2019 has proven to be another strong year for growing home equity. Interest rates are low, income is up, and affordability remains attractive relative to neighboring states. Buyers waiting for prices to come down have been sorely disappointed in 2019.
The saga of low inventory carried over into 2020 in a big way starting off 30% lower than this time last year. Higher price points inherently soften as buyer competition wanes, but homes price correctly are selling fast regardless of price point.
Market Summary for the Beginning of 2020 provided by Michael Orr, Cromford Report.
The current situation is remarkable.
Here are the basics - the ARMLS numbers for January 1, 2020 compared with January 1, 2019 for all areas & types:
- Active Listings (excluding UCB & CCBS): 12,141 versus 17,339 last year - down 30.0% - and down 12.5% from 13,869 last month
- Active Listings (including UCB & CCBS): 15,018 versus 19,900 last year - down 24.5% - and down 14.6% compared with 17,577 last month
- Pending Listings: 4,662 versus 3,740 last year - up 24.7% - but down 20.5% from 5,864 last month
- Under Contract Listings (including Pending, CCBS & UCB): 7,539 versus 6,301 last year - up 19.6% - but down 21.2% from 9,572 last month
- Monthly Sales: 7,764 versus 6,457 last year - up 20.2% - and up 8.7% from 7,142 last month
- Monthly Average Sales Price per Sq. Ft.: $179.92 versus $165.21 last year - up 8.9% - but almost unchanged from $179.90 last month
- Monthly Median Sales Price: $289,500 versus $260,500 last year - up 11.1% - and up 3.0% from $281,000 last month
The lack of supply can only be described as shocking. A 30% decline since this time last year to reach the lowest level since August 2005. This to satisfy a population that has grown more than 20% since 2005. Anyone who thinks this severe shortage
will not result in a significant rise in prices is going to have another thought coming pretty soon. The median sales price is already up 11% over the last 12 months and the average price per square foot is up almost 9% and probably heading for a
double figure appreciation rate.
We note that December 2019 contained 21 working days and December 2018 contained 20, giving 2019 a 5% advantage. However unit sales were up more than 20% so making an allowance for the advantage still gives 2019 a win by 15%. The listings under contract
count is less impressive. While it is almost 20% up from last year it had been almost 24% up at the start of December, so gave back a little of its lead. Only a little mind you. We are clutching at straws here to find something indicating a little
cooling in the market.
Demand remains higher than normal but the Cromford® Demand Index has eased from around 107 to around 103 over the past 4 weeks. This will not make much of a difference while supply remains under half of what is needed for a balanced market.
The big hope for buyers must be for a surge in new listings arriving over the next 12 weeks. Perhaps sellers will be tempted by the higher pricing they can achieve. However if they are staying around Phoenix, they will have to pay more for their new
home too. Phoenix is currently the strongest large-city housing market in the USA and this is fueled by inter-state population movements. Retirees are a big part of that, but so are people moving here from California and other Western states for work
and the lower cost of living. Demand is likely to remain healthy despite the rising prices.
The primary question is whether we will see any change in the meager supply of homes for sale. If this is to take place it is likely to be visible over the next few weeks. There has been no sign of an improvement in new listing flows in the last several
weeks of 2019. But 2020 is a new year, so we will be watching closely for signs of change.
* Source: Michael Orr, Cromford Report