The folks at the Cromford Report are helping us understand what to expect in the real estate market in the fourth quarter. Here it is, straight from the Cromford’s mouth:

For Buyers:
­The price reductions keep coming. In October, when mortgage rates hit 7.0%, the Greater Phoenix housing market responded with 4,427 price reductions, 24% of all active properties in the MLS. At least 50% of those dropped their price by $12,000 or more.

Closing cost assistance is expected to continue to rise into the 4th quarter as mortgage rates continue to stay high and stifle demand for the time being. Aside from paying the buyer’s costs for title insurance, pre-paid taxes, insurance, lending fees, and other closing costs, seller-paid concessions can also be used to buy down a buyer’s mortgage rate, if applicable, and ease the pressure on their monthly payment.

For Sellers:
The 4th quarter is expected to be a test for sellers as mortgage rate hikes have reduced contract activity to levels not seen since 2008. Frankly, it’s not the best time to sell if you have a choice in the matter. Unlike 2008 however, most sellers today do have a choice and those without an immediate need to sell have chosen to wait. This is reflected in some of the lowest counts of new listings coming on the market recorded at this time of year going back to 2001.

Fewer new listings is a ray of hope for existing properties on the market. If new listings are trickling in and new buyer contracts are trickling out, then overall supply does not spike and cause further downward pressure on price. Thus keeping the market in a delicate balance for now.

Prices hit their peak in May, shortly after mortgage rates hit 5% and before they peaked over 6% in June. Once that happened, buyer demand dropped dramatically and the reflection in prices started to show a trend downward. Now rates are near 7% and sale price per square foot is down 9.6% over the course of 4 months, currently measuring less than 1% higher than January 2022 and representing the elimination of appreciation achieved from January through May.

Finally heading into the 4th quarter, expect marketing times to increase as they typically do this time of year. Median days on market prior to contract was 31 days last week. From October through December, active days prior to contract is known to rise anywhere from 44 to 56 days historically, with 50% of listings going longer.

The key words for sellers in this “new” market are condition, price, concessions, and patience.

Few home owners are aware that the methane gas industry (under the misleading marketing name of “natural” gas) forces you to subsidize their expansion to new homes.

It’s called a line extension subsidy, and new home developers get it to cut down the cost of installing methane gas to new homes. Methane gas is 80 times more potent as a greenhouse gas over 20 years than carbon dioxide. So, we need to focus on electrifying homes if we want to avoid the worst of climate change.

You can read about it on this blog or this video about the subsidy

But why should you, as a homeowner in Arizona care about this subsidy? Well, in addition to the climate change issue, Southwest Gas Corporation is going in front of the Arizona Corporation Commission right asking to be able to charge customers 11.4% more on their gas bills.

Methane gas is not only volatile, in that it explodes, but also a volatile fuel in terms of price. Just look at the price of gas around the world right now due to the war in Ukraine.

But if you don’t have gas in your home, why care? Simple, the more we use gas, the worse it is for the climate, but also the gas infrastructure that transports gas from Texas to Arizona is notoriously leaky and sometimes explodes. It contributes to the record-breaking bad air quality in Phoenix.

As a home owner, you can reduce your carbon footprint, save money and clean the air by electrifying your home –in other words ditching the gas appliances for high tech gadgets like heat pumps and induction stoves.