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!
Information provided courtesy The Cromford Report.
