MLS Supply Up 45% in 6 Weeks; Rising Interest Rates Dropping Demand Quickly.
The Phoenix housing market has been stratospheric since the end of 2014. It has been pretty easy to project what will happen in the short term (1-2 years), but recently things have begun to change. Below is a summary of the Phoenix housing market from a buyer and a seller’s perspective. I relied heavily on the Cromford Report for this post.
For Buyers:
Active supply is up 40% from this time last year, but still 72% below normal for this time of year but rising quickly. The annual change in inventory is impressive, but it’s the short-term growth sending shock waves throughout the market. Inventory listed between $400K-$500K is up 35% in just 3 weeks. Counts in all segments between $500K-$1M are up 99% in 6 weeks and the count from $1M-$1.5M is up 54%, also within 6 weeks. Not all price ranges are rising in inventory. Properties listed below $400K are still flying off the shelves and declining in supply.
The increase in inventory may seem like an early Christmas miracle, but it’s not coming from a massive flood of new listings hitting the market. In this case, new listings are at normal levels and not excessive, but fast rising mortgage rates have reduced the number of accepted contracts and closed the drain.
While recent interest rates are disappointing for many buyers, causing some to drop out and wait, history has shown us they rarely stay high, or low, forever. While it’s near impossible to predict when interest rates may decline, if we look over the last decade when interest rates have risen by 1% or more within a year, it has taken from 1 to 3 years for them to return to their original starting point. Even when rates increased by a whopping 5% over 14 months from 1980-1981, it took only 1.5yrs to drop back to where they started. Future expected interest rate drops over the next few years along with moderate home price appreciation and monthly principal reductions may provide today’s buyers the opportunity to lower their payments by hundreds of dollars down the road.
For Sellers:
The market is in the early stage of shifting out of an insane seller market and into a mere frenzy seller market. Before we know it, it could be a regular old hot seller market where properties still appreciate but take multiple weeks to sell, buyers don’t waive their appraisal contingency, and sellers happily pay for home warranties. But before all of that happens, it starts with one simple act from a seller, a list price reduction.
As inventory has risen at a fast pace over the past 6 weeks, so have the number of weekly price reductions as sellers compete for fewer buyers. Listings between $400K-$500K have seen a 103% increase, with the median price drop at $13,000. Price drops in $500K-$800K range increased 157%, with median drops between $16,000 and $20,000. Drops in the $800K-1.5M range increased 125%, with a median drop between $25,000 to $50,000.
So far, price reductions have proven effective in keeping the median days before contract around 7 days. However, as inventory continues to rise in the coming weeks, price reductions may not be enough to keep some properties from lingering longer in active status, creating more choice for buyers and strengthening their bargaining power.
While the market is still strongly favors sellers, it is changing rapidly. For those sellers waiting to sell close the peak of price, this may be the time to list. Prices are still projected to continue rising as price is a trailing indicator. However, if the moderation of the housing market continues, prices will level off in the short run and in the long run could decline some should the coming recession be particularly severe. A major decline in prices is not however likely in the cards. Or course, that prediction and $6.00 will get you a cup of coffee or maybe a gallon of gas.
I focus my efforts on Corte Bella, which is a higher end, gated, golf retirement community and as such, it often acts differently than County wide trends. For example, many homes in Corte Bella are purchased for cash so interest rates do not impact a buyer’s purchase decision. There are other dynamics affecting buying and selling homes in Corte Bella, which is why you need an expert who resides in and focuses on Corte Bella. Don’t feel you have to go it alone. If you are thinking of buying or selling, call me and let’s discuss your situation.
