2025 Begins Quietly
Trying to read market signals with only two weeks under our belt is difficult at best. It is simply too short a time to detect meaningful trends. With that said, it is never a bad idea to look at where supply and demand stand currently and get a sense of where we begin this year.
When looking at demand, two very different markets are at play at the same time. The luxury market, which is not interest rate sensitive but responsive to gains in the stock market and crypto market, has performed well. Not so for the average buyer. Rising mortgage rates hitting the 7.25% range (this time last year they were in the 6.69% range), are limiting the pool of buyers. As the Cromford Report shares:
“Where is demand? Closed listings stand around 5,000 per month and year to date closings are down 12% from this time last year. We have 5,750 listings under contract. We started the year with 5,496 under contract, so the rise since the beginning of the year is pretty feeble at only 4.6%. On Jan 13 last year we had seen a growth of 13.2% in listings under contract by now. You would be right to conclude that 2025 is starting distinctly slower than 2024 did.”
As far as supply goes, we ended the year with a 12% drop in listings through the holidays (Thanksgiving thru New Year’s) which is the expected seasonal pattern. However, according to the Cromford Report, supply is now climbing by about 4% per week. In fact new listings for January are the strongest Greater Phoenix has seen since 2020. That should put us back in the 22,000 range of active listings soon. The Cromford Reports states:
It is not clear where supply will head beyond this, but 22,000 plus listings is going to be more than we need with demand still subdued. New listings are arriving in 2025 at almost the same rate as 2020, which is significantly faster than the intervening 4 years….These conditions suggest home price projections should remain flat, either at or slightly lower than the rate of inflation annually.
At the moment, the market appears to be similar to the last quarter of 2024 – with the overall supply exceeding demand. But, it is early. Whatever 2025 brings, we will report it here as it unfolds.
Russell & Wendy Shaw
(mostly Wendy)