By Mike Bodeen · 3 August 2024
Next week we’ll be picking up our discussion about the most monumental change in the “practice” of residential American real estate history that begins this month – the New Agent Reformation of real estate buyer’s agents, and the kick in the pants buyers will find themselves getting.
This week, however, we’ll bring you up to date on our local market. The timing of all this is, to me, amazing.
Overall, according to the Cromford Market Index, (see chart) the Phoenix Metro Market is a balanced market, meaning in short, neither buyers nor sellers are favored more than the other. And as I mentioned in our report a few weeks ago, the market doesn’t feel very balanced, since all of 2024 has been dropping from a seller’s market.
But with two brief exceptions, Phoenix Metro has been a seller’s market since June of 2009 – 15 years!
Ahh, but which direction from here Realtor Mike?
While mortgage rates have remained stubbornly in the high 6% to 7% range, prices are now dropping and more than is being reported. Seeing the continued drop might normally cause me to say we’ll continue to go in that direction, but I think a reversal is in the cards.
Here’s why.
Mortgage rates have been dropping and are now firmly in the 6% range. At the end of last week, the labor department reported that the unemployment rate rose to 4.3%. This pretty much assures that the Fed will begin to drop rates next month.
Then on Friday, the stock market reacted to recessionary fears and the Dow shed 600+ points, the S&P and Nasdaq got really roughed up as well. But even before the unemployment rate news was reported, rates were already dropping.
As rates continue their drop, this will kick-start more buyers to start their home search in earnest. And why not, prices are dropping and sellers are in the mood to get their home sold.
The result of that could (will) tip the balanced market back in favor of a seller’s market. The intensity of that pace is not known but could be substantial.
So look for a short term lagging of price drops, slightly out of balance favoring buyers, but then a reversal that will happen with continued mortgage rate drops.
But the most important question I have wonders what kind of a market buyers will find themselves in?” Buyer’s agents, (to borrow Dorothy’s great line), are not in Kansas anymore. That world is forever changed.
And that’s the segue to the Realtor New Age discussion we begin with next Monday!
Stay tuned and hold onto your seats.
Mike Bodeen
Market data referenced in this article comes from The Cromford Report.