The year started bad for homebuyers in the East Valley and it didn’t take long to get worse.
So said the Cromford Report, which closely analyzes the Valley’s housing market.
It reported two weeks ago while Maricopa County is welcoming new residents by the thousands, active listings of homes are down by 30 percent from where they were when 2019 began.
Last week, Cromford had even more distressing news for buyers looking in the East Valley, stating while the Valley barely held onto the pattern of having more homes listed by Jan. 15, than there were on Jan. 1 of any year, “significant segments of the market have broken the rules and reported lower active counts on Jan. 15 than on Jan. 1.”
It specifically cited every community in the East Valley, as well as Maricopa – which 10 years ago had trouble giving away homes, wracked as it was by the Great Recession.
Overall, the fact listings were higher by mid-January than they were when the year began Valley-wide wasn’t all that much to cheer about either, according to Cromford’s data.
Inventory this month rose a paltry .8 percent between Jan. 1 and Jan. 15 – a far cry from the 7.2 percent increase in available homes for the same time period in January 2019.
“Not only are they not getting a flood, new listings are well below what we would normally expect,” Cromford said.
“After two full weeks, we have seen fewer than 4,000 new listings across all areas & types – down 15 percent from last year at this time.
“This is an unexpected turn for the worse for supply and if it keeps up, we are going to see unusually weak supply during the key buying season kicking off in February. The competition for the listings that do exist will be intense.”
Even scarier for homebuyers in 2020, is rising prices.
For the first time in Maricopa County, Cromford reported, one community registered a shocking statistic: The average price of single-family active listings in Cave Creek exceeded $1 million.
While homes on the perimeter of the metro area, such as Florence, are seeing square-foot price increases of 10 percent, others closer to the center are seeing prices rise by 8 percent.
“Most of the larger cities are around 6 percent at present but heading higher,” Cromford reported.
The imbalance between supply and demand is driving prices, but so too is the rapid increase in people moving to Maricopa County, particularly from other states and especially from California.
“The lack of supply can only be described as shocking,” the Cromford Report said of the overall situation confronting buyers in the county, noting the 30 percent decline puts inventory at the lowest level since August 2005.
“Anyone who thinks this severe shortage will not result in a significant rise in prices is going to have another thought coming pretty soon,” it added, noting:
“The median sales price is already up 11 percent over the last 12 months and the average price per square foot is up almost 9 percent and probably heading for a double-figure appreciation rate.
Analysists “are clutching at straws here to find something indicating a little cooling in the market,” the website reported.
“The big hope for buyers must be for a surge in new listings arriving over the next 12 weeks,” it said. “Perhaps sellers will be tempted by the higher pricing they can achieve. However, if they are staying around Phoenix, they will have to pay more for their new home too.
“Phoenix is currently the strongest large-city housing market in the USA and this is fueled by inter-state population movements. Retirees are a big part of this, but so are people moving here from California and other Western states for work and the lower cost of living. Demand is likely to remain healthy despite the rising prices.”
Calling current inventory “the weakest start to the year we have recorded since 2005,” Cromford noted the market also has impacted iBuyers, whose purchases of homes last month fell 13 percent from December 2018, it added.
While Opendoor and OfferPad tend to prefer homes under $250,000, “these properties are an endangered species in Phoenix” amid competition “for a rapidly diminishing pool of homes with additional competition from buy-to-rent investors,” Cromford observed.
While many iBuyers’s sales have gone up by more than half over December 2018, it added, their sales “cannot continue to grow indefinitely if purchases are declining.”
“The biggest problem facing buyers is the shortage of homes for sale,” it said. “The problem gets worse the lower the price range, but exists at all price levels up to $1 million.”
While conceding “it is a little too early to be drawing firm conclusions,” Cromford said initial signs in the market “suggest the supply problem will intensify rather than get resolved.”
It noted when calendars flipped to a new decade, numerous East Valley ZIP codes showed alarmingly low listings – including Gilbert 85296, with 20; Mesa 85208, 19; and Chandler 85224 and 85225, both around 25 homes each.
“If you are house-hunting in these areas you will find very few homes to choose from,” Cromford said, noting listings in those ZIP codes typically exceed 120.
On the other hand, anxious buyers might find better conditions elsewhere in the Valley – if they’re prepared for long commutes.
Places like Carefree, far North Scottsdale, Wickenburg and Paradise Valley all have more listings, but they “tend to fall into one of two camps – very expensive or very remote from the center of the Valley,” it said.