Is the Phoenix housing market is slowing down?

Hello everybody, and welcome to a new edition of Merrill's Monday Morning Market Madness. I'm coming at you today with an update regarding the Phoenix, residential housing market, and just kind of letting you know, Hey, what is the latest and greatest what is going on? Maybe you've been seeing a lot of posts or.

No mumblings or murmurings about the market shifting. I, being a numbers guy, I'm going to dive into the numbers and talk to you about exactly what it is that we are seeing so far and what I think it means. and so, but as always, I like to start off with a very key metric called months, supply of inventory.

So we have 6,507 active listings currently in our MLS, there are 11,571 listings pending 8,836 listings that have closed in the past 30 days, giving us a month's supply of inventory of 0.74. Now the important thing about those numbers. So, so first of all, let's just address a month's supply of inventory.

All that is, is we're just taking the number of active listings divided by the number of listings that have closed in the past 30 days. So theoretically, if no new listings were to come on the market, how long would it take for everything to be gone at the current pace, which homes are selling? A balanced market typically would have a month's supply of inventory of four or five months.

We had a four or five months supply of inventory. We would expect home values to be pretty flat and stable and so with the monthly supply of inventory of 0.74, that is still just ridiculously low. We are still very, very much in a very strong seller’s market, but what it is is the highest among the supply of inventory and the highest active listing count we have seen this year.

So you pretty much have to go back all the way to like November and December before we saw 6,500 active listings on. Market. And before we saw, you know, a month's supply of inventory in the seven zero-point sevens. So, everyone's kind of talking about, okay, inventory is rising but I just, I want to make like really, really clear.

It is exciting that inventory is rising. It will hopefully make it a lot easier. Buyers to buy but it is still very, very much a seller’s market and a seller’s market in which I anticipate values will continue to rise at probably a stable pace of 10 to 15% over the next year. Because amongst my, of inventory of 0.7, four is still ridiculously far from a balanced market.

Put it this way. in May and April, we were seeing a lot of homes. Would go on the market and literally have 10 or 20 offers. Now we're seeing homes that are sometimes only getting three or four, but still getting multiple offers. And for the most part, they're still selling above list price. Even at these new, very highly inflated prices.

Average sales prices have increased by roughly. 5% over the past year and homes are still getting multiple offers, even at those new prices. So still a seller’s market values are still rising. So, so when you hear people say that the market is shifting, I don't, I don't want, I don't really like that word because I feel like it makes people think, oh, Well, then that must mean that we're no longer in a seller’s market.

It's a buyer’s market. And I can put in these low offers or, or something like that. It's probably, probably not the case, still, still a seller's market. So I looked back eight weeks. So if we go back exactly eight weeks from today, the date was May 17th. At that time, we had 5,065 active listings. So over the past eight weeks, we have gained 1,442 active listings.

It means that, on average, we're gaining 26 new homes average every day there are 26 more homes being listed than what’s right. Okay. So every day we add another 26 homes, which is pretty exciting, but if you take 26 times 365, okay. Let's assume that pace continues. Then we will have, we'll gain around 9,000 active listings, which add that to the 6,500 that we have will still only be at whatever that is.

So, you know, 14,000 doctor listings will still very much be in, an extreme seller’s market. A year later, continuing at this pace. So,lastly, I just wanted to mention possibly one of the reasons that we're seeing inventory increases right now is somewhat seasonal. So I, I put a little chart up here on my whiteboard.

And this is just to kind of show you what our seasonal sales cycle looks like now, 2020 was weird because of COVID. So, so our biggest sales months didn't end up being made. Jim. Okay. But if you go back all the way to the year, 2000, right. And you were to plot on a graph when all the, you know, what month all the homes.

Okay then traditionally, May and June are our biggest sales months of the year. Over the last couple of years, we've seen around 10,000 homes sell during those months. Okay. And then January and December are the slowest months of the year where around 6,000 homes sold. And then the months in between, you know, February to April and, and, you know, July to October, you know, We usually see around 8,000 homes sell during those months.

So it kind of creates this, you know, that this, I don't know this, this graph or with sales peak in May and June now keep in mind if you're going to close in May and June. Then that means you need to have gotten the home under contract in April and May. Okay. So, so we are now past, you know, our busiest selling season, not to say that homes aren't still selling.

We're still probably going to sell 9,000 homes in the month of July. So pretty significant amount of home selling, but the many, many buyers who really wanted to move this year, May have already done so during the months of May and June, and now it's just, it's just slowing down a little bit. And maybe soon fewer homes will start coming on the market because also sellers have realized that the super busy selling frenzy has ended.

So, so again, I really don't think we're on this trajectory of, oh, it's a matter of months before we reach a balanced or a buyer's market. I think it will take years to reach a truly balanced market. We're just seeing inventory rise right now. That's something that I personally am very excited about for the buyers that we work with because we've got a really great environment right now where we're values are still rising, which is great for homeowners and sellers and people are already home to homes, but it's also not a complete bloodbath, making it a little more doable for many buyers to buy, you know, sellers.

It's starting to get a little harder. You know, a few months ago, if you were selling your house, you could ask for, you know, they had to give you their puppy. They had to give you their firstborn child. They had to give you a kidney. They had to, you know, and now we're starting to see, you know, you're still gonna get a great price, but it's a little bit harder to get, you know, make such strong demands like, oh, Hey, we want to be able to stay in the house for 60 days past closing rent-free and we want.

To, you know, log in a little bit harder for sellers to make those demands right now, because again, the frenzy is, is, is calming down. So I'm continuing to keep you posted and we'll see what the inventory continues to do, but, you know, I think it will continue to go up, for the next couple of weeks and then eventually to level off, but we'll see what happens anyway.

I hope you found this information helpful. If you have any questions or you want to know more specifically what the market is doing in your area or in your neighborhood, please let me know. I'm always more than happy to help out with that. Thanks 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!