Here are some housing market metrics as provided by the ARMLS (Arizona Regional Multiple Listing Service) for August 1, 2022, compared with August 1, 2021, for all areas and types:
Active Listings: 17,957 versus 7,105 last year - up 152.7% - and up 24.6% from 14,406 last month.
Pending Listings: 5,291 versus 7,236 last year - down 26.9% - and down 8.2% from 5,766 last month.
Under Contract Listings: 8,058 versus 11,044 last year - down 27.0% - and down 6.5% from 8,621 last month.
Monthly Sales: 6,171 versus 9,139 last year - down 32.5% - and down 24.0% from last month.
Monthly Average Sales Price per Sq. Ft.: $285.93 versus $250.59 last year - up 14.1% - but down 4.8% from $300.38 last month.
Monthly Median Sales Price: $452,500 versus $400,000 last year - up 13.1% - but down 4.6% from $474,374 last month.
We all know a balanced real estate market means we have roughly the same number of buyers as we have properties listed for sale. It has been a long, long time since we saw a balanced market. For the past two years we have suffered through the tightest inventory we ever seen in our market. Multiple offers and no inspection contingency deals were the norm. It was crazy. Any time the housing is market is crazy in one direction it will inevitably swing back crazy in the other direction. Sure enough, we are seeing an over-supply of listings and a dearth of buyers.
From a seller’s perspective, June this year was dismal. This trend has continued as July was even worse. New listings are arriving much faster than demand can cope with. Listings increased by a whopping 25% in the last month!
Green 2019
Purple = 2020
Blue = 2021
Avocado = 2022 YTD
Now that the lack of inventory problem has been solved, let’s look at demand. There’s no nice way to say this. Demand has fallen off a cliff. Closed sales dropped by a whopping 24% last month and they are almost 33% lower than last year. Even in the high-end of the market as we have here in Corte Bella, demand is low, so the number of active listings is still plenty.
Prices are reacting much more quickly to the poor market conditions than expected. In 2005 and 2006, it took a long time for prices to change direction. In 2022, the change has happened almost overnight. This is probably because people are primed to believe price drops are likely whereas in 2005 most people still believed that home price never go down. Whatever the reason, sellers in 2022 have been willing to make quick and frequent cuts in their asking prices and accept offers well below those. The average percentage of deals closing at or above the listing price has dropped from 99.81% on July 1 to 98.74% on August 1 and the trend is strongly downward.
Further price declines are likely until a recovery in demand takes place. There is little distress in the market with foreclosures still low. Pressures to sell at lower prices are coming from the sellers themselves. Low demand mean they are competing with other sellers and a lower price is an obvious tool for them.
There are few reasons to expect an improvement in market conditions just around the corner. A large drop in interest rates would probably help, but this is not widely expected at the moment.
Speaking of interest rates, Mortgage rates as of August 8 for a 30-year fixed rate 20% down loan of $300,000 or less are approximately 5.875%. Rates are expected to remain constant. A stronger economy (not expected) would force mortgage rates higher. A weaker economy (more likely) would allow rates to decline.
The takeaway from last week’s performance haven’t changed except mortgage rates are steady:
· Inventory levels are up dramatically. + for buyers and - for sellers
· Demand is weak and getting weaker. + for buyers and - for sellers
· Mortgage rates are steady. + for buyers and - for sellers.
The Buyer's have the edge for the week of 8/1 - 8/7.
I am a year-round Corte Bella resident and I put 100% of my effort into Corte Bella sales transactions although on occasion, I will assist my sales clients relocating to another area in Arizona. As the market changes it is important you have clear picture of the value of your home should you decide to sell. No one knows Corte Bella than I do. I sell Premier Properties with Premier Service.
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