By Mike Bodeen · 31 August 2020
No matter which direction we look, the Phoenix Metro real estate market continues to be leading the country in whatever category you want to gauge.
Resale Appreciation?
Okay, the resale housing market is ablaze. The conservative 3 month S&P Case Shiller price index released a few days ago, shows Phoenix’ year over year (yoy) price increase to be 9%, which is way higher than the next highest appreciation city, Seattle, and over twice the national average increase.
The Cromford Report however, as of today, shows last year’s appreciation at 15.4%. The median price for monthly sales today is $325,000 — $10,000 (3.2%) higher than one month ago and $45,000 (16%) higher than one year ago.
Sales per year, in the year of the Covid 19 pandemic, are up 7%! We only have 1.4 months of housing (listing) supply compared with 2.0 last year, which was next to nothing back then. No end in sight here.
What about new home construction?
We’ve touched on new home construction in recent weeks. The Phoenix Business Journal reports that home builders around the valley have increased the number of new permits for the last three months adding 2799 in July, compared with 2405 in June and 1563 in May. Year to date builders pulled over 15,000 new home permits, up 8% from one year ago. Phoenix Business Journal Article
If we include both Maricopa and Pinal counties, 3003 July permits were pulled, the first time since 2007 that any month of the year exceeded 3000 permits, per The Cromford Report. Clearly, builders are increasingly bullish on the Valley.
Dare we look at the rental market?
How do I put this? Our local rental market is in crisis, from two ends. For renters, the price of rents increased each month since February 2020 when rents were at $1.00 per square foot (psf) – see chart. Today, that price is now $1.14 psf. That’s a 12% increase in 8 months, or, 1.5% rent increase every month.
“How do I put this? Our local rental market is in crisis… a 12% increase in 8 months, or, 1.5% rent increase every month.”
The other side of the crisis equation has to do with landlords and the Covid 19 moratorium on evictions, which has been extended to the end of the year. What landlord ever expected a pandemic when considering the purchase of an investment property? Not only has this cost some landlords big-time financially, but this does not bode well for the future of some renters applying for rent.
If you were a landlord, how would you view a future lease applicant if they’re in the restaurant/entertainment business, hotel and transportation fields and many others? At this hour, I’m not aware that certain occupations are an exempted class protected in law. Could that change next year?
Market data referenced in this article comes from The Cromford Report.