By Mike Bodeen · 30 December 2024
As we end one of the most disappointing and awful years in Phoenix residential real estate history, as is my custom, I take stock of my previous year’s prognostications (guesstimates) about our market. How did I do? Like most years, hits and misses. You decide.
I made 5 guesstimates about 2024.
The Misses:
Mortgage Rates: I missed this one. Though I did have a caveat – sort of. One year ago, I said that rates will go lower. At the beginning of 2024, rates were around 6.5%. I said, “Assuming inflation stays in check, mortgage rates will drop further…” Well, did inflation stay in check? It depends on the definition of “stays in check.” Most people would say no, it did not stay in check. It may not have gotten worse, but it lingered, and a majority of Americans voted to change presidents based on this economic issue. Instead, rates are ending 2024 slightly over 7%. This one thing affected most every other metric.
“…inflation…It may not have gotten worse, but it lingered, and a majority of Americans voted to change presidents based largely on this one economic issue.”
Listing Inventory: I Missed this one. At the end of 2024, we had 15,000 or so active listings. We now have 20,000 – a 33% increase. I said one year ago “that a lowering of rates to 5% to 6% could drop inventory below 10,000.” How would that happen? Lowering inflation.
The Hits:
Sales: A hit – but more of a bloop single: I said one year ago that sales “will hang out in the 70,000 to 80,000 range.” It’s looking like we’ll end up with 72,000 sales this past year. But to be honest, I was really thinking we’d be in the 80,000 range.
Appreciation: A solid Hit: Many national “experts” were predicting Phoenix would “plummet” in value, as in a “crash.” Instead, the Phoenix Metropolitan area, according to the Cromford report, registered an annual average gain of 4.3%, and a 3.4% annual median price increase.
Rentals: A solid Hit: At the end of 2024 our rental market was averaging $1.35 per square foot (PSF). Back then, I said, “Many apartments that are currently in the pipeline will come to market this year. I think the effect will be a stagnation in pricing, still hanging around the $1.35 PSF range. We ended the year at $1.35 PSF.
So, I and many others, especially buyers, say good riddance (meaning: A welcome loss or departure) to the 2024 real estate market. Will we see better things in 2025? Stay tuned for our annual prognostication of the market next week.
But more importantly. May our joy, yours and mine, in 2025 be exceedingly great, regardless of what comes our way!
A Joyous New Year to All of You!!!
Mike, Jonathan, Terri, Barb and Natalie
The Bodeen
Market data referenced in this article comes from The Cromford Report.