The Metro Phoenix real estate market is remarkably stable as compared to last year. The subtle shift I've been following for the last 2 months has apparently ended. Why? By of November 28th, listing counts of homes (supply) stopped increasing and demand held stable. Here's the most recent Cromford Report market infographic for a brief overview of the market and what Buyers and Sellers can expect in the near future.
The residential market is still positive for buyers. The most recent Home Opportunity Index (HOI) released by the National Association of Home Builders and Wells Fargo, which measures buyer affordability, measured 70.9 for Phoenix compared to 62.2 nationally. This indicates that a family making the median household income in Phoenix (reported at $64,000 annually) could afford 70.9% of the homes sold in the 3rd Quarter of 2015 given today’s lending standards. Normal range is between 60-75%.
Supply continues to be short for listings under $250,000. This price range makes up 64% of all year-to-date resales through the Arizona Regional MLS. Short supply with good demand in this price point indicates that positive price appreciation will continue over the next few months. If your price point is higher than $400,000, then resale supply is 10.1% more abundant today than it was at this time last year.
Despite the shortage of competing listings under $250,000, there has been a 25.6% increase in seller price reductions in this price range from an average of 91 reductions per day at the end of June to 113 per day at the beginning of December and appears to be rising at the moment. This implies that high demand has created an overly optimistic opinion of market value in this price point. While sale prices are continuing to rise, they are at a more conservative pace than some sellers would like.
Price reductions between $250,000 and $400,000 saw a mild increase in October, but have since settled back down to an average of 71 per day for the holiday seasons. The over $400,000 market saw a 44.8% surge in average daily price reductions in October, going from 58 per day in mid-August to 81 per day by the end of October. Since October they’ve settled back down to 63 per day. Don’t be fooled by the cool down. Every year daily price reductions dip in the 4th Quarter, only to surge again during the first week of January.
Written by Tina Tamboer-Glatfelter, The Cromford Report