Hows the Market?? Here is your West Valley / Phoenix area Real Estate Market Report for May 2022. Shift Happens, and when it does it happens fast! This shift swooped in quicker than 2006 shift! Just like that shift, many of us saw it coming, just rode the wave as long as it was still hot. But dont be concerned, this is not the same shift in anyway. Highly unlikely that we will see foreclosures and short sales like the past real estate bust, that was all driven by loose lending practices and banks flooding the market with to much inventory driving prices downward. Todays market, homeowners have equity and were very qualified borrowers, long gone has been the “breathe on a mirror”and you are qualified for mortgage! As well these notes over the last several years have historically low interest rates, which makes it much more affordable to own than rent. Security in mortgages is the key difference from todays shift to the past real estate crisis.
As interest rates have hiked the past several weeks, as expected, it bumped many buyers out of the market, as well as bumped most buyers a step down in what they can afford for the same loan amount. Median home price in Maricopa is $467,000, that payment a year ago would had been approx. $1800, todays rates, it’s roughly $2800, reducing buyers purchase price. So whats going in the real estate market, let’s take a look.
So keeping in mind theres a 30-45 day lag time for sales to close escrow, these numbers are true to April sales, which is when we all felt the slow in mid April. So next month we report truer numbers to this shift in the market, but still see the numbers shift for May.
Interestingly enough, all west valley cities still saw slight increases in median home prices, except for Glendale which held flat. Low inventory levels still depict an extreme sellers market, again completely opposite of the mortgage bust when lending institutions shot inventory levels up to 18mths causing a surplus of homes for sale and driving prices down. Maricopa county is sitting at less than 1 month inventory, so typically that low supply would not bring the prices down, only time will tell.
Inventory levels, basically supply demand are the number one contributor to home prices, as sales have slowed, Maricopa county overall all was down -1.13% compared to last year, inventory levels increases in all but two west valley cities. Phoenix is still down -7.23% and El Mirage down -8.82% compared to last year. Because inventory levels effect home prices so drastically thats always an important trend to follow. Avondale is up 155.81%, Buckeye up 87.50%, Tolleson up 68%, Waddell up 58.21%, Laveen up 59.68%, Peoria increased 30.36%, Litchfield Park up 26.19%, Goodyear up 25%, Surprise up 22.13%, and Glendale up 12.50%. Although these increases seem significant, we are still extremely low on supply, Maricopa county has only about 3 weeks inventory supply. All west valley cities are at 1 month or less of inventory.
Closed sales were down compared to last year in all west valley cities except for Laveen up 22.5%, Buckeye 8.3% up and Litchfield Park up 3.8%.
With interest rates expected to continue to rise throughout the rest of the year, and inventory levels creeping up we could see a “balanced market” next year. A bigger factor that we can not for see the effects of the real estate market would be inflation and a looming recession. Last time
inflation was this high, was the 80’s and interest rates were in the double digits. As far as good time to buy, 4-5% current rates could be very good rates compared to just how high they could go.
Although buyer traffic has slowed, there is still a fair amount of buyers still shopping for a home in the Phoenix area. Median priced homes, under $450,000 are still selling daily quickly under 2 weeks.
Price reductions: Most of the price reductions we are seeing are more like “price adjustments.” When 4-5 weeks ago the market was so hot that listings were coming on the market at an increase of what the previous homes had just closed at, thats no longer the case in todays market. So many of the price reductions are listings thats came on the market higher than the closed comps and they are prices adjusting to be in line with the comparable closed sales.
Personally with speaking to so many people about the real estate market, economic state, inflation and extremely high gas and food prices that our country is currently in I think consumer confidence is beginning to impact our local market. I am hearing a lot of buyers getting nervous and holding off on all major purchases for now, until theres more security in the economic state of our country.
So we will just keep tracking it month to month and keep you all up dated best we can with the local market trends.