April update written directly from the Cromford Report.
Just as we thought that the market would continue to weaken for sellers, mortgage rates dropped, causing an increase in buyer activity and strengthening the the market for sellers.
Median sales prices have increased to $267,000, which is up 4.7% from April of 2018.
The marketing is still going strong and seems that it will stay that way for a while!
As always …. we are a call/text/email away from helping you ?
Buyers got a break last month as 30-year mortgage rates dropped significantly from an aver- age of 4.41% to 4.08%, which is the lowest they have been since January 2018. On a $267,000 home (the median sales price in Greater Phoenix) the drop equated to nearly $50 per month in savings on principle and interest, which was enough to get many buyers off the couch and looking for homes. This rate drop combined with an increased conventional loan limit up to $484K and a 32% increase in weekly seller price reductions meant that price ranges between $200K all the way up to $800K saw a combined 19% increase in contracts written over the last 5 weeks. Contract activity is expected to increase at this time of year anyway due to seasonality, but last year over the same 5 weeks it only increased 8.6%. For buyers who are still waiting for prices to begin declining, their wait just got longer.
The drop in mortgage rates could not have come at a better time for sellers. Up until 6 weeks ago the negotiating advantage sellers have been enjoying for years in Greater Phoenix had weakened to the point where the market was on track to enter balance within a matter of months and price appreciation would have begun to slow even more. However by April 4th the average 30-year mortgage rate (as reported by Freddie Mac) had dropped to a 15-month low. This spurred buyer activity and resulted in Listings Under Contract, which were 10.2% below 2018 last month, to sharply increase and surpass 2018’s April count by 0.8%. Currently sales volume is down 9.6% from last April, however when these contracts close escrow over the next 4-6 weeks May and June should fare much better. Don’t get too excited though, the seller market is still much weaker than last year. Affordability and demand were helped by this interest rate drop but could quickly be negated as prices continue to rise. Sellers still need to be mindful of their asking price to get under contract before buyer activity seasonally begins to decline between May and the end of the year.
Commentary written by Tina Tamboer, Senior Housing Analyst with The Cromford Report
©2019 Cromford Associates LLC and Tamboer Consulting LLC
(if you would like a copy of the below Market Analysis, please email me and I would be happy to send it over to you)