The Greater Phoenix residential market continues its snail’s pace. We remain short on supply, and occasional downward blips in interest rates have not moved demand—as noted last month, the Phoenix housing market is stuck in a loop. The anticipated interest rate reductions projected by the Federal Reserve may help, although mortgage companies have already built some of that expectation into their current interest rates. In addition, there is some speculation that we will be see only two rate cuts rather than three during the remainder of 2024.
With additional rate decreases, it should become easier for current homeowners to make a lateral move or a move up, which has been unappealing in the past year or so. With lower interest rates, more buyers may enter the market as well—although that could also affect prices.
It is a supply-driven market, and until we see more homes on the market, we will experience more of the same. The lack of inventory gives buyers too few choices—unless they want to step up and pay the price. We are starting to see some pockets where buyers have more negotiability, such as Avondale, El Mirage, and portions of the East Valley, especially areas like Queen Creek where there are new builds. In the overall market, demand is strongest in the $1 million plus bracket, and even more above $2 million, because the buyers don’t necessarily need to borrow to purchase. Arcadia, Paradise Valley, and portions of Scottsdale and North Central remain in high demand and low supply.
What’s the Impact of the NAR Settlement? Too Soon to Tell
We have been getting quite a few questions about the impact of the recent National Association of Realtors (NAR) settlement that has been all over the headlines. The short answer is that the settlement just came out, and no one really knows. In addition to the NAR, the various real estate associations are going to provide different types of guidance for agents, sellers, and buyers.
As initially filed, the lawsuit was going to require that buyers have and pay their own broker. The fact of the matter is that sellers are going to be willing to pay a buyer’s broker to have the exposure on the AZ Multiple Listing Service and to make sure that their property gets shown. In addition, if a buyer needs to pay a commission, it may price them out of the market, particularly in entry-level and move-up housing.
For the time being, we anticipate a lot more discussions about commissions and how they are allocated, and there is likely to be more negotiability. As you can imagine, this is a hot topic. Stay tuned for more details as the situation evolves, and follow the R.O.I. Properties Facebook page for the latest news on the Phoenix housing market.
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