Average sale $/SF has risen 15.8% in the last 6 months, equivalent to an annual appreciation rate of over 31%.
– Mike Orr, The Cromford Report
And the high season is just beginning. And inflation the last six months has only been running at a 2% annual rate.
You can see from this Cromford Report graph that the months of supply of single-family houses for sale typically falls like a rock when home sales take off from February through May.
This year, however, we’re only starting out with 1.1 months of supply. Last year it was more than double that. In 2019, the months of supply was more than triple that.
It looks like all hell is about to break loose.
I hope I’ve missed something but the data says we’re looking at a bubble year – I’d say more like the late-1980s S&L Real Estate Bubble than the mid-2000s Great Real Estate Bubble.
This afternoon, my guess is we’re looking at a year or two of fast-rising prices, then a year or two of flat prices, then a year or two of weak prices, and then years of flat prices.
If you’re buying and selling at the same time, it doesn’t matter when you sell and buy. What you win on one, you lose on the other.
First time home buyers, however, need to be especially careful to buy a house they would be happy living in for at least 10 years, just in case my scenario above plays out.
From July through December last year, the number of single-family houses hitting the market were running a lot hotter than in 2019. The market still went crazy because the number of sales was even higher.
So far in 2021, the number of houses hitting the market is lower – not higher – than the previous year.
Incredibly, as mentioned above, this is usually the time of year when the number of houses for sale is the highest of the year. Last week, the number of single-family houses for sale was down 60% from last year and with no signs of turning around yet.
This is good. The number of houses under contract to buyers is falling, although it’s still 8% above last year.
The lower number of houses under contract to buyers worked its way throught the pipeline to sales. They were only 6% higher than a year ago where they had usually been running 20% to 30% above the previous year since September.
Note. I updated the format of the graphic below to make it more compact.
This information can vary a lot in different parts of metro Phoenix. Your real estate agent can find the data for your specific city or zip code at The Cromford Report.