REAL ESTATE
GILBERT SUN NEWS | MAY 15, 2022
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Housing market getting a tad friendlier to buyers BY MINDY JONES GSN Columnist
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s graduation day approaches for many in the valley and calendars start to fill up with cooler vacation destinations, the real estate market in Arizona appears to need some time off itself. After two years of plummeting supply and artificially low interest rates, we appear to have pushed the market about as far and as fast as we can without breaking it. While we have nowhere near enough homes for the people who want to buy
G COMIN
them and the rules of supply and demand say prices will continue to rise until we do, the interest rate hikes have finally weighed down the buyer’s enough that many are taking a seat and crying uncle. While inventory had been steadily declining pre-pandemic, it wasn’t until the low interest rates – manipulated by the purchase of mortgage backed securities in bulk – fueled an influx in buyer demand and both human and supply chains put a kink in our ability to ramp up historically low building that we ended up with a supply shortage we thought we might never recover from. Well, recovering we are – and it’s happening quickly. While prices and month-
ly payments have risen significantly over the last two years, buyers have 40% more inventory to choose from than this time last year and 45% more than just six weeks ago. While many sellers have given up their sideline positions in favor of cashing in on their pockets full of equity, the majority of this gain is coming from the buyers who are sitting out – not the sellers who are tagging back in. Just as vacations cannot by definition last forever, neither can the current market conditions we are experiencing as
part of the market’s desire to gravitate towards balance. History would tell us that rapid interest rate increases are often followed by a return to their starting point within a few years and a lesson in recessions would predict lower or stabilized interest rates and higher or stabilized housing prices to come. If you are looking to buy a home in the Gilbert area, you’ll likely have to budget for more than you planned – that part is
see MINDY page RE4
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REAL ESTATE
GILBERT SUN NEWS | MAY 15, 2022
Gilbert home prices rose 69% in two years BY PAUL MARYNIAK GSN Executive Editor
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he average sale price of a single-family house in Gilbert has increased 69% in two years and while home prices likely will continue to rise, mortgage rates and an apparent cooling in demand may spell trouble ahead for sellers, a leading Valley housing analyst said last week. Gilbert was not alone in seeing such a staggering increase in average sale prices among 17 Valley cities that the Cromford Report routinely monitors: 12 of the 17 cities saw the average sale price jump by at least 60% between the 17th week of 2020 and the 17th week of 2022. The average sale price of a Gilbert home rose from $413,047 to $696,128 in that time, it said. Valley-wide, the Cromford Report reported that over the past six weeks, “active listing counts are rising very strongly” – up more than 32% in a
month – and called it “one of the most dramatic shifts in direction we have ever seen.” “If this trend continues for several months the market dynamics will change significantly,” it said. Cromford Report also called out media reports of a continuing surge in rent, saying the most recent data from the Phoenix metro housing market shows rents are starting to fall slightly, available rental units are increasing and nervous landlords are starting to offer deals to attract tenants. Over the last few weeks, the Cromford Report has been identifying data that prompted it to state on April 22: “Almost everybody is saying rents are going up. Not in Phoenix, they’re not. With rents going down and mortgage rates and home purchase prices going up, the argument for buying over renting is starting to look significantly weaker.” It’s more than just inventory of single-family homes, townhouses and
apartments that is prompting that statement. The Cromford Report noted that inventory of for-sale homes also is rising while the number of closings is trending downward. “April is supposed to be one of the best months for the market, but new contract signings are significantly lower than last year. This means active listings are staying active longer and inventory is starting to build in most (but not all) segments,” it stated. “At the moment the number of homes for sale remains very far below normal, but we have seen before how it can increase sharply if more sellers emerge just as demand is declining.” Stating that the sellers market is slowly deteriorating in 17 major Valley municipalities, the Cromford Report said that between mid-March and midApril, Cromford Report noted, “We have seen a 34% increase in the number of new rental listings added to ARM-
LS (Arizona Regional Multiple Listing Service) compared with the same four weeks in 2021. It added there has also been a 20% increase in the number of rental homes available in Phoenix on the Progress Residential web site over the past four weeks. And on May 1, it reported, “Supply has been arriving in greater quantities over the past few weeks. This applies to both rental and for-sale listings. The most dramatic rises are in rentals. There were 2,550 new rental listings created in the last four weeks, which is up 45% from the same four weeks of 2021. For 2022 year-to-date we have seen 26% more new listings (10,072 versus 7,995).” The for-sale active listing count (excluding UCB and CCBS) across all areas & types has jumped 27% in just 4 weeks. This is even faster than we ex-
see PRICES page RE5
GILBERT SUN NEWS | MAY 15, 2022
REAL ESTATE
This chart by the Cromford Report compares home sale price averages in 17 Valley municipalities between week 17 of 2020 and that of 2022. (Cromford Report)
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REAL ESTATE
GILBERT SUN NEWS | MAY 15, 2022
MINDY from page re1
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LIVE & PLAY in one of Gilbert’s most desirable locations, Marbella Vineyards. This sought after open concept home, offers 4289sq ft, 5 bedroom and features 2 large luxury master suites, one including a kitchenette, perfect for Multi-Generational living. Both suites feature spa-style bathrooms with beautiful tile, dual sinks, glass shower, soaking tub and oversized closets. Finishes & must-have upgrades throughout with a white Gourmet Chef’s Kitchen with granite countertops and island, formal dining, loft and flex/office space. The double sliding glass doors guide your view to the beautifully designed low maintenance backyard. Splash & soak in your custom designer pool featuring lights, fire bowls, with built-in BBQ grill and veranda, showcasing open views. Relax in the front private courtyard or in the backyard under the covered patio. Plenty of parking and storage with the 4 car garage. Take advantage of centralized Gilbert corridor living, where world-class amenities meet you at your doorstep! Festive dining, shopping, with many attractions nearby include San Tan Village, Gilbert’s New Regional Park, San Tan Mountain & A-Rated school options are ALL within reach!
