I think the main reason for the rapid increase in months of supply in the second half of last year was skyrocketing mortgage interest rates AND iBuyers like Opendoor selling a ton of their houses and buying only a few.
But that was last year. The iBuyers got their inventory of houses they owned down to where they wanted it to be last spring. The jump since September in the Months of Supply of houses for sale isn’t due to iBuyers selling off their stock of houses.
It’s true that mortgage interest rates are higher and that’s a cause.
But mortgage interest rates were headed higher long before September.
Zero Upward Price Momentum
After a year of flattish house prices in Phoenix, we have zero upward price momentum.
After increasing $150,000 per house in just 2 years (January 2020 to January 2022) and all the excitement that created, the Phoenix median sold price of single-family houses increased $0 in the last 12 months (October 2022 to October 2023).
Consumer excitement about future house prices has got to be a LOT lower now than it was a year ago because those 2 years of skyrocketing house prices are now an additional 12 months behind us. It’s becoming history.
The iBuyers are not dumping their inventory anymore so who is selling more now? Investors? Short-term rental landlords? Vacation home owners?
The market psychology may have changed in September. We’ll know in a few months.
On the Other Hand
There’s a report that “the Scottsdale short-term rental market has continued to expand by 16% since 2022, according to AirDNA, a data collection website dedicated to tracking listings on Airbnb and Vrbo.”
Is that a big part of why prices increased in the first half of 2023?
What happens if short-term rental landlords stop buying and start selling?
We’re Back to 2019
Looking at the supply for sale another way, the number of single-family houses listed for sale in the Phoenix area MLS is now just above the same week in 2019, pre-COVID, but is still far less than last year. But last year at this time the number was falling. This year it’s still increasing a bit.
Advice for Home Buyers
Be sure and buy a “10-year Home”, a house you would be happy living in for the next 10 years because if prices do fall for a year or two, you may have to live in it for several years after that before you can sell it and break even.
Click on the graphs to go to the full-size, interactive versions.
Notice how very small changes in New Listings and Solds eventually cause HUGE changes in the number of houses For Sale and house Prices (see graph above).
This information can vary a lot in different parts of metro Phoenix. Your real estate agent can find the data for your specific city or zip code at The Cromford Report.