Is the Housing Market for Phoenix Homes Starting To Turn Around?

Hello everyone. And welcome to a new edition of Merrill Jencks Monday Morning Market Madness. I'm coming to you today with a quick update about the Phoenix residential housing market. This week we're going to kind of examine, you know, what's going on. It definitely feels like we are starting to see us slow down.

And so we're going to talk about what that looks like and show you what it looks like and talk about. You know what our path to a possibly more balanced market might look like. So as always, I like to start off with some key numbers. So right now we have 5,355 active listings on the market. there are 12,139 listings that are currently pending.

9,421 homes have closed in the past 30 days, giving us a current month's supply of inventory of 0.57, which is actually the highest month supply of inventory that we have seen since, February, the active listings. Also around the highest that we have seen that since February. So at the moment, and we've made this trend has been continuing now for well over like six weeks, more listings are coming on the market than what is actually.

So the active inventory is increasing slightly. The number of homes closing over the rolling 30 days is staying really steady right around 10,000, closings. So, since we're just at one week here into June, I thought I'd give you guys the final numbers for May. Cause that is actually really quite interesting.

So the month of May. In our MLS sod, 9,675 closings the average sales price for those 9,675 homes was $506,433. They do believe that it's the first time that we've seen an average sales price above 500,000. I do want to point out the median sales price is much lower than that. I believe the median sales price.

I don't have that exact number. The median sales price is right around four 50. That basically, you know, when you hear that average or 506,000, you know, that that number can get skewed pretty dramatically by some of the more expensive sales. For example, we did have a home sale in the month of May for over $14 million.

The total volume. Of closings in the month of May was 4.9 billion, which is actually a slight tick down really surprising. Cause it's usually, May and June are the biggest busiest months of the year for our MLS, April surpassed barely 5 billion. The average sales price in April was only 494,000.

So in one month. So from April to May, the average sales price increased by $12,000 but April had 10,200. Closings. So they had an extra 600 homes close in the month of April. So they actually sold about 5 billion instead of 4.9 billion so yeah, slight a slight decrease in the total volume of real estate that sold for the month.

But again, the average sales price is up, comparing it to may of 2020. So, you know, so may of this year, 9,675 closes. The average price of 506,000, in 4.9 billion in total volume, if we compare it to may of 2020 now in all fairness, the numbers of may in 2020 were very skewed because, because of COVID right, we, the market had picked up by May, but what was actually closing in me, right?

If you had a house that closed in May, that means that it needed to have usually gone under contract in March or April. Well, a lot of jumbo loans got shut down. A lot of normal loans got shut down. A lot of people just backed out of the deals. No one really knew what was going on. So the may, by June of 2020, we started to see normal numbers again, but may of 2020, the numbers were a little off.

So may of 20, 20 only saw 7,047, closing. So we're, you know, whatever that is almost 30% or something like that this year. But this is the kicker. The average sales price in May of 2020 was $353,782. So the average sales price, currently at 506,000 represents a 43% year-over-year increase. That's just insane now.

So I thought, okay, well, and the total volume was 2.5 billion. So I thought, well, maybe that again, maybe that number is skewed because a lot of the higher-end homes weren't closing yet. And you know, the luxury market got hit really hard, you know, with COVID and in May. So, but even if you look at June.

So June of 2020, we were back to a normal number of closings 9,722 homes closed in the month of June and the average sales price went from 3 53 to 369,000. So they saw an increase of, you know, $15,000 month over month from May to June of 2020. So, but even if you take that 369,000 to today's 506,000 in the average sales price, Obviously it is a huge, huge, exponential jump.

I'm going to go ahead and share my screen with you guys now because I want to show you a couple of quick things here. All right. So, I like to look at this website on a very regular basis. It takes a look at what rates are doing right now. According to Freddie Mac, the average rate on a 30 year fixed rate mortgage is 2.99%.

Which as you can see, you know, we were at an all-time low of 2.6, 5%, and that was on January 7th. Then rates increased to an, a, to a high. Not an all-time high, obviously, but a high for the year of was April 1st at 3.18%. Then we dropped back down to around 3% in April and it has been holding right around that number now, very steadily since April 1st.

