The Phoenix Real Estate Market is still a seller’s market. Even though we are still in a seller’s market, it is almost at the borderline and inching towards to a neutral/balanced market. This is based on the residential real estate statistics for just the City of Phoenix in Arizona, compiled by the Arizona Regional MLS.
Why is the Phoenix Real Estate Market still a Seller’s Market?
As of July 14, 2014, the city of Phoenix had an absorption rate of 3.47. This rate means that the city has only 3.47 months supply of residential inventory. Taking the rate at which people are buying homes in the city of Phoenix for the past year, if no new homes come up for sale again, the current number of homes available to sell will be sold out completely in about 3.47 months.
Absorption rate for Phoenix Real Estate Market as of July 2014
The absorption rate usually determines if we are in a seller’s market or a buyer’s market. The higher the rate, the more homes available for sale in Phoenix hence a buyer’s market because it favors the buyer who has lots of houses to choose from before buying.
The lower the rate the less homes available for sale, so using the demand and supply concept, the sellers have more negotiating power during a transaction making it a seller’s market.
If we are still in a Seller’s Market in Phoenix, why are homes taking longer to sell?
Even though we are in technically still in a seller’s market, we are almost on the higher end of the absorption rate range considered to be the sellers range, which is about 4%.
5% to 7% is usually considered a balanced market and 8% and above is a buyer’s market.
Back in August 2013, 12 months ago, we had only 2.45 months supply of homes for sale and homes in Phoenix were taking about 51 days to sell, last month the average was about 80 days.
Average number of days it took to sell homes in Phoenix as of July 2014
Homes are taking much longer to sell now because we have more inventory than we did a year ago and we are slowing inching towards a balanced market, if we continue increasing our inventory as we are doing.
Does it mean I can get whatever I want for my house if I am selling it?
A year ago with a lower supply, buyers had fewer choices but with continuous increase in inventory, buyers have more options so as a seller, you have to expect to get what your home is worth to a buyer based what is available in your neighborhood. A real estate agent will be able to advice you on how best to price your home so it sells quickly.
This article/blog post is to educate you on the current trends in The Phoenix Real Estate Market, not to predict upcoming or future trends.