We are entering the hot months. Compared to February through June or September through November of any given year in any type of market, you will see fewer sellers and fewer buyers.

And it makes sense, right? So many people are escaping the heat by leaving town, cooling off in pools that are barely cold anymore, or hiding inside their dark homes with the AC on and cold drinks in their hands.

So, as the Cromford Report folks look back at the first six months, we are still seeing fewer listings than last year and prices that are pretty much the same.

In our experienced opinions, you might want to brave the heat to find a deal over the summer, rather than waiting until more people come back as the nights begin to cool in October.

“Here are the basics – the ARMLS numbers for July 1, 2023 compared with July 1, 2022 for all areas & types:

• Active Listings (excluding UCB & CCBS): 11,545 versus 14,406 last year – down 20% – and down 1.6% from 11,730 last month
• Active Listings (including UCB & CCBS): 14,406 versus 17,261 last year – down 16% – and down 4.4% compared with 15,062 last month
• Monthly Sales: 7,377 versus 8,113 last year – down 9.1% – and down 9.0% from 8,110 last month
• Monthly Average Sales Price per Sq. Ft.: $287.76 versus $300.43 last year – down 4.2% – but up 1.5% from $283.71 last month

Comparisons with this time last year are getting easier, as a year ago the market was deteriorating as demand from institutional investors and iBuyers collapsed. A steep rise in interest rates had spooked the market and ordinary buyers were holding their breath too.

A year later we have a market which is seeing very low demand and even lower supply. With the 30 year fixed interest rate stuck around 7%, most homeowners do not want to sell and buyers are struggling to qualify and afford a home. Buyers are unimpressed with the low inventory of re-sale homes and are increasingly turning to new built homes. Developers are enjoying strong orders, firmer prices and healthy margins, but have relatively low inventory of homes for sale and a weak pipeline of new permits to build. The strongest sector in the housing market is single-family new construction.

Some people drastically overstate the importance of interest rates in determining home prices. Interest rates are important but when they move higher they lower supply as well as demand. It is the balance between supply and demand that determines how prices move. At the moment supply is much weaker than demand so prices are increasing, as they have since January.

For homeowners, rising prices are reassuring, but for agents, the low volume is a huge problem. There are remarkably few new listings and closings are declining as we enter the summer doldrums. Title companies, lenders, warranty providers, inspectors and appraisers are all suffering from a prolonged weakness in transaction volume. While interest rates remain at 6.75% or higher, we appear unlikely to see much improvement. In fact rising prices will make it even harder for buyers to close on a home. However if interest rates were to fall to 6% or below, we could see a sharp increase in demand and an improvement in supply too.

We will shortly see the average $/SF for closings overtake the figure from a year ago. At the moment the gap is 4.2%, but last year’s prices were falling fast and this year we are seeing a rise of almost 3% in just 2 months. The third quarter is notorious for weakness in average pricing, but even if closed prices stay flat for the next 3 months, annual appreciation will have turned positive by the end of the quarter.”

So, what’s the take-away from all of this? Inventory is not great, but prices continue to climb and will climb further at the end of the summer.

If you are a buyer, get out there now. If you are a seller, start preparing your property over the summer to list in September.

Even as we creep toward the most challenging part of the year, weather-wise, the evenings and early mornings are still great for exploring what’s around. If it gets too hot, I usually escape to a coffee shop for some light reading. Here are some ideas for both…

Local First Indie Week. We celebrate Indie Week every year to support local businesses and keep investing in our community. If you own a local independent business, you can sign up for Indie Week here. From June 24th to July 4th, and featuring the distinct Local Business Bingo Card, Independents Week encourages Arizonans to “go local” by supporting as many locally-owned businesses as possible. Each year, traditionally over the first week of July, first-timers and returning customers across the state discover new and fun ways to support Arizona’s small, independent businesses! Official Hashtags: #IndieWeekAZ #LocalFirstAZ

Creative Saturday at the Phoenix Art Museum. June 10th, 2023 at 11:00 AM – 2:00 PM Kick-off your summer with art-making activities, performances, and hands-on experiences for the entire family! Check out fashion-design exhibition MOVE: The Modern Art of Geoffrey Beene and create wearable fashion accessories with Phoenix-based artist Kyllan Maney. Discover the mixed reality artwork, Reynier Leyva Novo: Methuselah and investigate a monarch’s life cycle, migration journey, and wing patterns with biologist and Phoenix College professor Jon Douglas. Explore Juan Francisco Elso: Por América through music. Don’t miss live performances by Bolivian pianist Masaru Sakuma featuring selections from Cuba and across Latin America. Included with general admission.

