Metro Phoenix Market Update 1/17/23: Rise in Under Contracts

[Melanie Johnston]

According to The Cromford Report* Metro Phoenix has experienced an increase in properties under contract since the beginning of 2023. They attribute it to an improvement in mortgage rates.

"Buyers seem to like the new mortgage rates. Since January 5 there has been a sharp up-tick in the pace of contracts being signed and some attractive well-priced homes are receiving multiple offers," the report says, then offers this graph.

They go on to say, "The second week of January was the strongest week since mid-August, another time when mortgages rates moved lower, albeit only temporarily. If this trend in buyer demand continues, it is likely to halt price declines. This is already being seen in the average $/SF for active listings, which is showing an upward trend. It will then spread to under contract listings and eventually to closed listings. The latter is very much a trailing indicator so it might be Q2 before we see that signal. Of course, if mortgage rates climb higher again, all bets are off."

To detail the upward trend of average price per square foot, they also posted this commentary and these stats:

"Although prices have fallen back over the last 9 months, the annual average price per square foot is still substantially higher than it was this time last year. This is not surprising given how far prices rose in 2021

The top performing cities based on comparing the annual average $/SF with the same measure 12 months ago are:

1. Carefree - up 25.5%
2. Paradise Valley - up 24.7%
3. Fountain Hills - up 24.4%
4. Coolidge - up 23.4%
5. Wickenburg - up 23.2%
6. Cave Creek - up 22.2%
7. Scottsdale - up 21.7%
8. Youngtown - up 21.2%
9. Gold Canyon - up 20.0%
10. Avondale - up 19.9%

The bottom of the table looks like this:

1. Maricopa - up 16.0%
2. Waddell - up 15.7%
3. Sun City - up 15.5%
4. Eloy - up 14.5%
5. Tempe - up 13.9%

All the other non-trivial cities are up between 16% and 20%."

In Metro Phoenix, our first and second quarters historically record the highest numbers of contracts.

Among many contributing factors is "event season," when the main sports and lifestyle events attract thousands of people to the Valley. The season begins with the Barrett-Jackson collector car show and auction (and other ancillary car shows) and the Waste Management Phoenix Open (the best-attended golf tournament in the world that draws a collective 700,000 fans). This year is special, of course, because Phoenix is also hosting the Super Bowl. Fun fact: The final round of the Phoenix Open always falls on Super Bowl Sunday.

Event season continues through March with Major League Baseball Spring Training.

If lending conditions cooperate, the rise in contracts could follow its traditional path. This would mean that inventory, which is lower than it was a month ago and trending downward, would meet rising demand.

As new numbers on our market direction come in, I'll share them with you here.

* What's the Cromford® Report?

"The Cromford® Report provides detailed information to track the history and current status of the Greater Phoenix residential resale market and offers unique insight into its future direction.

Updated daily and usually published online within a few hours, this site is intended for anyone interested in the state of the market and how it affects their investments and livelihood. Our goal is to present data that is timely, informative and easy to understand - data not available anywhere else in this level of detail or immediacy."