Historically, the real estate market in Arizona cools down in December and heats back up January through May. This December was no different.

We are BACK TO BALANCE! In November we fell into a full-blown buyer’s market and stayed there for a few weeks. The Cromford Market Report notes the market has shown strong signs of recovery and we are now in a balanced market that is neutral to both buyers and sellers.

However, buyer demand is heating up and if this continues, the pendulum could swing back in favor of sellers during the typical Arizona selling season this spring.

December Recap

• The shift from a buyer’s market to a balanced market is noticeable with the number of price reductions in December being the lowest amount since May.

• Nearly half of all transactions in December had the seller paying a portion of the buyer’s closing cost with the median amount coming in around $9,300.

• Median sales price in Gilbert dropped slightly over November and was just about flat to December 2021.

• The rapid rise in inventory levels we saw in the summer/fall months tapered off in December falling 20% from October.

• Homes in Gilbert are taking 20% longer to sell than they did last month and a whopping 131% longer than they did last year.

• Since most leases are 6-12 months, rent prices are a lagging indicator of change in the market. We are now starting to see median rent prices decline slightly. For a 1,500 sq ft rental home, prices went from $2,010 in December 2021, up to $2,100 in August of 2022, and down to $1,965 in December 2022.

• Foreclosures could indicate a major shift in the market so we’re keeping a close eye on those. As of now, foreclosures are still well below pre-pandemic levels.

So, what does this mean for you if you are looking to buy or sell a home in the near future?

Buyers currently have very little competition. If you are planning to make a purchase in the near future, you may want to start the process before the selling season picks up at the end of January. This may give you more time to view properties, less competition when submitting an offer, and more leverage when negotiating.

If you are planning to sell your home in the near future, I would recommend getting it ready to list now and having it on market between January and March to give it time to be exposed during our biggest selling season of the year. Historically, 25% more homes sell between April and June than in the summer and winter months.  If you’re thinking about selling your home, contact me and I’m happy to discuss the process or even provide a complimentary market analysis to see what your home may be worth.

2 Kitchen Layout Trends That Are On Their Way Out

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At first glance, features like open shelving may seem more like a design choice than a layout-related one. But today’s trendiest kitchens conceal a lot of their components for a clean and continuous appearance, explains Brandy Aguirre, a licensed real estate agent in the metro Phoenix area. Think: Floor-to-ceiling cabinets, or breaking away from the popular format of putting the microwave above the stove and instead stashing it away in a built-in cabinet — but that’s just the start, Aguirre says. 

“One of the biggest kitchen layout trends I see over and over again on new-build homes, luxury homes, and freshly remodeled homes are hidden features such as built-in refrigerators and dishwashers that blend in with the cabinetry,” Aguirre says. 

Other hidden features include cabinets meant to hide trash cans and electrical outlets added under the cabinets and inside of drawers, she says.

And while the open shelving has enjoyed a good run, it’s tough to manage IRL.

“A few years ago, open shelving made its way back to kitchen design. When displayed in a model home, or one that’s not lived in, open shelving can look stunning,” she says. “However, unless you are Marie Kondo and keep your home ‘show ready’ all the time, these open shelves can be stress inducing. With open shelving, there’s no way to hide the faded Ninja Turtle cups your kid won’t let you toss.”

Brandy Aguirre donates 500 meals to United Food Bank for every home sold. 

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This past weekend in the East Valley, temperatures were in the high 90s and Elijah Aguirre felt inspired to help people cool off. He thought a lemonade stand would be a perfect way to help his neighbors beat the heat and with the money he raised, he wanted to help feed his neighbors too.

Encouraged to volunteer through his catechism class at Holy Cross Church, he donated the $54 dollars he and his sister, Layla, raised from their lemonade stand to United Food Bank. To help raise money, Layla took to dancing, specifically “flossing,” to reel in customers. Elijah put on a big smile and waved to neighbors passing by. 

The giving didn’t stop there; Elijah, Layla and their mom, Brandy, came in to volunteer with United Food Bank this Wednesday and Thursday, spending their fall break building emergency food bags to help feed their neighbors. Brandy, a local real estate agent, donates 500 meals to United Food Bank for every house she sells… No wonder her kids are so altruistic!