Let Voters Decide the Transportation Future. The Maricopa Association of Governments (MAG), made up of cities, mayors and council members of all political stripes, is asking the Arizona Legislature to approve a ballot measure that will go to the public to approve a continuation of an existing sales tax to support all manner of public transportation, from roads to mass transit. It is a feature of how things work in AZ that the legislature has to approve the language of the ballot measure before it goes to the ballot. Unfortunately, this means that some of the more radical, cuckoo-banana-pants legislators at the capitol are trying to hijack the process to exclude almost anything to do with light rail, busses, etc. That’s right, as we all know an increasingly dense area like Maricopa County needs more multi-modal options, rather than just more expensive and polluting freeways. So, please follow this link and sign on to the petition calling for the legislature to approve the language recommended by MAG.

Interpermeatte at the Bently Gallery. June 10th, 2023 at 11:00 AM – 4:00 PM. In Jake Fischer’s paintings, the word interpermeate represents the idea that light and dark are equally and mutually pervasive in defining space just as the physical environment and our mental processes are equally and mutually pervasive in defining experience. Free admission.

$6M Appropriated for Arizona State Parks Heritage Fund. On Friday, May 12, 2023, Arizona Gov. Katie Hobbs announced that she signed an $17.8 billion budget for the 2024 fiscal year that features heavy investments in education, transportation, and tax rebates. The budget also includes $6 million for the State Parks Heritage Fund and $500,000 for the Arizona Trail. View the State Parks Heritage Fund projects funded in the past two fiscal years in the map above.

The Foam Zone. The Children’s Museum of Phoenix is hosting this event seven days a week from, 9:00 AM – 4:00 PM. With three floors of play experiences inside and the Foam Zone outside, a cool day of play is guaranteed! Museum admission is $17 per person. I wanna go! Do I need to be a kid?

Investment – Jobs? Who knew? If you like to see how the Infrastructure and Jobs Act (IIJA), as well as the Inflation Reduction Act (IRA) has been attracting investment to Arizona, have a look at the Investing in America website for an interactive tracking of what we’ve gained. For instance, on this page you can see how the $4B invested from the IIJA has resulted in a $57B multiplier effect of new investments in Arizona. As Heather Cox Richardson points out in her Substack article on the issue, the flood of investment shows that decades of tax-cutting, deregulatory, infrastructure-draining dogma from the GOP is not what inspires investment from private industry. “…it appears that Biden’s policy of public investment to encourage private investment has, in fact, worked. So far, during his term, private companies have announced $479 billion in investments under the new system…”

Insurance Migrant from California? You may have heard that two major insurance companies have pulled out of California and won’t offer insurance to homeowners, in large part to increased risks from climate change. Think about that. If you have or want a mortgage, you must have insurance. So, unless you purchase all cash (imagine that in California), you can’t get a home. Here’s an interesting discussion of the issue and whether that could happen in Arizona. I’m thinking that, at least in the short term, we could see even more people moving to Arizona from California.

Prepare for Father’s Day at the Japanese Friendship Garden. Make this Father’s Day one-of-a-kind with a crafting workshop for the whole family! Spend quality time with your family in the Japanese Friendship Garden of Phoenix making adorable creatures using natural garden materials. General admission, plus $5 workshop fee.

Protecting Gas Stoves is anti-Woke? Here’s a great opinion piece on how the GOP has folded protecting gas stoves in to their “anti-woke” agenda. What’s crazy, of course, is that some of the most conservative areas of the country (the deep south) have the least penetration of methane gas service in the country, anyway. So, what are they protecting? Not people. Homes with gas stoves are more dangerous than homes without and electrified homes are less expensive to build.

