By Scott Gaertner
If you are not actually involved in real estate, there is a very good chance you don’t fully understand how crazy today’s real estate market really is.
As I write this article on December 9, 2020, the active listing count in the Arizona Regional MLS for the greater Phoenix area is 6,544, which is down 19% from this time in November. That is crazy low! How low? A normal market is about 30,000 listings available. In December 2008, there were 56,000 listings available.
Michael Orr of the Cromford Report tells us that the supply situation has recently gone from bad to worse with five cities, including Scottsdale, hitting record lows for the number of homes available to buy:
• Chandler: 140
• Gilbert: 116
• Mesa: 285
• Phoenix: 1,031
• Scottsdale: 725 (The lowest number since we have been keeping track!)
“This is not because of a low number of new listings. The flow of new listings was respectable in November and exceeded the total for November 2019 and 2018. However, it increased by far less than the annual increase in demand, and many of these new listings went under contract within days of listing,” Orr tells us. “We exited November with 15% fewer homes for sale than we entered it. We have run out of adjectives to describe the weakness of the supply situation. It looks almost certain that supply will collapse further during December, so if we had a good adjective, we would need a better one for January 3. Demand is extraordinarily strong for this late in the season, so we currently have a market that is more unbalanced (in favor of sellers) than we have ever seen before, even at the height of the 2005 bubble. But January will be even more extreme.”
“There seems to be a certain amount of denial in some quarters,” he continues in the report. “Concerns about delinquency rates and forbearance are being widely discussed. The idea is often expressed that this can reverse the current situation as if this is a foregone conclusion. We do not think the level of delinquency is anything high enough to seriously disrupt the housing market. For such drama, you probably need to look to the commercial real estate market, particularly the retail, office, and hotel sectors. Housing has been bolstered by the pandemic. This is a worldwide phenomenon, not confined to Arizona or even the U.S.A. At times of medical emergency, people really value their homes across the globe.”
Regarding the often-proposed notion that foreclosures and short sales will come in to flood the market with inventory,” Mike says, “It is likely that we will see more distressed sales in 2021 than 2020, but 2020 was a record all-time low, and reverting to normal would help a bit with the supply situation. In fact, we would have to see a colossal increase in delinquency from current levels just to get back to normal supply conditions.”
If that still doesn’t give you a sense of the critical nature of the real estate market today, consider this: If you are looking to buy a single-family home in Scottsdale North priced under $400,000, as of this morning, you have just one choice. And it isn’t built yet. In all of Scottsdale, you have just seven choices!
In an unprecedented sales environment like this, the stakes for buyers and sellers are higher. Wins and losses can be magnified exponentially. The National Association Of Realtors statistics tell us that 87% of real estate agents fail in the first five years. That means that the vast majority of agents have never worked in a market anything like this.
In real estate, experience isn’t expensive – it’s priceless. We have been your Scottsdale North trusted lifestyle experts for over 30 years and we can help. On the back page of this newspaper we have included some tips to help buyers be more successful. But if you or someone you know is looking to buy or sell a home, give us a call at 480-634-5000.
Scott Gaertner is an Associate Broker with Keller Williams Northeast, who for the past 25+ years has helped more people to find their lifestyle niche in the Scottsdale North area than anyone else. He also contributes his thoughts on lifestyle interests in the area.