Stability is the name of the game right now. March started the number with 81 active listings. April followed it up with 81 active listings. What did we have on May 1st? 81 active listings.
Inventory has been wavering a bit day to day but we are seeing a pretty stable market right now. Let's start by looking at the number of sales.
Much like the rest of the Phoenix market, McCormick Ranch is having an unusually low number of sales. From January through April, we are around 25% lower than 2023 and 40% lower than 2022 sales. Yet, the limited number of homes on the market has kept prices stable. Sellers are still not motivated to leave their low interest rates unless they have an incredibly good reason to do so.
Prices show a little bit of a dip but my feeling is that this due to our smaller sample size. The most expensive home that sole in McCormick Ranch in April closed at $1,650,000. We often see sales in the $1.7-$2.2 range so the data was slightly skewed. Looking at what is currently under contract, we should see this rise the next month. As of now, there are 5 homes under contract with list prices above $1,750,000.
Condos, patio homes, and townhomes were all flat to rising a hair as is usual this time of year.
Price per square foot did drop for single family, townhome, and condo. But, the trend overall has been upward over the past 12 months. Single family and condo price per square foot are up 6% over the prior year. Townhome and patio home are more subdued at just 1.5% higher.
So what now? Over the past month we have had a slew of economic data released. On Wednesday, April 10th, the inflation report showed that inflation was annualized at 3.5% instead of 3.4%. This, among other data, has been enough to raise average 30 year rates from 6.82% from 7.22% per Freddie Mac. Yet, Jerome Powell, head of the Federal Reserve just stated that they are not expecting to raise rates further, giving the bond market (and thus interest rates) a sigh of relief.
We are still in a gray area. Inflation is sticking around longer than anticipated. The question is now how long will rates stay high? Many economists went from expecting up to 7 Fed rate reductions for the year, then to 3, and now to possibly just 1.
This means that demand will still likely be tempered and the number of new listings will also remain low. We are also nearing the end of our busy season that runs from mid-January through June. I'm expecting a fairly flat market for the remainder of the year barring some major economic shift in either direction.
Yours in McCormick Ranch Real Estate,
Randy Arriola
The spring tends to be busiest part of the year throughout Phoenix, Scottsdale, and McCormick Ranch. February through June usually see a frenzy of buyer activity, limited amounts of listings, and the overall number of homes for sale decrease. In a normal year, prices will increase each month before leveling off for the remainder of the year.
While it is still early in the year, we are seeing signs that 2024 may buck the trend as inventory numbers are increasing. In fact, this is the first year since 2019 (excluding 2020 due to Covid) that the number of listings in McCormick Ranch have any meaningful increase between January and April. We saw a 44% increase in the number of listings. That being said, inventory is still relatively low compared to prior years. We had 81 listings to begin the month. April of 2019 had 128.
What's causing inventory to remain high? Lackluster buyer demand simply due to rates. Between 2016 and 2023 we average 138 sales in the first quarter of the year. Q1 2024 saw just 85 sales. The supply is there right now but buyers are sitting on the fence unless the home is perfect (or priced to allow for upgrades). If we see rates drop this could cause a huge influx of buyers.
Prices have been pretty stable over the past few months. We've seen some dips and some increases but the past year has ended up being relatively flat. This suggests that the homes that are selling are those that are in prime condition. Buyers are not afraid to pay for quality renovations. If a home is in original condition it has to be priced accordingly (and there is a large sliding scale, of course). Both single family and condos are sitting right near their all time highs. If we merge patio homes and townhomes due to their overlap they would also be sitting near their highs.
We see a slightly different trend with price per square foot. Single family and condos are both trending upward. This is another sign for single family that buyers are willing to pay top dollar for quality homes. Condos are rising likely due to the affordability and cost to still live in central Scottsdale and McCormick Ranch.
As we move through the remainder of the spring, I still feel as if we will be rate driven. The Fed is still being extra cautious. We hear conflicting reports from members of the Fed on almost a weekly basis. One committee member is ready to reduce while others want to keep rates the same. Some metrics come out showing inflation is soft while others show it still has the potential to stay high. Time will tell!
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Yours in McCormick Ranch Real Estate,
Randy Arriola
Updated: Apr 5, 2024
While it is still very early, we are seeing signs that 2024 may buck the trend as inventory numbers are increasing. In fact, this is the first year over the past 7 that the number of listings in McCormick Ranch increased between February and March. We saw a 35% increase in the number of listings. That being said, inventory is still relatively low compared to prior years. We had 81 listings to begin the month. March of 2019 had 125.
Number of Listings in McCormick Ranch | |||
February | March | % Change | |
2018 | 99 | 93 | -6.1% |
2019 | 137 | 125 | -8.8% |
2020 | 53 | 45 | -15.1% |
2021 | 24 | 24 | 0.0% |
2022 | 12 | 11 | -8.3% |
2023 | 84 | 78 | -7.1% |
2024 | 60 | 81 | 35.0% |
Prices of single family homes, patio homes, and townhomes saw a slight drop over the prior month. This is actually the first time that we saw a drop between February and March since 2018. Condos had a slight uptick between February and March but have been relatively flat over the prior 12 months.
Price per square has mirrored sales price pretty well, as you'd expect. We saw a slightly drop between February and March for all categories except condos. Single Family Homes are still up over the prior 12 months on a price per square foot basis.
Lastly, Days on Market actually decreased as well. When inventory goes up, you'd normally expect Days on Market to increase. However, these are for homes that have sold, not ones sitting on the market. My opinion is this: homes that are priced correctly are still flying and often selling in the very first weekend. Every home has a realistic price band for its current condition, be it 100% original from 1979 or fully remodeled from 2024. It's a matter of hitting this range from the start to maximize the sales price.
It will be interesting to see what transpires over the next few months and the remainder of the year. Real estate can change quickly and it is entirely possible buyers are just having a slower start to the year. Or, this could be the start of a softer year. As always, time will tell!
Yours in McCormick Ranch Real Estate,
Randy