Phoenix Real Estate Report

phoenix real estate market update1. How fast are homes selling? Average number of days on market for homes sold is 62 (up 2 from last year)
2. How many homes are for sale? We currently have 16,847 properties for sale (down 5.3% from last year)
3. What is the average sales price? Homes around the valley are selling for $341,888 (up 6.6% from last year)

July’s supply (measured by 8,802 homes listed for sale last month) was down 3.2% from July 2018 and July’s demand (measured by 9,341 homes sold last month) was up 9.3% from July 2018. In the latest rolling 12 months, average home values increased almost 7% and our current market absorption rate is only 2.14 months (keep in mind, lower is better if you are selling) and currently at its lowest level in the last year.

What is going on? Several measures of our housing market resemble 2004, the precursor to the 2005 “bubble”, unaware of the cliff that awaited us 2 years later when housing prices crashed 55% from 2007 through early 2009. Will that happen this time? Let’s look at what is similar to 2004 and then we’ll discuss what is not.

What is similar to 2004

– drop in supply: it may not look as dramatic to the casual observer, but supply hasn’t been this low since 2004.

– sales volume: this past July outperformed 2004 in sales volume. In fact, 5 out of our last 7 months have outperformed 2004 and May 2019 was a record month that outperformed both 2004 and 2005.

– price in relation to historical inflation: the long-term average rate of inflation for Phoenix is 2.1%. Generally speaking, annual appreciation between 2-3% is accepted as a comfortable and sustainable rate to keep up with wage growth and maintain a normal range of affordability. Today prices have risen higher than where they would’ve been had the market followed a 3% annual return for nearly 20 years; also similar to 2004 when average prices pulled away from the range of inflation. At 5.8%, the current appreciation rate is conservative compared to the last 8 years, but because it’s surpassed the historical “comfort zone”, sustainability and affordability are in question.

– homes sold over asking price: July saw 19% of sales with sale prices over asking price, the highest since 2013, and this measure is currently similar to 2004.

– affordability: it may come as a surprise that affordability was still normal in 2004. It wasn’t until 2005 that things went wonky. The good news is that affordability is still within the normal range, with rising private sector earnings and low mortgage rates. However it’s still on the low end of the normal range and could easily drop if earnings don’t keep up, mortgage rates increase, or prices rise too sharply.

What is NOT similar to 2004

– demand: it is currently 6% above normal, yet it was 26% above normal in 2004 and fueled by an extraordinary volume of flip investors. Today’s demand is driven primarily by people who need a place to live. The proliferation of 2004-2005 flip investors and speculators selling amongst themselves was dubbed “false demand” during the bubble.

– new construction: builders are not overbuilding and have filed only 12,028 single family permits through June this year. In 2004 they filed a whopping 27,561 within the same time frame.

– appreciation rates: annual appreciation rates per square foot are more modest today at 5.9% versus 11.3% in 2004. Reasons for this may include more conservative appraisal practices implemented after the crash and a higher percentage of buyers who are unwilling or unable to bridge the gap between the appraised value and contract price.

– skepticism: this is one thing we did NOT have a lot of in 2004 and 2005. In fact, people were mostly euphoric about the market back then and felt it would accelerate forever. Today, the very presence of skepticism and fear of another bubble mitigates the risk that we’ll see another one.

In conclusion, we are not doomed to repeat the bubble. The reality is that we’re not afraid to repeat 2004, it’s the rapid 45% appreciation rate of 2005 that sparks fear and hesitance. Many laws and industry changes have been put into place since that time to avoid repeating history. We have been here before, but this time the industry is wiser. Appreciation rates in Phoenix are forecasted to be positive for the rest of the year and into 2020.

Curious about your current Phoenix home value? Ask me for your Phoenix Property Value report created especially for your home and emailed to you within 24 hours. It is filled with local market data, demographics, pricing trends, your home’s estimated value and my confidence rating.

Data from ARMLS® COPYRIGHT 2019.

28455 N 67TH DR, Peoria

* UNDER CONTRACT * Highly UPGRADED & CUSTOMIZED Camelot Home in gated community awaits proud new owner! Expanded floorplan provides 4090sqft living space with 3 bed, 2 full bath, 2 half bath, private office, bonus room w/wet bar, professional gym & 5 car garage (1100sqft). Endless possibilities! Entertain fabulously in huge open kitchen w/island, enjoy quality time in pool & BBQing, play games in bonus room w/wet bar, retreat to private courtyard with gas firepit, relax in master jetted tub, dual head shower or outdoor heated spa. More free time & less to worry about in 2013 build, save time w/easy maintenance yard w/artificial turf front & back, save money with newer AC units & added insulation.

Gated subdivision at Canyon’s Edge Camelot Home for sale, marketed by Sonoran Mountain Ranch Realtor Andrew Robb.

