Summer is officially here. The temperatures will soon be reaching more than 110 degrees and there will be no escaping the heat. This is usually the start of the time of the year that real estate begins to cool off (maybe melt off?) but this year is still looking to be anything be normal.
Throughout all of the Phoenix valley (and even extending to the far reaches) we have been seeing incredible buyer demand. Homes are being purchased for 5-10% over the list price on a regular basis and sellers have complete control of everything from start to finish.
McCormick Ranch and Scottsdale have mirrored this. We are seeing multiple offers and homes often selling well above list price. This tends to be for homes that are fully remodeled and completely move in ready.
Case in point, in the last 18 months, we have seen the average single family home price go up by more than $300,000. This is just for McCormick Ranch and only considers single family homes. This represents a 45% gain over these 18 months (or around 28% per year). This is simply astounding.
Our market still relates to the fact that we have such huge population growth over a short period of time and a very limited amount of supply. Throughout Phoenix, many houses have been taken out of the supply chain due to regular rentals or short term rentals. And, we obviously have very little room to build houses here in central Scottsdale.
In a similar matter, price per square foot is up by a substantial amount. We're seeing 25-30% gains across the board over the prior 18 months (around 17% per year).
As we look at the number of sales, we're about as high as we have ever been (even looking over the prior many years). This time last year was very muted due to the initial effects of Covid. Since then, though, we have seen a substantial increase. I'm expecting our number of sales to drop over the next few months as there simply isn't enough inventory. As of this writing, there are only 25 active and available homes and 49 under contract. This isn't enough to have 70+ sales in a month.
So what happens from here? Anyone who tells you what to expect with 100% certainty is only selling smoke and mirrors. Real estate is just like the stock market where you can't predict anything and be completely sure of yourself.
However, I am expecting we will see continued gains throughout the rest of the year. It might be slightly more muted as most people really don't want to move during the summer. It's hot and miserable- we all know that! But there is still a lot of pent up demand and people looking for the right home. My best guess is that we will see another 5-10% gains for the remainder of this year and next year. I'm not expecting a major drop right now just because we are have such enormous population growth and this doesn't seem to be slowing down.
Only time will tell!
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Randy Arriola
As we move through the start of Spring, the housing market and our temperatures are rising at the same pace. Quickly!
April marks the middle of what is our busy season for the year. Sales prices tend to have their annual rise for the year all between January and June. Then, the later six months tend to be flat.
We're definitely seeing those same gains as there has been a huge uptick since January 2021. In fact, the average sales price is up $120,000 since then. This is for a 6 month rolling average but this is skewed to a certain degree. We have seen multiple homes above $2,000,000 which definitely aren't normal. I do expect this to flatten out as we get further sales.
What is normal are $1,000,000 sales now in McCormick Ranch. So far this year, there have been 22 sales above $1,000,000. Last year at this time there were only 9. There are also another 14 homes under contract with list prices at $1,000,000 or above.
Patio homes and townhomes have been converging on one another. There is a lot of gray area with how they are listings and classified so this doesn't surprise me too much. We've seen this at times in the past.
As you'd expect, the run up in sales prices also correlates to a run up in price per square foot. All price per square foot metrics are up between 16% and 26% from the start of 2020. This is substantial!
The number of sales has also been staying strong. We started see the first hits in the armor in March of 2020. Some contracts were canceled due to the first round of shut downs and this was the start of a lull in the market. Obviously it didn't last long! There were just 48 sales in March 2020 compared with 63 this year.
April, May, and beyond are looking to be well above last year's numbers.
The market as a whole has gone up around 20% over the past year due to limited supply, a boatload of demand, and low rates. As we move forward, I'm still expecting strength and gains over the next 6-12 months, if not more. There is a backlog of demand. Buyers are losing out on homes due to multiple offers and still waiting for their next home to come up. We have such a limited amount of homes in Phoenix, Scottsdale, and McCormick Ranch that it will not be an instantaneous change without some sort of an extreme catalyst.
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Yours in McCormick Ranch Real Estate,
Randy Arriola, HomeSmart
As we move into our season of perfect weather, we are starting to get a better glimpse of what the next few months will look like on the real estate side.
And it is busy for sure!
Everything and anything is selling quickly and for more of a premium than ever before. We are seeing every type of home sell with multiple offers. The list price is might not have much basis in reality as it is often now lower than the final sales price. We are in the largest seller's market ever seen in Phoenix, Scottsdale and McCormick Ranch.
What is causing this? It's demand driven. We are (still!) the fastest growing county. We have transplants coming from California, the midwest, and back east. And our home prices are still attractive for many.
Single family home prices are through the roof and at the highs once again. In February, we saw four homes sell between $1M and 1.3M. We saw three other sales at $1.98M, 2.2M, and 2.4M. In all fairness, these three are skewing the data high.
One of the common threads has been that there just isn't any inventory. However, I'm going to take a different approach and say that number of new listings isn't that much different than before. They are just being eaten up immediately due to all of the demand! If we look at all of 85258, we're seeing around 100-125 homes come to market each month. This isn't too far out from the norm.
So what is happening? Demand! There were 298 sales in all of McCormick Ranch for the prior 6 months (September 2020 through February 2021). There were only 230 sales for the previous year. This takes a massive chunk away from the number of available homes!
So what happens next? I'm expecting more of the same. Lots of bidding wars and a continued frenzy to raise prices.
As a buyer, this isn't necessarily a bad thing. Yes, you may be paying more than you were just 3 or 6 months ago. But if prices continue to go up then you are still building equity and your current purchase may seem like a killer deal in just a few more months. With the constant demand we are having, this seems like a good possibility (although there obviously aren't any guarantees).
As a seller selling for top dollar and having a quick sale is never a bad thing.
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Your neighbor in McCormick Ranch,
Randy
