Over the past few months, there have been hints of a return to normalcy for the Phoenix real estate market.
After enduring another hot summer with ascending home values, the expectation of cooler temperatures and price moderation could be the perfect forecast for Phoenix homebuyers.
Over the past weeks, a move to the middle has been a national trend in real estate. From August to September, home sales slipped 1.9 percent, according to the National Association of Realtors. The reason for this slight regression has been attributed to rising interest rates and home prices.
These factors, combined with the well-documented shortage of available home inventory, have made buying conditions very difficult. This is especially true in states like California, where affordability for middle class buyers has dipped below 30 percent in several major cities, according to a report from Trulia. Cities like San Francisco (14 percent affordability), Los Angeles (24 percent) and San Diego (28 percent) have priced out buyers looking for homes under $300,000.
Luckily Phoenix is not as tough on middle class buyers (67.7 percent affordability per Trulia), as low inventory continues to be the main issue for prospective buyers. Even better is the prediction from director of real estate at Arizona State University, Michael Orr, who told That Real Estate Show last Saturday that Phoenix’s real estate market could become “balanced” by mid-November.
But what is a balanced real estate market?
The loose interpretation, according to most experts, is that the national housing supply would have to be at six or seven months in order to be considered “balanced.” This means it would take six or seven months to sell all of the homes that are currently on the market without adding any new supply. In Phoenix, a balanced market would be between 4.5 and 6 months, according to Orr.
Currently, the national housing supply stands at around five months. The hope, especially locally, is that a move to the middle will continue to be in the forecast.