Although demand is lower than we would like to see, it seems that some buyers are sitting on the sidelines waiting for prices to drop, and other buyers feel that they should make low-ball offers. This is not an effective strategy in today’s real estate market in Scottsdale and Phoenix. Here are 4 reasons why.
1) Sellers are not desperate this time around. When the market crashed in 2007/2008, many sellers were desperate to sell because they were at risk of defaulting. Today, Arizona has one of the lowest default rates in the nation.
2) Sellers are not competing with distressed properties. During the Phoenix area real estate market crash of 2007/2008, 70% of all listings were distressed properties, according to the Cromford Report. Today, only a small percentage of properties are distressed properties – in fact only 4.8 % of all listings in Scottsdale as of June 10. As a result, traditional sellers are not competing against deeply discounted properties, and therefore don’t need to discount their own properties.
3) The market may actually be improving for sellers. The number of active listings in Scottsdale has fallen 6% in the last month. The decrease in supply is good news for sellers as it means less competition, and improved negotiating power. Seasonally, demand falls somewhat in the summer, but so far supply is falling more than demand.
4) Sellers seem to be doing well in price negotiations. Across Maricopa County and all property types as of June 10, homes sold within 97.06% of their list price, according to the Cromford Report. Since that number is an improvement over the long-term average of 96.88%, low-ball offers must not be succeeding. This is the same for Ancala, and for other nearby neighborhoods here too.
The market fundamentals are a lot healthier than in 2007/2008, despite lower than normal levels of demand. Buyers should think hard about sitting on the sidelines or making low-ball offers in the current real estate market in Scottsdale.
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