Active Listings in Greater Phoenix Down 14% to Start the Year
We hope everyone’s 2018 is off to a great start! We’re off to an interesting start as far as real estate is concerned. We already had a low number of active listings and have started 2018 with even fewer homes for sales. A few top-priced areas are still well-supplied but the vast majority of areas are seriously short of homes for sale. We have been commenting on a short supply for many years but in 2018 the situation for buyers is more difficult than it has been since 2012.
What happens when supply is this low relative to demand? Prices have to rise at an increasing rate to balance the market, so reducing demand, in theory at least.If you’ve given any thought to selling your home, 2018 may be the time to do it and get the best price.
Here are the ARMLS numbers for January 1, 2018 compared to January 1, 2017 for Greater Phoenix (all areas and property types).
Active Listings: 16,697 versus 19,397 last year – down 13.9%
Monthly Sales: 7,187 vs 7,133 last year – up 0.8%
Monthly Avg. Sales Price Per Square Foot: $156.44 versus $144.68 last year – up 8.1%
Monthly Median Sales Price: $245,000 versus $225,000 last year – up 8.9%
Here’s a closer look at the numbers for December 2017 compared to December 2016 in the following cities (single family homes only).
Active Listings: 2,258 versus 2,472 last year – down 8.7%
Monthly Sales: 390 vs 365 last year – up 6.8%
Monthly Avg. Sales Price Per Square Foot: $248.93 versus $236.09 last year – up 5.4%
Monthly Median Sales Price: $555,000 versus $494,900 last year – up 12.1%
Active Listings: 3,680 versus 3,775 last year – down 2.5%
Monthly Sales: 1,297 vs 1,229 last year – up 5.5%
Monthly Avg. Sales Price Per Square Foot: $160.90 versus $152.86 last year – up 5.3%
Monthly Median Sales Price: $248,000 versus $235,000 last year – up 5.5%
Active Listings: 301 versus 344 last year – down 12.5%
Monthly Sales: 49 versus 65 last year – down 24.6%
Average Sales Price Per Square Foot: $194.70 versus $192.06 last year – up 1.4%
Median Sales Price: $425,000 versus $440,000 – down 3.4%
Active Listings: 662 versus 847 last year – down 21.8%
Monthly Sales: 288 versus 320 last year – down 10%
Average Sales Price Per Square Foot: $159.48 versus $154.58 last year – up 3.2%
Median Sales Price: $296,575 versus $285,000 – up 4.1%
Active Listings: 837 versus 980 last year – down 14.6%
Monthly Sales: 371 versus 389 last year – down 4.6%
Average Sales Price Per Square Foot: $148.52 versus $141.58 last year – up 4.9%
Median Sales Price: $306,000 versus $290,000 – up 5.5%
Active Listings: 276 versus 297 last year – down 7.1%
Monthly Sales: 120 versus 102 last year – up 17.6%
Average Sales Price Per Square Foot: $168.65 versus $160.30 last year – up 5.2%
Median Sales Price: $296,000 versus $268,500 – up 10.2%
Active Listings: 712 versus 774 last year – down 8.0%
Monthly Sales: 301 versus 274 last year – up 9.9%
Average Sales Price Per Square Foot: $131.50 versus $125.16 last year – up 5.1%
Median Sales Price: $232,000 versus $217,500 – up 6.6%
If you’re interested in a more detailed breakdown of what’s happening in your area, contact us. Data and commentary shared with permission by The Cromford Report®
With supply down 13.9% to begin the year, buyers will be facing increased competition for homes. Here’s what Michael Orr with the Cromford Report has to say about the data in his market summary for the beginning of 2018.
“Starting the year with 14% fewer homes for sale than last year is more bad news for buyers. Even with a fresh batch of listings arriving over the next few months, they will have only about 65% of what we would consider normal to choose from. Bidding wars will continue to be the norm for the lower half of the market and are likely to get even more intense.
Demand is nothing special. December’s sales were barely able to record an increase over December 2016 and listings under contract are down almost 3% compared with last year. To be fair, supply is so low below $200,000 that the usual number of sales below this figure is impossible to achieve. If there were more supply then sales would increase. However the trend is strongly in the opposite direction, so I would not hold my breath.
The current imbalance between very low supply and normal demand generates substantial upward pressure on pricing. The average $/SF is up over 8% from a year ago and the monthly median sales price is up almost 9%. These are strong appreciation numbers given that inflation remains tame, but last year had a smaller imbalance than we have now. The Cromford® Market Index stood at 155.4 on January 1, 2018 up from 144.5 12 months ago. Both supply and demand are lower now than they were this time last year, but supply has dropped much further than demand. So unless there is a major shift in direction, it makes sense to expect prices to rise faster in 2018 than they did in 2017. In theory this should lead to further cuts in demand.
There is another factor at play in 2018. Mortgage rates have been on a distinct upward path for the last 4 months, especially the 15 year and ARM rates which have moved up faster than the 30 year rate. I anticipate that homeowners will increasingly prefer the terms of the loan they already have to the terms they could get on a new loan. This is likely to reduce both supply and demand but be beneficial to companies that specialize in modernization and refurbishing properties.
All the comments above apply exclusively to the market below $1 million which accounts for 98% of units sold. However the 2% of the market over $1 million benefits from having 12% of the active listings – six times it’s fair share. Consequently buyers have a much easier time if they are planning to spend $1 million or more and sellers are rarely in control of the negotiations. This is why you see some spectacular price cuts in the high-end market and a sales pricing trend that is flat to slightly lower. We should emphasize that this applies to the re-sale market and not the new home market, where pricing has a trajectory all of its own.”
City Rankings – Annual Average Sales Price per Square Foot
For more information on market conditions in your area and how they may impact your goals to buy or sell, contact us at Info@CarmelleAZHomes.com or call/ text us at 480-648-9253.