The real estate market exhibited a notable shift in August, with the supply of active listings without a contract increasing by 5.5% since the beginning of the month. This upturn is particularly significant when compared to the same period last year, showing a 57% increase as of September 1, 2023. Typically, such increases in supply are expected in September, making this August's data particularly intriguing. This pattern suggests a deviation from the usual seasonal trends observed in the housing market, hinting at underlying factors influencing market dynamics.Despite a recent decline in mortgage interest rates, which conventionally stimulates demand and suppresses supply, the expected market response has not materialized. Instead, the overall demand has slightly decreased, while supply has risen. This counterintuitive response highlights the complexity of the housing market's reaction to changes in interest rates. Interestingly, the increase in listings is not uniform across all sectors; the luxury single-family detached homes priced above $3 million actually saw a decrease of 4% in active listings from the previous month, though they are still up 20% year over year. In stark contrast, the segment for homes priced between $300K and $350K experienced an 18% increase in supply during August, a rate more than double that of any other price segment.Delving deeper into the geographical distribution of these changes, Maricopa County, rather than Pinal, witnessed the largest supply surge, particularly in Glendale and West Phoenix. This spike in listings, primarily occurring over an 11-day period from August 15 to August 26, was concentrated in the more affordable ZIP codes of the inner West Valley. These areas are characterized by older housing stock, predominantly from the 1950s and 1960s, but showed no signs of increased distress sales. Remarkably, active single-family listings in these regions rose by 32% across all price ranges, with an even more pronounced increase in the $300K to $350K bracket.This unusual surge in supply within the Inner West Valley prompts speculation about the motivations of sellers in these areas. It appears that homeowners might be seizing the opportunity to list their properties in anticipation of further reductions in interest rates, aiming to secure buyers before committing to purchasing newer, larger homes. This strategy suggests a proactive approach by sellers waiting to upgrade, conditioned by the need to have a buyer lined up as they navigate the complexities of a shifting real estate market.With rates coming down and demand not moving much, It might take rates to come down a lot more for them to make a significant impact on demand. We might need a lot more mortgage rate relief in order to see the demand that a lot of real estate professionals in the industry were calling for. Time to keep your eyes open and pay attention! "He that can have patience can have what he will."-Benjamin Franklin  Have a great week everyone!

The rebound of single-family building permits in Maricopa and Pinal counties in 2024 represents a significant recovery in the construction sector. As of July, there have been 18,498 new single-family units authorized, marking an increase of over 40% compared to the same period in 2023. Despite this growth, these numbers still do not reach the peak years of 2021 and 2022, where permit counts were 21,796 and 19,748, respectively. This surge indicates a renewed confidence among developers, though it’s interesting to note that this increase hasn't extended to the re-sale market, which has seen a 4% decline in closing volumes year-to-date compared to last year, illustrating a peculiar disconnect between new home constructions and re-sales. The optimism of homebuilders is further bolstered by economic factors such as the Federal Reserve's reduced interest rates. This financial environment has buoyed the spirits of investors and builders alike, with many publicly traded development companies experiencing all-time highs in their stock values recently. The positive trends in new home permits reflect a broader confidence in the real estate market, potentially spurred by these lower borrowing costs. A detailed look at the distribution of these new permits across Arizona shows a notable variation in regional growth. Maricopa County saw a 39% rise in permits, while Pinal County recorded a 43% increase. Other counties combined for a 38% upturn. The leading areas for new permits include unincorporated Pinal County, Phoenix, and Surprise, demonstrating a shift in development focus compared to the top cities in the re-sale market, such as Mesa, Glendale, and Scottsdale, which did not rank in the top ten for new constructions. This geographical shift underscores evolving market dynamics and preferences in residential development locations. Lastly, the county administration's handling of areas like San Tan Valley, which has yet to incorporate, reveals the complexities of urban planning in rapidly growing regions. Florence, for example, is issuing more permits than traditionally faster-growing areas like Gilbert and is on pace to surpass Scottsdale. The upcoming vote on whether San Tan Valley should incorporate reflects a critical moment that could reshape administrative oversight and infrastructure development in one of Arizona’s fastest-expanding areas. This scenario underscores the ongoing evolution and challenges within Arizona's real estate and urban development landscape.As we enter into September it is a big month for economic reports. The Federal Reserve might be put in a position to make a rate cut, which will sure affect the markets one way or another. If this starts to put pressure on the 10-year Treasury Yield, we may see mortgage rates start to head even closer to 6%. We will just have to wait and see!"Service to others is the rent you pay for your room here on earth."-Muhammad Ali Have a great week everyone!

