In the Greater Phoenix Area, we are seeing fewer homes listed for sale priced under $300,000 compared to same time last year.
There is a 28% decrease in the number of homes for sale priced below $100,000. On January 18, 2014 there were 2270 homes for buyers for choose from as compared to 1628 homes same day this year. We can contribute this to the fact that homes prices have increased but the trend shows up in all price ranges up to $300,000. With inventory shrinking in the lower price ranges, investors are finding it difficult to find great deals to flip. Most of the investment properties you can find on the market currently, are better suited for holding since the return on investment for flipping are considerably low.
As the price range increases, we see a lower percentage drop in inventory compared to last year. and around $300,000 it starts to be a positive change indicating, we are seeing more inventory of active homes for sale.
The highest increase in inventory is a 20% increase for homes priced between $1,000,000 to $1,499,999. Buyers in the price range have a whole lot more to choose from than they did last year.
According to The Cromford Report:
When demand grows it is likely to grow at the bottom end first, creating a shortage. The top end of the market has plenty of supply and this would remain true even if demand were to increase significantly in this segment.
The other implication of this change in the mix is that the average price for active listings has increased a lot since last year even though the asking price of any specific home has not. This effect can lead to a lot of misunderstanding by sellers who can easily get over-optimistic.
Buyers with a budget of $300,000 or more have more favorable odds in of finding a home they love with less competition as compared to those in the lower priced markets.
As a seller in the lower priced market, the chances of selling faster is higher provided the home is priced appropriately taking into consideration location, condition and other factors that affect pricing a home.