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true. But with more to choose from, the increasing likelihood of buying without waiving appraisals or giving up your first born, the return to some normal negotiations around inspections and concessions and the potential to reduce your monthly payment in a future refinance when interest rates drop and you’ve paid into your mortgage piggy bank, buying still looks pretty good. And don’t worry sellers, you aren’t being left out of the benefits of a less frenzied market especially since many of you will still need to buy another home to live in. If you’ve been trying to time to the market to make the absolute most on
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3490 E PENEDES DR., Gilbert, AZ 85298
your house, you’ve already passed up several signs that we are getting closer to the pricing peak and may want to stop the least scientific practice of real estate. Here in Gilbert, active listings have more than doubled from this time last year, pending listings have decreased by 30%, and days inventory has nearly tripled. What are you waiting for? Inventory will continue to rise and so will prices at least in the short term, interest rates will fluctuate and introduce new strategies into the negotiation process for the long term, and in the meantime, graduation caps will fly, vacations will commence, and those who still need to buy or sell a home will. Consumer sentiment will dictate how quickly we return to balance, a type of market that Arizona has spent very little time in and likely still wouldn’t IF we reach it again. Mindy Jones, a Gilbert Realtor and owner of the Amy Jones Group at Keller Williams Integrity First, can be reached at 480-250-3857. Mindy@AmyJonesGroup. com or AmyJonesGroup.com.
REAL ESTATE
GILBERT SUN NEWS | MAY 15, 2022
PRICES from page re2
perienced in April 2005. That’s a scary percentage, even though the absolute numbers remain small. If this growth rate persists through May and June, the market will be very different by July. Cromford Report is not saying rents are heading back to pre-pandemic levels – a scenario no housing expert anywhere is saying is on the horizon. But what it means, it said, is “renters of single-family detached homes are seeing far more choice than they did last year and we are starting to see homes advertised with ‘the first month’s rent is free.’ Rental supply is particularly strong in Gilbert. “This appears to be a significant turnaround in the rental market and it does not seem to have been recognized by the media outlets, who are mostly still referring to rising rents. That is so 2021.” Meanwhile, for those trying to buy or sell a house, the data is mixed but leaving no one much to necessarily cheer about, according to the data supplied by the Cromford Report and various
other sources. The Cromford Report has developed an index for 17 Valley cities that measures how far each is tilted toward either sellers or buyers, with 100 indicating a balanced market. While indices in all 17 submarkets were pointed downward last week, the lowest threshold was 210 in Buckeye whole the highest was 537 in Avondale. Phoenix was just under 422. That means all the markets are still weighted heavily toward sellers. But Cromford also stated, “Red flag warning. The housing market is changing more rapidly with rising supply and falling demand. While it remains far above normal for now, the (index) is dropping fast.” It also noted that its Cromford Market Index not only “is accelerating downward,” while it is still “a very hot market, the downward trend is so powerful it appears possible that it will drop below 300 in a matter of weeks rather than months. …We do not know when this decline will bottom out.”
But buyers shouldn’t take much comfort in all this. For one thing, Cromford noted, while overall market conditions are rapidly changing, “prices will continue to rise for many months since they are trailing indicators of market conditions.” In a report April 30, it looks at monthly average sale prices in the 17 Valley submarkets it monitors for 17th week of 220 and compared it to that of this year. The average percentage different between the old average price and the current one was at least 50% in all but three of the 17 communities: Tempe, 48%; Sun City, 46% and Fountain Hills, 34%. But don’t feel sorry for Fountain Hills: it posted the fourth highest average sales price in the Valley with $922,843 – behind only the three communities with seven-figure average home sale prices: Paradise Valley, $4.35 million; Scottsdale, $1.46 million; and Cave Creek, $1.15 million.
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