The high-end real estate market often experiences a significant slowdown during the summer months, which can cause noticeable distortions in market averages, particularly those related to pricing. This seasonal dip is a common occurrence, affecting the overall market dynamics and skewing data that reflects the true state of the market. To better understand how this happens, it’s essential to examine specific regions within the Greater Phoenix area and compare their performance during the months of April and July.Focusing on the Northeast Valley, where most luxury homes are located, we define this region as including Carefree, Cave Creek, Fort McDowell, Fountain Hills, Paradise Valley, Rio Verde, and Scottsdale, with the addition of Phoenix 85016 and 85018, while excluding Scottsdale 85257. In this area, the number of single-family detached home sales dropped from 662 in April to 440 in July, reflecting a substantial 34% decline in unit volume. Correspondingly, the average price per square foot also decreased from $558.56 to $505.70, marking a 9.5% decline.In contrast, the rest of the Greater Phoenix area, excluding the defined Northeast Valley, showed a much smaller decrease in market activity. The sales count for single-family detached homes fell from 4,631 in April to 4,267 in July, representing only an 8% drop. Additionally, the average price per square foot in this broader area decreased slightly from $262.36 to $254.26, a modest 3% decline. These figures indicate that the high-end market in the Northeast Valley has a more pronounced impact on the overall market averages.When examining Greater Phoenix as a whole, the weakening contribution from luxury sales is evident. The average price per square foot for the entire region fell from $313.17 in April to $289.28 in July, a 7.6% decline, which is more than double the decrease seen in areas outside the Northeast Valley. However, it is expected that high-end sales will rebound as temperatures cool, leading to a recovery in their contribution to the market, and subsequently, the stabilization of average pricing.Now is the time to prepare especially if interest rates start cooling even more! “When you arise in the morning, think of what a privilege it is to be alive, to think, to enjoy, to love.”—Marcus Aurelius Have a great week everyone!

The trends in the CMI (City Market Index) over the past month indicate a gradual recovery in several key markets, despite a varied performance across different cities. Over the past month, there has been an average decline of -1.8% in the CMI, showing a slowing in the rate of decline when compared to the more significant -4.4% seen last week. This moderation marks a continuation of the positive trend that began three weeks ago. Interestingly, in just the past week, the average CMI saw a slight increase of +0.4%, suggesting a subtle yet positive shift between August 1 and August 8. In terms of geographic performance, Fountain Hills, Cave Creek, and Scottsdale have demonstrated the largest percentage gains, indicating that the higher end of the market is exhibiting the strongest resistance against the broader market's weakness. On the other hand, cities like Maricopa, Buckeye, Goodyear, and Paradise Valley have also seen increases over the last month. However, the largest declines remain concentrated in the Southeast Valley, encompassing cities such as Tempe, Gilbert, Chandler, and Mesa. Notably, Chandler, which had previously maintained a strong position, has seen a dramatic weakening and is likely to be surpassed by Avondale, potentially falling to third place in the rankings. The current market dynamics reveal a significant variance in market conditions across the region. Out of 17 cities analyzed, eight remain classified as seller’s markets with a CMI over 110, suggesting strong demand and higher prices favorable to sellers. Conversely, five cities are categorized as buyer's markets, where conditions favor buyers due to lower demand and prices. There are also four cities that are considered balanced markets, indicating a more even dynamic between buyers and sellers. Furthermore, the persistence of three cities with a CMI over 140, coupled with Scottsdale’s efforts to join this group, highlights the ongoing competitive nature of certain high-demand areas. This variance underscores the complexity of the real estate market, reflecting different economic conditions and buyer preferences across the region. Such insights are crucial for potential investors and homebuyers to understand the current landscape and anticipate future trends in these local markets.Rates have stayed around the 6.5% mark the last week, a week and a half. It would be good if this started to build a base and solidify rates here with only a positive outlook on the horizon. This gives a good window for buyers to start game planning to hop back in, and for sellers to get close to their list price in order to make them move. So far we have not seen that but rate changes always affect demand in the future from rate drops about 2-4 weeks."When you have a dream, you've got to grab it and never let go."— Carol Burnett Have a great week everyone!

In July 2024, Maricopa County recorded a total of 6,360 closed real estate transactions, reflecting a 4.6% increase from the previous year's figure of 6,081 in July 2023, but a slight 4.1% decrease from June's numbers. Of these, 1,378 were newly constructed homes, marking a modest growth of 1.9% compared to 1,352 in the same month the previous year, though this segment saw a significant 13% drop from June. The resale market was more dynamic, with 4,982 transactions completed, up 5.4% from 4,729 in July 2023 and only a minimal 1.3% decrease from the previous month. This activity occurred over 22 working days, one more than in July 2023, offering a partial explanation for the increase in closings. The pricing dynamics in the market also painted a mixed picture. The overall median sales price for July stood at $467,545, a slight increase of 0.5% from July 2023 but a decrease of 1.6% from the previous month. Resale homes had a median price of $450,000, up 1.1% year-over-year but down by 3.2% from June, indicating some softening in prices. In contrast, new homes had a median price of $506,240, which was down significantly by 5.1% from the previous year, although it showed a small recovery of 0.5% from June. The market share of new homes decreased slightly to 21.7% from 22.2% a year earlier, suggesting a shift in buyer preference or possibly a response to pricing dynamics. Resale prices have notably struggled, remaining well below the peak of $486,000 reached in May 2022, prior to the liquidation sales initiated by iBuyers. This decline underscores the broader trend of weakening prices in the resale segment, contrasted with the overall median sales price increase of only 0.5%—a figure that falls below the inflation rate, indicating that, in real terms, homes have become more affordable compared to last year. Despite the nominal increase in median household incomes over the past year, the housing market in Maricopa County has seen improved affordability without a corresponding increase in demand. This suggests potential buyers may be anticipating further reductions in mortgage rates, influenced by recent statements from the Federal Reserve indicating possible adjustments. The observed trends cover both single-family homes and townhouse/condo residences, reflecting a comprehensive view of the county’s housing market dynamics during this period.If you are a buyer that has been waiting, KEEP EYES ON RATES! As of today, the 30-year has dropped significantly to 6.34%. Have to keep eye on this to see if there is any bounce back or if rates possibly keep falling with all this talk of markets crashing globally as investors continue to flock to the certainty of bonds. If so might be an opportune time to take advantage of the rate reduction and weary sellers who are not being educated properly by subpar agents on the market's current market conditions! “Failure is simply the opportunity to begin again, this time more intelligently.”—Henry Ford Have a great week everyone!

