What’s Going on in the Phoenix Housing Market?
Last July I was asked to write an article on the state of the Valley’s housing market for the North Valley Magazine. I decided to take a look at historical sales activity from 2002 (before the ‘boom’) to the present.
Using data from the Arizona Regional Multiple Listing Service, I showed that the markets for Phoenix real estate and Scottsdale real estate is more out of balance than many would believe. Inventory levels in 2002 ran around 25,000 homes in the MLS, which does not include new construction or For Sale by Owners. In 2007, we’re over 56,000. Furthermore, between May 2005 and May 2006 inventory rose from 9,451 homes to 51,013! Days on market has risen steadily from around 65 in a normal market to around 90 in May. Today that number is over 96, so we still have not bottomed out yet.
Normal sales levels are around 6,300, but in July 2007 only around 5,300 homes sold. Consistent with the law of supply and demand, the increased supply and decreased demand has resulted in a healthy drop in the average sales price.
Not all is negative, however, as a few historical trends should continue to bolster our market. While no one knows for certain what the future has in store for Arizona, more than 5 decades of consistent growth and economic prosperity point to a bright future. Data from the US Census Bureau, the Bureau of Labor Statistics, and the Bureau of Economic Analysis show that Arizona has been among the top states in the nation for more than 5 decades in key indicators – population, employment, and personal income growth. Furthermore, Ariozona has been growing by more than 100,000 new residents per year.
By 2030, Arizona’s population is expected to swell from 2000’s level of about 5.1 million residents to over 11 million, bumping Arizona from the 20th to the 10th most populous state. These statistics support a health housing market in the long term.
I ended the article by proposing what I call the “5 Building Blocks to a Successful Sale in Any Market.”
While most industry experts agree that the long term outlook for the Greater Phoenix real estate market is favorable and balanced, what about today’s home seller? What can she do to cope with the challenges of our market?
I’ve put together a list of five qualities, or building blocks, that any home seller can follow to consistently yield above-average sales results regardless of market conditions. They’re equally-important and just as relevant in a seller’s market as they are a buyer’s market. They are:
Right on pricing: The most accurate way to develop a pricing strategy is to put yourself “in the shoes” of a prospective buyer and visit several homes for sale in your community that are similar to yours. Only after you know how your home stacks up against the competition in terms of features, upgrades, and condition can you price it appropriately. Buyers today visit many homes and can very quickly identify when a home is not priced consistently with other similar homes.
Stand-out staging: You should never open your home up to a prospective buyer until it’s ready to show! Buyers in today’s market are rare and valuable commodities and you will only get one chance to impress them. Whether you lean on the experience of your REALTOR®, hire a professional home stager, or do it yourself, make sure you’ve tidied up, de-cluttered, and made necessary repairs or alterations to prepare your home for sale before you put the sign in the yard.
Aggressive marketing: The goal of any home seller should be massive exposure of their home to as large a pool of prospective buyers as possible. Your marketing plan should include a print component to attract local home buyers, as well as an extensive Internet strategy to attract global buyers. The fewer buyers there are in the market, the more important it is to extend the breadth and depth of your reach.
Diligent follow-up: Every single buyer who visits your home should receive a follow up phone call for feedback the day after the showing. Over time, you may receive consistent criticisms that give you the opportunity to adjust ‘on the fly’ and position yourself more favorably for the next visitor.
Smart negotiating: Many buyers and sellers focus so intently on “getting their price” that they overlook other factors that could mean the difference between a successful deal and a parting of ways. Before you rush to the negotiating table and risk losing a valuable buyer or the house of your dreams, take time to learn what’s important to the other party and compare them to your goals. Once you understand how your interests align, you’ll be in a better position to put together a win-win deal.