Believe it or not, the market is balancing again. Well, it’s moving in that direction. It seems crazy to say since active listings are up 182% since this time last year, according to the Cromford Report.

If you are a buyer, this is good news. But see the note in bold below. The market is creeping back to seller advantage. Buy now if you are in need of a home. I think that as soon as the FED announces that they will not raise interest rates again, buyers will flood back in to the market.

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

• Active Listings (excluding UCB & CCBS): 16,298 versus 5,776 last year – up 182% – but down 14.9% from 19,155 last month
• Active Listings (including UCB & CCBS): 18,097 versus 8,630 last year – up 110% – but down 14.7% compared with 21,206 last month
• Pending Listings: 3,657 versus 6,539 last year – down 44.1% – and down 15.0% from 4,301 last month
• Monthly Sales: 5,132 versus 9,265 last year – down 44.6% – but up 4.1% from 4,931 last month
• Monthly Average Sales Price per Sq. Ft.: $265.58 versus $267.92 last year – down 0.9% – and down 2.5% from $272.30 last month

There are lots of small numbers in December’s totals. We have very low volumes of closings because both buyers and sellers are discouraged. Monthly sales are down almost 45% from this time last year, and listings under contract are down nearly 42%. The numbers confirm that demand is very weak compared to normal for the time of year, and even weaker compared to the strong demand 12 months ago. However weak demand does not necessarily make a market crash. Excess supply is what really drives prices down hard. This is what we saw in 2006 through 2008. But in 2023 supply is low and getting lower. It is much higher than this time last year, when it was abnormally low, but it is still a long way below normal.

Activity is very low across the board, but the market balance is normal. By that we mean we have equal balance between buyers and sellers. The trend is now moving in favor of sellers, having been favorable to buyers a month ago. So although there is gloom and despondency almost everywhere, amid the murk there are clear signs of improvement. Because sentiment is so poor, there is psychological pressure to lower prices. However there is no such downward pressure coming from the market. If all trading was done by unemotional computers, prices should be stabilizing right now.

In the real world, strongly influenced by human emotions, prices fell sharply last month, losing 3.5% in the monthly median and 2.5% based on the average price per square foot. However sales prices are a trailing indicator and these moves reflect the balance in the market in November, when we experienced a clear advantage for buyers. Leading indicators are looking more positive. This probably stems from interest rates being less horrible than they were six weeks ago. Demand is starting to stabilize and even showing a few signs of a slow recovery. With new supply very weak, we are not witnessing a market crash. This is merely a correction, with prices now just a tad lower than a year ago – the monthly average $/SF is down 0.9%.

We are still dependent on the whims of the Federal Reserve. If they continue to push the Federal Funds Rate higher in an attempt to curb inflation, then mortgage rates could move higher too, putting a quick damper on any recovery in demand. However if the 30 year fixed mortgage rate stays between 6% and 6.75%, then we should have confidence that the housing market can operate normally at this level. Prior to 2009, anything under 7% was considered a low interest rate and rates under 5% were unheard of.

To achieve confidence we need several months of interest rate stability. This is by no means certain to happen, but it is possible. Once the fear is removed, we should see more signs of a recovery in demand and volumes will rise back towards a more normal level.”

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 unique art that you can find at Phoenix Sky Harbor Airport.

Rush into Sky Harbor Airport, hope the lines are short to clear security quickly, and then find a seat while waiting for the plane to arrive. For many this is a common practice. But for some, there is the more leisurely and deliberate method of heading to Sky Harbor Airport so they can see the latest art on display and in the case of Terminal 4, the Art Museum.

Didn’t know there is a museum in the airport? Next time, you need to stop and enjoy what our airport has to offer in each terminal.

Previously, we covered the Paul Coze mural in Terminal 2, but let’s focus on portable art. That’s art that moves, and in the case of Sky Harbor Airport, sometimes from one terminal to another.

Terminal 2, originally called East Terminal to distinguish it from West Terminal (Terminal 1), was home to one of the first portable pieces in the Phoenix Airport Collection which now numbers close to 1,000 pieces.

