Many potential home buyers and sellers are asking whether now is a good time to make a move. In this month’s Phoenix Market Update, we look at market indicators that might help us predict the future.
Of course, it is impossible to predict the future, but we can make certain assessments about today’s Phoenix market and draw some conclusions about what’s to come. Leading indicators help reflect future performance of the market. Trailing indicators show what has already happened.
Sales price is one trailing indicator and is the last measure that indicates something has already shifted in the market. Sales prices indicate behavior and actions that happened 30 to 60 days ago. We have seen Sales price per square foot increase every month in 2023, up 6.4% since December. So, what happened?
Listings under contract is another indicator. Volatile interest rates have sidelined many buyers and for nearly 12 months, we’ve seen the fewest numbers of buyers in escrow at any time since 2009. This might indicate, and does indicate, a very slow market. Buyer activity is down 18% from where it should be this time of year. If we had a normal level of inventory, this would be a very strong indicator of a buyer’s market.
However, when we compare buyer activity with seller activity, we get a different story. Currently, we have the third fewest active listings over the last 18 years – and that is despite massive population growth in the valley. Current seller activity is a whopping 42% below normal. There are not enough new listings coming into the MLS to replace those that are going under contract.
Adding to the lack of inventory, single-family home permits dropped by 74% between March and December last year, so builders are not adding significant supply at the moment. iBuyers, like OpenDoor and OfferPad have seen their supply go from 12% of of the market to just 3-4% today, and that’s continuing to decline. Foreclosures are still at record low levels with little evidence to support a significant rise. And with many homeowners holding a mortgage at or below 3% interest rates, they have little incentive to sell and move to a 6 or 7% mortgage rate. There appears to be little relief of inventory shortage in the near future.
Low buyer activity, paired with even lower seller activity, points to more upward pressure on prices in the Valley. As supply continues to decrease, seller concessions are decreasing, prices are increasing, and seller positions are strengthening.
And, Maricopa county was the fastest growing county in the United States again in 2022. All indicators point to increasing prices in the foreseeable future. Which makes this an ideal window for buyers to get into the market before prices become even more unaffordable. Though sellers may lament having to help buyers buy down their interest rates, they may be afforded the same benefit when they choose to make a move.
Fortunately, all indicators point to your advantage in having an agent who can help you navigate this wild market. And that’s me. When it’s time to make that move, please give me a contact me– Let me help YOU find or sell “Your Home By Amber Smale”.
Be on the look out for next month’s Phoenix Market Update and Follow me on Facebook!
