Decision Time For Sellers?

Welcome, welcome to the Rick Alps Real Estate Show, trying to make sense of this crazy Arizona market. And today we're gonna discuss if your home is listed, we're getting close to decision time. If it's been listed and it's kind of sitting there and you haven't had a lot of activity, chances are every morning you get up and you look and you shake your head and go, man, this agent is terrible. I haven't had one showing this week. Well, I'm gonna share you some numbers, some numbers with you and show you why that's happening. And what you should be looking at going forward. And also talk about any buying opportunities or what your strategy should be if you're looking at home. Because remember, nobody rings a bell at the top, nobody rings a bell at the bottom. It just is what it is. And right now our interest rates are stuck. They're stuck at 7.05. I thought we would start to see some volatility as the implementation of some tariffs came in. But as we saw yesterday, that was a one day event. I'm going to put a tariff out there on you and then in less than 24 hours, oh, well, maybe not. So the market didn't react. But here's what we have, what we are seeing. Our active listings are going up, but you can see that they're actually the momentum of new listings starting to slow just a little bit. And I'm seeing that in my seven day moving average where the number of new listings going up has kind of started to teeter just a hair. So I think we have peaked when it comes to an aggressive jump in new listings. Because you look here, we are at 20,061, 20,933 went from 21,704 up to 22,169. So it's a tiny number, but I'm seeing that our sales that I thought were really going to stay at about 2,700 a week actually went up to 3,000. Those have also leveled off. Not any indication that they're coming up. They're just right here now. So we went up to 3,000, stay in put. So what does that mean? Well, it's a difference between the number of listings that are out there and the number of contracts that are written, which gives us our month's supply, day's supply, et cetera. And it is resulting in some price changes. You can see our price changes are higher than they have been since 2023 back over here. And they weren't even this high. Back here, we had 2,410, and these are price cuts, 2,774. Now, I don't think I can scroll and find any other years on this chart. That's all it's given me is one year, but it is what it is. So people are adjusting their prices. Average days on market monthly sales. You can see here that that's also gone up to 81 days. Now, it tends to creep up every January, and let me explain why. If you're seeing a home that says, and we're the 2nd of February now, well, the 4th of February. So you're seeing a home and it says, and the average days on market is 84 days. Why does it always go up at the beginning of the year? Well, they were listed in either the end of October or November, and it's a slow time of year for us. So the number of days on market tends to go up naturally in January and February. So that in and of itself is not an alarm bell. So you really need to continue to look at that and say, well, is it gonna make a downturn? Because it does. It does start to turn down as you get closer to spring. See here, it flattens out. This is 2023. It peaked here and then it started going back down as the homes that were listed in January and February start to roll off and get sold. The average list price though, this one I think is bucking what shouldn't be this kind of a trend. Active listings with this kind of activity, as slow as it is, average list price, excuse me, as slow as it is, folks, this needs to come down. If you want any hope of selling your home, this line needs to start trending down depending on your neighborhood. We've seen the CMI data that Chandler's still doing well, so is Gilbert and Fountain Hills, but other areas. I mean, if you're still sitting there, February is your decision time because it's really not gonna get much better heading into March unless we see some reduction in rates. And I don't see that on the horizon. But here's another thing that again illustrates days of supply. This is months of supply. And boy, we have not been that high in a long, long time. In fact, let me roll this back and take a look because it's only showing us the 2023. Let me go back to pre-pandemic levels. Everybody likes to compare that. So we'll add 2019 to this. We've peaked at 3.5 months supply and now we're 5.2. If you're a seller, this should concern you. You're not gonna get that peak price. Now, the difference right now is that sellers are not really desperate. We're gonna talk about that in a moment. Here is sales per month. This is the rub right here, folks. That's not a good number. Now again, it tends to go down every January going into February and it turns around for the same reasons I just explained to you about average days of supply. So these are contracts that were written in December. So there aren't very many contracts written in December. So therefore, the sales numbers always plunge. You can see that it does it all the time. Are we gonna turn? We will, I'm