Throughout Maricopa County the housing market is being rocked by very low supply that has not been seen in years.
Low inventory is sparking bidding wars in the residential home market right now, with active listings down 28.7% compared with this time last year and down 16.8% compared with June, according to Arizona Regional Multiple Listing Service.
And with the big dip in supply, demand has taken off.
Monthly sales are up 2.4% compared with this time last year and are up a whopping 37.8% compared to June. Experts say the monthly increases are unheard of and the market could expect further dramatic changes over the next few months.
Realtor Rebecca Durfey said it is simply low inventory, and not enough homes and qualified buyers. The combination is making for multiple offers over list price, and buyers are starting to find creative ways to stand out, she said.
Ms. Durfey has been very busy fielding offers.
Of the homes she has listed recently, she received five and six offers, and could have had more if she didn’t restrict showings after one day.
“The homes that are under $400,000 and have pools don’t have enough hours in the day for buyers to see the home,” she said. “Under $600,000 with a pool, based on showing homes this week, are just as hard. They don’t have eight or nine offers, but they do have three or four.”
This is a good thing for sellers but it is making it difficult for buyers to close on a home.
“Without an improvement in supply, life will become ever more difficult for buyers while sellers will be dealing with many competing offers even if demand were to decline substantially,” according to the Cromford Report.
“Demand has recovered from the pandemic-induced slump of April and May and is now benefiting from the catch-up effect, replacing the sales that were deferred during the second quarter. At price points below $600,000, the market is constrained by the shortage of homes for sale.”
The monthly median sales price is $305,000, up 9.3% year-over-year and up 4.1% from last month, according to ARMLS.
Ms. Durfey said this is not an unhealthy market in that there are poor lending practices, straw buyers and a high number of investors like during the Great Recession, rather this is a market of “qualified buyers,” most of which are trying to purchase for their primary residence.
“That is what we want,” she said. “What we don’t want is to have such low inventory that there are not enough homes, especially in the under $500,000 market.”
The top three cities for single family home permits are Phoenix, Mesa and Buckeye with notable spikes in Surprise, Maricopa and Queen Creek.
About 28% of all sales in July so far have closed over asking price, with the percentage peaking at 41% for homes between $200,000 and $300,000. Top cities for closings over asking price are Tolleson, Avondale, Glendale, Gilbert and Youngtown. Gilbert is the only city in that list with a median sale price over $300,000.
In north Peoria, where inventory is also low, Realtors are happy that two large housing communities will enter the market later this year — Northpointe at Vistancia and Mystic at Lake Pleasant Heights, with 3,200 homes and 2,560 homes planned, respectively.
The average home price in Vistancia North is expected to be $475,000, and the average home price in Mystic at Lake Pleasant Harbor is expected to be $377,000.
Benjamin J. Katz, owner and designated Broker of Lake Pleasant Real Estate, said this will help with supply, but the state of the current market is making it very difficult for buyers.
“Inventory is extremely low in the Phoenix area,” he said. “That is creating bidding wars, making it great for sellers and a very tough situation for buyers. Especially tough for buyers that aren’t all cash or are only able to put a little down. Literally, in most markets under $550,000, if a home is priced well and shows well, the home has multiple offers within the first 24 or 48 hours. This has caused values to go up, supply versus demand, again great for homeowners and sellers,” he said.
Philip Haldiman can be reached at 623-876-3697, firstname.lastname@example.org, or on Twitter @philiphaldiman.