Chuck Hawkins and his wife put their Surprise house on the market on a Friday afternoon. By the following Monday, it sold for $55,000 over the asking price.
A “golden egg,” as Chuck described it, but one that is a prime example of the strong seller’s market the northwest Valley has become.
The housing market in the Valley is experiencing one of its strongest seller’s markets, and it is expected to stay one for a few years. Myranda Shields, a managing partner and Realtor at CM Home Realty, sold Hawkins’ house in Surprise, and said, “this is the strongest seller’s market I’ve seen in my lifetime.”
Shields said one reason the Valley is a seller’s market is due to the halt in construction of houses when the market crashed in 2008, which didn’t pick up for about 10 years.
“We have an influx of people from out of state, an influx of people who have grown up, plus it takes seven years for a bankruptcy to fall off your credit. ... So, we have a whole bunch of buyers, and we just don’t have the inventory,” Shields said.
Shields said state construction delays along with an increase in lumber prices are contributing factors to the slow construction of new houses.
With the influx of buyers from out of state, it is making it increasingly difficult for people living and working in Arizona to buy houses, especially first-time homebuyers. They are constantly being outbid and are not able to compete with people who can work remotely and are moving to Arizona with out-of-state salaries from states such as California, Oregon and Washington.
Lisa Verghese, a Realtor with The Laughton Team, said, “I think people in other states realized they didn’t have to go into work and could live anywhere, so why not live in a house with a pool and a bigger lot. ... But it’s a struggle for first-time homebuyers in Arizona because they usually can’t pay cash and are competing with investors who can.”
The high demand for houses in the Valley makes for situations such as the Hawkins’. Their house in Surprise was listed for $470,000 and sold for $525,000. Hawkins said in the three days his house was on the market, 26 people showed interest in the house and seven people placed offers.
“We were pretty amazed. That kind of blew our minds,” Hawkins said.
The couple bought their house for $315,000 and say they put about $20,000 into it in remodels. After living in the house for two years, they sold their house for over half a million dollars, making the home appreciation 40%.
“We’ve had a lot of houses, and some have been good, and some have been just OK, but this is just out of this world,” Hawkins said.
Their home in Surprise was at the end of a cul-de-sac and average-sized but had amenities such as a pool, an RV gate, and a larger backyard than most of the houses in the area. Still, houses all over the Valley are selling quickly. Shield said “houses are selling in a weekend all over the Valley and especially in the northwest Valley.”
One indicator of the state of the housing market is the months’ supply of inventory. The months’ supply of inventory refers to the number of months it would take for the current inventory of homes to sell with the current sales pace and is calculated by dividing the number of homes sold by the number of houses for sale per month.
To give you an idea of how strongly a seller’s market we are in, a balanced market would have around six months of inventory. Around three is considered a strong seller’s market, and around nine is considered a buyer’s market.
According to data from the Multiple Listing Services in Arizona, in November 2019, the months of inventory for Maricopa County was at 2.88, and now, two years later, it is 1.64.
If you are waiting for the market to correct itself before buying a house, you might have to wait a little longer. Shields and Verghese both said that until the inventory can meet the demand, the market will continue to be in favor of sellers.
Shields said she and other realtors are noticing a slight correction in the market with higher-priced houses, which usually will correct first since the target population is smaller, but the correction is not enough to get out of a strong seller’s market.
Both Shields and Verghese said this will likely be the case for the next few years. “Over 2.5 million projected people are moving here in the next year or so, and we’re going to need to build more houses, and until that happens, it is going to continue to be a seller’s market,” Verghese said.
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