It’s Always Sunny in Philadelphia Trivia Night. If you know where the Rose Room is at Valley Bar, you know. If you know about Always Sunny, you know. What else can be said? Hosted by Corey G & Carolyn.

Donna Reiner has written many articles over the years for the Arizona Republic and others about Phoenix history and memorials.  She is a regular contributor to our newsletter. This month Donna tells us about Margaret T. Hance Park, over the last mile of I-10 to be built, and the final connecting point between the Pacific and Atlantic oceans via that freeway.

When plans began for the design of the last mile of Interstate 10, no one could have imagined that it would first take so long to come to fruition. And even more so, once the plans were finalized, and construction began, that costs, budget constraints, and many of the usual things that are associated with a large project, would ultimately change much of the proposed landscape.

            In 1972, grand plans for the “Central Avenue Park” were approved with the proposed heliocoils of the new Papago Freeway to tower over it. The lushly landscaped park would include bike paths, a living museum operated by the Central Arizona Historical Society and located at the Shackelford House, numerous recreational facilities, and a visitor center.  On paper, this would be a park where Phoenicians and visitors would gather for fun, recreation, and festivals.  However, a dark cloud hovered over this proposal in the form of the failure for the freeway design to be approved.  Of course, the land had been purchased and cleared of houses leaving what looked like a dead zone right through the middle of residential Phoenix.  

            Back to the drawing board until 1984 with a new plan for a park which would be on top of an underground portion of the freeway.  While the park would be depressed below street level, the design concept intended that what was once a dead zone would now be a “major unifying element” for the surrounding neighborhoods and central Phoenix.  The plans once again proposed recreation and open space, but this time the new and improved version included an exhibit area for arts and crafts, a sculpture garden, water features, tree bosque, amphitheatre, and even an active recreation area that might have a racketball court. The idea was to re-establish a cohesive community that had been ripped apart by the removal of hundreds of homes.

            The city created an advisory committee in 1985 to move the project forward.  This committee presented a draft master plan to city council in March 1986. Despite city approval, unresolved land use issues caused some problems which were resolved that fall.  In the mean time, staff suggested that an arts district be integrated into the park. Neighbors were cautious, but generally supportive.  A freeway underground was a far better option than one towering above.  And the park with the proposed amenities would be a nice addition.

            The deck park concept still had more hoops to jump through before finally opening. Much larger than similar parks in Seattle and Washington, DC, it was being billed as the “playground of Phoenix.” A Japanese Tea Garden and then an Irish farmhouse to celebrate two of Phoenix’s sister cities were suggested to be included.  The city even proposed placing the new central main library in the park. Ideas continued to swirl around all while the actual construction of the underground portion of I-10 finally began in the fall of 1988. Newspaper articles announced that the proposed opening of the tunnel and the park would be in early 1990.

            Of course, things don’t always go according to schedule, costs, and plans. Work on the park finally started in January 1991. But budget constraints reduced the amenities. So the fountains and amphitheatre were not built and construction of the Irish farmhouse and the Japanese Tea Garden were postponed. The three original sections of this grand park: cultural, urban plaza (around Central Avenue) and neighborhood (west side) are not something most visitors or Phoenicians could even grasp today. While the library was constructed on the edge of the deck, by the urban plaza section, the other sections are distinct by contour of the land. The Japanese Tea Garden is cultural, but it is on the west end of the park and the Irish Cultural Center is on the southern side of what was to the urban plaza. The Phoenix Center for the Arts, a marvelous cultural center, is a bookend on the east end of the park.      

            So after twenty years, the Margaret T. Hance Park was dedicated on Saturday, April 25, 1992.

Heading in to the summer, we see conditions over the last month that we would expect to see as it heats up. They market is the busiest from about February until late June. Then things pick up again in late August until Thanksgiving.

These data points from the Cromford Report support what we are seeing anecdotally. We continue to suffer the consequences of high interest rates and out-of-control institutional investors and prices remain pretty close to what we saw last year.

