fbpx

Newsletter

SUBSCRIBE TO OUR POSTS

Share on facebook
Share on twitter
Share on linkedin

March 2023 Arizona Real Estate Market Update

Share on facebook
Share on google
Share on twitter
Share on linkedin

Here is a full list of all the charts for this presentation from the Cromford Report, click here

March 15th Update:  I just had a market report zoom meeting with the Cromford Report and thought I’d update you.  Typically housing market data is like a train trying to slow down, but it has been quickly changing with the sharp interest rate hike; here are some of the highlights:

  • Youtubers are still predicting a crash, but the data shows differently; we already had a correction.
  •  Avg prices increased by 2.7% since the beginning of the year.
  • Contract ratio is 60%, saying we’re in a seller’s market, and more homes are under contract than for sale.
  • Pre-foreclosures are still at record low levels at 321 compared to 10558 in 2009 and 445 in February 1996. Only 34 homes foreclosed yoy.
  • Rental leases bounced up while supply decreased in the past few months.
  •  FHA makes a 30bps MIP cut, mortgage industry cheers.  Rates are comparable with conventional mortgages now. 
  •  No correlation between housing and election cycles.
  • Interest rates follow the 10-year treasury.
  •  Chandler is the number one seller market right now.
  • Cromford Market index is at 131, 161 is Chandler
  • The numbers tell us prices will rise.
  • Year-over-year prices declined 6.1% from March to March. 13.3% down from Peak in May 22 to December 23.
  • Expect boring appreciation rates.


March 1, 2023

Thank you for checking out my newsletter on the Arizona real estate market! I do these once or twice a month and hope you gain great insight into what’s happening. Knowing what’s going on with so many talking heads out there is challenging, but I concentrate on what the Cromford Market report has to say. They have been right most of the time; go back through my blogs and look, except for spring 2022, where I thought they were a little too positive and didn’t account for the significant interest rate hikes. I want to show you why the Cromford Report is so positive and states that most cities in Maricopa county are in sellers’ markets.

Here are some points on why they say these markets are in sellers’ markets:

Contract ratios are a significant part of seller/buyer markets; if there is a high number of contracts compared to the active listings, it is a seller’s market.

 2023, compared with March 1, 2022, for all areas and types:

  • Active Listings (excluding UCB & CCBS): 14,739 versus 4,588 last year – up 221% – but down 5.5% from 15,598 last month.
  • Under Contract Listings (including Pending, CCBS & UCB): 7,810 versus 12,050 last year – down 24% – but up 16.6% from 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.
  • Chandler is the number-one market right now based on the Contract ratio.
  • Peak to trough on on appreciation home price was 13.3%
  • Active listings are very low right now compared to previous years; They may seem high compared to the last few years. 
  • Buyer demand has slowed a little with the interest rate hikes.
  • Fountain Hills, Glendale and Phoenix are strong seller markets per contract ratio.
  • Maricopa/buckeye is still in the buyers’ market. These cities are where there are a lot of new builds.
  • We all want rates to come down. They came down from 6.99% to 5.99 and are now back up to 6.75%; they bounce a lot; go to Bankrate.com to time interest rates.
  • Should you wait for the rates to come down?  Well, the demand is expected to rise once rates come down to payment levels.  Why not get the seller to buy down the rate now, with no competition, and you can still get a good deal?
  • Lease prices should be coming down more. 
  • The labor cost is coming down, but inflation is still not where it should be.
  • Phoenix labor is still good and growing more than in other parts of the country, meaning the housing demand.
  • Lack of inventory – Sellers just not having it. Lowest new active listings compared to previous years.
  • Price reductions are declining.  And they’re normal; it’s acting like a seller’s market.  
  • Days on the market are down to 33 days.
  • Seller-paid closing costs are still high in the 47% range.
  • The sale price to the list price is close to 97%.

Volumes remain much lower than a year ago but have recovered some ground. Monthly sales were down 29% compared with 2022, which is a significant improvement from 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, particularly Paradise Valley. You might expect demand to be fragile 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 three 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

  • The current pricing trend may contradict the claims by various amateur pundits and their daft YouTube channels, but almost no data supports the theory that prices will collapse from this point. For this to happen, we would need 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 rates discourage homeowners with mortgages from selling because that would mean the loss of their cheap loan and acquiring 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 compete for less with other sellers. This means much less need to cut their asking price, especially if they are patient and present their property well.

