Market Summary for the Beginning of September 2023

Here are the basics – the ARMLS numbers for September 1, 2023 compared with September 1, 2022 for all areas & types:

• Active Listings: 11,969 versus 18,694 last year – down 36% – but up 6.5% from 11,241 last month
• Pending Listings: 4,604 versus 5,607 last year – down 18% – and down 4.9% from 4,842 last month
• Under Contract Listings: 7,111 versus 8,419 last year – down 16% – and down 5.8% from 7,546 last month
• Monthly Sales: 6,211 versus 5,916 last year – up 5.0% – but down 1.7% from 6,317 last month
• Monthly Average Sales Price per Sq. Ft.: $282.52 versus $286.71 last year – down 1.5% – but up a tiny 0.01% from $282.48 last month
• Monthly Median Sales Price: $435,000 versus $444,900 last year – down 2.2% – but up a tiny 0.02% from $434,900 last month

Despite comparisons becoming easier with last year, the market still looks in poor shape. We can see that demand is very weak with listings under contract, down 16% from this time last year. The August closing count offers some relief from the gloom, rising 5% from August 2022, but with the 30-year fixed mortgage rate still north of 7%, qualified buyers are thin on the ground.

Sellers are also scarce. Some simplistic commentators are obsessed with imaginary bubbles and assume that if demand is weaker then prices will fall. Not the case. The fact that so many people think we are in a bubble is conclusive evidence that we are not in a bubble. The important measure is the balance between supply and demand, not demand on its own. Supply has been low for several years apart from the brief surge in the summer of last year. This was caused by panic among iBuyers and speculators, both trying to exit the market in too much of a hurry. At the moment supply is down more than demand is down, so prices are firm.

Without a large and prolonged increase in sellers, we won’t have the lop-sided market that causes prices to fall. We do have a small increase in supply compared with last month, but we are still down 36% from this time last year. If supply continues to grow at 6% or more for six months or more, then we could get back close to a balanced market, but now we are seeing just the usual seasonal pattern. Supply tends to expand from August until mid-November and then contract again.

It might seem that prices are weakening given that the median sales price is $435,000, having been $443,000 two months ago. This is a drop of 1.8%. However, luxury home sales are relatively scare in July and August, and we can see evidence of this from the fall in the average home size between June and August. This dropped almost 3% from 2,022 to 1,965 over the same two months, so median prices falling less than 2% tells us the underlying trend is still positive. The luxury home market share and average home size will no doubt bounce back in October and we should be able to see the upward trend reasserting itself more visibly.

HOUSING AFFORDABILITY in Arizona and nationally took another hit in the second quarter of 2023 primarily due to rising home prices and higher interest rates based on the latest National Association of Homebuilders/Wells Fargo Housing Opportunity Index released August 10. Nationally, 40.5% of new and existing houses sold in the second quarter were affordable to families earning the U.S. median income of $96,300. This was down from 45.6% in the first quarter, but still better than the fourth quarter of 2022 which was the lowest recorded measure (at 38.1%). Housing affordability was lower in all Arizona metropolitan areas for the second quarter of 2023 after increasing across the board in the first quarter of the year. In descending order, the share of affordable homes in Arizona were 60.8% in Sierra Vista-Douglas, 54.4% in Yuma, 41.7% in Lake Havasu City-Kingman, 38.6% in Tucson, 30,1% in Phoenix, 27.3% in Flagstaff and 23.5% in Prescott Valley-Prescott. House prices increased in nearly all Arizona metropolitan areas in the second quarter, with only Flagstaff and Lake Havasu City-Kingman posting slight decreases.

Check out my website which is full of information and a special feature called “Neighborhood News” “the best way to stay connected to what’s happening in the real estate market in your area”.   Also, you can search real time listings in any area of the market.  Check it out and stay updated with my daily blog, monthly market reports and so much more.  My Website–Find Your Dream Home

If you’re considering selling or buying, give me a call to discuss your situation and current market conditions.

I love referrals! Please remember me! Thank you, Shawn, your realtor.

