By Mike Bodeen · 30 December 2019
The close of the 2019 Phoenix Metro real estate sales market is just a day away, but in all things Phoenix real estate, 2019 will go down as one of, if not THE strongest years on record. Though our reporting is on residential real estate matters, we also know that the commercial and industrial markets have significantly strengthened in 2019, buoyed by decreasing supply and increasing demand, population and commercial growth, and statistically close to full employment levels.
Today, we’re looking back to see what’s transpired in the residential local market over this past year.
First, we look at the residential real estate market, of which, there is no good news (still) for renters. Residential long term (1 year or more) rentals end the market at an average rental price per square foot (PSF) of $1.00. This combines all (Arizona Regional Multiple Listing Service – ARMLS) rentals, including condos, townhomes, and single family detached homes. This overall average price rose 9% in the past 12 months. Though we will prognosticate more in depth in a future article, we can, with good accuracy, expect that next year may spell double digit rental price increases.
Of an interesting note, single family detached homes are renting for substantially less per square foot than condos or townhouses. Condos and townhouses are currently renting for $1.24 PSF, compared with 95¢ PSF for Single Family Detached homes. One year ago, townhomes and condos rented for $1.10 PSF. At $1.24 currently, that’s a 13% rental increase in one year for townhomes and condos. That’s huge folks!
On the sale side in 2019, sellers did very well. Benefitting from increasingly decreasing listing inventory, the supply of homes for sale dropped from 18,042 one year ago to 12,832 today – a drop of 29%. This helped raise annual home values on a PSF basis to 8.8%, up from 5.7% last December, gauged for the year previous.
“Therefore, at the end of 2019, the Phoenix Metro communities remain in a VERY strong seller’s market.”
The supply of homes for sale now registers just 2.2 months, compared with 3.0 months one year ago. For perspective, the near 20-year monthly average would range from 4-6 months. In the great recession of 2007-2009, the average months on the market ranged from 10-20. Those were not fun years.
Over the past 12 months, ARMLS sales have totaled 98,798. Though the number of sales increased by about 2700, it was amazing considering the huge drop in inventory.
Lastly, the CMI (Cromford Market Index), which is the gauge you’re seeing right above this story, has almost hit 200. One year ago it was at just 155. What does this mean? Taking into consideration the residential supply (# of listings) and demand (# of sales) it calculates whether we are in a buyer or seller’s market. A reading of 100 is a balanced market, while under 100 is considered a buyer’s market. As you can imagine, over 100 is a seller’s market.
Therefore, at the end of 2019, the Phoenix Metro communities remain in a VERY strong seller’s market. There has only been one December in the past 17 years where the seller’s market was higher. That was in 2004.
That’s it for now! We wish all of you a wonderful and prosperous 2020. See you next year!
Oh, one more thing. If you or anyone you know is considering buying or selling a home, please let us know, we’d love to help them!
Market data referenced in this article comes from The Cromford Report.