News for Buyers:
News for Sellers:
- Greater Phoenix as a whole has been in a balanced market since August but was expected to glide into a buyer’s market by mid-November. The only holdouts remaining as sellers’ markets are in the Northeast Valley cities of Paradise Valley, Fountain Hills, Cave Creek and Scottsdale.
- The 2022 peak of price was achieved in May, which was the result of contracts accepted in late March and April. Starting in June, sales prices revealed their decline in response to mortgage rate increases. At the end of October, the decline in average sales price per square foot since May was recorded at -9.1%, but still positive year-over-year at +5.7%. The largest declines happened between June and July at -4.5% and between August and September at –3.6%.
- Mortgage rates have stabilized between 7.0-7.3% for the past 6 weeks, all of October and November-to-date, and continue to keep buyer demand low for now.
- October sales saw 44% of sales involve a seller contribution to the buyer at closing, with a median contribution of $7,400. Closings in the first week of November showed a median contribution of $9,000.
- The tricky thing is that these seller-paid concessions are not recorded with the sales price. It’s common to see a buyer offer a higher price in exchange for closing cost assistance or a rate buy-down. This tactic can make the sales price measures appear to drop slower or even stabilize as the cost to the seller increases underneath that number on the settlement statement.
- The flaw in waiting for the market to bottom out before purchasing is that no one knows they’re buying at the bottom when they buy there. The bottom, or top, of the market does not become apparent until 3-4 months after the contracts were written.
News for Sellers:
- Appreciation rates for homeowners who have owned their home for at least 2 years are still impressive. Approximately 65% of MLS listings, excluding new construction, have been owned for 2 years or more. Appreciation rates based on sales price per square foot through the MLS are: 2 years: +33.6%, 3 years: +59.9%, 4 years: +68.1%, 5 years: +84.8%.
- While the environment has turned quickly away from a seller’s market to an impending buyer’s market, and the cost to sell has increased significantly for sellers, most are still walking away from the closing table with a profit.
- Fewer sellers are opting to sell in this market. Historically, October typically adds about 10,000 new listings to supply, but this October was the lowest recorded at just 7,334 new actives plus 188 in Coming Soon status, a record low for the month. This has caused supply to stagnate over the past 4 weeks. When supply self-regulates in response to lower demand, it puts less downward pressure on price. It would be worse if supply were also rising.