If you’re looking to purchase a Phoenix home, there’s one piece of advice to keep in mind: be patient. It’s unclear whether or not the housing inventory shortages that are plaguing large parts of the country will ease anytime soon, but as prices continue to rise, more home owners are likely to feel comfortable listing their homes for sale.Zillow’s Chief Economist Stan Humphries adds, “The supply of for-sale listings continues to dry up, driven in part by potential sellers trapped in negative equity and home owners that won’t sell out of fear they won’t be able to find a suitable home to buy later. But the impact of constrained inventory will create the solution to the problem. Over the past year, inventory tightness has contributed to increases in home values in many markets.”It’s a chicken and egg situation, to be sure. Zillow says that the number of homes listed for sale on their site fell 17% in February year-over-year, but by the same token, home prices are up. February asking prices were up 1.4%, marking the largest monthly gain since the real estate recovery began. Additionally, the pace at which inventory is declining has dropped off dramatically, giving prospective buyers renewed confidence that they will be able to find the Kierland home they’ve always wanted.What’s interesting is how inventory issues are affecting different price points in the market. The greatest annual decreases in inventory were among the most expensive homes with inventory declines of 20.5% year-over-year. By contrast, middle-tier homes saw 17.2% reduction in inventory levels, and bottom-tier homes fell 9.1%. What’s more, the current drop in inventory was less severe than in January, which could signify that inventory issues are leveling out to some degree.
Humphries continued, “As home values rise, some home owners will be freed from negative equity and able to list their homes, which will contribute to an easing of the inventory crunch. While this inventory is coming, it may still be a frustrating spring for buyers vying for what inventory is available. It’s important to be patient and not commit to paying beyond one’s comfort level in the heat of negotiations.”
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