By Mike Bodeen · 4 January 2016
An Upbeat Real Estate Start to 2016
Last week we discussed the benefits of owning rental real estate, especially in the Phoenix Metro area where our market has slowly and steadily been improving over the past few years. We recommended that folks consider including rental real estate as a part of their overall investment strategy. Indeed, as I write this blog this Monday morning, there has been a global sell off of stocks sending markets tumbling. Global fears (Middle East and China) have sent our DJIA down by more than 400 points.
When we zoom in on the Phoenix real estate market and compare it to one year ago on January 1st, 2015, we find a market that strengthened for sellers but not so much that it hurt buyers. Even the Fed’s long awaited rate hike only minimally increased mortgage rates.
Consider the following year to year comparisons provided just days ago by Michael Orr of ASU / Cromford Report:
Here are the basic ARMLS numbers for January 1, 2016 relative to January 1, 2015 for all areas & types:
Active Listings: 20,073 versus 22,604 last year – down 11.2% – and down 6.6% from 21,493 last month
Pending Listings: 4,865 versus 4,410 last year – up 10.3% – but down 20.9% from 6,147 last month (unnaturally high due to TRID)
Under Contract Listings (including Pending & UCB): 7,675 versus 6,724 last year – up 14.1% – but down 19.7% from 9,552 last month (unnaturally high due to TRID)
Monthly Sales: 6,666 versus 6,423 last year – up 3.8% – and up 22.3% from 5,452 last month (unnaturally low due to TRID)
Monthly Average Sales Price per Sq. Ft.: $137.73 versus $128.92 last year – up 4.0% – and up 1.1% from $135.69 last month
Monthly Median Sales Price: $215,000 versus $197,500 last year – up 8.9% – and up 2.9% from $208,900 last month
The median sales price was pulled lower in November by all the cash transactions unaffected by TRID delays. Financed transactions recovered their stride in December and so the median sales price bounced back again.
When we think back to a year ago, the market was tepid and not showing any of the positive signs that suddenly appeared in early February 2015. If you look at the daily market snapshot today you can see that almost all of the indicators are substantially more positive than they were a year ago, including:
days of inventory down 20%
annual sales rate up 10%
days on market (sales) down 10%
days on market (actives) down 7%
listing success rate up 6%
contract ratio up 29%
So we enter 2016 in much better shape than we entered 2015.
Amen to that!
Market data referenced in this article comes from The Cromford Report.