So not a lot of fluctuation in the 30-year fixed-rate mortgages. Recently, the reason I like to look at that is that I do think that the interest rates could have a pretty dramatic impact on housing. You know, a big thing that has fueled, a huge increase in prices is affordability. Yes, prices are rising incredibly fast, but if you can finance it at a 3% interest rate,  it feels a lot more palatable to people than if they had to finance it at a five or a 6% interest rate.

So I, I think that the slight slowdown we're starting to see in the market. Possibly being fed by affordability. Affordability is going to start to become a bigger, bigger factor. I think we're going to start to hear a lot more people talking about it. And, so if rates go up that will have a dramatic impact on affordability, And then I just wanted to show you, so again, I've shown this before, but we graph every day, the month's supply of inventory and how many active, pending, and closed listings.

There is a museum in on this for you guys a little bit. So you can see that the month's supply of inventory line went a little. First of all, you can notice that it's higher than it has been since again, since okay. We're around March 1st or late February. So very high. Well, when we say very high, I want you guys to take that with a grain of salt here because it's still incredibly low.

So yes, we're starting to see inventory, creep up a little bit, but it is very, very far from a balanced market. 0.57. These numbers here got a little wonky. The months of I have inventory numbers bouncing all over the place here instead of the normal curve because we had a strange. End of the month, a lot more closings happened.

And then we had a holiday, so that got a little, a little bit wonky right there. Actually, you know what? Well, I'm going to have to look at that later. I think one of those numbers, I think one of these numbers might be entered in wrong. Cause I don't think we, Hmm. Yeah. I don't know. 0.41. I think that one right there might be a mistake, but I'll have to go back and check that.

But, but just to show you like, okay, if we were in a balanced market, we would need a month's supply of inventory around a five. So I'm just going to get to change this number to a five. Just so you can see what that would look like. All right. So, so this is what a balanced market would look like with a month's supply.

And it was right around five, maybe four K. Now, suddenly it makes our inventory look ridiculously low. And this slight increase that we've seen is practical, practically not even noticeable. Right. And then the same thing with the active pending enclosed listing. So you can see, you know, the pending listings has been holding, you know, they're very steady around 12,000 pending listings at any given time.

The total number of listings closing over a 30 day period, very steady right around 10,000 now for several months. And then the active listing, this, this blue line here, you see it is starting to kind of creep up, you know, we're, we're getting over the 5,000 lines, you know, for over the last couple of weeks for the first time.

But again, if we wanted a balanced market, we would need an active listing count of, somewhere around let's call it 40,000. So again, I just want to graph that so you can see what it would look like. So, active listing counts up here around 40,000, with us selling around 10,000 homes a month. That's how many listings we need to reach a balanced market.

So yes, it's very exciting. Inventory is going up, but I guess the picture, yeah, I'm trying to paint here is that we still have a very, very, very, very long way to go. Before we reach, even a semblance of a balanced market. I expect it to remain a very strong seller's market for very, very long time years.

Most likely we will continue to see home values rising, as long as rates stay this low. And, I don't think we're going to see a big change in the market, but it is exciting that that, you know, the that, that we're starting to see it go up a little bit. Instead of there being 20 offers on most houses, it's starting to feel like there are only 10 offers on most houses.

So it's getting a, it's still insanely competitive, but not quite as ridiculous as it was a couple of weeks ago. So anyway, that is, that is it for the show this week. I hope you found the information helpful and, let me stop sharing. And if you have any questions or maybe you'd like to know more specifically what's going on in your neighborhood.

Or you'd like to get an update regarding the value of your home or anything like that. Please let me know. I would be more than happy to assist. Thank you and have a great day.

What does this mean to you? If you're even a little bit interested in learning more about participating in the Phoenix housing market as a seller, buyer, or investor... you NEED to know this stuff! Or at least work with someone who is obsessed with the market stats. Reach out to me today so we can start working on making your real estate dreams a reality!