This is the worst looking table for sellers that we have seen in a long time, with only one city (Queen Creek) showing an improvement, and that a very small one. The problem for sellers is that too many other sellers are joining them and competition among these sellers is therefore rising. Sellers tend to focus on tracking potential buyers, because those are the people they meet and they often forget to keep an eye on their competition down the street. However,buyers are checking out everything that is available in their chosen price range and location and they tend to know when their choices are growing wider. It is not always the case, but buyers are often more aware of market conditions than sellers.
This is the worst looking table for sellers that we have seen in a long time, with only one city (Queen Creek) showing an improvement, and that a very small one. The problem for sellers is that too many other sellers are joining them and competition among these sellers is therefore rising. Sellers tend to focus on tracking potential buyers, because those are the people they meet and they often forget to keep an eye on their competition down the street. However,buyers are checking out everything that is available in their chosen price range and location and they tend to know when their choices are growing wider. It is not always the case, but buyers are often more aware of market conditions than sellers.
Overall supply is still well below normal below $250,000 but there is now plenty of supply over this price and something of an excess in several of the luxury home areas over $500,000. Scottsdale, Cave Creek, Fountain Hills and Paradise Valley are all now below the balanced 100 mark and although they have not fallen below 90 into what we would classify as a true buyer's market, some buyers will no doubt use any advantage they can get.
The good news is that the downward trend is likely to slow down over the next few weeks. Normally the flow of new listings starts to ease off in March and we do not expect this year to be any different. Indeed there has already been some improvement in the CMI over the last week in a few cities:
- Gilbert
- Glendale
- Maricopa
- Peoria
Other smaller cities showing some slight improvement for sellers include El Mirage, Gold Canyon and Sun City West.
Overall I would say the Northeast Valley remains relatively weak, while the West Valley is gaining some strength at the expense of the Southeast Valley, which started the year strongly. Phoenix is still looking fairly good for sellers and is one of the areas I expect to see turn round its cooling trend sometime in the next 4 weeks.
The above CMI (Cromford Market Index) data mirrors what Mike Orr has been reporting for a couple of weeks now - that new listings are outpacing demand. As a talking point, the key thing is that increasing supply this time of year is typical. So the immediate fly in the ointment is obviously not seeing demand keep pace. However, I really like what Tom Ruff is saying in his most recent ARMLS STAT Commentary - that it's too early to say how this season will play out.
But then again, the CMI tends to be a good short term predictor and all those red dots suggest a slowdown.
I also like the highlighted comment above - where Mike Orr suggests buyers have a little better handle on the market because they're looking at the competition. He's a bit timid about that statement, but I'm quite confident that mostly true for just that reason - buyers are PHYSICALLY looking at ALL their choices.
What to do: Taking are cues from buyers, perhaps a good exercise for your sellers (assuming sufficient motivation) would be to have them put on their pretend buyer hat and PHYSICALLY look at ALL their competition.
One of the downsides of the virtual world is that we make consequential decisions based on online information. In many ways that works well enough I suppose and certainly saves time, but it often lacks sufficient 'context' to be as impactful as it could and maybe should be.
Looking at a broader context: What I mean by 'context' is for example, if you and your seller only look at comps in the immediate subdivision you're not factoring in that buyers typically are not hung up on a particular subdivision. They're most likely comparing properties across the broader market with similar features (size; amenities; etc) in their price range. So maybe the newer homes down the street are affecting the value in the older subdivision where your listing is. Buyers tend to prefer newer. That kind of thing.
Another example is that homes have a 'feel' to them that often isn't sufficiently conveyed in the carefully crafted remarks and photography, but becomes obvious when you physically look at a series of comparables. In fact, there's a statistic that says a knowledgeable buyer, when they've seen maybe a dozen properties - the national average for buyers making a decision - will 'know' their home of choice within 6 seconds of walking through the front door.
Bottom line: People buy by comparison - cars, toasters, houses, spouses. If your instincts (and lack of activity in the real world versus 'virtual showing' in the digital world) are telling you it's time for a price adjustment, and you dread the conversation, perhaps suggesting physically going out and simulating the buyer experience in that market segment as an exercise is a strategy worthy of consideration. Yes, it's taking time, but if current trends don't reverse themselves very soon time is definitely your enemy.
