Market Update: November Residential Numbers for Greater Phoenix
January 4, 2021
V.P. Business Development and
Real Estate Analyst Grand Canyon Title Agency
firstname.lastname@example.org Founder TheWilcoxReport.com
What to Expect for Residential Sales in 2021
Will Prices Keep Going Up?
November Residential Numbers for Greater Phoenix
For the sixth consecutive month, the median purchase price of a single-family resale home reached a new high in Greater Phoenix. It was $369,000 in November 2020. This was $4,000 or one percent higher than October 2020. November’s median purchase price is $53,100 or seventeen percent higher than November 2019 when it was $315,900.
November 2020 median monthly rent for a single-family resale home in Greater Phoenix was $1,875. It dropped five dollars from October 2020. November’s monthly median rent is up $243 or fifteen percent over last year when it was $1,632.
November 2020 sales of single-family resale homes were considerably greater than November 2019. There were 6,267 sales this November which is 1,294 or twenty-six percent more sales than a year ago. When I went into the sales archives, I found the following fact. The number of sales in November 2020 were the highest number ever for a month of November this century. Which in all likelihood is the highest number of sales for a November since the birth of Greater Phoenix. This is a product of our great population growth due to home affordability, job opportunity and weather. The average number of sales in the month of November for the last five years is 4,706 sales. November sales were 644 less than October. This was expected since there were only nineteen close of escrow days in November compared to twenty-two days close of escrow days in October.
The number of new monthly listings for single-family resale homes dropped sharply in November from October. There were 5,362 in November. This is 2,245 or thirty percent less than October. Traditionally there is a large drop off in new monthly listings in November from October. So, we do have some normality, maybe.
The length of time a single-family resale home is on the market has accelerated downward since July. Agent days on the market (ADOM) in July were fifty days. This November they were thirty-six days. In November 2019 they were fifty-two and in November 2018 fifty-nine days.
The overall level of active single-family resale homes on the market on any given day is extremely low and has been for months. This is a result of a colossal disproportion of demand over supply. On December 1 there were 4,240 listings. Six months earlier on June 1, there were 7,114 listings.
What to Expect for Residential Sales in 2021
The single-family resale market is experiencing explosion demand and rising prices. Let’s explore some reasons as to why this is likely to continue in Greater Phoenix and other areas in Arizona in 2021.
Population growth. Recent reports on population growth are based on 2019 numbers from the U.S. Census Bureau, not population numbers in 2020. Population numbers for 2020 will be coming out next year. However, it is very likely that previous population trends have continued well into 2020. So, what were the population trends before 2020? For the last four years Maricopa County and the City of Phoenix gained more people than any other county or city in the country. Last year Buckeye was ranked number two and Goodyear number fourteen for fastest growing cities in the United States with populations over 50,000. Out of Arizona’s fifteen counties the fastest growing county is Pinal County at 3.6%. Pinal County’s population on average increases by 15,500 people per year. A major reason for their growth is that industries are locating there and housing affordability.
A study from the Eller College of Management at the University of Arizona titled Destination Arizona: Where People are Moving From? And Why? suggests people are fleeing higher cost cities, especially remote workers due to the pandemic, to cities such as Phoenix and Tucson. Their report shows that both Phoenix and Tucson have a cost of living below the national average. It also showed that cities such as Portland, Denver and San Diego have a cost of living that is above the national average. See Table Two as to the cities where people are relocating from.
Retirees. Baby boomers are moving to where their children and grandchildren live. Baby boomers who do this are called baby chasers according to Zonda. Zonda found that Phoenix was the number three top location baby chasers were moving to. So expect more retirees to come our way in 2021.
Average Cost to Move a Three Bedroom Home. A current sign that more people are moving to Arizona than leaving is shown in Table Four. This Table shows it is much more expensive to move to Scottsdale from Chicago, Seattle, San Francisco, and Los Angeles then to move to one of these cities.
Low mortgage rates are another reason that is keeping the buyer fire going. Freddie Mac reported on December 3 that the thirty-year fixed mortgage rate once again hit a record low at 2.71 percent. As for mortgage rates in 2021 Freddie Mac predicts the thirty-year mortgage rates will be around 3.0 percent all year. The Mortgage Bankers Association predicts they will be around 3.0 percent the first half of next year and 3.5 percent by the end of year.
Employment. The most recent job report shows that Greater Phoenix has recovered three-quarters of the jobs that were lost. From February to April 193,000 jobs were lost, but from April to October 146,000 were gained back. This is better than many other areas in the country.
With single-family resale home inventory so tight, new home sales will continue to flourish in 2021. According to data from Jim Daniels of R.L. Brown, new home sales in Greater Phoenix from January through October were 19,858. This is 2,580 or fifteen percent more sales than at the same time last year.
As of January 1, both the conforming and FHA maximum loan amounts will be increased. The new maximum conforming loan amount in Maricopa County will be $548,250 and the new FHA maximum loan $356,362. These increases in the maximum loan amounts will fuel more buyers.
While we still are under the uncertainty of the coronavirus and how government may respond to it, it looks for certain there will soon be a vaccine with a high efficacy rate. When this happens many lost jobs will come back. Thank you Operation Warp Speed.
The New Year will not be without its challenges, but even with challenges, with hard work there should be an abundance of real estate opportunities. I wish everyone a happy and prosperous New Year!