Mesa home prices

This 6,149-square-foot house on East Grandview Street in Mesa, which also includes a 799-square-foot guest house, recently sold for just over $2 million. Built in 1986, the two-story, six-bedroom, 6 ½-bath house boasts a wrought-iron staircase, upgraded kitchen and fireplaces in the family room and master bedroom, among other amenities. (Special to the Tribune)


The average sale price of a single-family house in Mesa has increased 55% in two years and while home prices likely will continue to rise, mortgage rates and an apparent cooling in demand may spell trouble ahead for sellers, a leading Valley housing analyst said last week.

Mesa was not alone in seeing such a staggering increase in average sale prices among 17 Valley cities that the Cromford Report routinely monitors: 12 of the 17 cities saw the average sale price jump by at least 60% between the 17th week of 2020 and the 17th week of 2022. The average sale price of a Mesa home in that period rose from $353,810 to $547,196, according to the report.

Valley-wide, the Cromford Report reported that over the past six weeks, “active listing counts are rising very strongly” –  up more than 32% in a month – and called it “one of the most dramatic shifts in direction we have ever seen.”

“If this trend continues for several months the market dynamics will change significantly,” it said.

Cromford Report also called out media reports of a continuing surge in rent, saying the most recent data from the Phoenix metro housing market shows rents are starting to fall slightly, available rental units are increasing and nervous landlords are starting to offer deals to attract tenants.

Over the last few weeks, the Cromford Report has been identifying data that prompted it to state on April 22: “Almost everybody is saying rents are going up. Not in Phoenix, they’re not. With rents going down and mortgage rates and home purchase prices going up, the argument for buying over renting is starting to look significantly weaker.”

In the housing market, Cromford Report said rising mortgage interest rates and rising prices are discouraging potential new buyers from entering the market, citing a 6% decline in listings under contract in April.

“Closed sales are also down more than 9% from April 2021,” it said. “Demand is weak and getting weaker.

“The overall effect is a major cooling event, turning a hot housing market into one that still favors sellers (for now) but is looking increasingly dangerous with each passing day. It only favors sellers because the supply is still very low compared with a normal market. But if supply continues to increase, as looks very likely at this point, we could quickly find ourselves with as many sellers as buyers.

“The market does not turn on a dime, but it can certainly change dramatically over a handful of months, as it did between August and November 2005,” it added, suggesting “we are now entering a very different phase of the market cycle.”

But discouraged buyers won’t see prices falling any time soon, it added, noting that the per-square-foot price average jumped 4.1% in April.

“But this reflects the huge imbalance between supply and demand that existed two months ago,” it said. “That imbalance is much smaller today and is shrinking noticeably with every passing day. We are entering a much more uncertain period and great caution is advisable. 

“The mid-range market between April 2021 and April 2022 has been largely driven by enthusiastic investors. If their enthusiasm dissipates and turns to fear we could see far more rapid change than we have become used to.”

Cromford Report noted late last month that inventory of for-sale homes is rising while the number of closings is trending downward.

“April is supposed to be one of the best months for the market, but new contract signings are significantly lower than last year. This means active listings are staying active longer and inventory is starting to build in most (but not all) segments,” it stated. 

“At the moment the number of homes for sale remains very far below normal, but we have seen before how it can increase sharply if more sellers emerge just as demand is declining.”

Stating that the sellers market is slowly deteriorating in 17 major Valley municipalities, the Cromford Report said that between mid-March and mid-April, Cromford Report noted, “We have seen a 34% increase in the number of new rental listings added to ARMLS (Arizona Regional Multiple Listing Service) compared with the same four weeks in 2021.

It added there has also been a 20% increase in the number of rental homes available in the Valley over the past four weeks.

Cromford Report is not saying rents are heading back to pre-pandemic levels – a scenario no housing expert anywhere is saying is on the horizon.

But what it means, it said, is “renters of single-family detached homes are seeing far more choice than they did last year and we are starting to see homes advertised with ‘the first month’s rent is free.’ Rental supply is particularly strong in Gilbert.

“This appears to be a significant turnaround in the rental market and it does not seem to have been recognized by the media outlets, who are mostly still referring to rising rents. That is so 2021.”

Meanwhile, for those trying to buy or sell a house, the data is mixed but leaving no one much to necessarily cheer about, according to the data supplied by the Cromford Report and various other sources.

The Cromford Report has developed an index for 17 Valley cities that measures how far each is tilted toward either sellers or buyers, with 100 indicating a balanced market. While indices in all 17 submarkets were pointed downward last week, the lowest threshold was 210 in Buckeye whole the highest was 537 in Avondale. Mesa was at 411. That means all the markets are still weighted heavily toward sellers.

In a report April 30, it looks at monthly average sale prices in the 17 Valley submarkets it monitors for the 17th week of 2020 and compared it to that of this year. The average percentage different between the old average price and the current one was at least 50% in all but three of the 17 communities: Tempe, 48%; Sun City, 46% and Fountain Hills, 34%. 

But don’t feel sorry for Fountain Hills: it posted the fourth highest average sales price in the Valley with $922,843 – behind only the three communities with seven-figure average home sale prices: Paradise Valley, $4.35 million; Scottsdale, $1.46 million; and Cave Creek, $1.15 million.

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