Sellers: What the F#ck is going on in the Real Estate Market??!

[Cut to me]: Handing every Seller a tissue to wipe their tears. The 5 stages of grief are upon us, but let’s skip the denial, bargaining, anger & depression and go straight to: Acceptance. Long are the days of multiple offers, over asking, allowing free lease backs, and 100 showings in the first day a home was listed. Now is the time of patience, strategy & rational, logical thought. Accepting that this market change is out of our control, but controlling what we can, is how we get through this Neutral-Buyers market. In the Phoenix Valley we currently have 21,284 Active Homes For Sale, which is very similar to 2018-2019  (however the interest rates then ranged from 3.9%-4.5%). Just know, we will get there again, it will just take patience.

Seller: But, I need to sell my home, how long will it take?? I get it, I’m horribly impatient too but, let’s look at the current data to see what the market is telling us. For Example: In the neighborhood Arcadia/Arcadia Lite zip code 85018, in Phoenix, AZ. There are currently 141 single family homes for sale, 42 currently under contract and in the last 30 days, 30 homes have sold. The median sales price was $1,182,500 and it took 48-53 total days on market (including days under contract, a loan takes about 30 days) to close.

Ok, so that doesn’t sound that bad, right? Hold that thought. 30 days back would typically be incredibly accurate and relevant when looking at sales comparisons. But, with how quickly the Fed is raising interest rates, 30 days ago is *almost* irrelevant. As your Realtor, I am checking stats, staying on top of the market trends & interest rates on a daily basis. 30 days ago, interest rates were right around 6%. Today, Oct. 18th interest rates are right around 7.2%.

What does that mean when selling a home? Affordability. 30 days ago, that Buyer in Phoenix, AZ 85018, buying a $1,182,500 house at a 6% interest rate (ex. putting 10% down) had an estimated mortgage of $7,397/month. At todays 7.2% interest rate, that same mortgage would be $8,241/month.

Ok, but what does that mean for pricing my home? In today’s market, that $1,182,500 home would need to be priced at $1,050,000 to have that same Buyer, afford the same house, for the same $7,397/month mortgage. That’s a $132,500 price difference on affordability. Woof. Does that mean your house is truly worth less? Not necessarily. But, over the past few years prices have risen dramatically due to demand and when demand slows, home prices drop with it. Also a point of consideration: the percentage of Buyers that make upwards of $250,000/year that can even qualify for a mortgage of that amount is slim. The average household income in Phoenix is $85,527.00. With 6.99% of households in Phoenix, Arizona making $200,000+ per year.

Ok, but Emily, nothing you are telling me sounds all that great.. I know, things aren’t looking very positive for Sellers right now, but let’s keep perspective. There are still cash Buyers out there, who are unaffected by financing/ interest rates. About 150 People are moving to Arizona per day, who all need a place to live. Snowbirds are about to flock to Arizona, bringing their buying power and driving slow in the left lane with their blinker on…(I kid!). The amount of equity you have in your current home is a small fortune, especially if you have owned your home for 4+ years. Investing in Real Estate is a great way to build wealth, has tax benefits, and even if you sell your home for a little less than it would have sold 6 months ago, you are still netting a much higher profit than years past, due to unimaginable appreciation.

Ultimately, even if your house is gorgeous, and priced well, marketed creatively and you are using a Realtor (Me!), it just might take a few months before you get your home under contract. The Feds have ongoing plans to continue to raise interest rates even higher, which makes everything that much more unaffordable for Buyers, thus making days on market increase.

As your Realtor, a few questions I would discuss with you: Do you have to sell right now? Or can you afford to wait until rates come back down? If you need to move, but don’t need the money, would it make more sense to rent your house out for 6-12months, then re-list your home when things have become more normalized? And, if you have to sell, I got you! l will lay out my customized, strategic plan, making sure I am putting your needs in the forefront and will tackle sale of your home with my market knowledge, marketing creativity, and data driven strategies to get your home sold.

There is still so much left to cover, and I assume most people stopped reading after the first paragraph. So kudos If you made it this far! You hopefully learned something you didn’t already know, and will be better prepared to face this market as a Seller with me by your side. If you have any questions or want to chat, I am just a call away. 507-398-2555 or [email protected] And as always, Just Click Your Heels because there’s no place like Home.