ACTIVE LISTINGS:
· 13005 W Panchita Dr., Cambria Model, 2,690/sf., 3/2, Casita - $699,995*
· 12832 W Rincon Ct., Cambria Model, 2,470/sf., 3/2, Pool - $825,000
· 22410 N Del Monte Ct., Mirada Model, 2,559/sf, 3/2.5, Golf Course, Water - $925,000
· 13219 W Junipero Dr., Figueroa Model, 2,784/sf., 3/2.5, Golf Course - $940,000
· 13307 W Rincon Dr., Figueroa Model, 2,784/sf., 2/2.5, Golf Course, Pool - $1,055,000
* New listing this week
** Temporarily off Market
COMING SOON
· 129004 Quinto Dr., Encanto Model, 2,095/sf., 3/2 - $670,000
UNDER CONTACT ACCEPTING BACKUPS:
· 12903 W La Vina Dr., Encanto Model, 2,066/sf., 3/2 - $630,000
· 22516 N San Ramon Dr., Quinta Model, 1,283/sf., 2/1.75, Golf Course - $465,000
UNDER CONTRACT CONTINGENT ON BUYER SALE:
· 22719 N Arrellaga Dr., Arcada Model, 1,636/sf., 2/2 - $470,000
PENDING LISTINGS:
· 22409 N Los Gatos Dr., Quinta Model, 1,283/sf., 2/1.75, Over-sized Lot - $425,000
· 13418 W Nogales Dr., Montecito Model, 1,351/sf., 2/2, Corner Lot - $485,000
· 13755 W Nogales Dr., Arcada Model, 1,660/sf., 2/2 - $524,500
· 22310 La Positas Dr., Arcada Model, 1,636/sf., 3/3, Casita - $548,000
· 12930 W Micheltorena Dr., Arcada Model, 1,612/sf., 2/2, Recent remodel - $550,000
· 22225 N Pedregosa Dr., Encanto Model, 2,143/sf., 3/2 - $559,000
· 13803 E Figueroa Dr., Encanto Model (?), 2,143/sf., 3/2 - $634,900
· 22118 N Las Positas Dr., Encanto Model, 2,143/sf., 3/2, Pool, 3 Car Garage - $709,000
· 13228 W Santa Ynez Dr., Figueroa Model, 2,7984/sf., 3/2 - $770,000
· 22914 N Hank Raymond Dr., Granada Model, 3,027, 3/2, Golf Course - $859,000
SOLD LISTINGS (05/01/22 - 05/22/22):
· 22617 N Arrellaga Dr., Arcada Model, 1,684/sf., 2/2 - $474,900
· 12855 W El Sueno Dr., Encanto Model (Expanded), 2,143/sf., 3/2 - $569,000
· 13416 W Santa Ynez Dr., Cambria Model, 2,423/sf., 3/2, Pool, Extended Garage - $685,000
· 23036 N Padaro Ct., Granada Model, 3,037/sf., 3/2 + Casita. - $675,000
· 22807 N Del Monte Dr., Cambria Model (Expanded); 2,362/sf, 2/2, Golf Lot - $699,000
· 13423 W La Vina Dr., Mirada Model (2,560/sf.) + Casita (247/sf) 2,840/sf total - $750,000
· 22208 N San Ramon Dr., Figueroa Model, 2,784/sf., 2/3, Golf Course - $845,000
· 13230 W Rincon Dr., Figueroa Model, 2,784/sf, 3/2.5, Owned Solar - $829,000
· 23212 N Del Monte Dr., Alameda Model, 2,976, 4/3.5, Golf Course - $949,000
· 22508 N Del Monte Ct., Figueroa Model, 2,784/sf., 2/3, Golf Lot, Pool - $1,149,000
I am a Corte Bella resident. I may not be the listing agent on the above properties. If you or someone you know is interested in touring one of these properties, I would be happy to arrange a showing.
Jon K. Ladd, Realtor
ICON Homes AZ
KELLER WILLIAMS REALTY ELITE
2403 N. Pebble Creek Pkwy, Ste 101-A
Goodyear, AZ 85396
480.205.7331
jkladd@iconhomesaz.com
www.iconhomesaz.com
AZ License #SA693977000
The information contained herein is believed to be accurate however you are encouraged to confirm this information before relying upon it.
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