Who thinks about the housing market in August?

Who thinks about even going outside?

We do, and so do the folks at the Cromford Report.

Here are some of the basics – the ARMLS numbers for August 1, 2024 compared with August 1, 2023 for all areas & types:

• Active Listings (excluding UCB & CCBS): 17,677 versus 11,241 last year – up 55% – but down 3.6% from 18,121 last month
• Active Listings (including UCB & CCBS): 20,320 versus 13,945 last year – up 46% – but down 3.8% compared with 21,116 last month
• Pending Listings: 4,441 versus 4,842 last year – down 8.3% – but up 0.8% from 4,407 last month
• Monthly Sales: 6,199 versus 5,915 last year – up 4.8% – but down 2.0% from 6,324 last month
• Monthly Average Sales Price per Sq. Ft.: $286.58 versus $281.97 last year – up 1.6% – but down 2.9% from $295.15 last month
• Monthly Median Sales Price: $440,000 versus $434,900 last year – up 1.2% – but down 2.2% from $450,000 last month

There is very little positive about these numbers as the Greater Phoenix housing market continues to suffer from weak demand and low volumes. However if you dig deeply you can find some excuses for mild optimism. The supply has fallen over the past month and although it remains significantly higher than last year, it is now on a downward trend, at least for the short term. We also see a very slight up-tick in pending listings from last month, though this positive sign is counterbalanced by a decline in listings under contract.

Though there are plenty of credit problems in other sectors (e.g. auto loans, credit cards), home loans are looking very healthy with delinquency stuck at low levels. This also means foreclosure volumes are very small and there is little sign of that changing in the near to medium term. You Tubers have been forecasting a new tsunami of foreclosures for over 5 years now and have managed to be 100% wrong. Those who would love to see more bank-owned homes enter the market are out of luck. There is also no sign of their luck changing in the near term.

Current pricing is only slightly ahead of this time last year, with the median sales price up only 1.2%. Most things have risen far more than 1.2% over the past 12 months, so homes are effectively cheaper in real terms than they were a year ago.

Mortgage rates have dropped hard over the last 3 days, with the average 30-year fixed rate down from 6.80% to 6.40%. They could drop further if the Federal Reserve do as expected and lower the base rate at their September meeting. Nothing is certain, but it would be a fair guess than demand would pick up significantly if rates get back around the 6% mark.

Overall, the market is balanced with a slow and gentle trend towards greater bargaining power for buyers. However, now that supply is falling, it would only take a small increase in demand to reverse that trend.

From the Desk of the Cromford Report’s famous Tina Tamboer.

“For Buyers: It’s feeling a bit like the movie “Groundhog Day” in the Greater Phoenix housing market as we relive the same scenario over and over. The Federal Reserve met this month and once again opted not to reduce the Federal Funds Rate, keeping it steady now for 12 months in a row. On the same day, the Consumer Price Index was released showing the annual inflation rate declined to 3.3%. The combination resulted in conventional mortgage rates dropping from an average of 7.16% to 6.98% in one day. This was expected, however the Federal Reserve board announced they anticipate one rate cut this year, possibly in September. That could mean a mortgage rate drop in late summer, if we dare hope.

While the drop is positive for buyers, rates are still too high to expect a major boost in demand at this stage. Sluggish demand combined with supply that’s 54% higher than last year is creating an environment for buyers that hasn’t been this accommodating in 10 years. Price negotiations are ramping up, but they look different depending on the price range.

On paper, price negotiations in the mid-range between $300,000-$500,000 look similar to last year, landing around 98.7% of asking price, down from 99.0%. This equates to a closing price about $5,200 lower on a $400,000 home compared to $4,000 lower last year. What’s not reported in the media is the rising percentage and cost of seller incentives to the buyer. In this price point, the majority of buyers are sensitive to their monthly cash flow more than the final sales price. Therefore, 55% of sales are closing with seller incentives to supplement buyers’ payments temporarily, compared to 49% last June. The median incentive to the buyer is currently $9,400, up $1,200 from last year’s median of $8,200. Combined, buyers are receiving approximately $14,600 (an extra $2,400) in both price negotiations and closing cost assistance, putting the true ratio of sale price to list price at approximately 96.4% for our $400,000 sale.

For Sellers: While the industry hopes for lower mortgage rates in the latter half of 2024, active sellers can only address where the market stands presently, which is a challenge. Supply has been rising all year long, but has slowed its roll over the past 3 weeks. Seasonally, supply fluctuations level out in the summer before picking up again around late September and early October. The increase in competition for sellers has resulted in 12 Greater Phoenix cities in less populated outer cities sinking into a balanced or buyer’s market over the course of 2 months, while 13 out of 17 seller’s market cities in the densely populated interior weakened.

