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Glen Creno
The Arizona Republic
Metropolitan Phoenix's home-selling frenzy is beginning to calm and beleaguered buyers suddenly have more power in the fight for leverage in house deals.
The housing market is showing clear signs of slowing after a yearlong buying binge fueled partly by speculators. The latest evidence: The price for a typical Valley house fell last month for the first time in nearly two years.
People close to the market say it has a new personality. Sellers aren't necessarily calling the shots and can no longer assume a house will sell quickly after buyers stage a frantic bidding war, pushing sale prices thousands of dollars beyond the list price.
Buyers now are gaining the upper hand, though it's too soon to call it a buyers' market. But it is headed in that direction. With more homes for sale, sellers are cutting prices. Buyers also can take more time to think about a deal rather than snatching up a house just to beat a dozen competitors.
"There shouldn't be any panic," said Neil Brooks, a Century 21 agent in Scottsdale. "We're not blowing up. We're just getting into a more normal market."
The typical Valley resale home cost $259,900 in October, down from $263,000 the previous month, according to the Arizona Real Estate Center at Arizona State University Polytechnic. That's only a 1 percent decline, but it is the first such drop since December 2003. Even at the lower level, the price still is 44 percent higher than in October 2004.
The difference between those two figures accounts for the split in opinions among sellers. Some are listing their homes with the expectation of capturing the jackpot prices of the peak. But market watchers say other sellers understand that a shift has taken place and have adjusted their strategies.
"People who bought homes in September likely bought at the peak," said Jay Butler, director of the Arizona Real Estate Center. "But this dip isn't cause for alarm. The market is just getting back to normal."
Kim Seiferth and her husband, John, listed their Cave Creek house for $685,000 just a couple of weeks after a neighbor sold a similar house for $675,000. That seemed reasonable at the time, but they didn't know the market had changed in their neighborhood.
The couple has reduced the price a couple of times, and the house now is listed at $639,000. They're selling so they can move to northern Arizona, and they hesitate to push the price lower. They have invested $60,000 in such upgrades as hardwood floors and custom kitchen cabinets and don't view the house as an off-the-rack loss leader. They declined to say how much they paid for their home, but houses in that part of the city sold from the high $200,000s to the low $300,000s when the couple bought it new in 2000.
"There was a time when houses were selling in a feeding frenzy," Kim Seiferth said. " . . . It almost seemed like people could put a paper sign in front of the house saying, 'House for Sale,' like a kid with a lemonade stand. People were buying houses in this neighborhood without even seeing them. If we had listed it two weeks earlier, we would have been right there with our neighbors' house. Now, there are about 15 houses sitting here in our neighborhood, like stillwater."
Of course, some houses still sell for list price or more, depending on the property, its condition, competition from similar houses and demands of buyers. Owners of those homes still are in position to call the shots.
Negotiation tactics are starting to favor buyers. There are fewer things like no-appraisal offers or non-refundable deposits. Agents are split on whether buyers now can win contingency sales, or deals contingent on the buyers selling their old house before closing on the new one.
Agents also differ on what speculators are up to. Some say these investors sold out and moved early in the summer, searching for cheap houses in places like Boise, Idaho; Dallas; or Houston. Other agents say speculators are selling now, helping account for more houses on the market and sales times that have extended from a week to a month or two.
"What we will see over the next few months is investors bringing their homes to the market," she said. "You can see it now in the multiple-listing service: 'Just reduced.' "
Brett Barry of Realty Executives in the northeast Valley expects to see more foreclosures at the beginning of next year. He said buyers who shoehorned into a house with option adjustable-rate mortgages or interest-only loans will be hit with higher payments after their rates change.
Interest rates are climbing. The national average for 30-year, fixed-rate mortgages rose to 6.36 percent this week from 6.31 percent last week. That's the highest rate since September 2003.
"There are going to be more distress situations than we have seen for a long time," said Barry, calling it an opportunity for bargain-hunting buyers. |
