10 minute read
Real Estate
Buyers get no relief from tumbling sellers’ position
BY PAUL MARYNIAK
Executive Editor
Valley homeowners who are hoping to sell their house appear to be heading for rocky water, according to several reports last week.
The Cromford Report, a leading analyst of housing market trends in the Maricopa and Pinal counties, said one of the biggest factors threatening to dethrone sellers from the catbird seat they‘ve enjoyed in negotiations for several years is a mix of rising supply and falling demand.
“Demand continues to fall in most areas but the dominant e ect is now the rise in supply, with new listings arriving at a pace that is well above average,” it said, predicting that Buckeye, Queen Creek and Maricopa already are close to a balanced market, where bidding wars have evaporated and sellers no longer can call all the shots.
Nevertheless, the news also doesn’t o er much hope for buyers looking for “moderate” prices. Indeed, the meaning of “moderate” may not be at a new normal in the Valley and elsewhere in the country.
“The upper end of the market is
See MARKET on page 28
This 1,900-square-foot, two-story townhouse on W. Market Place in Sun Lakes recently sold for $572,00, below its $615,000 listing price. The four-bedroom, three-bath house, built in 2017, boasted richly appointed fi nishes with lots of natural light. (Special to SanTan S un News)
Rental scene may be changing – for now
BY PAUL MARYNIAK
Executive Editor
The rental market both locally and nationally is cooling a bit – but analysts said two weeks ago there might not be much reason to celebrate on either front.
Apartmentlist.com, a nationwide rental listing fi rm, said trends in apartment vacancies and rent indicate that more empty apartments are entering the market and rent increases are slowing, but that likely won’t remain the case long-term.
And looking at the Phoenix Metro area, the Cromford Report said that even the limited rental data available on the Arizona Regional Multi Listing Service shows that “though the median lease price has increased over the 12 months, far more listings are leasing below the asking price and far more listings are appearing on the ARMLS database.
“Landlords do not bother to list their properties on the MLS if they expect them to lease up very quickly and easily,” the Cromford Report said. “So the fact that we are seeing a 40% increase in new rental listings compared with 2021 shows us that landlords are less confi dent than they were a year ago.”
Nevertheless, sales of apartment complexes are continuing at a major pace – often at prices that are more than double what they sold for only a few years ago.
The Cromford Report said that in the Valley, nearly three-quarters of the 1,473 leases that closed in May 2021 came in at the asking rental price while 18.3% were below. By contrast, last month saw just over half of the 1,954 closed leases settle at the asking price and 41.6% fall below it.
Still, the median closed lease price last month was $2,200 – higher than the $1,900 median a year ago.
“The rental listings on ARMLS are not a balanced cross-section of the rental market,” the Cromford Report cautioned. “They tend to be skewed towards higher-end properties and single-family homes rather than relatively a ordable apartments.”
“Rental prices have not changed a lot in the last fi ve months and the median lease price seems to have hit a stable patch around $2,200,” it said, adding that the 2,385 vacancies reported on June 5 was up 26% from Jan. 1 and 79% form Sept. 1.
Those trends are similar to what apartmentlist.com reported.
“In Phoenix, for example, rents have increased by just 2 percent over the past six months, during which time the city’s vacancy index has gradually eased back to 5 percent, close to where it was before the onset of the pandemic,”
ApartmentList.com showed this nationwide trajectory in apartment vacancies and rent increases, but said these favorable trends may be adversely a ected by cooling home sales. (apartmentlist.com)
See RENT on page 28
MARKET from page 27
slowing, but to a lesser degree than the mid-range between $400,000 and $1 million,” the Cromford Report said. “Supply below $400,000 remains very low and that segment of the market remains strong.
Cromford said that data from May sales drawn from County recorder records show closed sales dropped 11% from where they were in May 2021 regardless of whether the deals involved new or used houses.
Even so, the overall median sales price in the Phoenix Metro area last month was $490,000 – up 24.8% from May 2021 with the new home median at $500,490 (up 27.8% over May 2021) and the median for resales at $486,000 (up 23.7% from May 2021), The Cromford Report said.
Those Valley price fi gures far exceed the national median sales price of $428,700 in the fi rst quarter of 2022, although that nationwide number is up 30% from $329,000 in the fi rst quarter of 2020. Mortgage rates jumped from 2.75% in the fall for a 30-year fi xed to over 5.25%.
An even more staggering blow to those in search of a ordable homes, according to the real estate brokerage Redfi n is that 8.2% of homes – about six million houses – are valued at $1 million or higher – double what those fi gures were two years ago.
Realtor.com said “Pandemic-era prices, as they currently stand, may be here to stay.
“It is entirely possible that prices level out and just don’t change very much for the next few years,” Greg McBride, chief fi nancial analyst at personal-fi nance site Bankrate.com, told Realtor.com. is still much higher than the $600,000 it would’ve sold for one year ago.”
Meanwhile, both the Cromford Report and MarketWatch.com kept a wary eye on the overall economy and how that might impact the housing market.
MarketWatch said the U.S. housing sector might be heading for the biggest slowdown in a decade, citing Len Kiefer, deputy chief economist for Freddie Mac.
