By Mike Bodeen · 21 April 2025
No one knows (or is supposed to know) what a home actually sells for until it’s closed, as in the deed recorded, the seller gets paid, keys turned over, etc. This is because the negotiated sales price is confidential between seller, buyer and their agents – for good reason. If a deal goes south before it closes, the home can go back on the market without future buyers knowing how much the seller agreed to sell it for. Public knowledge of that information would place the seller at a significant negotiation disadvantage.
Despite awful (read: unaffordable for most) mortgage rates, the Phoenix Metro residential real estate market has been remarkably strong, pricewise. But we know the market has slowed, as sales have dropped 34% compared with 3 years ago. We know that the number of listings have continued to rise. We know that unsold homes are staying on the market for months compared to weeks. This is happening throughout the country, not just in Phoenix Metro. But surprisingly, our average sales prices in Phoenix had still been rising – at around 4% per annum.
“In the past three weeks we’ve observed a significant downward shift in the actual average sales price per square foot (PSF).”
That is, until now. That sales price winning streak appears to be changing. Correct that; is changing! Shortly, media headlines around the country will be reporting: Home Prices Dropping! And friends, it won’t be fake news! And you can ignore the national S&P Case-Schiller Index when it comes out – these sales numbers are 3 months old when the MSM reports it. But we know that as Phoenix real estate goes, so goes the country.
In the past three weeks we’ve observed a significant downward shift in the actual average sales price per square foot (PSF). (see chart)
The Cromford Market Chart shows us that home prices can be viewed in 3 different ways:
Under Contract List Price per Square Foot (PSF)
Closed List Price PSF
Actual Sale Price PSF
The green line (Under Contract List Price PSF) back in December registered $350 PSF. Then in the first weeks of this year it dropped down to the $335 to $340 PSF range. This number is a leading indicator of future closings. In whichever direction it goes, prices will follow.
You’ll note that the brown line of the chart, the closed list price PSF most recently closed at $315 PSF. But the actual sales price PSF number, the red line, which is the final truth, has dropped to $302 PSF – a 4.3% decline in just 3 weeks. Based on current sales under contract, the Cromford Report is expecting a drop to $289 to $301 PSF by May 15th.
Our national hope has been that mortgage rates would drop to an affordable level. They have not. Many feel the only way that’s going to happen now is for the country to fall into a recession, which is the fear of many economists. Some see this as more of a possibility than not. And that’s not good news for the many who would be out of work.
These are not the types of Market Snapshots that we get joy out of. But one thing you can know for sure. We call it like we see it – and always will. We’re not always right, but we’re always honest!
Market data referenced in this article comes from The Cromford Report.