By Mike Bodeen · 8 March 2021
The current housing crisis continues unabated and it’s very tempting to think in terms of a “bubble” or “bust.” The Cromford Report recently discussed this issue and calmly points out the facts. According to them, there are four options we have for shelter which are ownership, renting, homelessness, and house sharing:
Ownership: February’s median sales price (see below) shows an 18% increase over the past year but increasing at a greater rate each month – up 2.9% last month. Interest rates are rising.
Renting: The numbers show that in the Greater Phoenix metro areas, rents have increased 21% this last year on a rent price per square foot basis – from $1.01 PSF to $1.22 PSF. Cromford points out that it should always be a red flag when rents and purchase prices move in opposite directions, such as they did in 2004-2005 when rents fell 6%. Something is wrong in a market that does that. Therefore, it appears that the price of buying a home and renting a home is similarly affected by our current supply and demand factor.
Homelessness: Not good.
House Sharing: If ownership and rentals are too much, look for more families and friends hunkering down together to split their housing costs. This however adds to further pent-up demand as those house-sharers will try and buy or rent as soon as they possibly can.
February’s Numbers:
Active Listings: 4,491 vs 11,003 last year – down 59.2% – and down 13.3% from 5,180 last month
Under Contract Listings: 12,630 vs 11,988 last year – up 5.4% – and up 8.7% from 11,617 last month
Monthly Sales: 8,020 versus 7,470 last year – up 7.4% – and up 9.1% from 7,354 last month
Monthly Average Sales Price per Sq. Ft.: $227.89 versus $185.09 last year – up 23.1% – and up 4.8% from $217.47 last month
Monthly Median Sales Price: $349,000 versus $295,000 last year – up 18.3% – and up 2.9% from $339,000 last month
The High-End Continuing Trend
Paradise Valley, Cave Creek, Scottsdale and Fountain Hills, per Cromford, “are all moving strongly in favor of sellers and finding a home is tough even if you have more than $2 Million to spend. We have never experienced such a low supply of luxury homes alongside exceptional demand, fueled in part by well-funded migration from other states.”
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Market data referenced in this article comes from The Cromford Report.