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April 2021: Arizona housing Market Update and how to predict where home values are going.

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Phoenix is one of the hottest real estate markets in the U.S. The Greater Phoenix housing market is booming. The buyer demand refuses to die down despite increasing mortgage rates. The median sales price has reached $360,000, which is an increase of $55,000 or +18.1% from the April of last year. There was a good supply of new listings in January 2021 (up 26% MTM) but the momentum took a dip in February 2021 (+0.1% MTM), according to the latest data released by ARMLS.

As a result, the total supply of properties is not enough to meet the demand in the Greater Phoenix real estate market. In fact, the month’s supply has dropped to 1.14, which is a record low in this housing market. Total inventory has a month-over-month decrease of -7.7% while year-over-year reflects a decrease of -43.8%. April’s sales were up by nearly 8.2% from the previous month and +5.2% from the previous year.

The pandemic could only pause sales, which in turn created a huge pent-up demand. As we saw Arizona real estate market thriving & becoming sizzling hot in the past couple of years, even the rise in mortgage rates was believed not to affect it. Low-interest rates are helping boost but the inventory is sparse. High demand and low inventory have increased prices, which is a piece of good news if you plan on selling.

Cromford market index.

Predicting future house prices.

If you’re trying to predict future prices in Arizona, there is no other chart you need to go to other than the Cromford market index, click here to review monthly.

Cromford Market Index™

Cromford Market IndexTM is a value that provides a short-term forecast for the balance of the market. It is derived from the trends in pending, active, and sold listings compared with historical data over the previous four years. Values below 100 indicate a buyer’s market, while values above 100 indicate a seller’s market. A value of 100 indicates a balanced market.

The Cromford Report™ provides detailed information to track the history and current status of the Greater Phoenix residential resale market and offers unique insight into its future direction. Its currently hovering over the 500 mark and for it to go to 100 for a balanced market, would take up to a year in a worst-case scenario. Only when the index is below 100, then prices would then start to come down. In the Crash of 07 it took 8 months to fall from 315 to below 100.

Foreclosures

If you’re waiting for the market to turn because of foreclosures, think again. I just completed this blog explaining why we will not see any foreclosures anytime soon, click here to view.

Changes that the industry has seen in the past 6 months.

  • Multiple offers. As a seller, if you price your home at a fair price, more than likely you will receive multiple offers, your agent should be well equipped to handle this situation drawing the most money out of buyers as possible. As a buyer, it’s tough out there.
  • Appraisal waiver/limit. Many offers that I’ve seen as of late include an appraisal waiver or a waiver for a limited amount over appraisal such as $10,000. I am not a fan of this at all.
  • Post possession. To make a buyer’s offer look more attractive, they are letting sellers stay in their own home for as little as 3 days up to 6 months for FREE. Crazy yes.
  • Buyers are waiving petty things like home warranty, seller concessions, shorter inspection periods, and quick closes. These are all nice for the sellers but ultimately price is your master indicator of acceptance.
  • CASH offers. Yes, you would not believe how much cash is floating around out there. All-day. Cash offers are king because a lender cannot screw up the deal as we’ve seen as of late. If the appraisal is waived, this makes it a very appealing offer, but how much $$ is it worth? It’s all cash in the end.

Hope this helps, please call me if you have any questions at all. Remember study the cromford market index and you will be able to tell where prices are heading.

Jay Bru

480-466-4917

jay@jaybrugroup.com

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