Phoenix homebuyers willing to wait it out for more favorable market conditions can expect the tides to turn in their favor by next summer, according to new research.
Home loan provider Knock recently released its Buyer-Seller Market Index. The index used MLS data from the United States’ 100 largest metros to determine whether they are currently in seller or buyer market territory and estimated where each market will be about a year from now.
In July 2023, Knock anticipates that the Phoenix-Mesa-Chandler metro housing market will favor buyers, shifting from its July 2022 ‘neutral’ position on the index. This is a noticeable change in direction from a year earlier when Phoenix’s real estate market was strongly in favor of sellers.
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On a list of the 25 top buyer’s markets in the nation next year, the Phoenix metro will rank in second place overall, one space behind Boise City. At present, Phoenix is the fifth-best buyer’s market nationally as of July 2022, falling behind the Salt Lake City, San Jose-Sunnyvale-Santa Clara, San Francisco-Oakland-Berkeley, and San Diego-Chula Vista-Carlsbad metros.
“After 12 months of record-setting markets for sellers, the national housing market has started to move toward favoring buyers,” stated Knock’s report.
Next summer, Knock forecasts that the median Phoenix sale price will rise to $495,776, up more than $30,000 from the current median price of $460,000. However, properties listed for sale in July 2023 are expected to stay on the market a little longer compared to 2022, with a median of 21 days on the market instead of 19 days.
In July 2023, 4,215 Phoenix homes are predicted to exchange hands, significantly more than the 3,759 properties that were sold in the same month this year.
Housing markets see change in mid-2022
U.S. housing market conditions have started to change as of late.
In July, Knock reported that fewer than 150,000 homes were sold across the nation’s 100 most active housing markets, the lowest monthly sales figure in the last 12 months and a 50.7% year-over-year drop. Meanwhile, national housing inventory increased 6.8% and the median days on market grew 27.3%.
Knock explained that all markets favored sellers at historic levels in early 2022, with the seller’s market index reaching an all-time high for its month in each of the first five months of the year. In June and July, the market fell below monthly historic peaks and towards buyer favorability for the first time since May 2021. However, June and July still rank in the top 20 most favorable months for sellers nationwide since 2017, Knock stated.
“This means that while median sale prices have continued to rise across the nation, overall price growth has started to slow,” said the index report. “At the same time, the number of homes sold and the likelihood a buyer will pay more than the list price are going down. The time it takes to sell a property and the inventory of homes available on the market are increasing.”
In July, housing market conditions in 81 of the 100 largest metropolitan areas continued to favor sellers. However, nearly all 100 housing markets moved toward favoring buyers when compared to the same month a year ago. Median home prices have dropped in 73 of the 100 largest metros since June, a reflection of seasonal trends and growing buyer favorability in the marketplace.
Buyers to see more favorability in 2023, but sellers still have the upper hand
By July 2023, 15 of the 100 major housing markets are projected to favor buyers, and 27 markets are expected to move to neutral territory.
A buyer’s market is established when the sale price-to-list price ratio is more likely to be below one, while the opposite occurs in a seller’s market, where homes tend to sell for more than the list price. Next year, the Austin metro area is projected to have the lowest sale-to-list ratio while Buffalo, N.Y., will have the highest.
“While the national housing market is expected to become consistently less favorable to sellers through July 2023, it is still likely to remain more favorable to sellers than buyers for most of this period, through May 2023,” said Knock’s report.
After bottoming in January 2023, the national median sales price is predicted to keep rising, reaching $425,000 in July 2023. However, the annual price increase of 6.3% would be low compared to recent years.