Ron & Kristina   Wilczek

Ron & Kristina Wilczek

Broker/REALTORĀ®

License #: BR518431000

Metro Phoenix Homes

Mobile:
602-300-0374
Email Me
Ron & Kristina   Wilczek

Ron & Kristina Wilczek

Broker/REALTORĀ®

License #: BR518431000

Metro Phoenix Homes

Mobile:
602-300-0374
Email Me

March 2023 Home Prices Rise for 3rd Straight Month

Monthly Phoenix Real Estate Market Update

“Home Prices Rise for 3rd Straight Month” would not have merited a headline over the last few years. However, it’s worthy of a mention after 6-months of consecutive price declines to end 2022. You may remember our January Update reporting it was the first time since 2009 that the average Price per-Square Foot (PPSF) finished the year lower than it started.

Statistics are provided directly from the Arizona Regional Multiple Listing Service (commonly known as the “MLS”) for this installment of our Monthly Phoenix Real Estate Market Update through the end of March 2023. We are proficient at market statistics. Trust us to help you buy or sell a home. Call or text us at 602-300-0374 to get your questions answered.

image to depict Monthly Phoenix Real Estate Market Update

Price Per-Square Foot (PPSF)

Rising interest rates caused havoc in 2022. Buyers pulled out of the market, and PPSF decreased from $303.46 in May 2022 (all-time high) to $264.70 in December — a total decline of $38.76. Many people were talking about another housing crash.

Now to the headline of this article. Home sales have produced 3-months of PPSF increases.  Prices rose $2.99 in January, $2.65 in February, and $7.47 in March for a combined recapture of $13.11 in gains. PPSF sits at $277.81 at the end of March. At this point there is no clear motivations for the increases. A few possible reasons are:

  1.  Spring is always when the housing market begins to heat up
  2.  the initial shock of rising interest rates has worn off, and buyers have made their mental adjustments. Remember: you marry the home and not the mortgage! There is hope for a great refi season in the years ahead when interest rates begin to subside
  3.  the annual cost of renting is hovering at all-time highs

The housing market could probably stand on it’s own two feet if it were left alone. But recession fears and looming interest rate hikes could turn prices downward yet again.  There are people on both sides of this fence. However, worsening geo-political events and rising government debt cloud the future. Our opinion is the housing market is more likely to find an area of stabilization — and be done with annual, double digit percentage jumps– rather than crash.

It’s notable that April 2022 marked the 1st time our housing market exceeded $300 per-square foot, but it’s unlikely we’ll see a return to the $300 level anytime in 2023.  Click this link to see the complete rise and fall of home prices in the Phoenix Area.

Important note: property values are based on local neighborhoods, so don’t apply this overall average to your specific area/home! Reach out to us at 602-300-0374 if you’d like a personal home valuation (not a computer generated algorithm).

Interest Rates

The Federal Reserve hiked rates:

  • .25% in March 2022
  • .50% in May (which was the largest since 2000)
  • .75% on June 15th (the largest increase since 1994)
  • .75% on July 27th
  • .75% on September 21st
  • .75% on November 2nd
  • .50% on December 14th
  • .25% on February 7th,  2023
  • .25% on March 22nd, 2023

That’s 4.75% points in about 12-months. The Federal Reserve is currently discussing additional hikes to climb over 5% in the next 6-months.

Mortgage interest rates in 2021 averaged 2.96% within a range of 2.67-3.18%. Mortgage interest rates in 2022 averaged 5.17% within a range of 3.11-6.95% (Source: St. Louis Federal Reserve). U.S. Government overspending  was the root cause. The Federal Reserve has been increasing rates to get inflation under control. Unfortunate news for the housing industry. It may take another 12-months before we see any significant reduction in mortgage rates.

Higher interest rates have made homes less affordable putting us in a strong buyer’s market over a short period of time. Rate increases are going to further affect sellers who are already reducing their prices.  Today’s buyers have been offering less than listing price and negotiating for a better deal (see below for “Highest & Best Offers vs Price Reductions”).

Sellers have had a good run and, just as with the stock market, there are corrections taking place. Many buyers are now locking interest rates near 6.5% (without rate buy-downs).  Buyers needing a home right now should act fast to secure a home while supply is high and sellers are more willing to negotiate. Refinancing at a lower interest rate when the economy gets back under control is a viable option.

Home Sales

January is historically the lowest sales volume month of the year. Home sales in spring are stronger and gain momentum through June. This year is no exception with sales of 4,347 in January, 5,687 in February, and 7,565 in March.  However, combined sales in the 1st quarter of 2023 are 30.3% less than the same period in 2022 and 31.7% less than in 2021. Home sales are clearly down, but will they pick up again as buyers adjust to the higher costs of a mortgage?

Rising interest rates have discouraged some buyers and knocked others completely out of the market. Sales have steadily decreased since the first of 9 Federal Reserve rate increases from March 2022 to March 2023. Sales are down -31,846 from the same 12-month period previous to the rate hikes. This link will provide a historical perspective on Area Home Sales.

