The West Side of the Metro Is the Place to Be

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The West Side of the Metro is becoming all that and a bag of chips:

Every growing city has what we call a "path of progress. "That is the area that is growing faster than the other sides. For decades, the path of progress has been the southeast section of the Phoenix metro beginning with southern Tempe, Ahwatukee, Chandler, and Gilbert. More recently, the area of growth has extended to Queen Creek and San Tan Village. The focus has changed.

With the completion of the southern 202 Loop that connects Ahwatukee to the I-10, followed by the 303 Loop connecting the I-10 to the I-17, the path of progress has changed for probably the next few decades. The west side's development has only just begun; it is the new shiny toy.

According to the Phoenix Business Journal's article called "Taking Flight" the development taking place at the Goodyear airport is key to all the expansion happening in the West. With the infrastructure in place, an airport that can ship manufactured goods, and is near tons of undeveloped land ready to be used. This is not the area to be if you don't like change.

The above chart is about the entire Phoenix Metro, not specifically the west side. I added it here because I wanted to show how the 1.7 months of current inventory is getting lower. That means there are more buyers than sellers and prices will be going up.

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Sellers are giving away an average of $9k to buyers. Don't think this trend will continue.

• Demand from normal buyers weakened in March, mostly due to higher interest rates. But these interest rates are lower again in early April, and the drop in demand has been overwhelmed by the sharp drop in supply.

• Casual observers tend to worry about factors which can cause weakness in demand, then forget to balance that with factors that can cause weakness in supply. Right now, supply is weakening much faster than demand, sointerest rate movements are no longer the key thing driving the market.Competition between buyers is starting to warm up because there are so few sellers. This should not surprise us.Supply is just as important as demand.

• In the above chart, you'll see that Sellers are still paying higher than "normal" concessions. This willingness will not last forever. This chart is a trailing indicator, meaning the data is always a month behind what is being negotiated today. As you can see, 46.6% of all sellers agreed to pay an average of $9,000 towards buyers costs. Most of that is most likely to help buy down the interest rate for the buyer.

If you would like chat about anything real estate, simply reply to this email or call/text me at 602-730-2143 for more details.

We're back to normal for the market cycle. Does that mean everything is normal, too?

• The balance between supply and demand has been moving consistently in sellers' favor since mid November. This confirms we are in the rebound phase of the correction that dominated the second half of last year and created an atmosphere of fear throughout the market.

• In Central Arizona this means loans written more than a year ago look very cheap compared with new loans. This deters homeowners from selling homes, unless they don't need them. They may not need a home if they have just inherited it from a relative who died, or if it is a second home or investment. But if they have a primary residence, selling that home means killing a very cheap mortgage and giving birth to one with a more expensive new rate. Most people do not want to do that.

• In 2022 we saw a flood of supply from investors, speculators, panicking Buyers and the like, but this wave has exhausted itself. We are back to a chronic shortage of homes to buy. We have less than 14,000 available, which is about 40% below normal. Demand is indeed weak, but it is only 18% below normal. Do the math.

If you are considering buying a new build, or a resale home, call/text me at 602-730-2143. I would love to be "Your Dedicated Home Advocate."

The Phoenix Metro is on FIRE, and I'm not just talking about getting closer to summer!!!!

Yep! The Contract Ratio is looking back to normal for the season.

• Sales volumes remain much lower than a year ago, largely because institutional investors and iBuyers are missing in action on the buying front. A year ago they were competing frantically, which they probably now regret.

• That fear can now be replaced with relief as one market signal after another turns positive and resumes a normal trend.

• New construction permits for single-family homes are currently low, so there will be limited new supply from builders for a while.

• Do not make the mistake of thinking the market is the same as it was in late 2022. We are in a new and very different phase.

• If you witnessed anyone saying the sky was falling and Phoenix is going to crash and burn over the past few months, feel free to forward this to the naysayers as a smack down. We're back and some spots are back in a "Frenzy" seller's market.

• If only anyone had been willing to take my bet from a few months ago, I could be talking some serious crap right here. Alas, no one who reads my newsletters was game. Maybe I should have taken to social media and looked for a gambler there.

If you would like to chat about down payment assistance, credit, home warranty options or if now is a good time to buy for your situation,

please either reply to this email or call/text me at 602-730-2143.

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Nancy Wittenberg