January delivered a strong start to the year, offsetting a slouching December, according to a report released by Phoenix REALTORS®.
Analyzing the latest ARMLS data, there were 6,848 new listings hitting the market, compared to 4,105 in December. As well, average sale prices rose in January from December and sat at $539,617, which was up by nearly $4,000.
“The first month of the year saw a rebalance in the real estate market,” said Butch Leiber, president of the Phoenix REALTORS board of directors. “Buyers and sellers alike remained cautious, but pending sales rose as the market saw a greater inventory of homes.”
In January, there were 17,085 homes on the market, an increase of 160.1% from January 2022 when there were only 6,568 homes available. Data reflecting days on the market until sale also revealed that sellers typically saw their homes on the market for 76 days, a 10-day increase over the past month, and a 30-day increase from the previous January. There is also nearly three months of housing supply inventory available, which seems to be excessive given that a year ago houses barely saw 24 days on the market before sale.
“Some analysts may feel that the numbers are heading in the wrong direction, but when we take an honest look at the data, there’s a clear indication that the market is rightsizing to more sustainable levels,” said Leiber. “Given how red hot Arizona’s real estate market has been the past few years, most Arizonans – especially newcomers to the state – see a downward spiral instead of the correction we were anticipating.”
While last January was ripe with pent-up demand, a shortage of housing supply and soaring sales prices, data revealed home sellers are still receiving top dollar for their homes. In fact, in January, they received 97.1% of their asking price, which was only down 3.3% from January 2022, but inched 0.1% higher from the December figures.
“Mortgage rates, inflation and economic conditions will continue to have an impact on the residential market, but Arizona is fortunate to still be entertaining positive sales activity as new businesses prepare to open and greater numbers of out-of-state home buyers enter the market,” said Leiber.
Sellers are also getting more creative as they compete with other properties for the attention and dollars of fewer buyers, as seller concessions have made a significant comeback.
“Prior to the boom years, sellers offered some degree of help to buyers in 35-40% of all transactions, which often helped buyers with closing costs. During 2021, that dropped to 10-15% of all sales,” said Leiber. “Since the shift in the market, we’re seeing more than 50% of all sales including seller concessions – and they’re significant. The median concession is currently over $9,000 – nearly double pre-pandemic amounts.”
One reason the amount is so high is that sellers are now helping buyers buy down their interest rate. There is an increase in “2-1 buy down” where the seller helps reduce the interest rate for the first two years of the loan, which is typically a 2% buy down for year one, and a 1% buydown for year two.
“This helps immensely with affordability as buyers hope rates will drop during that two-year period, allowing them to refinance at a lower rate,” said Leiber.
As the market continues to evolve and right-size itself, Phoenix REALTORS continues to keep a trained eye on data to help successfully guide buyers and sellers through both sides of the process.