By the numbers: Phoenix housing market primed for influx of buyers
By Terrance Thornton | Digital Free Press
As median sales value remains relatively stagnant and volume of listings remaining at historic lows, the Phoenix metropolitan housing market is experiencing more ebb than flow at the moment, real estate experts say.
“There weren’t many bright spots in 2023,” said Butch Leiber, outgoing president of the Board of Directors at Phoenix Realtors. “Interest rates dropped 1% in the last two months, and year-to-date median sales prices have been steady this year compared to last. However, the price per square foot is up 6% over last year.”
But while data points suggest a lackadaisical state of economic affairs, Mr. Leiber reminds interest rates appear destined to continue to dwindle in coming months.
“Nobody wants to buy or sell during the holiday season,” he said. “If we had seen that 1% drop two months ago, you would have seen a flurry of buyers back on the market. I believe that if we continue this trend, which many economists say we will, it will bring buyers back to the market first.”
According to data provided by Phoenix Realtors, pending sales are down 14.1%, and days on the market jumped from an average of 37 through November 2022 to 65 in the same 11 months of 2023 across the Valley of the Sun.
Here are the numbers in Phoenix:
For Mr. Leiber, who is a managing broker at Realty Executives, says while sales opportunities in the market are fewer, motiviated buyers and sellers are finding ways to get deals done.
“Motivated home buyers and home builders are offering greater concessions this year than typically seen,” he said. “Usually, there’s an average of $4,500 in concessions on a home, but this year, we’re seeing concessions worth $10,000 and more, including interest buydowns. That saves a buyer hundreds of dollars a month.”
About six months ago, the Phoenix housing market was seeing increases in price valuations based on dwindling homes for sale and explosive population growth meanwhile in December 2023 prices of home have cooled.
In places like Tempe, Chandler, Glendale and Avondale housing prices continue to see a leveling out.
A look at data provided by Phoenix Realtors shows new Phoenix single-family listings increased 1.9% and 6.8% for townhomes and apartments meanwhile pending sales decreased 32.3% for homes and 34.7% for multifamily dwellings.
Inventory, which remains at historic lows, numbers show, decreased 18% for single-family homes and 8.1% for multifamily homes as median sales price increased 5.6% to $475,000 for single-family homes and 11.1% to $347,500 for townhomes or apartments.
A look at the Scottsdale housing marketplace
For more than 50 years, Gary Shapiro has been living and breathing Scottsdale real estate.
“Scottsdale specifically remains the crown jewel in the Valley of the Sun. During my entire six-decade real estate career, buyers have consistently told me there is no other place in Arizona they would rather live,” Mr. Shapiro told the Arizona Digital Free Press. “Scottsdale continues to receive international and national recognition as one of the top five cities in America. If you pay attention to the law of supply and demand, it pays to own something in Scottsdale.”
Mr. Shapiro reminds the Phoenix metropolitan area is on good economic footing.
“Despite seasonal and temporary economic factors, our housing market is healthy,” he said. “Metropolitan Phoenix remains a coveted destination in America. Individuals and businesses are attracted to our blue skies, palm trees and welcoming culture epitomized as ‘Western Hospitality.’”
Earlier this year, Mr. Shapiro launched his own real estate firm: Shapiro Realty, Inc. —- and has been selling single-family properties for 52 years.
Here is a breakdown of the latest Scottsdale market data points:
Mr. Shapiro explains much of what is playing out in the numbers, are born out in predictable patterns over time.
“During this cycle, Realtors and lenders have advised clients to ‘date their mortgage and marry their house.’ It refers to an emphasis on focusing on the main goal of home ownership and worrying less about mortgage rates as they will change over time leading to re-finance opportunities,” he said.
“We were long spoiled on unrealistically low interest rates even though the past 50 years averaged seven percent for 30-year mortgages. Future reductions by the feds will be received favorably and will help drive the housing market.”
Scottsdale Realtor Michael Wills at HomeSmart agrees with the notion it pays to own Scottsdale real estate.
“If you look at the median sold price year over year, it is almost perfectly flat at roughly $800,000,” he pointed out. “When you factor in a how much rates have gone up during that time, the fact that values have stayed strong shows that Scottsdale is still a very desirable address.”
As all indicators suggest a reduction in national interest rates at the Federal Reserve — even a succession of them in the new year has been speculated by economists — Mr. Wills says the name of the game is timing.
“There is much debate on the timing of this but when it happens, I think it will really be a catalyst for the market,” he said. “We have already seen rates slip back down to 7% in same cases and even that move in rates has created an increase in mortgage applications.”
Mr. Wills points out inventory in Scottsdale continues to rise whereas today there is about 4 months of inventory available, which is a positive sign pointing to a balanced market.
“For sellers, I remind them that values are still near all time highs, it is still a great chance for them to cash in on the equity they have built,” he said. “For buyers, if they find a perfect house that fits all their needs, get it now. Our sales volume will pick up if rates drop and then buyers will have a lot more competition.”
For prospective buyers, Mr. Wills offers an idea of action rather then contemplation.
“So many buyers are concerned about getting locked into a mortgage now when they believe rates will come down going forward. Many lenders now have programs that offer a no fee refinance if rates drop,” he said. “Take advantage of that! If you are selling, be prepared to offer concessions if needed. Also be prepared to make needed repairs. The days of sellers calling all the shots are long gone for the moment.”