Approaching Price Tsunami in the Phoenix Area?

By Buying, Mike's Articles, Phoenix Metro Real Estate News, Selling November 11, 2019
0019-Gary (48)

Mark Twain said, “It ain’t the parts of the Bible that I can’t understand that bother me, it’s the parts that I do understand.”

That’s how I feel about writing today’s Monday Market Snapshot. There are many causes having their effects on our approaching (existing?) torrid sales market, that I don’t pretend to know, or understand, but I know enough to see an approaching market tsunami.

We reported last week about the most recent S&P Case-Shiller price index, which showed the Phoenix Metro area currently leading the nation in sales appreciation – by a long shot! Over the past months we’ve attempted to define why this is happening in our market. We would like to be able to isolate one or two concrete reasons why Arizona is being besieged by new growth, especially from California, but like an attempt to herd cats, it’s not that easy. So, what’s our concern?

First let’s view the recent numbers (For October) provided from the Arizona Regional Multiple Listing Service (MLS) and formulated by The Cromford Report:

  • Active Listings: 14,525 vs 17,953 last year – down 19.1% – but up 5.6% from 13,755 last month
  • Under Contract Listings: 9,716 vs 8,128 last year – up 19.5% – but down 1.3% from 9,848 last month
  • Monthly Sales: 8,018 vs 7,352 last year – up 9.1% – 0% change from last month
  • Monthly Avg Sales Price per Sq. Ft (PSF): $174 vs $165 last year – up 5.4% – up 2.8% vs $169 last month
  • Monthly Median Sales Price: $285,000 vs $262,000 last year – up 8.8% – and up 2.0% from $279,500 last month\

*Stats courtesy of the Cromford Report

These stats show an apples for apples comparison from last month and October 2018. You’ll note that active listings are down 19%, yet Sales are up 9% from last year and Sales Under Contract are up 19% versus 2018 – almost 20% less inventory in 2018 – this is very key to what we now see!

And this is the part I liken to Twain’s quote: What I can now see in these price increase categories comparing not from last year, but from last month, is what bothers me! Look at the “Monthly Average Sales Price Per SqFt (PSF) is up 2.8% (annualized at 34%) from September 2019 and the Monthly Median Sales Price has risen 2% from last month (annualized at 24%).

Yes, appreciation such as this bothers me. It aces out many new home buyers and can put us on a track that increases unaffordability for many – quickly. Our counsel: If you’re considering selling and buying in this market, that can be a wash if done concurrently. If you’re a prospective buyer, your time is now!

About the Author
Bodeen – 1 – Mike – Square
Michael Bodeen, Associate Broker

     I was born and raised in San Rafael, California, from the mid 50’s to the early 70’s. I had super parents who worked hard to provide 5 kids with a good Catholic education – despite my best attempts to overthrow the knuckle-cracking regime of Sister Mary Anselma. My dad worked as a self-employed butcher until his retirement at 65 and enjoyed many wonderful years until mom passed away in 1992.

     Dad passed away in the fall of 2006 having lived a great and full life into his early 90’s! In California, I attended college in Chico and Sacramento as a “Sosh” major, but like many of my contemporaries, I did not have a clue what I wanted to do when I grew up. Because of my age, I missed the Vietnam War and into my early 20’s I had many typical youthful indiscretions.

     Thankfully, that was a brief period of my life, and with greater thanks, not too much damage was sustained in those early and rebellious years. And by the way, those thanks are due to the answered prayers of faithful relatives who prayed for years that a wayward Michael would turn his life over to the Lord, and in January of 1982 that’s what happened.

     I lived in Sacramento, California in the mid 70’s, and later moved to Truckee, California, which is near Lake

Tahoe and Reno, Nevada. Truckee’s often labeled the “coldest spot in the nation.” Why did I move there?

My father-in-law was a real estate broker in Donner Lake, California, and despite his cantankerous disposition, he seemed very successful in his real estate endeavors. I joined him in sales in July of 1976.

    The Truckee and Lake Tahoe area was a wonderful place to raise a family, but a difficult and cold environment to live in, but we did so for 18 years. In 1994, my wife, Karen, and I visited Scottsdale at a friend’s request, and within 8 months, our family of 5 had relocated to “the valley” – or is it a desert? Whatever it is, it’s warm. At any rate, 24 years have gone by since we made the break from the late great state of confusion, uh, California, and it’s turned out to be a great move.

     As for hobbies, I enjoy family, friends and travel. My kids Robert, Kendra, and Jonathan are now 40,

34, and 31 respectively. I recently became “gramps” for the 4th time as well. It’s a nice time of life. Karen remains as lovely on the inside and outside as the day we were married. We continue to wonderfully grow together as the years advance. As an ordained Christian Chaplain, I volunteer Preaching at Florence Prison with Along Side Ministry. The ministry helps make the formerly incarcerated able to function, even thrive, on “the outside.”

     Should you choose to have me represent you in the sale or purchase of your home, you’ll be receiving my 40+ years of real estate knowledge, counsel, and experience (including negotiation experience).

    Beyond the transaction, I’m always available to you, should you ever need my real estate advice.