• Active Listings: 16,298 versus 5,776 last year – up 182% – but down 14.9% from 19,155 last month
• Pending Listings: 3,657 versus 6,539 last year – down 44.1% – and down 15.0% from 4,301 last month
• Under Contract Listings: 5,456 versus 9,393 last year – down 41.9% – and down 14.1% from 6,352 last month
• Monthly Sales: 5,132 versus 9,265 last year – down 44.6% – but up 4.1% from 4,931 last month
• Monthly Average Sales Price per Sq. Ft.: $265.58 versus $267.92 last year – down 0.9% – and down 2.5% from $272.30 last month
• Monthly Median Sales Price: $410,000 versus $425,000 last year – down 3.5% – and down 2.4% from $420,000 last month

• Active Listings : 15,598 versus 4,876 last year – up 220% – but down 4.3% from 16,298 last month
• Pending Listings: 5,109 versus 7,798 last year – down 34% – but up 40% from 3,657 last month
• Under Contract Listings: 7,810 versus 11,302 last year – down 31% – but up 43% from 5,456 last month
• Monthly Sales: 4,346 versus 7,098 last year – down 39% – and down 15% from 5,139 last month
• Monthly Average Sales Price per Sq. Ft.: $267.82 versus $274.42 last year – down 2.4% – but up 0.7% from $266.01 last month
• Monthly Median Sales Price: $410,000 versus $433,500 last year – down 5.4% – but unchanged from last month

Market Summary for the Beginning of March

Here are the basics – the ARMLS numbers for March 1, 2023 compared with March 1, 2022 for all areas & types:

• Active Listings: 14,739 versus 4,588 last year – up 221% – but down 5.5% from 15,598 last month
• Pending Listings: 5,911 versus 8,333 last year – down 29% – but up 15.7% from 5,109 last month
• Under Contract Listings: 7,810 versus 12,050 last year – down 24% – but up 16.6% from 7,810 last month
• Monthly Sales: 5,693 versus 7,993 last year – down 29% – but up 31% from 4,357 last month
• Monthly Average Sales Price per Sq. Ft.: $271.14 versus $284.56 last year – down 4.7% – but up 1.2% from $267.83 last month
• Monthly Median Sales Price: $413,000 versus $445,000 last year – down 7.2% – but up 0.7% from $410,000 last month

Volumes remain much lower than a year ago, but they have recovered some ground. Monthly sales were down 29% compared with 2022, which is a major improvement on the 39% deficit last month.

Although the market remains unhealthy from a volume perspective, it is warming up from a supply versus demand point of view. The supply of active listings has been trending lower for several months, although this is not true of the luxury sector, and particularly Paradise Valley. You might expect demand to be very weak because mortgage rates have jumped back over 7% again. However, buyers are not capitulating and the growth of listings under contract is much healthier than we expected under these circumstances. The 16.6% growth in listings under contract since the beginning of February, and the 31% increase in the monthly sales rate are surprisingly strong.

The balance between supply and demand has shifted significantly over the past 3 months and there is now upward pressure on pricing once more. We note that the monthly median sales price is up 0.7% over the last month while the average price per square foot for closed listings has risen by 1.2%. Pricing remains weaker than a year ago, when we were still in a boom period with exceptionally low supply. But the trend is now pointing higher, not lower. It is possible that the Federal Reserve may do more damage to interest rates, but the risk premium in mortgage rates is currently far above normal. This means there is plenty of scope for lower mortgage rates to be introduced if the risk abates.

The current pricing trend may contradict the claims by various amateur pundits and their daft YouTube channels, but there is almost no data that supports the theory that prices are going to collapse from this point. For this to happen we would need to have a wave of new supply creating problems for sellers. While this is always a remote possibility, there is very little foreclosure activity and low levels of mortgage delinquency. So where is this flood of homes for sale supposed to come from. The builders have cut back drastically on new home permits, so we are more likely to see a shortage of homes for sale than a glut. And rising mortgage rate discourages homeowners with mortgages from selling because that would mean the loss of their cheap loan and the acquisition of a much more expensive one.

Even though buyers are scarce, homes for sale remain stubbornly hard to find. It is always good for sellers when they have less competition from other sellers. This means much less need to cut their asking price, especially if they are patient and present their property well.

If you’re considering selling or buying give me a call to discuss your situation and current market conditions.  If you’re on the sidelines waiting to buy because you think there will be more down-turn or a crash in the market that’s a mistake, this is the time to buy……

I love referrals! Please remember me! Thank you, Shawn, your Realtor.

