East Valley Homes Prices Down and Inventory Up

[Andrew McGuire]

We saw many indicators in the August data that shows the housing market in the East Valley is softening. Prices are down seeing a significant drop of 3%, the largest drop in a single month in over a year. Prices have been going up since February this year gaining back about 14% of the nearly 17% loss housing prices saw at the end of 2022 and first 2 months of 2023.

We also saw inventory increase from just over a months supply to over 1.5 months. Still very low inventory but it appears to be increasing as sellers have a harder time selling homes. Transactions in RE in general are at historically low levels with sellers not wanting to sell and many buyers opting to wait. We are in an interesting place with both supply and demand low. If we see inventory increase we will see prices continue to do down and will enter a buyers market.

I predict we will see a modest increases in inventory and modest decrease in price the rest of 2023, with interest rates beginning to head South towards 5% in 2024. When interest rates hit 5% I expect to see buyers flood back to the market and prices go up again. 2024 is an election year which traditionally keeps transactions low so another thing to keep an eye on.

Other Market Indicators of Market Softening: 

List To Sold Price: 99% which is steady 

Inventory East Valley SFH (Tempe, Mesa, Gil, Chand, QC): 1550 up from 1378 up from 1.2 Mo Supply to nearly 1.5 Mo (still historically low)

Transactions Down 10% to only 1018 SFH, historically Low

Cancelled/Expired Listings: 191 

[Tom Nguyen]

Nobody knows where interest rate will go.  Earlier this year, many "experts" said we would be in the 5s by now.