By Mike Bodeen · 6 February 2023
Before I re-launch on this important topic, let’s get you updated on January’s sales numbers extracted from our local MLS, courtesy of The Cromford Report.
Active Listings: 15,598 vs 4,876 last year – up 220% – but down 4.3% from 16,298 last month
Under Contract Listings: 7,810 vs 11,302 last year – down 31% – but up 43% vs 5,456 last month
Monthly Sales: 4,346 vs 7,098 last year – down 39% – and down 15% from 5,139 last month
Monthly Average Sales Price per Sq. Ft.: $267.82 vs $274.42 last year – down 2.4% – but up 0.7% from $266.01 last month
Monthly Median Sales $: $410,000 vs $433,500 last year-down 5.4%- but unchanged vs last month
Double great news for buyers is the drop in inflation numbers bringing the 30-year fixed rate mortgage down to just below 6% last week. The other great news for buyers is a 220% increase in listing inventory from one year ago!
The bad news for buyers is that listings decreased 4.3% from last month and a massive jobs report last week reported an increase of over 500,000 new jobs reversed those mortgage rate declines. What rates will do from this point is anyone’s guess, but I’m hoping we can at least hang out in the 6% range for a while. The 6% number has been a motivator for buyers.
January Phoenix Metro sales were down 39% from last year and 15% from last month. Under Contract sales, the precursor of future closings, are down 31% compared to 2022, but up 43% from last month. The average monthly sales price per square foot (PSF) has dropped 2.4% from one year ago, but rose 0.7% from last month.
Mike’s Rant – Part 2
Three weeks ago, we wrote about our nation’s greatest housing danger being that due to a number of factors, most noteworthy being a lack of home affordability, Phoenix and perhaps the nation as a whole, are advancing (declining?) towards becoming a state and nation of renters and rentals.
I wrote that per a November 2022 study by the National Low Income Housing Coalition, Metro Phoenix has an affordable housing deficit of almost 120,000 homes. I’ve since been informed that figure is too low.
My main concern stems from the huge growth trend of multi-housing apartment rentals or near-zero lot line single-family detached homes that are built purposely for renting, not owning, versus adding single-family-detached housing for purchase.
Following that Snapshot, on January 29th, the Cromford Report, wrote the following (bold is mine, for emphasis):
Single-family detached building permits continue to fall in Maricopa and Pinal counties. Only 997 were reported in December, the lowest monthly total since January 2015. The fourth quarter of 2022 produced only 3,536, down from 7,597 a year earlier. It looks like the supply of new single-family homes is going to be very tight during the second half of 2023.
The opposite is true in multi-family and attached homes. Permits for these are hitting new record highs. 3,397 units obtained planning permits in December. This is by far the largest monthly total we have ever seen; the previous record being held by July 2022 at 2,546. At 5,893, the count for 4Q 2022 was the highest quarterly total ever and exceeded the single-family count by 67%.
Per Cromford: These are very unusual number for permits and suggest that the mix of homes built in Greater Phoenix will be much different in the coming year. We are likely to see far fewer detached homes and far more attached homes and apartment blocks. This will help affordability and increase population density, but the single-family detached home which has dominated the residential market for the entire history of Phoenix is starting to lose market share.
As Cromford notes, multi-family is good for rental affordability, and that’s a good thing, but it’s not the same as ownership. And it’s not the same as home ownership with a single family detached home.
Currently, it’s a very difficult market for our children, and as we look down the line further, towards our grandkids, we must ask what options will be there for them?
Market data referenced in this article comes from The Cromford Report.