The numbers for the month of December 2018, and a look at the 2019 Real Estate Market are painting a picture of what homeowners, new and current, can expect. The good news is, it is not a “Sky is falling” scenario, but we need to be realistic about the current state of the market. We have a lot of numbers to look at, so I’ll get straight to the point.
First, let’s take a look at the sales from Dec. 2018. These numbers, courtesy of the Arizona Regional Multiple Listing Service (ARMLS) show a continued slowing in sales month over month as well as year over year. There are a couple of factors that are causing this. One being the rising interest rates throughout 2018 that we have been discussing.
The other factor being (in my opinion) bad advise from listing agents to sellers. They spent 2018 seeing low inventory as well as rising prices and advised their clients to reach for higher and higher sale prices, as they would in a typical “Sellers Market”. However, buyers were simply not paying those prices. As you can see in the graph below, sales continued to slow month over month in the second half of 2018. Something I have pointed out repeatedly.
The “Low Inventory” aspect of the market continues as the amount of homes on the market dropped a touch. The prediction is that will add to the trend of higher asking prices in this faux seller’s market. I can tell you that as a “Man on the street”, I am seeing lots of “Price Reduced” notes recently. This shows that sellers have over priced (in a sense that buyers aren’t paying their asking price), and they are dropping the asking prices down trying to find the “sweet spot”. I call that chasing a falling market. Not a crashing market…simply an adjusting market.
The next two graphs are the most telling to me. The first graph shows the average list, or asking price around $389k. As you can see it is slowly adjusting down. Chasing a falling (adjusting) market.
The second graph show the actual average sale price around $326k.
On average it’s a $63,000 difference between what sellers want, and what buyers are willing to pay. This is not a sellers market…but it’s also not a crashing market. We are searching for the afore mentioned “Sweet Spot”.
I tend to approach things cautiously and my attention is drawn to one number that was released this month that needs attention, and that is the Distressed Property (REO, Foreclosure) number. ARMLS actually adjusted their numbers for the last 5 months as they had received bad data, and that number shows an ever so slight trend upwards.
The reason for this could be that homeowners who bought 5-8 years ago when prices were rock bottom made the typical mistake of cashing in on equity and over extending themselves to the point of not being able to pay the loan(s) on their homes now. That is speculation on my part, but experience tells me that cashing out equity is very appealing to some, and not always a great idea.
Whatever the case may be this number, while nowhere near a worrisome level, has been rising. It is one to watch.
The bottom line:
Sellers: Don’t be fooled. Your home is not worth more than what a buyer is willing to pay for it. An average asking price $63,000 over the average sale price should tell you that most sellers are getting bad advise from their agents. BE WARY OF AGENTS THAT PROMISE A WINDFALL!!!
If given the opportunity to earn your listing I will give you a realistic snapshot of ACTUAL comparable sales in your area, advise on how to sell your home fast and maximize your sales price.
I most certainly will not tell you what I think you want to hear simply to get your signature on the listing contract. Don’t fall in the “chasing falling prices” trap. Let me analyze the numbers with you, and get your home sold!
Buyers: I say it repeatedly. Now is the time to buy! Interest rates are continuing to trend upwards, and predictions are they will do so at a rapid pace in 2019. Historically, they are still fantastic, but you want the very best rate available and that opportunity is now.
Home prices are rising. Slowly, but they are. Waiting a few months will likely cost you a few thousand dollars more. Is that cash out of pocket, or do you give up your pool, 3rd garage, larger yard to offset the higher cost? Buy now, and don’t give up a thing!
I have an awesome team of professionals that I work with in all aspects of real estate. We have already helped many buyers set a path to home ownership whether they were ready to go, or needed guidance on credit etc. to get there. We are here to help you live your dream!
Call me, refer me, and THANK YOU! (602) 818-6065 – Kevin@GiantAgent.com