By Mike Bodeen · 14 October 2019
Market Summary for the Beginning of October
The cromford report ran a great article this week that not only dialed down on some recent changes in our local market, but got into some prognostications on the greater national economy and what we might expect. Such a great article thought it best you hear it from the horse’s mouth.
“The market remains hot and very unbalanced in favor of sellers but at least the situation did not get more extreme.
Per Michael Orr of the Cromford Report, sales activity always declines steadily as the temperature cools, despite the influx of snowbirds, some of whom decide to buy somewhere, often in a spot more conducive to retirement or vacation rather than commuting. In almost every year there is a move in favor of buyers between September and November, though the effect can be slight, moderate or significant. This year it looks to be slight, but it still exists.
Here are the ARMLS (MLS) numbers for October 1, 2019 compared with October 1, 2018 for all areas & types:
Active Listings: 13,755 vs 16,819 last year – down 18.2% – but up 1.1% from 13,609 last month
Under Contract Listings: 9,848 vs 8,679 last year – up 13.5% – but down 4.6% from 10,318 last month
Monthly Sales: 7,987 versus 7,067 last year – up 13.0% – but down 10.4% from 8,913 last month
Monthly Average Sales Price per Sq. Ft: $170 vs $161 last year – up 5.1% – and up 0.2% from $169.19 last month
Monthly Median Sales Price: $279,500 vs $260,000 last year – up 7.5% – but down 0.2% from $280,000 last month
Compared with August 2019, September gave us
a slight increase in active listings
a noticeable drop in demand numbers (sales, pending, under contract)
very little movement in sales pricing
a large upward movement in for-sale pricing
a large upward movement in under contract pricing
Mortgage interest rates have plummeted since January creating an unexpected jolt of affordability into the housing market. In most circumstances, greater affordability translates into strong demand. However, there are now significant signs of weakness in the US economy (and the rest of the world). International trade disputes have a history of hurting both sides quite badly. In the USA, the manufacturing and agriculture sectors are probably the most exposed to unwelcome trends.
The Federal Reserve will often cut interest rates in a faltering economy and if they do, and if these cuts translate to even lower mortgage rates, we could see continuing jolts of affordability for the housing market.
If we are to enter a recession, then the housing market will not be the leading cause like it was in 2008. In Central Arizona it should remain in pretty decent shape as long as the current employment trends hold reasonably steady. Unlike the last recession, the Greater Phoenix housing market looks well placed to weather a mild to moderate economic storm.”
Market data referenced in this article comes from The Cromford Report.