As the valley's housing market continues to heat up, prices are rising and homes are selling faster than they were a year ago.

The Phoenix area experienced the nation's sharpest drop in housing inventory during February compared with a year earlier, according to data released by Realtor.com.

       The following are statistics to know about the Phoenix Metropolitan Area

                               March 16,2020

Total Active Residential Listings                                                          6,769

Total Residential Listings Under contract                                            10,351

Average Market Time                                                                        55.9 days

Compared to last year at this time                                                     72.4 days

List Price vs. sales price                                                                    99.0%

Compared to last year                                                                      98.2%

Number of sales YTD                                                                        12,171

Average Sales Price                                                                           $430,016

Compared to last year                                                                       $386,306

Based on current numbers we have an approximate inventory of 42 days.  Normal balanced market is 6 months.

Builders, buyers and investors are more bullish on new homes because of the extreme shortage of existing homes for sale in metro Phoenix and other surrounding areas.  Year to date sales of existing homes are 3,459 with an active inventory of 7,685 homes.  That means if there were no new listings the existing inventory would be sold in 2.2 months.  A normal seller/buyer market is approximately 6 months.

A repeat of the overbuilding fiasco of 2006 ( 60,000 new homes valley wide ) which was based on very speculative demand is not on the drawing board.

Additionally, buyers today are consumers with a down payment  a real mortgage and for the most part plan to live in the home.

New home construction in 2019 was about 22,000 and about 23,000 homes are expected to be constructed this year.  The current anticipated numbers are low because of a lack of new home lots available, higher construction costs and a labor shortage.

Please contact me for information on all new home subdivisions.  Builders have  spec homes for immediate occupancy or if your plans are to move in the near future, a new build takes on average 8 months for completion. I can set up a portal for you to explore subdivisions all over the valley.

Metro Phoenix is the "hottest" housing market in the U.S., according to respected national experts.

However, the term hottest is not defined as it was in the past when prices and building of homes were going up in double digits.

Metro Phoenix is hot now because prices are not expected to drop as they are in other major metropolitan areas.  The reason for the stability of our market is the  sturdy job and population growth.  In 2018, our population grew by 96,000 people and in 2019, 70,000 jobs were added. At the time of the housing bubble, our area lost 155,00 jobs. Since that time we have added 350,00 jobs during the recovery.

Valley home prices are expected to rise 4% in 2020.  Additionally, new home construction has been increasing. Slowing down the rate of new home building has been the shortage of labor.  Builders I have spoken with do not see a large influx of available labor.  Most builders are telling us that the normal lead time for  new home construction is 6-8 months.

If you are interested in new homes, I can provide information on all developments in the valley

I am often asked when is the best time of year to buy a home in Metro Phoenix.

For the years 2015 through 2018, the month with the lowest median purchase price is January. For each of these years the median purchase price was between five to nine percent higher in December than the preceding January.  By the end of 2019 we will see a repeat of this pattern.

So, now may be a good time of the year to begin the home buying process. Based on information for the last few years, we are moving into the season when purchase prices are at their lowest of the year. Of course this information is based on sales of all single family resales in Maricopa County.

If mortgage rates continue to be as low in 2020 as they have been the last half of 2019, which is likely, this will mean many buyers will be competing for new listing inventory.

Maricopa projected population growth in 2020 is expected to be similar to the last few years.  Maricopa County will lead all US counties in numeric population increase.  The city of Phoenix will lead all cities in the nation for a numeric population increase.

Employers will continue to move operations to Maricopa County to fill jobs because of our population growth and people will continue moving here because of job opportunities. As previously mentioned, Mortgage rates are predicted to remain historically low, which means more purchasing power for buyers.

A faint glimmer of good news for buyers as the supply of homes has finally stopped declining and actually rose slightly in the last week.  While active listings are still 16% lower than they were at this time last year, they are 1% higher than 4 weeks ago.  This rise can be attributed to a 10% increase in new listings from July to August.  This is not uncommon, as July is typically a low in the year for new listings.  However, this August was 3% below last August in comparison and the lowest August since 2016.  