Home Prices Fall and Listings Soar: Could It Be a Great Time To Buy Despite High Mortgage Rates?

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More homes for sale and fewer buyers are helping to empower the few home shoppers out there, who can now hold out for a bargain. And sellers are caving: About 19.6% of all homes for sale were forced to reduce their asking prices to attract buyers in November. And while there likely won’t be an end-of-year buying bonanza, a few intrepid buyers might just score some deals.

“What does all this mean if you are looking to buy a home?” asks Aguirre. “That you’ll have all the leverage for negotiating with sellers. More sellers are willing to pay a portion of the buyer’s closing costs or pay money toward buying down their interest rate. Sellers are dropping prices an average of 3% off the list price—that’s $15,000 on a $500,000 home.”

And in addition to straight-out cash savings, Aguirre finds sellers are willing to make repairs and accept offers contingent on buyers selling their current home. And perhaps most importantly, sellers “no longer ask the buyer to make risky moves such as waiving the appraisal contingency.” (A contingency is simply anything a buyer or seller must do before closing the deal.)

So despite climbing mortgage rates, not all home shoppers need to sit on the sidelines wondering why they didn’t snag a home when rates were low. Instead, they should use their negotiating position with potential sellers.

“If you didn’t buy last year, you can’t go back in time and buy,” advises Hale. “You need to consider what’s possible now.”

Demand is low!

Active listings in the Greater Phoenix Area have grown 187% (6,433 vs 18,467) since November 2021 and 340% (4,197 vs 18,467) since April 2022. From August 2021 to April 2022 the active listing count was stable with few changes. But in April that quickly changed when interest rates started increasing.

Single-family building permits are down 53% from October 2021 and is the lowest monthly total we’ve seen since 2015. Furthermore, the year-to-date number is even more shocking. The number of single-family permits issued this year is lower than the 10 years spanning from 1996 to 2006. Because of this significant decline in building permits, we are expecting another shortage in supply if the interest rates drop, and demand improves.

Currently, only 2 of the 17 largest cities in Maricopa County hang on to a seller’s market, Scottsdale and Fountain Hills. The only city that rests in a balanced market is Paradise Valley and the remaining 14 cities have slumped into buyer’s markets and show weak demand, including Phoenix, Glendale, and Gilbert.

Three months of inventory is a healthy number in Arizona, and we are currently just shy of this at 2.7 months. My only doubt about this seemingly “healthy” number is the fact it was driven by the historically quick rise in interest rates. As soon as interest rates drop, I wonder if the buyer’s frenzy will be right where it was earlier this year?

The average time it takes for a home to sell now in the Greater Phoenix Area is 59 days. This feels like homes are lingering on the market compared to the short 25 days it took to sell in the past year, but 59 days is right on par with the healthy housing market we had in 2017-2019. The current days-on-market is much lower than the last buyer’s market in 2014 when homes took 84 days to sell and even lower than in 2008 when homes took 131 days to sell. Not to mention that historically, homes take longer to sell in the last quarter of every year in Maricopa County so we may expect this number to improve in the Spring due to the seasonal nature of the real estate market in Arizona.

Due to diminished demand, the listing success rate has fallen to 61%, meaning 1 in 3 homes will fail to sell. This may sound like a scary number but it’s actually the norm. For reference, back in 2006 – 2009 when the market crashed, the listing success rate was a measly 21%. So instead of every 1 in 3 homes failing to sell, only 1 in 4 homes that were listed successfully sold.

With the demand falling prices are adjusting back to familiar territory. In November, sellers received 97% of the list price when selling their homes, which was the average from 2012 – 2019. Another way to look at this is that buyers saved 3% off the list price compared to last year when they were paying 2% over the list price, on average.

So, what does all this mean if you are looking to buy a home? It means you have all the leverage for negotiating with sellers! Nearly 47% of transactions in the Greater Phoenix Area had seller concessions in November, with the median concession being $9,000. Back in May of 2021 only 10% of sellers provided concessions and the median was just $3,000. This means more sellers are willing to pay a portion of the buyer’s closing costs or pay money towards buying down their interest rate. As stated earlier, sellers are dropping prices an average of 3% off list price. That’s $15,000 on a $500,000 home! I’m also finding many sellers are now willing to make repairs, accept offers contingent on the buyer’s selling their current home, and no longer asking the buyer to make risky moves such as waiving the appraisal contingency.