If you were waiting for a drop in prices, that was last year. Inventory is still low enough that prices are not likely to come down. People are finding ways around the high interest rates to get in to the homes they want. They are re-entering the market and dealing with similar shortages.

To quote Cromford:

“Here are the basics – the ARMLS numbers for June 1, 2023 compared with June 1, 2022 for all areas & types:

• Active Listings: 11,730 versus 9,439 last year – up 24% – but down 6.2% from 12,503 last month
• Pending Listings: 5,696 versus 6,887 last year – down 17% – and down 8.5% from 6,224 last month
• Under Contract Listings: 9,028 versus 10,249 last year – down 12% – and down 9.4% from 9,969 last month
• Monthly Sales: 8,082 versus 8,728 last year – down 7.4% – but up 21% from 6,687 last month
• Monthly Average Sales Price per Sq. Ft.: $283.47 versus $303.39 last year – down 6.6% – but up 1.3% from $279.76 last month
• Monthly Median Sales Price: $434,000 versus $475,000 last year – down 8.6% – but up 2.1% from $425,000 last month

This time last year, the market was in full retreat, but pricing was just a few days away from its peak of $306.46 per sq. ft., reached on June 10. Closings were still plentiful, driven by the demand from institutional investors and iBuyers who were just about to curtail their buying spree.

So much has changed in the last year. The gut-wrenching slowdown that took place in the second half of 2022 is now a distant memory and the market is slowly and cautiously recovering to a semblance of normality. Closings in June were unusually strong – up 21% from May, but these were driven by contracts signed in April when interest rates were more attractive than they are right now. A spike in mortgage rates at the end of May meant we entered June with a weak count of listings under contract, down over 9% from the beginning of May. This means we should expect relatively unimpressive closing counts for June.”

Furthermore, and it’s never fun to say that I told you so, the long-ignored need to conserve water is beginning to affect housing. Cromford again: “The recent decision to restrict future permits because of water concerns means that situation is likely to remain in place for a long time. The market will see less volume than we have become used to, but prices will be reinforced by the chronic supply.”

I’m not saying that Arizona will be unlivable in 5 years. What I am saying is that home builders and realtors –the very people who undermined efforts to save water– really need to get with it and become ardent water conservationists and density developers before they condemn all of our collective life savings to the fate of the Hohokam.

As of the writing of this newsletter, the Cromford Report has not come out with its review of April, which usually comes out about now.

But we have some data coming from mid-April. In short, we are seeing prices up since March, but still lower than they were this time last year.

The number of active listings is up from last year, but trending down since the beginning of this year. That is why you are starting to see quicker offers coming in for those homes. The demand for homes seems to be somewhat inelastic, despite high interest rates.

From the folks at Cromford: “For the monthly period ending April 15, we are currently recording a sales $/SF of $279.64 averaged for all areas and types across the ARMLS database. This is up 2.4% from the $273.05 we now measure for March 15.”

“On April 15 the pending listings for all areas & types show an average list $/SF of $301.22, up 0.3% from the reading for March 15. Among those pending listings we have 99.3% normal, 0.1% in REOs and 0.5% in pre-foreclosures. This is similar to the last 2 months. We still have very few foreclosures appearing.”

So, what does this mean for you?

Well, if you are selling, be sure to spruce up your place and put your best foot forward. These are not the days where you can sell anything in any condition. But if you present well and price well, you will get offers.

If you are buying, you might want to get in before the Federal Reserve announces that it will no longer raise interest rates, which we think will come in the next few months. We think that, as soon as they do that, lots of buyers will re-enter the market with the plan to grab what they can and refinance in a couple years.

People are still moving to Arizona and that won’t change any time soon.

Cross your fingers. Forecasts for May indicate that we may have more cool days that we expected a couple weeks ago. So, there’s time to get out and see those May Attractions. Plus, I’m sharing some of the great reads that could occupy your attention at the pool.

The Smoking Gun Continues to Smoke. For many of us, we’ve known for decades that the big fossil fuel companies intentionally misrepresented the danger of global warming. And evidence of that has dribbled out over the years through discovery in various lawsuits. But now, we have a peer-reviewed study from Harvard and the Rockefeller Family Fund that assesses the known projections of Exxon going back three decades.

