Want to know what the March statistics for the Phoenix metro housing market is? ARMLS (Arizona Regional Multiple Listing Service) does a monthly report. This gives you Phoenix housing market data. stat-march-2015
Commentary by Tom Ruff of the Information market
The overall health of our housing market continues to improve. The two most important metrics that determine where the market is headed are supply and demand. STAT is a 30,000 foot view of these dynamics, so it is important agents create similar metrics on individual submarkets. It is important to view supply and demand from a neighborhood, price point, and features basis perspective as it’s an agent’s strength or weakness at the negotiation table.
When we view supply and demand from a price perspective, a shortage of listings is readily apparent at the entry level. As we move deeper into our 2015 season homes priced below $200,000 are going to move very fast as Tina Tamboer-Glatielter of The Cromford Report recently and not so subtly pointed out:
“Whoever told you the real estate market is sluggish is horribly misinformed, especially if your property is under $200,000. As of today, for single family listings under $200,000 in Maricopa and Pinal, there are only 4,768 active and 4,337 under contract. That’s practically a feeding frenzy. You may be reaching your desired price sooner than you think.”
Where’s the new supply for sub-$200k priced homes going to come from? It’s certainly not going to come from new construction, investors cashing out, bank foreclosures or from discovery of a hidden city below Mesa.
Why’s it unlikely that new construction is going to be the hero for our low inventory problem? Because new construction has been extremely slow with only 740 new homes being sold per month on average this past year. Of those, only 12% sold for under $200,000. The average new home sold for $360,000 last year showing there is little desire to build entry level homes.
Investors Cashing Out
From 2009 through July of 2013 investors who bought to hold played a major role in gobblingp sub-200k properties. According to RENT Check published March 5, rents in Phoenix have risen 6.3% over the last year. With a hot rental market and properties appreciating, it’s unlikely they’ll sell.
Residential foreclosures have been trending downward for some time. Year-over-year pending foreclosures have dropped 28%, and lender owner sales have dropped 24.5%. On average 268 homes revert back to the bank each month, of those 75% are valued under $200,000 by our valuation model. Simply put, foreclosures aren’t going to put enough entry level homes back on the market.
While entry level buyers face a dilemma, the baby boomers are an area of opportunity. Boomers are beginning to retire, and a study done by the Demand Institute* shows the largest majority of boomers (63%) do not plan to move when they retire. Of the remaining 37%, some will move for health reasons while others more well off will be downsizing on maintenance but not necessarily price to upgraded convenience and features. As a boomer myself, a groovy pad has always been a part of our lifestyle, think black light posters, a significant album collection, stereos with subwoofers, and the water beds of the ‘70s to the wine cellars, music rooms, and designer kitchens of today. It will be an interesting phenomenon to watch the baby boomers as they retire, and when they do, it is predictable they will seek high-end finishes with nearby services and amenities.
Pending Price Index
Last month the Pending Price Index projected a February median price of $194,800 with the actual median coming in at $195,000. Looking ahead to March, the PPI projects a median sales price of $199,000. With both the number of pending sales contracts and the number of UCB listings being greater than last year at this time, March 2015 sales volume will exceed the sales volume of March 2014 of 6,712. It would not be surprising to see a sales volume figure in March of 7,500.
ARMLS® STAT MARCH 2015