In the dynamic realm of Greater Phoenix real estate, the past year has seen a confluence of factors shaping both buyer and seller landscapes. Against the backdrop of an election year, the housing
market witnessed shifts in demand, pricing, and policy influences. As existing homeowners maintain their positions, the spotlight intensifies on first-time buyers, affordability concerns, and supply dynamics. Rental-versus-purchase considerations, coupled with evolving mortgage rates and stimulus effects, underscore the complexities at play. This overview delves into the market nuances, shedding light on trends, challenges, and opportunities that defined the Phoenix real estate landscape from March 2023 to March 2024.
The Spring Housing Season is Upon Us
What's Hot & What's Not in Greater Phoenix
For Buyers:
Supply is up 14% over last year, still 31% below normal, but 16,886 active listings feels like an avalanche compared to 2 years ago when there were only 4,400 to choose from.
Higher mortgage rates continue to keep buyer competition lower than normal, but even mild declines in the rate have resulted in a boost in weekly accepted contracts. Closings over asking price have edged up seasonally to 17% of March sales so far, but the majority of sales are negotiated down by an average of 2.1% below list.
Builders have been ramping up new single family home permits over the past 7 months, up 32% since June 2023. Over the last 3 months, 73% of new home sales closed have involved builder incentives paid to the buyer, with at least 50% paying $11,500 or more.
The median sales price has barely moved for 10 months. Starting at $440,000 from June-July 2023, stagnating at $435,000 from September-December, dropping to $430,000 from January-February 2024, and now back up to $441,000 in March. While the current appreciation rate from last March measures +5.8%, over the next 2 months this will start to move closer to 3%, which is in line with the rate of inflation.
In short, don’t listen to affordability reports that say the majority of homes are not affordable to the masses. You only need to find the one home that’s affordable to you. Don’t give up.
For Sellers:
Spring is statistically the best time to be a seller in Greater Phoenix as buyer activity closes in on its seasonal peak from April through May before slowing down from June through December. This season some areas and price points have been heating up more than others compared to last year, but heat is not all about demand because it’s difficult to increase sales without supply for sale.
Areas with the highest percentage increase in contracts over the past 2 months happen to be on the edges of the Valley, such as Black Canyon City, Carefree/Cave Creek, Rio Verde, Sun Lakes, Wittmann, El Mirage, and Avondale. With the exception of Avondale, none of these areas feel particularly hot to active sellers because there’s more competing inventory to accommodate the increase in demand.
When supply is taken into account, the hottest areas of Greater Phoenix where supply isn’t quite sufficient for Spring demand gravitate to the south. Namely Avondale, Tolleson, South Phoenix, Ahwatukee, Chandler, Gilbert, and San Tan Valley.
While median prices in these areas are still flat, reasonably-priced sellers are selling 1-2 weeks faster than the current 4-week median time frame.
Commentary written by Tina Tamboer, Senior Housing Analyst with The Cromford Report©2024 Cromford Associates LLC and Tamboer Consulting LLC