By Mike Bodeen · 15 February 2021
Before we get into our weekly story, let’s take a look at January’s sales numbers effective February 1st:
Active Listings: 5,180 vs 11,974 last year – down 56.7% – and down 14.5% from 6,055 last month
Under Contract Listings: 11,617 vs 10,030 last year – up 15.8% – and up 17.7% from 9,868 last month
Monthly Sales: 7,330 vs 6,464 last year – up 13.4% – but down 26.8% from 10,015 last month
Monthly Average Sales Price per Sq. Ft: $217.59 vs $182.18 last year – up 19.4% – and up 2.9% from $211.50 last month
Monthly Median Sales Price: $339,000 vs $289,900 last year – up 16.9% – and up 2.1% from $332,000 last month
The Arizona real estate story continues, though it’s national in scope. The Phoenix Metro record low inventory listed above is 5,180. If we were to peak at that number halfway through this month (14th of Feb) we’re down to 4,906 listings. Under contract listings are up almost 16% versus last year, but down 27% from last month. Why? No inventory!
The monthly median sales price is up 16.9% vs one year ago, and up 2.1% from last month. The monthly average sales per square foot (PSF) is up 19.4% from last year, but up 2.9% from last month. If that rate were to continue, it would equate to 35% per year annualized appreciation.
“Where have we been told to stay? Home. Where have we been told to work? Home. Where have we been told to shop? Online at home.”
So far, the 2020’s are an era of contrariness. Few if any foresaw a worldwide pandemic coming that would have participated in the deaths approaching a half million of our citizens. Few if any would have foreseen national social distress such as we’ve witnessed this past year. Economically, who would have thought that unabated upward pricing in our stock and real estate markets would have occurred in a pandemic?
Questions: Why is the market doing what it’s doing? Will the market slow? What reasons might there be to think the market will slow? Is real estate investing safer or more dangerous than stock market investing? What are reasons to suppose that price increases could continue rising. Start Falling?
Answers? Nope. Just Opinion. Two words answer the above questions: God knows!
Why is the market doing what it’s doing? In my opinion, it’s BECAUSE of Covid-19, AND absurdly low mortgage rates. This perfect storm has developed because people WANT something tangible in their lives. There’s nothing much more tangible than shelter. Where have we been told to stay? Home. Where have we been told to work? Home. Where have we been told to shop? Online at home. And mortgage rates have, at least until now, provided affordability to do so.
Will the market slow? Yes. At some future point unknown. Pricing will hit a certain point when house shopping slows, then stops, then drops, then levels, then increases again.
The two above reasons for this feverish market could reverse our current trend. If mortgage rates RISE SUBSTANTIALLY, sales will slow. If Covid-19 falls away to something akin to normal, people will forget and business as usual until it’s not.
Stock Market VS Real Estate as an Investment? This one is easy. Invest (or not) in the stock market. Invest (or not) buying real estate to rent out. But enjoy LIVING in your home. You can’t live in blue chips.
Arizona seems to be in a unique supply and demand reality. Growing and growing migration from our most western neighbor, and continuing migration from cold weather states continues. Business relocation is finding states like Texas and Arizona very friendly towards their profit needs. There are many other reasons, but time and space has me end here.