This time of year is fascinating to me because I have a working theory that changes to the market are easier to see in November and December when the market is at its weakest. A little a bit of underlying strength or weakness that would be hard to notice during the high season, might be visible during the weaker, low season market.
Mike Orr of The Cromford Report ($300/yr for MLS members only) had a great summary comparing January 1,
The most surprising numbers to me were;
- Monthly Sales (all home types and locations) – Down 9.7% from previous Dec
- Active Listings (homes for sale in the MLS) on Jan 1 – Up 3.8% from previous Jan 1.
- Under Contract Listings on Jan 1 – Down 16.7% from Jan 1, 2018, and the lowest on Jan 1 since Jan 1, 2008.
The much lower number of listings under contract this January 1 compared to last January 1 virtually assures that closed home sales in January this year will be significantly below January last year.
The big question is whether the number of homes going under contract in January 2019 will
I think it’s part of a larger trend because the monthly number of homes sold
New Phoenix Real Estate Market?
If home sales are down around 10% again in January, that would suggest to me a huge change in direction for the market compared to a year ago. And, since the number of listings under contract on January 1 was down 16.7%, sales being down around 10% in January as a whole would not be at all surprising.
At this point, I guess the big question is whether the number of homes that go under contract in January bounces back, meaning home sales themselves would bounce back in February.
Given the declining number of home sales, the only thing preventing the supply of homes for sale from skyrocketing has been that the number of new listings hitting the market has also declined
If, however, some home sellers last fall noticed a bit of weakness in the market and decided to wait until the high season (Jan-Apr) to put their homes on the market, the inventory of homes for sale would increase unusually rapidly during the high season. The number of homes listed for sale always skyrockets Jan-Mar, so, it can be hard to determine whether the skyrocket is higher or lower than normal.
Mike Orr wrote, “Clearly buyers are unenthusiastic about buying homes compared with just a few months ago. Sellers are not showing much enthusiasm either, coming up with fewer new listings than last year.”
I still expect Phoenix home prices to increase in 2019 but not nearly as much as the ~6% we saw in 2018.
Homebuyers. If you’re thinking of buying a home for personal use, I don’t know what to say right now except to go slow and don’t buy anything you wouldn’t be happy living in for at least 10 years.
Investors. If you own some investment properties, I’m feeling more and more confident that we may hit the cyclical top in 2019 and think you should sell any investment properties you don’t love or any investment properties you bought more for appreciation than cash flow. If you bought it for cash flow and it’s cash flowing well, and you want to hold it forever, that’s great. But if you were considering selling in the next few years, I’d seriously consider selling in 2019.
If you manage the property yourself and you’re looking for a recommendation and referral to a good agent in your part of town to help you sell the place, email me at John@JohnWake.com.
See also these recent posts;
What am I missing? Let me know in the comments below.
2 Responses to Phoenix Real Estate Market – Jan 1, 2019
I do not think your missing anything at all. A very concise summary of the current situation. Spring will be interesting but my personal thoughts are that we have seen the top and inventory will increase while demand is low and prices will come down. I already see many reduced prices for homes sitting on the market. I do not see a crash but maybe a few percent price drops over 2019 followed by stagnation unless we see a recession which would see a decent 20% or so fall.
We’re on the same wavelength. I’m thinking it’s more like 1989 than 2006.
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