Is metro-Phoenix a “sellers market”? Are we in a housing bubble and headed for a recession?
Maricopa County AZ – Highest in-migration in USA … So what?
The “Commentary” for the “Infographic” below states that metro-Phoenix “is showing signs of moving towards a seller’s market”. A 7.9% yearly increase in the market median sale price-per-square is, indeed, very strong, especially when the median price is now right at $290,000. And all the other stats on this graphic reflect a “surging” housing market. But there are factors limiting seller exuberance, as discussed below.
The present metro-Phoenix housing market is unique in more ways than we have seen in 25+ years of being deeply involved.
The primary driving force … incredible in-migration … in terms of both volume and longevity.
Maricopa County Arizona has had the highest monthly in-migration of any county in the entire USA for 3+ years.
The historically low interest rates are obviously unique and a strong supporting factor, but don’t seem to be “the” motivator for most buyers.
Another unique “force” affecting this market is the prevailing buyer “attitude”
… yes, I am referring to an “in your face” sort of mentality
at least until the “right” product is discovered.
Metro-Phoenix home shoppers are looking for a spotless and very up-to-date home
… exactly the home they want that’s “move-in ready” exactly as-is … and that’s priced “at-market”.
“Picky! Picky! Picky” seems to fit here.
They might push the price envelope slightly but only for the “perfect” home.
Wise sellers are adapting … especially the “flippers” … at least on the surface
… the “curb appeal”, entry area, flooring and kitchens of their offerings will commonly “knock your socks off”. Be sure you get a quality, thorough inspection if you buy one of these.
In the “Price Volume” chart below ( “Price Volume” is the sum of the prices for all transactions closed that month), notice that sales volume is rather close to new listings volume and that “average” days on market (DOM) … which is calculated only for the sales … is incredibly low … 60 days. Very-well prepared homes listed at “market” price sell VERY quickly.
But many listings “just sit there” month after month … most commonly for lack of preparation but also for too-high pricing … especially those overly-prepared in terms of cost. Real skills are required for getting renovations right … and getting it done at a workable cost.
For a poorly prepared home, or one that has flooring or other significant items terribly out-of-date, or that are just “ugly”, it takes an incredibly low price to entice a sale.
No seller wants to go through the inconvenience, time spent, cost and risk of renovation
… neither does any buyer … unless paid well to do it … with a really low price.
Also on the “Price Volume” chart, notice that the 2019 max volume of sales occurred in February, March and April. More commonly the months for this are April, May and June
… but max sales ALWAYS occur in the spring,
… declining precipitously as school starts and the heat onslaught begins
… hitting bottom over the year-end holidays
That said, thousands of metro-Phoenix homes are sold every month … including December.
The high closings in January, February and March likely reflect an unusual volume of winter homes bought by snowbirds.
Click this link to see the other charts in this report including sales volume by price-range
… very interesting.
Is this a “seller’s market”?
Are we in a housing “bubble” and headed for a recession?
The answer to both is … No!
Sellers are not going to get too obnoxious facing “picky, picky” buyers.
And even in this year of “impeachment”, the probability of a national economic downturn seems low
… and that’s what it would take to affect the metro-Phoenix housing trends.
But have no doubt, metro-Phoenix housing prices are going to increase substantially in 2020.
If you’re an owner – take delight.
If you are a renter – call me! Being an owner is likely easier than you think.
Here’s wishing you and yours a GREAT 2020!