MLS data for New Listings is accessible dating back to 2021. This year (2023) to date has been the lowest number of new listings that have come to the market on record - over 10K lower than this time in June of 2020.Multiple years of low-interest rates have set the real estate market up for the low inventory problem we are now facing. With higher rates, nobody wants to move and give up their low-monthly mortgage payments. We need to keep an eye on unemployment. A rise in unemployment will force many homeowners with low equity positions to sell or face foreclosure. This is a horrible way to create more housing inventory, yet part of the cycle that we have experienced in the past.
Jun 7 - Last week was very quiet for new contracts, with only 1,589 being accepted across Greater Phoenix. This followed another quiet week at 1,737. Both these numbers are lower than every week in 2023 except for the first 2 weeks of January, which are always low.
This leads us to conclude that buyer demand is going down and the culprit is obvious. Buyers much prefer interest rates around 6.5% to those around 7%.
Both demand and supply are low, so we can expect unimpressive volumes during June and probably July too. On the other hand, if rates were to drop back to 6.5% or below then activity would probably pick up again.
Jun 6 - Below is the newly published months of supply chart for the single-family detached market in ZIP code 85142.
I like this chart because it shows clearly the scale of the deterioration of the market during the second half of 2022 and also the large improvement we have seen in 2023. This is from the perspective of sellers since they would benefit from low supply relative to the monthly sales rate. Buyers see things from the opposite perspective.
The long-term normal supply is around 3 to 5 months for a ZIP code like 85142. As we dip below 3 months, things usually get tough for buyers and as we rise above 5 months things get difficult for sellers. We almost hit 6 months at the start of December and have lost nearly two-thirds of that supply over the past 6 months. That is a big change folks!
This chart works particularly well for 85142, and it is one of my favorite ZIP codes. This is because it is a BIG one, containing a much larger number of homes than average. This means we get a lovely big sample size every time we measure it. To a statistician, the sample size is of the utmost importance. Small samples lead to ugly charts and poor-quality information. Large samples lead to beautiful charts and a clear picture of what is going on.
Not all ZIP codes are as rewarding to measure as 85142. Some are extremely small and the sample size sizes are so tiny, they are exasperating. I am looking at you, 85003, 85004, and 85034, to name but a few.
I sometimes get requests to measure subdivisions. I have to politely decline. Attempting to do this is certainly possible but it is usually completely pointless. The sample size for a subdivision is so small that any statistics derived from it look like random data. A good rule of thumb is that you want around 100 sales per month before you can get reliable statistics for a sub-market. Very few ZIP codes are big enough to achieve that. Some that do include 85132, 85138, 85142, 85143, 85212, 85249, 85326, 85338, 85374, 85383, 85387 and 85396.
If a ZIP code generates fewer than 50 sales per month, I advise you to treat all its statistics with due caution. Below 20 sales per month, then it is frustratingly poor at giving us reliable information.
ZIP codes are defined by the US Postal Service to assist in the delivery of mail, They do not give any consideration to statisticians when they define them, and we should not expect their sympathy or cooperation. But we thank them for big beautiful ZIP codes, especially 85142 and 85383, and we hope they don't decide to split them up in the future.
Knowing what needs to get done before a closing can be a lot, and you will probably have many questions, but ya know what? I have a lot of answers, and I'm here to help.
Scottsdale Phoenix Paradise Valley Cave Creek Carefree Fountain Hills Mesa Tempe Chandler Gilbert Glendale Peoria
Dennis Carr - Realtor, GRI Licensed in AZ and CA 480.825.2870
Thinking of Selling or Buying?
Thank you for reading the Arizona Metro Market Report. I hope this newsletter helps you stay informed about local real estate trends.
The Phoenix real estate market continues to be one of the most attractive locations within the United States. An exodus from Los Angeles and Seattle has helped fuel the growth. In spite of historically high prices in Arizona, the cost of housing continues to be a bargain for many out-of-state buyers. While overall there are more listings for buyers to choose from vs last year, new listings are scarce. As a result, prices have not crashed due to oversupply. Contact me for a more targeted view of a particular location within the Phoenix Metro you are interested in.
If you are considering purchasing in Arizona and would like to discuss the possibility of buying or selling without being pressured, contact meso I can learn more about your timeline and real estate goals. It is important to plan ahead and develop a strategy for success.
