Phoenix-area seeing homes staying on market longer, selling for less in 2023
PHOENIX (3TV/CBS 5) -- Brenna Rizzuto is about to put her north Phoenix home up for sale. She should get a reasonable price, but it won’t be as much as she would have made listing her house last year. “I do understand that I am not going to have people beating down my door, not going to get as much as I might have six months or a year ago,” said Rizzuto. “But I am okay with that.”
The Valley’s housing market has taken a dramatic turn. Instead of homes selling in record time with multiple offers, properties are staying on the market longer and going for less money. Valley realtor Bobbi Jo Lee with EXP Realty said the turnaround is directly related to rising interest rates. In January 2022, the interest rate for a 30-year mortgage was around 3.2%. By November, the interest rate was up to 7%.
Higher interest rates can add hundreds of dollars to buyers’ monthly payments, making homes less affordable. “I definitely think the higher interest rates have kept buyers away,’ said Lee. “People are just waiting to see through the holidays and through the election to see where the market is going.”
According to the Arizona Regional Multiple Listing Service, home sales are down 45% in the Phoenix metro area from Dec. 2021 to Dec. 2022. The decrease in demand, however, does have some perks. Real estate expert Shelley Sakala with The Sakala Group said the slower market has given buyers a chance to be more selective and demanding when they make an offer. “We’re seeing buyers now that are able to make some demands,” she said. “They’re getting some concessions, asking for closing costs, asking seller for rate buy down, which is very helpful as far as interest rates go.”
Sakala said she’s also encouraged that home prices have remained strong, despite the drop in demand. She says homeowners can feel good knowing rising inflation has not dramatically impacted home values in and around Phoenix. “I think the biggest misconception is that home values have plummeted, and they really haven’t,” Sakala said.
According to ARMLS, the median sales price in the Phoenix metro area is now $415,000, but what’s the outlook for the Valley’s housing market in 2023? Tina Tamboer is with real estate market tracker The Cromford Report and said a lot depends on whether interest rates go up or down. “There’s no indication we’re in a bubble or close to a crash, and even if the country slips into a recession, we should be able to weather the storm,” she said.
“In any single recession going back to 1975, the mortgage rates have come down every single time,” she said. “If there is one that is called, we would start watching mortgage rates to see if they start going down. If that happens, we could get back to affordability a lot faster than people expected.” A slow housing market also impacts other services like lenders, escrow officers, appraisers, home inspectors, and handymen. Tamboer said all are working less than they would if more homes were being sold.
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