sure, statistically. We'll start to come up. Because I saw a jump of about 400 homes per week in what I track. But that's not enough to really move the needle. Here's homes closing over list price and that has dipped as well down to 12%. And it's only happening in the 300 to $500,000 range right here. And the average 19% in the three to four and 11.1. And so that is bidding wars have gone down. Now, there was one other one I wanted to show you here too, sales per month. No, that's not it. Bear with me here. Here's the contract ratio. And again, seasonally it dips. We got down to a low of 27.7 and we have gone up now to 33.6. That's a little encouraging. Will it trend up like it did last year? We shall see. Last year, the rates weren't as hefty as they are today. Monthly median sales price is still climbing. And then so it's, that's a tough one because that includes the upper end is doing very well. So anything over a million and a half is still doing quite well. Although I am seeing some pressure lately that there has to be some price adjustments there as well. If you're between one and 2 million, getting kind of slow or even over two, to be honest with you. Now, some of the news that's coming out right now is showing again, a large percentage of a small number, still a small number. And here it is again. This is single family serious delinquency rates. I read an article that said that it has spiked. Well, yeah, maybe. Let me get out my handy dandy magnifying glass here. It's not much of a spike. It's kind of hanging with last year. And it's still below pre pandemic levels. If you go out here to 2019, which is really right here. So we're right at that same level. So it's not an alarming number. It's not anything that says desperation. Now for you buyers, you're seeing data here that I'm showing you that says that if sellers want to sell, they're going to have to start bringing the price down. But one thing I want you to keep in mind is the sellers that we have out there are not desperation sellers. They don't have to sell. They're not panicking. They're not, many of them are just kicking tires saying, well, let's see if I can get it if I can't. Oh, well, I think we'll see a lot of expireds at the end of March. I think people went out, listed their homes for 90 days and said, you know, let's give it the old college try. If it doesn't work, doesn't work, take it off. And you can hold me to that. The end of March, I think you're going to see that number go from an average about six to 700, probably to 1200, if not higher of listings that expire. That's going to say a lot about the current state of the market. That's going to tell you that the sellers are out there were just giving it the old college try. What does that mean for you? Well, low ball offers are not going to get a lot of attention. The sellers are not in that type of situation. Their mortgage hasn't reset. They're not behind on their mortgage. As far as job losses, there aren't any huge job losses that are forcing people to have to sell their home. There's a few isolated ones, there always is. So if you're a buyer thinking that these numbers are going to be the catalyst to say, oh, they're going to accept my low ball offer right now. I would say probably not. And we're seeing that. We're not seeing a lot of low ball offers being accepted now. That doesn't mean that you don't go in and say, hey, let's see if we can get this, be reasonable. I'm reading a lot too, where a lot of sellers are just rejecting low ball offers. And some of them are predicated on the fact that the real estate agent says, well, this is, I'm sending you this offer and this is as high as my buyer's going to go. So in that case, sellers go, not interested, thanks. And they're rejecting it. Usually I like to look at a low ball offers and invitation to negotiate. But in this case, a lot of sellers are going, ah, you know what, if I can't get that price, I guess I'll just take it off the market. And so that's the market that we're in. Now, as far as interest rates, I don't know. I have no idea, except that we are at a pause. The bond market's really trying to figure out what's going on with this new administration, trying to get some footing. And it's going to be a while before they really see what's going to transpire. And so everything is lined up to stay right where we're at right now, which is lower volume, higher listing count, and interest rates that are staying put. If that's the case, then it looks like we're going to see lower prices going into the end of the first quarter. How low? Not sure. I did see an article the other day talking about top five markets where real estate is plunging. And I think Zillow had us still up 2%. Again, you look at the headline, you got to go in and look at the numbers, what they're saying, because you look and go, oh my gosh, Phoenix is on this list. And I look and go, up 2%, is that plunging? I don't think that's plunging. But it's going to be interesting to watch. So look, if you have any questions, shoot me an email, rick at rickhelps.com. And have you signed up for my weekly newsletter yet? That link is in the description below. Have a great day, take care.