Market Update

For Buyers:

With 54% of all sales closed over asking price so far in April, the average sale price per square foot is now higher than the list price for every price range up to $1M. In a balanced market, homes typically sell within 97% of list price; that percentage is now 101%. This means that, for the past month or so, the majority of list prices have been the starting price for where negotiations begin instead of a top price to work down from.

In past extreme seller markets, $5,000 over asking was typically enough to win a contract; that was true last year as well when the market took off. However, last January the median over ask was $6,000; by February it was 10,000; in March it was $11,000; and so far in April its $15,000. The highest was $905,000 over list price closed in March (It was an auction for a 10-acre property in Cave Creek that sold for $2,255,000).

By price range, over 62% of homes listed between $250K-$400K closed over asking price; the percentage is 54% for sales between $400K-$600K; 47% between $600K-$900K; 30% between $900K-$2.5M; 9.5% over $2.5M.

Putting an offer in over asking price may cause a buyer some anxiety, especially a first-time homebuyer. The median sale price is now $360K. Since January, the sales price per square foot for a home between $300K$400K has appreciated 6%. Thats approximately 2% per month and the current sale price to list price ratio within the price range is 102.4%. If this rate of appreciation continues in the short term, a buyer who paid 4% over asking price on a $360K home ($14,400 over) would recoup their investment through appreciation in approximately 2 months.

For Sellers:

The luxury market has been exploding since last summer and continues to be at the strongest level ever seen in Greater Phoenix. The number of listings under contract over $1M is up 156% over last year; but the num- ber under contract between $2M-$3M is up 296% and over $3M is up 212%. In a typical market, sales prices in this range would be landing around 93% of list price. However in the 2021 market, the sales price ratio is averaging 98% of list.

The luxury market is also keeping up with the rest of the market in terms of marketing time. Prior to con- tract, half of the contracts accepted valleywide in the last week were on the market 6 days or less. Over $1M, the median was 12 days prior to contract. Over $2M, the median is 67 days.

The market over $1M is outperforming in terms of annual appreciation in sales price per square foot. The median price for a 4,000-5,000 square foot home is running at $1.1M with an appreciation rate of 31%. The median price for a 5,000-10,000 square foot home is $2.3M with an appreciation rate of 35%. For perspec- tive, the median price of a 1,500-2,000 square foot home is $365K with an appreciation rate of 25%.

Commentary written by Tina Tamboer, Senior Housing Analyst with The Cromford Report ©2021 Cromford Associates LLC and Tamboer Consulting LLC