๐ฆ๐๐ฝ๐ฝ๐น๐: Supply has been slowly dwindling all year as sellers have elected to stay put given their current low interest rate mortgages. ย We have already dropped below last year in supply. As of today, the current supply of properties for sale is 11,609. ย For perspective, a balanced market typically occurs with active listings at around 25,000. ย As the Cromford Report shares: ย ย New listings continue to be insufficient in replacing properties that have gone under contract, resulting in overall supply dropping an average of 151 listings per week within the last month.ย ย All areas in the valley favor sellers with the exception of two – Buckeye and Maricopa which are currently balanced. ย Further afield, Casa Grande remains in a buyerโs market.
๐๐ฒ๐บ๐ฎ๐ป๐ฑ: Just like supply, demand remains below normal although stronger than supply. Hence the dropping number of homes for sale. Investor purchases are back to normal levels finally allowing for FHA buyers to compete for homes. Per the Cromford Report: FHA increased the amount of money theyโre willing to loan to $530K. They also lowered their Mortgage insurance premiums by $100s on monthly payments annually. These changes have resulted in the market share of closings in Greater Phoenix funded by FHA to go from just 9% in April 2022 to 22% in April 2023 on sales under $600K.
Even with the market favoring sellers โ over 50% of the sales between 200K-500K involve the sellers contributing towards buyerโs closing costs and interest rate buydowns. Additionally, in May many lenders began to offer new down payment assistance programs with just 1% down focused on first time home buyers (defined as anyone not owning a home in the last 3 years!) Both of these encourage buyers get in to homes regardless of the rates.
๐ฃ๐ฟ๐ถ๐ฐ๐ฒ๐: When demand outpaces supply (as it does currently) prices rise. While we are not yet back to 2022 pricing, the median sales price has recovered 5% since December and looks likely to meet 2022 pricing by the 4th quarter.
๐ ๐๐ผ๐ฟ๐ฑ ๐๐ผ ๐๐ต๐ฒ ๐๐ถ๐๐ฒ:
Demand can change far more rapidly than supply. Especially demand that is artificially suppressed by interest rates. If rates drop, we could see this market quickly tilt strongly in favor of sellers. In any case, the marketplace is showing no signs of improving for buyers. If youโre a buyer, it would seem wise to act now.
Russell & Wendy Shaw
(mostly Wendy)