2019 Market Updates

October Market Update

 For October, the Greater Phoenix residential real estate median sales price continues to rise. However, a closer examination shows that this rise is largely attributable to the continuing shift in available inventory from lower priced to luxury homes. While available inventory for moderately priced homes continues to shrink significantly, the inventory of luxury priced homes is still very healthy. 

This shrinking low-end inventory combined with the growing high-end inventory is driving much of the increase in our median price, which is up 7.5% from this time last year to $279,500 while the total number of “Active Listings” is 13,755, down 18.2% year over year. 

Mortgage rates continue to be accommodative with this week’s 30-year money at 3.57% with .6 points, down .08% since last week, and down 1.33% year over year (Freddie MAC 10/12/2019).

Both buyers and sellers should be aware that the rate forecasts have recently become less firm.  According to the minutes of the most recent Fed meeting: “The Market may be expecting more rate cuts than the Fed will deliver, meeting minutes show.” (CNBC 10/9/2019)

In the current economic and policy environment, short-term rate predictability has become less certain, and buyers and sellers might want to take this information into consideration when choosing when to buy or sell. 

As always, it is recommended that both buyers and sellers do their homework before purchasing or listing property and get advice from a real estate professional you trust.

September Market Update

 The inventory shortage swings into September, and active listings are down about 16% year over year. As the very low inventory in greater Phoenix continues, prices are up accordingly, rising 6.9% year over year to a median price of $280,000.

Low interest rates are still with us, with 30-year money at 3.49% with .5 points for September 5, 2019, down .09% from last week, and down a whopping 1.05% year over year (Freddie Mac 9/9/2019).

Additionally, interest rates are expected to continue their downward trend into 2020. Much of this forecast (Freddie Mac) is predicated on continued trade difficulties and tariffs.               

“The Fed could also cut rates in 2020 if an expected economic slowdown threatens to snowball. GDP growth should slow from 2.3% this year to about 1.8% next year...” (Kiplinger 8/12/2019).

Low inventory and falling interest rates make for a strong seller’s market. While, for buyers, waiting on the sidelines to “time the rates” to get “the lowest rate possible” might seem like an attractive idea, any potential rate benefit could well be cancelled out by our rising home prices.

Whether buying or selling, please do your homework, and come prepared to act as this is a rapidly moving market. As always, please work with a knowledgeable REALTOR® that you trust--they really can make your buying or selling process much easier.

August Market Update

We have talked about our low inventory of homes driving a very active market, with price-segment-specific hyper-activity. In July, the number of active listings was down 8.5% from June and 4.1% year over year. The number of active listings this month is down an additional 11% from last month! And as you would expect, the number of listings under contract is up 13.5%, further reducing available inventory. For homes under the $400,000 price point, we are seeing frequent, multiple offers, and many zip codes in this price range are highly price

competitive with very fast turns.

Listings over $400,000 are less competitive, however, still very seller favorable. To compete successfully, buyers may need to up their budget or downsize their expectations. Our median sales price for August is up 5.7% year over year, so healthy but not overheating.

Interest rates are somewhat harder to forecast but should trend flat to down. For those of you following the trade discussions with China, tariffs are ramping up and negotiations are moving slowly. The President is pressing the Fed to further lower interest rates, and reacting to a slowing world economy, the Fed cut rates by ¼ point at its last meeting (federalreserve.gov, July 31, 2019).

“The Federal Reserve lowered its benchmark rate by a quarter point Wednesday as an insurance policy not against what’s wrong with the economy now, but what could go wrong in the future. It was the first rate cut by the central bank in more than a decade.” (CNBC, August 1, 2019)

Current mortgage rates are 3.6% for a 30-year conventional mortgage, with .6 points. (Freddie Mac, August 8, 2019)

What does all this mean for today’s buyers and sellers?

Our very low inventory and falling interest rates have made the August 2019 market in Greater Phoenix an unusually active one. Buyers and sellers are encouraged to reset expectations and do their homework. Understand your specific neighborhood market using solid, comparable data, and come prepared to act as this market can move very quickly!

As always, please work with a knowledgeable REALTOR® that you trust.

July Market Update

 Inventory is the story for the greater Phoenix real estate market in July. Active listings were down 4.1% to 15,442. The median price continues to rise, up 4.1% to $279,000.

