Signs of a cooling market
The Phoenix housing market is cooling, but it is far from cold. Here are some interesting numbers from the Cromford Report. From April 1st to October 1st, the number of homes for sale in MLS rose 92% going from 3,591 to 6,883 active listings (supply). In the same time frame, listings under contract dropped 9% (demand). Rising supply with lowered demand says the market is shifting. Especially concerning is the lowered demand from owner-occupying buyers who are the heart of the housing market. But before we panic, it is important to note that a count of 6,883 active listings is still extremely low. To put that in perspective, supply is still 45% lower than the pre-pandemic 2019 seller market and 68% below the last balanced market of 2014. As of the writing of the newsletter, the active listing count has just risen above 8000 for the first time since late 2020. But even with the numbers remaining well below normal, the rising trend is notable. In “normal” markets the supply typically does not rise between April and October. But it did this year. Additionally, other sources of inventory are around the corner.
Possible supply increases
Forbearance agreements are expiring – causing many to expect additional supply of homes for sale from troubled homeowners. While most people in forbearance retain their homes, about 20% on average elect to sell. Add to that another anticipated source of homes for sale: the iBuyers (Open Door, Offer Pad, Zillow, etc) The iBuyers bought very heavily – in what appears to almost be a turf war over who could buy the most. As of this writing, Zillow has just announced they will not purchase any more homes through the end of 2021. Given the number of homes they purchased, it is not surprising they called a halt, but this will affect demand. The total iBuyer purchases hit an all-time monthly high in August with 1145 homes purchased (up 533% over August 2020). Add to that September buys of 1062 (up 471% over last year) and they are carrying a lot of inventory that is scheduled to arrive to market soon.
Where is our market heading? It is hard to guess given the trends have been somewhat masked by the investors dominating the market. But, we think most likely sellers will find 2022 a very different market than 2021. If you have questions about the market or cash offers vs traditional selling, contact us! We are always here to advise and help.
Russell & Wendy Shaw