Has the Housing Market Hit Bottom in Phoenix?

When buying a car or a home, it seems everyone is always looking for the "best deal." Did you ever hear a friend or co-worker tell you they got a "bad deal" when they bought a new car or home?

Just like trying to determine when a stock has hit bottom, it is very difficult to determine exactly when a housing market has hit bottom. By the time it has, a lot of people waiting to get the "best deal" have already missed out on it.

I would tend to argue that our housing market in Phoenix may already have hit bottom. Why you may ask? Well, let me cite some statistics for you and you make your own judgement. And remember, the numbers don't lie.

At the beginning if this year, there were about 55,000 active home listings in the Phoenix metro area. As of today, there are 31,362 active listings and 12,282 pending (under contract). Another 5,764 are active with written instructions or contingencies, which means they have offers but need approval from lenders (short sales) or the buyer has to sell their home, etc. I'm sure you understand the concept of supply and demand; the greater the supply, the less the demand and vice versa. So as inventory drops, there are less homes for buyers to choose from so buyers realize they have to make a decision faster and can't sit on the fence.

And for the first time in a long time, we have started experiencing increases in the average price per square foot. From the end of the first quarter this year on March 31, to the end of the second quarter June 30, the average price per square foot for a home in our area rose $5.75 and from June 30 to July 31, the average price per square foot increased $1.85.

As I've mentioned in previous blogs, we are getting multiple offers at and above list price on homes in the first few days they're on the market creating bidding wars and driving prices up.

So is it a seller's market? I would say it's a neutral market. There's still a decent supply of homes for buyers to choose from, prices remain well below the levels of the last 7 or 8 years, interest rates are still favorable and there's the first time homebuyer tax credit of up to $8,000 if you close by November 30. A first time homebuyer is someone who hasn't owned a home in the past three years.

So if you're thinking of buying or selling, it helps to know what you're up against and what is working in your favor.