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State of the Market Report
EVERYTHING REAL ESTATE.ARIZONA PHOENIX, CENTRAL & NORTHERN 2021 MID-YEAR
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2021 MID-YEAR MARKET REPORT | 2
Arizona Housing — Market Pulse Fast Start to Real Estate in 2021 The housing market was fast and furious in the first half of 2021. The pandemic, which started in early 2020, sparked an increased demand for housing which was further fueled by historically low interest rates. This created a “run” situation on available listings that were in limited supply. Multiple offers and homes selling almost “real time” became the norm, with large gains in home values as a result. Those fast market conditions created challenges for buyers trying to find a home to purchase and tilted the market to a strong seller’s market. Increases in home equity, strong market fundamentals, government stimulus, and recovering employment so far staved off the risk of increases in foreclosures or a market crash. Phoenix-Area Residential Market Conditions — Months of Inventory Jun 2019 0
2
Jun 2020 4
Jun 2021 6
8
10
$0–$499,999
$500,000–$999,999
$1,000,000+
Seller’s Market
Buyer’s Market
Early Signals of Normalization? Not a Burst We do not see indications of a real estate bubble or any market burst. Rather, we have been experiencing robust buyer demand fueled by demographics, pandemic lifestyle shifts — such as untethering geographic constraints with remote work and re-evaluating needs in a home — and very attractive mortgage rates, coupled with a shortage of available inventory to purchase. The excess demand to supply resulted in home sale prices increasing. We are seeing some possible early signals of the start of a market normalization, with buyer demand leveling and supply increasing slightly. • • • •
Buyer Demand Remains Strong; Leveling Off +7.5% YTD New Pended Sales; -8.6% May–Jun 2021 vs 2020 Mortgage Rates Remain Favorable 30 Yr Fixed Rate 2.98% Active Inventory Starting to Rise +41.9% June 2021 vs March 2021 New Listings Strong in Q2 +18.5% Q2 2021 vs Q2 2020
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Statistics based on information obtained from ARMLS on 07/07/2021 using TrendGraphix software. Information is believed to be reliable, but not guaranteed.
2021 MID-YEAR MARKET REPORT | 3
Phoenix-Area Residential — Closed Sales Strong Housing Sales
2019
Very strong buyer demand translated into a robust first half of 2021 for closed home sales, outpacing 2020 and 2019. Closed home sales dipped slightly in May and rebounded in June.
2020
2021
12,000
10,000
8,000
In total, closed home sales increased 18.5% year-to-date (YTD), compared to the same period in 2020.
6,000
4,000
2,000
+18.5%
0 Jan
Feb
Mar
Apr
May
Jun
Jul
Aug
Sep
Oct
Nov
Dec
Phoenix-Area Residential — New Pending Sales
29.5%
7.5%
6.4%
32.1%
28.1%
20.9%
20.6% 4.7%
10%
6.9%
20%
14.0%
30%
14.4%
40%
30.5%
50%
Buyer Activity Remains Strong
48.0%
45.1%
60%
There was a slight dip in new pending sales in May 2021 as compared to May 2020 and a 13.5% decrease in June.
-13.5%
YTD 2021 new pending home sales were up 7.5% vs YTD 2020. YTD
May 21
Apr 21
Mar 21
Feb 21
-15.4%
Long Realty Company LongRealty.com | 1-800-354-5664
Jan 21
Dec 20
Nov 20
Oct 20
Sep 20
Aug 20
Jul 20
Jun 20
May 20
Feb 20
Jan 20
-40%
Apr 20 -33.4%
-30%
Mar 20
-26.7%
-20%
Jun 21
-3.6%
0% -10%
Pending home sales increased in the first half of 2021, with very strong March and April new pending activity, which translates to strong closed home sales in subsequent months.
+7.5%
Long Realty Company
Statistics based on information obtained from ARMLS on 07/07/2021 using TrendGraphix software. Information is believed to be reliable, but not guaranteed.
2021 MID-YEAR MARKET REPORT | 4
Phoenix-Area Residential — Closed Sales Below $800,000 Strong Sales, Limited Inventory
12,000
Despite highly competitive conditions, including multiple offer situations, buyers vying for the same home, and listings selling as they hit the market, closed sales for homes under $800k increased 12.4% YTD 2021 compared to YTD 2020.
2019
2020
Apr May June
Jul
2021
10,000
8,000
6,000
4,000
+12.4%
2,000
0 Jan
Feb Mar
Aug
Sep
Oct
Nov Dec
Phoenix-Area Residential — Closed Luxury Sales ($800,000+) 2019
2020
Luxury Sales Take Off
2021
In arguably the most robust segment of the housing market, luxury home sales increased an astonishing 148.2% YTD 2021 as compared to YTD 2020.
1,200
1,000
800
Remote working, early retirement, vacation homes, the Arizona lifestyle, lower property taxes, and value compared to other markets are some of the many reasons for the uptick.