Month Sales Before Rate Hikes   Sales After Rate Hikes
March ’22 10,149 March ’23 7,565
February ’22 8,001 February ’23 5,687
January ’22 7,111 January ’23 4,347
December ’21 9,301 December ’22 5,138
November ’21 8,959 November ’22 4,915
October ’21 8,773 October ’22 5,407
September ’21 9,388 September ’22 6,456
August ’21 9,062 August ’22 6,309
July ’21 9,140 July ’22 6,172
June ’21 10,215 June ’22 8,115
May ’21 9,695 May ’22 8,747
April ’21 10,182 April ’22 9,272
TOTAL 109,976   78,130

May and June typically have the highest number of homes sales each year. We clearly have no chance of matching the sales volume of previous years. However, there is still a demand for homes across the Valley! Three homes we recently listed for our clients were under contract within 1 week despite the downturn in the market. All received offers near their asking prices or slightly higher. That’s because they all presented well, were marketed correctly, and were priced properly for this market.

Increasing Listings

Listings were woefully low before the rate hikes. Not so much anymore. Active listings in the MLS have dramatically increased over the last 12-months. There have been 119,643 more “on-market” listings in the months of April 2022 – April 2023 than over the same previous 12-months.  Listings are currently 2.5 times higher than before the rate hikes and down from 4 times higher in November.  The increased number of listings coincides with the drop in sales. Higher listings are also attributed to many people thinking they need to sell now to guard against prices dropping further. Buyers have so many more choices than they did over the past few years.

Month Pre-rate hikes Month Post Rate Hikes
April ’22 5,187 April ’23 13,581
March ’22 4,345 March ’23 14,938
February ’22 4,716 February ’23 15,690
January ’22 5,644 January ’23 16,261
December ’21 6,825 December ’22 19,155
November ’21 7,462 November ’22 20,340
October ’21 7,649 October ’22 20,121
September ’21 7,072 September ’22 19,023
August ’21 5,803 August ’22 17,957
July ’21 5,803 July ’22 14,648
June ’21 4,701 June ’22 10,411
May ’21 4,646 May ’22 6,477
April ’21 4,293 April ’22 5,187
TOTAL 74,146   193,789

We track active housing inventory and compare it against a 3-year monthly average. Get a more detailed look here: Homes on the MLS. Note how listings have been steadily declining in the Metro Area until this year:

  • 9,503 average monthly listings over the three year period of 2020-2022
  • 10, 762 average monthly listings over the three year period of 2019-2021
  • 14,409 average monthly listings over the three year period of 2018-2020

Highest & Best Offers vs Price Reductions

61.7 % of all homes selling in March 2023 closed in the $300,000 to $600,000 price range. This range is the most common price range in our area. The average sale was -$8,207 LESS than the list price, a disparity that has been lessening throughout 2023 after peaking at -$11,683 in December. July 2022 – March 2023 are the first months in a long time when sellers received less than their asking prices.

Month ($300-$600K price range)  Over/Under Asking Price
March ’23 ($8,207)  
Feruary ’23 ($9,015)  
January ’23 ($11,025)  
December ($11,683)  
November ($10,125)  
October ($9,461)  
September ($8,280)  
August ($8,049)  
July ($2,926)  
June $2,334  
May $8,176  
April $9,548  
March $7,645  
February $4,359  
January ($1,091)  

FYI:

  • Sellers across ALL price ranges in March received -$14,643 less than their asking prices. February received -$15,516 less and  January -$18,727 less
  • In recent history the highest “over-list” sales prices in the $300K – $600K range occurred in July 2021 at +$13,530 and June 2021 at +$12,003.

Inventory Turns

Our monthly Phoenix Real Estate Market Update reports most cities have increased their inventory turns from 2-4 times per-month to under 2-months. Marketing time is decreasing. The average time to complete a sale in March was 76 days – down from 78 in February. Even so, that time is more than double the 27 days in April 2022.  The quickest sales this month will come from sellers who understand the market and no longer attempt to sell at the top.

Distressed Sales

Distressed sales (foreclosures and short sales) are still at historic lows. There were only 12 bank sales and 2 short sales in March 2023. They accounted for a mere 00.19% of total sales.

For another perspective, there were only 155 distressed sales in all of 2022. That’s just 00.18% of the 85,832 annual sales. Most of them were outside the main metro area. Over the last three years distressed sales have accounted for under 1% of all sales. It would take a substantial increase in distressed properties to have any effect on home prices.

Bookmark this page and return every month for the latest updates. We are committed to providing excellent and professional service to all our clients and customers. We promise a home buying/selling experience that will exceed your expectations.

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logo for excellent service by Phoenix area realtorsCount on us to provide factual and unbiased reporting with our Monthly Phoenix Real Estate Market Update. Call or text Kristina and I (Ron) at 602-300-0374 for any of your real estate needs. We have over 400 sales, 100 excellent reviews, a combined 35 years experience, and Kristina has 30+ years as an interior designer.

About The Author

Ron Wilczek has been a Real Estate Agent since 1999 and the broker/owner of Metro Phoenix Homes since 2009. He has represented 400+ clients in resale, new home construction, investment homes, and multi-family investments. Clients include first-time home buyers through large investors. He has been a blogger since 2008 concentrating on the Phoenix Housing Market with his "Facts, no Fiction" style.

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License #: BR518431000

Education: *Bachelor of Business Administration from the University of Phoenix *23 years Corporate Management * USAF Veteran *30 Years Interior Design

Area Covered: Metro Phoenix Area