Greater Phoenix Residential Market
December 3, 2022
October 2022 Single-Family Resale Results for Greater Phoenix
Unless otherwise mentioned, the following results are for single-family resale homes in Greater Phoenix. The information used in this report was compiled from data provided by the Arizona Regional Multiple Listing Services, Inc.
The overall median purchase price (MPP) for a single-family resale home in Greater Phoenix moved downward in October to $494,200, equating to a one month drop of 1.1% or $5,700. In comparison, the MPP is up 7.4% or $34,220 from a year ago in October 2021 when it was $460,000. Chart One shows the MPP for the last thirteen months.
Over the last five years, home values in Greater Phoenix have greatly appreciated. What’s the cause? It was a very low supply of inventory and a very high demand to own. The high demand to own was fueled by extremely low mortgage rates and extremely high population migration to Greater Phoenix.
The overall (MMP) peaked in May 2022. From May 2017 ($269,000) to May 2022 ($540,000), there has been a 100% increase in the overall (MMP) of a single-family resale home in Greater Phoenix! We have seen 100% appreciation before in a five-year period. It was back in May 2011 ($124,750) to May 2016 ($252,500)! The former rule of thumb used to be that homes would appreciate approximately 7% per year. If we applied annually a 7% increase for a home purchased at $269,000 in May 2017 it would be worth $377,286 in May 2022. This is $162,714 less than what it was this last May.
Table One compares the MPP for thirty-one cities month-over-month (MOM) and year-over-year (YOY). It also compares agent days on market (ADOM) year-over-year. The thirty-one cities are in either Maricopa or Pinal Counties. MOM, the MPP went down in twenty cities, up in eleven cities. YOY, the MPP was up in twenty-nine of the cities and had no change in two cities, which were Queen Creek Sun City. ADOM, YOY were up in thirty of the thirty-one cities. In fifteen cities ADOM doubled. The only city in which ADOM went down YOY was Paradise Valley.
Last month, in October there were 3,468 sales of single-family resale homes in Greater Phoenix. October’s sales were 651 or 16% lower MOM and 2,364 or 41% lower YOY. Rapid increase in mortgage rates is the primary reason for the large decreased sales YOY.
Sales are not the only number down MOM and YOY. The number of single-family resale homes listed in the month of October 2022 was 5,181. This is the lowest number of listings for a month this year! Crazy as it seems, while less sellers listed their home in October compared to any other month this year, the aggregate number of listings is up approximately 90% YOY.
Median monthly rent (MMR) for a single-family resale home dropped for the second consecutive month. Rent in October this year was $2,250. This is lower by $40 or 1.7% contrasted from September of this year. MMR, YOY was $45 less or 2% lower than October of last year.
The number of Notices of Trustee Sales or Foreclosure notices is averaging about 1,000 per month in Greater Phoenix. This is a very low number. This is a number we should watch.
How Homes are Being Purchased
YOY, there has been a small but noticeable change in how homes are being purchased. The following is how homes were purchased in October 2022: cash buyers = 21%, conventional loans = 59%, FHA loan = 12% and VA loan = 8%. Both cash and conventional loan purchases are down 3% YOY. While FHA purchases are up 5% and VA purchases up 2% YOY. The number of sales with a seller concession in October 2022 was 44%. Contrast this to October 2021, when only 14% of sales had one. In October 2022, there were seller concessions in 79% of FHA loans, 66% of VA loans 47% of conventional loans, and 11% of cash purchases. In October 2022, 907 sales had a seller concession of $5,000 or more. See Table Two.
The following information is from the most recent Arizona Commerce Authority (ACA) Report.
Month-over-month, the Arizona seasonally adjusted (SA) unemployment rate increased to 3.7% in September 2022 from 3.5% in August 2022. The U.S. SA unemployment rate decreased to 3.5% in September 2022 from 3.7% in August 2022. Arizona non-farm employment increased by 25,200 jobs. The largest gains were recorded in Government (14,500 jobs) and Education & Health Services (4,900 jobs). Job losses were recorded in Information (-1,000 jobs), Leisure & Hospitality (-1,000 jobs) and Trade, Transportation, & Utilities (-100 jobs).
Year-Over-Year, Arizona nonfarm employment increased by 106,700 jobs (3.6%). Arizona private sector employment increased by 102,500 jobs (4.0%), while government employment increased by 4,200 jobs (1.0%). All eleven of eleven major sectors recorded job gains. The largest gains were recorded in Education & Health Services (26,500 jobs), Trade, Transportation, & Utilities (18,300 jobs), and Leisure & Hospitality (16,600 jobs). All seven Arizona metro areas (MSAs) gained jobs. The largest percentage gains were recorded in Flagstaff MSA (5.1%) and Yuma MSA (4.8%)
The Shifting Market
What’s actually shifting in the market?
- Price appreciation has generally reversed.
- The 30-year fixed mortgage has more than doubled. According to Freddie Mac in October 2022, the 30-year fixed mortgage averaged 6.9%. Contrast this to 3.07% in October 2021 and 2.83% in October 2020.
- Purchases with a seller concession are triple what they were last year at this time.
- Purchases with FHA and VA loans have increased. In October 2022, there were five sales over $1,000,000 in which the buyer used a VA loan to purchase.
- Overall, inventory is almost double of what it was last year, giving buyers more choices this year. Yet, in the month of October, compared to any other month this year, there were the least number of sellers listing their homes for sale. Is this a coming trend?
Some trends have not shifted though… we still have the continuing great numbers of people migrating to cities in Arizona in addition to the influx of all the snow birds getting ready to visit and the attraction of our ever-increasing job market.
So, get ready, get out and work and then opportunity will visit you!
Chart One: The Wilcox Report™ Overall Median Purchase Price
Table One: The Wilcox Report™ Median Purchase Price for Thirty-One Cities in AZ
Table Two: The Wilcox Report™ Percentage of Sales with a Seller Concession and Sales with Seller Concession of $5,000 or more