600
400
200
0 Jan
Feb
Mar
Apr
May
June
Jul
Aug
Long Realty Company LongRealty.com | 1-800-354-5664
Sep
Oct
Nov
Dec
+148.2%
Long Realty Company
Statistics based on information obtained from ARMLS on 07/07/2021 using TrendGraphix software. Information is believed to be reliable, but not guaranteed.
2021 MID-YEAR MARKET REPORT | 5
Phoenix-Area Residential — Homes for Sale Active Inventory Scarcity
Oct 2007
70,000
The number of available homes for sale is still historically low in 2021, with only 4,892 active listings as of June, up slightly from previous months. This represents a 41.1% decrease from June 2020.
61,143
60,000 50,000 June 2019
16,988
40,000
The myth is there are no listings. Fact: the number of new listings this year is similar to YTD 2020; however, listings have been selling as fast as they hit the market.
30,000
June 2020
8,308
20,000 June 2021
2020
2019
2018
2017
2016
2015
2014
2013
2012
2011
2010
2009
2008
2007
0
2006
-41.1%
2021
4,892
10,000
Phoenix-Area Residential — New Pending Sales vs New Listings New Pending Sales
New Listings
12,000
Listings Selling “Real Time”
10,000
The pent-up demand from buyers and low available inventory meant that listings went under contract as soon as they hit the market.
8,000
6,000
YTD 2021 58,347 new listings 55,230 new pending sales only 5% less pending sales than new listings
4,000
2,000
Long Realty Company LongRealty.com | 1-800-354-5664
Jun 21
May 21
Apr 21
Mar 21
Feb 21
Jan 21
Dec 20
Nov 20
Oct 20
Sep 20
Aug 20
Jul 20
Jun 20
May 20
Apr 20
Mar 20
Feb 20
Jan 20
0
New listings YTD 2021 are 6% higher than YTD 2020.
Long Realty Company
Statistics based on information obtained from ARMLS on 07/07/2021 using TrendGraphix software. Information is believed to be reliable, but not guaranteed.
2021 MID-YEAR MARKET REPORT | 6
Phoenix-Area — New Home Permits New Construction Can’t Keep Up With Demand June new home permits in Phoenix increased to 4,539 and YTD is outpacing the last three years. The increased rate of new home permits and construction is not enough to keep up with current demand and fill the gaps in listing shortages. 6,000
4,539
4,285
5,000 4,000 3,000
3,554
2,000 1,000 0
Jan
Feb
Mar
Apr
May
Jun
Jul
2019
Aug
2020
Sep 2021
Oct
Nov
Dec
2021 Six Month Average
Phoenix-Area Residential — Median Sales Price $450,000
June 2021
$401,769
$400,000 $350,000
June 2020
$312,139
$300,000
Home Prices Rise When you have high demand and low supply, you can expect prices to increase. In June 2021, the median residential sales price increased 28.7% to $401,769 from June 2020 levels.
$250,000 $200,000
Increasing values have bolstered the equity homeowners have in their properties.
$150,000 $100,000 $50,000
Long Realty Company LongRealty.com | 1-800-354-5664
2021
2020
2019
2018
2017
2016
2015
2014
2013
2012
2011
2010
2009
2008
2007
2006
0
+28.7%
Long Realty Company
New Home Permit source: University of Arizona Eller College of Management, Economic and Business Research Center as of 07/26/2021. Statistics based on information obtained from ARMLS on 07/07/2021 using TrendGraphix software. Information is believed to be reliable, but not guaranteed.
2021 MID-YEAR MARKET REPORT | 7
Mortgage Rates Mortgage Rates Steady around 3% After falling to record lows in late 2020, mortgage rates rose to slightly over 3% early in 2021 and have since fallen back to around 3% for the last few months.
July 1, 2021 30Y FRM 2.98%
Attractive mortgage rates helped to keep buyer demand high in the first half of 2021.
Phoenix-Area Residential — Monthly Payment Monthly Payment Rises
$1,800
June 2021 $1,605.07
$1,600
Low mortgage rates had partially offset monthly payment increases, but in 2021 the accelerated appreciation of home prices is finally being reflected in the monthly mortgage payment amount.
Mar 2008 $1,222.81
$1,400 $1,200
June 2020 $1,275.92
$1,000
The monthly mortgage payment on a median priced house is up 25.8% from June 2020.
$800 $600 $400
Oct 2011 $504.30
$200
+25.8%
Long Realty Company LongRealty.com | 1-800-354-5664
2021
2020
2020
2019
2018
2017
2016
2015
2014
2013
2012
2011
2010
2009
2008
0
Long Realty Company
Mortgage Rates source: Freddie Mac as of 07/15/2021. Statistics based on information obtained from ARMLS on 07/07/2021 using TrendGraphix software. Information is believed to be reliable, but not guaranteed.
2021 MID-YEAR MARKET REPORT | 8
Phoenix-Area Residential — Days on Market Homes Selling in Days
60
Buyer activity has been heated, competing for properties in 2021, with multiple offers being the norm and homes selling more quickly.
50
44
40
The days on the market, the average time listings go from being active to under contract, fell to only 16 days in June 2021, compared to 37 in June 2020.
