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Experts say cool down coming in Phoenix real estate market

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PHOENIX — As the Federal Reserve continues to raise interest rates, local experts say the frenzied Phoenix real estate market is cooling.

Christopher Martinez moved from Seattle to Phoenix in May.

After renting for a while, the seller bought his first house on the market for 10% more than the list price.

“The lowest offer was basically that high!” Martinez said.

Competition for homes at the time was so hot, he says, that his estate agent submitted six offers simultaneously in a single day. If you get hit, he says, there’s no reason to hold back.

“Basically, when I got a callback, I had to reply within a day,” says Martinez.

Sindy Ready is a board member of the Arizona Association of Realtors and has been involved in Valley real estate for 22 years.

“We’re definitely not in an unbursting bubble,” she said.

But Ready says the market has changed dramatically in the last three months due to the Fed’s rate hikes.

“About three months ago rates were in the 3x range, now they are in the mid 5x to 6x range and there are rumors of more,” she said. “That’s slowing the market down and it’s our inventories that have caused the change.”

“Three months ago we were at an inventory level of about 3,500 to 4,000 total homes in the market across the Valley, and that’s condos, mansions, everything,” she added. Single-family homes are hitting the market in the Valley.”

Ready says it’s still pretty low compared to normal stock levels.

“We see around 35,000 houses in the normal market every day. There is still a shortage. There are still not enough houses for the number of people who want to buy in the area,” she added.

However, as inventories increased slightly, sellers allowed prices to plateau, says Ready.

“This is not going to be a situation where prices drop significantly, it’s going to be a small fix,” she said.

The price adjustments, she says, will give buyers more choice.

“We’re back in a situation where there might be a little bit of room for negotiation.” “In the old market a few months ago, every time a house was sold, the next house was another $10,000 more, and he was another $10,000 more, and it was crazy,” says Ready. .

“So it’s not that the market is collapsing, it’s fixing itself. We’re in a more normalized market that’s still good for sellers, but the reality is that buyers are more normal. Now we have a simplified scenario: someone who is not a cash buyer can actually buy a house, before, you pay the price you want, you don’t ask for repairs, whatever the seller wants, Sellers have got a little more say in what they do with their sales,” Reddy said.

Instead of slashing prices, sellers would close deals in other ways, she said.

“Buyers are having a hard time because they can’t buy many homes because interest rates are going to be high. So instead of lowering prices, sellers are offering to cover some of the cost of buying at low interest rates. Through lenders, it helps them, and for sellers, it’s all about what they get,” Reddy said.

Ready says tremendous growth in Phoenix is ​​still outstripping supply, so modern buyers like Martinez needn’t worry about falling prices.

“We are becoming known as a high-tech destination. 303 and I-17 at the north end of town has a Taiwanese chip factory that affects the entire north end of town. We are very lucky to live in this area, and it is a great opportunity to own a property,” she said.

Martinez says he’s happy to be a homeowner in Phoenix, even though the price has dropped since he bought it.

“We are very pleased that Phoenix as a market and as a growing city will become a very safe place to own real estate,” Martinez said.

Ready believes the market remains strong.

“It used to be, but over the last few years we’ve seen 29% and 31% increases every year, so it’s very exciting to see a 6% increase,” she said. .

“Don’t be afraid to enter the market now. You can still get a great return on your investment,” she added.

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