As I look over the real estate numbers in Arizona this week, I noticed that people are asking on average about 15% more than what houses sell for. In fact, we had 4,427 price cuts last week alone. This is 23% of the 19,225 houses available for sale.
You can see from the average sales price houses are selling for $277.51 they peaked in May at $305.96. So they are currently 9.3% off from their high.
Now here goes the issue. The average price people are listing their house for sale for is $325.15 or about 14.7% too high.
So what do they do? They slash prices. 23% of house prices were cut last week alone. This leads to the next problem. Buyers now know the sellers are “desperate” or at least willing to reduce their price. So they no longer want to pay the asking price. They know they can offer less. This is why we will continue to see prices going down and inventory going up. So there is the main driver of low prices, the FED raising rates, and the secondary driver, psychology.
To confirm you can see the listing success rate is plummeting. It is now back to levels we have not seen since 2010.