Call Us 480-993-8653

Gilbert Real Estate Market Update Jan 2024

Jan 15, 2024 | Uncategorized | 0 comments

Greetings friends and Happy New Year to you and yours!

 

The Gilbert real estate roller coaster continues to twist and turn into the new year.  Ups, downs, highs and lows, and loop de loops abound as we all try to get our footing and find our bearings.  After reaching soaring heights in 2022 the market has been humbled by equally soaring interest rates and a significant decrease in buyer demand going into the last 2 months of 2024.  November and December presented challenges for sellers trying to make a move as shoppers seemed to pause for the holidays.  This has traditionally been a predictable trend.  Most of us are busier during the holiday season and other priorities can box out the housing moves.  The exceptions were 2022 and 2023 when hyper seller markets full of high demand and low inventory kept buyers focused on trying to acquire that perfect home.  The last quarter of 2023 felt more recognizable as a typical trend.

Of course that begs to question, what happens next? That is always the question isn’t it?  What follows is what I am seeing from my perspective.

 

In December the Federal Reserve indicated that inflation is trending to where they are more comfortable stopping the interest rate hikes that have been in place for the last 18 months and even signaled rate cuts to come in 2024 if all goes well.  That put a lot of steam into the stock market, which seemed to price in rate cuts in advance of the actual Fed action.  That was followed up by a still strong labor market report, which will likely influence the Fed to hold rates or delay cuts.  Most lenders, Realtors and buyers are watching Fed activity closely these days and they try to predict what this all means for buyer demand and housing in general.

 

The December Fed meeting announcements did seem to get the phone ringing and activity on listings ticked up at the end of December and first week of January.  It was not enough to tip the market back to seller advantage.  Inventory is ticking up steadily as builders continue to build and we are seeing more builder spec homes on the market and sales on the existing home market remain slow.

 

Like a large ship turning slowly, we see the prospects for a strong seller market to come in spring of 2024.  Time will tell if that will pan out but if interest rates start ticking down, many buyers that have been on the fence are likely to jump back in.

 

Home prices are also under scrutiny from home buyers and sellers alike.  Increased inventory in the last quarter of 2023 put pressure on pricing.  We saw more price reductions than we have in several previous quarters and days on market were ticking up, then we hit the holiday season.

Buyer sentiment from the folks we talk with shows that buyers are starting to feel pressure to buy sooner than later as everyone expects demand to increase significantly in the year to come.  Decreases in interest rates and renewed migration to the area would put the advantage squarely back to the sellers and many buyers that missed out during the chaos of the last couple of years are starting to feel this is their opportunity to get into homeownership before things go crazy again.

It’s a reasonable assumption, but the reality will be dictated by employment trends and whether or not the economy goes into recession.  Nearly 100% of the times that Fed has raised interest rates to combat inflation, there is some sort of economic recession and not having a recession in 2024 would be a bit unprecedented.  The caveat is most of what the economy has done in the last couple of years has been unprecedented.  Recession of some sort remains likely, the question will be how deep and how long it lasts.

Today there are opportunities for buyers.  While prices have not come down as much as most would have liked for them to, buyers do face less competition in the marketplace and most sellers are ready to make a deal today rather than wait the market out for better prospects.

 

My personal feelings are that if rates start trending down, employment remains at least healthy if not strong, that the sun belt becomes the beneficiary of migration and we see a significant increase in buyer demand.  How long inventory remains as current levels will be tested and if inventory starts to fall again, look out!  We may never see buyer demand like we did in 2022 into 2023, but safe to say the conditions for strong sellers market would likely return.

 

Long story short is that currently the limited buyers out there are at an advantage in most cases.  That is likely to change with movement on interest rates and the moving into the typically more active spring season.

 

Buyers and sellers alike should be taking advantage of experienced professional representation to assist them with their property needs.  We stand with over 20 years of industry experience, ready to assist you or anyone you know that has interest in purchasing or selling residential property here in the metro Phoenix area.  We welcome your questions and your referrals.

 

Until next time,

Mark Newman

0 Comments

Submit a Comment

Your email address will not be published.