Practical Art’s 15th Anniversary. We’ve been fans of Practical Art for years. We did special events with them over the years, way way back when they were new to the scene. So, it’s exciting to see their 15th Anniversary Art Edition with lots of beautiful and accessible art to choose from. They are located uptown, just north of Camelback and Central.

Revisiting Cadillac Desert. This seminal work spanned two centuries of, corruption and short-sightedness of water policy all across the growing United States, but primarily in the arid desert Southwest. (See this short video from the documentary to get a taste.) It’s a biggie. At over 600 pages, it leaves no stone unturned. I’ve had it on my shelf for two decades and only got through the beginning. I had to admit defeat and download the audio book. The 27 hours of listening is still engaging. As we in Arizona have been told by the Bureau of Water Reclamation to radically cut our use of Colorado river water by 25%, it is worth diving in to this one. If nothing else, watching the documentary will give you an idea of the mentality of decision makers that got us here and what it would take to save our skins.

Kickback with the Locals. Local First Arizona is hosting an event on May 11th at Barcoa, downtown, to link up local artists, makers, growers, foodies, trendsetters, entrepreneurs, and local advocates. Brought to you by Local First Arizona | LocalBuzz | Barcoa | XICO Gallery. The evening will be hosted by Marshall Shore, the Hip Historian! in a century-old building in Downtown Phoenix. Discover tons of local businesses and learn how to officially become a Localist through Local First Arizona and learn about Pollyn – a hyper-local creator marketplace by LocalBuzz. Guests can sip from an exclusive Mezcal tasting at Barcoa Agaveria while enjoying the action of the print workshop in XICO Inc. gallery and studio.

Third Fridays. Little-known fact outside of downtown: Third Fridays is like the adult swim of art Fridays. That will be May 19th this month. If you get overwhelmed by the masses of people at First Fridays, you will enjoy the room to breath on Third Fridays. For many people, it’s the only way to experience art downtown (and on Grand Ave) these days.

4br/2ba, 1,867sqft home priced at $449,000.

We have this new listing to share with you, and possibly another coming on in the next couple weeks.

Caution: this new listing went live on the MLS just last night and we already have four showings. I know that is anecdotal evidence, but it supports the market data we have seen from The Cromford Report that indicates that last year’s relative slump in the market may be clearing out.

This home has made great use of space, with a master bedroom on the second floor and three rooms on the first floor. So, whether you plan to have room mates, family members, or just yourself in the home, you will have plenty of space.

The kitchen and living room are spacious, with a separate dining room. The back yard has been recently landscaped and there is a whole lot of extra space for a garden or storage.

I’ll tell you that from my perspective as an urban garden enthusiast, the extra space in the back yard where the city returned the ally easement to the owner would make a great garden. It is shielded from the harshest morning and evening sun in parts of the year, but it would get plenty of sun in the winter.

Also, note the recently updated electrical panel and roof, bath and kitchen.

The home is well-maintained in a centrally-located neighborhood. It’s close to the freeway, but not too close and just up the street from shopping, restaurants and entertainment.

Let us know right away if you’d like to get in to see it. It may be gone before next week!

Donna Reiner has written many articles over the years for the Arizona Republic and others about Phoenix history and memorials.  She is a regular contributor to our newsletter. This month Donna tells us about the influence of Ruth Freethy’s dance instruction on the growth of the arts in Phoenix.

Phoenix, despite rumors otherwise, has always been a cultural oasis in the desert. Theater, brass bands, opera, concerts, vaudeville, dance, and various recitals have entertained Phoenicians for well over 100 years. And today, if one searches carefully, the number of options every day is staggering.

But when it comes to dance, my favorite is ballet probably because my mother started me off before I began kindergarten. Thus, when a recent posting on Facebook mentioned the first ballet studio in Phoenix, I knew there was a story.

Ruth S. Freethy arrived in Phoenix with her husband and infant daughter Dorothy probably in early 1926. In her early 20s, Freethy was eager to start teaching what she most loved: ballet.  Within a short time after the family’s arrival, Freethy located a spot at the LDS Recreation Hall which is now the site of the Lath House at Historic Heritage Square. Classes began in the Russian ballet method on October 1,1926.