The imminent settlement of the National Association of Realtors (NAR) Commission has introduced a cloud of uncertainty and confusion within the real estate industry. The Council of Multiple Listing Services (CMLS), representing 225 MLS providers nationwide, has refrained from offering best practice guidance to its members. Instead, it has encouraged them to engage in "thoughtful conversations" and to independently navigate their responses, which suggests that the impact of the settlement could vary widely across different regions. This variety in response is further complicated by the NAR's settlement FAQ webpage, which has expanded to over 100 questions, indicating the complexity and widespread concern about the settlement’s implications. Recent data on commission rates show a slight decrease but maintain a relative consistency, with buyer's agents historically earning between 2.6% and 2.8%, and listing agents earning between 2.8% and 3.2%. These rates have recently adjusted to slightly lower percentages. The stability of these rates amidst the fluctuating market dynamics underscores a persistent uncertainty about future commission structures and their potential variations over the coming year. This lack of consensus among industry professionals reflects the broader ambiguity surrounding the settlement's long-term impact on real estate transactions. While the settlement is poised to impact real estate agents significantly, its effects on the broader housing market are expected to be less pronounced, likely reinforcing existing trends rather than initiating new ones. However, the real estate market is currently experiencing a dip in closing activities, with a notable decrease from the previous year and a significant deviation from the long-term average. This reduction in activity, coupled with legal and procedural uncertainties, suggests that the declining rate of closings might persist until potentially mitigated by more favorable mortgage rates. The Department of Justice (DOJ) has criticized the high real estate commissions in the U.S. compared to other developed economies and is pushing for reforms to lower these costs. They advocate for a model where buyer’s agent commissions are negotiated directly between the buyer and their agent, independent of the seller or selling agent's influence. This shift could lead to lower upfront costs for buyers, but it may also reduce the level of advice and support buyers receive, which could be detrimental given the significant financial stakes involved in real estate transactions. Thus, while the settlement aims to reduce costs, the overall quality and comprehensiveness of real estate services could also decline, echoing the adage that one often gets what they pay for, particularly in professional services like real estate and legal advice.If you have questions about the recent changes coming to real estate commissions and how they affect you and your home pricing, please reach out to me I am here to help guide you through the confusion the media throws out there with misleading and false information! It is vital to understand the changes and how just listening to the media could tremendously impact you in a negative way! “An unexamined life is not worth living.”— Socrates Have a great week everyone!

In discussing real estate prices on this market update, I primarily present figures in nominal dollars, as is common practice. However, this approach can be misleading when comparing the affordability of homes today to those from decades past. Specifically, using nominal dollars to discuss price changes over a 24-year period fails to account for the varying purchasing power of the dollar at different times. For instance, in January 2001, the average price per square foot in Greater Phoenix for all types of dwellings was $99.04. Fast forward to June 2024, and this average has escalated to $299.44. At first glance, this suggests a staggering 202% increase, indicating that prices have more than tripled. Yet, this comparison doesn’t consider the significant decrease in the dollar's purchasing power over time—a dollar in 2001 was worth 79% more than a dollar in 2024, according to the Consumer Price Index (CPI). To provide a more accurate assessment, it's insightful to look at price adjustments made for inflation. The accompanying chart delineates the average price per square foot over time, with the nominal figures shown in green and the inflation-adjusted figures in blue. The latter are recalculated to 2001 dollars using monthly adjustments based on the CPI. This adjusted data reveals that while homes are indeed more costly in 2024 than in 2001, the real-term price increase is 69%—significantly lower than the nominal increase of 202%. Further analysis of the real-term price data yields additional intriguing insights about the housing market's fluctuations over the years. From September 2008 to April 2015—a seven-year span—real home prices dipped below their January 2001 levels, suggesting a prolonged opportunity to purchase homes at relatively low prices. Conversely, today's real home prices, though below the peak in May 2022, align closely with those from the latter half of 2006 and late 2021. Notably, the housing market experienced two major surges, one from mid-2004 to mid-2005 and another from mid-2020 to mid-2022, both brief yet intense periods of growth. Conversely, the significant downturn from early 2007 to early 2009 marked the major bust phase, distinctively shorter in duration compared to the prolonged excess inventory phase from 2006 to 2011 that followed the first boom. These observations illustrate the nuanced dynamics of the housing market over the last two decades. The distinction between nominal and real prices not only highlights the actual changes in housing affordability but also contextualizes the economic factors influencing these shifts. By examining these patterns, we gain a clearer understanding of the market's past trends and can better anticipate future movements."There are risks and costs to action. But they are far less than the long-range risks of comfortable inaction."-John F. Kennedy Have a great week everyone!

