09/29/2023
My job is to inform the public of the most up to date market analysis in residential real estate. Following current statistics tracked on a daily basis, allows me to share detailed information. I utilize a firm that tracks the history and current status of the Greater Phoenix residential resale market and offers unique insight into its future direction in the Phoenix metropolitan area.
WHY BUYERS SHOULD STAY IN THE GAME IN 2023!!!
When first-time home buyers talk to their parents or grandparents about today’s mortgage rates, they may get a response similar to, "I purchased my first home in the 80’s between rates of 10%-18% !" In fact, some carry their high mortgage rate like a badge of honor because it turned out to be a great decision, despite the uncertainties of their time. In their 20s and early 30s, Baby Boomers endured 4 recessions, 4 rounds of high unemployment, and erratic mortgage rates that started from a low of 7% and rose to a peak of 18%. However, those who got in the game where they could, with a long term mindset, were rewarded and are looked upon as “lucky” to have gotten in when they did.
Flash forward to 2023. While admittedly there is a large swath of buyers priced out of purchasing a home due to mortgage rates between 6.8%-7.5%, there are a number of them who have the means to enter the market but are waiting for mortgage rates to decline. Their mindset is not unlike those buyers who waited for prices to come down when rates were below 3% 2 years ago, and now regret it. Waiting for the perfect home, at the perfect time, at the perfect price and the perfect mortgage rate is an exhausting and futile endeavor. The reason being that when all the perfect boxes are checked off, there is a line of competing buyers that make the experience… well ...less perfect. Almost never ever is it a prudent financial move to rent, if you can afford and or qualify to purchase.
Jump to September. As Greater Phoenix moves into the last few months of 2023, seasonally this is the best time to be a buyer. Active listings are rising as they typically do in the Arizona Regional MLS, providing more selection. The median sales price is $40,000 below the highest peak of June 2022, and prices are stable for now. These months are typically slower than the Spring, but competing demand for homes is further suppressed by mortgage rates. Thus 41% of sales involve seller-paid closing costs that often include a rate buydown!! Closing cost assistance is one of the first things to be eliminated by sellers, when rates decline and/or buyer competition increases in relation to supply. Since January, the percentage of sales with assistance has dropped from 51% to 41% and the median paid by sellers has dropped from $9,700 to $7,500. Things aren’t perfect, but 3 out of 4 isn’t bad.
