McCormick Ranch Real Estate: January 2024
The start of the year is a great time to have a look back and see what prior predictions came true or false. And, we have another excuse to bring out the crystal ball and (using data, of course), try and figure out what the next year will bring.
Last year, I expected a busier first half and flat second half. Rates rose in the latter part of the year and we had exactly that throughout the greater Phoenix metropolitan area. McCormick Ranch saw a bit of a boost, especially when looking at price per square foot. Keep in mind that this is a rolling 6 month average to smooth the data out, as a month by month basis would be extremely chopping for our small market. McCormick Ranch Single family homes have seen a huge increase over the past 24 months, more so than the rest of the Phoenix metropolitan market. Phoenix as a whole had an approximate 9.7% increase in price per square foot between January 2022 and now. As you can see below, McCormick Ranch was a staggering 24.3%. That is an amazing difference!
What's the cause? Desirability of Scottsdale is obviously one. In my opinion, a large factor is also that our HOA does NOT allow AirBNBs or short term rentals. We are still centrally located and close to major activities yet away from the party scene.
\When looking at pure home prices, we can see a similar 20.5% in the prior two years (or around 9.8% annualized). This also beats the regular Phoenix market. On the flip side, condos, patio homes, and townhomes were just slightly up. I generally mix patio home and townhomes as there is a lot of crossover in our MLS. They converge often and meeting in the middle is more representative of how they trend. Both of these were just up a handful of percent over the prior years.
Looking at Days on Market shows a different perspective. DOM has risen dramatically, which usually would show a decrease in prices. However, buyers are more knowledgeable and pickier than ever. There are more tools to know if a home is overpriced. Thus, well price homes are selling quickly and overpriced homes tend to sit before multiple price reductions.
So now, onto the crystal ball. We saw rates rise substantially over the prior 18 months. The Fed gave the first hint that they may start to decrease rates in December. Mortgage rates quickly responded and dropped by around 1%.
We also have a lot of build up of buyer demand and seller supply. Buyers put their decision on hold to see what was going to happen. Similar, sellers did not want to sell. Who want want to trade a 3% rate for an 8% rate unless it was 100% required due to work or life situations? This created gridlock and a lull in the market.
I'm expecting more inventory to come up this year from sellers who finally decide to move, especially if rates continue to trend downward. But, increase buyer activity should offset this. As such, I'm expecting a busy spring season with higher numbers than 2023 but still nothing like 2021. We are likely in more of a transitional season that should see a marginal increase in prices through May or June. But, this is still rate dependent. Time will tell!
Yours in McCormick Ranch Real Estate,
Randy Arriola
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