Sometime after the opening dedication of East Terminal in May 1962, the Phoenix Art Museum placed a four-foot bronze sculpture on a long-term loan to the airport. “The Skirt” by Betti Richard had been donated to the art museum by Friends of the Museum for its opening dedication in November 1959. Records on why this particular sculpture was on loan to the airport do not seem to exist. In 1967, the Board of Trustees of the Phoenix Fine Arts Association gifted the sculpture to the City of Phoenix.

“The Skirt” was cast in a mold that was made from a clay sculpture and the artist had a special chemical mixture added to the bronze so it would have a brown patina. Ms. Richard entered the sculpture in the 43^rd Annual Exhibition of the Allied Artists of America in 1956 where it won a Gold Medal of Honor award which helps with dating the piece. The sculpture was strategically placed in front of the Terminal, but no photos seem to exist of it there, so no one is quite sure exactly where it was.

Being outside for years with our harsh weather and sprinklers (once there was grass in front of the terminal) caused a great deal of damage to this stunning figure. It gained a refurbished patina in 2005 courtesy of Arizona Bronze. Now she is on display inside Terminal 4 where you can enjoy this representation of women in general, poised in a sweeping dance gesture.

Our five great listings from last month are now down to one active and two closing this month.

It is clear that buyers are making a move before interest rates go up again.

See our listings page directly for more information.

Price Drop! 10018 E Indigo St., Mesa. 4br/3ba, 3,000sf. NOW $915,000

If you want space for all your toys, your garden and all your things, this roomy home and huge lot will be great for you.

The owners updated the flooring, the kitchen, the back yard and added a huge, four-bay garage. This is perfect for the auto enthusiast, or for all the toys.

That’s in addition to the three-car garage that is attached to the home! The additional garage bays are 30 feet deep and the entire garage is 50 feet wide with 8 foot tall doors.

You will be able to sit out on the back patio with amazing views of the mountains, with Usery Mountain Regional park almost out your back door. Whether you are all about indoor or outdoors, you will love this one!

Closing this Month. 387 N. 2nd Ave, #2G. 2br/2.5ba, 1,803sf.

You can enjoy a roomy condominium in a cozy HOA in this beautiful historic building, which was renovated from its original state about 20 years ago. In that renovation, the developer added many modern conveniences, including gated, covered and garage parking for all owners.

While everybody else drives around looking for a space to park, you can pull right in to your own secure garage downtown. You are steps away from live music, the weekly farmer’s market, shows, restaurants and all the things anyone is looking for in downtown living.

Plus, you get a beautiful full kitchen, 2.5 bathrooms and the kind of open living space you’ve been looking for.

Closing this month. 1107 W. Osborn Rd., #101. 1br/1ba, 849sf

This is a rare condo in Central Phoenix for under $230,000 from a motivated seller.

Since it was last purchased, the owner has completely remodeled the bathroom and has updated the kitchen to complement the historic features.

Walk around the grounds and you will see why people love living here. The trees are big and offer plenty of shade.

This particular condo is in the center of a beautiful breezeway, which feels like a green jungle, even in summer.

The pool is sparkling and just around the corner from your front door. See it before it’s gone!

Closed in November. 1107 W. Osborn Rd., #219. 2br/1.75ba, 1,108sf

This affordable gem has a balcony that over-looks the beautiful acreage at Nonpareil Condos, with a massive tree shading from the west.

Sit out on the balcony and enjoy your morning coffee or read the paper, er, kindle, er, smart phone.

Aw, you get the picture!

You’ll love the original 1950’s kitchen. Still functional and cut.

Shopping at Sprouts and Safeway is just around the corner, with easy access to all of the fun of Central Phoenix.

You will be hard-pressed to find a value like this so close to everything, including Phoenix College, which is directly to the south of this property.

Closed in November. 18427 N 36th Ln, Glendale 85308. 2br/2ba, 1,283sf

Our sellers on this property updated the flooring and paint.

