July 17, 2022 - - After two straight years of strong sales activity and rapidly rising home prices, our market is cooling and cooling rapidly, with a balanced market now a reality. The days of multiple offers and bidding wars have ended as “For Sale” signs multiply. A sudden increase in interest rates (with a possible 1% hike this coming week) and record home prices have sent many potential buyers to the sidelines. Mercifully, the days of incessant TV and radio commercials by a certain local brokerage company known more for its marketing prowess than its seller experience, with sellers boasting about receiving $100,000 over their asking price (maybe their asking price was artificially low in the first place?) have become a relic from a different age. The time has come for sellers to reset their expectations while buyers consider more options before deciding.
JUNE NUMBERS AS REPORTED BY ARMLS:
Sales volume was down yr-over-yr by 20.1%.
The median sales price was $475,000, up 18.8% yr-over-yr.
The median sales price for June matched May’s $475,000.
The median sales price of $475,000 will be the high water mark for the year.
The average sales price in June was $590,800, up 16.3% yr-over-yr.
The average sales price hit its high-water mark for the year in April at $591,100.
Yr-over-yr gross dollar volume was down from $4.91 bil to $4.56 bil yr-over-yr.
The 7.1% decline in gross dollar volume was the first month we’ve seen a yr-over-yr decline since the onset of COVID-19.
As of today, supply is up 38.6% month-over-month and whopping 237.3% year-over-year.
Fueled by rock-bottom interest rates and restricted supply, the median sales price in Maricopa rose to $187,000 after the outbreak of COVID-19, an increase of 62% in a little over two years. It wasn’t a coincidence that along with this prolific and unsustainable rise in housing prices, inflation spiked. Our economy has also seen a rise in the cost of other basic needs like food and fuel, leaving public policy makers no choice but to step in and reverse course. It appears one of their strategies to curb inflation is to slow down housing. For the time being, at least until inflation is under control, the interest rates of last year will only be seen in our rear-view mirror. The central bank has raised its benchmark interest rate three times this year. The most recent hike in June was three-quarters of a percentage point, the largest since 1994. In concert, mortgage rates also shot up. According to Freddie Mac, the current 30-year fixed rate mortgage is 5.51%, nearly double the 2.88% rate at this time last year. Our cooling housing market reflects our overall economy and the steps taken by our public policy makers to get inflation under control.
As “affordability issues take their toll”, it has become much more difficult for traditional buyers, particularly first-time buyers, to purchase a home. In a report done by First American Financial Corporation, Phoenix is listed as the fifth city in the country where affordability has declined the most year-over-year at 56.1%. Charlotte, North Carolina, led the nation at 62.5%. In the report, Mark Fleming, Chief Economist at First American, reiterates what we already discussed, “The pandemic-driven supply and demand imbalance that fueled historically strong house price appreciation is coming to an end as the housing market rebalances to a new normal.”
In Conclusion: In June, we saw a 20% year-over-year decline in the number of homes sold, as reported by ARMLS. The recent changes in monetary policy are accomplishing the desired goal of slowing housing demand, which will slow inflation. When July’s closing numbers are reported, the impact of these changes will be visible and undeniable. Real estate runs in cycles, ranging from hot to cold and everything between. The policy is to raise interest rates and cut demand, as demand drops supply will build. In turn, prices will moderate, and when prices moderate, demand will rise once more. Traditionally, this cycle takes roughly 12 - 18 months to go from where we are today until prices stabilize and demand builds.
Credit: Tom Ruff, Arizona Regional Multiple Listing Service.
Below is the tale of the tape for the last week of June:
ACTIVE LISTINGS AS OF 07/17/22:
· 22425 N Los Gatos Dr., Quinta Model, 1,283/sf., 2/1.75, Corner Lot - $429,000
· 22516 N San Ramon Dr., Quinta Model, 1,283/sf., 2/2, GC - $459,999
· 12812 W Junipero Dr., Arcada Model, 1,660/sf., 2/2, vacant - $500,000*
· 13510 Nogales Dr., Arcada Model, 1,684/sf., Private lot - $505,000
· 22713 N Pico Dr., Arcada Model, 1,636/sf., 2/2, Remodeled - $549,000
· 13432 W Los Bancos Dr., Encanto Model, 2,095/sf/. 2/2, - $599,000*
· 12959 W. Rincon Dr., San Marco Model, 1,904/sf., 3/2 - $600,000
· 12839 La Vina Dr., Encanto Model, 2,095/sf., 3/2, Casita - $625,000
· 22823 N Los Gatos Dr., Encanto Model, 2,095/sf., 3/2, Casita - $650,000
· 12847 W Panchita Dr., Alameda Model, 2,726/sf., 3/2.5, Updated - $749,000
· 12832 W Rincon Ct., Cambria Model, 2,470/sf., 2/2, Pool – $799,900
· 23023 N Pederegosa Dr., Mirada Model, 2,593/sf., 2/2.5, Pool - $875,000*
· 13307 W Rincon Dr., Figueroa Model, 2,784/sf., 2/2.5, GC, Pool - $897,000
* New listing this week
** Temporarily off market
*** Price reduction
COMING SOON
· None.
UNDER CONTACT ACCEPTING BACKUPS:
· 13105 W Junipero Dr. Arcada Model, 1,684/sf., 2/2 - $489,900
UNDER CONTRACT CONTINGENT ON BUYER SALE:
· 13005 W Panchita Dr., Cambria Model, 2,690/sf., 3/2, Casita - $699,995
· 23215 N Cardenas Dr., Mirada Model, 2,805/sf., 3/3.5, Casita - $729,950
PENDING LISTINGS:
· 13354 W Junipero Dr., Arcada Model, 1,931/sf., Casita, Private lot - $599,000
· 23325 N De La Guerra Dr., San Marco Model, 1,904/sf., 2/2, Pool - $623,500
· 13544 W Figueroa Dr., Encanto Model, 2,095/sf., 2/2, MBR Remodel - $629,500
· 23227 N Cardenas Dr., Mirada Model, 2,840/sf., 3/3.5, Casita - $739,000
· 13232 W Los Bancos, Figueroa Model, 2,784/sf., 2/2.5,3 car garage - $795,000
· 22410 N Del Monte Ct., Mirada Model, 2,559/sf, 3/2.5, Golf Course - $925,000
SOLD LISTINGS (07/01/22 - 07/17/22):
· 22719 N Arrellaga Dr., Arcada Model, 1,636, 2/1.75 - $460,000
· 12930 W Micheltorena Dr., Arcada Model, 1,612/sf., 2/2, Remodeled - $550,000
· 22516 N Padaro Dr., San Marco Model, 1,904/sf., 2/2, 2.5 Garage, Pool - $625,000
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.
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