Arizona Real Estate and Community News

Aug. 7, 2020

Aug 20202 Market Update

 

Market Summary for the Beginning of August 2020

Here are the basics - the ARMLS numbers for August 1, 2020 compared with August 1, 2019 for all areas & types:

  • Active Listings (excluding UCB & CCBS): 8,477 versus 13,746 last year - down 38.3% - and down 3.5% from 8,788 last month
  • Active Listings (including UCB & CCBS): 13,259 versus 17,920 last year - down 26.0% - and down 7.1% compared with 14,279 last month
  • Pending Listings: 7,550 versus 6,479 last year - up 16.5% - but down 5.5% from 7,993 last month
  • Under Contract Listings (including Pending, CCBS & UCB): 12,332 versus 10,653 last year - up 15.8% - but down 8.1% from 13,424 last month
  • Monthly Sales: 10,536 versus 9,340 last year - up 12.8% - and up 8.5% from 9,714 last month
  • Monthly Average Sales Price per Sq. Ft.: $191.02 versus $169.72 last year - up 12.6% - and up 4.5% from $179.82 last month
  • Monthly Median Sales Price: $315,000 versus $280,000 last year - up 12.5% - and up 3.3% from $305,000 last month

The housing market is extremely strong and has been hitting a number of new records in the last few days. See the Daily Observations for more details on these.

We can see that supply remains very low indeed, but has only declined 3.5% over the past month, a much weaker trend than last month. This is because we are seeing far more new listings than we got during the first half of the year. This increase in new listings appears to be setting in for the long run, which is a little bit of good news for buyers.

July 2020 was a very active month for closings, up almost 13% compared with July 2019. All those closings have caused the number of listings under contract to decline 8% since last month, but the total remains very high for early August and it is up nearly 16% compared with August 2019. We can conclude that demand has not only recovered from the COVID-19 pandemic, but has reached heights that make it very strong by any historical standard.

We should all know that when supply is low and demand is high, prices will rise. They certainly did that with a vengeance during July. The monthly average price per sq. ft. rose 4.5% during just 31 days, something we would think quite normal if it were an annual increase. This happened during a summer month, making it even more remarkable, because summer months are usually rather weak for pricing, even in strong markets.

The same thing show up in the median sales price - up 3.3% in a single month, and up 12.5% for the last 12 months.

Appreciation rates are now well into double figures, something which we have not seen for 6 years.

Despite the rise in new listings, the environment is extremely unfavorable for buyers. Not only do they have to contend with prices rising at an unusually high rate, when they do find a house on which they would like to make an offer, they will probably find dozens of other buyers with exactly the same idea in mind.

We do not see things improving for buyers during August, and most sellers can get away with being pretty much as unreasonable as they wish to be. Frustration, tension and stress are the order of the day.

The market will not stay like this forever, but there is no immediate sign of a change in direction. We will consider the chances of a sea-change this time next month.

For Buyers:
Greater Phoenix has a population of approximately 4.8 million people and 1.4 million single family homes, condos and town-homes in total inventory.  As of July 8th, only 8,579 of these units were available for sale through the Arizona Regional MLS.  If that number doesn’t cause you to gasp, then this might: only 1,023 are single family homes under $300,000 and that number is diminishing every day. The last month has seen a surge of buyer activity, but it was not met with an equivalent surge of new listings.  New listings overall compared to last year were down 7.8% while contracts in escrow soared 24% higher.  For buyers under $300K however, new listings were down 22% in June compared to last year and are down 38% so far in July.  This is causing an extreme amount of buyer competition in this price range.  When buyers expand to over $300K, then new home construction starts supplementing inventory and providing some much needed alternatives.  The top 3 cities for single family home permits are Phoenix, Mesa and Buckeye with notable spikes in building permits issued in Surprise, Maricopa and Queen Creek.  Most new homes are selling between $300K-$500K, but buyers looking for a brand new single family home under $300K still have some options. Their best bet is in Pinal County or Buckeye with average sizes between 1,800-2,000 square feet for their budget. Conversely, new listings over $500K saw a spike last month, up 20% over last year.  1,596 new listing came on the market and 2,046 contracts were accepted in this price range in June.

