By Mike Bodeen · 27 February 2023
Everyone would love to know when the “bottom of the market” is, be it gold, stocks, or real estate.
I’m continuing to see a number of national real estate pundits predict sharply falling home prices in some major metro areas in the country, among them, Phoenix. Unfortunately, when inaccurate information gets out there it affects right thinking in folks, especially those who most need to enter the home market for the first time.
We’ve been recommending to potential Phoenix buyers for several months now, not to hit the “pause button” but rather to find that right home and secure it if at all possible. Yes, mortgage rates spiked, which was the cause of the stoppage in the market. That stoppage increased inventory and reduced prices, a perfect storm for the home buyer. We advised that this was a limited window of opportunity that is now open.
“Yea, but you’re a Realtor, and you guys always say that,” you say.
Well, I hope that’s true. If anyone took my advice to buy at any time over the past 22 years and held onto that home or did a simultaneous cross sale for another home, they would have done well for themselves. Actually, they would have done VERY well.
Note this week’s Annual Average Sales price Per Square Foot chart just below. Even if you bought a home in any given year, and though it may have subsequently lost value, that was a blip in time. At the end of it all, you would be on top where the average sales price per square foot (PSF) is now at $287 PSF.
Getting back to the pundit naysayers, whereas their predictions of metros falling in price in areas such as California, is accurate (and will get worse), the Phoenix Metro area is a different animal. We have a real estate problem for sure, but our issue is demand that will continue to outstrip supply. Pricing that will continue to drive spikes into the hands of wanna-be buyers.
Below $1 Million Dollars, our listing supply is falling. We currently have 12,682 active listings. In 2019 we had 16,612. New homes are not being built fast enough, which will be further magnified as new home permits are dropping.
In Phoenix (city), there are only 2,076 homes for sale below $1 Million, compared with 3,919 for sale in 2019. And guess what, the average PSF for Phoenix is rising.