March 20-21

Welcome Back, Weekend Warriors!

This is the Amy Jones Group's weekly newsletter, detailing local events, recent real estate news, and open houses.

This week, we're bringing you five fun-filled events happening around the Valley!

As an Arizona native, I don’t know when Spring officially starts but I do know that I had to manually change the clock on my Alexa, so we must be getting close. Daylight savings time has always eluded me, but figuring out what time it is NOW in OTHER places has always been the signal for good weather, baseball, and more outdoor events here in Arizona than any one person could possibly schedule on their calendar. Covid obviously has left its impact on all of these things except the weather, which now that I think about it, HAS been a little different this year, AND it's been a big player in the real estate market - something else that is typically ramping up to its full blossoming self this time of year. 

And wouldn’t you know it, we’re also marking the one year anniversary of the Feds committing to buying up the mortgage backed securities which was ultimately the beginning of the buying frenzy here in Arizona and across the nation as average interest rates dropped into the low and mid 2s (I’m not quoting rates here, just to be clear). We would ultimately see some fluctuation shortly thereafter like a boat that rocks and sways after a big wave, but for the most part we’d stay in the 2s until this month when we popped up over the 3s again. The intention of course was to ensure that Covid didn’t derail our housing market which was otherwise doing well thanks in part to builders under building nationally (but especially here locally) for the last ten years and population growing nationally (but MORE especially here locally) for the last ten years meaning that we simply didn’t have enough houses for the people who wanted to buy them.

But even as we celebrate, which clearly in Covid times means something completely different than it did a year ago, the one year anniversary of the best interest rates in history and the greatest jump in appreciation we’ve ever recorded (north of 20% in just 12 months) we’re also experiencing a much different market than we were just 6 months ago. Last summer, as we started to see interest rates hold steady and resale options decline in availability, we shuffled all of our ready buyers to new construction - many of whom are actually moving into their houses over the next couple of months (with a ton of equity and gratitude that they masked up and gloved up to look at model homes) because you could still walk into a builder, hand them a check, and pick your house. Today you’ll likely be added to a list, given the option of offering highest and best, or be entered into a raffle - but you won’t be walking into a builder, handing them a check and picking out your house. With the loss of options in new construction, everyone turned their heads back to the resale market and the buyers just started stacking up, literally, ten for every house.

A year ago, being prequalified was important - the market was moving fast and you had to be ready. Today, being prequalified is just part of the winning strategy - you also need to understand escalation clauses, appraisal waivers, and have cash or strategies to leverage cash to pay over appraised value, provide lease backs to the sellers, and really get creative with how you are going to stand out from the ten other offers they’ve received. Why though? But why try so hard? Because with demand so high and inventory so low, YOU will get much of the same windfall of appreciation that they got once you move in. So, how long can this go on for? How long can every sale in a neighborhood be $40K more than the last, how long can a list price be used only as a marketing tool and not an indication of how much a house will sell for or how much the seller even expects to get, how long can everyone exhaust every option they have for every dollar they have just to get into the house? Probably not much longer.

It’s too hard to say exactly when things will change, but we are starting to feel the early breeze and its enough to grab a sweater when you already took it off and on a dozen times as the weather heated up, cooled off, heated up, cooled off, heated up and cooled off again. We’re seeing some slight downward movement in demand - so slight that your neighbors won’t believe it, but it's happening. We are making our way through the people with the $50K in their pocket to pay over appraised value, we have some buyer fatigue, and we’ve got some very well qualified people who can’t compete. At the same time, we are finally starting to see an uptick in the number of listings - we’re years out from having enough for the people who live (or want to live) here but with more listings comes more competition for sellers, with less buyers comes less competition for buyers and so we start the long road to some assemblance of balance.

We’re watching our numbers like a hawk, but as one of the hottest seller’s markets in the valley with just two weeks of available supply and homes selling on average at least 2 percent over asking with many pushing 8-10% over asking - The East Valley will be one of the last to FEEL these tides changing, but they are a changing. While the numbers have only slightly shifted, we’re seeing more active listings than we saw a month ago, less pending listings than we saw a month ago. Less sales per year than we saw in the previous 12 months from a month ago, putting supply up in Gilbert, demand down in the town, and our overall gauge of the market only 6x stronger than your average market. See why numbers are relative? 

The key takeaway is that as you start to see early indications of change, it's often the best time (other than the last best time) to act in real estate. Sellers looking to push their price point should get in on the action while there are less of you to choose from, buyers looking to maximize their first year equity in their home should get in on the action before interest rates go any higher and before appreciation slows to 10% a year (gasp!) instead of 20% a year, and investors should just keep on course - buying properties to rent out as rents are on the incline will continue to be a way to have someone else pay your own mortgage. Which brings me to my last point, if you are paying someone else’s mortgage - let’s find out how not to leave you behind with the rest of the 2020 remnants we are still trying to shake off. 

Have more questions? Give us a call or schedule an appointment below - 

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