Scottsdale Real Estate Market Update 2023

Market Summary for the Beginning of November 2023

Here are the basics – the ARMLS numbers for October 1, 2023 compared with October 1, 2022 for all areas & types:

• Active Listings (excluding UCB & CCBS): 15,247 versus 20,582 last year – down 26% – but up 14% from 13,404 last month
• Under Contract Listings (including Pending, CCBS & UCB): 6,028 versus 6,578 last year – down 8.4% – and down 7.2% from 6,499 last month
• Monthly Sales: 5,177 versus 5,420 last year – down 4.5% – and down 5.4% from 5,472 last month
• Monthly Average Sales Price per Sq. Ft.: $295.19 versus $276.73 last year – up 6.7% – and up 3.4% from $285.40 last month
• Monthly Median Sales Price: $435,000 versus $436,000 last year – down 0.2% – but up 0.7% from $432,000 last month

Mortgage rates rose yet further during October, peaking at an average of 8.03% on October 19 and remaining around 7.9% until the end of the month. This had a chilling effect on demand and the pending listing count dropped below 4,000, an unusually low level for the time of year. Monthly sales were also weak at 5,177, even lower than the poor level of a year ago.

New listings have been arriving at more normal levels over the past 3 months, leading to a rise in active listings, though we are still well below the levels we experienced 12 months ago. Rising supply and falling demand have led to a significant change in the state of the market and the seller’s market is quickly becoming more balanced, with a few areas becoming favorable to buyers instead. This has not been reflected in the average closed price per sq. ft. which shot up by 3.4% over the last month and is now 6.7% higher than a year ago. However the median sales price is much less impressive, still slightly below last year’s level and up only 0.7% for the month.

An absence of pain can sometimes be experienced as pleasure, like when you stop banging your head against a wall. This principle applies to the Federal Reserve who decided NOT to raise the Federal Funds Rate at the start of November. The mortgage market had a huge party in response. The average 30-year fixed rate dropped from 7.88% on October 31 to 7.38% just 3 days later. The lower rates may possibly result in a recovery of demand during November, but the change was too late be reflected in any of the numbers above.

Demand remains surprisingly robust in the new home market, which has benefited from the weak supply in the re-sale market. New home pricing has increased much faster than re-sale pricing as a result. Offering mortgage rate buy-downs has been an important factor is maintaining this demand.

We now have to watch the demand numbers to see if buyers respond to rates under 7.5%.