Arizona Market Predictions 2022-2023: How to survive the market
December 3, 2022
Shamile Botzman- Psy. D, SFR, E-PRO, CCIM
Agenty CRE-By Cluff RE
The overall cost of living in the Valley has risen higher than the United States average according to National Study data. So, what is happening with inflation in our state and how will this impact the Arizona housing and real estate market?
Homes that were becoming dramatically unattainable just a few months ago suddenly are becoming within reach as the housing market goes through a dramatic correction. In some popular markets like Phoenix, home prices are adjusting amid an increasing inventory, the result of which is sellers being forced to revisit their pricing, listing strategy, concessions, or even amenities to include in the sale to stay competitive. As a seller, you may have missed “the peak” but that does not mean you are out of luck when it comes to locking some promising terms for the sale of your home.
First, let’s check some important financial facts:
According to The Mortgage Reports and Fannie Mae Q3 forecast, Interest rates reached a point they haven’t seen in over 20 years. The average 30-year fixed rate mortgage increased from 6.94% on Oct. 20 to 7.08% on Oct. 27, according to Freddie Mac. It marks the first time breaking the 7% barrier since April 2002.
We see a relentless pattern of inflation creating upward great pressure on mortgage rates. This continues to generate higher borrowing lending/borrowing costs, a clear reduction of home buyers demand, and the inevitable reduction of housing price growth.
According to Fannie Mae “Mortgage rates will move up closer to 7.5% in November leading to 8% in December. Even though inflation has slightly ease, continues to elevate by record. In the meantime, rent prices — accounting for 38% of the consumer price index — will continue to climb as people may need to rent for longer due to facing one of the hardest recessions in the last four decades.
Bigger banks like Morgan Stanley and Goldman Sachs are predicting housing bearing numbers to fall between 7% to 10% by the end of 2023, expecting home pricing growth to stall completely and average 0% in 2023- according to their report by Wall Street Journal.
Top strategies for Listing and Buyer’s Agents:
Our experts on the housing Cromford Report note that active listings are up 152% compared to the same time a year ago. Cromford reports show sellers lowering the prices often and taking offers below asking prices.
Tips for sellers:
- Do Not Overprice Your Home
We understand that you want the most value for your home. Trust your real estate professionals to aggressively price your home based on your neighborhood comparable. The longer your house sits, the harder it will be to get it sold
- Adjust Pricing Based on Conditions- TLC.
In a shifting and volatile environment like our current housing market, is not time to test the waters. If you know your roof needs repairs, and you do not have the funds to do so, please adjust your pricing upfront and note it on the remarks.
- Offer The Buyer’s Agent Reasonable Compensation
Usually, a seller’s agent will split a commission and compensate the buyer’s agent on a home for sale.
The days of offering agent’s reduced commissions are over. Compensate your agents fairly, and your home will sell faster with a higher incentive. Many ethical agents will show all properties available to the market. Just remember that a higher incentive will always move a property faster.
- Choose An Agent Wisely!
Hiring your friend or family member is a thing of the past. Ensure that you find a high pricing agent that knows your area. Agents that have more than a digital marketing strategy or just flashy advertising are required to get something sold in this market. Hire a professional real estate advisor with all proper legal, lending, and financial resources as a team for advice. Both buyers and sellers are currently entering into potential assumable loan transfers, highly requested concessions, modifiable terms, and other carry back products to navigate our challenging housing costs and rates.
- Do Not Overprice Your Home
Shamile Botzman is owner and founder of Agenty CRE- Powered by Cluff Re Brokerage. She is a multiyear and nationally recognized as a Commercial Broker of the Year and Residential Agent of the Year by many organizations. As an investor herself and owner of both short-term and long-term rentals across the state she recognized the importance of having an expert guide you in this process.