By Mike Bodeen · 9 March 2020
Mike, where do you see the real estate market heading? (AKA home price direction)
In so many words, I’ve been asked this question so many times over 4+ decades in my industry. Until the dot-com bust or the recent great recession, that seemed to be a no-brainer, but there was always a caveat that I would say with every upward positive response I’d give, “barring a national or global economic catastrophe.”
Well, I’m not sure where we’re at yet with the Coronavirus stock market meltdown, but I have some thoughts which I’ll elaborate on following our recent February stats below. These numbers are, as always, courtesy of the Cromford Report.
Our hyper-vibrant market has continued as we’ve expected and reported. ARMLS numbers for March 1, 2020 compared with March 1, 2019 for all areas & types:
Active Listings: 11,003 vs 18,959 last year – down 42.0% – and down 8.1% from 11,974 last month
Under Contract Listings: 11,988 vs 10,357 last year – up 15.7% – and up 19.5% from 10,030 last month
Monthly Sales: 7,450 vs 6,522 last year – up 14.2% – and up 15.3% vs 6,461 last month
Monthly Average Sales Price per Sq. Ft: $185.11 versus $168.65 last year – up 9.8% – and up 1.6% from $182.20 last month
Monthly Median Sales Price: $295,000 vs $264,000 last year – up 11.7% – and up 1.8% from $289,900 last month
“Arizona is different than the rest of the country…Our strength is our normalcy, growing diversification, still affordable living, and quality of life.”
Note the continued downfall of listing supply. Also note the large rise in listings under contract and monthly sales, despite falling supply. And especially notice pricing, both on a per square foot (PSF) basis and monthly median. As we’ve predicted, appreciation is now at double digits. The monthly average sales price PSF has risen to 9.8%. The scarier number is the past month’s increase of 1.6%, which if annualized translates to over 19%. The monthly median sales price is now near 12% compared with one year ago and up 1.8% from last month.
And now, some forward thoughts.
California real estate, which is currently seeing no or low appreciation, will tank further with accompanied wealth evaporation. Many California homeowners could (will) experience under-water mortgages (remember those) if they’ve bought with marginal down payments over the past few years. “Cashing out” may be the new reason for fence-sitters to bail. The exodus out of California will continue to increase.
Arizona is different than the rest of the country. We may see unsettling in our upper luxury price range (over a Million), IF the stock market continues to drop, or fails to quickly recover. Our strength is our normalcy, growing diversification, still affordable living, and quality of life. I see a greater Arizona migration from our westerly neighbor. We may not have seen anything yet.
Market data referenced in this article comes from The Cromford Report.