Let's celebrate balance in Metro Phoenix’s residential real estate market

Cory Mishkin

Submitted photo/Courtney Lively

What does all this mean for buyers and sellers? It means it is time for sellers to price to market if they expect to sell their homes. It is time for buyers to enter the market and not be afraid to make an offer based on what they think the home is reasonably worth. And it is time for real estate agents to have honest and open conversations with their clients about resetting expectations.”

As the residential real estate market sees an increase in inventory, both local and national headlines have been crying out that Phoenix Metro is speeding toward an impending crash in home values. But the facts may point to something else, balance.

For over five years, buyers in the Phoenix area have suffered through a stubbornly strong sellers’ market. In that time, those same buyers were conditioned by the market to waive inspections and bid above ask price with escalation clauses, only to lose out on the home of their dreams. Now that the market is showing the slightest signs of an advantage to buyers, pundits say the sky is falling.

Those last five years created unhealthy expectations for both buyers and sellers that linger today. Sellers often expect a slew of buyers to come bidding for their homes, while buyers are afraid to make offers on homes, lest they offend demanding sellers.

To be clear, buyer demand has not changed over the last 12 to 18 months. The amount of transactions has held steady. The change in the market is directly attributed to more sellers entering the marketplace.

Why could this be? The reasons are as varied as the homes on the market. It can range from variable-rate mortgages resetting, short-term rentals not being as profitable as they once were, economic uncertainty, or the fact that homeowners now stay in their homes more than twice as long as they did just 30 years ago. Sellers are itching to make a change.

Plus, there is the fact that, according to the National Home Builders Association, Americans have a record amount of equity in their homes — just over $35 trillion. That is a huge amount of equity tied to homes and the highest percentage of household wealth tied to housing since the 1950s.

This points much more to a healthy market more than one careening over a fiscal cliff. Over 90% of home owners have equity in their homes, meaning the overwhelming majority of homeowners have the ability to sell their homes and receive a nice check at closing. This is in stark contrast to 2008, where many homeowners were underwater, meaning they owed more than the home was worth.

What does all this mean for buyers and sellers? It means it is time for sellers to price to market if they expect to sell their homes. It is time for buyers to enter the market and not be afraid to make an offer based on what they think the home is reasonably worth. And it is time for real estate agents to have honest and open conversations with their clients about resetting expectations.

The market is balanced with The Comfort Report pointing to the slightest of buyer advantages. If a home is priced appropriately it will sell, if not it will sit. This is text book balance. Once buyers and sellers are able to understand where we are in the market, both groups will be able to enter into terms that are fair for everyone. When neither party feels like they won big, we have balance.

As the old Realtor saying goes, “The best time to buy a house is when you need a house.” With nearly 25,000 homes on the MLS in the metro area, the market is now primed for everyone to get a fair deal.