Update Regarding Phoenix Housing Market!
Update Regarding Phoenix Housing Market!
Hello and welcome to a new episode of Merrill's Monday Market Madness, coming at you today with an update regarding the Phoenix residential housing market I'm going to be talking a little bit about prices and whether they're currently rising or falling and what we anticipate to see moving forward but if you have any questions about anything that might be happening in the market or what might be happening in your area feel free to comment on this post. I should be able to see some of your comments live here during the video if I can answer it on the spot I will and if I can't I will definitely get back to you and do my best to answer the question directly. So, I like to always start off by looking at a supply and demand metric that we look at called month's supply of inventory.
So right now, active in our MLS we have 12,405 listings to put that into perspective so again all residential listings so that's Town Homes, condos manufactured homes, and single-family homes 12 405. So in 2022 early 2022 at the lowest amount we ever hit was around 4,000 active listings so right now we have 3x more homes than we did at the lowest point however we at the highest point which was around November of 2022 we had around 21,000 active listings so we were from in recent high if you go back to the housing crash in like 2008, 2009 there were 40 - 50 000 active listings at a time so right now 12,000 is actually a very very low number I mean consider the population of the Phoenix Metro Area, five six million people and there are only 12,400 homes currently available for buyers who want to buy so not the lowest that we've seen it but down almost in half from the from how many we had just last November.
So not only is it falling but it's falling fast currently pending we have just under 10,000. 9,983 homes that are currently pending. One thing that we did see in 2020 and 2021 was that we actually had way more pending contracts at a time than we had active listings. So right now there are slightly more active than there are pending but if the trend continues for another month or so we will probably go back into that where there are actually more homes that are pending than there are that are active the last 30 days. We've seen 6634 closings so the month's supply of inventory number meaning I'm just taking the actives divided by how many homes sold in the past 30 days is at 1.87 which is considered a seller's market meaning that there's just for how many buyers that are buying despite lower demand so to give you an idea, the month of April we saw 6,637 homes close well in April of 2022 we saw 9,285 homes closed so that the total number of homes selling this year this April compared to April of last year is down 29 so much fewer like volume much fewer homes are selling however um the uh the fewer home selling but not with such little inventory but we still have a very low kind of month supply of inventory number so I'd like to just kind of give you a recap of what some of the April numbers were and how they compared to April last year to kind of give you some perspective of where the market is compared to a year ago so again a year ago there was next to nothing for sale demand was still really high interest rates were just starting to go up but April really hadn't felt a big change in the market yet the market didn't really start to fill a significant slowdown until like June or July so even though again rates had started to go up a little bit by April, the market was still in a frenzy.
So, 6,637 homes sold as I already said the average price of the homes that sold in April just take all of them the average was $553,669 compared to April of last year the average price was 592,000. So year over year average prices are down 6.5%, so you know homes have sold in April this year compared to April 2022 they did sell 6.5% less money on average so that might make you think well how could we possibly be in a Cell, how could we possibly be in a seller's market but prices are declining? Well, unfortunately, the year-over-year average price isn't telling the accurate story and this is why like sometimes the big national news Sensational headlines just don't really help you understand what's actually happening in the market locally and what's happening at that given time so year over year we're down 6.5%t but check this out in March the average price was $541,000. so for March to April the average sales price actually increased over 2% for around 2% at 500,12 000 increase February was 524 and then go all the way back to December that was our kind of low water mark the lowest average sales price that we saw in the Phoenix area was $516,571 so December so what we saw right was the average prices hit about $600,000 in I think Zoom $600,200 in June of 2022 and then they fell pretty hard and fast down to about $516,000 in December. Well, since December they've been rising and they're back up to $553,000. So, again like I said year over year down 6.5% but since December average prices are actually up 7.2% in a very short period of time. I mean, if you figure it's only been five months since our four months or December anyway it depends on what part of the month you're looking at but it's been four or five months since that time and so to have already gone up 7.2% home prices on average since December is increasing by more than one percentage point a month that might not sound like a ton but if you have a median home, the median home price right now in the Phoenix Metro area is $420,000 and the value is going up between one and 2% then the value of your homes going up between $4,200 and $8,400 a month not like clockwork right it doesn't actually work like that we have to look at the comps in your area but just kind of on average that's what we're seeing right now.
