Here are the latest numbers and trends in our Arizona market.

It is true, Maricopa and Pinal counties have officially dropped below 60% on the affordability scale, but what does that mean?

We like to see affordability at 60% or above for a healthy real estate market. We are now at 56.4%, which is nearly identical to the national average. This means the typical family making the median income can only afford 56% of the homes for sale right now. This is below where we want it, but it’s not too far below.

“We’re trending towards a weaker seller’s market.”

Many of our zip codes and cities have trended down in terms of pricing and demand. The sale prices haven’t come down, but we are starting to shift away from the nutty market we’ve been seeing. Last month, we saw as many as 25 offers on a home, but now we’re seeing maybe four or five.

The very first shift we should see is with the number of price reductions. For the last 18 months, we have seen none at all, but now we are seeing some reductions. It’s not like we’re falling off a cliff; 56% of home sales are above the listing price, so we’re trending towards a weaker seller’s market.

We do need to see more inventory, which has been creeping up in recent weeks. According to The Cromford Report, on the demand side, we have 110%, which is 10% over a balanced market, but on the supply side, we are at 31%, which is 69% below normal. We’re still very short on supply, and though we have had more recently, it’s still a big shortage.

We have seen over the last 18 months anywhere between 3% to 5% appreciation for property values. That is not normal, not sustainable. We’re expecting that to shift down to a more balanced point of about 0.5%.