Freethy’s ballet school must have been popular because after three months at her first location, the school moved to a house at 60 W. Roosevelt. While ballet was the primary focus of Freethy’s School of Dancing, she also offered ballroom dance lessons as well as tap dance.

Of course, there were student presentations. In May 1927, some of Freethy’s students even became the “second bill” at the Rialto Theater. And after the Orpheum opened in 1929, Freethy and the Phoenix Phantoms, her high school students, often performed on that stage.

Business continued to boom and Freethy and her husband, now the school’s business manager, purchased a lot at 16 W. Cypress. Now Freethy could design a studio to fit her needs and needs of her ever-expanding School of Dancing and no longer worry about having to change locations.

An article described the studio as 2000 sq ft with maple flooring, bars at different heights for the younger students and the older ones, and plenty of light. The same article described the new studio as
“the best equipped and most complete school of dancing in the southwest.” And the beautiful brick building painted cream was also the home of the Freethys.

In its spacious new home, the Ruth Freethy School of Dancing blossomed. Freethy’s dancers performed before various women’s groups and on stage wherever one was available. For a brief time, performances were held in the former West High School Auditorium.

Some of Freethy’s students continued to dance after leaving the school. A few though, including Freethy’s daughter Dorothy, joined the studio as instructors.

Ruth Freethy finally retired in 1959 after her dancers and herself presented more than 30 recitals and benefit dances before Phoenix audiences. Queries from former students resulted in this comment from Donna Ballard: “I attended [The Freethy School of Dancing] around 1958 when I took tap and ballet. I loved the wintergreen candies she gave us all at the end of the lesson. She was very kind to this pudgy little dancer and always made me feel special.”

Donna Reiner is the co-author of three books about Phoenix history.

I’ve not done one of these curated lists of events, articles and various things for many months.

I’ve been looking forward to getting back to doing it.

If you feel these are valuable, please let me know. Pretty please.

Rooftop Easter Brunch. On April 9th from 9am to 2pm, the Rennaissance Hotel will host it’s 2nd Annual Rooftop Easter Brunch. Easter Brunch comes complete with bottomless mimosas, an ocean bar with oysters, shrimp, crab, ceviche, and more, carving stations for Easter ham and prime rib, omelet and pasta action stations, salads, desserts…and the menu goes on. For the kids and kids at heart, Easter egg hunts, cookie decorating, and kids drink table. Adults $85, Kids 5-12 $50, Children under 5 FREE. Don’t let the egg roll over the edge. That’s all I’m saying.

Keep Your Money Where Your Home Is. On Wednesday, April 12th, Local First is hosting this meet and greet with community banks. Even if you don’t own a business, this is valuable. About 10 years ago, I finally wriggled my way free of Wells Fargo. The Great Recession and being a member of Local First showed me the value of joining a local credit union. But, its not easy to get free, especially if you have more than one business account. This is a great first step.

Is a Boycott Free Speech? Starting at about minute 15 in this On the Media podcast, you can learn about how a little-watched court case could result in deciding that boycotts are not free speech. (The Supreme Court decided decades ago that boycotts are free speech.) In at least one appellate court district in America, if you call for a boycott of a company, you could be sued. In other words, we could live in a country where dark money is free speech, but boycotting businesses that refuse to serve black people could land you in court. The title of the episode is Indicted, in case the link, above does not work.

Inspirational Ikebana with Ping Wei. On April 16th, learn Ikebana, traditional Japanese flower art, outside in the beauty of the Japanese Friendship Garden of Phoenix. Led by master Ikebana teacher, Ping Wei, you will learn essential Japanese flower arranging techniques, aesthetics and the meanings of flowers in order to make your own arrangement. $50.

Tour the Historic Orpheum Theater on April 18th. The Orpheum Theatre is a fully-restored 1929 atmospheric theatre complete with a disappearing Mighty Wurlitzer Theatre Organ! Guided tours of the theatre include all public and many non-public areas and offer visitors a glimpse behind the scenes of a movie palace. All regular tours last approximately 60 minutes. Free. 12:00 PM & 1:30 PM.

