Local Market Update for Cave Creek, Carefree, N Scottsdale, for the Beginning of August:
One year ago the Annual appreciation began to decline, after a record setting 3 year run of increased Home and Land prices.
General Phoenix Area Market Summary for the Beginning of August:
Decrease in Buyers + Decrease in Home Inventory = Slower Sales
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Here are the basics - the ARMLS (all of Phoenix), numbers for August 1, 2023 compared with August 1, 2022 for all areas & types:
Active Listings (excluding UCB & CCBS): 11,241 versus 17,957 last year - down 37% - and down 2.6% from 11,545 last month
Active Listings (including UCB & CCBS): 13,945 versus 20,724 last year - down 33% - and down 3.2% compared with 14,406 last month
Pending Listings: 4,842 versus 5,291 last year - down 8.5% - and down 3.1% from 4,997 last month
Under Contract Listings (including Pending, CCBS & UCB): 7,546 versus 8,058 last year - down 6.4% - and down 4.0% from 7,858 last month
Monthly Sales: 5,906 versus 6,190 last year - down 4.6% - and down 21% from 7,452 last month
Monthly Average Sales Price per Sq. Ft.: $282.34 versus $286.03 last year - down 1.3% - and down 1.9% from $287.78 last month
Monthly Median Sales Price: $434,900 versus $452,500 last year - down 3.9% - and down 1.8% from $443,000 last month
Comparisons with this time last year continue to get easier, as a year ago the market was deteriorating quickly as institutional investors and iBuyers pulled out of the market.
Now we have a re-sale market which is plodding along slowly with poor demand and weak supply. There is little to get excited about unless you are in the new home construction business. At the time of writing the typical 30 year fixed mortgage rate is up to 7.20%, so affording to buy a home just got a little harder. Selling an existing home with a mortgage looks even less attractive, so new MLS listings are arriving in very low numbers, as they have done all year.
So far in the third quarter of 2023 we have seen 7,447 new listings. The equivalent number last year was 12,439 and in 2021 it was 11,712. We are down 40% from last year and down 36% from 2021. This annual drop in new supply is unprecedented and is having a far bigger impact on the market than the affordability issues caused by the high interest rates.
Some badly informed observers still think there is a bubble popping situation ahead, but they completely misunderstand the situation. For prices to fall, we have to have an excess supply compared to demand. Even though demand is very weak, supply actually got 2.6% smaller over the last month. There is very low delinquency in residential real estate lending right now, so it takes a ridiculous leap of great imagination to believe that foreclosures are going to have any significant effect on supply in the foreseeable future.
Pricing has been weaker since June, but this is just the usual effect of the hot summer months, when the luxury market goes to sleep. With the Cromford® Market Index near 160, we have a seller's market where overall pressure on prices is up not down, despite the lack of enthusiasm on both sides of the negotiation. Once we get to the end of September and it starts to cool down, the luxury market will be fully contributing to the price numbers again and we will probably be reporting positive annual appreciation once more.
Cromford Report summary August 2023
