PHOENIX (3TV/CBS 5) – It’s a brand new year and a brand new real estate market for 2023!
Real estate agents across the Valley are expecting more balance in the market with more room for buyers and sellers to negotiate. In the Valley, there are around 17,400 homes on the market. That’s the most inventory we’ve seen over the summer when the market was at its peak of just 3,500. In a “normal” market, there was an average of 35,000 homes up for sale. Several real estate experts say the market is in a good place to welcome buyers with interest rates being of prime interest in 2023.
Sindy Ready, vice president of Arizona Association of Realtors, said, “So we’re kind of in that place for a couple of years where interest rates where at that 3 to 3.5 and now they’re up to 7.5. Everybody is kind of going ‘Woah! What’s going on with interest rates?’” she said. “Yes, you could wait for a lower interest rate, but then you’re going to be competing with more people for the same houses just like we were before.” Ready added that if buyers are concerned about the rates, keep in mind that many sellers are willing to negotiate so you can buy down your interest rate. She also said to remember that if it’s your primary home, mortgage interest is tax deductible.
The Cromford Report, a real estate market tracker, said that overall, the market in Phoenix has moved back into balance. In December, 50% of the closings closed with some form of buyer’s concession. That means anything from a repair or contribution to an interest rate buy-down. Tina Tamboer, an associate of the report, said, “The outskirts of town, such as areas like Maricopa, Casa Grande, Buckeye, you’re still going to see a buyer’s market. Still very good deals are to be had with builders,” she said. “But, some areas like right like Phoenix, Chandler, and Glendale are in balanced markets–still very good for buyers. Then you have the northeast like Scottsdale, Fountain Hills, Cave Creek–those areas are still in seller’s markets. So the luxury markets are still doing very well.”
Sky-high interest rates appear to be coming down, at least a little. However, you might have a little more leverage to negotiate this year, experts say.
Inventory is an important piece of the equation, according to Eric Gibbs, the president of the Arizona Association of Realtors. He said that overall, the market is in a better place with around a 3-month supply of homes in the Valley. Gibbs said, “Buyers are in the market. Buyers are moving. The problem buyers have is that they can’t find inventory. There’s not a lot of inventory. If they’re looking for a home under 300K, there may only be a few available to them, and so that’s what’s causing some of the slow down in buyers buying.”
Economists for the National Association of Realtors are projecting that the mortgage rates will settle around 5.5% by the end of 2023. More and more businesses will be moving into the Valley this year so experts are claiming that pricing will likely reflect the boom in demand. Sindy Ready said, “The pricing has adjusted down, just slightly, about 4% over the last 6 months, and they’re saying we’re going to hold pretty steady where we’re at. Maybe another 1.1% is really what I’ve seen with some of the speculation, so pricing has kind of leveled.” Ready said that from the seller’s perspective, she recommends to check out what houses have been selling for and be realistic. “You’re still going to make a great profit on your home, but it may not be what it would have been a year ago,” she said.
Ready suggests to sellers that make sure their house looks sharp, clean, and furniture has been thinned out. “Photography is important. The way the house looks…making sure any major repairs that need to be done are done,” she said. “Gone are the days of ‘I’m not going to do anything to this house and sell it.’ I mean, you can still do that, but you’re going to take a big hit on pricing if you do that.”
Gibbs says that many buyers are generational families looking for a bigger home. “The openness, they want the open floorplan with a nice size backyard,” he said. “The ability to really enjoy life and community, living in an area where they have the things they need without having to drive so far to stores and those accessible restaurants and things like that.”
Copyright 2023 KTVK/KPHO. All rights reserved.