Buckle Up and Wear a Helmet

Greater Phoenix Real Estate Update 6/27/2024

It has been a minute since my last post and I appreciate you for reading this now, after all of this time. It seems like millions of things have happened over these past few months. I celebrated my 20^th year of being in title insurance sales in Greater Phoenix. That was exciting for me but the biggest news has been the commission lawsuits and the NAR settlement. This continues to be fluid and the DOJ has strong opinions. How things actually transpire remains to be seen. I have my suspicions and as an avid industry watcher, so far my predictions have come to fruition. NAR’s danger report, released in 2015 was the start of it all. It can be tough to find, and you can view or download it below.

The new listing and new contract numbers are running very close together. Inventory isn’t growing super quickly but if you compare it to where we were a year ago, it is up a lot, over 50% higher. Demand remains low. It was low last year and it is about 8% lower this year than it was. The relationship between supply and demand is no longer benefiting sellers. Arizona’s summer is here and the luxury buyers have left. Prices were flat from April to May with a median sales price of about $450,000. The expected median for June is $445,000. While it is typical for prices to moderate during the summer, it is early for them to already be declining. The persistently high mortgage rates are deterring today’s buyers. The demand is there, but they are sitting on the sidelines.

While the overall economy remains strong, the cracks are beginning to show. The COVID money has all been spent and American’s savings rates are at the lowest in years. People feel poor and are pulling back on spending. The easiest way to see this is by going to your favorite restaurant. Restaurants are less full. We no longer have to wait for a table. Unemployment ticked up last month, despite a stronger than expected jobs report. There were more separations than there were new jobs. The thing to watch now is the workforce participation rate. That is declining now, nationally. The benefit we have here in AZ is that our unemployment rate is extremely low, it is around 2.6% which is lower than the national 4% rate. This gives us a bigger buffer should we go into recession soon. I am a bit more bearish on this front than several of my colleagues.

The best thing we can do for today’s buyers and sellers is to tell them what is happening. Sellers MUST price their home right. This is not the time to push the market. Buyers are educated and watching everything that happens. A recent Redfin report stated that buyers view properties that have been on the market for 14 or more days as either overpriced or busted. Sellers have 14 days to put their VERY best foot forward. There are buyers in the market but they can be discerning. They have more options than they did last year and more often than not, they are flexing their negotiating muscles.

On a side note, ARMLS released a recent update addressing the upcoming changes due to the NAR settlement. Navi Title’s own Lance Billingsley contributed to writing this and creating the path forward. NAR Settlement – ARMLS

Roughly half of all listings on the market have taken at least ONE price reduction. This will likely increase in the coming weeks.

If you do not regularly read ARMLS’s STAT, created and written by my friend Tom Ruff, I suggest you do, the full report can be found at https://armls.com/statistics.

Properties priced well, sell faster and sell closer to their original asking price.