For Sellers:
Brace yourselves.  Half of the sellers who accepted contracts under $400K in the first week of July were on the market for just 8 days or less with their agent prior to contract acceptance.  Sellers who took contracts between $400K-$600K had a median of 14 days on the market with their agent and those who landed contracts between $600K-$1M had a median of 41 days.  It’s a good time to be a seller.  While 28% of all sales in July so far have closed over asking price, that percentage peaks at 41% for those between $200K-$300K. Top cities for closings over asking price are Tolleson, Avondale, Glendale, Gilbert and Youngtown.  Gilbert is the only city in that list with a median sale price over $300K.  Seller-assisted closing costs remain popular and were involved in 23% of all sales in the first week of July. That percentage increases to 33% on transactions closed between $150K-$300K.  Top areas where 50%-60% of sales involved seller accepted closing cost assistance were Youngtown, West Phoenix, Aguila, Glendale, and Tolleson. This supports the theory that sellers receiving offers over asking price in the West Valley and other affordable areas are still open to accepting closing cost assistance if a contract meets their most important needs.

Posted in Market Updates
July 4, 2020

July 2020 Market Update

 

 

Market Summary for the Beginning of July 2020

Here are the basics - the ARMLS numbers for July 1, 2020 compared with July 1, 2019 for all areas & types:

  • Active Listings (excluding UCB & CCBS): 8,788 versus 15,422 last year - down 43.2% - and down 26.5% from 11,917 last month
  • Active Listings (including UCB & CCBS): 14,279 versus 20,030 last year - down 28.7% - and down 16.8% compared with 17,171 last month
  • Pending Listings: 7,933 versus 6,642 last year - up 19.4% - and up 9.8% from 7,224 last month
  • Under Contract Listings (including Pending, CCBS & UCB): 13,424 versus 11,230 last year - up 19.5% - and up 7.6% from 12,478 last month
  • Monthly Sales: 9,702 versus 9,476 last year - up 2.4% - and up 37.8% from 7,040 last month
  • Monthly Average Sales Price per Sq. Ft.: $182.71 versus $172.17 last year - up 5.8% - and up 1.6% from $179.82 last month
  • Monthly Median Sales Price: $305,000 versus $279,000 last year - up 9.3% - and up 4.1% from $293,000 last month

The numbers above represent some of the largest percentage movements we have ever seen during a single month. The market remains a long way from normal, so we should probably expect further dramatic changes over the next few months.

Supply is crashing - down 26.5% (excluding UCB and CCBS listings) in a single month - and this is the most important factor in the state of the market. Without an improvement in supply, life will become ever more difficult for buyers while sellers will be dealing with many competing offers even if demand were to decline substantially. For sellers this is a nice problem to have, but for buyers the level of competition from other buyers presents a massive obstacle to them achieving their goals. This extends to the iBuyers who have seen their acquisition numbers collapse since the first quarter. Their market share has dropped substantially as a result.

Demand has recovered from the pandemic-induced slump of April and May and is now benefitting from the catch-up effect, replacing the sales that were deferred during the second quarter. At price points below $600,000, the market is constrained by the shortage of homes for sale.

Price measurements took a hit during April and May due to a few panic sales and the small number of high-end homes closed, but they are recovering at a fast pace now. The median sales price is juiced up by the lack of homes selling under $275,000 and the monthly median rose over 4% during the single month of June. We expect this to continue as a strong upward trend while homes under $400,000 remain in very short supply. The average $/SF is a more stable measurement but this rose 1.8% during June, as the top end of the market started to function properly again. Based on the number of luxury homes that are under contract, the average $/SF for July is expected to be substantially higher this time next month. Both list price and under contract price $/SF are now in an upward trend.

The Cromford® Supply Index has dropped from 52.9 to 44.1 over the last month. The normal reading is 100 and 41.3 represents the record low touched in April 2005. It is looking likely that we will crash through that record low during July. The Cromford® Demand Index has recovered from 83.7 to 102.5, a remarkable surge, taking us from well below normal to slightly stronger than normal (100). At the moment both the CSI and CDI numbers are diverging so the Cromford® Market Index can only go higher still. It stood at 232.7 on July 1 and the record high is 313, set in the spring of 2005. This is the first time that record has looked in danger since 2005.

Frenzy Is Back - 23% of Sales Close Over Asking Price
Luxury Rebound - Contracts Over $500K Up 159%

For Buyers:
Greater Phoenix is officially back to a frenzy market with more properties under contract than available for sale.  Over the past 4 weeks the number of contracts accepted weekly has jumped another 20% since last month’s report, bringing the total recovery since April 5th to 68% and 2.5% higher than it was in late February; before the stock market crashed and the stay home orders were imposed due to COVID-19. 

