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Updated: July 8, 2023 @ 4:33 am
This 5,250-square-foot house on E. Whisper Rock Trail in Scottsdale recently sold for $4.4 million. Built in 2020, the four-bedroom, five-bathroom home sits on nearly 3 acres and boasts a slew of amenities, including a separate casita and an expansive patio and outdoor area that comes with a pizza oven as well as fire pits, pool and fireplace. (Special to the Progress)
This 5,250-square-foot house on E. Whisper Rock Trail in Scottsdale recently sold for $4.4 million. Built in 2020, the four-bedroom, five-bathroom home sits on nearly 3 acres and boasts a slew of amenities, including a separate casita and an expansive patio and outdoor area that comes with a pizza oven as well as fire pits, pool and fireplace. (Special to the Progress)
Valley home buyers and sellers may be facing a long and not-so-hot summer, according to a leading analyst of the Maricopa and Pinal counties’ market.
“With supply and demand both dropping, volume is likely to be weak between June and September,” the Cromford Report said. “It is currently a contest between sellers and buyers for who loses motivation fastest.”
Rising mortgage rates, a plummeting inventory of resale homes and a continuing increase in prices continue to create havoc for buyers and sellers alike.
While all three trends are interrelated, low inventory of resale homes in the metropolitan area threatens to turn the not-so-hot summer into a not-so-hot year for most anyone hoping to buy a house, the Cromford Report warned.
Noting inventory of resale homes continues to dwindle to below 12,000, it said:
“This is an unhealthy supply and it is well-nigh impossible for prices to decline when supply is so weak and trending lower.
“If supply were to rise, then a cooling trend could start to build. The monthly releases of building permit data suggest that future supply will be strong for rental multi-family property, but single-family homes to purchase are being planned in ever smaller numbers.
“The recent decision to restrict future permits because of water concerns means that situation is likely to remain in place for a long time. The market will see less volume than we have become used to, but prices will be reinforced by the chronic supply.”
A week earlier, the Cromford Report said, “we can reasonably expect the supply shortage to last for a long time,”
It reported that all 17 submarkets in the Phoenix Metro are showing improving conditions for sellers, though at a slower pace than in the first five months of this year.
“Most improved are Cave Creek and Fountain Hills,” it said. “Not far behind are Glendale, Peoria, Maricopa, Chandler, Avondale, Queen Creek and Buckeye. The slowest rate of improvement for sellers is 1%, achieved by Goodyear.”
And it said none of those markets are considered favorable to buyers with all but two heavily tilted toward sellers.
But that’s cold comfort for sellers right now, the Cromford Report suggested, noting “demand remains weak and is clearly weakening further after 30-year fixed mortgage rates exceeded 7%.”
“Listings are going under contract at a slower rate than this time last month,” it said. “However, high interest rates are discouraging to sellers too, and the flow of new listings is getting alarmingly low.”
In the past four weeks, it noted, 7,205 new listings were added – down 37% from the 11,392 that came on the market in the same time period in 2022.
The report said that should mortgage rates edge below the 7% threshold, “things could change quickly” because buyers likely will find it “psychologically a lot easier to live with than numbers over 7%.”
For now, it added, “the few sellers we have are seeing their listings find buyers quite easily, with less than 17% getting cancelled or expiring.”
Because it seems the only potential buyers in the market are ready to meet almost any price, the listing success rate is 83%, the Cromford Report said.
“The long-term average success rate is only 67.6% and rates over 83% are relatively uncommon in history. although they have become much more common since 2017,” it said. “This is largely due to the chronic shortage of supply that still prevails today.”
The Cromford Report also cautioned hesitant buyers not to put much hope in any predictions of declining prices, calling that incompatible with the high rate of successful listings.
“Those who predict more drops in sales prices will have to explain where a vast new supply is going to come from,” it said.
“Prices only drop when there is a glut of homes coming to market and not enough buyers. In the current circumstances this is looking very unlikely.”
It also warned again against believing any predictions of a massive wave of foreclosures, calling people who believe that “deluded by fabricated data that exists only in their own mind.”
“All the real world data says that delinquency rates remain below normal, that pre-foreclosure activity is unusually low and that the rate of actual foreclosures taking place is extremely weak, even though most of the forbearance that was introduced during the pandemic has ceased,” it said.
Last week there were only 993 foreclosures pending in Maricopa County – a stark difference from the 50,537 that existed in 2009 and the 10,159 average over the last 21 years.
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