October Market Update

THE MARKET FACTORS

BOTTOM LINE: all of the greater Phoenix market remains a seller’s market, yet the slight cooling trend continues in most areas. With the low inventory and decently strong buyer demand, upward pressure on prices will continue. Sellers still have the upper-hand.

• SALES PRICES RISING: After two months where the average price was declining (due to more lower priced homes selling), the overall price is on the rise again. The year over year increase is 20%, which is slightly lower than previous months as we are now comparing against a strong market one year ago. We could likely expect these YOY increases to become more “reasonable”.
  
• INCREASED INVENTORY: Active listing are slowly increasing, and almost back to where we were last year, which is still not a normal “healthy” level of supply. Days on Market has now been increasing for the last 4 months after a 15-year low in June.
  
• SELLERS MARKET: The entire Valley remains a SELLER MARKET. As of today, the Cromford Market Index (CMI) is trending towards buyers just slightly at 346. A balanced market of supply vrs demand is a CMI of 100. Interestingly, FOUNTAIN HILLS still remains the hottest market for sellers at 614.
  
• CLOSINGS OVER LIST PRICE: This has been slowly declining for the last 4 months which peaked in June at 60%. Currently for October, we are seeing 47% of all homes being sold at OVER list price! The price point with the highest percentage of sales over list price is $300-400k.
  
• ANNUAL APPRECIATION: With as long as we’ve been in an appreciation spike, it’s hard to believe that we are still seeing a 27.5% appreciation rate!! This is measured using a monthly average price/sf.
  
• HIGH TRANSACTION VOLUME: Though we actually had more transactions in September of last year, this September was still well above the norm for amount of closed transactions!
  
• NEW CONTRACTS:  Interestingly, throughout 2021 we have seen very little fluctuation or “seasonality” to the number of contracts being written. It has essentially been flat since January.
  
• iBUYERS: One of the most surprising stories in the last week was that Zillow paused it’s buying spree through the remainder of 2021. They noted several reasons for this (supply chain and backlog in closing services), but some analysts would suggest they didn’t adjust when the market shifted and they continued to overpay for properties. They are now sitting on extra inventory and navigating significant price reductions.