By Mike Bodeen · 19 April 2021
A picture, or a graph, is worth a thousand words, so I’ve decided to include an interesting graph below. What it shows is annual Phoenix Metro appreciation based on the monthly average price per square foot (PSF), a fairly accurate way to determine appreciation, though no chart or graph is perfect in doing that. Lots of variables.
The record price appreciation year in our history was 2005 where it peaked at 47% for the year. 2005 and 2021 have started out at around a 17% annualized appreciation rate (previous 12 months). Both have followed a similar arc in price increases, with 2021 a few percentage points behind.
Based on homes currently under contract, we can see that the 2021 trend will continue spiraling upward and could surpass 2005. I believe this will be the case.
If you’re a seller who bought a $400,000 home one year ago, theoretically, your home is now worth $512,000 based on a current 28% annualized appreciation (see chart) rate. Last year at this same time, we were getting giddy that our PSF annualized appreciation was almost 9%. (see chart at year 2020).
Some advice for sellers at this hour: If you sell, immediately buy. A lateral move will help you keep pace with market increases. We have been reporting for the past 6-8 months that we’re not seeing anything on the horizon that will quickly slow this engine down. When the pandemic struck one year ago, we were fairly confident that our market would stall or drop, which it did stall – for 2-3 weeks. And has roared since then.
“A good buyer’s agent who is writing a contract is contacting the listing agent ahead of time asking (begging) what they can put into their offer to sweeten the pot.”
Another seller tip: You control the terms! If you’re like many sellers today, you’re getting multiple offers. A good buyer’s agent who is writing a contract is contacting the listing agent ahead of time asking (begging) what they can put into their offer to sweeten the pot.
If you need to buy another home, buy some time. See if you can have 30, 60, 90 days following close of escrow to surrender possession to the new buyer, rent, or even rent free. This allows you to close, get your funds and offer on the next home without a contingency to sell your home and perhaps avoid the dreaded double move. Next to cash, this is your strongest position assuming you have a strong pre-qualification form (PQF).
There are other tips that sellers can employ to their advantage, and in the week’s ahead we’ll be sharing more. For buyers, we’ll continue to cover buyer strategies to help you in the current buying crisis. Stay tuned, or give us a call. 602.689.3100 (Mike) or 602.341.9490 (Jonathan) We’re always here to help.