Phoenix Real Estate Market Update for August 2019

Phoenix Real Estate Market Update - August 2019

Phoenix Real Estate Market Update

The Phoenix real estate market is crazy…seriously out of whack right now.  We are about 14% low in supply compared to last year at this time. We have the LOWEST Number of new listings posted in at least 18 years. That makes it really tough for buyers. However, contracts in escrow are up over 15% which makes it INSANE!

Anybody shopping in the price range between $200K-$500K* which is pretty much everybody, is finding slim pickings, What’s really raising eyebrows is that this is not typical for August.

Record Setting Sales Volume

Overall, this year has had a mind of it’s own. We started off sluggish, maybe a sign that the market would equalize this year. Then we played a little catch-up in Spring. Then BOOM! now it’s summer madness.

Homes under contract in the $200K-$500K price range are up by almost 90% compared to last year.

The number of contracts is up overall, but when you look at the hot spot price range of $200K-$500K, it gets really crazy. Up almost 90% from last year. most double!! Why? It’s anyone’s guess. Interest rates dropped. Buyers are starting to feel like it’s “now-or-never”. Folks are moving to Phoenix and need a place to live. It all leads to a VERY HOT MARKET.

Check out Mesa for example. For every 100 houses on the market, there are 116 in escrow. In Avondale, it’s even crazier, 143 in escrow for every 100 listed. You read that right! More homes in escrow than on the market!! Not every area is experiencing this level of insanity, but most cities in Metro Phoenix are HEAVILY favoring sellers for the foreseeable future.

Record Low Listings

Typically listing counts increase mid year. This year is not typical. .

Houses are selling like hot cakes, and to make matters works, fewer sellers are listing their homes for sale.  July was THE lowest month for brand new listings going all the way back to the year 2001.  Keep in mind that the population today is 50% larger and the number of housing units is 63% higher than it was 18 years ago. Sellers are becoming few and far between.

Despite the lopsided market, prices are increasing at a pretty normal rate.

So what’s happening to prices?  Appraisers are very conservative these days and that is moderating price increases. Even though some desperate buyers would love to add $20K to a $300K asking price, appraisers are  the voice of reason and keeping our annual appreciation rate to a reasonable 6.4%. Prices will continue to climb. The sales price is the last metric in real estate, so the disparity between supply and demand today translates to higher prices 3 months from now. With the crazy imbalance in supply vs demand, prices have no where to go up until more sellers decide to sell – increasing our inventory – or buyers tap out – reducing demand.

The Bottom Line for Sellers and Buyer (and Renters)

An interesting side note: 32% of sales in this price range included some form of seller-paid closing cost assistance. That’s a reality check, sellers. Even though you are in the driver’s seat, you have to realistic when listing your home. It might sound like you can just stick a sign in the yard and start collecting offers, but there are houses languishing on the market right now because they aren’t marketed properly.

Buyers…I am still hearing from people “waiting for prices to come down”. All I can say is if you have bought 2 years ago, you’d have paid about 10%, 15%, 20% less, something like that AND you would have that equity in your pocket rather than buying less house for more money now. Bottom line…waiting for prices to come down is not a good strategy.

Sorry renters, but that “waiting to buy” strategy is going to cost you in another way. Rental rates broke through the $1/sf threshold this summer with a 15% average increase over the last 2 years. The squeeze is on…It’s getting harder and harder to find decent 3 bedroom/2 bath rentals under $2000 per month.

Real estate markets gravitate towards equilibrium. Here in Phoenix, we have been in recovery mode since 2011, with home prices rebounding from the market crash. We are pretty close to where we would have been had the crash just been a bad dream. Unlike 2005, speculation is not the driver right now. This latest rally is purely a matter of people looking for a place to live. At some point, and conventional wisdom says sooner rather than later, things will level off. Inventory levels will rise and buyers will have an easier time finding a home. So sellers, enjoy the ride while it lasts.

*news alert, under $200K is pretty much non-existent

Check homes for sale in Avondale and Mesa right here: 

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1535 N Horne -- 101 Mesa 85203, Horn Avenue LT 1-127 TR A-C

$259,900
Bedrooms: 3
Baths: 2
Sqft: 1,421
MLS: #6047292
Broker: My Home Group Real Estate
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6706 E Ellis Street Mesa 85205, Dreamland Villa 16

$195,000
Bedrooms: 2
Baths: 1.75
Sqft: 1,294
MLS: #6057718
Broker: eXp Realty
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12826 W Roanoke Avenue Avondale 85392, Rancho Santa FE

$245,500
Bedrooms: 3
Baths: 2.5
Sqft: 1,611
MLS: #6026700
Broker: My Home Group Real Estate
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107 W Rio Vista Lane Avondale 85323, Wigwam Country Estates Lot 1-91

$124,900
Bedrooms: 3
Baths: 2
Sqft: 1,080
MLS: #6056348
Broker: My Home Group Real Estate
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7741 E Wolf Canyon Street Mesa 85207, Mountain Gate AT Las Sendas

$475,000
Bedrooms: 4
Baths: 3
Sqft: 2,451
MLS: #6058711
Broker: RE/MAX Alliance Group
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2405 E Crescent Circle Mesa 85204, Summer Place 5 Lot 1-102

$294,999
Bedrooms: 3
Baths: 2
Sqft: 1,192
MLS: #6056722
Broker: HomeSmart
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9110 E Halifax Street Mesa 85207, Sierra Heights

$317,900
Bedrooms: 3
Baths: 2
Sqft: 1,595
MLS: #6054759
Broker: DPR Realty LLC
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3160 E Main Street 16 Mesa 85213, Village Grove OF Mesa 1

$132,000
Bedrooms: 2
Baths: 1
Sqft: 938
MLS: #6047634
Broker: HomeSmart
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8305 E Kiowa Avenue Mesa 85209, Sunland Village East 1 Lot 1-315 TR A-T U

$290,000
Bedrooms: 2
Baths: 2
Sqft: 1,726
MLS: #6059022
Broker: ProSmart Realty
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805 S Sycamore Street 204 Mesa 85202, Graysill Condominiums

$218,000
Bedrooms: 2
Baths: 1.75
Sqft: 1,534
MLS: #6059033
Broker: Hague Partners
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8817 E Odessa Street Mesa 85207, Metes & Bounds

$1,074,000
Bedrooms: 5
Baths: 3.5
Sqft: 4,395
MLS: #6059013
Broker: HomeSmart
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5136 E Evergreen Street 1083 Mesa 85205, Northpointe 2 Amd Lot 1001-1152

$169,900
Bedrooms: 2
Baths: 2
Sqft: 849
MLS: #6053552
Broker: Lanier Real Estate, LLC
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3037 S Royalwood Street Mesa 85212, Sunland Springs Village Unit 8

$299,999
Bedrooms: 2
Baths: 2
Sqft: 1,240
MLS: #6059017
Broker: Springs Realty
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2151 E Inverness Avenue Mesa 85204, Mesa Tierra No 3

$255,000
Bedrooms: 2
Baths: 1
Sqft: 1,114
MLS: #6048482
Broker: Keller Williams Integrity First
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220 N 22nd Place 1081 Mesa 85213, Del Camino Villas Unit 1-93 96-157

$165,000
Bedrooms: 2
Baths: 2
Sqft: 1,155
MLS: #6058818
Broker: Delex Realty
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ARMLS Listing Data last updated 3/31/2020 4:00 AM MST.