None of us has a crystal ball… but we do have valuable people and resources to help us draw some general conclusions: where the market is and why, as well as where it may be headed in 2023. So… tell me what YOU have heard out there? Most respond with a sort of “national weather forecast” which we know does not exist. What is being communicated in global, national and even state-wide media must be drilled down to relevant levels. When we are able to show you what matters specifically to you and the home you are buying or selling, there has to be some frank conversation.
Looking back at 2020-2021 may be a poor means of comparison to 2022. Several factors obviously were to blame for these two years of “transition”. It was frenetic; great for sellers and listing agents, but very challenging for buyers. For those of us who were fortunate enough to have properties listed for sale during this time, we were in disbelief. It was stressful. Didn’t feel right. By necessity we adopted new ways of doing business, making sure we were always representing our clients in the best ways possible despite the craziness. If our buyers wanted a property, they had to do things that made us – their trusted advisors – uncomfortable. This is just the way it was. And if our sellers were faced with 27 offers in the first afternoon, we had to really coach them carefully. It was easy to get greedy and end up with nothing. Many agents longed for a “normal” market.
2020-2021 Market Conditions
• COVID-19
• Historically low interest rates
• High demand
• Low inventory
• Multiple offers above list price
• Waivers of inspections, appraisals, financing contingencies
So here we are at the end of 2022, about to embrace a new year following a dramatic market shift. For the early months, 2022 felt like it was going strong… like we couldn’t see a change in sight. We were still closing transactions that smacked of 2021, but our momentum was slowing. Sellers wanted to reap those 2021 & Q1 2022 prices and were afraid they would “miss the market”. Buyers were getting fatigued. Interest rate hikes started to make an impact on many price points. Transactions were canceling because buyers were simply not willing to go to the measures they had before, fearful they would pay too much and the market would tank. Sellers continued to hold out for spring prices, wondering where they would go if they did sell. We began to see price reductions – something we had not seen in a very long time. Everyone was concerned with inflation, elections, investment markets, and overall economic stability. In many ways the real estate market needed to slow down because the pace was unsustainable.
The last half of this year has been moving at a very different cadence. We are happy to see more options for our buyers, especially in the luxury sector. We are also happy to share with our sellers that they really are not “losing” money. They may not make as much as they would have last year, but they have equity which is a very different dynamic from the housing bubble back in the day. Our proprietary Cromford Market Index has always been a reliable mathematical indicator of supply & demand, with an index of 100 at perfect balance. It’s a good time to buy, it’s a good time to sell, and the balance has brought back slower more cautious decision making and longer market times. A slow, transitional healthy market is always what we want in the long term.
2023 Market?
• Similar to our last 9 months
• Elections are over (all markets dislike uncertainty)
• Interest rates will continue to be a factor and will impact supply (domino effect)
• Supply will remain stable
• Sellers may continue to have the same 2020-2022 mindset
• Pricing will remain stable
• Demand needs to improve, bringing up low closing numbers
• Demand will continue to be driven by changes in living circumstances (relocation, death, divorce, debt, family dynamics)
Overall we are not anticipating any remarkable changes. Arizona will continue to attract new industry and subsequent job growth. People will continue to move here for the quality of living, lower taxes and spectacular weather. As we bring beautiful new properties to market just in time for our 2023 tourist season, we are excited to regain momentum and keep the market moving. We welcome the opportunity to prepare real estate reviews with you to assess where you are and where you want to go.
Happy New Year,
Sally Cashman
