3/9 Downshift
TSMC Secures $5B Grant, Mortgage Rates Dip Below 7%, The Market Continues Its Steady Decline
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Read 2 weeks ago newsletter here → "3/2 No Landing"
Ray Dalio wants Taylor Swift for President. NASA is recruiting astronauts in what may be the most competitive job ever (next to being a real estate agent obviously). Jake Paul is set to box Mike Tyson. Law enforcement seized cocaine-infused roller blades that were shipped from Columbia to Wisconsin. Bitcoin is booming. Biden promoted weed in his State of the Union address. And Facebook / Instagram went down for a brief moment this past week (serenity).
tl;dr
The Phoenix market is slowly down in what is usually our busy season.
The average mortgage rate is 6.85%
TSMC was granted $5b from the government.
Phoenix
With many existing home owners comfortably staying put these days, more attention is placed on first-time home buyers, affordability, and supply of homes. The first thing that comes to mind is the choice between renting and buying. According to RealData the median cost of a 3 bedroom apartment at a 50+ unit complex in Q2 2023 was $2,100 per month in Maricopa County. The median size is roughly 1,250 square feet. The past 30 days of sales show the median sale price of a 1,200-1,500 square foot, 3+ bedroom single family starter home to be $370k in Greater Phoenix.
Unless you like under a rock- It’s an election year. Every four years there is an expectation that the drama, uncertainty, and manipulation that comes with presidential campaigns will dramatically affect the housing market, specifically prices or mortgage rates. Spoiler Alert: It doesn’t. The main influence on the housing market comes from policies, not the elections themselves. For instance, the stimulus packages and policies that were passed during the 2020 COVID-19 election year and continued into the next administration were the first stones to cause a ripple effect of fortunate and unfortunate events in the housing market over the past 4 years.
The affidavits of value have been counted and analyzed for Maricopa County's February filings and her is what we found:
There were 5,933 closed transactions, up a tiny fraction from 5,910 in February 2023 and up 25% from January.
There were 1,345 closed new homes, up 11% from 1,208 in February 2023 and up 23% from January.
There were 4,588 closed re-sale transactions, down 2.4% from 4,702 in February 2023 but up 25% from January.
The overall median sales price in February was $467,234, up 6.2% from February 2023 and up 2.7% from January.
The re-sale median sales price was $450,000, up 7.1% from February 2023 and up 2.5% from January.
The new home median sales price was $516,215, up 0.3% from February 2023 and up 3.3% from January.
Despite the slim majority moving in favor of buyers, the average change is still positive at 0.8%, but this is down from 1.6% last week. Mesa is single-handedly responsible for the positive average of 0.85, because without mesa the average would be -0.3%. Tempe, Avondale, Chandler and Queen Creek are the only other cities with a substantial move higher over the past month.
The Cromford Market Index is a gauge of Phoenix’s Supply and demand metrics. 100 is considered a balanced market. Anything higher than the 100-point benchmark is considered a seller’s market. Anything below 100 is considered a buyer’s market.
As of February March 8th, 2024, the CMI has decreased to 116.3. Down 6 basis points from 7 days ago.
Supply has increased by 9 basis points and demand has increased by 5 basis points.
Rates
7-Day rate change: -23 basis points
YoY change: -2 basis points
Average interest rate: 6.85%
Big chips
Taiwan Semiconductor Manufacturing Corp is expected to win up to $5b in grants from the U.S. government for building a chip at their fabrication facility in East Phoenix. In May 2020, TSMC announced plans to invest $12b in a semiconductor manufacturing facility in Phoenix, Arizona, aiming to bolster its production capacity in the United States.
The Chips Act, with $39b in direct grants and $75b in financing options, aims to incentivize chipmakers to establish production facilities in the US. And unless you haven’t watched a minute of Jim Cramer and chipmaking stocks, Nvidia, Intel, TSMC, and AMD have been on a tear lately.
Amid the highest geopolitical tension between the USA and China over Taiwan, Phoenix is lucky enough to have a chip plant that puts a massive target on our back. I wouldn’t want it any other way.
Meme, tweet, & fact of the week
US stocks rallied to fresh all-time highs thanks to hopes over easing inflation
If you own Nvidia stock, what color Lambo are you buying?
Meme, tweet, & fact of the week
The 50-star American flag was designed by an Ohio high school student for a class project. His teacher originally gave him a B–.