Market Summary for the Beginning of April

Here are the basics – the ARMLS numbers for April 1, 2023 compared with April 1, 2022 for all areas & types:

• Active Listings : 13,933 versus 5,051 last year – up 176% – but down 5.5% from 14,739 last month
• Pending Listings: 5,701 versus 8,008 last year – down 29% – and down 3.6% from 5,911 last month
• Under Contract Listings : 8,935 versus 11,620 last year – down 23% – and down 1.9% from 9,109 last month
• Monthly Sales: 7,540 versus 10,141 last year – down 25% – but up 32% from 5,706 last month
• Monthly Average Sales Price per Sq. Ft.: $277.60 versus $290.80 last year – down 4.5% – but up 2.4% from $271.08 last month
• Monthly Median Sales Price: $419,900 versus $456,000 last year – down 7.9% – but up 1.7% from $413,000 last month

The market continues to improve.

Sales volumes remain much lower than a year ago, largely because institutional investors and iBuyers are missing in action on the buying front. A year ago they were competing frantically, which they probably now regret. However sales in March are up 32% from February and only down 25% from March 2022, which compares favorably with down 29% in February and down 39% in January.

iBuyers create 2 transactions instead of one, so transaction volumes will fall when they stop (or almost stop) buying. Demand from normal buyers weakened in March, mostly due to higher interest rates. But these interest rates are lower again in early April, and the drop in demand has been overwhelmed by the sharp drop in supply. Active listings without a contract fell by 5.5% during March whereas listings under contract fell only 1.9%.

The balance between supply and demand has been moving consistently in sellers’ favor since mid November. This confirms we are in the rebound phase of the correction that dominated the second half of last year and created an atmosphere of fear throughout the market. That fear can now be replaced with relief as one market signal after another turns positive and resumes a normal trend. Despite the doomscrollers on social media and elsewhere, today’s market is healthier than it was in April 2019, which at the time we were perfectly comfortable with. Casual observers tend to worry about factors which can cause weakness in demand, then forget to balance that with factors that can cause weakness in supply. Right now, supply is weakening much faster than demand, so interest rate movements are no longer the key thing driving the market. Competition between buyers is starting to warm up because there are so few sellers. This should not surprise us. Supply is just as important as demand.

The USA is unusual in having a very large percentage of its existing mortgage loans at fixed interest rates. In most countries, the majority of mortgage loans have adjustable rates. In Central Arizona this means loans written more than a year ago look very cheap compared with new loans. This deters homeowners from selling homes, unless they don’t need them. They may not need a home if they have just inherited it from a relative who died, or if it is a second home or investment. But if they have a primary residence, selling that home means killing a very cheap mortgage and giving birth to one with a more expensive new rate. Most people do not want to do that. In 2022 we saw a flood of supply from investors, speculators, panicking iBuyers and the like, but this wave has exhausted itself. We are back to a chronic shortage of homes to buy. We have less than 14,000 available, which is about 40% below normal. Demand is indeed weak, but it is only 18% below normal. Do the math.

Prices have moved higher even earlier than we expected. The monthly median is $419,900, up from $410,000 in late February. The average closed price per square foot has reached $277.60, up from $265,20 on Feb 9. That is almost a 5% rise in just 7 weeks.

The listing success rate is back to 78% or so, having fallen to a low of 62% in November last year.

Foreclosure activity remains minuscule. There is little sign of much new supply coming from that direction antime soon.

New construction permits for single-family homes are currently low, so there will be limited new supply from builders for a while.

It is time to re-adjust buyers to expect increasing competition from each other as they chase a dwindling number of homes for sale. Sellers have recently been offering generous incentives including substantial interest rate buy-downs. Those incentives are likely to reduce in value as sellers start to realize they have the upper hand in negotiations.

A few areas on the outer fringes of Greater Phoenix still have a robust supply. These include Buckeye, Casa Grande, Coolidge, Florence, Maricopa and San Tan Valley. However these are counter-balanced by extremely low numbers of active listings in the more affordable central areas, such as West Phoenix, South Phoenix, Tolleson, South Glendale and West Mesa.

Do not make the mistake of thinking the market is the same as it was in late 2022. We are in a new and very different phase.

​*****I have moved from neutral to now again a sellers market, interest rates have moved down about 1% from the high, if your holding off on buying because you think we have a substancial down-turn on its way, thats a mistake…..BUY now….

​*****If you’re considering selling or buying give me a call to discuss your situation and current market conditions.  If you’re on the sidelines waiting to buy because you think there will be more downturn or a crash in the market that’s a mistake, this is the time to buy……

I love referrals! Please remember me! Thank you, Shawn, your Realtor. 

