Since 2008 Arizona realty firms have insisted that buyers and sellers sign a Market Conditions Advisory stating the startling news that real estate markets go both up and down. This year we’ve had ample validation of that remarkable concept. In March saw the Median Recorded Sales Price for single-family homes sprint an unsustainable 42 percent year over year. Since then, the Federal Reserve has embarked on a recession-by-design campaign aimed at curbing inflation by raising interest rates. Key targets: rent and home sale prices. Well, it’s working. We’ve gone from a hyper-Seller’s Market in the spring to a Buyer’s Market this fall.
In early October, Altos Research’s Market Action Index finally slipped to a 29 point rating – indicating a Buyer’s market. In early April it was 76 – a super-Seller’s market. Year-over-year, September 2022 housing sales figures, were down 27 percent and land, 70 percent. Home listings were three and a half times what they were in early spring, but still only 60 percent of the average pre-Pandemic number. So, supply remains a bit tight. Pending sales – a good indicator of demand – were off about 35 percent compared with March 2022, but only down 18 percent vis-à-vis the Pre-Pandemic average.
Percentage of home listings that had price decreases
MRSP for the month of Sept. 2022
The effect of all this on prices is striking. At the end of September, Altos’s Sedona area figures indicated that 56 percent of home listings had price decreases. Breaking that out by zip code, 86336 had a 45 percentage decrease whereas 86351, the Village of Oak Creek, experienced 66 percent .
For actual sales, the MRSP for June through September was down 11 percent from the previous four months. That included the oddball metric of an August MRSP of $1,329,000 followed by a radical swing to $875,000 in September. Both of those numbers were, however, based on exceedingly small sales numbers that make them suspect in terms of statistical reliability. In any case, the downward trend appears inescapable.
Yet, in mid-September, Zillow still projected a 4.7 percent value increase in the year ahead for Sedona homes. In early-October that was revised down to 2.5 percent. Still, that seems to defy gravity, but it might provide a lifeline for those swimming in denial about the declining market.
Minute by Minute Dynamic Changing Market
The question, then, is, “What to do now?” For buyers and sellers, it’s a balancing act between trying to time the market or proceeding with one’s personal life needs and goals. If you’re a seller who honestly doesn’t need to sell now, you might hold off until we weather the promised economic storm, however long that might be. But, if you do need to sell, get on with it while we are in our traditional high season. Buyers are fewer and farther between, but they are there.
If you are a buyer, the window of opportunity is now open for the time being. Waiting may make sense if you believe that further price declines are coming, but that window could close at any moment. Let your lifestyle needs and desires over-rule your market timing calculations and purchase if you find just the right property. In the long-run, you’ll forget about the price if the home is just what you wanted.