Over the past month, the average change in the Cromford Market Index (CMI) has been a notable -7.2%, a more significant decline than the -6.9% observed the previous week. However, there is a silver lining as the rate of decline appears to be slowing. This week’s -0.3% change is an improvement compared to the -0.8% measured last week. If this trend continues, we could potentially see a reduction in the monthly deterioration soon. In the past two weeks, only three cities have shown an increase in their CMI, while fourteen cities have experienced a decline. The three cities with improving CMI are the same as last week, with Avondale standing out for its significant percentage increase. This limited improvement contrasts with the broader trend of declining market indices across most cities. A substantial shift in favor of buyers has been observed in several cities, including Tempe, Gilbert, Fountain Hills, Paradise Valley, Goodyear, Cave Creek, Glendale, and Chandler. Despite this shift, nine out of seventeen cities remain strong seller's markets, with indices over 110. Two cities are balanced, and six have transitioned into buyer's markets. Notably, only three cities maintain a CMI above 140. Although there has been little change since last week, the market is approaching a balance without clear signs of a widespread shift towards a buyer's market. The recent release of benign Consumer Price Index (CPI) data has had a small downward impact on mortgage rates but has significantly boosted the share prices of home builders, with KB Home seeing a rise of over 10% in anticipation of improved market conditions if the Federal Reserve lowers rates. Overall supply seems to be leveling off, halting the upward trend observed since the beginning of the year. Should interest rates fall, any resulting improvement in demand could potentially reverse the CMI's direction. However, this remains speculative and unconfirmed at this stage. Further developments will be closely monitored and reported.Mortgage rates will continue to be the steer to market demand. I have noticed the last week we have been below the 7% average and have been trending down which might give some more push of buyers into the market in the next month or two if it continues to drop!“The best way out is always through.”―Robert Frost  Have a great week everyone!

In recent analyses of the real estate market, particularly focusing on the single-family detached segment, we have delved into contract ratios across various price ranges, comparing data from July 1st, 2024 to the same date in 2023 and 2022 (See 2nd graph below). This examination provides a comprehensive view of market dynamics over the past three years, revealing shifts in buyer behavior and market conditions. By scrutinizing these changes, we can better understand the factors influencing the real estate market's ebb and flow. The market conditions of July 2022 were notably turbulent due to a rapid increase in interest rates, which sent shockwaves through the real estate sector. The immediate impact was a significant drop in contract ratios from their highs in June 2022, particularly affecting the low to mid price ranges. This sudden shift was largely driven by buyer panic, reacting to the climbing interest rates, which markedly cooled the market enthusiasm that was present earlier in the summer. However, by July 2023, the market demonstrated a robust recovery, driven by a stark reduction in supply. This scarcity of available properties propelled contract ratios to elevated levels, marking a return to a more competitive market environment. Notably, this resurgence was most pronounced at the lower end of the market, where competition intensified, reflecting a significant turnaround from the previous year’s downturn. Moving forward to July 2024, the market presents a contrasting scenario characterized by a more balanced interplay between supply and demand. Although certain price segments, such as those under $300K and between $400K and $500K, have shown stronger performance compared to two years ago, the overall market is softer than in 2022. It is interesting to observe that the segment above $10M has bucked the trend, showing a hotter market than in both the previous years, whereas luxury price ranges between $800K and $10M have cooled significantly, indicating a shift in buyer interest and market dynamics. Through these observations, we gain a nuanced understanding of the varying forces at play across different market segments.We are seeing two different buyer pools in split markets right now. Those in the ultra-luxury market, and those in the starter home/move-up market! Know your sub-market and know how pricing and demand are affecting each other right now!   “I have not failed. I’ve just found 10,000 ways that won’t work.”― Thomas A. Edison Have a great week everyone!

The housing market in Maricopa and Pinal counties is experiencing a notable surge in new construction activities, as evidenced by the substantial number of building permits issued for single-family homes. In May 2024 alone, authorities issued 2,740 permits, marking a 22% increase compared to the 2,246 permits recorded in May 2023. This upward trend underscores a growing interest in new home developments in these areas, reflecting a robust demand for newly constructed residences. This increase in building permits has significantly impacted the cumulative figures for the year. By the end of May 2024, a total of 13,689 building permits had been issued in the first five months of the year. Although this figure does not surpass the peak construction years from 1998 to 2008, it represents the third-highest total since 2007 and shows a striking 56% increase from the previous year. Such statistics illustrate a rejuvenation in the housing construction market, positioning 2024 as a year of strong recovery and growth. However, the surge in new constructions brings challenges for those selling existing, or re-sale, homes, particularly in areas with high levels of new construction like Buckeye, Maricopa, and Queen Creek. These areas are experiencing increased competition in the housing market, affecting the seller's leverage. The Construction Market Index (CMI) in these regions remains below 80, indicating a buyer's market influenced by a strong preference for new homes over re-sale properties, a trend that has been consistent in recent years. Conversely, central locations such as Chandler, Tempe, Phoenix, and Glendale face a different scenario. The scarcity of vacant land in these areas limits new construction, thereby restraining the supply of new homes. This constraint helps maintain a seller's market, as reflected in the CMIs, which are currently above 120. Sellers in these areas continue to benefit from favorable market conditions, contrasting sharply with the challenges faced in regions with abundant new construction.Even though permits are up, new construction is still a 6-18 month process so any new inventory from permit pulls is a LAGGING indicator for new inventory. Where we are with rates when that time comes will play a huge part if this supply helps at all or just ends up throwing more gas on the fire.   “It is during our darkest moments that we must focus to see the light.”— Aristotle Have a great week everyone!

