The Phoenix Metro residential real estate market began the new year in balanced territory. It didn’t take long for the Cromford Market Index (CMI) to rise into a seller’s market – increasing 12.4%.
The news was not all bad for buyers. Year to date we have seen a healthy amount of new listings coming onto the market – 7,467 new listings which is up more than 22% compared to January 2023. We currently have 15,644 homes on the market, an increase from 15,086 last month – a 4% rise in inventory. Not earth shattering, but a gain, nonetheless.
Combined with lower mortgage rates, offers on homes have increased quite a bit, but so has inventory. The new supply of homes on the market has also exceeded 2021 and 2022.
“Balance has seldom defined us…unless mortgage rates drop sufficient enough to move many more homeowners to sell, lack of supply will win the day. And buyers will again get the short end of the stick.”
Cromford noted that with demand and supply both increasing, sales volume will likewise increase. As long as these index’s continue to rise at similar rates, there won’t be a huge threat of runaway appreciation, per Cromford. That even ratio would be ideal, but I personally don’t think that will happen. We are an all-in or all out market. Balance has seldom defined us. And if I had to pick, I’d say that unless mortgage rates drop sufficient enough to move many more homeowners to sell, lack of supply will win the day. And buyers will again get the short end of the stick.
Record Asking Price Per Square Foot (PSF)
The average price PSF for listings (not sales) is at a record high of $369 as of the 25th. So how does that compute to future sales price PSF? Asking prices are a starting point, and of course we’ve been in markets where the final sales price was HIGHER than the listed price, but historically they are less than the actual list price. The current average sales price ratio to list price is 97.36%. Two years ago the ratio was 99.75%!
The current price disparity is stark – as it usually is. The current asking price per square foot as mentioned above is $369. The current pending price per square foot is $322. These are sales under contract showing only the listed and not closed price. The monthly average sales (closed) price is now at $295 – a 27% difference from the asking price. (see chart)