In the last 45 days, we listed six homes under $325,000 (Mesa, Gilbert and Glendale), with each of them selling in less than a week and almost all for full price.
In each case, we were able to get our clients top dollar for their properties. What is happening in the Valley? Are we in a bubble?
According to Tom Ruff, of the Arizona Regional Multiple Listing Service, home sales are up 9 percent from last year, and Phoenix’s median home price is up 6.5 percent for the year. The improving local economy, first-time homebuyers, and relocations are driving the boost.
Many first-time homebuyers have waited years to be in the position to buy and finally are ready. Boomerang buyers who finally have recovered from short sales and foreclosures also are jumping in again. Furthermore, for two consecutive years, Maricopa County has been the fastest growing county in the country.
So, what is up with inventory? It’s low. In the hot market of 2005, there were approximately 9,000 single-family homes on the market. In 2009 and 2010, we had more than 75,000 single-family homes on the market. A balanced market, which we had last year, is considered to be around 22,000 to 24,000 homes.
Right now, we have less than 15,000 homes on the market in our entire MLS database, which includes all of Arizona, from Kingman to Bisbee. Now, you can understand why investors from all over the country are building apartments in the Valley, and builders are clamoring to get new projects in the ground.
The market intensity is still mostly below $400,000 and it is stronger in certain areas. In some pockets of the Valley, we are seeing homes that actually have caught up to their 2005 values, which is amazing to see after all we have been through. Over $400,000, the market is not as intense, but it certainly is catching up. On the plus side, this type of market structure can offer unique opportunities for those clients wanting to move up to a higher price range.
So, do we have a real estate bubble? No. In the case of our current market, investors aren’t the ones scooping up properties as much as regular individuals who are purchasing primary residences. Furthermore, buyers actually have to qualify to get a loan. Under the new Dodd-Frank lending regulations, the loan approval process is much more comprehensive than it was in 2005.
The market intensity is mostly the result of backlog. For years, new construction was non-existent in the Valley, financing was tight, first-time buyers didn’t have the resources to enter the market, and others simply were hamstrung by the consequences of the recession. We finally are just catching up to where we should have been.
The Valley is outpacing the nation in job creation, with an increasing number of corporate relocations and expansions, which means our growth is set to continue for some time. Unless we see a sudden increase in real estate inventory, our prices will continue to rise.
Do you want to learn more about how the market might impact your real estate plans? We are here seven days a week to help answer questions for you about your real estate goals. We are always happy to help. Send an email to JohnK@KORproperties.com or call (480) 568-8684.
John Karadsheh is the Designated Broker for KOR Properties. He has been a Multi-Million Dollar producing agent for more than 15 years and is an Accredited Buyers Representative (ABR) and Certified Residential Specialist (CRS). In 2014, John was voted the No. 1 Real Estate Agent in Arizona by Ranking Arizona. You can reach John at (480) 568-8684, or visit his website at KORproperties.com.
KOR Properties is a boutique real estate brokerage serving the Valley of the Sun and the creator and founding sponsor of Mesa Food Truck Fridays.