Where Have All The Buyers Gone?

Here we are in mid July and the softest part of the market this year. This is typically the peak of our market here in the greater Phoenix area. What is happening? The amount of listed homes per week is way down. Unfortunately, the number of homes purchases per week is following the same pattern and is at the lowest level since the year 2000. Remember about 300,000 homes have been built here in the Phoenix Metro area since 2000.


We started the year with so much promise; February was awesome and was showing signs of a pending recovery with strong home sales. Then the sub prime fall out in March took us out of recovery mode. But we persevered and our market was looking good into the 3rd week of May. What now? Higher interest rates were the next culprit to home sales. It is amazing to see how sales follow interest rates here in Phoenix. The valley is a very interest sensitive area. That was followed by too much negative press. The general public is aware we have not hit bottom yet.
I must say, the signs are there that a bottom is near. Why do I say that? Well in 2005, everyone was talking about making money in real estate; the quick flips. Now, most everyone is talking about the declining market. This is a contrarian indicator.


Here we are, what do we do? I want to say first of all that I don’t make the market; I only do my best to interpret the market. I don’t think our market is crashing, but the bottom is still in front of us. When will we reach it? That will actually occur differently in each part of town and neighborhood by neighborhood. It is all about supply and demand, plus a return of the buyers. So, if you are a motivated seller (one that wants to sell in the next 12 to 18 months), then stick to the basics. First, keep it clean and staged well. Fix repair items and showcase your home for the buyer. Second, be very cooperative in showing your home, make it available. Third, this market is all about price. You need to have the best selection for the best price, so the next buyer chooses you. Check your comps, not the sold comps those are too old today. Anything over 30 days from COE is too old. The Pending comps and your competition are where you get your best direction. What other choices does the next buyer have? BE THE BEST CHOICE.
How do you know if you have a proper price? The only way to know if you’re priced right is to see how your price is influencing buyers. Remember, about 90% of buyers in the Phoenix area are searching on-line prior to viewing a home in person. The internet is great, but it has created some problems. We can only look at how many of those buyers were motivated enough to get out and actually go to your home and view it. What we expect today is an average of 1.5 to 2 showings per week. If you are not getting that, then your home is over priced. One may say it is not the price, but yes it is; if no one is coming it is price. If you are achieving the showings, yet not selling, then you have to review what the buyers’ feedback is about your home. This is difficult; it takes a lot of time and effort for agents to get quality feedback from other agents. The difficulty is for a listing agent to reach a buyer’s agent. They rarely return phone calls and most do not give out their cell number. Once reached, most agents will give fair feedback about your home, especially when their buyer is not interested in purchasing it. Follow the direction of the feedback with reason and adjust accordingly until your home sells.


Remember as a home seller you want to “lead” this market, not “chase” the market. A quick example of that is as follows:
Say the most recent comparable sale for a home was 60 days ago and it sold for $400K. A good agent reads the market and directs the seller to list the home for sale at $380K. However, the seller lists home at $400K. 30 days later seller says, OK take me to $380K, but the market has already adjusted to $365K. The seller feels they have lowered and should now sell. This repeats several times and the seller is down to $350K, they feel this is it this is a great price. But until the seller jumps out and “leads” the market they will continue to “chase” the market down and loose more and more equity.


These numbers are only used as an example to convey the meaning of “lead” vs. “chase” the market. However, I have seen this played out over and over again in our market.
One may ask how I know if I am leading or chasing the market? That is what a qualified Realtor is for. No one really knows what the value of any given home is right now in a declining market. But a home that is properly staged, given access to the market and priced reasonably is where we start. From there it is a manner of gauging the activity and feedback, then responding properly. We continue this process until the home sells. It is a very difficult process because there are always exceptions to the rules. Remember a home is a very emotional and subjective purchase. However, today’s buyer is pretty savvy and has VALUE on the mind.
Many people point out to me that the average prices are not down. I agree with that statement. The average price has stayed fairly level. It is the product mix that has changed things. More homes are selling in the $500,000 to $1,000,000 and higher price ranges. This causes the average to stay constant during price declines. So, another way of saying this is that prices are down, but there are more homes selling in the higher price ranges.


If you or anyone you know is even considering buying or selling a home, call The Cameron Team and get the best representation. Know your market before entering it! I am in the process of creating a blog to record market information for access at anytime. I hope you all find it useful.