Homes On The Market Too Long?? | Phoenix Real Estate Market Update

Half of the homes on the market are selling slower than they were a year ago. They're on the market at least 60 days. So is this a problem? We're going to look at this data, but we're also going to take a look what's going on with expired listings and canceled listings because that tells a story as well. So let's get into it. Let's talk about what's going on. This Redfin article here, half of all home listings have gone extra stale, unsold after 60 days on the I feel like that's a really aggressive label, but let's look at what's going on. 48% of all homes for sale in August had been on the market for at least 60 days, up from 43% a year ago. So that has ticked up. The typical home took 37 days to find a buyer, six days longer than a year earlier. Homes are selling fastest in Seattle and slowest in So this says that nearly half, 48%, have lingered on the market for more than 60 days, which is the highest share for any August since 2019. Okay, 2019, not that long ago. What happened in 2019? It was pre-pandemic. So is this really anything to be concerned about? My opinion is no. When we're in a balanced market, homes take longer to sell. They don't sell in the first weekend and sometimes they don't sell in the first month. Homes take a while to sell. That's normal. That's what it has always been. So if we're going to compare this to be the highest level since 2019, I just don't really feel like that is any reason to raise a red flag. It says that share was up from 43.2% a year ago and marked the fifth straight month in which the share of homes sitting for at least 60 days posted an annual increase. So we've seen five months of data here of the days on market getting longer and longer. Nearly 70% of homes sitting for at least a month. So nearly seven out of ten homes on the market last month have been sitting for at least 30 days, which is up from 63.9% a year ago. This rises for the sixth month in a row. So I think bottom line here is that we are seeing a longer days on market, which isn't really surprising given what's been going on in the market, that we're closer to a balanced market in many places, that there's been concerns over affordability. All of those things, I just don't think that 60 days on market or even 30 days on market is anything for us to talk about as extra stale. But let's take a look at what's going on in Phoenix. So the median cumulative days on market for closed listings right now in September is about 50 days on market. So a little bit lower than what they're reporting, what Redfin is reporting, but not quite as fast as what's going on in Seattle because that article said Seattle homes are selling within two weeks. So that is still very quick. But you can see this has ticked up in Phoenix a little bit over the last few months here. And when we started the year, January is always going to have a higher days on market. But then we kind of went down in the spring, which is typical. That's a bit busier time for us. And then summer started to increase. So we'll see if our days on market stays here, goes down. It'll definitely be higher in December, more than likely. December-January, that's accounting for the the months that homes were on market around the holiday time frame. But this is really not any sort of outlier graph that would be concerning. And this goes all the way back to 2015. So if we look at 2015 when we were in a balanced market, we're kind of similar, maybe a little bit higher on days on market in the last few months here than we were during 2015. But there really isn't anything to be concerned about as we're looking at days on market, the history in Phoenix. And I just really wouldn't consider this extra stale. Now in 2022 when we saw the interest rates go up and everyone decided to list their home and no one was selling their home for a period of time, you can see that climbed here very aggressively. And at the, you know, towards the end of 2022 and beginning of 2023, we had some peaks here in terms of days on market. It since went down and started to rise a little bit again this year. But as we talked about last week, there's been some pretty significant changes with mortgage rates. We've started to see buyers coming back out. So this days on market might start to decrease a little bit, although we are also still seeing our inventory increase. So even if we're having more demand, buyers will still have a lot of options. Therefore, homes likely won't sell as quickly. So what can we expect this week in the economy? Well, Fed cuts aren't the key. Labor will decide mortgage rates according to experts. This week we get a jobs report, which is going to be really interesting to see because the last jobs report showed that we started, the labor market was starting to cool, and that's actually more important to the Fed at this point than inflation. We've been really interested in inflation data for a couple years now, and now that that is showing signs of leveling out and kind of getting under control, the Fed is really eyeing more what is going on in the labor market. So this week we'll want to keep an eye on the jobs report and what takes place there to see how the Fed may react at the next meeting. So last week we saw rates jump up just a slight