By Realtor Brian Doherty, JD, LLM, ABR, PPS
Apart from day-to-day transactional activity in the real estate world, the biggest story of the year was the shakeout resulting from numerous class-action lawsuits filed against the National Association of Realtors (NAR), certain multiple listing services (MLS), and national real estate brokerage firms. In 2023, many national real estate brokerage firms settled with plaintiffs rather than proceeding to trial. Those that did not settle received significant jury verdicts in favor of the plaintiffs. While other cases — and appeals — will continue in 2024, the outcome of this litigation is already clear. The practice of buying and selling homes will change forever as the verdict in Burnett v. National Association of Realtors et al. has triggered a shakeup in the business of residential real estate. More specifically, new rules have emerged on how homes are listed for sale and how brokerage fees are paid — and who pays them. The year 2024 will see these changes solidify as real estate industry professionals adjust accordingly.
Another big story in 2023 was the persistence of higher rates on loans to homebuyers. Think “mortgage interest rates,” but a lender’s security for a home loan in Arizona is typically a deed of trust — not a mortgage. Nevertheless, there is an interest cost to the borrower, and rates on a 30-year fixed loan secured by real estate were above 6.5% for most of 2023, hitting a high of 7.79% during the week of October 26. Those rates have started to tick down weekly. As I write this article in mid-December, the 30-year rate is now below 7% at 6.95%. Projections are that 2024 will see continuing rate declines, with many financial gurus predicting rates in the low 6s. While many Paradise Valley real estate transactions involve cash buyers, interest rates on loans to buy a home impact all residential real estate prices and market activity. With lower borrowing costs available, more buyers can enter the market, spurring activity in all price sectors. More homes get listed for sale, and more closed transactions result. Overall market activity is expected to be robust in 2024.
How robust? Only time will tell. While Mark Twain is said to have remarked that there are three types of lies: white lies, damn lies, and statistics, it’s important to monitor the numbers to understand what’s happening in residential real estate. The Cromford Report is the most reliable source of real estate data in Maricopa County. My firm, RE/MAX Fine Properties, subscribes to the report, and I can share some of its most recent information. December 2023 data from The Cromford Report suggests that there are now eight Maricopa County residential real estate markets that are, statistically speaking, “buyers’ markets.” Yes, Paradise Valley is one of them, as its Cromford Market Index (CMI) is now 99.6. (Cromford considers 100 to be a “balanced market.”)
Perhaps even more telling about what 2024 will feature is that, up to mid-December of this year, 50% of the closings featured some form of buyer’s concession, such as a repair, a contribution to an interest rate buy-down, or a monetary credit to the buyer. A seller’s offer to sweeten the deal for a buyer is a strong indicator of a trend favoring buyers. But area Realtors are aware that “Snowbird Season” is almost upon us. Historically, the influx of winter residents brings additional buyers competing for homes.
However you interpret these matters, one thing is clear: If you are contemplating a purchase or sale of property in 2024, you must have a competent real estate professional on your side representing your interests! Before you make a mistake in your planning, reach out to me!
Brian Doherty, JD, LLM, ABR, PPS, is an Associate Broker with the office of RE/MAX Fine Properties in Scottsdale. He specializes in the purchase and sale of Arizona’s finest luxury homes, with particular emphasis on the communities of Scottsdale, Carefree, Cave Creek, and Paradise Valley. In addition to a legal background, he has earned specialized real estate designations as an Accredited Buyer’s Representative (ABR) and a Professional Property Stager (PPS). He has more than 25 years of experience with Arizona residential real estate.
