By Mike Bodeen · 17 May 2021
In our Monday Market Snapshot, we discuss a number of the market’s different facets, but mostly we concentrate on the residential real estate market. Because of Arizona’s population growth, and specifically, the Phoenix Metro market, we are more recently including the new home industry and the residential rental market.
The news currently is our radical resale appreciation rate, which no matter how you slice and dice it, is escalating at extreme rates. The chart below is showing our annual appreciation based on the monthly average price per square (PSF).
Dissecting that a tad, we note that 2019 started the year at a “typical, normal” annual increase of 5% PSF and ended the year at an 8% clip – strong, yet healthy. The 2020 pandemic year started at the 8% level and dropped in half as the Pandemic reality began to hit home in Spring. At this point, most all market observers were looking at a large, possibly huge market downturn – but the market bottomed the third week of May.
And then, the unimaginable happened: Sales increased. Inventory, after a brief rise, continued its drop and the lack of the supply of homes to buy continued descending. The result looking at the chart shows a continued and dramatic rise in values, especially these last two months showing a 37% rise from this time last year. (See Chart)
And Then, There’s the Rental Market!
Our real estate sales market is crazy enough but the same Phoenix metro rental market is in a parallel universe as well with lack of supply, high demand and spiking values. (See Chart)
Our rental market began its price escalation in 2014. At that time the monthly average lease price per square foot (PSF) was .70 cents PSF. In 7 years it has risen to $1.16 PSF – a 66% increase based on year over year. The actual PSF for the Month of May so far has hit $1.28 and this compared to $1.00 PSF one year ago, or a 28% rise in rental prices.
And the beat goes on.