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\
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!