The real estate market sure has been keeping us all on our toes these last few years. The last 2 1/2 years have been a great ride for the Phoenix area and many cities across the country but now the tide is turning. From the beginning of 2013 to about Aug/Sept we were seeing very low levels of inventory. In the last couple months the inventory has increased but buyer demand is down. There is a theory that because investor activity is down, there is a current slow down in the market but we never saw much investor activity in the areas of Tempe, Gilbert, Peoria, Fountain Hills, Cave Creek and Chandler so why are these areas being affected?
As an example, let’s look at single family homes in Fountain Hills. There is certainly an extreme lack of demand for single family homes in Fountain Hills right now. There were just 14 pending listings as of October 31. This is the lowest number of pending listings we have ever seen in Fountain Hills going all the way back to January 2001. Normally we should expect to see some 40 or 50 pending listings at this time. The monthly sales rate on October 31 was just 22. We have to go back to February 2009 to find such a low sales rate. Demand has clearly collapsed in Fountain Hills, with the sales rate down 29% from this time last year and the pending listing count down 70% in the last 12 months. But Fountain Hills has never received much attention from investors, let alone institutional investors. In September 2013, 90% of purchases were by owner-occupiers (split 15% as second homes and 75% as primary residences). Only 10% were purchased as investments. In September 2012, investors purchased 14% and owner occupiers accounted for the other 86%.
Investors have such a small share of the overall market here in Fountain Hills that they could stop buying here completelyand we would barely notice. It takes a fall in owner occupier demand to cause the sort of effect we are now seeing.
This still leaves the unanswered question: why is owner occupied demand in Fountain Hills at so weak? Fountain Hills is normally a popular spot, and there is no doubt that it will continue to be for years to come, especially with out-of-state buyers. Let’s see what 2014 brings when we reach our peak selling season in Fountain Hills which usually occurs between Feb- May
If you are looking to purchase a home, this may be a perfect opportunity as we are no longer in a seller’s market here in Fountain Hills.
I would love the opportunity to get to know you and your family and help you with whether you are looking to buy or sell a home. You can contact me anytime with your questions.