Here are the numbers:
-Active listings are down 30%
-Sold listings are down 37%
-Prices have increased by +6% median sales price & + 8% median sales price per sq ft.
Over all our market in Arizona remains very strong. We are seeing the same frenzied buying as 23% of homes listed sold above asking price. More listings are currently under contract that are available for sale. Over the last few weeks the number of properties under contract has jumped by 20%.Our recovery since the COVID crash is around 68% of normal sales activity. The most active price points are the range of 200/k-400/k these include areas in the southeast valley, west valley north & south phoenix. Even the luxury market is rebounding as counteract over 500/k are up 159% for the year.Overall inventory levels are at a low point for buyers sitting at March levels of around 11/k properties. Low interest rates continue to be a driver for buyers. As stated 23% of all closed homes sold above ask price. up from 17% in Jan and 19% in Feb.
That percentage increases to 38% for closings between $200K-$250K and 27% between $250K-$300K. It’s not uncommon for sellers to experience multiple offers, escalation clauses and appraisal waivers in today’s environment. In fact, there have been reports of 70 competing offers or more on homes under $300K.
Sellers who have been on the fence about listing their home lately should seriously consider it now and take advantage while the market is hot. This spurt in buyer activity may peak very soon and then fall into the typical seasonal decline the Greater Phoenix market experiences every year from July to December. Pent up demand from the pandemic is now being released, but there’s no guarantee that it will continue at this level for long. If you planned to sell your home this year, now is the time to list it.
Supply: Our local inventory started dropping on May 12 and has continued to decrease every day since. We finished May 2020 nearly 28% below where we were at the end of May 2019 and that is nearly 48% below normal inventory levels. To keep prices under control, we need more listings, desperately. Dr. Lawrence Yun, the chief economist of NAR said, “More listings and increased home construction will be needed to tame price growth.”
Demand: Showing Time shares its physical showing request data. The requests peaked on February 22 and then immediately dropped by 63% through mid-April. As of last week, we are only 2.7% below February’s peak and only 4.8% below where we were last year. Our demand is running about 15% below normal and increased 3% in the past week.
New Listings, New Pendings, and Closings: When new pendings outpace new listings, we have a market frenzy. This week over week comparison for the southeast valley since March 15 shows an early drop in new listing counts which is concerning given the growing demand. Only time will tell if it is pent up demand or actual demand. Based on February’s demand it is likely to be actual. If this is the case, prices will rise rapidly. Closings always increase at the end of the month. May’s end of the month was not only bigger than April’s, but the closing increases started earlier. Good signs for what is to come!
Other Arizona News:
- High paying tech jobs continue coming to AZ.
- Despite the headlines, Boeing is hiring and growing.
- Mitsubishi’s location in the Falcon Field district in Mesa is growing and they are bringing in more jobs.
- Industrial building continues in NE Mesa and companies are occupying them quickly.
- More businesses have committed to moving to AZ bringing several hundred jobs.
- According to Elliot Pollack & Company as of the week of May 16 in Maricopa County retail and recreational trips are down 27.3% year over year.
- April hotel occupancy levels were 24.8%, down from 73.8% year over year and from 47.9% in March.
- Hotel demand in April was down 69.4% year over year and supply dropped 8.9% year over year. Several closed their doors completely.
Amazon hired 175,000 new employees and announced that they will be keeping 150,000 of those new employees. Of the nearly 42 million who have filed for unemployment around 22 million are collecting benefits. A study from the University of Chicago found that 68% of unemployed workers who are receiving benefits that exceed the lost earnings. Further, 20% of the unemployed workers are receiving benefits that exceed two times the lost earnings. Becker Friedman from the Institute of Economics at the University of Chicago said, “The CAREs Act actually provides income expansion rather than replacement for most unemployed workers.”
National savings rates are up; April was 33% versus 12.7% in March and 8.4% a year ago. Remember one person’s spending is another person’s income. Saving is good yet so is spending. Spending on travel is slowly increasing. According to the TSA as of May 23 travel is down 89.1% year over year, an improvement from 91.3% the week before. Traffic through Sky Harbor is down 93% year over year in April.
- We are seeing increases in second home purchases which is unusual in a financially stressful time.
- Today’s consumers are researching commute time, wifi strength, cell strength, access to Amazon Prime Now, etc. These will likely become searchable data points in the future.
- Moody’s Analytics expects that by the end of the year office vacancy rates could reach an all-time high of 19.4%.
- 75% of Americans that are working from home said they would like to continue doing so and of those 2/3 said they would like to move.
- 40% of homes do not have an extra room for a home office; 31% of people working from home are working in their living room or family room, 10% in the kitchen, and 3% in the attic.