Market Summary December 2021
Here are the basics - the ARMLS numbers for December 1, 2021 compared with December 1, 2020 for all areas & types:
- Active Listings (excluding UCB & CCBS): 6,825 versus 7,388 last year - down 7.6% - and down 12.2% from 7,777 last month
- Active Listings (including UCB & CCBS): 10,609 versus 12,481 last year - down 15.0% - but down 12.3% compared with 12,104 last month
- Pending Listings: 7,830 versus 7,347 last year - up 6.6% - but down 8.0% from 8,507 last month
- Under Contract Listings (including Pending, CCBS & UCB): 11,614 versus 12,440 last year - down 6.6% - and down 9.5% from 12,834 last month
- Monthly Sales: 8,964 versus 9,171 last year - down 2.3% - but up 2.1% from 8,780 last month
- Monthly Average Sales Price per Sq. Ft.: $264.36 versus $207.78 last year - up 27.2% - and up 0.7% from $262.40 last month
- Monthly Median Sales Price: $420,000 versus $330,000 last year - up 27.3% - and up 1.2% from $415,000 last month
The slight downward trend in supply that we reported last month has turned into a much stronger dip - down over 12% in just 30 days. This is not too surprising since a fall in active listings happens in November during most years. We can expect further falls during December and by January 1 we will probably see another record low for the time of year. So, there is really no good news for buyers here.
There has been a significant drop in the use of UCB status since this time last year. UCB listings are down 26% but pending listings are up almost 7%. Overall, demand is still looking much stronger than normal. However, it has weakened just a shade over the past week, with the Cromford® Demand Index fading from a peak of 123.6 on November 26.
Prices are still moving higher, of course, and with the Cromford® Market Index over 360, there is little sign of that changing in the near to medium term.
December is unlikely to give us much housing market excitement as thoughts turn to things other than real estate. We are almost certain to see supply fall faster than demand. and prices are likely to rise by another 1 to 2%.
The next big signal will come in January when we see what the fresh supply looks like.
2022 Housing Predictions: Who to Believe?
Median Price Currently Rising 1% per Month on Average
For Buyers:
‘Tis the season for 2022 projections in the housing market and, as expected, there are conflicting opinions among national housing analysts. Zillow and Goldman Sachs predict home values will rise nationally 14-16% between now and the end of 2022. CoreLogic released their prediction that home values will only rise 1.9% next year, citing a concern with rising interest rates. Then there’s Zelman and Associates warning that investors are over-building and over-buying as household formation and population growth are weak, challenging the notion of a housing shortage.
Who do we believe? Zillow recently pulled out of the business of buying homes after realizing their algorithm was failing to accurately value homes under current market conditions. CoreLogic’s prediction last year, that home values would drop 6.6% by May 2021, was a gross misfire as values soared instead. While Zelman is waiving a caution flag, the organization is stopping short of issuing a price prediction for next year.
In the meantime, prices in Greater Phoenix continue to rise. Prior to 2020, the median had been rising at 0.6%-0.8% per month on average (7-10% per year) which was in response to a milder seller market. In the 2020-2021 extreme seller market, that average rose to 1.3% per month in 2020 and 2.3% per month so far in 2021, with a peak in the Spring between 3-5% and 1% per month average since June.
Many local analysts agree the past rate of increase is indeed unsustainable. The payment for a 1,500-2,000 sqft home has risen 33%, or $500/month since last November, and the median rent on the MLS for the same sized home increased $372/month. At the rate prices have been increasing for the past 2 years, returning to a mere 7-10% annually would be considered a massive relief for buyers.
For Sellers:
While the caution flags are waving for a softer housing market next year, there are a number of positive indicators in Greater Phoenix that may keep our market appreciating, albeit slower. While interest rates, affordability, sluggish population growth and household formation are valid reasons for concern, here are a few counter-indicators to consider:
- Lending practices have loosened up with the new $625,000 loan limit and more consideration of self-employed borrowers
- Arizona is ranked in the top 10 states for population growth and household formation over the past decade due primarily to domestic migration
- Per the Arizona Department of Economic Opportunity’s October Employment Report:
- Jobs and the labor force have completely recovered from last year’s pandemic losses
- Unemployment claims have fallen to pre-pandemic levels
- W-2 Incomes have continued to rise and are up 3.4% YOY
While the market is expected to downshift sometime next year, the local economy and current supply and demand indicators for Greater Phoenix still point to strong price appreciation for at least 3-6 months.
Commentary written by Tina Tamboer, Senior Housing Analyst with The Cromford Report
©2021 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: TroyHolland44@yahoo.com
Web: www.AZ-RealEstateGroup.com
Raving Fans: Client Reviews Here