Here Is The Outlook for The Arizona Economy: Click link below to read

Here is the outlook for the Arizona economy – AZ Big Media

With only 12,500 active listings without a contract we are once again approaching a dire shortage of homes for sale. Even a modest increase in demand is likely to force prices higher and quickly recover the ground lost over the past 12 months. The median sales price is down almost 9% compared to a year ago, but has recovered nearly 4% over the last 3 months.

Read on……..

Market Summary for the Beginning of May

Here are the basics – the ARMLS numbers for May 1, 2023 compared with May 1, 2022 for all areas & types:

• Active Listings: 12,503 versus 6,688 last year – up 87% – but down 10.3% from 13,933 last month
• Pending Listings: 6,224 versus 7,386 last year – down 15.7% – but up 9.2% from 5,701 last month
• Under Contract Listings: 9,969 versus 10,889 last year – down 8.4% – but up 11.6% from 8,935 last month
• Monthly Sales: 6,662 versus 10,141 last year – down 28% – and down 12.3% from 7,598 last month
• Monthly Average Sales Price per Sq. Ft.: $279.92 versus $302.48 last year – down 7.5% – but up 0.8% from $277.61 last month
• Monthly Median Sales Price: $425,000 versus $466,000 last year – down 8.8% – but up 1.2% from $419,900 last month

A year ago the market was weakening fast, but pricing was approaching its peak of $306.46 per sq. ft. and closings were still running high, fueled by the unwise purchasing frenzy of institutional investors and iBuyers. The slump that followed in the second half of 2022 is now well behind us and the market is displaying increasing resilience despite interest rates that are far higher than during most of the last 10 years.

Closing volumes were unimpressive in April, but the growth in listings under contract makes up for that with one of the largest month to month increases (11.6%) that we have ever seen for this time of year. The net result is that demand is now growing again, while supply is falling even faster than before. This is good news for sellers, but most home owners are still uninterested in selling, deterred by the large increase in mortgage interest rate that would incur.

With only 12,500 active listings without a contract we are once again approaching a dire shortage of homes for sale. Even a modest increase in demand is likely to force prices higher and quickly recover the ground lost over the past 12 months. The median sales price is down almost 9% compared to a year ago, but has recovered nearly 4% over the last 3 months.

The new home market remains robust with most publicly listed home builders in an optimistic mood, supported by their stock prices hitting new highs in the last few days. The numbers in the ARMLS database suggest their optimism is justified, especially if the perception that the Federal Reserve has finished hiking interest rates becomes a reality.

If you’re considering selling or buying give me a call to discuss your situation and current market conditions.  If you’re on the sidelines waiting to buy because you think there will be more downturn or a crash in the market that may be a mistake, this is the time to buy if you plan on being in the home for more than two years……

I love referrals! Please remember me! Thank you, Shawn, your Realtor.

Market Summary for the Beginning of June

Here are the basics – the ARMLS numbers for June 1, 2023 compared with June 1, 2022 for all areas & types:

• Active Listings : 11,730 versus 9,439 last year – up 24% – but down 6.2% from 12,503 last month
• Pending Listings: 5,696 versus 6,887 last year – down 17% – and down 8.5% from 6,224 last month
• Under Contract Listings : 9,028 versus 10,249 last year – down 12% – and down 9.4% from 9,969 last month
• Monthly Sales: 8,082 versus 8,728 last year – down 7.4% – but up 21% from 6,687 last month
• Monthly Average Sales Price per Sq. Ft.: $283.47 versus $303.39 last year – down 6.6% – but up 1.3% from $279.76 last month
• Monthly Median Sales Price: $434,000 versus $475,000 last year – down 8.6% – but up 2.1% from $425,000 last month

This time last year, the market was in full retreat, but pricing was just a few days away from its peak of $306.46 per sq. ft., reached on June 10. Closings were still plentiful, driven by the demand from institutional investors and iBuyers who were just about to curtail their buying spree.

So much has changed in the last year. The gut-wrenching slowdown that took place in the second half of 2022 is now a distant memory and the market is slowly and cautiously recovering to a semblance of normality. Closings in June were unusually strong – up 21% from May, but these were driven by contracts signed in April when interest rates were more attractive than they are right now. A spike in mortgage rates at the end of May meant we entered June with a weak count of listings under contract, down over 9% from the beginning of May. This means we should expect relatively unimpressive closing counts for June.

It is common knowledge that demand is sensitive to interest rates, but thinking that higher interest rates lead to lower prices is simplistic and wrong. In the current environment, higher interest rates dramatically reduce the desire to pay off low-interest loans and so dispose of property. Those who bought at the peak during the first half of 2022 may be underwater, but unless a dramatic change in their circumstances makes their financial situation desperate, they are unlikely to be motivated to sell and convert that loss on paper to a hard loss of real money.