37
30 20
16
10
June 2021
Apr 2021
May 2021
Mar 2021
Jan 2021
Feb 2021
Dec 2020
Oct 2020
Nov 2020
Sep 2020
Jul 2020
Aug 2020
June 2020
Apr 2020
May 2020
Mar 2020
Jan 2020
Feb 2020
Dec 2019
Oct 2019
Nov 2019
Sep 2019
Jul 2019
Aug 2019
June 2019
Apr 2019
May 2019
Mar 2019
Jan 2019
Feb 2019
0
Phoenix-Area Residential — Sold Price to Original List Price % Difference 104%
102% 102%
In June, on average, homes sold for 102% of the original list price. This reflects how competitive the market has been, with homes being bid up over list price. This ratio has been steadily climbing in 2021.
100% 98%
97%
96%
This is a ratio to watch for the balance of 2021, as it may be an indicator of the market’s pace.
94%
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June 2021
Apr 2021
May 2021
Mar 2021
Jan 2021
Feb 2021
Dec 2020
Oct 2020
Nov 2020
Sep 2020
Jul 2020
Aug 2020
May 2020
June 2020
Apr 2020
Mar 2020
Jan 2020
Feb 2020
Dec 2019
Oct 2019
Nov 2019
Sep 2019
Jul 2019
Aug 2019
June 2019
Apr 2019
May 2019
Mar 2019
Jan 2019
Feb 2019
92% 90%
Homes Selling Higher Than List Price
Long Realty Company
Statistics based on information obtained from ARMLS on 07/07/2021 using TrendGraphix software. Information is believed to be reliable, but not guaranteed.
2021 MID-YEAR MARKET REPORT | 9
Northern & Western Arizona — Residential Closed Sales 2021 vs 2020 Sales Higher Across Arizona
45%
Even with a tight listing inventory environment, home sales increased across Arizona YTD — with Sedona seeing the largest increase of 40%. Low interest rates and the attractive qualities of an Arizona lifestyle drew more buyers in, and we expect to continue to see strong real estate sales across the region in 2021.
40%
40%
38%
35% 30% 25% 20%
18%
15% 10%
10%
10%
13%
5% 0
Closed Sales YTD 2021
Phoenix
White Mountains
Prescott
Sedona — Village of Oak Creek
Flagstaff
Yuma
53,353
1,200
826
398
1,101
1,816
Northern and Western Arizona — Residential Median Sales Price 2021 vs 2020 Home Sales Prices Rise Across the Region
60% 50%
50% 40% 30%
29%
28%
27%
28%
21%
Across Arizona, the high buyer demand and low supply of available listings resulted in an increase in median sales prices. Sedona saw the highest increase percentage of home sales price. Real estate is local, so trends and prices may vary for your specific situation.
20% 10% 0%
Median Price June 2021
Phoenix
White Mountains
Prescott
Sedona — Village of Oak Creek
Flagstaff
Yuma
$401,769
$280,000
$543,000
$860,000
$503,150
$227,000
Long Realty Company LongRealty.com | 1-800-354-5664
Long Realty Company
Statistics based on information obtained from ARMLS, White Mountains MLS, Prescott MLS, Sedona Verde Valley MLS, Northern Arizona Association of REALTORS MLS and Yuma MLS on 07/07/21 using TrendGraphix software. Information is believed to be reliable, but not guaranteed.
2021 MID-YEAR MARKET REPORT | 10
2021 Projections Home Prices Expected to Rise Leading economists forecast that home prices nationally will rise in 2021, given the continued high demand and low inventory housing environment. The average of these six forecasts is 8.9%.
Home Price Forecasts 2021
10.6%
10.3% 9.2%
8%
Despite the rapid rise in home prices YTD, we do not see indications that prices will go down; however, the pace of appreciation may normalize and smooth to a healthier level. Market conditions can vary considerably by area, so for your home’s current value, please consult with an experienced Long Realty agent who can do a complete market analysis.
6.6%
Zelman
MBA
2021 Q3
Freddie Fannie Mac Mae EVERYTHING 3.3
LONG REALTY 2021 Q4 3.4
MBA
3.3
3.6
1926 3.2 TRUSTED SINCE 3.35%
3.4
3.7
3.4
3.48%
3.5
3.60%
3.5
3.68%
for EVERYTHING REAL ESTATE 3.5 3.5 3.9
2022 Q1 2022 Q2
you
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3.6
Average
of All Four for you
NAR
REAL ESTATE
3.5
4.1
NAR
Fannie Mae
Freddie Mac
Mortgage Rates Will Likely Increase, but Remain Low
Mortgage Rate Projections Quarter
8.9% average of all forecasts
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Economists are in agreement that they expect mortgage interest rates to rise modestly in the second half of 2021 and into 2022. The average forecast has rates at 3.48% at the end of 2021, and 3.68% at the end of 2022. Since the forecasted interest rate rise is modest, we do not expect this to considerably slow buyer behavior or demand, but it may aid in normalizing the market. The possibility of higher future rates should keep current demand strong.
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EVERYTHING for Keeping you Current Matters. Information is believed to be reliable, but not guaranteed. Forecasts and Projections Source: REAL ESTATE.
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