bit. We ended at 6.21, still in the low sixes, which is really nice to see, but we were a little bit lower than that the previous week. So keeping an eye on rates and what's going to happen with the jobs report will be interesting. And then also as the Fed continues to discuss their next move, you can expect that mortgage rates will move in anticipation of that. Now I said we're starting to see a little bit more demand because of the change in rates, and according to this Redfin article, buyers are coming back, mortgage demand shoots up, home tours hit highest level since May. News about last week's interest rate cut is starting to bring homebuyers back, so this was written last week. Homebuyers locked in nearly 70% more mortgages than they did a month earlier on September 23rd, five days after the Fed cut interest rates for the first time in four years. They say there's also other indicators that demand is improving. Mortgage purchase applications are up more than 10% month over month, and Redfin's homebuyer demand index, which is a measure of tours and other buying services from Redfin agents, shot up to its highest level since May during the week ending September 22nd. They're also talking about improving affordability, which is essentially, you know, based on the changes in mortgage rates and the rate cuts, so you can kind of lump all of that into one, but improving affordability is also a major factor. The median monthly housing payment is down 4.4% year over year, which is the biggest decline in more than four years. It's dropped to its lowest level since January, with the exception of the prior four week period, because of mortgage rates dropping to the lowest level since February of 2023. So although many people feel that home prices are still inflated, it just comes down to the fact that many people are looking at their affordability based on a monthly payment, and if the mortgage rate goes down, then that monthly payment becomes more affordable to them, and if they can still afford that down payment, they may be willing to jump in to buy a property. Now one of the important things that we always look at for buyer demand is the number of listings under contract, because this is showing buyers going out there writing offers and getting under contract on listings, and we saw a small uptick in this a few weeks ago. It's kind of stayed stable the last few weeks. I think it's still too soon to tell if we're going to see this change here in Phoenix immediately from the changes in mortgage rates, because this is going to take a few weeks for us to actually see the number of homes under contract increasing. For instance, there may be more buyers out there looking, but maybe they haven't found the right home yet or haven't come to terms with the seller yet to get under contract. All of that could take a few weeks, so even though that activity could be out there, it's not reflecting in this chart until we start to see those actual contracts being accepted. Now I could be wrong. I could be saying that demand is coming back when maybe it's not, but I do think just based on my business, the activity that I've seen out there, that we are starting to get some buyer demand back. That said, let's take a look at what's going on with supply as well, because we've been tracking the active listings in the Phoenix market, and it has been increasing every single week. And yet again, we are seeing this increase this week. We're at about 17,000 active listings as of the most recent week. Now is this anything to be concerned about? I don't think so. We tend to see our active listings increase this time of year. You can see it in all of these years here, some a little bit more significant than others. So this time of year, not strange. We did start to see this a little bit early though, so something to keep an eye on. But if we are beginning to get buyer demand back, depending on how many buyers come out and are interested in getting under contract, we might start to see the active listings start to decrease and get absorbed as well. Now I mentioned that I don't feel like 60 days on market is really stale listings, but we need to take a look at what's going on with expired listings and cancelled listings as well, because those are essentially the listings that didn't make it for whatever reason. The seller got frustrated or exhausted or maybe changed plans, but they either expired off the market or they cancelled. So if we're looking at expired listings on the market, you'll see I'm comparing here last year to this year, and we actually started this year lower than we did last year and have started to increase a little bit and are now meeting at the same point as we were last year in terms of our expired listings. So a lot of this will depend on whether or not that buyer demand comes back and whether or not we continue to get more new listings on the market, because if we continue to see more listings and fewer buyers, then likely fewer homes will sell and therefore will expire or cancel. So we're not seeing an astronomical number of expired listings by any means. If we go back to like a really hot market like 2021, you'll see here 2021 is this red line. Obviously we had much, much fewer expired listings back in 2021 because pretty much every home was