In the real estate market, recent trends have shown a pronounced decline, with the Cromford® Market Index (CMI) recording an average drop of 5.0% over the past month. This decrease is sharper compared to the 3.4% fall observed last week, signaling an intensification of the downward trajectory initiated five weeks ago. The market is witnessing not only a rise in the frequency of price reductions but also in their magnitude, underscoring a growing pressure on sellers across multiple cities. Interestingly, despite the overall decline, a few cities have demonstrated resilience or even growth. Out of the seventeen cities monitored, only four have shown an increase in their CMI over the past month, while the majority, thirteen cities, have experienced a decrease. Maricopa stands out as the most significant positive mover, with a modest 4% increase in favor of sellers. This contrast highlights the varied responses of different local markets to broader economic conditions. On the other side of the spectrum, several cities are clearly shifting towards buyer-friendly conditions. Notably, Gilbert, Peoria, Goodyear, Paradise Valley, Mesa, and Glendale are tilting in buyers' favor, with Gilbert experiencing the most rapid market deterioration. This shift indicates that buyers in these areas might find more negotiating power and better deals due to increased inventory and reduced competition. Despite these changes, the market's overall landscape remains predominantly in favor of sellers, with 11 out of 17 cities still classified as seller's markets, maintaining a CMI above 110. However, Goodyear presents a unique scenario, aligning closely with a balanced market, while five other cities have transitioned into buyer's markets. This mixed picture reflects the complexity and localized nature of real estate dynamics, where market conditions can vary significantly even within relatively close geographical areas.Rates have been seeing some relief but not enough to change demand in a major way. As we head into election season will be interesting to see if politics plays a factor in the Federal Reserve's decision to have a rate cut at all. If that happens it could start to make things interesting. "Our greatest weakness lies in giving up. The most certain way to succeed is always to try just one more time."-Thomas Edison Have a great week everyone!

In the current real estate market, week 23 of 2024 has seen a startlingly low number of homes under contract, with only 8,238 listings—a number that hasn't been this dismal since 2007. The data highlights a concerning trend, as not once this year has the market managed to surpass the already low totals of 2023. This stagnation points to a significant decrease in buyer interest and market activity, reflecting broader economic apprehensions and a possible downturn in buyer confidence. Reflecting on 2007, it's evident that it was a notably challenging year for the real estate market, primarily due to widespread anticipation of a housing price collapse. This resulted in a complete market stall, setting a precedent for poor market conditions. However, while 2024 mirrors some of these issues with low buyer enthusiasm, the current circumstances differ as there isn't an imminent expectation of a market crash. Nevertheless, the low number of contracts is an indicator of continuing buyer reticence towards investing in resale homes. To offer some perspective on just how low current engagement is, during week 23 of 2011, there were over 21,000 homes under contract—more than double the current figures. This stark contrast not only underscores the sluggishness of today's market but also accentuates the need for significant changes to rejuvenate buyer interest and market dynamics. Looking ahead, there is potential for improvement if the conditions align favorably. Particularly, a reduction in the 30-year fixed mortgage rate to well below 7% could stimulate the market. It is advisable for stakeholders to monitor the market indicators closely over the next few months, especially the movements of the turquoise line relative to the purple line in market trend graphs. This observation could provide early signs of whether we can expect a recovery or if the market will continue to struggle.Rates will continue to be a huge steering factor in buyer demand. I am not expecting any surges only possible lowering as we head into the election this year. As some global tensions also seem to be rising a bit, will be smart to keep an eye on treasury yields heading into the election as well since mortgage rates are mostly based on the 10-year. “You don’t have to be great to start, but you have to start to be great.”– Zig Ziglar Have a great week everyone!