Listing Price: $699,000
MLS #: 5964343
Address: 28455 N 67TH DR
City: Peoria
State: AZ
ZIP: 85383
Home Size: 4,090
Lot Size: 12,150
Bedrooms: 3
Bathrooms: 4
Garages: 5
Pool: Y
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Freon Phase-Out

end of freonYou probably recognize R22 by its common name: Freon. This refrigerant has been used in households for over 60 years to allow our air conditioners to cool our homes. During the 1970s, scientists discovered a link between hydro-chlorofluorocarbons (HCFCs) and depletion of the Earth’s ozone layer. With this link began the phase out of R22, an HCFC product, in 2010. R22 is an HCFC refrigerant that use gases to produce cool air by compressing warm air sources into liquid through HVAC coils. Freon has been an industry standard in refrigerants since the 1950s due to its efficiency.

How will this affect homeowners?
Although production of R22 will cease, there is expected to be plenty available and approved for use through December 31, 2029. Between 2020 and 2029, servicing systems with R22 will rely solely on recycled or stockpiled quantities. Homeowners are not required to stop using R22 air conditioners, nor are they required to replace existing equipment. However, homeowners should keep in mind that as supplies of R22 becomes limited over time, they may experience an increase in prices.

Phaseout dates to know:
Under the Clean Air Act of 1990, the U.S. began to outline a phase out for the use of R22 that would unfold slowly over the course of 20 years.
January 1, 2020 – there will be a ban on production and import of R22. Service of product will rely on stockpile.
January 1, 2030 – there will be a ban on remaining stockpile and import of all HCFCs.

What can homeowners do now?
The phase-out of R22 has been lengthy to allow homeowners to replace their air conditioner as they naturally age, and replace them with new energy-efficient equipment that uses EPA-approved
refrigerants, such as R410A which is a non-ozone-depleting refrigerant alternative refrigerant. It is flourine-based and contains no chlorine. R410A is also noncorrosive, nonflammable, and neutral to the environment. It is manufactured and sold under many names such as, PURON®, GENTRON AZ-20®, and SUVA®.

Purchasing a home warranty plan for the property is likely the most cost effective way to deal with the R22 Freon phase-out and conversion to R410a that we are facing. It can save you thousands when entire systems need to be replaced.

19418 N 86TH DR, Peoria

Rare opportunity to live behind the gates inside Vista Pinnacle at Westbrook Village! Great room floor plan with 2 bedrooms, 2 large bathrooms (each with separate shower & tub), highly sought-after 3-car garage with cabinets, all on an oversized corner lot! The bright sunny kitchen features an island, flat cooktop, wall oven & microwave, with spacious eat-in area. Impressive gas fireplace in great room, integrated dining area & dry bar make for splendid entertaining. Gigantic hobby room has window & tile floor, plus reconfigured laundry area inside home – not in garage! Extended covered back patio with gas stub for BBQ to enjoy private large back & side yard. Added bonus: new AC & exterior painted in the past year. Plus enjoy community pool, spa, tennis, pickleball, fitness & more!

Gated subdivision Westbrook Village home for sale, marketed by Westbrook Village Realtor Andrew Robb.

Listing Price: $372,000
MLS #: 5949798
Address: 19418 N 86TH DR
City: Peoria
State: AZ
ZIP: 85382
Home Size: 2,326
Lot Size: 10,456
Bedrooms: 2
Bathrooms: 2
Garages: 3
Pool: N
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3809 N 424TH AVE, Tonopah

* UNDER CONTRACT * Incredible home on 5 flat acres with mountain views, 1500sqft workshop (30’x50′ with electric & garage door), 3-car covered parking & OWNED SOLAR with new 5-year warranty. Exterior & interior just painted, 3 solar tubes for lots of natural light, new roof in 2010, open kitchen with island & storage, roll-out shelves & breakfast nook, laminate floor throughout, spacious family room & dining room, master bedroom walk-in closet with custom built-in, separate shower & jetted tub. Huge covered patio overlooks grass & very large pond with relaxing water feature, gazebo structure for cooking, fully fenced yard perimeter, convenient RV electric hook-up & prewired for generator, plus separate exterior storage shed, 7 hose taps around property & drip/sprinkler system.

Tonopah home for sale, marketed by RE/MAX Realtor Andrew Robb.

Listing Price: $249,900
MLS #: 5945742
Address: 3809 N 424TH AVE
City: Tonopah
State: AZ
ZIP: 85354
Home Size: 1,750
Lot Size: 217,800
Bedrooms: 3
Bathrooms: 2
Garages: 6
Pool: N
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RE/MAX Renaissance Realty
9059 W Lake Pleasant Pkwy #B200
Peoria, AZ 85382