May 30 - The latest S&P / Case-Shiller® Home Price Index® numbers were published today.
The new report covers home sales during the period January to March 2023. This means the typical home sale closed in mid-February. No homes sold during the second quarter are included at all, even though the month of May is just one day from being over.
We should remember that this makes the Case-Shiller Index just over 3 months out-of-date on the day it is published and just over 4 months out of date before the next report is issued.
We are just now seeing firm confirmation of the turn-round in the market reflected in the Case-Shiller Index, with a higher index for Phoenix for the second month in a row. In the Cromford® Report, and in the real world, prices have been rising for 5 months now.
Compared with the previous month's series we see the following changes:
San Francisco +2.98%
San Diego +2.51%
Detroit +2.19%
Minneapolis +1.98%
Denver +1.96%
Seattle +1.96%
Chicago +1.86%
Los Angeles +1.67%
Charlotte +1.65%
Washington +1.46%
Portland +1.42%
Boston +1.34%
New York +1.28%
Atlanta +1.13%
Dallas +1.06%
Tampa +0.99%
Miami +0.68%
Cleveland +0.57%
Las Vegas +0.49%
Phoenix +0.46%
Phoenix has dropped from 8th to last place in this table despite the improvement. The market in the other 19 conurbations has turned around more violently than in Phoenix. It is quite unusual for Phoenix to move slowly, but a refreshing change. The national average increase month to month was 1.26%, far higher than Phoenix.
The change from 2 months ago is dramatic. All 20 of the 20 cities are showing positive price appreciation month to month. There was only 1 two months ago.
Comparing year over year, we see the following changes:
Miami +7.7%
Tampa +4.9%
Charlotte +4.7%
Atlanta +4.5%
Chicago +4.0%
New York +3.3%
Cleveland +2.0%
Detroit +1.1%
Boston +0.8%
Minneapolis +0.5%
Washington -0.2%
Dallas -1.2%
Los Angeles -2.9%
Denver -3.6%
Phoenix -4.5%
Portland -4.6%
Las Vegas -5.1%
San Diego -5.4%
San Francisco -11.2%
Seattle -12.4%
The national average was +0.7%. Phoenix remained in 15th place.
This means the few sellers we have are seeing their listings find buyers quite easily, with less than 17% getting canceled or expiring.
The listing success rate has just moved above 83% for the first time since June 2022. The long-term average success rate is only 67.6% and rates over 83% are relatively uncommon in history. although they have become much more common since 2017. This is largely due to the chronic shortage of supply that still prevails today.
In fact, we see rates over 83% only during the following intervals:
Feb - Jul 2005
Apr - May 2017
Mar - Aug 2018
Mar - Dec 2019
Feb - Apr 2020
May 2020 - Jun 2022
Those predicting home price declines should be reminded that listing success rates over 83% have been found to be incompatible with falling home prices.
Scottsdale Phoenix Paradise Valley Cave Creek Carefree Fountain Hills Mesa Tempe Chandler Gilbert Glendale Peoria
Dennis Carr - Realtor, GRI Licensed in AZ and CA 480.825.2870
Thinking of Selling or Buying?
Thank you for reading the Arizona Metro Market Report. I hope this newsletter helps you stay informed about local real estate trends.
The Phoenix real estate market continues to be one of the most attractive locations within the United States. An exodus from Los Angeles and Seattle has helped fuel the growth. In spite of historically high prices in Arizona, the cost of housing continues to be a bargain for many out-of-state buyers. While overall there are more listings for buyers to choose from vs last year, new listings are scarce. As a result, prices have not crashed due to oversupply. Contact me for a more targeted view of a particular location within the Phoenix Metro you are interested in.
If you are considering purchasing in Arizona and would like to discuss the possibility of buying or selling without being pressured, contact meso I can learn more about your timeline and real estate goals. It is important to plan ahead and develop a strategy for success.
Hillside Home Just Sold in Paradise Valley, AZ - Congratulations Tom and Michelle from Minnesota! Located on North Highlands Drive off of Lincoln, this gem is nestled into a hillside with breathtaking views of Camelback Mountain, Mummy Mountain, and the surrounding valley. Tom and Michelle conducted a thoughtful survey of available homes that offered drama, yet suited their lifestyle needs. After viewing this home, and conducting inspections/investigations, they are delighted with their decision. I feel grateful to have the opportunity to assist home buyers and sellers in Paradise Valley, Phoenix, Scottsdale, and surrounding areas. If there is anything I can do to help your dreams come true, don't hesitate to reach out for a 'no-pressure' discussion about your goals and timelines.
