RE/MAX Year-End Report 2022 Hometeam

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YEAR-END 2022

REAL ESTATE REPORT

Fountain Hills and Rio Verde

GOOD NEWS

The over-active market we were in during the past few years – especially in late 2021 and early 2022 –was not sustainable. So, when the media portrays “declining sales” let’s all understand ... that’s a good thing!

YEAR-END 2022 REAL ESTATE MARKET REPORT

Those of us in the real estate industry are always asked “How’s the Market?” In our current market, it’s understandable that our clients might be skeptical when we respond with “It’s Really Good!” So, to prove our point, here’s some perspective!

First, let’s acknowledge that the market is decidedly slower than it was one year ago. THANK GOODNESS! The over-active market we were in during the past few years – especially in late 2021 and early 2022 – was not sustainable. So, when the media portrays “declining sales” let’s all understand ... that’s a good thing! And yes, there will be some price reductions in some markets and in some price categories. Those markets are typically more susceptible to the temperature set by interest rates. The good news is that there is an abundance of buyers who still would love to buy a home, and softening prices help those folks.

But, you ask, what about the folks selling those homes? Well, if they owned their home for more than a couple years, they are still likely to have a good deal of market influenced appreciation. According to the Case-Schiller Market Index, average values in the Phoenix marketplace were 31% higher in 2022 than 2020; between 2017 and 2022, prices increased 54%.

YEAR-END 2022 REAL ESTATE REPORT The Sonoran Lifestyle Team Office 16824 E. Avenue of the Fountains #12 Fountain Hills, AZ 85268 info@SonoranLifestyle.com 480.837.1331
“... some markets flourished, like Fountain Hills and Rio Verde with their small, hometown feel and amazing outdoor recreational activities.“

MARKETS SHIFT. THEY HAVE TO!

Markets shift. Some years, a market will surge. Other years markets decline. That’s what markets do. There are a variety of reasons, but the laws of supply and demand can’t be ignored.

Between 2020-2022, SUPPLY was short due to new home construction having been dormant for the previous 12 years. In addition, investors (both institutional and private) were purchasing rental properties in huge amounts, effectively taking those homes out of sales inventory. (Note: 36% of all households in Arizona are tenant occupied.)

On the DEMAND side, a convergence of the three largest buying groups occurred when the Millennials joined the GenX and the Baby Boom Generations to create more demand than this country has ever seen. And then, COVID hit. Lifestyles and priorities changed. Buyer trends shifted. Many Americans sought a better quality of life. With the advent of Zoom technology, a record number of buyers were able to work remotely and live where their hearts desired. Some markets saw dramatic negative impacts as people left urban centers for the suburban or rural lifestyle. Other markets, like Fountain Hills and Rio Verde with their small, hometown feel and amazing outdoor recreational activities flourished.

In fact, the community of Fountain Hills was one of those “in-demand” markets. The Cromford Market Index, a report that has been analyzing the Phoenix marketplace since the early 2000’s, consistently placed Fountain Hills among the highest (demand) indexes throughout the past two years among all valley markets. And, with the market shifting in the last half of 2022, Fountain Hills is the HIGHEST ranked market for demand vs inventory at the beginning of 2023.

Fountain Hills & Rio Verde Through the Years

In both the Fountain Hills and Rio Verde markets, the Absorption Rate is still historically low, indicating how long the current inventory of properties would last at the current rate of sales.

Local MLS Numbers also bear this out. In the graph above, “Fountain Hills & Rio Verde Through the Years,” notice that inventory is still low compared to most previous years, with an absorption rate of 1.8 months for the year-ending. That’s among the lowest of absorption rates for the previous 16 years ... by a wide margin!

