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Is The Greater Phoenix Market In A Bubble? What To Know

Bubble Or Not Bubble?

Welcome to the LUXE BLOG, where we post ALL KINDS of real estate content for our readers to consume. From the heart of Greater Phoenix, we tell it like it is. When things were frantic, we said it. When the market seemed to stop in late 2022, we posted it right here. And today? We ask the question that's on everyone's mind: Is the housing market in a bubble?

U.S. Housing Market Overview

  • US housing market perceived to be very weak
  • National perception, not Greater Phoenix-specific
  • Affordability challenges present
  • Median home price pre-pandemic: $322,000
  • Current median home price: $416,000

Expert Insights

  • Sheila Bair, former chairwoman of the FDIC, interviewed
  • Acknowledged risks of subprime mortgage loans early on
  • Believes affordability is at its worst in decades
  • Doesn't expect a sharp drop in home prices soon
  • US facing a housing shortage
  • Prices remain high due to high demand and low supply

Bubble Dynamics

  • Housing bubbles arise when prices detach from demand
  • Today's market differs from the mid-2000s bubble
  • Researchers warn of home prices detaching from fundamentals
  • Desire for a gentle deflation rather than a burst

Also Read: Today We Take A Look At The Current Real Estate Landscape

Houses in a bubble.

As Of October 2023, Demand Is Still Stronger Than Supply In Greater Phoenix

Greater Phoenix Housing Stats

  • National trends differ slightly from Greater Phoenix
  • Greater Phoenix doesn't see a rapid influx of new listings
  • Active listings in Greater Phoenix are on the rise
  • Median sale price slightly declined from $435,000 to $432,000 between August and September

Mortgage Rates Update

  • Mortgage rates near long-term highs
  • Recent fluctuations observed
  • Importance of checking with lenders for current rates emphasized

Cromford Market Index (CMI) Analysis

*As of October 17th, 2023

  • CMI specific to Phoenix Metro analyzed
  • Current status: Seller's market with a score of 132.6 (110 and above is a seller's market)
  • Market is weakening month-over-month
  • Demand at 73.4 (approx. 26.6% below the average)
  • Supply Index at 55.2 (approx. 44.8% below the average)

We can clearly see demand still surpasses inventory. Currently the Demand Index is approx. 18.2% STRONGER than the Supply Index.

So What Is Going On?

While the national perspective suggests we might be in a housing bubble, markets like Greater Phoenix have unique dynamics. The bottom line is we have less inventory than demand. So yes, people aren't buying as much, but there are more people not selling. As a Scottsdale real estate brokerage, we're do NOT make predictions. However, we DO fill our website up with killer content. As always, through LUXE BLOG, we will keep you informed about the latest in the Greater Phoenix real estate scene. More blogs coming soon!

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