Earth Day, April 22nd. There are several Earth Day Events going on. See the official Phoenix event at this link. The Phoenix Zoo has its own events. See here for that. More than going to an event, I recommend you check out the official Earth Day website, which details simple things that you can do to reduce the damage to the earth, and thus ourselves.

Localist Open House. Many years ago, Local First was very smart to create an alliance of people who support local businesses. That way you don’t have to feel like you are a business in order to be involved in the movement. Localists get special tours of locations and businesses that most people never see, and they get to socialize and network with like-minded people. You know…community. The next Localist Open House is on April 27th at 6pm in downtown Phoenix.

Voter Choice AZ Speaker Training. If you, like me, are a fan of Ranked Choice Voting, a way that you can help us get it on the ballot is to join the speakers’ training. There are two trainings coming up on April 10th and April 17th. They are on Zoom, so you can participate from your home in your PJs if you so desire. You can learn the best ways to talk about it, so you can join the speakers’ bureau. Speakers address all kinds of social or political groups. I’ve never seen a group do such an effective job of building it’s grassroots support. Learn more about this crucial election reform here.

We keep hearing news of a market in distress, albeit an odd kind of distress where high interest rates are pushing historically-high prices slowly down.

But that’s not the case, according to our friends at the Cromford Report:

“After 200% Increase, Supply Still Nearly 40% Below Normal

Sale Prices Up 3.5% Since December (Even though they are down since last March.)

For Buyers:

Rates defied industry predictions once again and rose over a point from 5.99% to 7.1% between February 2nd and March 2nd. For the past 4 weeks, rates have hovered in the upper 6% range, figuratively “pinching the hose” on demand during the popular Spring season for buyers.

At 9,001, contracts are at their 4th lowest count since 2005, the lowest counts were in 2006-2008 and normal range is 11,000-13,000. Buyers are not the only ones holding back due to higher mortgage rates, sellers are too. New listings added to the Arizona Regional MLS are the lowest ever recorded going back at least 23 years.

This may be shocking to some as there has been a 200% increase in supply year-over-year, but last year at this time supply was merely 4,820 active listings. The reality is that ARMLS active supply spiked over 300% last year between March and October, peaking around 20,000 listings. But since then it has declined 27% to 14,772, which is the 4th lowest supply count since 2005 for this time of year. Typically, active listings should be between 20,000-24,000 to be considered normal. In a nutshell, while higher rates have stunted demand for now, they are not expected to stay high forever. If and when they come down, expect demand to increase again.
 
For Sellers:

Low-level demand combined with even lower-level supply equals a seller’s market for Greater Phoenix. Not a crazy one like the last 2 years, but since coming out of a buyer’s market last December sale price measures have stopped dropping and have risen a modest 3.5% so far.

Sellers continued to pay for buyers’ closing costs on 48% of MLS closings in March, with half paying $9,000 or more. Fewer new listings hitting the market has meant less pressure on sellers to reduce their list price. As a result, weekly price reductions are actually falling instead of rising as they typically would at this time of year. Only 13-14% of inventory issued a price reduction last week compared to 25% of inventory last October.

The average negotiation is 97.4% of the last list price this month, an improvement from 96.5% in January and in line with the pre-pandemic market of 2019. Current median days on market prior to an accepted contract is 32 days. Most seasonally-adjusted housing measures are reflective of a weak seller’s market similar to 2015 where properties appreciated an average of 4.6% annually.

The majority of cities in Greater Phoenix are now in seller’s markets. Only 5 cities remain in buyer’s markets at this stage. They are Queen Creek, Maricopa, Buckeye, Casa Grande, and Sun City West. The outskirts of town tend to be the first to enter buyer’s markets and the last to come out. While these cities are lagging the rest of the valley, their measures have all improved 8-14% over the past month.

Commentary written by Tina Tamboer, Senior Housing Analyst with The Cromford Report
©2023 Cromford Associates LLC and Tamboer Consulting LLC

Trimmed by Get Your PHX for brevity.