We’ve heard some rumblings lately about a potential “bubble” in the Phoenix real estate market. We’ll let Mike Orr – the Director of the Real Estate Center at ASU’s W.P. Carey School of Business and creator of the Cromford Report – speak on the subject.
“April 10 – In some parts of the valley, the market is so hot that a few people have been drawing parallels with 2005 and expressing fear of a bubble. While I agree that the Southeast Valley, Pinal County and parts of the Northwest Valley are much hotter than they have been for a while, the market is more akin to 2013 than 2005.
I think some people forget quite how ridiculous 2005 was. It was exactly 12 years ago that:
- Days of Inventory stood at 28 (currently 85)
- Months of supply was 0.9 (currently 2.8)
- Annual appreciation rate was 27.9% (currently 6.8%)
- Dollar volume was up 43.9% annually (currently up 14.6%)
- Listing success rate was 84.3% (currently 81.9%)
- Cromford® Supply Index was 41.4 (now 72.6)
- Cromford® Demand Index was 129.5 (now 106.1)
- Cromford® Market Index was 312.7 (now 146.1)
- Average percent of list for closed listings was 99.16% (currently 97.69%)
- New homes sales were 42,724 a year just in Maricopa County (currently 13,958)
The Greater Phoenix market has a long way to go before conditions get bubbly, and we should remember how few skeptics there were in 2005 that the market could ever go down. Now there are skeptics everywhere, which is a very good reason that another bubble is unlikely to develop. The next housing bubble is likely once everyone who experienced the last one has retired or passed away.”
Now that we can all rest assured that we’re not heading into another bubble, what’s the story in Phoenix real estate? Supply is significantly down from last year which is making life difficult for buyers. The monthly sales rate is very strong, up almost 11% from last year, though this year over year growth is a little less than we saw last month.
Pricing continues to advance, though not at any alarming rate. The average $/SF indicates an appreciation rate of 6.1%, better than last month’s 4.8%.
Learn more about what’s happening in Phoenix and Scottsdale real estate in this months Real Estate Rundown. Make sure to sign up for our mailing list to receive our monthly market update directly to your inbox.