A recent client dreamed of a new build home but had been priced out over the past few years. With low inventory, lot premiums, lotteries, and bidding wars, they just couldn’t compete. With the shrinking demand, builders now have incredible incentives they were able to take advantage of. The price for this brand-new home was dropped $60,000 with a much lower interest rate. The builder also paid the closing costs and included upgrades such as natural stone counters, front and back landscaping, a smart home system, and window coverings throughout the home, all of which are typically upcharges for new build homes. Many builders are now offering interest rates between 4-5% when most people are at 6.5-8%.

One-by-One, Most Cities in Greater Phoenix Succumb to a Buyer’s Market
44% of October Sales Involve Seller Paid Concessions to Buyer

For Buyers:

Greater Phoenix as a whole has been in a balanced market since August, but is expected to glide into a buyer’s market by mid-November. Buckeye, Maricopa and Queen Creek entered a buyers market in July. Surprise, Chandler, Gilbert and Tempe followed in August. Goodyear, Peoria and Avondale joined in September with Mesa and Goodyear falling in line by October. Phoenix is expected to succumb this month within a matter of days. The only holdouts remain in the Northeast Valley cities of Paradise Valley, Fountain Hills, Cave Creek and Scottsdale.

The 2022 peak of price was achieved in May, which was the result of contracts accepted in late March and April. Starting in June, sales prices revealed their decline in response to mortgage rate increases. At the end of October, the decline in average sales price per square foot since May was recorded at -9.1%, but still positive year-over-year at +5.7%. The largest declines happened between June and July at -4.5% and between August and September at –3.6%.

Mortgage rates have stabilized between 7.0-7.3% for the past 6 weeks, all of October and November-to-date, and continue to keep buyer demand low for now. This provides an opportunity for buyers as more sellers agree to contributing to closing costs and rate buy-downs. October sales saw 44% of sales involve a seller contribution to the buyer at closing, with a median contribution of $7,400. Closings in the first week of November showed a median contribution of $9,000.

The tricky thing is that these seller-paid concessions are not recorded with the sales price. It’s common to see a buyer offer a higher price in exchange for closing cost assistance or a rate buy-down. This tactic can make the sales price measures appear to drop slower or even stabilize as the cost to the seller increases underneath that number on the settlement statement.

The flaw in waiting for the market to bottom out before purchasing is that no one knows they’re buying at the bottom when they buy there. The bottom, or top, of the market does not become apparent until 3-4 months after the contracts were written. By the time most buyers figure out that the market hit rock bottom, they’re too late to the party.

For Sellers:

While the environment has turned quickly away from a seller’s market to an impending buyer’s market, and the cost to sell has increased significantly for sellers, most are still walking away from the closing table with a profit.

While most reports are focused on short-term price drops since May, or smaller year-over-year appreciation rates, appreciation rates for homeowners who have owned their home for at least 2 years are still impressive. Approximately 65% of MLS listings, excluding new construction, have been owned for 2 years or more. Appreciation rates based on sales price per square foot through the MLS are:  2 years: +33.6%, 3 years: +59.9%, 4 years: +68.1%, 5 years: +84.8%.

Fewer sellers are opting to sell in this market. Since the tipping point in June, weekly accepted contracts have fallen 36%, counterbalanced with a 34% decline in weekly new listings. Historically, October typically adds about 10,000 new listings to supply, but this October was the lowest recorded at just 7,334 new actives plus 188 in Coming Soon status, a record low for the month. This has caused supply to stagnate over the past 4 weeks and is a small relief for existing sellers.  When supply self-regulates in response to lower demand, it puts less downward pressure on price. Not to say prices will not decline, they will, but it would be worse if supply were also rising. Contracts written in November and December will close in January and February next year. As Greater Phoenix glides into a buyer’s market this month, year-over-year appreciation rates are likely to turn negative in 2023.

Generally speaking, neither sellers nor buyers prefer to engage in real estate during times of uncertainty. Dramatic fluctuations in mortgage rates combined with insecurities surrounding inflation and unemployment have pressed pause on housing decisions for many sellers and buyers alike, for now. If mortgage rates drop, they’ll get off the fence.