In the realm of real estate analysis, the median sales price is often preferred by analysts due to its robustness in handling data of varying quality and its ability to ignore extreme values at both ends of the spectrum. Despite the relatively small number of transactions in the luxury market, these high-end properties do not significantly influence the median sales price. However, they do impact the average sales price and the average price per square foot significantly. Large transactions within the luxury market can skew these averages higher, demonstrating the distinct behavior of different market segments.To gain a clearer picture of these market dynamics, it's crucial to consider all recorded transactions, not just those closed through the Multiple Listing Service (MLS). By applying various data filters, we can observe distinct trends across different segments of the market. For instance, as of April 2024, the overall median sales price shows a rising trend since February 2023, yet it hasn't surpassed the peak of $470,000 seen in May and June of 2022, standing at $456,995.Focusing on specific areas reveals more nuances. In the Northeast Valley, encompassing regions like Scottsdale and Fountain Hills, the median sales price reached a new high of $879,500 in April 2024, up from a low of $730,000 in January 2023. Conversely, on the fringes of the Valley, in places like Buckeye and Maricopa, the median sales price has only seen marginal increases, highlighting a slower recovery and a longer path to reaching previous highs.It is also important to note that public record data, while complete and accurate, tends to lag, making the numbers less timely compared to other sources. This underlines why such data from April might be used rather than more current data from May. Additionally, when narrowing the focus to single-family homes, all median prices tend to shift higher, though the comparative dynamics between different areas remain consistent. Such detailed examination helps in understanding the varied and complex landscape of real estate markets, emphasizing the importance of using comprehensive data sets for analysis.It is important to keep an eye on each city you are interested in buying or selling as no two cities a alike right now. Certain areas get hot and then cool quickly while others pick up the momentum. See the city graph in the 2nd graph below and you will get a great visual of what I mean! “A genius is often merely a talented person who has done all of his or her homework.”– Thomas Edison Have a great week everyone!

The real estate resale market is currently experiencing a slight downturn, as evidenced by an increase in available inventory coupled with a persistent lack of buyer interest. A critical tool for gauging this trend is the contract ratio, which offers a comparison between the number of active listings (those not yet under contract) and the listings that are under contract. This ratio provides insight into the dynamics of the market by reflecting the balance of supply and demand. Recently, there has been a noticeable decline in the contract ratio across all areas and types of properties, with the ratio falling by 15% from 54.5 to 46.1 over the past month. This decrease is significant when compared to the contract ratio of 77.0 recorded on June 1 of the previous year. The current ratio of 46.1 suggests a shift towards a balanced market. In such a market, buyers have a wide variety of options available, while sellers face increasing competition from other listings, more so than at any time in the last decade. This shift indicates that the market dynamics are changing, with implications for both buyers and sellers. Despite the cooling market, pricing remained robust during the first five months of the year. However, the outlook for continued strength in pricing is uncertain, particularly as the market approaches the typically hotter months, which can influence real estate activity and pricing. Observations have already shown a leveling off in the average dollar per square foot ($/SF) pricing, following an unexpectedly strong peak earlier on May 8. This indicates that the earlier price gains might not be sustainable as the year progresses. For those involved in the real estate market, whether buyers, sellers, or observers, the contract ratio can serve as a valuable metric for understanding specific segments of the market. By monitoring this ratio, stakeholders can assess whether the general trends noted above are applicable to the particular market segments in which they have an interest. This approach helps in making informed decisions based on current market conditions and trends, thereby aligning strategies with the most recent data available.For clarity pricing overall is not crashing but instead bouncing between periods of buyer demand changes with the combination of mortgage rates increasing or decreasing. As I have stated in past updates, as of now there is no set up for a market crash based on the numbers. Of course, a black swan event can happen at any time like in 2008, however, this time around it does not look like it will be from the housing sector if there is one!"Believe you can and you're halfway there."-Theodore Roosevelt Have a great week everyone!

Last week, mortgage interest rates experienced a decline for the third consecutive week, which led to a surge in refinancing activity. Despite this decrease, the response from homebuyers remained tepid. According to data from the Mortgage Bankers Association’s seasonally adjusted index, the total mortgage application volume saw a modest increase of 1.9% compared to the previous week. This uptick was primarily fueled by those seeking to refinance rather than purchase homes, with the average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances up to $766,550 dropping to 7.01% from 7.08%. The detailed statistics revealed that applications to refinance a home loan increased by 7% over the week and were 21% higher than the same week a year prior. Despite these gains, the overall demand for refinancing remains significantly subdued compared to historical averages. This is largely because most current borrowers still benefit from much lower rates obtained in previous years. The gap between current rates and those from a year ago has been closing, evidenced by last week's rates being only 32 basis points higher than those of the previous year. On the other hand, the market for new home purchases did not exhibit the same level of activity. Applications for mortgages intended for buying homes decreased by 1% for the week and were 11% lower than the same period last year. Factors such as high mortgage rates have impacted affordability, exacerbating challenges like low housing supply and intense competition, which continue to fuel bidding wars among prospective buyers. As the week progressed, mortgage rates remained relatively stable, with little expectation of significant changes following the release of the Federal Reserve's meeting minutes. Given the current environment, where Federal Reserve members frequently communicate their views, it is unlikely that the upcoming minutes will significantly sway the mortgage rates. Historically, such releases have caused notable fluctuations, but the present market conditions suggest a more stabilized outlook.As summer kicks off for families as school lets out, it will be interesting to see the next two months how buyer activity changes if at all. A lot of buyers who have been waiting on the sideline last year or two are starting to come to realize rates might not be changing much if at all. As well as sellers realizing with limited inventory buyers have their backs against a wall unless they choose to keep renting.“Ask not what your country can do for you — ask what you can do for your country.”— John F. Kennedy Have a great week everyone!