selling. So it was very rare to be expiring off the market. However, if we can go back to a year like 20, let's say 2015, more of kind of that balanced market time frame, we had more expired listings at that point than we do today. So if we were seeing really long days on market and we were beginning to see a lot of these expired listings and canceled listings, I would say that those indications are saying that we're in trouble in some sense. And frankly, we would probably know about that before we start to see these listings expiring off the market. But this number isn't anything to be concerned about. Then if we look at our canceled listings, same thing here. 2024 is leading the pack over the last few years. But again, we're coming from very, very hot markets in those last few years. So around 11,000 in terms of canceled listings. So what is actually going on with these listings? Well, either they didn't sell in the time frame that the real estate agents said that they would. So whether that be three months, six months, nine months, a year, whatever that agreement was. So therefore, once that agreement is up, it automatically expires or the seller decided to cancel the listing because they gave up or they maybe had a change of plans. Either way, it doesn't mean that these homes couldn't still sell. So one of the things that I like to do is actually call on expired or canceled listings and find out if they're still interested in selling, because this gives us a little bit more inventory out there to provide to our buyers. That's something that my team and I do for our buyers. If you are considering buying a home and want to see that detail on which homes have canceled, which homes have expired, check the description below. We have a link where you can request that information. Now let's talk about our CMI and what's going on here in Phoenix. And by the way, if any of this is helpful for you, make sure you hit that subscribe button and consider sharing with someone who might find it interesting. So the CMI is the Cromford Market Index. I followed the Cromford report and anything between 90 to 110 is considered a balanced market. So 95, we're in a balanced market. This has been going down bit by bit, week over week, really hasn't been climbing at all and I thought that it would. So we'll see if rates change any of that. But we have our Supply Index, which has been increasing a little bit, and then our Demand Index, which has been around 74, really not changing all that much on the demand side, or at least that we can see in these gauges just yet. So time will tell there. If we look at every city on this chart and where each one is week over week, we have Fountain Hills and Paradise Valley really leading the pack here. Over the last month, the change month over month for all of these cities is negative 1.9 percent, which is more negative than last week, which was negative 1.3 percent. So that average change has accelerated a little bit in a direction more favorable for buyers. Any of these green arrows mean that those cities moved in a direction favorable for sellers and red means those cities moved in a direction favorable for buyers. We do have a few cities in a buyer's market, which is Surprise down to Maricopa, many of those mostly because there is a lot of new construction taking place in those areas. And then our balanced markets are between Peoria and Tempe, Cave Creek, and up to Gilbert, which kind of starts off at the seller's market going up to Fountain Hills. So technically, Gilbert at 110.9 is a seller's market, although it is very weak. So that's what's going on throughout the valley as it looks as we look at that CMI number. And then we also like to look at this contract ratio heat map. This is showing us the number of homes available for sale in each zip code and how many of those homes are actually under contract. So what that ratio is gives us a good idea of what the heat is in that area. So you're seeing a lot of green in here, some blue. So this is that balanced warm market and that cold market in some areas. And then we have a few zip codes that are yellow, which is considered hot. We're seeing those yellow zip codes in Chandler, in Gilbert, just one zip code in Gilbert, Tolleson, Glendale, and then one red zip code, Glendale 85310, considered a hotter zip code. So that's kind of the overall look of the valley. And it's always interesting to see where we were even just like a month ago compared to where we're at today. So if we take it back to August 31st, seeing a few more zip codes that were hot. So we've obviously cooled down a little bit throughout the market. Now, sellers, although we're approaching a little bit of a slower time as we get into the holidays, once we get into November and beyond, we are going to see an uptick in buyer demand based on the changes in mortgage rates. And I do see rates continuing to make some downward movement. So if you want to take advantage of that buyer demand, you can check the description below, see what your instant home value is and whether or not it makes sense for you to list right now. And buyers, if you want to find those canceled and expired listings, don't forget to check the description. I have a link to check that out as well. I'll see you guys next week on my next market update.