The most frenzied areas are those with average sale prices between $200K-$400K.  That includes just about all of Southeast Valley and West Valley, North and South Phoenix.  At last count, there were 2,061 properties for sale between $200K-$300K and 4,333 under contract already.  Between $300K-$400K, there were 2,006 available for sale and 3,017 under contract (24% higher than this time last year). 

While all price ranges have rebounded in contract activity, May saw the largest comeback between $500K-$1M where the number of accepted contracts soared 167% from a low of 148 contracts the first week of April to 395 the first week of June.  That’s 58% higher than last year’s count in the same week of 250 contracts. Even more dramatic, contracts over $1M are now up 85% compared to this week last year.

The result for buyers is an inventory that’s back to a pre-pandemic low. In our March update, inventory was at a historic low of 11,087 listings before vacation rentals began flooding the market for sale.  Inventory rose 35% over the course of 4-5 weeks and peaked in mid-April. Since then, inventory has consistently dropped week over week and now lies at 11,232; just 145 more listings than before this whole situation began.

Low interest rates and positive affordability indicators continue to fuel demand and cause prices to rise.  The big question buyers ask, “Is it still a good time to buy?”. The answer is yes, for now.  Affordability is still within normal range, which is a good reason why there’s so much demand. However, if affordability drops below the normal range for those making the median family income, then the market will begin to cool.  We are not there yet. It’s best to get in while it’s affordable.

For Sellers:
Not surprisingly, there is an increasing percentage of closings over asking price.  23% of all closings so far in June have recorded over asking price, up from 17% recorded in January and 19% recorded in February.  That percentage increases to 38% for closings between $200K-$250K and 27% between $250K-$300K.  It’s not uncommon for sellers to experience multiple offers, escalation clauses and appraisal waivers in today’s environment. In fact, there have been reports of 70 competing offers or more on homes under $300K.

Sellers who have been on the fence about listing their home lately should seriously consider it now and take advantage while the market is hot.  This spurt in buyer activity may peak very soon and then fall into the typical seasonal decline the Greater Phoenix market experiences every year from July to December.  Pent up demand from the pandemic is now being released, but there’s no guarantee that it will continue at this level for long.  If you planned to sell your home this year, now is the time to list it.

If you or anyone you know is looking to make a move, Please let me know!

480-773-5792

www.FlatFee-NoFee.com 

Client Reviews Here

Saving You Thousands!

Saving You Thousands!

 

Information provided courtesy The Cromford Report.

 

Posted in Market Updates
May 6, 2020

May 2020 Market Update

May 2020 Market Update!

Market Summary for the Beginning of May

In summary, supply went up, demand came down, sales dropped sharply and prices weakened slightly, the latter because of large changes to the sales mix. The summer lull in luxury home transactions has come 2 months early in 2020.

The sudden rise in active listings without a contract ran out of steam during April and is now on a flat to slightly lower trajectory for May.

The sharp fall in contract activity has stabilized at a level some 20% to 25% below normal for the time of year. Closings tend to follow the same pattern as listings under contract, but offset into the future by 4 to 6 weeks, It is therefore no surprise that closed sales dropped around 20% compared with last month and abut 26% compared with April 2019.

Sales are still declining but are not far away from leveling out given that new contracts have now found a floor to stand on. May should see less volatility than April as supply and demand both start to stabilize.

We do not anticipate any fast return to normality, which would need sales to increase by 35% from where we are now. This would require a quick end to the pandemic which does not look likely. We are a long way from herd immunity and a vaccine that can be supplied in large enough quantities is not expected in the short term. This means the market must adapt to a new normal. This will be very different from the old normal and probably last for several quarters.

Sales pricing will look a little weak for the next 5 months (at least) because the market over $350,000 has seen a larger fall off in transactions than the market under $350,000. The sales prices do not reflect a fall in home values, however, which continue to be supported by the fact that the lower demand is still in excess of our meagre supply. Home prices are unlikely to fall without a glut of homes for sale, something that does not look likely at this point. Almost no foreclosures took place in May and many borrowers took advantage of the government imposed forbearance on lenders. The greatest risk to the market is in what happens to lenders and loan servicers over the next 12 months.