If you’re in the market for a home in Phoenix, many of the properties you see will likely be new builds. In the first quarter of this year, about 33.4% of single-family homes available for sale were newly built, nearly double the pre-pandemic levels. This trend is not necessarily due to an increase in new construction; rather, the resale inventory has significantly decreased. In a housing market with low supply, buyers are turning to new construction because it offers more opportunities. Unlike existing home sellers, builders are generally more flexible with pricing and can offer buyers incentives such as rate buy-downs and covering closing costs. Builders are employing various incentives to promote sales, with around two-thirds using some form of incentive, including amenity upgrades and mortgage rate buy-downs. Only about a quarter of builders are using price reductions, averaging around 5% to 6%. The median sales price for new houses sold in the U.S. during March was $430,700. While new builds are still slightly more expensive than existing homes, the price gap has narrowed significantly. Before the pandemic, the median price of a new home was over 40% higher than that of an existing house. Now, the median price for a new home is only about 4% higher than for an existing house. The low supply of existing homes in Phoenix has caused prices to increase, while prices for new builds are influenced by factors such as interest rates, housing demand, competition for existing homes, and construction costs. If you decide to look into new construction, it's important to note that only about 10% of new homes available for sale are completed and move-in ready. Most new homes are in various stages of construction, from empty lots ready to be built on to homes nearing completion. Therefore, today’s buyer needs to be strategic, patient, and flexible, considering different types of housing and locations and making design decisions. When considering new construction in Phoenix, there are a few key points to keep in mind. First, consider opting for a smaller house to reduce construction costs and future utility and maintenance expenses. The size of new single-family homes has been decreasing, with the median square footage reaching the lowest levels since 2010. Second, be open to different geographic locations, as new construction can be more affordable in rural areas with lower regulatory costs and greater land availability. Third, keep construction costs down by focusing on essential structural elements and opting for basic or lower-cost features during construction. Lastly, be mindful of future costs, such as property taxes, which can increase significantly after the first year of owning a new build. However, newly built homes are often more energy-efficient and resilient, potentially leading to lower long-term operating costs.And specifically, if you are in the Central Phoenix/Scottsdale area buying and fixing up could potentially get you in at a lot better price if you are having trouble finding a home. A lot of investors including myself have been seeing thinner and thinner margins as construction costs and resale costs are all a factor, but a primary home buyer might be able to save a bunch of these costs when retaining the property, there are many renovation loans available to consumers so might be something worth considering!"Your time is limited, don't waste it living someone else's life."-Steve Jobs Have a great week everyone!

Once again, we are seeing small signs of improvement in the market for sellers in certain sub-markets. This trend is particularly evident in the changes observed in the Cromford® Market Index (CMI). Over the past month, the average change in CMI is +1.8%, slightly up from +1.7% last week. This gradual increase has been a mild but consistent trend that started five weeks ago, indicating a slow yet steady shift in favor of sellers in some areas. Specifically, ten cities have shown an increase in their CMI over the past month, while seven have experienced a decline. Although this is less positive compared to the previous week, it still reflects an overall trend toward a stronger seller's market in select regions. This dynamic shift highlights the varying conditions across different cities, with some experiencing more favorable market conditions for sellers, while others lean towards buyers. The cities of Paradise Valley, Peoria, Fountain Hills, and Goodyear have seen the most significant movement in favor of sellers, followed by Avondale. Conversely, Tempe, Queen Creek, Maricopa, and Cave Creek are the primary locations where the market is shifting in favor of buyers. Notably, Buckeye remains at the bottom of the table, but Maricopa is looking increasingly likely to take its place. Chandler, on the other hand, continues to lead at the top, indicating a robust seller's market in that area. Currently, 11 out of 17 cities are considered seller's markets, with Paradise Valley recently joining this group. Additionally, two cities, Goodyear and Surprise, are balanced markets, while four cities are categorized as buyer's markets. This distribution underscores the diverse real estate landscape, where market conditions can vary significantly from one city to another, offering different opportunities for both buyers and sellers depending on the location.Keep an eye on mortgage rates as this is currently the main driver of demand until we see other major economic events that could raise supply, or hurt demand further like massive job layoffs.“If you really want to do something, you’ll find a way. If you don’t, you’ll find an excuse.”―Jim Rohn Have a great week everyone!

Over the past four days, the ARMLS database has recorded a significant milestone in the real estate market, with the monthly average price per square foot for closed listings across all areas and types surpassing $308, setting a new record at $308.01. This achievement not only marks a historic high but also highlights the market's robust performance despite ongoing predictions of a downturn. Such a surge in prices underscores a dynamic shift in market conditions, reflective of a resilient and upwardly trending real estate environment.Despite continuous forecasts since 2018 by various YouTube housing pundits predicting an imminent massive price drop, the market has consistently defied these expectations. The persistence of these forecasters, who have been proven wrong year after year, seems to stem more from a desire to attract views than from solid market analysis. As their predictions fail to materialize, a noticeable decrease in their confidence is evident, possibly driven by an understanding that sensationalism, rather than accuracy, drives their viewership numbers.The fundamental misunderstanding among these pundits lies in their assumption that a mere decrease in demand will lead to falling prices. However, the market dynamics are not that simplistic. It is true that low demand results in low transaction volumes, but significant price reductions typically require a combination of excess supply and desperate sellers. An illustrative example of this occurred from June to December 2022 when iBuyers became such desperate sellers. After accumulating homes at high prices to capture market share during a boom, they were caught off-guard by sharp interest rate hikes, leading to a rush to offload excess inventory at below-market prices, thereby impacting their financial outcomes negatively.As we look towards the third quarter, a seasonal decline in average price per square foot is anticipated. However, the market's current standing deserves recognition for its resilience. Sellers, in particular, have reasons to celebrate the new record highs, which reflect not only a recovery but also a potential for sustained growth. The real estate market, with its cycles of ups and downs, continues to offer valuable insights and opportunities, rewarding those who understand its deeper mechanisms and timing.Be prepared and plan accordingly! If you need a game plan and want to lay out a path to help build wealth or protect it, give me a call/text, I am here to help you! "In three words I can sum up everything I've learned about life: It goes on."— Robert Frost Have a great week everyone!

