Phoenix area home prices are up an average of 10% from this time in 2019, and selling in an average of 10 days, making Phoenix the hottest real estate market in the country.
Supply and Demand
The issue is simply a matter of supply and demand as inventory remains at record lows down 27.8% compared to 2019. In July, overall listings dropped 9.6% resulting in only 13,006 listings compared to over 18,000 a year ago.
Maricopa county continues to lead the country with population growth as people flee overpriced markets in California and major northern cities across the US. This high demand coupled by homeowners reluctant to list their properties during the global pandemic has resulted in a severe shortage of homes for sale.
The shortage of inventory along with record-low interest rates, has pushed home prices to record levels. Sellers who list their property at fair market value can expect multiple offers and bidding above asking in many areas.
“We have had clients list their home and on the first day they receive multiple offers at or above asking price” says Miles Zimbaluk, CEO at Canada to Arizona and lead real estate agent for the Canada to Arizona group with HomeSmart. “We are helping many Canadians list their homes remotely while they are stuck in Canada. Many have decided to capitalize on this seller’s market and also the lower Canadians dollar.”
Home sales in terms of gross dollar volume for the year are the highest on record. Even after suffering the COVID dip, 2020 still leads the way.
The 10,303 home sales were not only the highest number of sales ever recorded in July, but one of the highest monthly totals ever. Sales normally don’t peak in Phoenix in July. The high-water mark for sales usually occurs in March, April, May or June. It is now clear that COVID-19 only paused sales, which in turn created pent up demand.
The record sales were accompanied by record home prices. The price per square foot for July was $190.87, surpassing the previous record set in May of 2006. The average sale price as well as the median sales price also reached all-time highs of $391,600 and $315,000 respectively, leading to the highest monthly dollar volume in history.
The incredibly strong market is further fueled by the lowest interest rates in the 50 years. The average interest rate on a 30-year fixed-rate mortgage fell to a record low of 2.88% the first week of August. The 15-year fixed-rate mortgage dropped to 2.44%.
As for the longer term, nobody knows how long this extreme market will last, but we do know things will eventually change. Expert analysts believe median price gains will moderate through the end of the year as the normal seasonal patterns finally kicks in. Much is dependent on the global pandemic and the US election in November.
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