It’s settled then. I think. The Phoenix Metro real estate market that is. Phoenix is currently a balanced market!Actually to be more accurate, in the blink of an eye we have passed through a balanced market in December and are trending to a Buyer’s market.
I realize that may not sound all that exciting, but a balanced market, even just temporarily is cause for wonderment. It’s something we’ve not had for years – yes years – and has only occurred about 5 times in the past 11 years. Our last one was three years ago this month.
So Mike, exactly what is a balanced market and how do you support that declaration? A balanced market is where supply and demand meet and neither buyers or sellers have an inherent advantage. Take a look at this chart which indexes the balance of the market over the last 12 years. It is a basic computation of supply vs. demand and other factors where 100 indicate balance. Figures above 100 show a seller’s market where figures below 100 show a buyer’s market.
Our market had been above the “100” level for three years (See chart), firmly entrenched in a seller’s market. It has been trending to buyers since June, and if history is a solid gauge, it will stay a buyers’ market for a while. But history may not play out on this one.
The good news for sellers has been the torrid appreciation since the fall of 2011. This has enabled many sellers to “move up” and “move on.”
The good news for buyers is that price increases have now moderated, and with rare occasions, multiple offers are no longer a player in this market. Pending sales have decreased which will also slow sales and the rate of appreciation. Most “experts” believe the Phoenix metro market will have 6% appreciation for all of 2014.
The amount of foreclosures and short sales has diminished greatly. This is terrific news for everyone. Pending foreclosures are at their lowest level since 2006 and continue downward. Interest rates are still okay, even dropping recently, so the increase in home supply and decrease in demand “looks like” the solidification of a buyer’s market.
I say “looks like” because there is a new “wild card” out there which will bring the “boomerang” buyers back. We’ll be addressing this soon as it will potentially be a major real estate game changer in the Valley.