Not-so-perfect listings, those that appear to have delayed maintenance issues, need excessive repairs, or simply don’t show well, have the most trouble in these environments. With so many other homes to choose from, these homes may not even get a showing in many area cities regardless of their attractive list prices.

Even perfect listings may suffer from dashed expectations in this market. While these homes that smell like a Spring breeze, well maintained with updated finishes, will sell in any market, seller expectations for time on market and price may not be met. As the market shifts abruptly from Spring to Summer, the median marketing time prior to contract has grown from a historical standard of 3 weeks to 4 weeks and more than half of existing listings will experience at least one price reduction within that time frame. Sellers haven’t seen a supply/demand ratio like this since about 2014-2015, so managing expectations and patience will be key to navigating a successful sale.”

Commentary written by Tina Tamboer, Senior Housing Analyst with The Cromford Report
©2024 Cromford Associates LLC and Tamboer Consulting LLC

Solar on your home, the co-op way. We need more solar + batteries on homes to stabilize the grid. But there are some solar installers that give the whole industry a bad name. I think every one of us has had some random company knock on our doors to sell us solar. Unless you are an electrician or engineer, it seems impossible to know if you can trust what they are selling. Well, there is an answer. Learn how to be a confident consumer with this event from Solar United Neighbors (SUN) on July 30. SUN not only educates you about what makes a good system and good investment, but they also pool the installation orders for many home owners at the same time in order to buy down the cost of your system. Sign up for their Solar 101 presentation to learn more.

Free resources to save money and go electric. One of the most frustrating things about this election is just how little the media has educated the public about the many ways Biden’s Inflation Reduction Act (aka Clean Energy Plan) will help regular folks save money while combating pollution and climate change. But if you want to know exactly how you can save money, check out the Rewiring America website that can help both home owners and renters.

The Winner in the Terrible Idea Category Is. The MAGA-dominated Arizona Corporation Commission last month created a loophole that effectively shuts down any oversight of utility dirty methane power plants –one of the biggest contributors to air pollution in AZ. In short, and contrary to all climate science, APS, TEP and SRP are pushing to install over 4,000 gigawatts more dirty methane gas over the next five years. If that is not bad enough, this decision guts the Certificate of Environmental Compatibility process (read “pollution controls”). You can get a summary of the situation here and here.We need new leadership at the corporation commission this year. Learn about candidates Ylenia Aguilar, Jonathan Hill and Joshua Polacheck, all of whom understand that the little-understood Corporation Commission really is our climate commission.

In case you thought all Ken can talk about is clean energy. Here’s a nice summary of everything you need to know about the July 30th primary elections in the “great state” of Maricopa County, Arizona. The county’s “Be Ballot Ready” system is really helpful. And if you want clear answers to that crazy election denial uncle at your next family get together, see this page.

Strict Scrutiny. The very corrupt US Supreme Court, SCOTUS, has delivered more ill-considered and possibly nation-dismantling decisions in the last few weeks than 99% of people can keep track of. And that’s fair. It can be challenging to understand these arcane legal theories and the arguments. Its even more frustrating that “low information voters” seem to be in control of our future. I’ve found the Strict Scrutiny Podcast to be a breath of fresh air. The three female legal specialists who host the show are witty, comprehensive and they don’t talk down to the listener. You can see it on YouTube, as well. In particular, listen so the episode on the Snyder case, in which SCOTUS effectively made bribing of public officials a-okay under the law.

I told y’all last month how I am winding down the real estate business over the next 9 months.

Luckily, I am able to work remotely to do my work on the clean energy transition.

That freedom to work remotely has me thinking. After 26 years in Phoenix, it may be about time for me to move out of Arizona. But I’m not 100% sure and I’m asking you to come along as I decide. 

I’m starting a 2-month, remote work, van life tour with my dog Ellie, and I’m going to document it all on YouTube, Facebook, with teasers on Instagram (since they won’t let me publish full videos).

Have a look at my short kickoff video and, as they say, “punch that like button and subscribe”. I’ve published another since then, with all of the following installments landing every Sunday.

I’m also transitioning my old monthly real estate newsletter into something more like a Substack, with news on the trip, and comments on Arizona real estate and politics.

And, since I’m also closing down my real estate business later this year, there will be less sales content.

That is all. I really hope you join me and I value your thoughts as I answer this big question.

