By Mike Bodeen · 28 September 2020
We’ve been watching our Phoenix-Metro residential real estate market closely for years, but acutely since the global pandemic began earlier in the year. Particularly, our falling supply.
Originally, the numbers seemed to indicate what most of us felt was going to happen as a result of Covid-19 – a market implosion greatly slowing real estate sales and sending values south. Indeed, that’s how it all began, but instead:
Listings, in the Phoenix Metro region had been low and decreasing since 2011, the bottom of the market. From spring 2016, when listings numbered around 20,000, listing supply continued to drop annually. At the beginning of 2020 we had 11,500 listings on the market.
The market, however, instead of having listings rise as they do every year in January, they rose only slightly to 11,700 at week 3 of the new year.
During February, the Pandemic publicly surfaced. Then in mid-March, the feared implosion happened, and listings started to increase radically. From just over 10,000 homes on the market in March (week 11), that number rose to 13,302 at week 16. In 5 weeks, our listings increased over 30%.
“It’s no surprise then, to see the upheaval in home appreciation. While demand (sales) rose to a height not seen in 14 years, we are radically under-listed.”
But then, they stopped rising and began dropping radically and weekly, to just over 7,500 units for sale at week 31 on August 1st. This was a 41% drop in the next 15 weeks! We have since then leveled off and risen slightly to 7890 currently.
It’s no surprise then, to see the upheaval in home appreciation. While demand has risen to a height not seen in 14 years, we are radically under-listed. Unless demand slows big time, or supply increases substantially, we may see appreciation rivaling 2005-2006. And folks, that wasn’t healthy – not for buyers and not for many sellers.
To get an accurate look at our current appreciation we observe the 29 Phoenix area cities with the highest appreciation. The Cromford Report has provided us with an accurate look at price per square foot (PSF) appreciation comparing August 24th and September 23rd, 2020 with the same period one year ago.
One Year Appreciation (Based on Price Per Square Foot):
Cave Creek – 23.6%
Sun Lakes – 23.1%
Arizona City – 19.4%
Scottsdale – 19.4%
El Mirage – 19.0%
Avondale – 18.6%
Gold Canyon – 18.2%
Phoenix – 18.1%
Litchfield Park – 18.0%
Peoria – 17.3%
Queen Creek – 16.9%
Casa Grande – 15.7%
Gilbert – 15.6%
Fountain Hills – 15.5%
Tolleson 15.0%
Tempe – 14.9%
Apache Junction – 14.7%
Sun City West – 14.6%
Maricopa – 14.1%
Paradise Valley – 13.6%
Surprise – 13.1%
Laveen – 12.9%
Sun City – 12.6%
Goodyear – 12.0%
Mesa – 11.9%
Glendale – 11.9%
Anthem – 10.6%
Chandler – 9.6%
Buckeye – 9.0%
The Cromford Report states: The greater part of those price rises happened in the last 4 months and the next 4 months will also see rapid escalation of pricing. This will continue until the prices have risen enough to cure buyers of their enthusiasm.
Market data referenced in this article comes from The Cromford Report.