Scottsdale and Phoenix Real Estate Inventory Rise
In this current Scottdale and Phoenix Metro residential real estate market, something’s gonna have to give, and we’re not sure what that will be.
Historically and economically, when mortgage interest rates rise, sales and new escrows will slow. When inventory increases, buyers can gain an upper hand in negotiations with sellers, thereby having the tendency to reduce prices. When all of these factors are happening at the same time, prices will drop – or will they?
First off, we’re currently seeing the drum beat rise of mortgage rates taking us into the mid 7% range. We’re also witnessing the rise of homes for sale (inventory), albeit, slowly, but rising nonetheless. Next, listings under contract (6,983) at this time of year (September) are at their lowest point since 2007. Sales per month (6,207) are at their lowest levels since 2008 (Aug).
Yet Prices Continue to Rise?
Finally, the release of last week’s S&P / Case-Shiller Home Price Index showed that Phoenix is again catapulting towards the top (2nd Place) of the national monthly sales price chart increasing .88% compared to the previous month. A note of caution on this index, however, is that it’s 3 months behind in reporting sales prices.
The only plausible explanation for our price increase remains the still very low level of inventory. And this is not just in Phoenix, but nationally too. Judging by the slowing market as a result of higher rates, I think we’ll start seeing price drops. The pressure for sellers to sell will grow with passing time. Affordability is suffering and right now it looks like this could continue into next year. A reversal in mortgage rate hikes, however, would spark buyers.
For buyers, time on the market for any given listing, will let them know how much negotiating room there might be. For sellers, correct pricing is critical. Adding or agreeing to incentives for buyers such as rate buy-downs may also help that property to get under contract.