Per my previous comment about reporting important policy issues to you. Here are some things that most people miss, or that polluters are happy when the public misses. 

Solar for All. As part of the ground-breaking Inflation Reduction Act, Arizona will get $156 million that can be used to improve access to rooftop and neighborhood-scale solar generation for all Arizonans. The Solar for All Arizonans program plans to deploy just over 61 MW of new solar resources throughout the state, benefitting thousands of low-income families, renters, and rural and Tribal communities. The innovative Solar for All Arizonans program will provide numerous benefits for families throughout Arizona, including over $164 million in bill savings for participating families. Additionally, over 300 rural households will benefit from solar plus battery systems for their homes, protecting them from electricity service disruption.

The Climate Commission. There is a direct tie between the Arizona Corporation Commission, power companies and climate change generally and public health specifically. It probably seems obvious to my readers, but polls show that most people don’t see this connection. In fact several hundred thousand voters don’t vote all the way down the ballot where the Corporation Commission candidates are listed. If more people knew that the Corporation Commission really is the “climate commission”, I know they would vote in those elections. See this great article from the Arizona Public Health Association for examples of how the Corporation Commission affect you very directly.

Phoenix Air Quality. While Gila, Maricopa, Pima and Pinal counties, were given an “F” for air quality from the American Lung Association in their annual report last month, our public utilities are pushing forward with plans to build as much as 4,000 megawatts of new dirty methane gas power plants. Most of these plants are, or will be, in areas that are failing to meet clean air standards already, or are populated by marginalized communities. 84% of Arizonans live in areas with unhealthy air. A combination of renewable energy, batteries and utility-funded home energy efficiency incentives could clean the air.

Former mayor, famed champion of historic properties in Arizona, and long-time fighter of dark money, Terry Goddard is announcing the opening of the Monroe Street Abbey. The new location will be an indoor/outdoor event space, which will activate a corner that has been sitting empty for decades.

Congratulations to everyone involved. From their public announcements of the opening:

Build in 1929, the Abbey is listed on the National Register of Historic Properties.  In 1984, a huge fire destroyed the roof, but courageous fire fighting saved the rest of the building.  Eventually the wall supports were removed, and the building was prepared for demolition. 

Fortunately, Housing Opportunity Center, an Arizona not for profit corporation, secured a short-term loan from the National Trust for Historic Preservation and put the property into escrow just hours before demolition was to start.  Since that day, there have been many plans for the restoration and adaptive reuse of this landmark. 

But the ideas always come back to a Garden in a Ruin, a new purpose literally rising from the ashes of the old.  The current plan combines the best of the prior suggestions, a mix of food and beverage services within stately walls, private events and public functions for our enjoyment in an environment unique in Arizona and the Southwest.

The Courtyard:  The centerpiece of the Abbey was the church’s sanctuary, a room that could seat as many as 1,400 congregants on the main floor and the steeply slopped balcony.  The fire brought down the beautiful, high pitched Spanish tile roof and made the large inside room an outside garden. Designed more as a performance theater, what is now the Courtyard had a formal proscenium arch and a double curtain over two stories high.  This stage area was lit from above and designed for choral performance.  Even without a roof, the acoustics in the Courtyard are excellent. 

The Abbey Café: The former Chapel forms a unique space for a full service restaurant where diners can enjoy the quiet breezeway between the Abbey and the apartments next door or take their food and drink in the Abbey Courtyard.  2,500 square feed with kitchen and two designated restrooms.  The Bell Tower: The tower space on the first and second floors provides the chance for a coffee and a sweet or a light refreshment with a unique view of the City on one side and the Abbey Courtyard on the other.

I became a realtor in 2008, when you had to be one hammer short of a tool box to want to be a realtor.

But I learned to be scrappy and soon after joined forces with my amazing business partner, Michelle Conley. Together, we’ve done hundreds of transactions together with many repeat clients.

But my deeper love has always been public policy, especially around climate, environment, human rights and voter rights.

Since my election loss since 2018, I’ve found a way to work on those issues with amazing people, and it’s taken more and more of my time.

Further, as the real estate market has been eaten up by mega-brokerages, greedy investors buying residential homes and corporate short-term rentals, the market has shrunk for the people agents really should be working for.

If you are a regular reader of this newsletter and/or one of our clients, this is what you can still expect:

1. Michelle will continue to be available for most buyers and sellers. So, if you contact me with a need, I will refer you to Michelle. If she can’t help you, we have a list of amazing agents who can.
   
2. Until my current subscription to the Cromford Report end in September, I’ll share some of their monthly analysis.
   
3. I’ll definitely keep you posted on cool things like Phoestivus, and any special news that our fellow Phoenix lovers might share.
   
