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Arizona Market Report | Sep 5, 2022

Weekly real estate market report from Phoenix, Arizona. This week Ryan talks interest rates, inventory, mortgage lenders, days on market, and new home sales.

Introduction

August shows us strong new home sales, but re-sales drop a whopping 38% from last year. The Arizona Market Report is next.

YellowBrickDrive.com

Happy Labor Day, and welcome to the Arizona Market Report this Monday, September 5th. My name is Ryan, and I’m a Realtor at HomeSmart in Phoenix, Arizona. YellowBrickDrive.com is our home-search website and is the home of this Market Report. Just tap the Report icon in the upper right corner to catch the most recent episodes. You will also find us on our YouTube channel, where you can subscribe and get notified each time we post a new episode.

The Cromford Market Index

Alright, so last week, we talked about the Cromford Report being one of our sources for market analysis. These fine people do the work by organizing numbers and presenting them in a way that makes sense to the rest of us. One of the ways they do this is through what they call “The Cromford Index.”

This single value indicates the balance of the residential resale market.

  • Values below 100 indicate a market that favors buyers.
  • Values above 100 indicate a market that favors sellers.
  • And a value of 100 is, of course, equally balanced.

As of today, September 5th, 2022, the Cromford Market Index reads 105.5, which is within the balanced range. Just for reference, the market index was at 119.6 just last month at this time. So as we discussed earlier, this represents a market moving away from favoring sellers to a more balanced market.

You might be thinking; this market doesn’t feel balanced. Let’s keep in mind that we’re on the move and likely moving towards a buyer’s market. Whenever you’re on the move, things tend not to feel stable. It’s where we land that will determine how balanced we are. But I think this is more complicated than previous moving markets. And I think it might take its sweet time before it gets to where it’s going.

Let’s take a look at this week’s key factors.

Key Factors

  1. Interest Rates
  2. Active Listings
  3. Days On Market
  4. New Homes vs. Resale
  5. Mortgage Lenders Exit

Interest Rates

The Feds are closely watching inflation and labor market reports to help determine the next rate hike on September 21st. Today, the average 30 yr. fixed mortgage rate is 6.02%, according to mortgagenewsdaily.com. The most recent jobs report has once again sparked debates about recessions. But the slight drop reported in the average consumer’s FICO score is a reminder of how financial stress can chip away at household savings. Yet consumers are also more resilient than ever, coming off all-time high average FICO scores. In my opinion, this just means that people have more resources available to help alleviate short-term financial stress. It’s the long-term struggles that deserve our attention. That’s how markets get reshaped.

Active Listings

Active listings are around 17,863, up slightly from last week.

Days On Market

This week the average days on market increased from 41 to 42 days, continuing the upward trend from back in June when we saw homes selling in just 24 days on average.

New Homes vs. Resale

New homes median price is $513,890, whereas resales came in at $450,000 this week. New homes made up 22% of all closings in August, up from 14% a year ago.

Mortgage Lenders Exit

Higher interest rates and home prices have removed the possibility of homeownership for many families. Shut down the refinancing pipeline, add it all together, and some lenders are closing up shop. We saw this back in 2008 for different reasons. Or was it? Round and round we go.

Summary

Ok, so what have we learned this week? First, we know that 30-yr fixed-rate mortgages are hanging around 6%, which is a big deal when purchasing a $500k home. No, we haven’t seen this before, like back when rates were 18%, and we walked uphill to school both ways. The truth is that home prices have never been higher, and interest rates make all the difference.

We know active listings are slightly up from last week, around 17,800. This equates to around three months of supply when we want to see it closer to 6 months.

The days on market continue to increase as homes are sitting longer. And new homes continue to surge, making up 22% of all closings in August.

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Description

Thanks for tuning into the Arizona Market Report. This week we break down 2 key points in the Arizona real estate market.

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