YEAR-END 2022 REAL ESTATE REPORT The Sonoran Lifestyle Team Office 16824 E. Avenue of the Fountains #12 Fountain Hills, AZ 85268 info@SonoranLifestyle.com 480.837.1331
YEAR-END
REAL
FOUNTAIN HILLS 85268: Dec-06 YTD 2006 Dec-11 YTD 2011 Dec-15 YTD 2015 Dec-19 YTD 2019 Dec-21 YTD 2021 Dec-22 YTD 2022 Active Listings 865 2518 395 1680 452 1723 252 1399 71 1267 180 1096 Sold Listings 41 724 65 793 64 771 63 907 80 1106 47 762 Absorption Rate in Months 14 mos 10 mos 6 mos 6.7 mos 6.9 mos 6.9 mos 3.3 mos 3.5 mos 1 mos 1.07 2.7 mos 1.8 mos Sold Sale Volume $23 mil $399 mil $18 mil $250 mil $28 mil $311 mil $29 mil $431 mil $54 mil $766 mil $29 Mil $623 mil Days on Market 135 95 137 118 104 106 58 81 40 47 90 43 Avg List Price $660,636 $626,294 $481,991 $420,765 $649,172 $531,510 $915,234 $627,565 $1,119,235 $752,746 $1,071,675 $901,418 Avg Sale Price $571,708 $550,564 $284,998 $316,440 $438,750 $403,915 $453,452 $475,560 $678,502 $692,646 $606,315 $818,077 RIO VERDE 85263: Dec-06 YTD 2006 Dec-11 YTD 2011 Dec-15 YTD 2015 Dec-19 YTD 2019 Dec-21 YTD 2021 Dec-22 YTD 2022 Active Listings 99 245 170 396 113 348 91 365 28 318 69 272 Sold Listings 8 79 6 86 13 119 17 184 21 264 14 162 Absorption Rate in Months 14 mos 8 mos 24 mos 25 mos 12 mos 11 mos 6 mos 5.5 mos 1 mos 1.5 mos 4.9 mos 2.5 mos Sold Sale Volume 4.6 mil 46 mil $2 mil $31 mil 5.8 mil $52 mil $10 mil $97 mil $17 mil $204 mil $10.80 $138 mil Days on Market 103 89 208 239 168 169 124 104 65 66 91 56 Avg List Price $654,700 $670,553 $451,339 $451,703 $464,254 $482,172 $645,961 $603,316 $845,459 $807,474 $964,253 $913,514 Avg Sale Price $575,697 $583,918 $322,770 $361,069 $445,538 $436,322 $607,499 $529,000 $800,756 $771,900 $773,731 $851,464 Sold listings: The total number of listings whose sales contracts were completed, or closed, during the month.
2022
ESTATE REPORT
About the Absorption Rate, in Months Chart Active listings: Data Provided by the Arizona Regional Multiple Listing Service All "Year to Date" figures above are as of December 31 in each respective year. Sold sale volume The total sale price value of all the properties whose sales contracts were completed, or closed, during the month. The Absorption Rate in Months chart shows how long the current inventory of properties would last at the current rate of sales. If no new properties were added to the market, and sales continued at a steady pace, the Absorption rate indicates the number of months required to sell all the properties on the market. Absorption rate is based on two numbers: The number of active listings, and; The average number of listings sold per month for the previous n months. The number of active listings is a "snapshot" of listings active on a single day (the 15th of the month). However, the number of actives is not static and depends on when the report is run. The number of months of sold listings, here, is 12. The formula is Absorption Ratio = A ÷ N Where A = listings active on the 15th of the month, and N = the average number of listings sold during each of the previous 12 months. How many listings were for sale during each month. The number of active listings is a "snapshot" of active listings on the 15th of the month. Rather than showing the number of all listings that were active at any time during the month, this chart displays a representation of the number of listings that were active on one day. However, the number of actives is not static and depends on when the report is run. A trend upward or downward from month to month can be established by using the same day of every month.

GOOD NEWS

According to the Case-Schiller Market Index, average values in the Phoenix marketplace were 31% higher in 2022 than 2020; between 2017 and 2022, prices increased 54%.

MORE ON SUPPLY VS DEMAND: THE U-HAUL EFFECT

The US Census Bureau recently released their numbers and, once again, Arizona is one of the top gainers for employment-based population growth. From July 1, 2021 to June 30, 2022, approximately 94,000 people parked their U-Haul in Arizona, making AZ the 5th fastest growing state in the US for that period. Approximately 58,000 moved to Maricopa County, equating to 159 people per day. On top of this, a major shift in the economic base of Maricopa County occurred in the past ten years. Yet, the new Taiwan Semiconductor (TSM) plant in Northwest Phoenix promises an even larger shift as new companies announce each month they are relocating to Phoenix to be near TSM. According to Nikkei Asia, a market reporting media company: “TSMC has said its investment in Arizona will create at least 4,500 jobs directly and some 10,000 supply chainrelated jobs.”

So, while the valley continues to rocket forward, there is one area that promises a friendly, hometown atmosphere unlike any other in the Valley of the Sun: Fountain Hills and its neighboring communities of Rio Verde, Tonto Verde and Trilogy at Verde River. Protected against the threat of traffic and urban sprawl by protected lands such as Indian Reservations, National Forest, Mountain Preserves and Regional Park, these communities offer the best of all options: Vast, scenic outdoor recreation plus all the conveniences of major airports, world class dining, shopping, sporting events and major employment hubs within minutes, all accessed by an impressive freeway system.

And those protected lands offer one other element any astute investor recognizes: A very limited opportunity for growth! So, now the supply side of the equation just became very interesting, indeed!

HYPERLINKS:

Arizona’s population growth leads the West in latest Census estimate:

https://www.thecentersquare.com/arizona/arizonas-population-growth-leads-the-west-in-latestcensus-estimate/article_a9021cfc-822e-11ed-b0ed-17265649c857.html#:~:text=The%20data%20 is%20from%20July,12%20months%20ending%20last%20summer

Mortgage rates chart: Historical and current rate trends:

https://themortgagereports.com/61853/30-year-mortgage-rates-chart

Forbes Housing Market Predictions For 2023:

https://www.forbes.com/advisor/mortgages/real-estate/housing-market-predictions/

The ‘TSMC effect’ comes to Arizona as U.S. pushes chip ambitions:

https://asia.nikkei.com/Business/Tech/Semiconductors/The-TSMC-effect-comes-to-Arizona-as-U.S.pushes-chip-ambitions

YEAR-END 2022 REAL ESTATE REPORT The Sonoran Lifestyle Team Office 16824 E. Avenue of the Fountains #12 Fountain Hills, AZ 85268 info@SonoranLifestyle.com 480.837.1331

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