Market Update for May 2015

The spring real estate market is in full swing here in The Valley of the Sun. As temperatures start to rise, the housing market always seems to follow.

 

The supply of homes in Phoenix has been relatively low for a city of our size – with only about 3 months worth of inventory. This means if no new homes were listed for sale, Phoenix would run out of homes in about 3 months. Even though our inventory of homes is low, the demand for those homes has been relatively flat as well. This is why, for the most part, the lack of inventory has gone unnoticed.

 

Recently, there has been a change. More and more new buyers have started to enter the real estate market.

 

This new trend is especially evident in the sub $200,000 market, or first time home buyer market, where the monthly inventory is even lower. In this emerging market, there is only about 1.5 months worth of inventory. Already, we are seeing a comeback of multiple offer situations, higher home sale prices, and homes with fewer days on market. Buyers are losing the bargaining power they’ve enjoyed as the pendulum swings back towards sellers.

 

Think this doesn’t effect you? think again.

 

Most real estate markets are driven by first time home buyers. As these new buyers enter the market, existing home owners often see their homes increase in value. A form of Trickle Up Economics if you will.

 

Michael Orr at the Cromford Report is a great person to follow to learn more about the current state of the housing market. He’s basically the Nostradamus of Arizona Real Estate trends.

 

According to Michael Orr:

“The lack of supply of entry-level homes is a very troubling sign. The most obvious source of new supply would be the large number of homes that are currently owned by landlords and used as rentals. However vacancy rates are low, rents are rising and these landlords would probably buy more properties if they could rather than sell them off. There are remarkably few new homes being built below $200K and if this situation persists, it is going to remain a very competitive struggle for buyers. Prices are likely to rise faster than earnings. This is good for current homeowners but bad for those currently renting and wanting to get started in home ownership. This could become even more of a problem if mortgage interest rates rise, adding to affordability problems for the first time home buyer.”

 

Curious about the current housing numbers and statistics?

 

Take a look at what The Valley did in April versus March, as well as April 2015 versus April 2014.

 

• Active Listings April 2015: 21,512
• Active Listings March 2015: 22,203
• Active Listing April 2014: 26,205
  • Phoenix’s housing inventory is down almost 18% from last year and down 3.5% from last month.
  • Due to low supply and increased demand we’re going to see prices and home values start to inch their way up.

 

• Under Contract Listings April 2015: 12,276
• Under Contract Listings March 2015: 11,988
• Under Contract Listings April 2014: 10,584
  • The number of homes under contract is up almost 16% from last year  and up 2.4% from last month.
  • Buyers are out in force and homes that are listed accurately are selling fast.

 

• April 2015 Closed Sales: 8,363
• March 2015 Closed Sales: 7,887
• April 2014 Closed Sales: 7,572
  • The number of homes that sold is up 10.4% from this time last year, and up 6.0% last month.
  • This figure is showing that the Phoenix real estate market is really active right now.

 

• April 2015 Average Sales Price per Square Foot: $135.88
• March 2015 Average Sales Price per Square Foot: $131.99
• April 2014 Average Sales Price per Square Foot: $130.27
  • Up over 4.3% from this time last year, and up 2.9% last month.
  • This is a positive sign for sellers in the short term and a real downer for buyers right now.
  • I attribute this to simple supply and demand. There isn’t a lot for sale out there so prices for what is are going up.

 

• April 2015 Median Sales Price: $202,000
• March 2015 Median Sales Price: $200,000
• April 2014 Median Sales Price: $190,000
  • This number is up 6.3% from this time last year and up 1.0% from last month.
  • This number shows that the number of homes priced below $200,000 is shrinking quickly.

 

Curious what your home is worth check out our home value tool or search the entire MLS for free at NewPhoenixListings.com