Why is the housing market in Phoenix Arizona sluggish? Buyers are growing resistant to higher home prices. Home Prices. They will wait till they drop. They are willing to sit back and wait till prices adjust. Home affordability is the issue.
Buyers are pushing back against higher home prices, according to the latest Credit Suisse monthly survey of real estate professionals. Overall, agents in 37 of the 40 markets surveyed in September reported lower-than-expected buyer traffic, up from 31 markets in August.
Too Much, Too Fast?
Some housing analysts are concerned that the sudden rise in home prices could make homes more unaffordable again if the price increases outpace income growth.
“Many buyers have shifted from a negotiation mindset toward a willingness to sit on the sidelines and wait for lower prices,” according to the survey. “The resistance of buyers to higher home prices was broad-based with comments from agents suggesting that affordability and the future trajectory of home prices was a particularly large part of conversations with buyers.”
The median price of existing-homes has risen by 25 percent in the past five years to $219,800 in August. The median price of new homes has increased even more, up 33 percent, to $275,600 during that time period.
Real estate professionals in several of the largest housing markets are complaining about lackluster growth heading into the fall. For example, the Credit Suisse report showed that in Phoenix, Ariz., many real estate professionals report that housing demand is being challenged by sluggish job growth. They say many sellers have over-priced their homes and are unwilling to negotiate. In Atlanta, real estate professionals blamed dropping buyer traffic on the lack of quality inventory.
“To purchase a house you have to have confidence in the future and the buyers are very uncertain about the future,” the Atlanta agents surveyed said in the report.
Even in Dallas, where the housing market is strong and more buyer traffic has been reported since the spring, real estate professionals say low inventories are hampering growth. Dallas real estate professionals are “relying on new builds much of the time but even that inventory remains low,” according to the survey.
In Houston, another strong market, agents reported that relocation activity has slowed in September, but the market there is returning to normal levels after more than three years of price increases and high home sales.