The weakness of supply is the main factor to consider when studying the current housing market. Despite the low number of homes going under contract, the number of homes for sale (without a contract) dropped another 6% and is now below 12,000. This is an unhealthy supply and it is well-nigh impossible for prices to decline when supply is so weak and trending lower.

If supply were to rise, then a cooling trend could start to build. The monthly releases of building permit data suggests that future supply will be strong for rental multi-family property, but single-family homes to purchase are being planned in ever smaller numbers. The recent decision to restrict future permits because of water concerns means that situation is likely to remain in place for a long time. The market will see less volume than we have become used to, but prices will be reinforced by the chronic supply.

In the very long term (over decades), a shortage of water could cause net migration to drop and even turn negative. This would generate more supply and cause downward pressure to build up on prices. But that event is very unlikely within our existing time horizon. Without such a macro-level change in circumstances, the supply of single-family homes and condos for sale looks set for long-term scarcity.

Unless we get a significant reduction in mortgage rates, the affordability of homes will remain a major problem. This will constrain sales volumes, but it is very unlikely to put downward pressure on pricing. Instead we are much more likely to see a long-term price appreciation trend setting in once more, with the chronic shortage of supply the over-arching unsolved issue.

TITLE FRAUD IS ON THE RISE: Last week, the Maricopa County Recorder’s Office launched a new service, Maricopa Title Alerts.  Here is the link to help protect your home:

Maricopa County Recorder’s Office Title Alerts service sees 15,000 sign-ups | KJZZ

Market Summary for the Beginning of July

Here are the basics – the ARMLS numbers for July 1, 2023 compared with July 1, 2022 for all areas & types:

• Active Listings: 11,545 versus 14,406 last year – down 20% – and down 1.6% from 11,730 last month
• Pending Listings: 4,997 versus 5,766 last year – down 13% – and down 12% from 5,696 last month
• Under Contract Listings (including Pending): 7,858 versus 8,621 last year – down 8.9% – and down 13% from 9,028 last month
• Monthly Sales: 7,377 versus 8,113 last year – down 9.1% – and down 9.0% from 8,110 last month
• Monthly Average Sales Price per Sq. Ft.: $287.76 versus $300.43 last year – down 4.2% – but up 1.5% from $283.71 last month
• Monthly Median Sales Price: $443,000 versus $474,374 last year – down 6.6% – but up 2.1% from $434,000 last month

Comparisons with this time last year are getting easier, as a year ago the market was deteriorating as demand from institutional investors and iBuyers collapsed. A steep rise in interest rates had spooked the market and ordinary buyers were holding their breath too.

A year later we have a market which is seeing very low demand and even lower supply. With the 30 year fixed interest rate stuck around 7%, most homeowners do not want to sell and buyers are struggling to qualify and afford a home. Buyers are unimpressed with the low inventory of re-sale homes and are increasingly turning to new built homes. Developers are enjoying strong orders, firmer prices and healthy margins, but have relatively low inventory of homes for sale and a weak pipeline of new permits to build. The strongest sector in the housing market is single-family new construction.

Some people drastically overstate the importance of interest rates in determining home prices. Interest rates are important but when they move higher they lower supply as well as demand. It is the balance between supply and demand that determines how prices move. At the moment supply is much weaker than demand so prices are increasing, as they have since January.

For homeowners, rising prices are reassuring. There are remarkably few new listings and closings are declining as we enter the summer doldrums. Title companies, lenders, warranty providers, inspectors and appraisers are all suffering from a prolonged weakness in transaction volume. While interest rates remain at 6.75% or higher, we appear unlikely to see much improvement. In fact rising prices will make it even harder for buyers to close on a home. However if interest rates were to fall to 6% or below, we could see a sharp increase in demand and an improvement in supply too.

We will shortly see the average $/SF for closings overtake the figure from a year ago. At the moment the gap is 4.2%, but last year’s prices were falling fast and this year we are seeing a rise of almost 3% in just 2 months. The third quarter is notorious for weakness in average pricing, but even if closed prices stay flat for the next 3 months, annual appreciation will have turned positive by the end of the quarter.

If you’re considering selling or buying give me a call to discuss your situation and current market conditions.

I love referrals! Please remember me! Thank you, Shawn, your Realtor.