By Mike Bodeen · 7 September 2020
Arizona is setting heat records, and we’re not just speaking of August and September 2020 outdoor temperatures, which have been blazing! We’re also speaking of the rising appreciation rates now experienced in the Phoenix Metro residential real estate market.
The Monthly average sales price of a home in the Phoenix Metro area is a record $401,000. The Monthly Median Sales Price is a record $325,000.
The numbers are in for August 2020 sales:
Active Listings: 8,028 vs 13,609 last year – down 41.0% – and down 5.3% vs 8,477 last month
Under Contract Listings: 13,042 vs 10,318 last year – up 26.4% – and up 5.8% vs 12,332 last month
Monthly Sales: 9,225 vs 8,916 last year – up 3.5% – but down 12.5% vs 10,543 last month
Monthly Average Sales Price per Sq. Ft: $195 versus $169 last year – up 15.2% – and up 1.9% vs $191 last month
Monthly Median Sales Price: $325,000 vs $280,000 last year – up 16.1% – and up 3.2% from $315,000 last month
Historically, this time of year begins a swing upwards of listing inventory as buyers slow their search. The inventory rise continues until Halloween, or thereabouts, and then starts backing down through the end of the year, as sellers stop putting homes on the market during the holidays.
This last month however active listings plateaued. They dropped over 41% from one year ago, and 5% from last month, to just over 8000 on the market presently.
Due to the decreasing inventory rate, and sustained sales, prices have been forced upward at an annual rate of 16%. This rate increase cannot be sustained much longer without serious repercussions to our first time home buyer market (and others).
Normally a market’s price point would level out or decline based on local demographic income. Once homes become unaffordable such as through rising mortgage rates or rising prices, sales slow, inventory grows, and prices drop.
But here’s a possible dilemma. It’s called rising incomes. If migration to Arizona from other states continues, and even increases, there becomes a very real possibility that local incomes rise. How? Through the greater incomes of new residents bringing with them higher incomes through mobile occupations, such as from Silicon Valley. And those new residents CAN AFFORD higher prices, further increasing values.
As a current homeowner, that’s good news! But as professionals representing a number of first time homebuyers trying to get into the game, that’s not good news.