Active Supply is Down 32% - Prices up 11% and rising
Good morning there friend :)
I'm sure you struggle with the same kind of thing we do... what info about "X" is real and what of it is also crap. In our business it becomes so hard at times to delineate what and how things are going. One thing that I've worked hard on is using my gut as an indicator. Someone can just read and watch all day - sure they develop an opinion - but the real answers come from action.
In our case, action is the unprovoked people whom present us with questions or interest. There's a lot of hype/crap about what an open house can do and not do... for me, that's the opportunity to see what people are thinking through their actions.
Additionally, I like to take my time vetting what and where the good information comes from. One of them is the Cromford Report. This is something we real estate people have to pay for. When used correctly, their information can be powerful. It's so powerful that I've seen it used in appraisals to help an appraiser validate their why/how they came to value. The beauty of these facts is that they are facts... true hard numbers from everything within our MLS system, regurgitated into discernible data.
Every new year takes a little time to generate the data of the prior year so we can see where we're headed for the new year... all defined by the why. For the last two months I've been collecting their perspective and couldn't agree more. In the last couple of days I've been asked about this topic and felt the time was right.
Below is an easy read, but wicked informative. It approaches the perspective from both the buyer and seller sides. I've gone through and highlighted the juicy parts. :) which there is a lot of good stuff.
Active Supply is Down 32% Median Sale Price up 11% and Expected to Rise
The urgency for buyers cannot be stressed enough; real estate prices are not projected to decline in the Greater Phoenix area in 2020. There is not one measure from any angle that supports that theory. Not only will they not decline, they will not stop rising this year at the current levels of supply and demand.
On January 9th, active supply was counted at just over 12,000 listings for all of Greater Phoenix.
This is down 32% from this time last year and excruciatingly low. To put it in perspective, a “normal” level of inventory should be at least 28,000 - 30,000 active listings in the MLS for a metropolis the size of Maricopa and Pinal County.
The last time inventory was recorded this low was in 2005 at 9,000 listings with a population of 3.8M. Now Greater Phoenix has 4.8M people with less than 1% of existing housing available for sale. With monthly sales up 17% over last year, fueled by population growth, job growth, income growth and low interest rates in the area, sellers have few reasons to sell below market value.
It’s not logical to expect prices to soften in this environment.
Buyers who have been waiting for sales prices to decline before they purchase have nearly missed the boat. This is because while they were watching prices rise, the payments for those same homes declined for a year with declining mortgage rates. However, when mortgage rates stabilized 6 months ago, hovering around an average of 3.75%, payments started to creep up again. In short, if someone wants to purchase a home and they have the means, then they should lock into one. They should expect competing offers, expect to lose some opportunities, and expect to do some upgrades. They should also expect to live in their new home for at least 5 years to build up enough equity to mitigate the risk of ups and downs in the future.
This is an exciting time for those who need to sell. Anyone who owns property has probably been contacted multiple times by multiple means throughout the year by people wanting to buy their home. While sellers are under much less pressure to perform repairs and upgrades in order to sell their home, it doesn’t mean that they will sell it as quickly or for as much as those that are move-in ready. But, it will sell in this market. Those who are considering selling to an internet investor buyer (aka iBuyers who offer some up-front certainty and convenience in the selling process), should know that they still have negotiating power in the transaction and have the option to be represented by a Realtor if they choose.
MLS Luxury Sales Over $1M Up 52% in January Supply Between $200K-$250K Down 60%
Supply continues to drop as the market heats up with the seasonal rush of Buyers. Typically we would see supply rising at this time of year as January is a strong month for new listings to hit the market.
However this year new listings year-to-date are down 17% from last year and January 2020 had the lowest number of new listings recorded going all the way back to 2001. Combine this with a 21% increase in sales volume and the 4th highest January recorded for MLS sales, and it’s no surprise that supply is plummeting.
While supply is down in all price points, it’s felt the most between $200K-$250K. Supply in this price range is nearly 60% lower than this time last year and a quarter of sales in the last 3 months have recorded over asking price.
Seller-paid closing cost concessions are also down. Nearly 22% of all sales in the 1st Quarter to date have included some form of seller-paid or assisted closing costs. That’s the lowest percentage recorded in nearly 5 years.For Sellers:The luxury market continues to go gangbusters in 2020. Sales over $1 Million in 2019 outperformed 2018 by 10%, which makes it the #1 year for in Greater Phoenix in this price range.
January closings were up 52% in this price and listings under contract are up 43%.With all this demand, one would think price appreciation would be rising significantly however that hasn’t happened yet. The average sales price per square foot between $1M-$2M has only appreciated 1% while those between $2M-$3M have appreciated 0.2% and those over $3M have increased 6%. The current appreciation rate per square foot is between 8-9% for Greater Phoenix as a whole.
Considering where the PHX market was just 10 years ago... we've recovered quite well.
It was my intent to be informative and not over the top. With only colors and size as options I rolled with it as best I could :) There's a lot there and hope you found it beneficial. As with anything we talk about, if you have any questions. Me and my wonderful bride would be grateful to help answer anything.
This picture felt like spring to me :)