Or sure, in the market we had three years ago the average busboy or cab driver could have sold a house. In fact, many of them did and are now back to doing what they did prior to the market going wild. What is funny is that even in that market where a home seller could just put their home on Craigslist or pound a sign in the ground and from either of those actions, find their own buyer (at one point, in less than a day) – it still wasn’t the same as what we did for the seller. I understand that this can come across as self-serving but in most cases that seller cost themselves about 40k (estimated average loss in the Phoenix area) by “saving the commission”. They found A buyer. At that same time, the top agents were “finding” around 25 buyers per house. Really. This created a bidding war and drove the price of the house up. Way up.
This market isn’t that market. Now, the balance between sellers and buyers is completely reversed. Now, we have more sellers than buyers and it is going to be that way for a while.
So, is now a “good” time to buy? Is now a “good” time to sell? Well, it depends: if you are a first-time buyer the important question is how would your house payment compare with what you are paying right now in rent. Are the prices going to continue to slide? Maybe. There is no YES or NO answer to that question because it depends on the price range and the part of the valley. Some areas will not have any further meaningful price declines. Some will. My counsel to a person currently renting would be to see how the payment (using only a 30 year fixed rate loan, thank you) would compare with projected rent increases. You can make that type of comparison here.
What if you are a local home changer? You live here now and would be buying another home here. Then it makes NO difference what the market is doing. If the market “went up” it does not help you. If the market “went down” it does not hurt you. The only significant variable in this instance is interest rates. Interest rates moving up or down does make a difference – but not the prices of the houses.
Selling and not buying another home? Better to sell now or wait? The real answer depends on the location of your home (the one thing you can not change). To give a specific (as in correct) answer requires doing a supply – demand analysis of the immediate neighborhood. It doesn’t take long for us to do and is the only way to give you a real answer to that question.
What does it take to get your house noticed (the only way to actually get top dollar) is effective marketing. Literally letting agents and buyers know that the house is for sale. Can a sign on the property cause a buyer to call? Sure, but the only people who will see the sign are those people driving down that street. Same for an open house and in today’s world you can have an “open house” 7 days a week, 24 hours a day with a virtual tour. So having the house on the internet is vital but isn’t enough. Anyone can put any house on a web site (just about every home for sale today is on one or more web sites) but that isn’t enough to get the home viewed or sold. There must be the right kind of traffic to that web site. The right kind of traffic. People looking for homes because they want to own one. Do enough of that last one, and have the home priced correctly and it will sell. It doesn’t have to take a long time either – even in this market.
“It was the best of times, it was the worst of times…” so begins the novel a Tale of Two Cities, As we mentioned a couple of months ago, in the case of Phoenix area real estate it is the tale of two markets: homes under $350,000 in sales price and homes above the $350,000 sales price. That price point couldn’t be more exact.
There are 52,361 active listings in the local MLS (Arizona Regional Multiple Listing Service). There were 5,616 sales in the past 30 days. This is a 9.32 month supply. At that level there is still an over supply based on current demand, but not nearly what one might fear. At least that is how it appears, but let’s take a closer look. Under 350k there are 35,667 active listings and with 4,628 sales – a 7.71 month supply. With less than an 8 month supply we could say we had returned to a “normalized market”.
Now let’s take a peek at the sales and inventory in the above 350k price range. Inventory stands at 16,695 homes for sale. On the surface that sounds pretty good. Except there were only 886 sales in that price range for the past 30 days – this is almost a 19 month supply (18.84 months to be exact)! That is a dramatically different picture and in sharp contrast to the homes below 350k.
Why the disparity?
Answer: FHA financing. The FHA limit for Maricopa County is $346,250. FHA loans, almost a relic for the past decade are now back in vogue. In fact, the majority of the sales are currently FHA financed sales. Why? A variety of reasons – lower interest rates than jumbo loans, more generous lending guidelines, and the availability of FHA down payment assistance programs allowing buyers to purchase with no down payment or closing costs. So for all of the brainstorming that Congress is doing on housing bailout programs, perhaps the simplest answer lies in expanding the FHA price limits
Be that as it may, even these small bright spots are tenuous. Currently, and for a period of the next 60 days, Congress and HUD are revisiting the down payment assistance programs called Nehemiah and Ameridream. Because these programs currently comprise at least 50% of all the FHA sales locally, elimination of these programs would send another shock wave through our already fragile market.