Market Snapshot March 2023

   

The Headlines vs. Realty
 
The media continues to push the narrative that interest rates are killing the spring home buying season. Yet the facts do not support this theory in the greater Phoenix area.  While interest rates may be keeping some buyers out of the market – the impact seems to be the greatest on sellers.  When sellers cannot comparably replace their current interest rates if they buy – they stay put.  So although listings are far more abundant than last year, they are still roughly 40% below the normal range of 20,000-24,000.  Here are some interesting facts reported by Tina Tamboer of the Cromford Report:
 
New listings added to the Arizona Regional MLS are the lowest ever recorded going back at least 23 years. This may be shocking to some as there has been a 200% increase in supply year-over-year, but last year at this time supply was merely 4,820 active listings.
 
At 9,001, contracts are at their 4th lowest count since 2005, the lowest counts were in 2006-2008 and normal range is 11,000-13,000.
 
Low-level demand combined with even lower-level supply equals a seller’s market for Greater Phoenix. Not a crazy one like the last 2 years, but since coming out of a buyer’s market last December sale price measures have stopped dropping and have risen a modest 3.5% so far.
 
To summarize – we are in a gentle sellers’ market.  Demand is below normal (as indicated by the contract rate) but supply is even more constrained.  At the moment, only 5 cities are in a buyer’s market: Queen Creek, Maricopa, Buckeye, Casa Grande, and Sun City West. This is to be expected as the outer areas of the valley tend to be the first to tip to a buyer’s market and the last to recover. Supply is a slow moving number and does not appear to be on the rise.  Recent changes in FHA loans (increased loan limits of  $530,150 combined with reduced expenses) and sellers’ current willingness to help buy down buyer’s interest rates may encourage first time homebuyers to buy.  If demand takes off as it is threatening to do, we may once again find ourselves in the midst of a strengthening seller’s market in defiance of the headlines.
 
Russell & Wendy
 
(Mostly Wendy)