Commentary written by Tina Tamboer, Senior Housing Analyst with The Cromford Report
©2022 Cromford Associates LLC and Tamboer Consulting LLC

JAW-DROPPING HOME IN PARADISE VALLEY

Everything about this home is bigger and better than any other home I've toured yet! 

When I said I haven’t seen a home like this yet, I meant it! This luxurious home built in 2015 by Santorini checks every. single. box. ✅

📐 6,798 Sq Ft

🛏 6+ Bedrooms

🛁 6.5 Bathrooms

🚗 8+ Car Garage

🏡 1 Acre Lot

📍 Paradise Valley, AZ

Offered at $6,500,000

This truly stunning home showcases a 400+ bottle temperature controlled wine wall, a chef's kitchen with premium appliances, a butler's bar, several fireplaces throughout the home, and 6 ensuite bedrooms. The primary suite boasts a spa-like bathroom with a steam shower, oversized freestanding copper bathtub, dual water closets and dual walk-in closets. 

Need space for your toys? This home has it! The attached 4-car garage is climate controlled and has plenty of built in storage. The detached 4-car garage has loft storage and is lift-ready for a potential to park up to 8 vehicles! You'll also find a circular drive in the front of the home as well as gated RV parking on the side of the home. 

The resort style backyard was made for entertaining! With an impressive outdoor kitchen that features a Chicago brick pizza oven, a Beadcrete pool with Baja shelf and raised heated spa, being in the backyard feels like you're on vacation. With a 1-Acre lot the backyard is sizable with plenty of space for the 420 Sq Ft casita, sports court, and lighted batting cages. 

Contact me for more information or to schedule a private tour of this spectacular estate. ✨

Listing courtesy of Urban Luxe Real Estate 

Watch the video above for a full tour!

October 2022 Real Estate Market Update

While median sales prices have dropped $80K since the peak of the market in May, it’s still up 4.81% over October 2021.

On average, homes in Gilbert are selling for 2% less than list price.

Sellers are now paying a portion of the buyer’s closing costs in 41.5% of transactions in Gilbert, up from just 10% in April.

The average time on market before going under contract is now 53 days. This might sound shocking compared to 19 days back in May, but 53 days on market was the norm for the last 6 years prior to the pandemic.

With many homes still having positive equity there has been no significant movement in foreclosures. We are still well below pre-pandemic levels in Maricopa County.

Would You Buy Your Home on TikTok?

Forget Zillow. There’s a new online tool to help find (or sell) your dream home, but there are pros and cons.

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TikTok’s algorithm is personalized to each user’s interests. If buyers continue to search for home listings and interact with those posts on the platform, more related content will be recommended on their account.

Brandy Aguirre, a real estate agent in Arizona, says the reach of some of her posts has been surprising, and it exposes her listings to a massive audience. She says she loves showcasing her personality and connecting with clients by using humor in her videos.

“I’ve had videos that have had 100,000 to 1.6 million views and so many others that only had 100. But even the videos with only 100 views are valuable considering the time it would take me to get myself in front of 100 people if I were door knocking or making phone calls,” Aguirre says.

Brandy Aguirre Among Top 30 Realtors To Look Out For In 2022

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Buying a real estate property is a daunting experience, thankfully, realtors are there to make this experience a real breeze for both beginners and seasoned buyers. They not only take the pressure off your shoulders but also offer their insightful advice so that you can make educated decisions about your investment options.

However, that's not all realtors are for, they are the new driving force in the real estate industry who are revolutionizing the market and bringing waves with their knowledge and expertise in the area.

Brandy Aguirre is a residential real estate advisor in the Phoenix Valley with Engel & Völkers Gilbert. At the beginning of her career, Brandy recognized that to truly be an expert in her field, she had to possess deep knowledge and understanding of the communities that she would be helping her clients with.

The light bulb moment, according to Brandy, was when she realized that all the time spent driving around and previewing homes to familiarize herself with the various neighborhoods in the market she served could be captured on film. These feature videos have helped educate people, both locally and those relocating to Arizona from other states, to familiarize themselves with their prospective communities. Her work can be found on multiple platforms, including YouTube, Instagram, and Facebook. Her sense of humor and wit has earned her an ever-increasing following for her comical short videos on TikTok.