22
REAL ESTATE
THE CHANDLER ARIZONAN | WWW.CHANDLERNEWS.COM | JUNE 26, 2022
From Uptown to Downtown, we cover Chandler like the sun
Listings suddenly flooding Valley home market BY PAUL MARYNIAK Arizonan Executive Editor
W
hether you’re selling your home or looking to buy, better wear seatbelts. And that may especially be true right now for sellers, who are flooding the Phoenix Metro housing market with a record number of listings, according to the Cromford Report. The Cromford Report, the Valley’s leading analyst of the market in Pinal and Maricopa counties said a whopping 1,845 homes were added to the Arizona Regional Multiple Listing – 34% more than average. “If we were just suffering deflating demand,” it said, “the market would be cooling off pretty gently. But if 34% more new listings are arriving every four weeks, supply is increasing just at the wrong time and it just cannot be absorbed. This is why we are seeing the fastest cooling trend that the Greater Phoenix housing market has ever experienced. “ The Cromford Report two weeks ago said “uncertainty is compounded by the unusual speed of change” and that the Phoenix Metro housing scene “is shifting faster than we have seen at any time in the last 22 years.” Other analysts weighing in the day after the Federal Reserve on June 15 raised interest rates 0.75% and MarketWatch.com said even before that hike, Freddie Mac reported mortgage rates had surged 55 basis points for the largest one-week increase since 1987. All this spells bad news for both sellers and buyers. Sellers are quickly losing the catbird seat they’ve enjoyed in negotiations with prospective buyers for more than a year. Slower demand and quickly rising inventory are weakening their position, according to various analysts. But buyers need not break out the champagne as no one is predicting any sharp
This 2,978-square-foot house on W. Jupiter Way in Chandler recently sold for $950,000. Built in 1977, the four-bedroom, 2 ½-bath home was billed as “the last opportunity to buy at Stellar Airpark for less than $1 million.” price drops in the cost of housing and mortgage rates continue to climb, they said. “Further increases in mortgage rates are kicking a big hole in demand while supply continues to grow extremely fast,” Cromford reported. “It would appear that some owners who do not need their property as a home for themselves are timing the market and prefer to be in cash right now. “Sales prices are finally expected to reflect the shift by stepping backwards. The predicted fall is small so far, and coincides with a period when prices usually drift lower each year.” Two weeks ago, the Cromford Report said, “Demand continues to fall in most areas but the dominant effect is now the rise in supply, with new listings arriving at a pace that is well above average.” It said Buckeye, Queen Creek and Maricopa already are close to a balanced market, where demand and supply are basically equal. That report was buttressed by a news release two weeks ago from Sam Khater, Freddie Mac’s chief economist, who said: “Higher mortgage rates will lead to moderation from the blistering pace of housing activity that we have experienced coming out of the pandemic, ultimately resulting in a more balanced housing market.” Nevertheless, the news also doesn’t offer
much hope for buyers looking for “moderate” prices. Indeed, the meaning of “moderate” may not be at a new normal in the Valley and elsewhere in the country. “The upper end of the market is slowing, but to a lesser degree than the midrange between $400,000 and $1 million,” the Cromford Report said. “Supply below $400,000 remains very low and that segment of the market remains strong.” Cromford said data from May sales drawn from County recorder records show closed sales dropped 11% from where they were in May 2021 regardless of whether the deals involved new or used houses. Even so, the overall median sales price in the Phoenix Metro area last month was $490,000 – up 24.8% from May 2021 with the new home median at $500,490 (up 27.8% over May 2021) and the median for resales at $486,000 (up 23.7% from May 2021), The Cromford Report said. Those Valley price figures far exceed the national median sales price of $428,700 in the first quarter of 2022, although that nationwide number is up 30% from $329,000 in the first quarter of 2020. Mortgage rates jumped from 2.75% in the fall for a 30-year fixed to over 5.25%. An even more staggering blow to those
in search of affordable homes, according to the real estate brokerage Redfin is that 8.2% of homes – about six million houses – are valued at $1 million or higher – double what those figures were two years ago. Realtor.com said “Pandemic-era prices, as they currently stand, may be here to stay.” “It is entirely possible that prices level out and just don’t change very much for the next few years,” Greg McBride, chief financial analyst at personal-finance site Bankrate.com, told Realtor.com. “This would benefit first-time buyers by allowing their incomes to ‘catch-up’ to the cost of homeownership somewhat, but this would unfold over a 2- to 4-year period, not the next 2 to 4 months.” McBride cautioned would-be buyers who hope for a significant price correction: “Sellers have been putting homes on the market and asking for moonshot prices. In a neighborhood where homes were selling for $600,000 one year ago, a seller may now be asking $800,000. Sure, they may need to cut the price a bit and eventually sell for say, $725,000, but that is still much higher than the $600,000 it would’ve sold for one year ago.” Meanwhile, both Cromford and Mar-
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