By Mike Bodeen · 27 March 2023
Is the Phoenix Metro residential real estate market strong or weak? Spoiler alert. An argument can be made for both, which depends on whether you’re buying or selling. Let’s see how this can be.
First, for buyers, the Phoenix Metro market fell in value this last year from $455,000 to $417,000 – an 8% drop. The number of listings on the market available to purchase is currently 14,500 – a 187% gain from March of 2022. It’s currently taking an average of 77 days to sell a home. One year ago, the average was 31 days. This means there’s a lot fewer bidding wars and sellers are much more apt to provide financial incentives – half of sellers are. Listings under contract are off by 21% from last year. Sales per month are off 26% from one year ago.
Clearly this is a huge help for buyers, even if mortgage rates are now hovering between 6.5% and 7% – over twice what they were in early 2022. Yes, it’s unfortunate that buyers are not getting the benefit of those lower rates. But our memories are short. As mentioned previously, when we had 3% mortgage rates we had the multiple offers (10 or more) with total buyer frustration. Many buyers left that market throwing in the towel. Because rates increased, so did the white-hot market. Now, they can shop with less anxiety. Our counsel continues to encourage buyers to find the best house they can for the money and get into the game, before the seller’s market comes back.
Ah, a segue…
For sellers, the market exhibits strength. For now, the pricing bottom is in the rear-view mirror. Yes, though there are many fewer buyers in the market, there is much less competition in homes for sale. 14,500 homes remains way low historically. In 2008, you may or may not recall we had 56,000 homes on the market. Supply and demand are in balance except that inventory is dropping again. Prices are again on the rise! Monthly sales pricing per square foot (PSF) rose $8.00 PSF from last month and is now at $278 PSF. Listings under contract have increased slightly over last month, but substantially over last quarter (9,528 vs 6,072 – a 58% increase)
So in true agent double-speak, we’re seeing good news for both buyers and sellers. Having said that, my strong leaning is that time is not an ally of the buyer.
Today’s chart we put forth to the many naysayers who were convinced that large metro markets, such as Phoenix, will have an epidemic of foreclosures. This was stated when COVID started, and for a few months listing inventory exploded, but then followed one of the biggest price escalations in our history. Well, that rumor (lie) is being perpetrated again. This pic is worth a thousand words.