Sellers, buyers

This 4,338-square-foot house on N. 24th Street in Mesa recently sold for $1.72 million. The five-bedroom, 3 ½-bath two-story house, built in 1998, has a full basement and recently underwent a $210,000 remodeling. (Special to the Tribune)

Recent reports from the leading analyst of the Phoenix Metro housing market as well as national experts suggest that homebuyers and sellers face a volatile fall.

Neither Cromford Report nor analysts of national mortgage trends are painting much of a rosy picture for either group.

On the plus side for sellers, the Cromford Report said, the average square foot list price per square foot for homes sold increased over August.

While that increase was only from $285 per square foot to $289, the Cromford Report said, “This is not consistent with the idea that the market is crashing.”

On the other hand, the report said sale prices have dropped below final list prices, prompting it to warn this “confirms that sellers’ negotiation power is far weaker than it has been in many years.”

It also noted the four-week trend last month showed square-foot prices for listings under contract had steadily fallen.

The Cromford Report also noted that the trend in successful rates declined to 70.4% in August – “the lowest we have seen for late August since the year 2010.

“Mind you, in 2010 the reading was a dismal 58.1% thanks to all the short sales and pre-foreclosures crowding the market at the time,” it said, but added:

“Any new sellers need to be realistic: 30% of listings fail to sell these days. At the end of March, the percentage was less than 8%. Listing agents now need to focus on marketing instead of worrying about how to handle the deluge of offers in the first few days.”

In its September forecast, the Cromford Report observed, “The market is still suffering the effects of unusually low affordability. Interest rates are much higher than they were at the start of the year and even if prices drop to the level they had in January, homes will still be less affordable due to these higher rates… The small increase in buyer enthusiasm could soon dissipate if interest rates rise again.”

It also saw a decline in the number of “coming soon” listings, prompting it to note, “It is no longer a matter of great excitement that your home is shortly to be listed for sale.”

The Cromford Report also noted that supply “is only rising slowly and even falling in a few areas,” prompting if to remark, “Overall, the picture is less gloomy at the start of September than we expected at the beginning of August.”

But it cautioned that while “demand remains weak,” it also “remains sensitive to interest rate changes” and whatever increase  in demand some areas of the Valley has seen in recent weeks “could easily peter out if rates jump higher again.”

Freddie Mac reported on Sept. 1 that the U.S. 30-year fixed-rate mortgage averaged 5.66% – an 11-basis-point increase over the previous week.

“The market’s renewed perception of a more aggressive monetary-policy stance has driven mortgage rates up to almost double what they were a year ago,” Sam Khater, chief economist at Freddie Mac, said in a statement.

“Sellers are recalibrating their pricing due to lower purchase demand, likely resulting in continued price growth deceleration,” he added.

Khater noted that the rate increase was coming at “a particularly vulnerable time for the housing market as sellers are recalibrating their pricing due to lower purchase demand, likely resulting in continued price growth deceleration.”

Mortgage News Daily seemed to take issue with Freddie Mac, reporting on the same day, “To be clear, the reality is 6.23%. It is derived from the actual rate sets as opposed to Freddie Mac’s survey responses, most of which were received Monday (Aug. 29).”

Marketwatch said buyers are “spooked by higher rates and economic uncertainty” and that they “continue to pull back, based on mortgage application data.”

“Mortgage applications continued to remain at a 22-year low, held down by significantly reduced refinancing demand and weak home purchase activity,” according to Joel Kan, Mortgage Bankers Association vice president of economic and industry forecasting.

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