By Mike Bodeen · 9 April 2018
Appreciation Up. Sales Modest. Buyer Competition Grows.
Real estate news continues in a positive vein for sellers but a negative one for buyers. So what’s new!?
First of all, let’s look at our Phoenix Metro market, the big picture, which is helpful for trends, but not necessarily to find out how your home in your neighborhood is doing. As we’ve preached often in the past, all real estate is local.
The macro view of our market follows. Starting with the basic Arizona Regional Multiple Listing Service (ARMLS) numbers for April 1, 2018 and comparing them with April 1, 2017 for all areas & types:
· Active Listings: 16,972 vs 19,810 last year – down 14.3% – and up 0.3% from 16,924 last month
· Under Contract Listings: 11,985 vs 12,556 last year – down 4.5% – but up 2.4% from 11,708 last month
· Monthly Sales: 9,566 versus 9,354 last year – up 2.3% – and up 35.3% from 7,071 last month
· Monthly Average Sales Price per Sq. Ft: $161.08 versus $148.31 last year – up 8.6% – and up 1.5% from $158.71 last month
· Monthly Median Sales Price: $253,995 versus $232,500 last year – up 9.2% – and up 1.2% from $251,000 last month
Total active listings saw a small increase of 1.7% during March, — only a 0.3% rise. At least this is better for buyers than the 1.7% decline we saw in February, but not enough to make a significant difference.
Sales increased over last year, but only modestly at 2.3%.
For pricing, there is only good news for sellers and bad news for buyers. The monthly average price per sq. ft. increased almost 9% over March 2017 and the median sales price rose by more than 9%. With pending listings priced at 0.7% higher per sq. ft. than last month, this upward trend looks likely to continue for at least another month.
The monthly median sales price was almost $254,000, which is an increase of over 9%. The sales price rose 1.2% from last month indicating that substantial price increases may be in the works.
New Large Scale Investor Arrives in Our Market!
Back in 2012 – 2013, there was quite a bit of real estate chatter about the possible effect of when institutional investors would dump their Phoenix single-family holdings that had increased in the thousands. These investors were largely responsible for the massive yet healthy upward turn-around of our market. I say healthy because they were buying and fixing up so many of these homes and converting them to rentals. This in turn improved neighborhoods and provided needed shelter for the thousands of folks having to leave their owned homes due to the effects of the great recession.
Since our memories (certainly mine) are not as sharp as they once were, you might not recall just how bad our market was. Foreclosures and short sales dominating the news. Neighborhoods suffered greatly. Homes were abandoned and often damaged in the process. Prices plummeted. It was ugly. Then, large-scale investors started buying – a lot!
The fear was that when the value of local real estate moved up, which began in 2011, these investment monoliths would then dump their holdings onto the market producing negative property saturation which would further drive down values. It never happened. Not only have these investment companies not been liquidating their inventory, but another firm has now entered our market, known as Cerberus Capital Management. Beginning in November Cerberus purchased 4 homes, then 28 the next month, then 66 in January, 222 in February, and 263 in March. Their target has been homes priced at less than $250,000. As if it wasn’t tough enough for regular buyers in this price range, it’s now getting harder. Maybe a large inventory dump right now might not be such a bad thing – and all prospective buyers replied, “Amen.”