“The U.S. housing market is at the begin-
“This would benefi t fi rst-time buyers by allowing their incomes to ‘catch-up’ to the cost of homeownership somewhat, but this would unfold over a two- to four-year period, not the next two to four months.”
McBride cautioned would-be buyers who hope for a signifi cant price correction: “Sellers have been putting homes on the market and asking for moonshot prices. In a neighborhood where homes were selling for $600,000 one year ago, a seller may now be asking $800,000. Sure, they may need to cut the price a bit and eventually sell for say, $725,000, but that ning stages of the most signifi cant contraction in activity since 2006,” he said, adding:
“I don’t think that home sales are going to grind to a complete halt. They’ll just slow. People will still be able to sell homes, but it may take you just a little bit longer than what it’s been.”
He also was quoted as saying, “It hasn’t shown up in many data series yet, but mortgage applications are pointing to a large decline over summer,” and that mortgage applications already have tumbled 40% from their most recent peak in 2021.
Purchases and refi nance applications are in fact down to the lowest level in 22 years, Realtor.com said.
Mortgage applications as a data point “gives you a sense of where the market might be headed,” Kiefer told MarketWatch, “because that’s the early stages of when people are looking to buy a home. And if the volume of applications falls, that tends to indicate that in a month, month and a half, mortgage originations of home closings will also decline.”
Kiefer expects home sales to henceforth “slow quite a bit over the summer.”
Meanwhile, the Cromford Report called May sales data “worrisome” because of a 16% year-over-year decline in home sales in the Phoenix Metro market.
“This leads me to conclude that the market is serious about this change of direction and the new trend is likely to continue for some considerable time,” it said.
“There are two things that concern me about the sales decline in 2022,” it continued: “It is taking place in May, which in a healthy market should be one of the busiest months for closing
“We are seeing a very steep drop in a short period. In this environment, selling a home is no longer like falling o a log. Showings will be fewer in number and o ers far less easy to get than they were in March. Once buyers realize what is going one, expect them to start fl exing their negotiating muscles. They might even ask for the seller to pay for a home warranty (shocking, I know).”
RENT from page 27
Apartmentlist.com said last week.
“After experiencing signifi cant disruption over the past two years, the rental market has begun to gradually stabilize,” it continued. “The markets that saw large spikes in vacancies in the early pandemic have since seen renters return. Meanwhile, demand has started to level o in the nation’s hottest markets. That said, the availability of vacant units nationally remains notably constrained compared to the pre-pandemic norm.
“Even if our national vacancy index continues its gradual easing, it won’t surpass 6 percent until well into next year on its current trajectory.”
Apartment list also said that the rapid cooling of the housing market may have an adverse impact on rental units’ supply and, consequently, rates.
“There are factors at play which could present headwinds to that easing,” it said. “Although we’re now at the start of the busy season for the rental market, when the bulk of moving activity normally takes place, rapidly rising rents may incentivize many renters to stay put and renew existing leases rather than looking for new ones.
“At the same time, the recent spike in mortgage rates has created yet another barrier to a historically di cult for-sale market, potentially sidelining would-be homebuyers and keeping them in the rental market. Given these factors, it’s possible that the easing of our vacancy index could level o in the coming months.”
In Mesa, six complexes and one condo community changed hands in the last four weeks in deals totaling $459 million.
The biggest deal involved the $142-million sale of the 460-unit Indian Springs Apartments on South Stewart, near Southern Avenue and Alma School Road, by California-based Open Path Investments to Rise48 Equity of Phoenix, according to Valley real estate tracker vizzda.com.
Built in 1985, the complex consists of 25 buildings, three pools and basketball/tennis court, three laundromats and a club house on just under 10 acres.
The sale equaled a per-square-foot price of $723 and a per-unit price of $308,685, vizzda said.
Last week, California-based TIC Group shelled out $125 million for the Talise Apartments, a 388-unit complex, built in 1984, on Gilbert Road and University Drive.
Another big transaction also saw Rise48 Equity buying the 288-unit The Nolan on W. Broadway Road for $92 million. Northmarq Phoenix said its investment sales team ’s investment sales and debt and equity teams represented the buyer.
The sale price was more than three times greater than the $30 million that seller Benedict Canyon Equities paid for the 36-year-old complex in 2018,
The gated complex comprises 18 two-story residential buildings, three pools and a clubhouse on 12.3 acres. Vizzda said the sale broke down to a per-unit cost of #319,444.
Rise48 Equity plans to renovate the interiors of all the units at The Nolan, Northmarq said in a release.
“Rise48 has purchased over 1,000 multifamily units in Arizona since the start of 2022, and over $1 billion in transactions since 2019,” said Brandon Harrington, a member of Northmarq’s debt and equity team. “They continue to seek out well-positioned communities with value-add opportunities through improvements to the individual units and the complex amenities.”
ANIL SINGH (NEIL), REALTOR® HOMESMART MY PRIORITIES AS A REALTOR:
• Listen to my clients needs to achieve the best outcomes inanyrealestatetransaction–buying,selling,findinga home or investment property. • Make the home buying and selling experience stress free; keeping my clients updated and informed during the entire process.
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