By Mike Bodeen · 18 January 2024
Back in October 2023, we were reporting the negative direction that the Phoenix Metro residential real estate market was taking if you were a seller. (see October 26th Cromford Market Index directly below)
As you can see, EVERY city in the October CMI was heading south – trending to a buyer’s market. We were hailing it as a “buyer window in time” when, better, IF, buyers could get back into the game.
The problem was not the desire, but the ability of buyers to afford 7% – 8% mortgage rates. It seemed apparent that they were not, as evidenced that every city was in tanking mode. For most of the cities, the dip in demand never crossed deep into buyer market territory, thanks to the extremely low inventory. All in all, we ended 2023 in a “balanced” market. A good place to start.
Less than 3 months since that slide, we’ve seen mortgage rates drop to the sub 7% range. With that drop, buyers have begun to “slowly” pick up the pace, but alas, sellers haven’t – yet.
So, the CMI, an early indicator of future trends, has now done a complete trend reversal favoring sellers in every city within the index. (See January 11th CMI Chart – below)
Without additional supply that exceeds demand, this trend will continue and further exacerbate affordability. The CMI is now showing that.
Frankly, this remains a major concern for “affordability” in Phoenix metro. We are applauding recent civic and private efforts to increase the supply of housing – certainly everything can help – within reason. But just because a municipality such as Phoenix has many ideas to increase housing does not mean those ideas are wise. The wise implementation of additional housing takes time to consider all their impacts.
The problem is not the effort, keep that going. But we’re late to the gate. The best thing that our local and state government can do now is to expedite all ideas to see which ones make sense to implement into action, then get out of the way. Unfortunately, that takes time.
Market data referenced in this article comes from The Cromford Report.