December Arizona Real Estate Market Report

Market Summary for the Beginning of December

Thank you for your continued support! Now, let’s talk real estate: new homes are doing well with lower mortgage rates. December is usually chill, but mid-January might bring a twist with rates at 7% versus 8%. Given the past year’s unpredictability, we’re keeping it straightforward by monitoring the stats.

For a more comprehensive report tailored to your specific needs, feel free to reach out! Call me at (480) 466-4917 or email me at jay@jaybrugroup.com.

For more insights, refer to the charts and direct information from the Cromford report in the provided links.

Here are the basics – the ARMLS numbers for December 1, 2023, compared to those from December 1, 2022, for all areas and types:

• Active Listings (excluding UCB & CCBS): 15,981, compared to 19,155 last year, down 17% but up 4.8% from 15,247 last month.
• Monthly Sales: 4,616 versus 4,928 last year, down 6.3% and a decrease of 11% from 5,210 last month.
• Monthly Average Sales Price per Sq. Ft.: $288.97 versus $272.29 last year, up 6.1% but down 2.1% from $295.13 last month.
• Monthly Median Sales Price: $439,000 versus $420,000 last year, up 4.6% and a 0.9% increase from $435,000 last month.c

Buyers:

• Buying a home may not be as exciting as a few years ago due to high interest rates, soaring prices, low inventory, and unsupported hopes of price drops without data backing.

• If prices rose when interest rates skyrocketed, what will happen when rates drop? Most likely, there will be increased demand, leading to further price hikes. This, in turn, means less negotiating power—limited inspection times, fewer seller concessions, and closer-to-list-price acceptances.

• If you look at the charts below, buyer activity typically increases after the new year and it’s best to buy a home in the fall leading up to the new year. 

• The work doesn’t stop after you purchase. Maintain a high credit score, avoid new debt, and refrain from job changes to prepare for future refinancing. Stay in touch with your lender to strategize when the time comes.

Sellers:

• Days on the market can be frustrating, but with the right price, patience is best. Always watch what similar homes in your area are selling for. (I can put you on a nosy neighbor report to get instant notifications) or click here to find your home price.
• The new year is best to list your house with more demand. 
• Remember, at 16,000 listings in our market today, supply is very low, and buyers do not have many choices. Click to see all the charts and look to see what your city is doing. Buyers’ markets are typically on the outskirts of town, and more established cities are still in sellers’ markets. 
• Remove clutter and lighten up your home. This is a time to clean, do minor repairs, and present your home as best you can. 
• If you’re wondering about how to present your home better, read my blog on preparing your home for selling here.
• You need to plan! If you’re selling and buying at the same time, talk to lenders, and your agent, and come up with a plan.
• If you’re wondering about the numbers for closing costs, text me at 480-466-4917, and I can send you a report on what you should get in your pocket at closing.
• Are you thinking of remodeling before your sale? With the contractors in Arizona, you have to wonder if the stress of a remodel will pay off. Start with the small things, in my blog on Remodeling before selling, click here.

After rising during October and peaking at an average of just over 8% mid-month, mortgage rates declined thereafter and tumbled throughout November. In theory, this should have injected some life into housing demand, but there is precious little evidence of this in the numbers above. We have fewer homes under contract than last month and far fewer than a year ago when we were all depressed about the low demand. Sales counts are also down from last year and last month, reaching the unusually low level of 4,616 in November.

One reason for the severe lack of demand may be that home prices are noticeably higher than they were a year ago, something few people predicted 12 months ago. Over the last few months, there have been mixed signals. The median sales price grew by almost 1%, but the average price per square foot dropped by over 2%. This followed a sharp increase the month before. Typically, when this happens, it is caused by fluctuations in the luxury market. With much lower unit volumes, the luxury market can vary significantly from month to month, affecting the price per square foot substantially. The luxury market has a negligible effect on the median sales price, which tends to be strongly influenced by unit volumes at the low end. Despite the weak demand, the supply is still below normal, preventing prices from tumbling. Although supply has risen for several months, it is now stable again as few people list their homes in December, and several take their homes off the market for the holiday season. We anticipate more supply appearing in January.

The new home market continues to outperform the resale market. Mortgage rate buy-downs have kept new home demand at a healthy level.

December is not usually a month for us to see a flood of new home buyers, so we anticipate the second half of January will tell us whether buyers see a big difference between mortgage rates around 7% compared with 8%. The last 12 months have been full of surprises, so caution and watching the statistics carefully is still the order of the day.