By Mike Bodeen · 8 November 2021
We have a sort of mixed bag of news this week and a brief report about the iBuying giant Zillow getting out of the iBuying business and what that might mean for the market. But first, October’s numbers:
CURRENT (Nov 1st) MARKET NUMBERS
Active Listings: 7,777 vs 8,682 last year – down 10.4% – up 1.7% vs 7,649 last month
Under Contract Listings: 12,834 vs 13,081 last year – down 1.9% – but up 10.8% vs 11,578 last month
Monthly Sales: 8,765 vs 10,019 last year – down 12.5% – and down 6.6% vs 9,383 last month
Monthly Average Sales Price per Sq. Ft: $262 versus $207 last year – up 26.4% – and up 4.0% from $252.14 last month
Monthly Median Sales Price: $415,000 vs $332,000 last year – up 25.0% – and up 1.2% from $410,000 last month
Active listings continue to rise, up 1.7% from last month. Notably, the Monthly Average Sales Price Per Square Foot (PSF) rose 4% from last month. Along with the obvious appreciation, it could also mean the sales of homes are of less size, which could also increase the PSF. The median sales price rose 25% from one year ago.
Under contract listings are down almost 2% from last year, but rose a healthy 11% from last month, reversing what was trending lower, showing that the slow march to a balanced market may have slowed further, though it could be a brief hiccup.
“Home prices do not go down when interest rates rise. Home prices do not go down just because they have gone up. What goes up must come down is a saying that relies on gravity. There is no gravity involved in home prices. Home prices go down when supply exceeds demand. With supply as low as it is at present, demand would have to collapse far below normal. Instead, demand remains well above normal right now and appears to be on the rise.” The Cromford Report
GIANT iBuyer ZILLOW THROWS IN THEIR iBuying TOWEL
You’ve seen their ads on TV and online. We write about them periodically, but the iBuyer playing field just got smaller due to Zillow ceasing national operations. Not only that, but Zillow over purchased and badly miscalculated ROI so badly that now they are looking to sell off 7,000 (nationally) homes. Read the article here.
iBuyers (Instant Buyer) are companies (large and small) who buy low and sell high — well supposedly. They’ve been around for a long time, but corporately, for just a few years. You may recall in the past seeing yellow signs with bold handwritten-like print around town saying “We Buy Ugly Houses!!!” This is actually a large company (I think franchised) that like their larger corporate competitors offer a homeowner a cash price for their property with a quick close. Other’s in this field include Opendoor and Offerpad.
These companies have not folded, but are hardly profitable in a corporate sense. What little success they’ve had is due in large part to price appreciation. As appreciation cools, what small profit margins these companies are having will dry up.
Will a slowing of iBuyers make a difference in our Phoenix Metro market? It’s possible. Even though they have at best around 5% of our local sales market share, if there is a decrease in their competitive buying, that might be a help to regular buyers, such as first time and move-up buyers.
There will always be a place for buyer entities/individuals to strike a deal with a seller to get a house at a significantly reduced rate which could be a benefit to a seller. Convenience, after all, does have its value — but the tradeoff is $$$. Read the article here.
Market data referenced in this article comes from The Cromford Report.