It's Time to Declare a National Housing Emergency
Phoenix home sale price per square foot was up 16% in 6 months... and the high season is just beginning.
“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
Inflation the last six months was at a 2% annual rate.
Subscribers-Only Graph
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, it was more than triple this year’s supply.
It looks like all hell is about to break loose.
I hope I’ve missed something but the data say 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 given the demographics.
If you’re buying and selling at the same time, it doesn’t matter when you sell and buy.
First time home buyers, however, need to be especially careful to buy a house they would be happy with for 10 years or more, just in case, my scenario above plays out.
New Listings
From July through December last year, the number of single-family houses hitting the market was 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. That’s bad.
For Sale
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.
Under Contract
This is good. The number of houses under contract to buyers is falling, although it’s still 8% above last year.
Solds
The lower number of houses under contract to buyers worked its way through the pipeline to sales. They were only 6% higher than a year ago. They had usually been running 20% to 30% above the previous year since September.
Let me know in the comments what you’re seeing or email me.
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.
"Frothy", as Alan Greenspan put it in 2005, I believe. I'm anxious to see what effect the end of pandemic and the associated moratoriums have on the market over the next few years.