One price range where inventory is still declining are homes listed in the $200K-$250K range.  Inventory in this price range has plummeted 51% since February.  The Southeast valley of Maricopa County has seen the largest decline of 73% in this price range for single family homes.

Employment growth in metro Phoenix was robust, gaining 58,500 jobs in the 12 months ended March 31, showing a gain of 3.1%, nearly double the national rate.  Improvement was widespread, with all sectors showing net gains.  Construction led the way with the addition of 14,000 positions (badly needed) with the sustained expansion of real estate development.  Education and health services followed closely adding 13,900 jobs, bolstered by both Arizona State University and the booming bioscience field.  Professional and business services also added 11,600 jobs, as the metro Phoenix area is competing with Texas in corporate relocation and expansions.

The Valley's housing market is still strong with prices setting new records and the number of sales continuing to soar.

Valley Real Estate experts do not see signs of a major correction.

According to Tina Tamboer, senior housing analyst with the Cromford Report, a potential plummet in the area's home prices "is not happening".

Metro Phoenix median home price hit a new record of $278,000 in May and likely climbed to $280,000 in June.

Maricopa home sales hit 10,341 in May, the highest monthly tally since the boom of 2005.

Mortgage interest rates are down from nearly 5% in November to the current rate of just under 4%.

A Housing Perspective

In the 2005-2006  boom years, prices skyrocketed about 50%.  Home prices in the past few years have climbed a more modest 6% to 8%.

This spring, the U.S. median home price did fall and the cities on the East and West coasts are seeing declines.  However, Metro Phoenix home prices are still much lower than those areas.

Also, current stricter  mortgage underwriting standards and the elimination of "crazy money" are two of the main reasons, I and others believe we are not in a bubble.  The differences between the boom years and now are significant.

The Phoenix metro area saw some of the strongest job growth during the past year, according to the latest data from the U.S. Bureau of Labor Statistics.

Metro Phoenix non-farm employment grew 3.2% from May 2018 to May 2019 according to BLS data.  That marks the largest percentage growth rate among all major U.S. metro areas with population in excess of 1 million.

In raw numbers, the valley added 66,500 jobs during the 12 month period. The leading sectors for job growth include education and health services (17,200 jobs ), construction ( 15,100 jobs ) and professional and business services( 12,800 jobs ), according to the BLS.

According to the U.S. Bureau of Economic Analysis, Arizona personal incomes climbed 5.5% from the fourth quarter 2018 to the first quarter 2019.

Home Prices continue to rise in metro Phoenix, according to the latest CoreLogic Home Price Index.

Valley home prices gained 6.2% between April 2018 and April 2019, the report said.  That's still significantly higher that the 3.6% average home price growth across the country, and was about the same reported for Phoenix in March.

Mortgage rates are significantly lower than they were at the end of last year.  Mortgage rates for a 30 year fixed rate last November were close to 5%.  Today, rates are at a two year low averaging 3.99% for a 30 year fixed rate.

Between April of this year and April 2020, home prices nationwide are expected to increase at a projected gain of 4.7%, the CoreLogic report said.

Population Growth

These two Arizona cities are the fastest growing in the US, according to population estimates released by the U.S Census Bureau.

Buckeye's population saw the largest percentage growth of any city in the country, growing in size by 8.5% between July 1, 2017 and July 1, 2018.

Phoenix saw the largest numeric increase during this time frame. adding 25,288 people for a total population of 1,660,272.

This is the third year in a row that more people moved to Phoenix than any other city in the country.

The Census Bureau announced in April that Maricopa County was the fastest growing county in the country for the third year in a row.

Jobs

What may come to some as a surprise is the nature of our job market and unexpected areas that have shown increases.  Prior to the recession, most job opportunities came from real estate, retail sales and construction.  But now, financial and business services, as well as healthcare and manufacturing, are meeting, if not outpacing, the industries previously mentioned.  Additionally, Phoenix, dubbed by some as "Wall Street West," is ranked #3 on the list of cities with the highest number of workers in the financial services industry.