2024 | METRO PHOENIX
Economic Snapshot
®
It’s a coin flip For an economic soft landing
By: Elliott D. Pollack & Company • 2024 Economic Outlook The Fed delivered seven interest rate hikes in 2022 which was the fastest increase of this magnitude in history and pushed borrowing costs to a 15-year high. They followed it with four additional increases in 2023, the latest, however, occurred back in July. Since then, it has been a waiting game as new economic data rolled in over the next several months that inflation was trending down. All the while, talks of actually pulling off a “soft landing” (lowering the gap between unfilled jobs and labor supply, which minimizes actual job losses) have ramped up. So, far, we are technically already experiencing the soft landing. Job growth has slowed but is still in very positive territory. We have gone from 11.8 million job openings in April 2022 to now 8.7 million job openings. And job seekers have increased over that time from 6.0 million to 6.5 million. So, the gap is shrinking as desired. This decreases competition for employees and lowers wage pressure, which is a key ingredient to tackling persistently high inflation.
Greater Phoenix Economic Forecast
Population 1.7% increase | 2023 1.6% increase | 2024 1.6% increase | 2025
Employment 2.2% increase | 2023 1.8% increase | 2024 2.7% increase | 2025
Retail Sales 2.9% increase | 2023 2.6% increase | 2024 5.4% increase | 2025
Single Family Home Permits
-12% decrease | 2023 15% increase | 2024 20% increase | 2025
We are not out of the woods yet. Consensus forecasts are split 50/50 on whether or not there will be a recession in the next 12 months. Nearly every recession indicator point to there still being one. But the economy has proven to be resilient so far and household finances are historically in very good shape (consumers make up 70% of our economy). Being an election year also makes forecasts harder to make. The federal government is scheduled to spend a substantial amount of money this year from previous COVID stimulus packages. That was very likely by design to fuel economic activity. But bank lending has slowed, and interest rates are still very high. Declining availability of money and credit slows down our economy and makes us vulnerable to unforeseen shocks. The real estate market in terms of resale homes is still in a holding pattern. Mortgage interest rates have retreated from previous peaks but are still well above rates held by current homeowners. This limits both the pool of buyers and the supply of listings.
Expectations are for rates to decline further this year. But will likely be modest if the economy continues to grow. This has been a positive for new home building. The combination of limited resale supply and the ability of home builders to buy down a buyer’s mortgage interest rate as an incentive, has fueled new home construction. We fully expect an uptick in new home permits this year compared to last year. Our latest forecasts for the economy in 2024 have taken into consideration a likely slowing economy over the next 12 months, recession or not. We still believe Arizona will be a preferred destination for new residents and industry. Arizona will continue to grow more rapidly than the U.S. as a whole and will create more jobs than most places. Also, as previously mentioned, new home development is also expected to increase.
Overall, a cautiously more optimistic outlook compared to last year.
2023 has ended with a huge sigh of relief for many in the real estate industry as they hope 2024 brings some much needed stability to the residential housing market. Market emotions have run the gamut from euphoria in 2021, pessimism and panic in 2022, to despair and skepticism in 2023.
Residential Real Estate
By: Tina Tamboer | Cromford Report
So, what’s on the horizon for 2024? Hope In December 2023, the Federal Reserve bestowed a gift on the mortgage industry; not just by announcing they were not going to be raising the federal funds rate again, but by forecasting three (3) rate drops in 2024. Mortgage rates responded by immediately dropping a half point, but that alone isn’t the gift. The most significant gift was hope; hope for an exhausted industry that the housing market can finally get back to a normal, albeit boring, rate of appreciation and sales activity. Starting off 2024, below are the year-over-year price appreciation measures for December 2023, and 6-month appreciation rates since June.