Lack of inventory continues to squeeze buyers, especially below $200,000. And now buyers looking for something between $200,000 and $250,000 are having a difficult time too, as new listings in this price range were down a whopping 15.1%!

Fortunately, interest rates are still favorable, with 30-year loans at 3.75% with .5 points, down .78% from one year ago (Freddie Mac, 07/11/2019).

In their July/2019 report, Freddie Mac says:
“The recent stabilization in mortgage rates reflects modestly improving U.S. economic data and a more accommodative tone from the Federal Reserve to respond to the rising downside economic risk from trade tensions and soft global economic data. On the housing front, the latest weekly purchase application data suggests home-buyer demand continues to rise, which is consistent with the slowly improving real estate data from the last two months.” (Freddie Mac, 07/11/2019)


What does all this mean for today’s buyers and sellers?

Shrinking inventory along with low interest rates will continue to drive modest price increases. If you are thinking of buying, waiting on the sidelines may not be your best move. For sellers, you are selling into a significantly larger percentage of investors, especially flippers. These investors are looking for a deal, not a home. Get your home ready by freshening it up and pricing smart.

As always, work with a knowledgeable REALTOR® that you trust.

June Market Update

 Residential real estate in greater Phoenix continues to see price appreciation, driven by modest personal pay increases and falling interest rates.  Current 30-year conventional loans are 3.82% with .5 points. (Fannie Mae, June 2019) 

Further, the Federal Reserve is now forecasting a drop in rates through next year with many Wall Street analysts predicting three reductions of ¼ point each over the next 12 months. 

Why the change in rate forecast? 

Late last year, signs of a significant slowing in the U.S. (and global) economies began to emerge. The Gross Domestic Product (GDP) had slowed, and forecasts were predicting continued slowing over the next several months.  Also, the U.S. found itself in a significant trade dispute with China (and for a brief time, Mexico), and trade disputes are almost never good for global economic growth.  With the economy significantly slowing, the Fed announced its intent to change its forecast of approximately three interest rate increases to taking a “wait and see” position.  


Today, analysts are predicting rates in 2020 to be flat to slightly down:

(Reuters) - The U.S. Federal Reserve is done raising interest rates until at least the end of next year (2020), according to economists in a Reuters poll who gave a 40 percent chance of at least one rate cut by end-2020.

So what have these lower rates done to our housing market?

Our median sales price in June 2019 is $278,000, up 4.9% year over year.  

One last point, whether buying or selling, please keep in mind that our market is not monolithic.  Price ranges and neighborhood locations will vary in performance, often significantly. 

For the $150,000 to $225,000 range, expect annual appreciation rates to be between 6%-10%.  For homes that sell for $225,000-$500,000, appreciation is expected to be between 3%-5% and those selling over $500,000 appreciation is expected to be between 1%-3%. (Cromford Report, June 2019)

Please be sure and partner with your real estate professional to determine the correct market value of your home.

May Market Update

 May continues our listings and sales resurgence for the greater Phoenix area.  This is not a random phenomenon but rather a direct response to our continuing interest rate moderation and decline.  As you may have noted, the Fed recently said that “On a 12-month basis, overall inflation and inflation for items other than food and energy have declined and are running below 2 percent.” --J Powell, Federal Reserve news conference, 5/1/2019

The Fed’s previous 2019 interest rate forecast was to have between three and four quarter-point rate hikes; however, the rapid slowdown in Gross Domestic Product (GDP) caused the Fed to rethink that plan.  Even though the GDP was slightly above expectations in the first quarter of 2019, inflation slowed to well below the Fed’s target.  This means that any rate hike(s) for 2019 will be dependent on improvements in either GDP and/or inflation (the Fed’s dual mandate).

All this is very good news for real estate.  Current 30-year money is 4.1% with .5 points (Freddie Mac, May 2019), having come down from a high of 4.9% late last year.  For greater Phoenix, the May median home price is $270,000, up 5.9% from last year.  Active listing are up 7.3%, and closed sales are up 5/3%. 

All very good numbers!


Also, you may recall in late 2018 and early 2019 our sales and listing numbers were well below our current numbers.  The market has recovered nicely and is now on track for another very good year. What changed?

Interest rates!

Accordingly, work with your real estate agent to keep track of interest rates, and their likely trend.  Both buyers and sellers would benefit from our current interest rate picture.  Please consider both the current rate and rate forecast in your buying and selling decisions.