Real Estate Market Update
The Greater Phoenix real estate market is shifting. Foreclosures are ticking up, buyer interest is declining, and the region has officially entered a buyer’s market. Let’s break down what’s happening, why it’s important, and what to watch for next.
Foreclosures Are Climbing
Foreclosures in Greater Phoenix are increasing, though the numbers remain modest compared to historical trends. Here’s the breakdown for October:
- 416 Notices of Trustee Sale: Homeowners received these notices, giving them 90 days to catch up on payments or sell before foreclosure.
- 55 Trustee Sales: These properties went into foreclosure after owners failed to resolve their delinquency.
- Increase From September: Notices rose from 304 in September to 416 in October, marking a notable upward trend.
Many recent foreclosures involve hard money loans, often used by fix-and-flip investors. Rising interest rates and slowing buyer demand have made quick resales harder, forcing some investors to let properties go into foreclosure.
What This Means
Foreclosure activity is still low compared to pre-2020 levels but is clearly increasing. Watch for additional spikes as rates rise and demand stays subdued.
Also Read: Scottsdale Office Rents & Vacancies Amid Pandemic Aftermath
Buyer Demand Keeps Dropping
Mortgage rates are pushing buyer demand lower. According to the Mortgage Bankers Association:
- Mortgage demand is down 41% since September.
- The 30-year fixed rate hit 6.81% in early November, the highest since July.
- Listings under contract have dipped after a brief September spike, coinciding with higher rates.
Buyers often pause during the holiday season, which could deepen the cooling trend. Unless rates drop or buyer confidence improves, demand may continue to lag.
Active Listings Are Rising
The number of homes for sale keeps increasing, even as buyer activity slows. Current data shows:
- 2,462 active listings in October vs. 2,411 in September.
- Listings have plateaued recently but remain elevated compared to earlier this year.
Key Implications
If supply continues to grow while demand weakens, the Greater Phoenix market will lean further into a buyer’s market. Sellers may need to adjust pricing or offer incentives to attract interest.
Contract Ratios Show Market Cooldown
Contract ratios, which compare active listings to those under contract, highlight the market’s cooling trend. Notable findings include:
- A sharp decrease in hot ZIP codes (e.g., Chandler and El Mirage).
- Luxury homes ($1.5M-$7.5M) are performing better year-over-year, but most price ranges are seeing declining activity.
- Overall contract ratios are weaker compared to 2022.
This metric underscores declining competition across most segments, giving buyers more negotiating power.
Also Read: Here Are The Questions To Ask When Choosing A Buyer’s Agent
The Cromford Market Index Confirms A Buyer’s Market
The Cromford Market Index (CMI), which measures supply and demand dynamics, hit 89.3 as of early November. A CMI below 100 signals a buyer’s market. Current levels indicate:
- Demand at 76.8: Roughly 24% below normal.
- Supply at 86: Around 14% below normal.
While the market isn’t dramatically oversupplied, the balance favors buyers, especially in certain price ranges and ZIP codes.
What To Watch Next
The Greater Phoenix market could experience more shifts heading into 2024. Trends to monitor include:
- Foreclosures: Watch for continued increases, especially among fix-and-flip investors.
- Mortgage Rates: Any rate stability or reductions could reignite buyer activity.
- Listing Trends: Higher inventory without matching demand will pressure prices further.
- Seasonal Effects: Activity typically slows during the holidays, but changes in supply or buyer interest could reshape trends.
For buyers, this environment offers more choices and room for negotiation. For sellers, pricing competitively and staying flexible are especially important.
Also Read: Another Land Deal In The Scottsdale Road & Loop 101 Corridor