By Mike Bodeen · 11 June 2018
Our summer heat’s been turned up, and the heat of the real estate sales market has as well. As home values approach the record high numbers of 2005, some folks with longer memories are whispering the “B and B” words, as in Bubble, and Bust.
We’ve discussed on several past blogs, reasons why this is not our current condition – not yet anyway, though the most recent numbers (see below) haven’t done anything to alleviate the whispering.
Quite honestly, these higher appreciation rates (9 to 9.5%) are not sustainable. According to Mike Orr of the Cromford Report, if the trend continues into next year, there will be a leveling off of the market. Crash? No! But the most susceptible to price gains are the lower price ranges, further putting dampening on sideline buyers in this category.
First, we’ll look at the active listings in the Arizona Regional Multiple Listing Service (MLS). All 2018 May stats are comparing this year with May of 2017.
“My concern however is regarding the appreciation numbers… Since last month, the median jumped an astonishing 3.9% ($253,000).”
Listings are down 13.3% year over year (YOY) and down 1.9% from last month. May was a weaker month for new listings, down about 1% compared with one year ago. So, the trend of listing scarcity continues. We’re now looking at increased interest rates with higher prices. A bummer combination.
Monthly sales are strong and getting stronger, up 2.3% vs last year, while rising 9.8% compared to last month. One area of buyer positiveness is that listings under contract have dropped 6% YOY and almost 9% compared to last month.
My concern however is regarding the appreciation numbers. The average sales price per square foot rose 9% compared to last year and 0.7% from last month. The median sales price rose 9.5% from last year standing at $262,900 compared with $240,000 a year ago. Since last month however, the median jumped an astonishing 3.9% from last month ($253,000).
Basic MLS numbers for June 1, 2018 comparing them with June 1, 2017 for all areas & types:
Active Listings: 16,018 vs 18,476 last year – down 13.3% – and down 1.9% from 16,329 last month
Under Contract Listings: 11,399 vs 12,129 last year – down 6.0% – and down 8.8% from 12,504 last month
Monthly Sales: 10,081 versus 9,858 last year – up 2.3% – and up 9.8% from 9,178 last month
Monthly Average Sales Price per Sq. Ft.: $164.03 versus $150.51 last year – up 9.0% – and up 0.7% from $162.81 last month
Monthly Median Sales Price: $262,900 versus $240,000 last year – up 9.5% – and up 3.9% from $253,000 last month
According to Orr, “at some point this trend will impact demand, which is why we are keeping a close watch on the annual sales rate and the number of listings under contract. However we are not at all in the sort of situation we faced in 2005.”
Agent Matters
The Arizona Republic reported that the number of real estate agents in Arizona is increasing and is now at 73,500 current licensees and growing monthly. Well, this number has always gyrated based on the health of the market, and it always will.
The number of sales, based on current sales closings, indicate that there will be 106,000 closings for all of 2018. So, grab your calculator, do the math, and this will average out to 1.44 sales per agent.
Our advice on this matter has always been, and will no doubt remain, “don’t give up your day job!”
Market data referenced in this article comes from The Cromford Report.