It boasts a large master suite with sliding doors leading to the large covered patio. The patio will make a shady space for relaxing or gardening.

The yard is landscaped, irrigated, and includes a sliding RV gate for your fun toys. The two-car attached garage includes a plethora of additional storage cabinets, and a workbench to fix the aforementioned toys.

The home includes a newer roof and security shutters. It is close enough to the I-17 and the loop 101 to be convenient, but far enough away so that you can enjoy a quiet neighborhood.

I’m picking up mixed signals in the market right now. While I can’t explain what’s happening, I wanted to share it with you for your consideration.

On Saturday I showed properties around the valley and saw the first of the mixed signals. Of the four houses I showed, three of them had buyers either finishing up their appointment or waiting to look after our clients.

So, multiple potential buyers. I’ve not seen that since this time last year. One property had multiple offers prior to our showing.

Another property had the sellers son and nephew sitting around drinking beer in the living room and looking at their computers while we showed. Needless to say that did not go over well and gave a different sort of mixed signals: “I want to sell this out, but I really don’t want to appeal to anybody.”

Anywho….

While this represents an anecdotal experience, I’ve learned not to ignore things like this. However, the Cromford Report tells us that the number of buyers is dropping and, oddly, the number of listings.

“Here are the basics – the ARMLS numbers for December 1, 2022 compared with December 1, 2021 for all areas & types:

• Active Listings (excluding UCB & CCBS): 19,155 versus 6,825 last year – up 181% – but down 6.9% from 20,582 last month
• Pending Listings: 4,301 versus 7,830 last year – down 45.1% – and down 2.5% from 4,411 last month
• Monthly Sales: 4,909 versus 8,957 last year – down 45.2% – and down 9.5% from 5,425 last month
• Monthly Average Sales Price per Sq. Ft.: $272.34 versus $264.36 last year – up 3.0% – but down 1.6% from $276.79 last month
• Monthly Median Sales Price: $420,000 the same as last year – but down 3.7% from $436,000 last month

Demand not only remains weak, but it became even weaker during November with under contract listings down 3% from a month earlier and sales down a massive 45% from a year ago. After so many years with strong demand this feels very unusual and a little unnerving. This lack of demand is far worse for re-sale homes than it is for brand new homes, which are experiencing relatively brisk closings and little downward pressure in gross contract prices…

The big news since last month is that supply has changed direction and is now declining fairly rapidly. Almost 7% fewer active listings than a month ago means sellers have less competition.

Mortgage interest rates have stabilized and if they were to fall meaningfully, demand might recover once the new year is well underway. However, no-one can really predict the next interest rate move with any confidence.”

That previous point about the decrease in listings may indicate why I was seeing lines of people to look at homes. Hopefully the market will respond with more listings.

The folks at the Cromford Report are helping us understand what to expect in the real estate market in the fourth quarter. Here it is, straight from the Cromford’s mouth:

For Buyers:
­The price reductions keep coming. In October, when mortgage rates hit 7.0%, the Greater Phoenix housing market responded with 4,427 price reductions, 24% of all active properties in the MLS. At least 50% of those dropped their price by $12,000 or more.

Closing cost assistance is expected to continue to rise into the 4th quarter as mortgage rates continue to stay high and stifle demand for the time being. Aside from paying the buyer’s costs for title insurance, pre-paid taxes, insurance, lending fees, and other closing costs, seller-paid concessions can also be used to buy down a buyer’s mortgage rate, if applicable, and ease the pressure on their monthly payment.

For Sellers:
The 4th quarter is expected to be a test for sellers as mortgage rate hikes have reduced contract activity to levels not seen since 2008. Frankly, it’s not the best time to sell if you have a choice in the matter. Unlike 2008 however, most sellers today do have a choice and those without an immediate need to sell have chosen to wait. This is reflected in some of the lowest counts of new listings coming on the market recorded at this time of year going back to 2001.

Fewer new listings is a ray of hope for existing properties on the market. If new listings are trickling in and new buyer contracts are trickling out, then overall supply does not spike and cause further downward pressure on price. Thus keeping the market in a delicate balance for now.

