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January Market Update & More About Peoria

If you’ve been looking for to buy a home or are considering it now then you know that last year, traditional buyers took a back seat to an influx of cash investors and speculators who outbid them. Then, mortgage rates increased and suppressed their power even more. As of November, traditional buyers have once again returned to 71% market share under $500K, and investors have retreated under 20%.

This is great news, especially for first-time home buyers, as prices have come down significantly for starter homes. The median sales price for a 1,400-1,600sqft single family home has declined from $435K in May to $370K so far in January; a decline of $65,000, or 15%. At today’s mortgage rate of 6%, that’s a savings of at least $352 per month in payment. To sweeten the pot, both FHA and conventional loan limits increased for 2023. FHA increased from $441,600 to $530,150, and many lenders began honoring the 2023 loan limit before 2022 ended. Many first-time home buyers take advantage of FHA financing as they have softer requirements for approval and their rates are typically lower than conventional loans.
Some buyers believe that prices will continue to drop dramatically in 2023 and continue to wait. However, after a brief 4-week Buyer Market from November to December, the ratios of supply to demand are showing Greater Phoenix moving back into a Balanced Market. This means less downward pressure on price going forward and, if inflation and mortgage rates continue to decline, the worst may be behind us.

If you’re considering selling then what is happening right now is a shift out of the shortest Buyer Market ever recorded by the Cromford Report. The shift is a direct result of the fewest number of listings added to supply in the 4th quarter of the year going back to 2000. Fewer listings mean fewer competitors for sellers. Demand is still very low, but when it’s met with low supply there is less downward pressure on price.

In November, every region in Greater Phoenix was in a Buyer Market except for the Northeast Valley. By mid-January, Phoenix, Glendale, Mesa, Tempe, Avondale, Gilbert, and Chandler had all come out of Buyer Markets and into Balance, except for Chandler which leapt into a Seller Market. Not far behind are Peoria and Surprise. The only large cities left in strong Buyer Markets are Goodyear, Queen Creek (including San Tan Valley), Maricopa, and Buckeye. This does not mean that sellers can expect 2021 and 2022 scenarios to come back. Price drops, negotiations, concessions, and rate buydowns will continue to be the key to keeping buyers in the game this quarter. Currently, 51% of all January sales have involved some form of concession from the seller, with a median cost of $9,854; in line with the cost of a temporary rate buydown.

While Avondale is in a Balanced market, 85392 over the last 30 days showed 14 out of 15 sales with concessions and a median of $12,000 to buyers. In addition to concessions, final sale prices are showing sellers getting an average of 96.7% of their last list price. This is not unusual for a Balanced Market. The luxury market over $1.5M sees fewer concessions, but more price negotiation. January sales so far show sellers closing at an average of 94.5% of their last list price in this segment. Under $500K, sellers are closing at 97.4% of list price. All in all, the majority of sellers are coming out ahead at closing. 65% of active resale listings have been owned for at least 2 years. The long-term appreciation rates for homes in Greater Phoenix are as follows using January sales to date: 25% for 2yrs., 50% for 3yrs., 63% for 4yrs., 70% for 5yrs., and 86%+ for 6yrs or more.

Whether you’re buying or selling in Arizona, The Garcia Group is here for you. Give us a call, to see what we can do for you and answer any of your questions that you may have about the market!

Commentary written by Tina Tamboer, Senior Housing Analyst with The Cromford Report ©2023 Cromford Associates LLC and Tamboer Consulting LLC

Looking to relocate to the Phoenix Valley or to a different side of the valley?
Consider Peoria, Arizona!

Peoria was established in 1886, just 30 minutes northwest of Phoenix, when William J Murphy, head of construction on the Arizona Canal, saw the agricultural potential and brought back 4 families to live and work the land. They named the settlement after their hometown of Peoria, Illinois.

Peoria is home to Lake Pleasant Regional Park, which is a 23,000 acre park with 2 marinas that you can boat, fish, water ski, kayak, scuba dive, and also camp at. Lake Pleasant is the second largest lake in Arizona. The city has over 570 acres of parks throughout its city and communities. More than 60 miles of these parks allow you to explore while hiking, biking, or even horse riding.

Spending time in nature isn’t the only way to pass the time. Peoria offers Spring Training baseball, 2 community theaters, an art museum, and there’s events and festivals happening all year round. The P83 Entertainment District includes a variety of restaurants, shopping and other entertainment venues.

The population of Peoria, based on the 2020 census, is about 191,000 people in about 180.5 square miles. It was also ranked number 2 in the best places to live in Arizona in 2022 and the number 1 in the city to work, live and play in Arizona in 2021. The Value statement of Peoria’s city government is: “The city of Peoria follows an unwavering adherence to the principles of respecting diversity and insuring inclusive practices. Through the leadership of our interdepartmental Diversity Committee, we work to assure that the Peoria community, as well as all city of Peoria governmental departments, is welcoming, and respectful to everyone.”

If you’re looking to live in the desert and still have close access to all things H2O then Peoria is the place for you! Call us today, and we’ll help you find your perfect home in Peoria, AZ.

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