4. I still won’t crowd your inbox more than once per month.

Here’s how things will be different:

1. Expect more insights and reflection on policy and politics in Arizona. Heck, my newsletter has been moving that way anyway. So, you’ll see more, and hopefully more in-depth analysis. I’ll still throw in some thoughts on real estate and housing.
   
2. In June I’ll be launching a 12-week van life tour of the western states. I’ll be seeing the sights that I never got to see when I was running for office or starting a business. I’ll also be interviewing people who are doing inspiring things around sustainability, climate change and community. More on that later.

So, that’s it, folks. If you’ve been getting this newsletter for the real estate and local events, I won’t be offended if you unsubscribe.

But I hope you stick with it for a bit. I hope to share insights and experiences that enrich your life. My life has certainly been enriched by writing this newsletter for you every month since 2008.

The price of our listing in midtown has come down a bit and the sellers are very reasonable, though not in a rush. So, have a look.

520 W. Clarendon Ave, Unit G2. $282,000, 2br/1.75 ba, 1,320sf. There are a few pristine co-op apartments still in central and downtown Phoenix. Most were built in the 1960s and only a few maintain that mid-century charm. This is one of them. But, on top of that, the owners of this unit opened up the kitchen since and completely remodeled since they purchased the home in 2021. This home is being sold with all of the unique furniture, as an option for the buyer. This secure community is just steps from dining, light rail and shopping. You can lounge in the pool or chill in the historic commons knowing that your investment is being maintained and cared for as a co-op uniquely is. See the listing and more photos here.

2033 West Elm. Listed at $279,000, 2br/1.75ba, 1,260sf. Under Contract! This patio home is very affordable in a high market, and very convenient to Central Phoenix, as well as to multiple modes of transportation. The owner has completed a list of repairs and updates to the property and the community is stable and walkable, with lush grassy areas and trees. Updated flooring, updated kitchen and appliances and updated bathrooms.

Many of the tens of thousands of people moving to Arizona are moving because of the growth in the electric vehicle, clean energy and battery manufacturing industry. After all, Arizona is now an auto manufacturing state.

(Take that, Detroit.)

That means your property value is going up as the demand for housing continues.

I wanted to take a moment and make it very clear that we have President Biden’s Inflation Reduction Act (IRA) to thank for that.

For whatever reason, media is not reporting on these huge benefits that the President won from a hostile congress.

The IRA set aside billions in investment dollars and tax credits to match private money for all kinds of clean energy manufacturing and infrastructure. See this link for a breakdown of where those jobs are going in Arizona, specifically.

If you’ve lived in Arizona for long, you know that our rural towns suffer from high unemployment. So much of this growth is going to rural Arizona. See this example of how EV and battery manufacturing is bringing jobs to Arizona.

I’ve said it before. Investments like this affect the real estate market and your home directly.

Congratulations Arizona.

Climate Change seems so overwhelming that it almost freezes us in place.

But it does not have to be that way.

You can do with your vote and your wallet by standing up to the utilities and supporting those who want reform.

Utilities like APS, SRP and TEP make money selling electrons to us with a mark-up. So, why would they want to support solar and batteries on your home?

That’s bad, but we could fix that that if only we had a corporation commission that would hold them to higher standards. But we don’t. The current, MAGA-dominated corporation commission is now considering dismantling the requirements we put in place in 2008 that push the utilities to meet carbon reduction standards.

Just as a reminder, the production of power from fossil fuels wastes millions of gallons of water per year in Arizona.

The Corporation Commission also directed APS to add fees to those of its customers who have solar panels.

Meanwhile SRP continues to throttle residential solar and they have plans to add over 4,000 megawatts of dirty methane gas power generation. Remember, methane gas is 80 times more potent as a greenhouse gas than carbon alone.

Please take a moment to research the SRP Clean Team, a crew of citizens who are very close to getting a majority of SRP board seats in elections happening right now. Many people don’t know that SRP has an elected board. Learn about that here, including maps of voting territories. If you own a home in current (and some past) SRP territory, you may have a right to vote. Register here.

There are also three candidates running for the Corporation Commission who all want to reform the commission. People don’t know that the Corporation Commission has more control than any other elected office to decide our climate fate. The Corporation Commission is the “climate commission” when it comes to clean energy.

You can sign e-petitions at this link. The only pro-clean energy candidates are Ylenia Aguilar, Jonathan Hill and Joshua Polacheck.

Please check them out. This is the simplest, most direct thing you can do today.