Prices hit their peak in May, shortly after mortgage rates hit 5% and before they peaked over 6% in June. Once that happened, buyer demand dropped dramatically and the reflection in prices started to show a trend downward. Now rates are near 7% and sale price per square foot is down 9.6% over the course of 4 months, currently measuring less than 1% higher than January 2022 and representing the elimination of appreciation achieved from January through May.

Finally heading into the 4th quarter, expect marketing times to increase as they typically do this time of year. Median days on market prior to contract was 31 days last week. From October through December, active days prior to contract is known to rise anywhere from 44 to 56 days historically, with 50% of listings going longer.

The key words for sellers in this “new” market are condition, price, concessions, and patience.

Few home owners are aware that the methane gas industry (under the misleading marketing name of “natural” gas) forces you to subsidize their expansion to new homes.

It’s called a line extension subsidy, and new home developers get it to cut down the cost of installing methane gas to new homes. Methane gas is 80 times more potent as a greenhouse gas over 20 years than carbon dioxide. So, we need to focus on electrifying homes if we want to avoid the worst of climate change.

You can read about it on this blog or this video about the subsidy

But why should you, as a homeowner in Arizona care about this subsidy? Well, in addition to the climate change issue, Southwest Gas Corporation is going in front of the Arizona Corporation Commission right asking to be able to charge customers 11.4% more on their gas bills.

Methane gas is not only volatile, in that it explodes, but also a volatile fuel in terms of price. Just look at the price of gas around the world right now due to the war in Ukraine.

But if you don’t have gas in your home, why care? Simple, the more we use gas, the worse it is for the climate, but also the gas infrastructure that transports gas from Texas to Arizona is notoriously leaky and sometimes explodes. It contributes to the record-breaking bad air quality in Phoenix.

As a home owner, you can reduce your carbon footprint, save money and clean the air by electrifying your home –in other words ditching the gas appliances for high tech gadgets like heat pumps and induction stoves.

You might want to skim this list of interesting ideas and up-coming event as you multi-task between planning your Thanksgiving table placements and reading that huge ballot measure guide that is somehow now the size of a small phone book.

The Grand Unification. November 5th from 11am to 7pm. Grand Avenue.

It’s not just a theory. It’s an event.

“Where the Arts and Commerce come together. Grand Avenue will fill the streets with spectacles to see and delightful treats! Parking lots exhibiting low riders and vendors. All the while honoring the dead of our ancestors. The Grand Unification highlights the businesses hat brings something unique to all our 5 senses. This will be the place to be. So bring your friends & family and come on down to Grand Avenue, where you will experience something GRAND and new!”

MercyHill Church Preservation Letter Writing Campaign. Preserve Phoenix is organizing a letter-writing campaign to encourage a partial save of the MercyHill Church buildings at 745 W. Fillmore Street in the Historic Grand Avenue District. Formerly the Church on Fillmore for many decades, you can view photos and their post directly on the Preserve PHX Facebook page. The current Mercy Hill Church complex was built in 1946 by Arizona architectural firm Lescher & Mahoney and was modified several times as it became the center of community life for the area at the south end of 7th Ave and Grand Avenue (now known as the Triangle Neighborhood).

Money and Energy Saving Tips. Lot’s of people are learning that the Inflation Reduction act of 2022 will be able to save people a lot of money on energy, with credits and incentives. If you want discounts on a new ultra-energy efficient water heater or head pump to replace that dollar-sucking old A/C, look at this article from the Public Interest Research Group about what you could qualify for. It could save you thousands of dollars.

MidTown Urban Living Tour. Tickets are on sale NOW for Midtown Neighborhood Association’s annual Urban Living Tour, to take place on Saturday November 12, 2022 from 10AM to 4PM. This event is a self-guided home tour, offering exclusive access to explore unique single-family homes and high-rise condominiums in the historic Midtown neighborhood. The tour will set off from Central United Methodist Church at 1875 N Central Ave. The tour will span from McDowell Rd. to Thomas Rd.

