Chandler, AZ Real Estate Market Update

Are you more of a football, golf, baseball spring training, or horse show kind of person?

We have the busiest tourism period, from Jan to Feb, then we've ever had before. Watch out for crazy drivers!

Chandler's real estate market and it's water supply:

I hate to say I told you so, oh wait. I LOVE being right. (You'll know when this happens as I typically do a happy dance with a goofy smile on my face!)

If you were looking to buy "steal" in Chandler, or in most of the Valley, your time has passed.We have already moved into a Seller's Market, as you can see from this chart. In fact, we are currently about the same level as we were at this time in 2017 and 2019. Do you remember what appreciation was back then? From Feb 2016 to 2017, overall appreciation by sf was 4.6%. From Feb 2018 to 2019, it was 5.9%. If the volume of sellers and buyers remain at this level, we should expect to have that same success this year. Our "norm" is about 4-6% appreciation within a year.If you own a home valued at $600k and appreciation is 5%, that will be an increase of $30k in a single year. Well worth it!

Let's shift gears and talk about water supply.

We've all been hearing about the drought we've been in for the past 27 - 29 years. In fact, 20 of the last 29 years have had less water coming to us than we need.This mega-drought is the worst it has been in the past 1200 years.

What does the mega-drought mean to those who live in Chandler?

• Chandler, and most of the other cities around the Valley, get water from 3 sources: the CO River (which comes from rain and snow from Wyoming, Utah, and Colorado); Lake Powell and Lake Mead (both in trouble); and Lakes Roosevelt, Apache, and Verde (at about 70% of capacity as of a month ago and are expected to gain water with all the rain and snow we had lately).

• They capture 90% of all rainwater and use it to recharge the underground aquifers.

• Starting in the 1990s, Chandler built the first reclaimed water system in the area. There are 2 water systems. The first is for human consumption and the cleanest. The second is for reclaimed water, filtered yet not at a human consumption level. They also have 2 treatment plants that take reclaimed water and send it to businesses (such as Intel), for irrigation, and also to recharge the aquifers.With these systems in place, the city reuses 100% of the water that goes down the drain.

• Chandler has 35 wells that pump water from the aquifer, which is used during peak times, such as during summer. They have been claiming 100% of their water rights for decades and have a "surplus" of 450k acre feet of water they can pull from, if needed.

• The current volume of water used per person per day is 111 gallons, which is down from the 144 gallons used about 40 years ago. The water conservation that has been accomplished by households, businesses, and agriculture over the years has helped tremendously, though we will need to do more if the mega-drought continues in the decades to come.

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Though we won't know for months in the future when the "best" time to buy was, I'm solidly optimistic, as long as the interest rate stays in the 6%s or under.

• All looked fine on February 2 when the 30 year fixed rate averaged 5.99%. This was the day AFTER the Federal Reserve increased its benchmark rate by 0.25%.However the average 30 year rate has now jumped up to 6.45% in just 3 days.The FHA 30 year rate has increased from 5.36% to 5.90% over the same period.

• If these rates stick around it will probably apply the brakes to the recovery in demand we experienced in January. Keep watch for my next email update in 2 weeks. My tummy is tingling from this roller coaster.

• It seems a bit silly these days to refer to Opendoor and OfferPad as iBuyers. They are still "i" but they are doing very little buying.During January 2023 in Maricopa County they purchased 42 homes, and all but 2 were bought by Opendoor. (Diabolical laugh here.)

• Both are actively selling to try to reduce the very large inventory that built up from May 2022. Cromford Report's rough calculations indicate that Opendoor has whittled theirs down from a peak of 2,500 in August to around 1,500 now. This represents 6 to 7 months of supply at their current sales rate, so probably twice as many homes as they would ideally want. OfferPad hit a maximum slightly under 500 in August and is now down to less than 240. This represents only 3 months of inventory if they keep up the monthly sales rate they achieved in January. At 82 sales January was their busiest selling month since May 2022.

• As you can see from above, 2 of the 3 strongest Seller's Markets have slowed down a little bit from the increase in interest rates. Chandler made a huge leap up, which is pretty timely for my newsletter. (Yeah, it is all about me.LOL)

• No one can predict the future, though I can predict that pessimists will expect the market to tank and optimists will be excited about the appreciation we have the next few years. Which paradigm do you value more?

If you would like chat about anything real estate, simply reply to this email or call/text me at 602-730-2143 for more details.

This will be a quick summary statement in the future. In theory.

Let's talk MORE about Real Estate! (One of my favorite subjects.)

• Clearly buyers now have a lot more enthusiasm than they did in December.This is bringing down the counts of active listings (excluding UCB and CCBS). This is very unusual for January, a month in which we expect to see lots of new listings.

• Indeed new listings are up from a weekly rate of less than 700 in late December to over 2,000 a week at the end of January.Despite the huge increase in new listings, overall supply is falling because so many are going under contract. We also have fewer new listings than we did last year when we saw over 2,250 per week.

• An interest rate of around 6% would have been considered horrendous this time last year, but now it seems quite reasonable compared with rates over 7% that we witnessed in October and early November.

• Volumes are still well below normal, but they are recovering nicely and promise better times when the Spring buying season gets fully underway.

• The last 10 months have seen the most rapid market cycle in history. but it is becoming clear that the worst is now several months behind us.

• As you can see here in the chart above, the current emotional reaction to the market has changed from "despair" in December to "skepticism" in January and "relief" in February. We look forward to "hope" building during March.

• Going back to the mega-drought topic, every city has their own way of handling their unique situation and not all local cities have access to underground aquifers. (For example, Motorola used to put nasty chemicals in the ground, which created a huge underground superfund aquifer. Can't use the water from there!)

• If you have heard anything about the Rio Verde Foothills water issues? The City of Scottsdale was literally trucking in their water supply for years and decided to stop. About 500 homes are on their own to try to figure out how to transport water from somewhere. AARRRGGGGHHH!!!!

• Rural areas, such as New River, don't have the Valley's water rights controlled by a governing entity. People are pulling out more water than is being replenished and they might be the next ones to have to start trucking in water to cover their needs.

If you would like to chat about down payment assistance, credit, home warranty options or ifnow is a good time to buy for your situation, please either reply to this email or call/text me at 602-730-2143.

Follow me on Tiktok, Instagram, and Facebook at "NancywRealtor" for all sorts of real estate content and some weird randomness thrown in for fun.

In fact, I've started doing different series specifically tailored to for Buyers, Sellers, and Renters, we'll cover topics such as negotiation techniques, home improvement, credit scores, escrow hurdles, market updates, recent news articles, and so much more.

Nancy Whittenberg