Loan Assumptions, Rate Buy Downs, and Incentives More Choice For Buyers: Supply is Up 22% in 10 Weeks
For Buyers: The 4th quarter is here, and this is the best time of year to be a buyer in Greater Phoenix! Inventory continues to rise, up 22% in 10 weeks to be exact, and price reductions typically peak in October and November. Most sellers listing in October are motivated to close on their homes before the end of the year, but few are more motivated than builders.
New homes make up 22% of active MLS listings and 29% of Maricopa and Pinal County August sales. Builder incentives are including not only closing cost assistance, but select upgrades and significant permanent and temporary rate buy downs.
First-time home buyers may feel like the difficulties they’re facing in today’s housing market are unique and unprecedented. However, high rates like today bring out tools and opportunities for buyers that only emerge when the market is stressed, and they disappear when the market recovers. Baby Boomers, considered to be the wealthiest generation today, didn’t have it so great when they were in their 20’s and 30’s. In the midst of building their careers, growing their families, and purchasing homes, the economy experienced 4 recessions, 4 rounds of high unemployment, and mortgage rates that soared over 10 years from a low of 7% to 18%; it took another 10 years to get back down to 7%. During that time, home sales were low but home values did not decline, similar to today.
It’s highly recommended, especially today, to consult with a Realtor® and a lender who is fully aware of available loan programs, FHA and VA loan assumptions, seller incentives, down payment assistance, and other tools designed to help you on your way to home ownership and building wealth.
For Sellers: The seller market is weakening in the wake of rising mortgage rates as we head into the 4th quarter. Greater Phoenix is still in a seller’s market, but at the current rate of decline it could see a balanced market by year end. This means that sellers should allow for longer marketing times, improving the condition of their homes prior to listing if necessary, and staying open to funding rate buy downs.
Prices are holding tight and are not expected to decline significantly for now.
Commentary written by Tina Tamboer, Senior Housing Analyst with The Cromford Report ©2023 Cromford Associates LLC and Tamboer Consulting LLC