As we finish the 3rd quarter, the McCormick Ranch real estate market has turned into the seasonal slowdown.
For this year, though, slowdown likely isn't the right word.
Let's talk about what "slow" looks like right now:
1. The number of sales dropped from 55 in July to 39 in August to 36 in September. But this is still higher than the 32 in September 2018.
2. The average days on market for single family homes bumped up 3 days to 84 days. This is still very low!
3. The absorption rate (how quickly the current inventory of homes would sell if nothing new came on the market) went from 1.61 to 1.80 months. It was 2.56 in September 2018. Anything under 4 is considered to be a seller's market and you can see that we are substantially lower.
Inventory still remains incredibly low with just 65 available homes at the beginning of the month, and that is one of the major catalysts to low days on market and a low absorption rate. We usually see the number of sales drop from August through December and this is nothing to be alarmed of.
Prices have also remained very flat over the past few months. This also follows the annual trend where the majority of price increases in Phoenix area housing happen over the first 6 months of the year. So while it may look like things could be stopping their long term run-up, I still do not feel this is the case.
We should expect to have a few more fairly quiet months through the end of the year. After that, all bets are off once the true buying season commences. If inventory remains low (and buying is still spurred by low interest rates), I'd expect to see some fireworks and some substantial price increases once again.
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Late summer in Scottsdale and Phoenix real estate is usually marked by a bit of a slow down. We are all sluggish from the heat and in the full back-to-school swing of things. We normally see the number of home sales dip a bit, prices remain flat, and have a little bit of a lull in the market.
This past August, we definitely saw some of that. McCormick Ranch saw just 39 homes sell in August, compared to 55 in July. August 2018 saw 32 homes sell and so we were still up substantially over that. But prices have continued to rise.
Inventory numbers have remained extremely low and the late Summer season has done little to change this. At the beginning of the month, there were just 63 homes, condos, or townhomes available for sale. We have averaged around 100 homes for sale over the past year, so this is a dramatic difference. We are still in a full on seller's market with just 1.6 months of inventory.
With very little inventory, buyers are either having to wait on the side to find the right home or snatch up what comes onto the market right away. So, recent sales may be even higher if there were more available homes.
Home prices have continued their notch up in price over the past month. We're seeing annualized gains of around 5% from this time last year for single family homes. Price per square foot for condos, townhomes, and patio homes are also up around 5%, but pure sale prices are relatively flat.
At the start of the month we had 41 homes under contract in McCormick Ranch. I expect around 35 of these to actually close in September. This is fairly close to our 32 closings in September 2018.
We usually see inventory start to climb in the Fall. However, we will likely remain in a strong seller's market even with a substantial increase.
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Yours in real estate,
Randy
The summer sun isn't the only thing bringing the heat. What is usually a slow and sluggish season has turned out to be on absolute fire.
Like much of the metropolitan Phoenix area and Scottsdale, McCormick Ranch homes have been selling extremely quickly. This is due to two factors: limited supply and declining interest rates. And, it doesn't seem to be changing any time soon.
Over the last 6 months, we have seen a huge home buying spree due to dropping interest rates. This has continued throughout July even with news that the economy may be slowing down. Homes in almost all price ranges are being gobbled up, and McCormick Ranch is no different.
Also affecting this buying spree is that Maricopa has been announced as the fastest growing county in the country (!). There is a huge amount of demand not only from locals but those coming from California, the Midwest, and everywhere else.
When you couple that with very low inventory (there were just 69 active and available homes at the start of August), you start to see some fire works. With 55 sales in July, we only have 1.25 months of inventory. This is as low as I have ever seen.
Interestingly enough, we are mostly seeing this with single family homes. Condos prices had a big push over the past few years but have been very flat since then (although price per square foot is up). Townhomes and patio homes have been fairly even, as well. But single family homes have risen by around 9% in terms of price per square foot and 5% in terms of pure average price.
Moving forward, there are a couple of factors that can greatly affect what we are seeing.
First, is how long is this low inventory going to last? With so few homes to choose from, what is available will very likely turn into a bidding war.
Second, what will happen with interest rates? If they spike up we could quickly see demand shift and change. If they stay low for a while, the demand will stay high.
There were 45 homes under contract at the beginning of the month. So, we should see around 40 homes actually close. This still puts us less than 2 months of inventory meaning prices *should* shift a bit higher.
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Yours in McCormick Ranch real estate,
Randy