We have four great listings on the market right now. We now have three of our five listings under contract. Two have price drops.

It is clear that buyers are making a move before interest rates go up again.

See our listings page directly for more information.

Price Drop! 10018 E Indigo St., Mesa. 4br/3ba, 3,000sf. NOW $920,000

If you want space for all your toys, your garden and all your things, this roomy home and huge lot will be great for you.

The owners updated the flooring, the kitchen, the back yard and added a huge, four-bay garage. This is perfect for the auto enthusiast, or for all the toys.

That’s in addition to the three-car garage that is attached to the home! The additional garage bays are 30 feet deep and the entire garage is 50 feet wide with 8 foot tall doors.

You will be able to sit out on the back patio with amazing views of the mountains, with Usery Mountain Regional park almost out your back door. Whether you are all about indoor or outdoors, you will love this one!

Price Drop. Stunning Historic Building. 387 N. 2nd Ave, #2G, NOW $589,000

You can enjoy a roomy condominium in a cozy HOA in this beautiful historic building, which was renovated from its original state about 20 years ago. In that renovation, the developer added many modern conveniences, including gated, covered and garage parking for all owners.

While everybody else drives around looking for a space to park, you can pull right in to your own secure garage downtown. You are steps away from live music, the weekly farmer’s market, shows, restaurants and all the things anyone is looking for in downtown living.

Plus, you get a beautiful full kitchen, 2.5 bathrooms and the kind of open living space you’ve been looking for.

Under Contract! 1107 W. Osborn Rd., #101. 1br/1ba, 849sf

This is a rare condo in Central Phoenix for under $230,000 from a motivated seller.

Since it was last purchased, the owner has completely remodeled the bathroom and has updated the kitchen to complement the historic features.

Walk around the grounds and you will see why people love living here. The trees are big and offer plenty of shade.

This particular condo is in the center of a beautiful breezeway, which feels like a green jungle, even in summer.

The pool is sparkling and just around the corner from your front door. See it before it’s gone!

Under Contract! 1107 W. Osborn Rd., #219. 2br/1.75ba, 1,108sf

This affordable gem has a balcony that over-looks the beautiful acreage at Nonpareil Condos, with a massive tree shading from the west.

Sit out on the balcony and enjoy your morning coffee or read the paper, er, kindle, er, smart phone.

Aw, you get the picture!

You’ll love the original 1950’s kitchen. Still functional and cut.

Shopping at Sprouts and Safeway is just around the corner, with easy access to all of the fun of Central Phoenix.

You will be hard-pressed to find a value like this so close to everything, including Phoenix College, which is directly to the south of this property.

Under Contract! 18427 N 36th Ln, Glendale 85308. 2br/2ba, 1,283sf

Our sellers on this property updated the flooring and paint.

It boasts a large master suite with sliding doors leading to the large covered patio. The patio will make a shady space for relaxing or gardening.

The yard is landscaped, irrigated, and includes a sliding RV gate for your fun toys. The two-car attached garage includes a plethora of additional storage cabinets, and a workbench to fix the aforementioned toys.

The home includes a newer roof and security shutters. It is close enough to the I-17 and the loop 101 to be convenient, but far enough away so that you can enjoy a quiet neighborhood.

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 manmade lakes in some of the early Phoenix Parks.

         People going to Eastlake Park might be confused as apparently no lake exists. Was one ever there? Man-made lakes in some Phoenix parks is not a new phenomenon. But why do we have them when we live in a desert?

         When Phoenix incorporated in 1881, residents wanted places where they could relax and play, especially on warm summer evenings.

         Moses Sherman, a local businessman who started the Phoenix Street Railway Company, developed Phoenix Park at the southwest corner of 16^th Street and Jefferson. Sherman ensured that people would come by cleverly ending the Washington streetcar line with a loop on Jefferson just north of the park. He made it even more convenient with a station located there.

         While today’s city parks are free, Phoenix Park, now renamed Eastlake Park, had an admission charge. This splendid park offered picnic areas, boating and fishing on a small lagoon and a natatorium or swimming pool to entice visitors. Trees lined the lake, which was filled with well water and reportedly at one time even had an alligator. 

