Timing is everything! If you’re a buyer looking for a home or an investment property in the Phoenix metro, the pendulum is finally starting to swing in your direction. Over the last few years, the Valley of the Sun has been at the center of one of the hottest housing markets in the country, but it’s showing signs of cooling down, as most real estate markets across the country are shifting. As a buyer, you’ll want to know what this means for you, and how you can make the most of a normalizing real estate market.
1. Abundant New Buying Opportunities In Phoenix
The whirlwind of bidding wars, lucrative cash offers over the asking price and bleak inventory are coming to an end, at least for now. Now, there’s less competition pitting buyers against one another. With more inventory, there’s a lot more to choose from and with a cooling of buyer demand, there’s less competition when it comes to offering on a home.
Our friends at the Cromford Report who provide credible housing market analysis for the Phoenix metro report that supply is rising faster than they’ve ever seen before. In fact, there are now more than 14,000 active listings compared to 5,700 last year – that’s a whopping 153% increase in potential homes from which to choose. Additionally, almost all monthly median sales prices are below their peak. Cromford notes these price reductions across many Phoenix metro areas as of July 7:
- Avondale is down from $460,000 to $450,000
- Buckeye is down from $451,040 to $445,500
- Chandler is down from $630,000 to $577,450
- Gilbert is down from $635,000 to $623,950
- Goodyear is down from $554,700 to $520,800
- Maricopa is down from $415,000 to $410,000
- Mesa is down from $520,000 to $500,000
- Peoria is down from $570,000 to $550,000
- Phoenix is down from $500,000 to $480,000
- Queen Creek is down from $515,000 to $510,000
- Scottsdale is down from $1,115,000 to $1,100,000
- Surprise is down from $494,495 to $490,000
- Tempe is down from $585,000 to $555,000
When the downward trend in pricing stops, no one knows. However, with the downturn in new homes being built, coupled with an increasing population in the area, plus recent interest rate stabilization, most analysts are not predicting lowering prices as a long term trend
One thing the pandemic taught us is that security is everything. Investing in real estate is one of the best hedges against economic downtowns like inflation, which means now is an opportune time to buy investment property to secure your nest egg. Cromford reports rental supply in the metro is growing, with detached rentals growing the fastest. There are 33% more apartments and 145% more single-family homes available for prospective tenants compared to a year ago. So, whether you’re looking to buy a home to live in or as an investment property, you have a higher chance of finding something that matches your needs.
2. Exercise Your Power As A Buyer
As a buyer, you now have more leverage than you did during the last 12 to 24 months. That means you have more power to negotiate and we can help you use that to your advantage. After all, purchasing a home is one of the biggest financial transactions you’ll ever undertake, and when you have the ability to negotiate favorable terms, it is in your best interest to capitalize on that ability while it lasts.
Interest Rate Buydowns
For the rest of the year, interest rates on home loans are likely to fluctuate between 5 to 7%. Interestingly, the Fed’s recent 75 basis point hike resulted in a slight downturn in rates as the commentary thereafter from the Fed indicated positive movement regarding inflation. Don’t let the current mortgage rates scare you. In a previous article we shared some tips to make them work in your favor.
With interest rate buydowns, you ensure that you’re getting the greatest possible offer from your lender. It’s possible to lower your interest rate by paying more up front, which means lower monthly payments for the first few years of your loan.
You can also ask for seller concessions as part of your closing costs. In a marketplace that is shifting toward buyers, sellers are more willing to negotiate, which could include paying for a portion of or all of a buyer’s closing costs.
At Halpern Residential, our goal is to be your master negotiator. When you’re ready to make an offer on a home but are concerned the asking price is still too high, we have ample opportunities to negotiate the sale. We’ll work with you to create a purchase scenario for each home you are interested in that makes the most sense for you. If the seller won’t budge on a price reduction, we can ask them to cover some or all of your closing costs, as mentioned above. And if your offer is accepted, we can use the home inspection to look for any issues that could end up costing you money. There are flaws in every home, some more obvious than others, and you can use these to your advantage when negotiating repairs or to request a credit in lieu of repairs. Last, if the appraisal comes in lower than expected, we have another bargaining chip to work with.
3. Sellers Have Some Power In A Shifting Market
If you’re a seller, you may wonder if the shifting real estate market leaves you any power at all. Indeed, it does.
You Can Be A Contingent Buyer!
If you are like many of our sellers who have needed to sell your home to free up the equity as a downpayment on your next home, you have not been able to do that in the last two years. Well, now you can! As a seller, you can make an offer on your next home that is contingent on selling your home first. With a contingent offer, you won’t have to close on your new home unless you’ve sold your old home. That way, you have the security that you’re protected in case your house doesn’t sell, or if you are not getting offers high enough to support purchasing the next home.
Pay For Home Warranties
Some buyers find home warranties attractive and purchasing one for an incoming buyer may make your home more likely to sell. It’s a great marketing tool and gives buyers, especially those who are doing this for the first time, confidence in choosing your home. A basic home warranty covers most major household items such as heating and cooling, plumbing, electrical and appliances.
Throw in Add-Ons
As a seller, you want to understand the needs of your buyer. What are some nice touches you can throw in to sweeten the buyer experience? Even the little things such as window treatments, a fresh coat of exterior paint or upgraded lighting fixtures can go a long way to seal the deal.
Buy Your Dream Home With Halpern Residential
Like the seasons, real estate trends change. With all change come opportunities. As new variables enter the fold, our expert team at Halpern Residential works hard to stay on top of the trends so you don’t have to. Whether you’re looking to buy or sell in this shifting housing market, we want you to get the best deal possible. It’s an exciting time of transition and we’re here to help you through it. Call Halpern Residential, today!