For the first time in quite a while, the residential real estate experience in Glendale has shifted. Sellers look to be on the side of caution, and opportunities for buyers may be growing.
Look no further than a recent case in the city.
Ron Palmer, 72SOLD program director with West Valley Hague Partners, has sold real estate in Glendale for 19 years. He had a buyer in town with a cash offer company and opportunity for a quick close. The way home prices are falling, however, the buyer was the one backing out. The numbers showed that they couldn’t turn the house around and sell it at a profit they’d like to have because of the market’s appreciation.
Whereas sellers have been driving the market the past couple years, through a combination of irresistible profit margins and low inventory, it’s now buyers having more of a say. The market seems to be impacting profitability to sell high, and there’s a lot more inventory out there, Palmer is seeing.
“It’s important for sellers to know, in that right now if there’s a reason to sell they need to do it sooner than later,” he advised the last week of July.
Business Insider reported Tuesday that mortgage rates have been trending down over the past few days, with 30-year fixed rates dropping significantly. At the end of July, the average 30-year fixed rate dropped below 5% for the first time since early June.
That helps buyers who have had a hard time getting into an inflated price market, but even with those lower rates, affordability remains an issue for many buyers.
“If you’re looking to buy but are struggling with high home prices, keep an open mind and avoid the urge to take on a monthly payment that stretches your budget too tight,” the outlet reported.
On Tuesday, Zillow showed an average 30-year fixed mortgage interest rate of 4.99%, and average refi rate of 4.89%.
Data or no data, Palmer has seen a number of potential buyers, including in Glendale, staying on the sidelines for the most part.
“A lot of it is consumer confidence. Nobody wants to buy high, right?,” he said. “So a lot of buyers got knocked out of the game because of interest rates.”
The game may be changing.
The city of Glendale’s ZIP codes aren’t homogeneous when it comes to sales trends or values, so take the city’s highest price point ZIP, 85310 on the north end, for instance.
Just from March to July, inventory in this part of town has increased 253%, Palmer notes. Listings under contract have decreased by 33%, and showing requests have gone down 4.9%. Also, the median sales price in 85310 in March was $625,000, but by July dropped 15% to $540,000.
“The price decrease has been skewed by these higher price homes seeing significantly less sales activity,” Palmer explained.
Meanwhile, the 85308 ZIP code, also on the north end of town where most growth is occurring, is showing similar trends.
From March to July, inventory levels there have increased 326%, and listings under contract have decreased 26%. Showing requests as recorded through Showing Time has decreased 46.7%.
Paradoxically, the median sales price in this part of town in March of $522,000 increased by July to $540,000.
With inventory levels increasing and demand falling, Palmer believes prices will be down in comparison to March by the end of August.
“The market has absolutely shifted, and it’s shifting historically,” he added. “Most experts feel like March/April was the peak of the market. And it’s actually turning faster than it did in ’08.”
Most of all, he says, sellers are the ones seeing more concessions these days, not buyers.
“Before, sellers were pretty much in the driver’s seat,” Palmer said. “We’re seeing price reductions at normal to starting to climb into above-normal territories. In other words a lot of sellers are having to reduce price just to see if they can attract a buyer.”
He expects to see prices in all city ZIP codes continue to drop over the next two or three months as summer turns to fall.
Palmer cautions, though, that a market where homes trend toward affordability for all may still be a ways off.
“For sure the first-time home buyer — that entry-level price point — it’s getting pretty tough,” he said. “Cash buyers are not near as aggressive as they were before because they were able to buy a property, and it was appreciating 1 to 1-and-a-half percent a month. So they could buy it and the market was working in their favor.”