Homebuyers should get ready to pounce on new listings as activity is expected to ramp up at the start of the new year as supply hovers at its lowest December levels.
According to Tina Tamboer of the Cromford Report, the last supply count of resale homes in the Phoenix area was about 5,400 — the lowest count for December in the Phoenix Multiple Listing Service since 2005, she said. “Typically, we would expect to see 17,000 to 21,000 (resale homes) on the market,” Tamboer said. Tamboer said demand has stayed high in December despite houses for sale being on the market a week or so longer than in previous months.
And those searching for a deal could be out of luck. According to the Associated Press, The S& P Core-Logic Case-Shiller 20-city home price index, out Tuesday, climbed 18.4% in October from a year earlier.
The gain marked a slight deceleration from a 19.1% year-over-year increase in September but was about in line with what economists had expected.
All 20 cities posted double- digit annual gains. The hottest markets were Phoenix (up 32.3%), Tampa (28.1%) and Miami (25.7%). Minneapolis and Chicago posted the smallest increases, 11.5% each, the AP story said.
But Tamboer said it’s common to see perceived slowdowns in November and December sales when there is a shorter window with holidays when Thanksgiving, Christmas and New Year’s holidays are mixed in.
“It’s only slow because technically, you only have so many days in the month to close deals,” Tamboer said. It’s not anything unusual.”
The Phoenix market had one big surge — from May 2020 to June 2021 — and
then the luxury market took a “stutter step” in June, July and August.
“The slowdown in the luxury market made it seem like the whole market was slow,” Tamboer said. “Since then, we did see a boost from August to October — a reset if you will. We kind of just got back on track. The one thing you see is that prices aren’t going up as fast as they were. But they are still going up.”
For new houses, supply chain issues remain as 2022 approaches. Some builders must wait to get needed materials to build new homes.
Tamboer said it’s “not clear” how much of that is going to be resolved in the coming months.
“It’s hurry up and wait for the builders,” Tamboer said. “They are doing the best that they can.”
In June, local economist Elliott Pollack predicted the seller’s market in the Valley would last three to five years because not enough homes cannot be built for the market to correct itself in the nearterm.
A seller’s market in Phoenix looks to remain steadfast for the near future.
Phoenix has been a seller’s market for 13 out of the past 21 years, according to Tamboer. She said Phoenix has been a seller’s market for the past six years in a row.
But it’s unclear whether interest rates will eventually go up and push a pause for buyers.
According to the AP, mortgage rates fell last week — to 3.05% for the benchmark 30year, fixed-rate and 2.66% for the 15-year fixed-rate home loan. But the Federal Reserve is expected to increase its benchmark interest rate, or the rate it charges banks to borrow money. Such an increase would impact interest rates across the board.
But the pandemic’s impact on growth, particularly the ability to add new inventory to the housing market, likely will continue to impact housing availability and prices.
“The persistently low rates signal that credit markets appear more concerned about the omicron variant depressing economic growth than about the highest inflation rates in nearly 40 years,” the story said.
For now, the market is not the peak of price, Tamboer said.
Instead, Tamboer said, home values are rising each month at about 1.3% with the median resale home price at $430,000 in the Multiple Listing Service for December.
“We might see the market cool off this year,” Tamboer said. “But not today.”
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