We are in the home stretch of the summer heat and cooler temps are finally right around the corner! And, the 110 day streak of 100+ degree days is finally over! This is one of my favorite times of the year as we can soon enjoy dinner on the patio, longer walks with our dogs, and seeing our gardens thrive.
Fall is also generally a semi-busy time of the year when it comes to real estate. Activity is much lower than the spring but there is often some revitalized demand for those that want to move before the holidays. And, many are back from summer trips (or just can't imagine moving during 110+ degree days). We're also seeing a preliminary drop in interest rates that has the potential to spark demand. Average rates have dropped from 7.79% to 6.2%. While this is a far cry from the low 3% of 2020, it is still a large improvement. We will continue to get further guidance from the Fed at their future meetings.
When looking at a market it is often best to focus on a single aspect. Real estate is incredibly local and even the city, zip code, or neighborhood can affect supply, demand, and thus prices. If we look specifically at single family homes in McCormick Ranch, we see continued appreciation and rising prices. Single family homes have hit their all time high of around $1.335M for the rolling 6 months. Buyers are willing to pay top dollar for fully renovated homes which is helping prices all around. There were two sales above $2,000,000 this past month, one of which closed at $2,960,000. Many areas of the Phoenix valley are seeing light demand but McCormick Ranch is the opposite.
Patio homes and townhomes have also seen increased prices over the prior 18 months. Townhomes are up just a few percent while patio homes have risen around 11.7% over the prior 18 months (7% on an annualized basis). Condos are essentially flat with a .8% drop.
As expected, we see a very similar view when it comes to price per square foot. Single family and townhomes have hit all time highs. They are up around 6% on an annualized basis since the start of 2023. Patio homes are just off of their highs but have also increased around 6% per year since January 2023. Condos price per square foot is up around 1% in the same time period.
McCormick Ranch started the month with 67 listings, 24 of which were single family. There were 23 sales last month, including 12 single family. So, there is still a decent amount of demand in our neighborhood. That leaves 2 months of inventory for single family homes which is a slight seller's market. That being said, this total number of sales is very tepid compared to prior years. Our 5 year average for August is 37 sales.
Looking forward, I'm still expecting our low number of sales to continue through the end of the year. We still need rates to drop further to release some supply and increase demand from buyers. All eyes will be on the Fed in the coming months to see how they respond to changes in our economy.
Yours in McCormick Ranch real estate,
Randy
The summer heat is in full swing and I hope you are able to enjoy the pool, escape town, or stay cool indoors! One of my favorite things about McCormick Ranch is our easy access to the Greenbelt. I run on the Greenbelt most mornings and still see lots of others staying active and getting your morning workout in even with the heat. It's great to see!
Traditionally, as we move through summer, the entire Phoenix-area real estate market slows down. Who wants to move in 115 degrees unless absolutely necessary? The slowness is compounded when you add in the effect of higher rates that we have had. However, McCormick Ranch was unusually slow for the month even when taking these into consideration. Only 25 houses changed hands in the last month. These were contracts written in May which tends to be the tail end of the busy season (the heat hadn't set in by then!). For reference, June 2023 had 49 sales so we are down almost 50%.
Interestingly enough, even with the lackluster sales numbers, inventory dropped for the month. We went from 87 available homes on June 1st to 76 on July 1st. This is between condos, townhomes, patio homes and single family homes. Sellers are becoming more stationary as many are locked into their low rates. This has been the first drop in inventory since the beginning of the year. We are continuing to buck the trend of a normal real estate market as inventory levels typically drop throughout the first half of the year and begin to rise in July.
Prices appeared to drop for the month. However, we did not have any true luxury properties sell during June. The most expensive listing sold was my listing at 9031 N 83rd Way for $1,355,000. We often see renovated listings sell in the $1.5-2.5 range so this will cause a small blip in prices. I'm expecting that this will be very short lived, though, as there are currently 3 homes under contract between $1.9-2.5M in McCormick Ranch.
Patio homes/townhomes and condos remained healthy and prices have stayed very stable.
We saw a very similar chart with the price per square foot. Single family homes dropped month over month to $502.94 due to the lack of renovated homes being sold. This is still 6.8% higher than a year ago. Condo price per square foot has dropped a hair in the past 6 months but is only .4% down from a year ago. When we combine patio homes and townhomes we are up around 5% in price per square foot from June 2023.
What's next for our market? It's still incredibly difficult to tell. There are still hopes and rumors that the Fed will begin to drop rates as recent data has shown inflation is leveling. This could set off extra buyer interest and heighten demand. If inventory levels continue to drop then we could also see a squeeze on buyers as it moves further into a seller's market. But, this can change in an instant if there are extra sellers who decide they need to move for any multitude of reasons. As always, time will tell!
Stay cool out there!
Randy Arriola, HomeSmart
June doesn't only mean the start of our summer. It also usually marks the beginning of a slow down in the number of sales and overall real estate activity throughout Phoenix. This does not mean that prices drop but sellers often put their moves on hold and buyers take a vacation instead of looking at homes for sale on an ongoing basis. That being said, May is generally one of the last busy months until the early Fall. This past May was no exception as we had a strong number of sales and prices remained high.
Single family prices have continually been the bright spot for McCormick Ranch. Their average price ticked back up over the prior month and once again approached their all time highs. There were two sales of single family homes over $2,000,000 (including a beautifully remodeled home that sold for $2,750,000) which helped buoy their price. Buyers are not afraid to pay for quality homes right now.
Townhomes and patios have remained relatively flat for the preceding 12 months. There is a lot of cross over between the two and a lot depends on how they are input in MLS. If we were to combine the categories we'd see a gain of just a few percent for the year. Condos have also ticked up slightly over the past 12 months.
Price per square foot is ticking up in all four styles of homes here in McCormick Ranch. The high sales price of those renovated single family homes caused a substantial bump to an all time high in price per square foot. The 6 month rolling average is now sitting at $513.65. This is a 7.5% increase over 12 months ago. Once again, this shows that buyers are not afraid to pay for quality homes that have been updated to modern standards.
Patio Homes and Townhomes have ticked up a hair to average around $404/square foot. Condos are also up a couple of percent to $353.29.
Days on Market has been relatively flat for the year for McCormick Ranch. Please keep in mind that these are for sold homes. There are often homes that sit on the market for a long time and are then canceled or expired. Thus, many homes are on the market but do not affect statistics like this.
From my view point, we are still seeing a tale of two kinds of houses. Anything remodeled and in turn key condition is more likely to sell quickly and for top dollar. Something that needs a full remodel will also sell quickly when priced appropriately. Investors here are constantly looking for projects. I'm seeing the middle ground be the most challenging. Homes that were updated a long time ago or have had bits and pieces done tend to sell slower than their remodeled counterparts.
Looking forward, I'm expecting things to remain relatively flat for the remainder of the year. Inventory has stayed stable over the prior 4 months. We have seen between 81 and 87 homes listed for sale in McCormick Ranch since March. While higher interest rates have slowed down demand for many buyers it has not completely killed our market.
The Fed and inflation policy will be a major factor in what happens in the near and long term. We are still seeing mixed reports with some metrics improving and some metrics not. The Fed has been extremely cautious thus far and so these rates may be here to stay for longer than expected.
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Yours in McCormick Ranch real estate,
Randy Arriola
