they won’t find a home to move into. So, hold on to hope that we should see some opportunities increasing this month.
As we have discussed before, another reason people who want to sell are sitting still is because of interest rates. If you’re in a home at a 3.5% interest rate, your payment will likely increase when you buy a new home. The ability to predict what’s happening with interest rates is beyond my scope and while so many economists thought we’d see some relief by this summer/fall, it is yet to be seen. We’ve had a few dips, but then they bounce back.
Because inventory has been low, that means sales have also been low and often times people assume that prices will fall and we’re going to have a bubble. Here are two quotes from the Cromford Report after the July data was posted:
“Some badly informed observers still think there is a bubble popping situation ahead, but they completely misunderstand the situation. For prices to fall, we have to have an excess supply compared to demand. Even though demand is very weak, supply actually got 2.6% smaller over the last month. There is very low delinquency in residential real estate lending right now, so it takes a ridiculous leap of great imagination to believe that foreclosures are going to have any significant effect on supply in the foreseeable future.”
“Once we get to the end of September and it starts to cool down, the luxury market will be fully contributing to the price numbers again and we will probably be reporting positive annual appreciation once more.”
Here is the data as of August 1, 2023, which further supports the summer trend to be expected:
• Active Listings: 11,241 versus 17,957 last year – down 37% – and down 2.6% from 11,545 last month
• Under Contract Listings: 7,546 versus 8,058 last year – down 6.4% – and down 4.0% from 7,858 last month
• Monthly Sales: 5,906 versus 6,190 last year – down 4.6% – and down 21% from 7,452 last month
You’ll likely see various news outlets report slumping real estate numbers for July and August, but just realize that July is the least favorable month to look at homes or move, so hence the slump in inventory and sales for July and August.
Soon we’ll be raising our pumpkin spice lattes for a cheers to more inventory, more buyer activity, and hopefully reduced interest rates!
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.