By Mike Bodeen · 12 October 2020
SINGLE FAMILY DETACHED HOME REPORT
Our recent personal experience on the front line of home sales, has been showing us our need to be prepared to aggressively represent our buyer clients because of the number of multiple offers being received by sellers on new listings coming onto the market. This trend has been increasing even above the moderate to moderately high end, for example the $500,000 to $750,000 range. BTW, our California friends would snicker that we consider $750,000 the moderately high end.
The continued low supply and high demand is the reason for this increasing trend. Per the Cromford Report, almost 1/3 of the zip codes in the Phoenix Metro communities have average sold prices greater than the average list price at for Single family detached homes. The top 15 examples:
Phoenix 85031 – 101.49%
El Mirage 85335 – 101.37%
Mesa 85210 – 101.28%
Tolleson 85353 – 101.17%
Phoenix 85051 – 101.15%
Chandler 85226 – 100.92%
San Tan valley 85143 – 100.91%
Mesa 85204 – 100.86%
Arizona City 85123 – 100.84%
Glendale 85302 – 100.84%
Avondale 85392 – 100.83%
Mesa 85208 – 100.78%
Chandler 85225 – 100.78%
Gilbert 85233 – 100.74%
Mesa 85203 – 100.72%
Jonathan had a recent sales experience of a home that came on the market in North Phoenix at $285,000. In one day there were four offers on the home. His client, a cash buyer, offered $20,000 over asking, or $305,000. His client won the prize.
“Some believe (and it’s hard to argue too vehemently) that due to rising incoming personal, commercial and industrial migration, our prices are at the tip of the iceberg, or more appropriately in the desert, the base of the mesa.”
The new normal of real estate in the Valley is changing. Are buyers overpaying? Is our market much like the 2004-2005 market? Some believe (and it’s hard to argue too vehemently) that due to rising incoming personal, commercial and industrial migration, our prices are at the tip of the iceberg, or more appropriately in the desert, the base of the mesa.
The Cromford Report, provided a half dozen reasons why this isn’t the case. Back in 2004-2005:
Thousands of homes were purchased and left vacant being snapped up by speculators
Rents were low and headed lower as there were more homes than people who wanted to live in them
Almost anyone could get a 100% loan with minimal documentation, and thus had no skin in the game if prices were to fall (as they did)
Few people thought the market could decline
Mortgage fraud was rampant creating artificial demand
Developers had built (and would continue to build through 2007) more homes than were demanded by the population growth
For all 6 of these, the opposite condition exists today:
Vacancies are very low
Rents are high and heading higher
Qualifying for a mortgage requires financial resources (for example, a job) and must be supported by documentation, and almost all home owners have equity
Many people think the market could go down, supported by articles claiming this is likely (although it is not)
Mortgage fraud is at a relatively low level
Developers have built fewer homes than demanded by population growth between 2008 and 2020.
What do you think?
Market data referenced in this article comes from The Cromford Report.