Arizona Real Estate Market Update August 17, 2020
SHOCKING BUT TRUE STORY OF THE WEEK
Property Market Comparison value $300,000
Property listed at $325,000
52 offers received over the course of 1 weekend
Final purchase price $360,000
This was a financed purchase, appraisal came in at the $360,000 price.
Week #33 (August 9th-August 23rd)
Yes I said the Cromford Market Index was officially the HIGHEST EVER RECORDED last week and just like our temperatures outside, we are breaking records again this week.
These numbers don't mean much unless you can compare against previous years. This chart from 2 weeks ago already beat the all time high from back in 2005 ... and we are even higher today with no reprieve in sight.
Last week I reported 33% of all sales in the Greater Phoenix area that closed last month were over list price (hint hint to some Buyer's that still think they can offer below the list price). In some areas, like Gilbert, we are seeing an even higher percentage. Think of list price as the 'starting' price.
This is NOT a bubble for the simple reason that 83% of these purchases (also the record high) are owner-occupied purchases. Only 8% were identified as landlords, 8% as second homes and less than 1% as IBuyers on the Affidavit of Values when they closed.
Despite what many Arizonans may think as we've been so spoiled the last decade, our prices are actually 'not out of whack'. In fact, with the numbers released for Q2 2020, Arizona has inched up to a more affordable price point from where we were pre-COVID.
The Housing Opportunity Index (HOI) for a given area is defined as the percentage of families that could afford to buy a home in a specified area. Nationwide, 59.6 percent of new and existing homes sold between the beginning of April and end of June were affordable to families earning an adjusted U.S. median income of $72,900. This is down from the 61.3 percent of homes sold in the first quarter of 2020 that were affordable to median-income earners and the lowest reading since the fourth quarter of 2018. But for Arizona, we had a significant move upwards (which is a good thing) beating the national percentage with 64.8%. This is the number to watch, not actual prices. Ideally we want to stay between 60-75.
Home prices continue to rise across the U.S. and while millennials have delayed homeownership, evidence suggests they are now jumping in to the market with both feet first. Their biggest financial constraint is the lack of down payment or the knowledge of how to even get started. Most grew up in households that were affected by the crash and their parents had nothing great to say about homeownership. With home shopping so accessible and just a click away, many potential Buyer's do not know where to start. Lining up with an experienced and knowledgeable Realtor in today's market is key. This is not a market to use a friend, neighbor or family member thinking they're doing you any sort of a favor. Go back to the 'story of the week''. Don't think that Buyer agent that wrote that winning offer just happened to be lucky that the appraisal came in (and didn't cost the Buyer a ton of money out of pocket to cover the difference). This only comes with local area expertise.
The median rent has hit an all time high for the Greater Phoenix market at $1,795/mo for a single-family home 1,500SF-2,000SF. In the southeast valley, the newer apartment communities run at that same rate for a 2-bedroom, older communities are even seeing over $1,700/mo for 3-bedroom units that do not come with garages. Great news for landlords, tenants however will potentially see rent increases as their leases come up for renewal.
Are you still waiting for the market to drop?! Well, when looking at the Cromford Market Index today (the black line) which is followed by appreciation (the blue measures), you are missing a whole hell of a lot of appreciation (16% right now for the year) before anyone will see that.
With more than one-third of the homes listed on MLS being sold for over list price, there is honestly no better time than the present to get yourself ready to buy a home as soon as it's possible for you.
And if you have a home to sell before you buy, we should talk! I GUARANTEE that I will sell your home (even if you aren't buying a new-build) for less money than any other agent/broker out there!
Sheryl (Shey) Willis, CNE
GOARIZONA REAL ESTATE
Maricopa County Real Estate Special Commissioner
Zillow Premier Agent
Redfin Partner Agent
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Sheryl Willis, Go Chandler and eXp Realty does not engage in or condone activities which illegally discriminate on the basis of race, color, religion, sex, age, national origin, disability, familial status or any other protected classification under federal or state law.