Market Update January 22nd, 2024

In recent weeks, several cities have witnessed a significant increase in their contract ratios for single-family detached homes. This ratio is a key indicator of market demand versus supply, and a rise suggests an uptick in demand. The cities of Apache Junction, Anthem, Arizona City, Gilbert, Sun Lakes, Chandler, Tempe, Peoria, and Gold Canyon have shown remarkable increases. Apache Junction leads with a 64% increase, reaching a contract ratio of 94, while Gold Canyon has the lowest increase of 30%, achieving a ratio of 32. These figures highlight areas where the real estate market is rapidly heating up.

However, not all cities have experienced positive trends. Fountain Hills, Laveen, Goodyear, and Sun City West have seen declines in their contract ratios. Fountain Hills recorded an 11% decrease, falling to a ratio of 36, whereas Laveen experienced a 15% drop yet maintained a higher ratio of 67. These contrasting trends indicate that while some areas are becoming more desirable, others are witnessing a reduced demand in the housing market.

In the broader context of the regional market, Phoenix has seen an 18% increase in its contract ratio, now standing at 48. This indicates a moderate improvement in demand for homes in Phoenix. Generally, a contract ratio above 40 is associated with a seller's market, implying that sellers have an advantage due to higher demand. However, this varies with location and property value. For instance, more affluent areas like Paradise Valley and Scottsdale have lower contract ratios of 21 (up 20%) and 30 (up 15%) respectively, reflecting the different dynamics in high-end real estate markets.

The contract ratio serves as a crucial leading indicator of market changes, particularly in the real estate sector. The recent trends observed in these cities provide valuable insights for potential buyers and sellers. While most areas are showing a seller's market with high contract ratios, the variation across different locations underscores the importance of understanding local market conditions.

2024 is starting off with some buyer activity, and supply not increasing at the same pace so expect in some areas to go close to, if not at the list price if priced correctly. Some buyers who have been sidelined are now accepting a 6-7% rate as the norm for a little bit and diving back into the market.

"There is nothing impossible to they who will try."
- Alexander the Great

Have a great week everyone!