January’s over so let’s see where the Phoenix real estate market is at.
My takeaway is still the same, if you have an investment property that you wanted to sell at the top of the market, you should very seriously consider selling in 2019. Signs are that the first half of 2019 will be a okay for home prices but if a recession hits in 2020 or 2021, I think home prices will fall. I don’t think it will be like the 2001 DotCom recession when home prices didn’t fall.
Number of Homes Sold
The number of single-family homes sold in Maricopa County in January was down 12% versus January 2018 but then again the first half of 2018 was
The 3,860 single-family homes sales this January was less than last year and the year before but it was similar to the sales number 3 years ago in January 2016, which was still a strong year for sales.
If the real estate market is just resetting a notch lower than the wild first half of 2018, then 2019 will still be a tight “sellers” market, just not wild.
Less Fear of Higher Prices. But I think when prices stop rising rapidly, the number of home sales can slow down faster than you expect (all other things being equal).
When prices are increasing rapidly like the last few years, a lot of buyers buy out of fear that prices will go even higher. They’re afraid of being priced out of the market “forever.”
When prices are only increasing at, say, around the rate of inflation or a little higher, a lot of those same type of buyers will wait to buy until they’re more ready to buy financially. The fear of much higher prices that pushes many toward buying ASAP, isn’t there anymore.
Homes Under Contract (=Future Sales)
After 4 weeks, the number of single-family homes under contract in Maricopa County in the MLS was down 15% compared to January 2018. Again, January 2019 looked a lot like January 2016.
Listings under contract give us a great idea of the number of sales that will close in the next month or two. That means the number of homes sold in February won’t bounce back much, or at all, from January’s down 12% (vs. 2018). Now, the soonest we could see a bounce back in home sales toward 2018 levels would be in March.
The median price of sold single-family homes in Maricopa County was $290,000, up 5.9% from January a year ago.
The median price per square foot was $173/SF up 4.3%.
Supply of Homes for Sale (Listings)
The supply of homes for sale is important because it affects current and future home prices.
The number of single-family homes in Maricopa County listed for sale in the MLS in early February was up 12% from January 2018 but was still lower than at the same time in 2017 and 2016.
New Supply (New Listings)
Despite the unexpectedly weak numbers, sellers aren’t headed for the doors.
The number of single-family homes that hit the market in Maricopa County in January was only up 1% from 2018.
If we saw the number of new listings increase, I would see that as very bearish for Phoenix home prices. In fact, I expected new listings to increase last fall as sales weakened but new listings haven’t moved so far.
It’s kind of amazing home stable new listings have been year to year since 2012.