Market Update November 13th, 2023

The current state of the Phoenix Metro real estate market, as depicted by the Cromford® Market Index (CMI), indicates a concerning trend of weakening across various cities. The data, specifically focusing on 17 key cities, reveals an alarming average decline of 16.3% in the CMI, surpassing last week's decline of 15.8%. This downward trajectory suggests a persistent softening in the market, calling for a closer examination of individual city performances and trends.

A detailed look at the CMI figures reveals significant disparities among the cities. Notably, Cave Creek, Buckeye, Mesa, Scottsdale, Paradise Valley, Surprise, and Phoenix are experiencing declines well above the average. These cities are witnessing a rapid contraction in market strength, indicating shifting dynamics that could impact buyers and sellers differently. On the other end of the spectrum, Gilbert, Goodyear, and Tempe are showing the slowest rates of decline, suggesting a relative stability in these areas compared to their counterparts.

The balance between sellers' and buyers' markets is a critical aspect of understanding the real estate landscape. Currently, 10 out of the 17 cities examined are still categorized as sellers' markets. Surprise, Buckeye, Goodyear, Queen Creek, and Maricopa are transitioning into buyers' markets, with Maricopa, Queen Creek, and Buckeye dipping below the 80 level in the CMI. This trend is also evident in secondary cities like Casa Grande and Gold Canyon, both falling below 80, while Litchfield Park hovers just below 90.

Despite the overarching trend of market weakening, there is a glimmer of hope in certain areas. Secondary cities such as Tolleson, Laveen, Sun Lakes, Anthem, El Mirage, and Apache Junction are showing robustness, with their CMIs standing strong at over 180. Additionally, the recent decrease in mortgage rates since the beginning of November seems to be influencing the market positively. Some cities are beginning to see a slight uptick in listings-under-contract numbers, possibly heralding a turnaround or stabilization in the near future. This potential shift could be a critical indicator of how the market might evolve in the coming months.

For those waiting for pricing to continue to pull back, watch the mortgage rates week to week as this is your biggest indicator. My belief, if rates stay about 7% or higher, we will continue to see pullback as the market corrects itself until we hit back to middle-class affordability standards. Demand will continue to be slashed due to unaffordability. However, with the lower supply we have, I believe if somehow in the coming 6-12 months rates drop below 6% and supply stays around these levels, we may actually see another slight boom in housing. Safe to say the Federal Reserve broke housing.

“If you want to live a happy life, tie it to a goal, not to people or things.”
― Albert Einstein

Have a great week everyone!