Over the past couple of years PHOENIX REAL ESTATE PRICES have been rising at an unbelieveable rate, like a hot air balloon. The hotter the air, the higher the balloon. Over the past 3 months, real estate has gone from a white-hot seller's market to a slight buyer advantage. It turned almost over night about 15 weeks ago. Inventory started going up and demand was dropping. Sales were dropping and time on the market was increasing. The hot air in the balloon was turning cold. Over the last month, prices have started to drop. Many sellers have decided to put their houses on the market hoping to cash in on the high prices before its too late. Although the prices are still about 13% higher than last year; prices have dropped almost 5% in THE PAST MONTH.
Will the balloon fall enough for hopeful buyers to enter the market again? This is not likely anytime soon. Many buyers have already moved into rentals because purchasing a home became out of their reach. Prices, interest rates, and corporate competition locked them out of the market.
Institutional investors are now showing signs of liquidating their inventory. Some are selling properties at a loss.
Sellers are beginning to "Chase the market". Chasing the market means prices are falling faster than seller is reducing their prices. Price reductions are becoming commonplace.
The catalyst for buyers re-entering the market may be interest rates dropping. Unfortunately, interest rates are on the rise to stem inflationary pressures and no one can predict when this will stop.
The balloon is coming down. How fast is still to be determined.
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