To quote Yogi Berra, “It’s déjà vu all over again” as the ratio of supply and demand indexes start off 2024 in nearly the same spot as they did 2023. While prices aren’t expected to rise at this stage, we expect lower mortgage rates to improve the number of sales, which has recorded the 2nd lowest annual count through the Arizona Regional MLS in 22 years, totaling 68,053 compared to the lowest count of 58,534 recorded in 2008. Population data was released by the U.S. Census Bureau in November 2023,
Arizona is 7th in the nation for numeric population growth,
Dec 22
Dec 23
Change
Price Per Sq Ft
$265.90
$285.47
+ 7.4%
estimating 65,660 people were added to the state between July 2022 and July 2023. Top Metro Phoenix cities for population growth by percentage are:
Avg Price
$516,544
$560,759
+ 8.6%
• Queen Creek (+8.2%)
Median Price
$412,000
$429,990
+ 4.4%
• Maricopa (+6.8%)
December 2022 vs December 2023
• Goodyear (+4.2%)
June 2023 vs December 2023 June 23
Dec 23
Change
Price Per Sq Ft
$287.67
$285.47
- 0.8%
Avg Price
$581,625
$560,759
- 3.6%
Median Price
$443,000
$429,990
- 2.9%
You may have noticed that the annual appreciation rates show an increase in price measures while the last 6 months show a mild decrease. December 2022 proved to be the bottom for home prices in response to dramatic increases in mortgage rates. After that, the buyer’s market turned and moved back into seller market territory, pushing sales prices up 7-12% (depending on the measure) in the first half of the year before further mortgage rate hikes put the kibosh on appreciation and it stagnated. By October, mortgage rates peaked at 8% and in November the seller’s market had turned into a balanced market once again. Which brings us to the present state of hope. Since the announcement by the Federal Reserve on December 13th, 2023, the Greater Phoenix housing market has turned again, out of a balanced market that lasted 7 weeks and back into a weak seller’s market.
Growing incomes and declining mortgage rates, combined with slow appreciation in home values, mean that Greater Phoenix affordability measures should show a positive and notable improvement in the first quarter of 2024. All things considered, the outlook for the upcoming year is positive for the housing market. If rates continue to gradually decline and stabilize, sales are projected to gradually increase, and prices are projected to rise at a modest rate. This will provide much needed relief and recovery to the industry professionals and organizations that support homeownership.
Hope is a good thing.
2022
2023
CHANGE
Goodyear
$425,614
$512,393
+ $86,779
Glendale
$365,822
$443,523
+ $77,701
Phoenix
$427,300
$522,252
+ $94,952
Mesa
$378,992
$441,255
+ $62,263
Peoria
$450,762
$530,892
+ $80,130
Litchfield Park
$477,911
$541,072
+ $63,161
Tempe
$408,068
$475,687
+ $67,619
Gilbert
$527,266
$624,300
+ $97,034
Chandler
$494,561
$577,681
+ $83,120
Cave Creek
$783,846
$962,280
+ $178,434
Fountain Hills
$707,446
$813,351
+ $105,905
Scottsdale
$911,840
$1,108,959
+ $197,119
Carefree
$1,053,155
$1,210,470
+ $157,315
Paradise Valley
$2,639,978
$3,775,258
+ $1,135,280
AVERAGE SALE PRICE
BY CITY
01/01/22 - 12/31/22
01/01/23 - 12/31/23
BY COMMUNITY
METRO PHOENIX BY THE NUMBERS AV E R A G E S O L D P R I C E
$177,629 AVERAGE INCREASE IN SALE PRICE
BY COMMUNITY
Days on List/Sell # Homes Sale Price Market Price Ratio Closed
Eastmark
$617,989
76
99%
373
Fulton Ranch
$1,119,659
77
97%
28
Ironwood Crossing
$460,419
75
99%
112
Las Sendas
$1,030,738
75
98%
29
Lindsay Ranch
$615,936
52
101%
17
Mountain Park Ranch
$587,128
50
98%
89
Ocotillo Lakes
$712,693
44
98%
15
Power Ranch
$562,759
60
99%
150
Seville
$690,052
60
98%
136
$674,948
49
99%
28
$823,300
54
98%
5
AVERAGE
2023 SALES STATISTICS
2022 VS 2023
EAST VALLEY Superstition Foothills 01/01/2023 - 12/31/2023 Val Vista Lakes
Statistics gathered from ARMLS. All information deemed reliable but not guaranteed. (Single-Family Residences)
Patti Swisher ASSOCIATE BROKER HAGUE PARTNERS
480-748-8752
pattiswisher@gmail.com
pattiswisher.com If your home is currently listed, this is not a solicitation for that listing.
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