In February, we saw many of the same trends from the preceding months. Sales are still strong, inventory is still low, and there aren't any signs that this will change in the near future.
Total home sales in all of McCormick Ranch
February 2016: 40
February 2017: 47
February 2018: 42
A tale of two numbers
When looking at Single Family Homes, prices have dipped a hair from the highs while $/sq foot has actually skyrocketed. What's the cause? Lots of smaller homes seem to be selling. All things being equal, a 2,000 square foot home will have a lower overall sales price compared to a 3,000 square foot home. Yet, the price/square foot will be higher on the smaller home.
Between February 2017 and February 2018, single family homes overall prices are only showing a 2.1% gain. But $/sq foot is up 8.3%. When looking at overall trends, I think our real gains happily in the middle of this and in the 5-6% range.
Homes are selling quickly!
The average days on market (DOM) for sold single family homes is now down to just 61 days. And, it is dropping fast into full on seller's market territory. Condos are at 60, Patio homes at 74, and townhomes at 82. Even though patio homes and townhomes sound soft that is still very quick. If you are looking, be prepared to see a home the second it is listed or you may lose out.
To look at this a different way, there were only 93 active and available listings on March 1st. With 42 February sales (and this is from a short month), that is just over two months supply of homes.
Looking ahead, March home prices appear could go up significantly
When looking at the future, there are 4 $1,000,000+ single family homes that went under contract in February. If we assume a regular 30-45 day close, they should close in March. Considering that only 6 closed in all of 2017, we could see this skew the data some moving forward. It'll be interesting to see!
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Randy
As we get the first glimpse of what the year may bring, we are already seeing the makings for a strong 2018. Granted, this is just one month but it is foreshadowing to continued increases in home prices.
In January 2018, 50 homes sold in McCormick Ranch. This is compared to just 40 in January 2017 and a paltry 32 in January 2016.
Normally the first month of the year is pretty slow and sluggish. We're in holiday mode in December and most of us don't want to think about dealing with home buying or home selling. I don't really blame you either- who wants to think about the potential of interrupting a family event for a home inspector or a showing? Or, who wants to add the extra layer of stress of buying a home on top of Christmas?
However, it didn't stop buyers and sellers this year.
When we look at pricing, I'm seeing a little bit of a split. Price per square foot has gone up and up and up over the last 12 months. Absolute home price peaked around $600,000 but has dipped a hair over the last few months. To me, this just shows that there have been smaller homes selling over some of the larger homes available here. Depending on metric you like to use, our home prices are up between 5-7% year over year.
Moving forward, I do think that we will continue to have a strong year. Right now, there are only 102 homes listed for sale throughout McCormick Ranch. This includes single family, patio homes, townhomes, and condos. With 50 sales in a home, that just leaves a scant 2 months supply of inventory. We're going into the busy season (last February, March, and April saw 182 homes close!). Without a lot of supply, we could see prices push higher even faster.
I will say that with a major caveat, though. And that is interest rates. Over the last 45 days, the interest rate on a conventional loan has increased by almost .5%. That obviously increases the payment and can reduce purchasing power. It remains to be seem if these higher rates affect anything over the next 60 days. And, if rates continue to rise, we could see the real estate market flatten very quickly.
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2017 is a wrap! It was a great year for home sales throughout almost all of the Phoenix Metropolitan area, including McCormick Ranch. Prices increased, homes sold faster, and the pure number of sales went up.
Let's start with single family. The average sales price jumped 5.2% up to $597,104. In December 2017, there were 17 single family home sales which matched December 2016. The average price per square foot went up 6.1%. For the full year, 193 single family homes sold compared to 186 in 2016.
Townhomes saw a huge bump over the fourth quarter. This was primarily buoyed by a few sales in Las Palomas. For example, a $1.06M townhome closed in December. Gotta love life on the lake! The 6 month rolling average shows a price increase of 15% for townhomes (383k vs 333k in 2016)! However, this is skewed from the couple of sales. Price per square foot was up a more modest 9.64% (also due to the large townhomes that sold).
After a very weak start to the year, patio homes also jumped over the last few months. They ended up 8.3% year over year. Days on market dropped from 152 to 82. That shows a lot more demand and interest and is a very good sign moving forward, especially as we move into the high season.
Lastly, condos rose a whopping 9.2% throughout the year. Days on market dropped from 89 to just 61. So if you are looking to sell a condo, expect it to move quickly. If you are looking to buy, be prepared for competition from other buyers! Price per square foot was up 10.3%.
Looking forward, I'm expecting 2018 to be very similar to 2017. We should still see healthy gains but perhaps on a slightly smaller scale. At the start of the year, there is still a very large lacking of inventory with just 1.75 months to sell (93 active listings and 53 sales in December). There is still a lot of demand for housing here.
Interest rates remain very low which allows borrowing power to go further. Scottsdale's population is increasing by just under 3% a year which always creates more demand. And, the economy as a whole seems to be chugging along quite nicely right now.
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Happy New Year!
Yours in real estate,
Randy
