Your Monthly Real Estate Market Report Updates

January 10, 2024 by Manuel Lopez

February 2024 Real Estate Market Update

2024 is finally here! But how are we going to compare it to 2023 moving into the peak time of the season here coming up? Stay tuned for that and much more in this month’s installment of the Arizona Real Estate Market Report Update.

Hey everyone, thank you for joining me on this month’s installment of the Arizona Real Estate Market Report Update. For those of you that are new, and watching this for the first time, Hi my name is Manuel Lopez with West USA Realty and I’ve been a real estate agent here in the valley for over 24 years now and each month I give a quick 4 to 5 minute video on the current housing market here in Arizona specifically here in Maricopa County. You know what, you didn’t come here to know more about me…let’s get right to the numbers!

So for those of you who have seen my past videos, you’ll notice that I’m starting something new here for this month where I’m incorporating a chart so you could follow along and know exactly what I’m talking about. Current active listings right here in Maricopa County according to the MLS as of today, February 8, 2024, are hovering at just over 11,940. So far for February, we’ve been averaging anywhere around 11,700 to about 12,000 units for sale at one time. Now this is about 100 to 200 more than my last report last month. But if you will notice we are still historically low, compared to where we need to be for a neutral market. So, seeing an increase in inventory little by little is a good thing. Active days on the market are 99 days active days on the market. Last month’s report was at 108 days. So this is also great news that the active days on the market are coming down. Months of inventory, we have just over a three-month inventory supply out there. Now, list price the sale price retention we are at 97.69%. So, what this means is that for you people watching this for the first time is that for every hundred thousand dollars that a homeowner lists their property for, buyers can talk them down or get closing cost assistance right at about $2300. Now on a $500,000 home, this equates to about $12,500. So, the spot that we like to see is around 97.8%…So as you can see, we’re not far off from that. The absorption rate is at 24.53%.

Now let’s get to what’s sold as you can see here January sales were, according to the MLS, 3,574 sales in Maricopa County. Now this is about 350 fewer than what sold in December 2023 which is a little discouraging but compared to January 2023 there were 3,559 homes sold according to the MLS here in Maricopa County. So, we are right on track, or even just a tad bit more home sales than what was in January 2023. The median sale price was hovering around $430,000 for here in the valley. And for closed days on the market, we are at 77 days which is still a great number because this means that homes are going under contract with probably about 30 or 40 days being on the market. And then, if it’s a finance offer that means another 30 to 35 days of going through the financing process. So, 77 days is still a really good number.

Now, what does this tell me moving forward here into the peak season of the buying season here in the valley which is of course March, April, May, and June. I believe you’re going to see an uptick in sales compared to 2023 because now I know all this is dependent upon interest rates, but I believe people are getting off the fence and looking to buy a home here in 2024 because they’re realizing that interest rates aren’t gonna come down much lower.

And also, I believe what you’re going to see here is more people coming into the market because they’re going to realize that if rates do come back down in the third or even fourth quarter of this year, which all predictions say they are, that getting into a home now will be an advantage for them. Because, if rates do come back down, you’re gonna see even more buyers back in the market. And you can probably see multiple offers on a lot of properties out there if this happens. I mean, of course, this is no guarantee that this is gonna happen but from what I’m hearing this is a possibility.

Expert Quotes on the 2024 Housing Market Forecast

December 27, 2023 by Manuel Lopez

If you’re thinking about buying or selling a home soon, you probably want to know what you can expect from the housing market in 2024. In 2023, higher mortgage rates, confusion over home price headlines, and a lack of homes for sale created some challenges for buyers and sellers looking to make a move. But what’s on the horizon for the new year?

The good news is, that many experts are optimistic we’ve turned a corner and are headed in a positive direction.

Mortgage Rates Expected To Ease

Recently, mortgage rates have started to come back down. This has offered hope to buyers dealing with affordability challenges. Mark Fleming, Chief Economist at First American, explains how they may continue to drop:

“Mortgage rates have already retreated from recent peaks near 8 percent and may fall further . . .”

Jessica Lautz, Deputy Chief Economist at the National Association of Realtors (NAR), says:

“For home buyers who are taking on a mortgage to purchase a home and have been wary of the autumn rise in mortgage rates, the market is turning more favorable, and there should be optimism entering 2024 for a better market.”

The Supply of Homes for Sale May Grow

As rates ease, activity in the housing market should pick up because more buyers and sellers who have been holding off will jump back into action. If more sellers list, the supply of homes for sale will grow – a trend we’ve already started to see this year. Lisa Sturtevant, Chief Economist at Bright MLS, says:

“Supply will loosen up in 2024. Even homeowners who have been characterized as being ‘locked in’ to low rates will increasingly find that changing family and financial circumstances will lead to more moves and more new listings over the course of the year, particularly as rates move closer to 6.5%.”

