The numbers are in for February in the Phoenix metro area and there are some bright spots! While the number of homes sold continues to decline, the historical data shows this is not that unusual. The months supply of inventory is declining, a positive sign in this volatile market. We have been on a decline for 3 months in a row, from 18 months in December ’07 to 10 months in February ’08. This is a good thing for sellers in that there is less competition for buyers. However, the options for buyers remain strong. This is not quite as good a situation as early ’06 and ’07, yet the indication is typical of the last few years. Could this be a normal cycle or is this and indication of the market making an ever so slight shift? I’m sure the Republic will catch on to this in a few months. The days on the market continue to hover around 80 – 90 days as it has for the last year. The number of homes under contract since December ’07 is up 80% for February ’08! A remarkable increase over prior years when that number was closer to 27%. One of the best indicators of market shift is the pending sales for the last month relative to the new listings for the same period. That number is 12% for February ’08. Again, that is a slight improvement over the last year. While not terribly significant, it is still a bit of light at the end of the tunnel.
What about mortgage programs and interest rates? Interest rates remain at historical lows. Consider this. Every half point move in the interest rate increases or decreases a buyers buying power by $10,000. While 100% financing is virtually non-existent, programs like FHA, Ameridream and Nehemiah (where the seller makes a contribution to the buyer through one of these 3rd parties) are on a resurgance. This gives buyers the potential to own a home with very minimal out of pocket expense. However, remember that buyers with little “skin in the game” may find it easier to walk away if they run into financial difficulty.
For sellers or buyers, waiting on the market to “turn” is a flawed strategy on both sides of the equation. This will take some time. Sellers who need to sell will be waiting for another year or more to see prices begin to climb. Every day, week, or month delay can cost thousands of dollars in sales price. Buyers who use this same strategy will get left behind as interest rates are expected to move upward in the coming months.
So the good news is homes are still selling and buyers are still out there! The time to buy or sell is one of the best in the last year. Sellers must be willing and able to provide concessions to a buyer in order to get their home sold. Still, price is the number one factor when it comes to selling your home or buying. Buyers are willing to overlook flaws if they can buy the house “right.”
No one, including My Arizona Home Team, can speak with certainty as to where our market is going. Anyone who tells you otherwise is blowing smoke. We can only look at the data and try to make some sense of it all through logic. If we really knew the answer to that question, we’d be on the beach in St. Thomas!