Here's how many Phoenix-area homebuyers are paying above asking price

Here's how many Phoenix-area homebuyers are paying above asking price

By Joanne Drilling

While high interest rates are prompting many sellers to drop prices at a record pace nationally, 19.22% of homes in the Phoenix metro market are still selling above the listing price.

That's according to a new analysis of data from Redfin Corp., which found 32% of homes nationally sold above listing price in October — up 2.7 percentage points from a year ago. In Phoenix, the jump was more pronounced, rising 5.49 percentage points from a year earlier.

A variety of factors suggest the housing market is shifting to give buyers more leverage in many markets. However, prices remain significantly elevated and, in many metros, are still on the rise — just not at the rapid pace of recent years.

In the Valley, homes sold for an average of 98.48% of the listing price in October. The Valley's median sales price of $450,000 is the same as it was in October 2022, but it was up 2.27% from September, according to Redfin's numbers.

Additionally, homes are still selling quickly in a number of metro areas. While Phoenix sales are taking longer than many places nationwide, they aren't taking as long as they used to.

In October, the median days on the market in and around Phoenix was 40. That's down from 52 a year ago. The national median was 34.

A separate October report for the Phoenix metro released late last month showed that sales were up 4.04% year over year. That report, from R.L. Brown, also showed new homebuilder permits had more than doubled from one October to the next.

The national housing picture

While nearly one-third of homes sold above list price nationally in October, some metros posted significantly higher totals.

That includes Rochester, New York (72%); Hartford, Connecticut (70%); and Buffalo, New York (65%); which had the highest percentage of homes that sold above list price.

Among major metros, Cape Coral, Florida (10%); West Palm Beach, Florida (11%); and New Orleans (11%) had the lowest percentages selling above list price. In general, several of the Sunbelt markets that had significant spikes in pricing during the pandemic are now among the metros with the lowest share of homes sold above listing price.

Nationally, homes are selling at an average of 99% of listing price.

Housing's 'missing middle'

These trends come as no surprise when coupled with Business Journals' analysis of recent Zillow data showing the number of ZIP codes requiring a six-figure income is on the rise.

Sustained sales well above listing prices coupled with high interest rates and ever-increasing salary requirements continue to account for what’s now called the “missing-middle.” The term is in reference to the dearth of housing that falls between traditional single-family homes and midrise apartment buildings, and includes duplexes and townhouses.

The concept “missing middle” was coined by architecture and planning thought leader David Parolek in 2010.

“When we originally framed this concept, we were primarily thinking of it as a way to emphasize the growing demand for walkable living (and) living in walkable neighborhoods. And over the last five to seven years, in particular, it's shifted,” Parolek said in an interview with the Business Journals’ Ashley Fahey last month. “I originally was focused on the higher-value real estate markets like the Bay Area or Seattle, but it's now a concept that's being applied and discussed in every corner of the country, including smaller rural communities, because they're having housing-cost issues just as much as the bigger cities and the regions.”

But putting Parolek’s theories into action has proved difficult in the face of exclusively single-family zoning in communities across the country.

In 2019, The New York Times found in some American cities, more than 75% of residential land is zoned for single-family development only. 

Efforts to reform those zoning policies are often sparking intense debates between those who prefer single-family housing and those who want to see more affordable options in their communities.