Here is a full list of all the charts, click here

I hope this helps; please call me to know what’s happening in your market. 

Yes prices are ticking back up, its in the data.  Although it doesn’t feel like it, it is.  From May 2022 till now, prices have come down 13.3%.  Will they go lower, still possible but it is what it is.

Youtubers click bait

They're not taking all the data into consideration and are typically not from AZ.

New Listings

Not many coming to market as a surprise. Lets see what the future brings.

Historically still low or average.

This is what is so frustrating for buyers.  The payments.  There are ways around this with refinancing and using the 2/1 buydown.  

Days on Market – Active Listings is the average cumulative days on market for Active Listings 

Contract Ratio indicates how “hot” a market is. It specifically measures the number of completed sales contracts relative to the supply of active listings. It is defined as 100 x (Pending Listings + UCB Listings) / Active Listings Excluding UCB. The higher the number the greater the buying activity relative to supply. If this number rises then it is a sign of growing contract activity and a positive signal for sellers. Conversely a falling number is a sign of a weakening market – either supply of active listings is increasing or contract activity is slowing, or both. In a balanced market for normal market segments, the value of the Contract Ratio is usually between 30 and 60. When it lies below 20 the market can be considered “slow” or a “cold market”. Above 60 can be considered a “hot market” and when it moves above 100 we regard this as evidence of a “buying frenzy”. In high-end luxury market segments the normal level is lower, usually lying between 15 and 25.

Cromford Market Index™ is a value that provides a short term forecast for the balance of the market. It is derived from the trends in pending, active and sold listings compared with historical data over the previous four years. Values below 100 indicate a buyer’s market, while values above 100 indicate a seller’s market. A value of 100 indicates a balanced market.

Cromford Market Index™ is a value that provides a short term forecast for the balance of the market. It is derived from the trends in pending, active and sold listings compared with historical data over the previous four years. Values below 100 indicate a buyer's market, while values above 100 indicate a seller's market. A value of 100 indicates a balanced market.

This is one of the reasons it’s so frustrating for buyers; we have low inventory, interest rates are high, and you have the uncertainty of what’s to come.  Home prices are predicted to be strong. You have to calculate the value of home ownership vs renting.  If you stay put for 3-5 years, you’ll be better off buying.  

Youtubers concentrate on the last 3 years, well I suppose it’s bad, but look at the past decade.  Listings are coming down, the contract ratio is climbing, and prices are reversing.  It’s all in the stats.

 It is possible that you are skeptical when I claim that prices are heading higher. List prices have been moving up for several months but sales prices, not so much. Until now that is. Look at the daily chart below:

The $264 we hit in the middle of January is now well behind us, and we are threatening to breach the $274 level. We may hit some resistance at this level, but there is also positive news coming from the percent of list department. Right now, homes are closing for an average of 97,2% of list. This is well up from the 96.5% we saw during January and the best reading since October.

The Federal Reserve will not like these signs because they want prices to decrease. This may result in interest rates moving higher again. This may suppress demand, but it may also make buyers think current rates are better than future rates, justifying a purchase decision now rather than later. That could be a wise move if prices and rates both rise.

 

Life is tough, especially when putting a roof over your head nowadays, it’s just expensive, and it feels like you struggling, right?  Some not so much more than others but items are expensive still, homes are expensive, rent is expensive, and the fed is trying to slow the buying of Americans.  Things are adjusting along with the post covid life.  Many mistakes were made, and now we’re paying for it.  

This data is from the Cromford Market Report, which I subscribe to and is the only way in Arizona to get true information.  It’s mostly been spot on since I’ve watched it, except when things turn fast like in the spring of 2022 with sharp interest rate hikes.  Data lags, so it’s hard to make decisions.  I can also get you specific data to your zip code, remember every zip code and city is different.  

Hope you’re well and i’d love to help!

You can reach me at 480-466-4917 or jay@jaybrugroup.com

Jay Bru

Leave a Reply

Top Posts

SUBSCRIBE TO OUR POSTS