By Mike Bodeen · 22 February 2021
“It can be hard to explain to people just how bad the supply of re-sale homes has become in Greater Phoenix. The reality is quite difficult to grasp unless you are trying to buy one. Many people mistakenly think demand must be exceptionally high, but that is not really the issue. It is above average but not unusual.” (Cromford Report 02-20-2021)
Until you’re a buyer’s agent, on the street, in the trenches, writing offers, over and over, seeing prices escalate before yours and your buyer’s eyes, you can’t grasp the sense of futility buyers and their agents are currently experiencing. It is reminiscent of 2005.
But compared to those days, our market today is healthier but also scarier!
It’s healthier because Arizona’s fundamentals of growth are strong and getting stronger. Also, the mortgage industry is not in the corruption mode it was 10 years ago allowing anyone to buy a home, regardless of income, home value, credit, etc.
The Milken Institute in a recent annual study reported that Phoenix is among the top 7 large cities poised for growth and recovery in 2021.
https://milkeninstitute.org/reports/best-performing-cities-2021
The report which goes into detail as to the why of Phoenix’ continued ascendancy, such as lower cost of living than the national average. Plus Phoenix has regained 85% of jobs lost during the pandemic downturn and is expected to fully recover all jobs lost by the end of THIS YEAR! Unemployment had hit 12.5% in April 2020 and is currently 6.9%.
It’s scarier, because it will get worse before it gets better. But even the better may still restrict many from affording homes.
One possible deterrent to our current frenzied market would be a rise in mortgage rates which began an upward tilt last week. This possible rate increase rise impacts first time homebuyers and even move-up buyers. Much of the throng that is buying now are doing so with cash, or really large down payments, trumping the low down payment group wanting to get their foot in the door.
The Milken report however also pointed out that Arizona is 98th overall in housing affordability that besides sales price growth, Arizona rents are outpacing national rents by double. Our current sales price increases are furthering the squeeze on low to moderate income residents to afford housing.
Quite honestly, housing affordability is nearing, or is at, crisis mode.
Market data referenced in this article comes from The Cromford Report.