In a perfect world, a local real estate market would be a balance of buyer and seller supply and demand, with reasonable annual appreciation. The Phoenix and Scottsdale area has had a consistent six-year run of just such a market between May 2014 and June 2020.
Then, in early 2020, we had a global pandemic and predictably, per all of us experts anyway, real estate values declined – for all of 2-3 months. I’m not just talking about Phoenix, Arizona, but nationwide as well.
At that point, the market decided to release its foot off the breaks and apply the pedal to the metal, sort of like popping a wheelie, and laying rubber simultaneously to hit new pricing records within two years. It went from a reasonably healthy and consistent market to one that’s out of control. It had also become unaffordable.
Brakes Applied Again!
Over the past few months since spring, the breaks have once again been applied. A slowing market has returned, and we have now entered a balanced market. But not everywhere. Per the Cromford Report, Surprise, Gilbert, Tempe, Maricopa, Litchfield Park, Buckeye, Queen Creek & San Tan Valley are buyer’s markets, while Fountain Hills, Paradise Valley, Scottsdale and Cave Creek are seller’s markets.
If you check out our weekly Cromford Market Index today, which takes into account our entire Phoenix Metro area, you’ll see that we have fallen just below 110. A rating of 90-110 is a balanced market.
The question now is where we’ll go from here? Can this be a sustained slower growth market, or a quick touch and go back to a rabid seller’s market as we did 30 months ago? It’s also very possible that we continue slowing into a full-fledged buyer’s market. This is a possible scenario, although there are some indications that the slowing is slowing. Either way, the rate of downward pricing will still be felt for a while, especially in the trailing sales price numbers.