Spring training in Scottsdale usually marks the beginning of the busy season for the entire Phoenix area. This is just as true for McCormick Ranch as ever before.
However, we're starting with incredibly low inventory and it is greatly affecting our local market. With very low inventory, homes are selling faster and at a higher price.
At the start of February, 53 homes were available. There were 50 total sales in February. And, now at this writing, there are only 45 homes available. This means that the absorption rate is just .9 months. If we did not see any new homes listed, the current inventory would last less than a month.
In all of my time keeping statistics for McCormick Ranch, I have never seen it this low. This is even more interesting because this encompasses homes over $1,000,000, which has been the softer side of real estate over the past few years. There is a larger demand for quality renovations now than ever before.
Price per square foot is my favored metric of a smaller market like McCormick Ranch. You can see that all categories are rising between 4 and 7%.
With the extremely low inventory, it only seems plausible that prices will continue to go up over the spring. Interest rates have dropped again to historic lows, meaning a buyer's purchasing power will rise.
All this being said, it's a great time to be a seller. That is, as long as you can find a new home!
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
As we move towards the end of the year, the McCormick Ranch real estate market is telling a very similar story to the previous few months.
Inventory is low with just 65 active and available homes. We've seen this level of 60ish homes available now for since September.
The number of home sales for October is slightly higher than last year (38 vs 33).
Interest rates have remained close to historic lows.
Yet, prices have remained fairly flat over the past few months. The dip that we see is likely based off of a handful of $1M+ homes dropping off from Spring versus a true drop in the market.
Looking at the data, I'm expecting a very busy Spring season. The price changes will vary based on how much supply comes to market. Based on the prior years, we do see lots of new homes come up for sale. But there also tend to be many new home buyers looking to make their move.
When we are already starting with low inventory, I believe we will see bidding wars, multiple offer scenarios, and pressure to raise prices.
