Summer Real Estate Market Insights
As summer arrives, the Valley becomes quieter with less traffic, easier dinner reservations, and fewer drive-thru lines as many residents escape the heat. This seasonal shift slows down our housing market, which is influenced by weather and holidays.
Current Market Overview
Our 2024 home buying and selling season has been slower than expected. Sales and prices haven't met projections. Mike Orr of the Cromford Report says, “sellers are nervous, and buyers are unenthusiastic.”
Mortgage Rates and Market Impact
Mortgage rates have jumped from 2.65% in January 2021 to nearly 8% in late 2023. This has created "Rate Locked Homeowners," making sellers reluctant to move and buyers hesitant due to high rates.
Maricopa County Data
In May, the inventory of unsold homes rose to 12,691, a 21.8% increase from last year but still below pre-pandemic levels. If mortgage rates drop, demand will outpace supply, further tightening the market. Currently, Arizona has 2.4 months of inventory, compared to a historical six-month supply.
Market Dynamics
- New Listings: No surge of sellers or distressed properties, with a 9% increase in sellers from last year. Quality homes, priced correctly, continue to go under contract quickly, thanks to a cash-rich market.
- Days on Market: Homes spend an average of 65 days on the market, a 16.7% decrease from last year.
- Prices: Median home prices grew 7.9% over the previous year, with price reductions becoming more common as demand softens.
- Future Projections: We anticipate ending the year with 20% more homes than we had at the close of 2023. While high mortgage rates have driven inventory up, they have also slowed property value rises, suggesting that a drop in interest rates could restore affordability.
Future Projections
We expect 20% more homes by year-end compared to 2023. High mortgage rates have increased inventory but slowed property value growth. A drop in interest rates could restore affordability.
Expert Insight
Jessica Lautz of the National Association of Realtors says "One thing that seems to be pretty solid is that home prices are going to continue to go up, and the reason is that we don't have housing inventory."
Buying Advice
Home prices aren’t expected to surge but will likely continue to rise. Mortgage rates might decrease modestly by September. Entering the market sooner could be beneficial due to less competition and potential home appreciation, with the possibility to refinance later at better terms.
Source: ARMLS Market Reports 07/2024 + Housing Market Forecast: What's Ahead For The 2nd Half of 2024.