Home Price Growth Should Moderate

And mortgage rates pulling back isn’t the only positive sign for affordability. Home price growth is expected to moderate too, as inventory improves but is still low overall. As the Home Price Expectation Survey (HPES) from Fannie Mae, a survey of over 100 economists, investment strategists, and housing market analysts, says:

“On average, the panel anticipates home price growth to clock in at 5.9% in 2023, to be followed by slower growth in 2024 and 2025 of 2.4 percent and 2.7 percent, respectively.”

To wrap it up, experts project that 2024 will be a better year for the housing market. So, if you’re thinking about making a move next year, know that early signs show we’re turning a corner. As Mike Simonsen, President and Founder of Altos Research, puts it:

“We’re going into 2024 with slight home-price gains, somewhat easing inventory constraints, slightly increasing transaction volume . . . All in all, things are looking up for the U.S. housing market in 2024.”

Bottom Line

Experts are optimistic about what 2024 holds for the housing market. If you’re looking to buy or sell a home in the new year, the best way to ensure you’re up to date on the latest forecasts is to partner with a trusted real estate agent.

Why Today’s Housing Inventory Shows a Crash Isn’t on the Horizon

October 4, 2023 by Manuel Lopez

You might remember the housing crash in 2008, even if you didn’t own a home at the time. If you’re worried there’s going to be a repeat of what happened back then, there’s good news – the housing market now is different from 2008.

One important reason is there aren’t enough homes for sale. That means there’s an undersupply, not an oversupply like the last time. For the market to crash, there would have to be too many houses for sale, but the data doesn’t show that happening.

Housing supply comes from three main sources:

Homeowners deciding to sell their houses
Newly built homes
Distressed properties (foreclosures or short sales)

Here’s a closer look at today’s housing inventory to understand why this isn’t like 2008.

Homeowners Deciding To Sell Their Houses

Although the housing supply did grow compared to last year, it’s still low. The current month’s supply is below the norm. The graph below shows this more clearly. If you look at the latest data (shown in green), compared to 2008 (shown in red), there’s only about a third of that available inventory today.

So, what does this mean? There just aren’t enough homes available to make home values drop. To have a repeat of 2008, there’d need to be a lot more people selling their houses with very few buyers, and that’s not happening right now.

Newly Built Homes

People are also talking a lot about what’s going on with newly built houses these days, and that might make you wonder if homebuilders are overdoing it. The graph below shows the number of new houses built over the last 52 years:

The 14 years of underbuilding (shown in red) is a big part of the reason why inventory is so low today. Basically, builders haven’t been building enough homes for years now and that’s created a significant deficit in supply.

While the final blue bar on the graph shows that’s ramping up and is on pace to hit the long-term average again, it won’t suddenly create an oversupply. That’s because there’s too much of a gap to make up. Plus, builders are being intentional about not overbuilding homes like they did during the bubble.

Distressed Properties (Foreclosures and Short Sales)

The last place inventory can come from is distressed properties, including short sales and foreclosures. Back during the housing crisis, there was a flood of foreclosures due to lending standards that allowed many people to get a home loan they couldn’t truly afford.

Today, lending standards are much tighter, resulting in more qualified buyers and far fewer foreclosures. The graph below uses data from the Federal Reserve to show how things have changed since the housing crash:

This graph illustrates, that as lending standards got tighter and buyers were more qualified, the number of foreclosures started to go down. And in 2020 and 2021, the combination of a moratorium on foreclosures and the forbearance program helped prevent a repeat of the wave of foreclosures we saw back around 2008.

The forbearance program was a game changer, giving homeowners options for things like loan deferrals and modifications they didn’t have before. And data on the success of that program shows four out of every five homeowners coming out of forbearance are either paid in full or have worked out a repayment plan to avoid foreclosure. These are a few of the biggest reasons there won’t be a wave of foreclosures coming to the market.

What This Means for You

Inventory levels aren’t anywhere near where they’d need to be for prices to drop significantly and the housing market to crash. According to Bankrate, that isn’t going to change anytime soon, especially considering buyer demand is still strong:

“This ongoing lack of inventory explains why many buyers still have little choice but to bid up prices. And it also indicates that the supply-and-demand equation simply won’t allow a price crash in the near future.”

Bottom Line

The market doesn’t have enough available homes for a repeat of the 2008 housing crisis – and there’s nothing that suggests that will change anytime soon. That’s why housing inventory tells us there’s no crash on the horizon.