By Holly Henbest, Realtor

Over the last few months, we’ve seen many headlines regarding real estate that frankly just aren’t true. So, let’s dig into a little bit of reality versus headlines.

To start, there have been articles about the increase in foreclosure sales, because bank-owned sales (sales by banks after a home is foreclosed) are up 333% from June 2022 to June 2023. Wow! That’s a huge percentage increase, but the increase in real numbers was three homes in 2022 versus 13 homes in 2023. A huge percentage increase but only 13 total homes. Considering the number of homes in Maricopa County, 13 is not a number to fret about.

Next, comparing June 2022 to June 2023, overall MLS sales are down 19%, but a big chunk of that drop is related to reduced investor buying. Normal re-sale buying was only down 13%, but new construction buying was up 7.4%. So, the overall drop in buying activity is in the investor categories.

To further explain, iBuyer’s (see below) have all shown a decrease in homes being bought and sold:
• OfferPad (down 76%)
• OpenDoor (down 56%)
• Redfin (down 100%, but they actually only had four homes in 2022)

Additionally, institutional investors are down 88%, wholesale transactions are down 42%, and for sale by owner sales are down 53%.

This is a lot of news about how sales are down, but the question is, why? There are a number of reasons, but one of the main reasons is that 60% of mortgaged properties in the United States have a mortgage with an interest rate below 4%, and the owners have equity in their home, creating a situation where homeowners are inclined to stay in their home and wait to see if interest rates come down to ensure better affordability of their mortgage payment on a future purchase.

If sellers are staying put, there are fewer homes to buy/sell, resulting in the iBuyers and institutional buyers having less to grab. Plus, and this is the big plus, sellers want to make the most money possible, and selling to an iBuyer, an institutional buyer or for sale by owner typically nets a lower sales price. When one sells to an iBuyer, one is paying for the convenience of the sale by selling the home for less. Sellers, of course, want to capture as much profit as possible, so they are calling Realtors instead of iBuyers to list their home for sale to ensure their home is marketed and sold for the most potential profit.

We’ve also seen headlines about big banks like JP Morgan Chase, Bank of America, Goldman Sachs, and others reporting big loan losses. When we hear loan losses, we typically think that means home loans, but it doesn’t. Much of these losses are credit card loans and commercial real estate loan losses, but not home loan losses. This makes sense in as much as we have seen commercial real estate impacted by COVID and more people working from home and more online shopping. Hence, a downturn in office space needs and retail shops. However, there is some news that commercial real estate is having a comeback and will become more stable soon.

Pricing is always a headline hot topic and we’ve seen a lot about home prices coming down. Again, let’s look at the data in Maricopa County for June 2023:
• The re-sale median sales price was down 3.3% from June 2022 but up 1.6% from May 2023
• The re-sale median sales price has risen five months in a row and is now up 7.1% from the low point of January 2023
• The new home median sales price is up 3.7% from a year ago, and up 2.4% from last month

As always, when it comes to the value of your home and the real estate market, the most important market to know is your own specific neighborhood. Looking at nationwide data or even county data may be insufficient. If you want to know specifics about your neighborhood, please let us know and we’re happy to answer any questions.

*Data from the Cromford Report

Holly has been a Desert Ridge resident since 2000 and has been a Realtor since 2006. She is the leader of The Henbest Team with Realty One Group. Holly is ranked in the top ½ of 1 percent of Realtors in Arizona and is a certified luxury marketing expert. She has been ranked #24 in the Top 50 Realtors by the “Phoenix Business Journal” for the past several years and recognized by “So Scottsdale!” magazine as a Real Estate Superstar for 2019, 2020 and 2021. She’s also been the #1 ranked realtor at Realty One Group/North Scottsdale for the past several years. Learn more at henbest.com.