The residential real estate market was the worst in 2023 since the Great Recession in 2009. It’s a good year to put behind the industry and prepare for a better 2024 with lowering interest rates and increasing population, according to Phoenix REALTORS®.
Looking back over the year, new listings dropped 25.3% from the same 11-month period for 2022. A new report from Phoenix REALTORS citing the latest home sale data indicates that pending sales are down 14.1%, and days on the market jumped from an average of 37 through November 2022 to 65 in the same 11 months of 2023.
“There weren’t many bright spots in 2023,” said Butch Leiber, outgoing President of Phoenix REALTORS® Board of Directors and managing broker for a local real estate company. “Interest rates dropped 1% in the last two months, and year-to-date median sales prices have been steady this year compared to last. However, the price per square foot is up 6% over last year.”
The combination of lower interest rates and steady median prices kept the Greater Phoenix housing affordability index at the same level this year compared to last year’s year-to-date data.
New construction is boosting the housing inventory as homebuilders brought 38.7% more new homes to market than in 2022. This was offset by a 23.5% decline in previously owned homes offered for sale. December is not expected to save the year, either.
“Nobody wants to buy or sell during the holiday season,” said Leiber. “If we had seen that 1% drop two months ago, you would have seen a flurry of buyers back on the market. I believe that if we continue this trend, which many economists say we will, it will bring buyers back to the market first.”
The inventory is still tight, looking at year-to-date data, but the supply is holding steady when checking month over month for the past couple of months. Year-over-year pending sales are down 14%, but in 2022, they were down almost 25% from 2021.
Leiber says that more competition comes with buyers returning to the market. He believes they’ll come back in force if and when interest rates drop in the first quarter.
Additionally, homes are sitting on the market longer this year than last, with 58 days in 2023 year-to-date data compared to 32 days in 2022.
“Motivated home buyers and home builders are offering greater concessions this year than typically seen,” Leiber said. “Usually, there’s an average of $4,500 in concessions on a home, but this year, we’re seeing concessions worth $10,000 and more, including interest buydowns. That saves a buyer hundreds of dollars a month.”
The median sales price is steady for 2023 year-to-date. While the median jumped almost 16% in 2022 over 2021, it’s down under 5% for 2023 compared to 2022. The percent of list price received is steady at a hair under asking price, 98.1 %. Last year, it was slightly over the asking price, 100.6%.
Leiber said that the words on the street are that with interest rates dropping and the population climbing, 2024 could be a terrific year compared with this year. He believes a lot of pent-up demand and sellers holding property will come onto the market and boost sales in the first quarter.
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