The housing market in Arizona is gangbusters right now, but how long can the record breaking sales go on?
Real estate consultant Jim Belfiore said the surge could stick around into next year.
The Valley has not seen such high activity in home closures for 15 years.
In August 2015, the Phoenix metro area had 91% fewer buyers than July, Mr. Belfiore said at a recent virtual forum hosted by Rose Law Group.
“I think we are going to have the best spring selling season that we have had since 2005,” he said. “We may be in the fourth inning in terms of the housing demand.”
But inventory is extremely low and most people in the market to buy don’t have homes to sell.
“A lot of them are Millennials. They are in the market finally and at that point in their life stage where they are buying homes. And then you have a percentage of the market that are investors and they don’t have homes to sell either, so about 50% of buyers in the Phoenix metro area don’t have homes to sell,” he said. “You have surging demand and it all funnels into a pricing situation that’s not pleasant if you are a buyer.”
New buyers will have great mortgage rates at 2.5-3% for conventional loans but because of the low inventory, Mr. Belfiore said home buyers should act quickly.
“If you are a home buyer, if you have been considering buying a home, absolutely do it as soon as possible because home prices are jumping at a percentage rate of more than 1% on a monthly basis and we are going to continue to see that into the future because there is no supply.”
The luxury home market is no different, with $1 million contracts up an amazing 93%, compared with this time last year.
Rod Cullum, president of luxury home builder Scottsdale-based Cullum Homes, said the last two years have been the best in gross sales for him in 35 years.
He said at the forum the pandemic is changing how luxury homes are designed and built — getting a little larger because people are adding another office in the house, with working from home more common.
Luxury homes were often under 3,000 square feet, now buyers are requesting closer to the 3,000-4,000 square foot range, he said.
Luxury lock-and-leave homes that were once all the rage are not any more, he said.
“We now talk about what does the Zoom wall look like behind you? They want multiple Zoom walls. His and her Zoom walls. They need a Zoom wall if they are asking for a raise or if they are closing a deal. Some want to show the golf course or mountains in the background,” Mr. Cullum said. “Clients are wanting more locations within the house to interact with employees in different parts of the world and with clients from around the world. It has been a very interesting conversation.”
One negative effect of the pandemic on the housing industry has been the increase in lumber costs due to closed mills.
Mr. Cullum said there has been an almost 100% increase in lumber costs, which has put pressure on starter homes.
A 4,000 square foot home generally required around $40,000 in lumber costs, now it is in the range of $70,00-$80,000, he said.
“I’ve been through this three or four times in my career. Hopefully we will start to see a softening. Some are predicting end of first quarter for a more normal level,” Mr. Cullum said. “And right behind lumber, we are seeing a surge in labor costs. The labor situation is tough. There are just not enough skilled people to build homes.”
Philip Haldiman can be reached at 623-876-3697, phaldiman@newszap.com, or on Twitter @philiphaldiman.
Meet Philip Haldiman is an award-winning journalist who most recently took first place for investigative reporting in 2023 from Arizona Newspapers Association. He joined Independent Newsmedia, Inc., USA, in 2015, covering Sun City West his first year. Since 2016, he has covered the city of Peoria. Prior to coming to INI, he was a reporter with The Arizona Republic for seven years, covering numerous cities throughout the Valley. Before that, he was a freelance writer.
Community: Haldiman spearheads the Peoria Independent Hometown Heroes Awards program, honoring local individuals and businesses that give back to the community. He has hosted local candidate forums over the years and is a member of the Society of Professional Journalists. Haldiman also served as a member of the Journalism Program Community Advisory Board at Glendale Community College. Outside journalism, Haldiman served as a member of the city of Peoria Complete Count Committee for the Census, 2019-2020. Lastly, he has served as a member of his HOA governing board since 2021.
Education: Arizona State University with a BA in Journalism and Mass Communications and a BA in Theater.
Random Fact: Haldiman is a fourth-generation Arizonan as well as wrote and produced an autobiographical comic book about his time spent in Hollywood and his life as a cult film star.
Hobbies: He enjoys hiking Arizona’s mountainous landscapes and is currently working on a play for the stage.
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