Feeling super excited for Chris and Linda, my clients from Minnesota. They have secured their Arizona Dream Home and will enjoy living here part-time until their permanent transition in about five years. We were able to go under contract on this home during the coming soon period, prior to it being advertised on the open market with Zillow and realtor.com. They have worked hard to make this happen, and I could not be more excited for them - congratulations Chris and Linda!
New Contracts are outpacing New Listings, and this will increase competition in spite of demand remaining low year-over-year.
Apr 17 - Demand is beginning to improve. as we can see from the chart below:
The listings under contract count is making a determined attempt to breach the 10,000 level. In the 2 days since we created this weekly chart the count has reached 9,944, meaning it is quite likely that target will be exceeded later this week.
That puts us ahead of where we were in late May last year.
The Cromford® Demand Index has started to stabilize and confidence appears to be slowly improving.
What's the Difference Between a Home Inspection and an Appraisal?
If you’re planning to buy a home, an inspection is an important step in the process. It assesses the condition of the home before you finalize the transaction. It’s also a different step in the process from an appraisal, which is a professional evaluation of the market value of the home you’d like to buy. In most cases, an appraisal is ordered by the lender to confirm or verify the value of the home prior to lending a buyer money for the purchase. Here’s the breakdown of each one and why they’re both important when buying a home.
Home Inspection
Here’s the key difference between an inspection and an appraisal. Bankratesays:
“In short, while an appraisal helps you understand a home’s value, inspections help you understand a home’s condition.”
The home inspection is a way to determine the current state, safety, and condition of the home before you finalize the sale. If anything is questionable in the inspection process – like the age of the roof, the state of the HVAC system, or just about anything else – you as a buyer have the option to discuss and negotiate any potential issues or repairs with the seller before the transaction is final. Your real estate agent is a key expert to help you through this part of the process.
Home Appraisal
The National Association of Realtors (NAR) explains:
“A home purchase is typically the largest investment someone will make. Protect yourself by getting your investment appraised!" An appraiser will observe the property, analyze the data, and report their findings to their client. For the typical home purchase transaction, the lender usually orders the appraisal to assist in the lender’s decision to provide funds for a mortgage.”
When you apply for a mortgage, an unbiased appraisal (which is required by the lender) is the best way to confirm the value of the home based on the sale price. Regardless of what you’re willing to pay for a house, if you’ll be using a mortgage to fund your purchase, the appraisal will help make sure the bank doesn’t loan you more than what the home is worth.
This is especially critical in today’s sellers’ market where low inventory is driving an increase in bidding wars, which can push home prices upward. When sellers are in a strong position like this, they tend to believe they can set whatever price they want for their house under the assumption that competing buyers will be willing to pay more.
However, the lender will only allow the buyer to borrow based on the value of the home. This is what helps keep home prices in check. If there’s ever any confusion or discrepancy between the appraisal and the sale price, your trusted real estate professional will help you navigate any additional negotiations in the buying process.
Bottom Line
The inspection and the appraisal are critical steps when buying a home, and you don’t need to manage them by yourself. Work with a real estate professional today so you have the expert guidance you need to navigate the entire home buying process.
Scottsdale Phoenix Paradise Valley Cave Creek Carefree Fountain Hills Mesa Tempe Chandler Gilbert Glendale Peoria
Dennis Carr - Realtor, GRI Licensed in AZ and CA 480.825.2870
Thinking of Selling or Buying?
Thank you for reading the Arizona Metro Market Report. I hope this newsletter helps you stay informed about local real estate trends.
The Phoenix real estate market continues to be one of the most attractive locations within the United States. An exodus from Los Angeles and Seattle has helped fuel the growth. In spite of historically high prices in Arizona, the cost of housing continues to be a bargain for many out-of-state buyers. While overall there are more listings for buyers to choose from vs last year, new listings are scarce. As a result, prices have not crashed due to oversupply. Contact me for a more targeted view of a particular location within the Phoenix Metro you are interested in.
If you are considering purchasing in Arizona and would like to discuss the possibility of buying or selling without being pressured, contact meso I can learn more about your timeline and real estate goals. It is important to plan ahead and develop a strategy for success.
