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.