Here are the basics - the ARMLS numbers for May 1, 2020 compared with May 1, 2019 for all areas & types:

  • Active Listings (excluding UCB & CCBS): 14,051 versus 17,513 last year - down 19.8% - but up 6.4% from 13,211 last month
  • Active Listings (including UCB & CCBS): 17,867 versus 22,650 last year - down 21.1% - but up 3.6% compared with 17,238 last month
  • Pending Listings: 5,696 versus 7,326 last year - down 22.2% - and down 7.0% from 6,125 last month
  • Under Contract Listings (including Pending, CCBS & UCB): 9,512 versus 12,463 last year - down 23.7% - and down 6.3% from 10,152 last month
  • Monthly Sales: 7,127 versus 9,659 last year - down 26.2% - and down 19.6% from 8,864 last month
  • Monthly Average Sales Price per Sq. Ft.: $184.24 versus $172.24 last year - up 7.0% - and down 1.3% from $186.59 last month
  • Monthly Median Sales Price: $299,999 versus $270,000 last year - up 11.1% - and down 0.3% from $301,000 last month

 

For Buyers:
The kickoff of 2020 was developing into a nightmare for normal buyers who just wanted to find a place to live.  Extreme competition for homes between wholesalers, cash buyers, vacation rental investors and traditional buyers depleted supply and created an environment consisting of multiple offers, appraisal waivers and an increasing number of sales over asking price. The Greater Phoenix housing market was on the precipice of seeing price appreciation accelerate at an alarming rate and had analysts wondering what could possibly slow it down.  Well, they have their answer, an act of nature. The COVID-19 pandemic came in like a wrecking ball in March shutting down tourism and crashing the stock market single-handedly over the course of a few weeks.  Hedge funds and iBuyers (funded by Wall Street) bowed out of purchases and vacation rental buyers put their plans on hold.  This is providing much needed relief to normal home buyers, if only they could leave their house. Stay-at-home orders to stem the impact of the pandemic has “pinched the hose” on what is arguably one of the hottest housing markets in the country.  This is causing a build-up of pent up demand that will undoubtedly return with some gusto when travel restrictions are lifted and a level of stability returns. Do not expect prices in Greater Phoenix to drop like they did in 2008, however. Back then when investors pulled out of the market, prices were so high that families making the median income could only afford 27% of what was selling.  This time around as investors once again pull out of the marketplace, families making the median income can afford 68% of what’s selling with today’s incomes and interest rates.  This is well within normal range and puts regular home buyers in a better position to pick up the pieces left by Wall Street and vacation rental investors. 

 

For Sellers:
Lock downs and travel restrictions across the country are causing buyers who need to relocate to Arizona, either for a job or to retire, to put those plans on hold for now.  The effects of COVID-19 span the job market, stock market, corporate profits, and exchange rates. This has had the highest impact on high-end luxury market buyers.  Not only are these buyers restricted from leaving their home cities at the moment, they have instability in their portfolios as well.  Under these circumstances it should not come as a surprise to see that weekly contract activity over $500K has slowed down by 64% since their peak on February 24th while price points under $500K have only seen a 30-40% slow down.
Sale prices are not declining at the moment, but seller expectations are adjusting.  Upticks in weekly price reductions tell us that sellers are beginning to ease up on pushing market value.  Sellers are also beginning to realize that it will take longer to sell their home under these conditions.  Weeks ago, some listings were receiving multiple offers within a matter of hours, but that’s not a reasonable expectation now.  Active listings that would’ve flown off the market 4 weeks ago could be on the market for weeks, maybe even months at this rate.  Information, communication and strategy will be important during the course of the pandemic response.  It is situations like these where professional REALTORS® get to show the value of their experience and service.

 

If you or anyone you know is looking to make a move, Please let me know!

480-773-5792

www.FlatFee-NoFee.com 

Client Reviews Here

Saving You Thousands!

Saving You Thousands!

 

Information provided courtesy The Cromford Report.

Posted in Community News
April 20, 2020

Gilbert 4-20-2020 Update

Here is a quick overview of the Gilbert Market....

  • New Listings: Still Increasing.

  • New Contracts... Down but still strong.

  • Market Balance... Changing, but still a strong sellers market.  (aka Cromford Index is 239. Neutral Market is 100.),

  • Contract Ratios:  "Hotter and Frenzied"

  • Pricing:  Upward pressure as long as Demand is higher than supply.

 

Please reference the below charts that support the Gilbert Market Overview!

 

New Listings

 

New Contracts: Down, but still strong.  Back On Market... Almost Unchanged.

 

 

Market Balance:  Sellers Market @ 239... (Neutral is 100)

Cromford Market Index™ is a value that provides a short term forecast for the balance of the market. It is derived from the trends in pending, active and sold listings compared with historical data over the previous four years. Values below 100 indicate a buyer's market, while values above 100 indicate a seller's market. A value of 100 indicates a balanced market.

 

Heat Map:  Hotter and Frenzied!