Sometime between the primary and the general election in Gilbert, the weather starts to dip below 100 on more consecutive days than not, pumpkin spice makes its way back into our lives, fall markets start to pop up around downtown and in town square, and historically it becomes one of the best times for buyers to buy houses in Arizona.
With the kids off to school and the landscape returning to its pre-summer blooms, we start our steady seasonal incline in activity that will last through May, giving buyers more options to choose from and more sellers who are interested in closing out their home sale before the end of the year.
Over the last five months, we have seen a massive increase in pricing followed by a speedy correction that has resulted in prices looking very similar to those in January or February of this year.
Consumers who have been in their home for the last few years may or may not be focused on this rise and fall as their equity position remains strong. But most considering entering the market are well aware that negotiations will look different than they did just a few months ago.
With more than 10% of homes closing having some form of seller-paid closing costs on the settlement statement, sellers should expect offers to come in with these requests and know how to negotiate them.
Analysts are projecting a strong purchase market to return in 2023 as we settle into our typical seasonal bustle of real estate activity, and we see the return of massive crowd gathering events such as the Super Bowl, Phoenix Open and Spring Training that tend to bring more eyes to our market during an already busy time of year for Arizona real estate.
While closing costs and other programs designed to help buyers with the impacts of volatile interest rates are readily available now, it is unclear if these tools and tactics will be available once the pace of the market picks up.
That makes it prime picking season for our buyers now.
The shift in consumer sentiment about the real estate market has been anything but rapid. I would describe it as cautiously optimistic in the sense that most homeowners have significant equity in their home and want to believe that they can use it to make a purchase that addresses many of the life changes they have experienced over the last three years, when the market was profitable but simply not accessible to everyone.
They hear the messaging that there are options to purchase and that they can get help with closing costs and rate buy-downs but they can’t help but feel like that means it’s a good time to buy but not to sell. And for many one comes with the other.
The problem with trying to time the market is that it doesn’t usually work. Any gain you have from pulling the trigger at a tipping point, you lose from waiting to make a decision on the incline or decline from that point.
While real estate works over time every time there are unintended consequence of injecting high-volume buyers into the real estate market making main street look a little more like wall street.
While iBuyer activity in part drove our prices up dramatically over the last year, their strategy, inventory management and purchase history impacts pricing and inventory in a different way than consumer driven purchases.
An excess of inventory in the hands of many of these companies that made massive purchases over the last couple of years continue to exert downward pressure on pricing and interest rate volatility creates waves of buyer demand and inactivity. Meanwhile, Gilbert’s active listing count appears to have stopped rising while listings under contract have risen by more than 10% in just the last month.
Days on market have inched up while the months of supply remain steady due in part to rising demand and a more moderate rise in supply.
While we do not quite have an excess of supply in Gilbert based on historical averages, an increase in demand fueled by lower interest rates and continued growth in the manufacturing and healthcare sectors will be welcome and could quickly move our supply situation back into deficit territory.