The 4th quarter in real estate rarely is one to talk about. Demand is highest in the spring thru mid-summer and then progressively declines in the 3rd and 4th quarter. This year is no exception but comparatively, according to the Cromford Report, we are in the midst of the best 4th quarter for the Greater Phoenix market in 3 years. Admittedly the last 3 years have had anemic demand. The market has taken time to absorb the extreme shift in rates in 2022 where the typical 30-year mortgage interest rates moved from 3.9% in February to over 7% in October. But demand is slowly adapting to the new normal. To quote the Cromford Report:
“It took a while for the buyers to mobilize, but better late than never. So far, this is the best 4th quarter Greater Phoenix has seen in 3 years for contract activity. Listings under contract are up 15% over last year with notable improvements in the market under $300K and the market over $1M. The government shutdown didn’t help closings for FHA and VA transactions, especially between $300K-$600K, but October saw a 3.3% increase in sales regardless, and closings delayed will add to the November sales counts…
In the meantime, stock market performance, corporate profits, and cryptocurrency have performed well enough to boost the luxury market in Q4. Contracts in escrow between $1M-$2M are up 25% over the past 5 weeks, and up 16% over last year. Contracts in escrow over $2M have risen 25% over the past 9 weeks putting them up 7% over last year. It hasn’t been enough to boost contracts in retirement communities much, but Sun City, Sun City West, and Sun Lakes are not doing worse than last year.
Contract activity typically drops after the Thanksgiving holiday until the new year begins. This sparks a wave of price reductions just before Thanksgiving followed by just a trickle of reductions in December. January is the most popular month for new listings to hit the market, so properties that don’t sell between now and December should expect another wave of price reductions in the first few weeks of January.
Overall, while demand is slowly improving, supply is still on the rise and keeping most cities in a balanced or buyer’s market. Prices are still under pressure and buyers are looking for the best value for their budget”
Russell & Wendy Shaw
(mostly Wendy)