Your Phoenix Housing Market Update for December 2020:
A lack of inventory and increasing demand for homes in the Phoenix-metro area continues. In the past 4 months, the average monthly price-per-square foot (the standard measure for valuing appreciation) rose 12.4%. As of November 15, homes in the Valley were recording an average $208.58 per square foot. This rose 3.2% from October 15, 2020 alone and is expected to continue rising through mid-December. The luxury market can be a factor for these average increases, but the lack of inventory and high demand are definitely contributing to the swift rises. Not since July have we seen this little inventory. COVID surges, the election, and the Holidays may all be playing a part in the lack of people wanting to sell.
But even with everything going on, this upward trend of appreciation isn’t expected to shift any time soon. As Tina Tamboer reports, “The housing market will not crash in 2021 regardless of the (2020 election) outcome. It may be hard to believe, but the new and resale housing markets don’t move quickly. Unlike the stock market where it takes a push of a button to sell a stock and record the price, it takes longer to sell a home between the marketing time and escrow process.
“To put things in perspective, the Arizona Regional MLS should seasonally have between 25,000-30,000 listings active at this time of year; as of November 9th there are under 8,600. That type of shortage doesn’t happen overnight and new construction will not be able to fill the gap quickly. Even if demand were to scale back in 2021 and return to a normal level, the market would not see a massive drop in prices; just a slowing in appreciation.”
In mortgage news, Carla Hancock reports, “Renting vs. Buying has become heavily in favor of buying over the last 5 months. Leases in the MLS have increased by 17% and home values have risen 16%. With the declining interest rates keeping monthly mortgage payments level (while rents just rise), it could potentially save someone hundreds of dollars while building equity.”
“A lot of Home Buyers are still under the impression they need a 20% down payment to purchase a home. Even though 20% down avoids the added expense of mortgage insurance, it is certainly not necessary. There are so many options available now, including down payments as low as a 3% or even 0% for VA loans. It is always worth exploring the various options with a mortgage professional to see if the timing is right for homeownership or to plan what will work for you in the future.”
For a detailed December 2020 housing market update for your zip code, contact Kerrie Kruse at [email protected] or 602-451-6329.