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There are far more homes for sale in Phoenix than there are homebuyers, setting the city up to be one of the top buyer’s markets in the country, according to a study from the real estate site Redfin. But is anyone actually buying?
In December, the number of home sellers in Phoenix outweighed the number of buyers by nearly 66%, according to Redfin. That’s the 14th-highest difference among the 50 most populous metropolitan areas in the U.S. There were 30,669 homes for sale that month in Phoenix, the third-most of any city in the study.
Nationally, there were also 47% more home sellers than buyers, which is the largest gap since 2013. That may have less to do with an increase in the housing supply and more to do with a decrease in people looking to buy homes.
“Homebuyers are backing off due to stubbornly high home prices and mortgage rates, layoffs and mounting economic and political uncertainty,” Redfin wrote. “Sellers, many of whom are buyers themselves, are backing off in response to lackluster demand for their homes.”
Other analyses support Phoenix becoming a buyer’s market. The REMAX National Housing Report for December found that inventory jumped 9.8% year over year and new listings jumped 3.9% in the same span. Similarly, the Phoenix Realtors Association said active listings surged to 14,574 in December, a 24.5% increase compared to the year prior.
But does that mean Phoenix is now a buyer’s paradise? Not quite. Rather than cave and drop prices, Phoenix homesellers have been content to pull their homes off the market. Both REMAX and the Phoenix Realtors Association reported that homes are taking longer to sell. The realtors association said homes are sitting on the market for an average of 70 days, which is up from 63 days a year prior. REMAX reported that the average home goes 80 days between listing and sale.
Redfin
“They usually say buyers kick tires,” Scottsdale-based relator Zack Heene said. “For this last couple of years, it’s been sellers doing that.”
You can trace that phenomenon to the pandemic.
Many sellers who have their homes on the market purchased them at lower interest rates or have paid them off completely. Mortgage loan interest rates currently sit around 6%, much higher than they were at the onset of the COVID-19 pandemic. For many homeowners, selling their home already means confronting a higher interest rate on their next mortgage. So, rather than selling below asking, they’d rather take their home off the market entirely.
“They’re not forced to sell, a lot of these people,” Heene said. “They’re stubborn. They’d rather pull the house off the market than sell. And because they have these great rates, it makes it so much easier just to say, ‘I’ll just wait it out.’”
Meanwhile, the unbalanced supply and demand equation does little to force buyers to meet high asking prices. (REMAX pegged the median sale price for a single-family home at $457,500, far beyond the means of most Valley residents.) Just like potential sellers who would have to buy into a new home, buyers are turned off by higher interest rates. While those rates aren’t high in a historical sense, they’re much higher than they were five years ago.
Instead, like their counterparts, many potential buyers are waiting for interest rates to drop. In the meantime, they’re continuing to rent or keep their lower interest rate on their starter home.
“It’s not real high, but for the last five to eight years, it’s high,” Heene said of interest rates. “People that are newer to the market think 7 and 8% is crazy high.”
