If you’re a Star Wars junkie, like my son and business partner, you might get a chuckle from today’s Snapshot Heading.
If not, then what I’m referring to today is that our Phoenix Metro real estate market is reversing course, cooling its (X-Wing Starfighter) jets from a rabid seller’s market to a potential state of normalcy. And it’s happening rapidly.
The Cromford Market Index, which measures the balance of supply and demand (defined as between 90-110) in our market, in the first week of January, stood at 474 – its peak for the year. Today, less than 6 months later, it has dropped to 237 – exactly by half! And our lightspeed (faster than the speed of light weirdly enough, per Wookieepeida), descent from the heights does not seem to be abating, least not yet.
And before I get myself into more Star Wars vernacular battles with Jonathan, I’d better pull up😉
In related news, the Phoenix Business Journal released an article today (link below) about the dramatic cost-of-living increase in the nation and Phoenix Metro. The cost-of-living index in the Valley has increased over 24% in the last 3 years, far out-pacing the national average of 9.76%. And nationally, as well as locally, the article stated that the “recent surge in gas prices wasn’t accounted for in the report.”
Honestly, there needs to be a retreat or sustained leveling off in housing prices, both rentals and purchases. Yes, as property owners we love to see our home-equity/net worth increase, but on the other side of the equation, buyers and renters could use a break.
“as property owners we love to see our home-equity/net worth increase, but on the other side of the equation, buyers and renters could use a break.”
Jonathan and I were discussing this matter last night, and both of us are concerned that Phoenix and Arizona are on a business growth path that has, and probably will continue to change the affordability landscape for years to come. What we’re seeing is the immensely high rate of growth in new business (e.g., TSMC) and start-ups, plus the growth of many existing businesses (e.g., Intel) throughout the region and state.
Of course, Phoenix and Arizona are not alone. This is a national problem. The highest cost of living increase in the country is Dayton, Ohio. And smaller cities such as Bozeman, MT and Cape Coral, FL, have some of the largest cost of living spikes as well.
But the cost of housing is at the center of our economic universe, and something’s got to give. Real estate balance would be a great place to start.
May that force be with us.