The real estate market has recently witnessed a substantial number of price reductions, with almost 9,000 price cuts observed over the last four weeks. This is a rate not seen since January of the previous year. This sudden surge in price reductions is reminiscent of the period between June and December 2022, when iBuyers aggressively lowered prices across their extensive inventories. However, even excluding that unique phase, the current number of price cuts is one of the highest since 2020, highlighting a significant trend in the market dynamics. A deeper analysis reveals that a staggering 56% of active listings have undergone price reductions in the last month. This widespread phenomenon indicates a broader market adjustment rather than isolated incidents. Notably, this trend is not confined to lower or mid-range homes; it also significantly impacts the luxury segment. Homes priced over $3 million, though fewer in number, are experiencing more frequent price cuts than usual. This suggests a shift in buyer behavior and market expectations, even among higher-end properties. Focusing specifically on the high-end market, the data shows distinct patterns in price adjustments. Out of the 668 homes listed above $3 million, 184 have seen price reductions in the past four weeks, which represents 27.5% of such listings. This rate is particularly pronounced in the $3 million to $5 million range, where 32.4% of homes have experienced cuts. The pattern changes slightly in the ultra-luxury segment, with homes priced over $5 million seeing price reductions at a lower rate of 22%. These statistics not only illustrate the extent of the current price adjustments but also indicate varying levels of buyer resistance across different price tiers. The ongoing trend of price cuts, especially in the higher echelons of the market, suggests a cooling period where sellers are adjusting to align with reduced buyer demand and changing economic conditions. Homes in the upper price brackets typically stay on the market longer, and their price adjustments are spread out over several months. This slower pace of sales and extended market exposure necessitates more significant price adjustments to attract buyers. Overall, these developments could signal a shift towards a buyer's market, particularly in the luxury segment, where adjustments tend to be more pronounced due to the higher stakes involved.Proper education from agents to their clients who understand the numbers can easily show, that this price cutting is not the direct result of pricing dropping but from mortgage rates and demand fall off. Inventory is still at a low. What this means sellers shouldn't be rushing to slash pricing because these rates are not affecting too much unless you're cutting a tremendous amount, instead sellers should be going in with the understanding that it will just take longer to sell. And instead of cutting, seller concession should be the answer first not just cut cut cut! “Never confuse a single defeat with a final defeat.”— F. Scott Fitzgerald Have a great week everyone!

In recent market analyses, there has been a significant observation concerning real estate pricing: the average price per square foot across various regions and property types has once again surpassed the $300 mark. This resurgence in pricing is an important indicator of the current market dynamics, which seem to reflect a recovery from past fluctuations. Such a milestone is crucial for both buyers and sellers as it affects overall market sentiment and could potentially influence future pricing strategies and real estate investments. The historical context of this pricing trend is marked by a peak record of $306.39 per square foot on June 10, 2022. Following this high, the market experienced a notable correction of 14%, plummeting to a low of $263.83 by January 17, 2023. This downturn was significantly driven by a wave of inventory sell-offs from iBuyers, highlighting a period of volatility within the real estate sector. Such movements are vital for understanding the ebb and flow of market conditions and can guide future investment and selling decisions. Since the start of 2023, there has been a gradual and steady increase in the average price per square foot. Comparatively, the price was $279.86 a year ago, and over the past twelve months, it has witnessed a growth of 7.3%. This upward trajectory suggests a stabilizing market that is slowly regaining its strength after the previous year's challenges. Observing such trends is essential for predicting the short-term movements in the market and for strategizing accordingly. Looking ahead, the market is poised at a critical juncture. With current prices needing only a 2% increase to set a new all-time high, there is palpable anticipation about the potential for reaching new milestones. This impending possibility could play a significant role in shaping market strategies, affecting everything from individual buying decisions to broader investment perspectives. Such a scenario underscores the dynamic and ever-changing nature of real estate markets, making it imperative for stakeholders to stay informed and agile in their operational approaches.With all this information that seems to be positive in a hostile rate environment, let me ask you, do you think pricing will only go up if mortgage rates drop drastically? If inventory stays close to current levels then yes I do, I think rates dropping will only cause a secondary boom when buyers who have been on the sideline waiting, rush to make offers, as well as sellers who are trapped in their low-interest rate homes."In three words I can sum up everything I've learned about life: It goes on."— Robert Frost Have a great week everyone!