Market Summary for the Beginning of May 2018
Starting with the basic ARMLS (Arizona Regional Multiple Listing Service) numbers for May 1, 2018 and comparing them with May 1, 2017 for all areas & types:
- Active Listings (excluding UCB): 16,329 versus 19,228 last year – down 15.1% – and down 3.8% from 16,972 last month
- Active Listings (including UCB): 21,440 versus 24,472 last year – down 12.4% – and down 1.7% compared with 21,800 last month
- Pending Listings: 7,393 versus 7,552 last year – down 2.1% – but up 3.7% from 7,128 last month
- Under Contract Listings (including Pending, CCBS & UCB): 12,504 versus 12,796 last year – down 2.3% – but up 4.3% from 11,985 last month
- Monthly Sales: 9,157 versus 8,827 last year – up 3.7% – but down 5.1% from 9,649 last month
- Monthly Average Sales Price per Sq. Ft.: $162.44 versus $151.88 last year – up 7.0% – and up 0.6% from $161.46 last month
- Monthly Median Sales Price: $253,000 versus $232,500 last year – up 8.8% – but down 0.4% from $253,995 last month
The supply of active listings without a contract got worse compared to last year, 15.1% down compared to 14.3% lower last month. We normally see supply drop between April and May and expect this trend to continue until September. Buyers can expect fewer homes to choose from, but at least there will also be a fall in the number of buyers looking at them. Buying activity tends to drop as the temperatures rise. Pending listings are still lower than last year but the gap has reduced from 5.9% to 2.1% over the last month. The number of listings under contract is also down compared to last year, but up 4.3% from last month suggesting a strong sales month in May.
Prices continued to rise during April but quite a bit slower than in March. The average price for homes under contract suggests another modest rise by the end of May.
The situation below $500,000 remains largely unchanged, still a tough place to be a buyer and little sign of any relief. The next price range up, between $500,000 and $1,000,000 has started to go a similar way, with falling inventory and price rises beginning to gain momentum. Demand is very strong over $1,000,000 but relatively plentiful inventory has been stopping prices from rising quickly until recently.
Typical of the $500,000 to $1,000,000 sector is McDowell Mountain Ranch in Scottsdale, which we will use as an example of the improving situation for sellers in this price range. With average prices around $600,000, the annual sales rate has jumped 25% since April 2017. Pricing has increased only modestly for a couple of years but has risen sharply in the last 2 months. The annual average $/SF is now up 8% from this time last year, having grown only 4% when we measured 2 months ago.
Despite a slight dampening effect of demand from the higher interest rates, there is still more than enough demand for homes to overwhelm the inadequate supply in the general market. For the highest price ranges, where excessive supply had been a problem since 2015, demand has increased to the point where the supply is now looking quite normal and prices can make some progress again.
“For sellers, the situation continues to look very good while any bargaining power that buyers possessed is gradually drifting away from them.”