         Records are unclear as to when the lake at Eastlake Park was discontinued, but playing fields and a recreation center were built at the site. And the swimming pool is open all summer.

         By the early 1930s, the park demand increased. William G. Hartranft, President of the Phoenix Parks and Recreation Board, persuaded the city to purchase approximately 200 acres from Dr. James Norton and J. W. Dorris. Encanto Park, located outside the city limits at the time, would become the city’s park system crown jewel. 

Hartranft’s envisioned a park like Golden Gate Park or Balboa Park. A 1933 city bond funded the construction of a boating lagoon, band shell, 18-hole golf course, clubhouse, playground, and picnic area. With WPA assistance, the city was able to complete much of the design. The lagoon was filled with water supplied by SRP. Trees and shrubs lined the winding paths, while nature trails completed the transformation of former agricultural land into a veritable lush green oasis in the desert.     

Over time, Encanto Park suffered from heavy use and lack of adequate care. The lagoon filled with algae; fish died; and the concrete bridges began to disintegrate. Fortunately, the city conducted major renovations on the park’s facilities in the late 1980s ensuring its continued popularity.

We have four great listings on the market right now. One of them went under contract last month, just after the newsletter came out. All sellers are realistic about the market and they’ve dropped their prices in the last week.

But don’t wait too long. The interest rate increases in September erased most of the savings buyers could have seen had they made offers in early September. Don’t let that happen again. See our listings page directly for more information.

Price Drop. Stunning Historic Building. 387 N. 2nd Ave, #2G, NOW $599,000

You can enjoy a roomy condominium in a cozy HOA in this beautiful historic building, which was renovated from its original state about 20 years ago. In that renovation, the developer added many modern conveniences, including gated, covered and garage parking for all owners.

While everybody else drives around looking for a space to park, you can pull right in to your own secure garage downtown. You are steps away from live music, the weekly farmer’s market, shows, restaurants and all the things anyone is looking for in downtown living.

Plus, you get a beautiful full kitchen, 2.5 bathrooms and the kind of open living space you’ve been looking for.

Price Drop. Rare find! 1107 W. Osborn Rd., #101. 1br/1ba, 849sf, NOW $199,000

This is a rare condo in Central Phoenix for under $230,000 from a motivated seller.

Since it was last purchased, the owner has completely remodeled the bathroom and has updated the kitchen to complement the historic features.

Walk around the grounds and you will see why people love living here. The trees are big and offer plenty of shade.

This particular condo is in the center of a beautiful breezeway, which feels like a green jungle, even in summer.

The pool is sparkling and just around the corner from your front door. See it before it’s gone!

Price Drop. Lush Trees. 1107 W. Osborn Rd., #219. 2br/1.75ba, 1,108sf, NOW $274,000.

This affordable gem has a balcony that over-looks the beautiful acreage at Nonpareil Condos, with a massive tree shading from the west.

Sit out on the balcony and enjoy your morning coffee or read the paper, er, kindle, er, smart phone.

Aw, you get the picture!

You’ll love the original 1950’s kitchen. Still functional and cut.

Shopping at Sprouts and Safeway is just around the corner, with easy access to all of the fun of Central Phoenix.

You will be hard-pressed to find a value like this so close to everything, including Phoenix College, which is directly to the south of this property.

Price Drop. 18427 N 36th Ln, Glendale 85308. 2br/2ba, 1,283sf. NOW $352,000

Our sellers on this property updated the flooring and paint.

It boasts a large master suite with sliding doors leading to the large covered patio. The patio will make a shady space for relaxing or gardening.

The yard is landscaped, irrigated, and includes a sliding RV gate for your fun toys. The two-car attached garage includes a plethora of additional storage cabinets, and a workbench to fix the aforementioned toys.

The home includes a newer roof and security shutters. It is close enough to the I-17 and the loop 101 to be convenient, but far enough away so that you can enjoy a quiet neighborhood.