It’s time for our Urban Team Phoenix real estate market update March-April 2014. In this article we’ll talk about what’s happening in the greater Phoenix real estate market as well as probe the downtown Phoenix hosing market.
How is The Phoenix Real Estate Market Doing?
In general, the Phoenix real estate market is slow and steady. The housing supply continues to grow. According to Michael Orr at ASU, supply is up well over 50% from this time last year.
The other side of the equation, demand, is a different story. Normally home sale are pretty robust during the early spring buying season, but not in 2014. Michael Orr says sales in February and March were down 21% from a year ago and pending (homes that have gone under contract) are down closer to 40%.
Thankfully, April’s numbers are looking better. The list of cities and their homes sales listed below offers insight into how various areas are doing. Tempe is rocking with sales as is Paradise Valley, AJ and Laveen. We are also seeing decent sale in some of the retirement communities like Sun City and Sun Lakes. Here is the list:
- Tempe (115 versus 112)
- Apache Junction (61 versus 68)
- Laveen (61 versus 66)
- Paradise Valley (31 versus 33)
- Sun City (130 versus 139)
- Sun Lakes (65 versus 67)
The following cities are showing some improvement yet still well below week 15 last year.
- Avondale (107 versus 138)
- Buckeye (146 versus 180)
- Cave Creek (44 versus 62)
- Chandler (345 versus 429)
- El Mirage (53 versus 65)
- Fountain Hills (41 versus 55)
- Gilbert (389 versus 481)
- Glendale (283 versus 341)
- Gold Canyon (40 versus 57)
- Goodyear (148 versus 174)
- Maricopa (126 versus 181)
- Mesa (591 versus 640)
- Peoria (229 versus 283)
- Phoenix (1,306 versus 1,561)
- Scottsdale (415 versus 518)
- Sun City West (109 versus 124)
- Surprise (305 versus 372)
- Tolleson (42 versus 50)
We expect to see modest demand from Mid-April to Mid-July as families traditionally make moves before the new school year starts. The increase in demand is likely to increase actual sales but little data suggests home values are on the rise. The exception to flat values is the luxury market where we are seeing modest price gains.
The graph to the right shows how appreciation has fallen this past year. Some would say this is a bad thing, we disagree. The greater Phoenix market saw home values jump significantly in 2012 & 2013. We feel the shift to modest gains and reduced market demand as signs of the market finding healthy equilibrium.
What’s happening in the Downtown Phoenix Region?
Downtown Phoenix’s market is behaving much the same as other areas. Here are some bullet points to take a look at (Data comes from ARMLS):
- Active Listings:
- Single Family Homes = 150 and Condo/Lofts = 90
- Homes/Condos Under Contract
- Single Family Homes = 62 and Condo/Lofts = 16
- Home/Condo Sales (March 1-April 14, 2014)
- Single Family Homes= 49 and Condo/Lofts= 17
- Average Sales Prices
- Single Family Homes= $185,000 and Condo/Loft=$150,000. No SFH homes sold in the $400-$700K range, yet many in the $250K-$375K.
What Do the Numbers Mean?
The most significant tell is that demand is strongest for homes and condos priced under $300,000. The fact that no home in the $400,000-$700,000 range sold in March-mid-April is both interesting and significant. Home buyers are still cautious, willing to wait to find the right place and many want the place mostly move-in ready. Successful home sellers tend to be those who realistically price their home, have places that are move-in-ready and have charming qualities. Home sellers should not be surprised if their homes is on the market for a few months. The graph (right) shows the months of supply increase we’re seeing.
FYI: Many downtown buyers are Millennial’s. They tell us they want a sense of community, a warm-welcoming home to entertain friends, walk-ability and authenticity. It is no wonder this generation is choosing to buy in downtown Phoenix and why cozy homes with historic features are so welcomed.
What to Expect In the Coming Months:
We expect to see inventory numbers to continue a modest rise. Many of the investor flippers are out of the market now so most new inventory will likely be personal properties and some from the investor/landlords who bought in 2009-2012.
It would be reasonable to suggest more demand as we end the school term and new ASU/UA staff is added for the coming term. In addition, Cronkite News reports that Arizona is expected to be #2 in the US for job growth in 2014. Since downtown is home to the bio-medical and education sectors biggest job winners, we expect to see better than average demand.
On a personal note, historic home buyers seem to want historically authentic or at least cozy feeling homes. Many of the flippers have gutted homes and replaced interiors with contemporary materials like granite counters, travertine tile, fake wood floors and Ikea kitchens and baths. We believe many buyers are attracted to historic homes because of the vintage feel. Just food for thought for those thinking about a remodel.
That’s our Phoenix real estate market update March-April 2014. If you have questions, please know we are here to answer them. We believe a well-educated home owner or home buyer is a good thing.
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