Market Summary for the Beginning of April
Here are the basics - the ARMLS numbers for April 1, 2021 compared with April 1, 2020 for all areas & types:
- Active Listings (excluding UCB & CCBS): 4,088 versus 13,211 last year - down 69.1% - and down 9.0% from 4,491 last month
- Active Listings (including UCB & CCBS): 8,699 versus 17,238 last year - down 49.5% - and down 4.3% compared with 9,094 last month
- Pending Listings: 7,964 versus 6,125 last year - up 30.0% - but down 0.8% from 8,027 last month
- Under Contract Listings (including Pending, CCBS & UCB): 10,152 versus 11,988 last year - up 23.9% - but down 0.4% from 12,630 last month
- Monthly Sales: 10,385 versus 8,076 last year - up 28.6% - and up 29.2% from 8,039 last month
- Monthly Average Sales Price per Sq. Ft.: $231.61 versus $186.61 last year - up 24.1% - and up 1.7% from $227.68 last month
- Monthly Median Sales Price: $358,250 versus $301,000 last year - up 19.0% - and up 2.7% from $349,000 last month
The active listing counts are now so small that it makes a huge difference which day of the week you measure. Over the last week the maximum count (on Saturday) is 16% higher than the minimum (on Wednesday). In some locations there can be twice as many homes listed on Saturday as the following Wednesday. This means that comparisons of April 1 with March 1 can be misleading because it depends on the day of the week they happen to fall on.
What we can tell you for certain is that the active listing count was painfully small last month and this month it is no better. We would need to add about 24,000 active listings to get back to a normal level. Many of the younger agents working in Phoenix have never experienced a normal level of supply.
The monthly sales count for March 2020 was strong but the annual comparison with March 2020 is affected by the COVID-19 measures that started to bite in March last year. Between March and June last year the pending listing counts and under contract counts were dramatically lower than normal, which tends to obscure the fact that these counts in 2021 are also somewhat lower than we would normally expect. This is one of several signs that demand is starting to fall from the heights achieved in 4Q 2020.
Once borrowers start emerging from forbearance, we may see some degree of improvement to the abysmal supply shortage. However, indications from the lending industry suggest that any increase in supply will be tiny compared with the flood of distressed homes that hit the market between 2007 and 2013. We expect to see price rises slowing a little after June 2021, but there are currently no indications that a change in the direction of those prices is likely.
For Buyers:
44% of sales through the Arizona Regional MLS have closed over asking price in the last 30 days. The median amount over asking price for all price ranges combined is $10,000 with a range between $1 to $310,000. (I know what you’re thinking, “$1 over? What is this, ‘The Price is Right’?” In some cases, yes.)
While 56% of all homes still sell for at or below list price, if you have a budget between $250K-$400K, the percentage selling over list is highest at 52% with the median amount over asking at $10,000. However even if your budget is over $400K, a significant percentage is closing over asking price. Up to $800K, 42% have sold over list with a median escalation of $12,000-$15,000. From $800K-$1M, 30% sold over list with a median escalation of $17,000-$20,000. From $1M-$2.5M, 20% sold over list with a median escalation of $30,000-$50,000. Over $2.5M, only 2 sold over asking price with a median escalation of $150,000.
Over the past 6 weeks, REALTORS® have added an average of 2,059 new listings per week to the Arizona Regional MLS. During the same time period, an average of 2,312 contracts were accepted per week. This is what has caused the overall supply of homes to consistently drop and competition between buyers to escalate.
While just over 2,000 new listings per week may seem like a lot, it’s actually the lowest rate for this time of year in at least 20 years. A normal level would be considered around 2,500 new listings.
For Sellers:
While supply is still 77% below normal for this time of year and demand is 17% above normal, demand has been dropping faster than supply over the last 30 days. It’s not noticeable when one is in the midst of a contract negotiation today because sellers rarely notice when they’re getting, for example, only 15 offers instead of 25. But consider last December demand was 35% above normal; at this rate, demand could be at a normal level in a couple months and below normal by June. This will not cause prices to decline because there are still a miniscule number of competing listings in the MLS, but it could mean that the second half of 2021 could look different from the first, especially if there’s a temporary boost in new listings after the forbearance period ends and the foreclosure moratorium is lifted.
The average mortgage rate rose to 3.02% this month according to Freddie Mac. Even though this is still considered an excellent rate, it understandably weakens the purchasing power for some buyers and reduces the affordability measure for Greater Phoenix overall. When a family making the median income can afford less than 60% of what’s selling, demand is typically expected to suffer. However, buyers with median incomes coming from Los Angeles and San Francisco are used to only affording 9-11% of what’s selling in their home towns, so Greater Phoenix prices look amazing by comparison. In fact, for some the idea of being able to own a home at all is amazing.
Commentary written by Tina Tamboer, Senior Housing Analyst with The Cromford Report
©2020 Cromford Associates LLC and Tamboer Consulting LLC
If you, or anyone you know, is looking to buy or sell, Please let me know!
Troy Holland
Cell: 480-773-5792
Email: Troy@Sell4Free-AZ.com
Web: www.FlatFee-NoFee.com
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