McCormick Ranch Sales Update: July 2021

The dog days of summer are here. It's hot but thankfully the monsoons are starting. Hopefully we have a better monsoon season than the previous year.

As we progress through the summer, we are starting to see a little bit of a chink in the armor of this crazy market. Now, to start, do not even get the idea that this is all of a sudden a huge shift in sales and that everything is going to start to drop tomorrow. It is just the slightly slowdown where we aren't see a million offers in the first 43 seconds that the home is listed. Can it turn into a full market shift? Well, of course. But this seems like it is more seasonal than anything.

Let's go back in time a few years. Or 15ish. When we go through an annual sales cycle, we generally see a steady ramp up in sales and prices from January through June. Then, July through October drop about 30% from there (who wants to move when it is 118 degrees?!?). And then we see another 20% from there for November and December. While this isn't exact for every year it is a pretty rough generalization.

Going now to just last year, Covid obviously changed the trajectory for the past 18 months. We saw a busy January and February, a shut down for 3ish months, and then a ramp up for the remainder of the year. Then this year got extremely busy from January through now.

If we look specifically at last year, home prices were up around 18% overall. Yes, this is a lot and more than most years on average. The majority of these increases were in January through March and then from September through December. So far this year we are up 15% making for another huge year.

As such, a flattening out (or a very small increase) for the year is not necessarily such a bad thing. It puts our home gains in line with what is more reasonable for a city with exploding population growth.

Going to the charts, you can see there is a bit of a decrease in the average sales price. I wouldn't read too much into this at this point. We have had a multitude of million dollar sales this Spring and it can affect numbers.

Price per square foot is a better metric of all sales. It is worthless for an individual home but tells more of where prices are headed overall. As you can see, it is still increasing.

Moving forward, we will still continue to see homes sell extremely quickly. But, these will be the ones that are well appointed and/or priced appropriately. Whenever we have an extreme seller's market some sellers decide to overprice their home by 10-20% or more (this can translate into $100-200,000 in our market so not an insignificant amount). It's easy to get greedy and be unrealistic. But buyers are still smarter than that. They are still bound by appraisals and their own personal budgets. These will be the homes that will sit and stagnate.

All that being said, it will be interesting to see what happens over the remaining months.