So it's it's still just and the crazy part is all of this is with interest rates being in the mid sixes so interest rates in the mid sixes but the buyers are still buying and the demand is still really again lower than where it was last year but Supply is so low that prices are still rising, so a couple of other interesting April numbers to look at. So the average days on the Market this number really tell a big difference between what happened this year compared to last year's average days on the market for the 600 homes that sold in April was 73 days the average days on the Market in April 2022 was only 27 days. So homes are taking three times longer to sell on average right now than they were in April of last year and then here's another interesting one, the average sales to list price ratio so what this is what kind of looks at is on average? How far below or above the asking price are homes selling for? right? So, if someone lists a home for it depends on the price range as well but again just to make the math easy, if someone lists a home for a hundred thousand on average what would we expect it to sell for? So right now of all the homes that sold in our MLS in April, the average sales-to-list price ratio was 98% so think of it as when you see a list price it depends on the exact home and the scenario but just on average that home is probably going to sell for about 2% below what the seller is asking to compare that to April of last year homes were selling for an average of 102% of the list price. So homes were selling for 2% above the asking price so we have seen a 4% swing there buyers are still negotiating a little bit they are still getting a little bit off of the price but not it's not a bloodbath it's not prices are not plummeting matter of fact they're rising and buyers might be able to negotiate a little bit but for the most part only about 2% and in fact, I remember like pre-covered 2019,2018, 2017 a very typical sales to list price ratio and a normal Market if you want to call it that but even prices were rising then the average it was around 97% so we're at 98% right now. So buyers are actually even getting a little less negotiation right now as they were even pre-covered so inventory continues to be the main problem. There's just for the number of people who want to buy even given the interest rate climate there are just not a ton of homes for sale we are starting to see more and more homes with multiple offers over the last couple of weeks. We've been seeing on average the total number of active listings going down by around 70% per day. Meaning, we look at how many active listings were on the market three weeks ago today versus how many are there today, right? And, then divide that by 21 days like how much inventory are we losing on average per day?
So every day when you wake up there are 70% less choices that don't exactly work like that of course, there are days when inventory rises like Thursdays and Fridays for example, we tend to see more homes come on the market while very little homes are going under contract and then Monday and Tuesday tons of homes are going under contract and very few homes are being listed. So it's not like clockwork 70% a day but on average so I did the math on that and I said y if that trend continued like if we continue to lose 70% homes a day in the Phoenix area, how long would it take it turns out around six months? So if that trend were to continue which I don't anticipate that it will but if it did just to put into perspective how hot the market is right now. If it did everything would be gone in six months and there would be there would 0 active listings on the market so obviously I don't expect that to happen. We are kind of in the peak of our buying season right now the springtime March, April, May, and June are the busiest months for the Phoenix housing market and really for the housing market across most of the country.
So we are seeing a little bit of a frenzy and I do think that it'll probably calm down once we get into the peak of July and August and then into the fall so but I guess the point that I really want to make is I don't expect home values to fall any further, matter of fact they've been rising, right? I mean we hit a low point of 516. now we're back up to what were the 553 so not only Enterprise is not falling they're rising. I think that'll probably stabilize in the fall given that you know there'll be a little bit less demand and I expect supply will probably increase but I doubt we see a significant drop in prices given that there are only 12,000 active listings, it'll probably stabilize and then we're going to be in for a major roller coaster ride next if we go into 2024 with only around 12 or 13 000 active listings again.
Remember, we went into this year with 20,000, right, or 19,000 or whatever and we're already down to 12. if we go into next year with only 12 it's gonna yeah and if you combine that with the possibility of interest rates improving we we could see a situation next year very similar to what we saw in 2020 and 2021 where there are so few homes for sale and there's just multiple offers on everything 2021 saw average prices in the Phoenix area increased something like 22%. I doubt we see anything that extreme but I wouldn't be even remotely surprised if we saw prices rise between 10% and 15% given that just since I mean put that might sound like a bold claim but put this into perspective just since December prices are up 7.2% this year and that's what's rates at 6.5%. So we'll see what happens don't have a crystal ball but that is what I am predicting. So I hope you found this information helpful if you have any questions again you want to know what's happening in your area your neck of the woods you want to know what your home is worth or anything like that I'm always happy to help I appreciate you tuning in and I hope you all have a great day!