The Baylon Group September 2022 Newsletter
September 2022
“Autumn is the antidote to stifling summer.” – Terri Guillemets
Seller & Buyer Highlight
In a blink of an eye, we are already in September!
What a blessing this year has been so far!
I wanted to share my gratitude towards everyone who has allowed me to be part of their journey in accomplishing their real estate goals! It is an honor to be able to serve you! I also want to express gratitude towards everyone who has showed me continuous support throughout the year.
Congratulations to our home buyer who has been patiently waiting for the right home and is now under contract on a home for $17,000 under asking in Phoenix in the month of September!
?We are grateful for your continued trust in our team to serve you in attaining your real estate goals!
?A lot of people I talk to are asking if it is the right time to buy or sell their home. I have conversations like this daily and would be happy to share market insights and some tips for your specific situation.
If you would like to get signed up for a free valuation and report of your home sent to you monthly, please sign up below!
Market Update September 2022
August was a pleasant relief after 2 awful months in June and July. The market still moved in favor of buyers but the rate of change dropped significantly and a few indicators actually managed to turn positive. We haven't been able to say that for quite a while.
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The supply of active listings grew during the month by 4.1%, which is a lot better for sellers than the 24.6% we reported in July. By the end of the month the rate of growth of active listings was almost zero. This is largely because we are now seeing a low number of new listings. This is a big change because June and July gave us an unusually high number of new listings.
Demand has also shown a few tentative signs of growth. This is again a big improvement on large declines month to month. Demand is still paltry compared to a year ago but it is slightly better now than it was a month ago. You can see this in the monthly unit sales, pending listings and under contract listings. All are slightly higher than a month ago.
Clearly desiring to reduce its inventory, iBuyer Opendoor has been cutting its list prices fast and furiously. This has attracted buyers and the number of listings under contract with Opendoor has jumped from just 137 at the start of August to 477 at the start of September. This demonstrates that low prices are strong motivators for buyers (well duh!). However it puts a lot of pressure on sellers competing against Opendoor and leads us to expect pretty low average sales pricing in September as these contracts close escrow. The drive to sell and sell quickly is what we saw from the banks during the foreclosure wave. The bank-owned inventory is tiny now, but iBuyer inventory is very large and a strong motivation to reduce it will drive pricing lower. And lower than it would go if iBuyers were not in the market.
The market is still suffering the effects of unusually low affordability. Interest rates are much higher than they were at the start of the year and even if prices drop to the level they had in January, homes will still be less affordable due to these higher rates. The future direction of interest rates is notoriously hard to predict. The last 2 months saw a decline in average 30-year fixed mortgage rates from 5.52% to 5.22% (as reported by Freddie Mac) and a clear drop in asking prices. You could argue that the slight rise in demand we have witnessed is a weak response to both these factors. However, at least it did respond. The small increase in buyer enthusiasm could soon dissipate if interest rates rise again.
Ominously we have seen a large rise in rates over the past week and if they stay at this level, demand is likely to fade again quite quickly.
All in all, August was not too bad, but it might be just a temporary respite due a small up-tick in demand which could easily fade. The lull in new supply may prove to be more long-lasting and therefore more significant. We will have to wait and see.
Market insights provided by the Cromford report.
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