By Holly Henbest, Realtor
Have we hit the top of the local real estate market? The short answer is “no,” but here are some reasons why. Over the last few months, we’ve seen what is being referred to as a “cooling” of the market. Although the “frenzy” has subsided, we have not yet hit the top of the market and prices are continuing to rise. However, they are not continuing to soar.
During the “frenzy” last spring, we listed several houses where we received over 20 offers in one day. When we list homes now, we are often seeing between five to ten offers on the first day. So, while we aren’t seeing the volume of offers on a home, we are still typically receiving multiple offers. When you receive five offers and can only sell it to one, that leaves several buyers still in search of a home.
Our price per square foot in Maricopa County increased about $10 between September to November. This is not as dramatic as the increases we experienced over the last year, but prices are continuing to rise.
While prices continue to rise, we continue to see an inventory shortage. In October, just over 10,000 total homes were sold, which was 8.5% below October 2020. New construction homes were down 22% from last year, but re-sale homes were up 6.6%. A lot of people are looking to new construction homes to help alleviate our inventory issues, but there are not enough new construction homes in process to help compensate for the lack of re-sale inventory.
New construction homes are suffering from shortages and delays with product, as well as a shortage of labor. The bigger issue, however, is the number of new construction permits being issued. In September, only 2,325 permits were issued in Maricopa and Pinal Counties; that was the lowest month since May 2020 and it was down 25% from September 2020. With new construction permits on a downward trend, we’re likely to continue to see a housing shortage for quite some time.
The issue of supply and demand remains, which leads a lot of people to assume that the market will crash when we finally catch up with inventory. Keep in mind that, while we will likely continue to see prices increase, they aren’t increasing dramatically, and we now have a new baseline of home prices and a significant population of home owners with equity. Equity in homes is at an all-time high, which will also help to support stability and prevention of a crash. When you think about the recession and the housing crash, a key component to the crash was lack of equity. Homeowners owed more on their home than it was worth, and a significant population of buyers bought their home with little or no down payment, so when the prices fell, they were upside down.
The future continues to be bright for our housing market. If you’re thinking about selling or buying, please give us a call at 480-266-8785 to determine your home’s value and the best next steps to make toward your home ownership goals. We hope you enjoy a happy and healthy holiday season in your home sweet home!
Holly has been a Desert Ridge resident since 2000 and has been a Realtor since 2006. She is the leader of The Henbest Team with Realty One Group. Holly is ranked in the top ½ of 1 percent of Realtors in Arizona and is a certified luxury marketing expert. She was also ranked #24 in 2019 by the Phoenix Business Journal and recognized by So Scottsdale! magazine as a Real Estate Superstar for 2019.