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Market Summary for the Beginning of June

Here are the basics - the ARMLS numbers for June 1, 2022 compared with June 1, 2021 for all areas & types:

• Active Listings (excluding UCB & CCBS): 9,439 versus 4,917 last year - up 92.0% - and up 41.1% from 6,688 last month (Not including coming soon listings. The total counts would be significantly higher if they were included)
• Under Contract Listings (including Pending, CCBS & UCB): 10,249 versus 12,317 last year - down 16.7% - and down 5.9% from 10,880 last month
• Monthly Sales: 8,729 versus 9,663 last year - down 9.7% - and down 6.1% from 9,295 last month
• Monthly Median Sales Price: $475,000 versus $390,000 last year - up 21.8% - and up 1.9% from $466,000 last month

Supply has risen dramatically over the last month. Excluding UCB and CCBS listings, we see active listings up 42% in a single month and up 92% compared to this time last year.

Almost everyone expected demand to fall because of the sharp increase in mortgage interest rates, and demand has behaved as expected - sales are down almost 10% compared with May 2021 and listings under contract are down almost 17% compared with June 1, 2021. Demand numbers tend to be less volatile than supply numbers. Lower demand means active listings stay active longer and if the arrival of new listings remains constant, supply starts to build up. This has happened as expected, but what was not generally anticipated was a significant increase in the rate of arrival of new listings.

As of June 1, the rate of arrival of new listings is up more than 14% compared to the same time last year. It is also up 40% compared with June 1, 2020, but that is an unfair comparison because the housing market was being disrupted by the COVID-19 pandemic. If we compare with 2019 then new listings are arriving 13% faster. I think it is fair to say we are getting significantly more new listings each week than we are used to. Because demand is falling, these extra new listings accelerate the supply growth. The number of active listings without a contract exceeded 10,000 today (June 3) for the first in 2 years. At 10,000, the number of active listings is well below normal right now, but if it keeps increasing at the current monthly rate, we would be looking at more than 26,000 active listings without a contract within 3 months. This means that by the beginning of September we would not be a seller's market, unless we also saw a recovery in demand.

The big unknown is whether this increase in new listings is a short-term blip or the start of a much more important trend. The increase is only 5 weeks old, but at the moment it is getting stronger each week.

The increase in supply is not confined to homes for sale. There are 2,316 active rental listings, up from 1,382 this time last year, an increase of 68%. In addition, coming soon listings are up 20% compared to June 1, 2021.

Closing prices continue to move higher, but at a slower rate than last month. List prices for active listings have started to weaken, as sellers start to realize they need to moderate their ambitions. Some may not realize this and their homes will probably stay on the market for a long time before reality bites and they realize a price cut is in order. We expect to see a large increase in the number of price cuts for active listings over the coming months.

During May, the buy-to-rent operators remained very active. Institutional buyers purchased 770 homes in Maricopa County alone, representing almost 9% of sales and nearly 15% of sales below the median sales price of $475,000. If these institutions were to suppress their appetite, demand would would fall further and supply increase faster. At the moment it is not clear whether the rising supply will cause them to increase their acquisitions or tamp them down. The danger we see from institutional players is that their decisions can have a more sudden effect on numbers than those of ordinary home buyers.

It is very rare for the Greater Phoenix housing market to change as fast as it has done over the past month. In fact this represents the most dynamic period we have ever recorded since 2000. This rate of change only adds to the uncertainty of where we headed. It suggests that extreme caution is in order.

Commentary courtesy of Michael Orr and the Cromford® Report

Why the Growing Number of Homes for Sale is Good for Your Move Up

Are you thinking about selling your current home? If so, the biggest question on your mind may be: if I sell now, where will I go? If this resonates with you, there’s something you should know. The number of homes coming onto the market is increasing and that could make it easier for you to move up this summer.

According to the latest data from realtor.com, the number of homes being listed for sale, known as new listings, has increased consistently this year (see graph below):

While this news has clear benefits for buyers who are craving more options for their home search, what does that mean for current homeowners like you? It gives you two distinct opportunities in today’s housing market.

Opportunity #1: Take Advantage of More Options for Your Move Up

If your current house no longer meets your needs or lacks the space and features you want, this gives you even more opportunity to sell and move up into the home of your dreams. As more options come to market, you’ll have more to choose from when you search for your next home.

Partnering with a local real estate professional can help make sure you see these listings as soon as they come onto the market. And when you do find the one, that professional can advise you on how to write a winning offer to seal the deal.

Opportunity #2: Sell Before You Have More Competition

Just know that, in order to make sure your house shines above the rest, it may make sense to put your home up for sale before your neighbors do the same, creating more competition in your area. The increase in the number of homes being listed for sale is expected to continue, and a recent study from realtor.com says two-thirds of homeowners looking to sell say they’ll do so by August.

A real estate professional can advise you on what you need to tackle to get your house ready to list so they can put that for sale sign up in your yard sooner rather than later. That’s because the process of getting a home ready to sell isn’t taking as long as you may think. As a result, you can capitalize on today’s sellers’ market and get ahead of the competition.

Bottom Line

If you’re a current homeowner looking to sell, reach out to a local real estate professional to begin the process. You have a unique opportunity to benefit from the additional homes being listed today and sell before your house has more competition.