January 2020 update for McCormick Ranch

The start of the year is a time that we can enjoy the beautiful weather and perfect temperatures here in Scottsdale. It also allows us to take a look back on the previous year and see what happened in the real estate market.

Back at the start of 2019, I was expecting gains in the 2-4% range for much of the Phoenix metropolitan area. Interest rates had been climbing, we were in the middle of a large trade war, and it seemed like a recession was looming.

However, sometime over the middle of the summer, a switch seemed to click. Interest rates plummeted which led to a buying spree. The trade war seemed to be working out. And, the economy and stock market took off once again.

All in all, the McCormick Ranch real estate market had a great year. We normally see most of the price gains in the first half of the year and then a quieter second half. This shifted some in 2019. The first few months were extremely quiet then began to build steam in March and April. The summer slowdown didn't last as long and we have a substantially busier fall then in 2018.

Overall, we saw very similar number of homes change hands. There were 533 homes sold in 2019 and 516 sold in 2018. Of this, 246 sold in the second half of 2019 (versus just 205 in the second half of 2018). This 20% increase in sales made up for the softer first part of the year.

If we break it down further, single family homes and condos were the real winners of the past 12 months. There has been huge demand for both and very little supply. Both are selling almost instantly when listed.

Townhomes and patio homes are slower and prices have been flat. We have seen a small uptick in price per square foot but nothing like condos or single family. My feeling is that these tend to have higher HOAs and this drives away buyers. Higher condo HOAs do not have as much of an effect as the condo price is lower on its own.

Looking ahead to 2020, I feel we will see a strong year. I will guess that we will see gains in the 4-6% range.

We're starting the year with extremely low inventory with just 59 homes were available for sale. We have been hovering over this amount for the last few months. While we usually see a plethora of new homes be listed in the spring, these will likely get gobbled up quickly by willing and able buyers.

Our local absorption rate is down to just 1.29 months. This means that all current homes would be sold in about 40 days if nothing new came to market. This is an extremely strong sellers market.

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Yours in real estate,

Randy Arriola