Inflation looms as local home market stays hot | Real Estate


The average sale prices for Ahwatukee properties dipped last month while inventory was up slightly and the number of units  sold slightly decreased. 

The average price of a home sold in Ahwatukee decreased in November to $536,195 – down 5.6% from $566,695 in August. The marketing time to get a contract increased from 21 days in August to 31 in November. 

When we compare the November 2021 Ahwatukee real estate market to the same month last year, we see average prices increased  dramatically. The average sale price increased from $454,864 in 2020 to the current $536,195 – 18% higher. 

For the first few months of 2021, the average number of active listings was under 50 – frequently much under. Inventory in August was was around 100 units but last month dropped to about 80.

As we have noted all year, this is still a very strong seller’s market.

In August, the number of units that closed escrow slipped to 125 units – 23% less than the average 155 units sold per month in the January-August market. The trend we noted in August continues in the November market with 135 units closing escrow.

If inventory continues to increase and the number of units sold continues to decline, it could bode well for frustrated buyers.

There could be a slowing or even a reversal of the rising prices as well as an increase in the number of homes for sale. The increase in the number of active listings and the lower average prices of closed listings in November could portend a slowing down of property price increases in Ahwatukee.

Despite the drop in the average sale price, it was higher than the asking price at most price points. The average list price of an Ahwatukee property that closed in November was $532,637 while the average sale price was $536,195 – 2.2% higher.

Between Jan. 1 and Nov. 30, 1,701 Ahwatukee properties closed escrow at an average price of $516,308 with an average 27 days on the market. The number of units sold increased 12.9% over the 1,506 units sold in the same time frame in 2020.

The average sale price of $516,308 in the first 11 months of this year in Ahwatukee is up 23.9 percent from the same period in 2020, when the average sale price of $416,564.

The dramatic year-to-date increase in the value of Ahwatukee properties continues to be fueled by incredible, demand coupled with the continuing record, low-interest rates that allow buyers to purchase homes that would be out reach if interest rates were even a few points higher.

Here’s another snapshot of the Ahwatukee market between Jan. 1 and Nov. 30:

  Properties over $1 million: There were 75 sales with an average sale price of $1,443,576.

  $600,000 to $999,999: There were 279 properties sold for an average $730,393.

  $500,000 to $599,999: The 251 properties sold at an average $557,962.

  $400,000 to $499,999: The 466 properties sold for an average $454,029. 

  $300,000 to $399,999: The 380 properties sold for an average $365,201.

  Under $300,000: The 205 properties sold for an average $253,935.

When we expand our search to include the Metro Phoenix area, we see similar trends.

 In the same Jan. 1-Nov. 30 time frame, 80,808 properties closed escrow at an average price of $529,547 – 28% higher than the average sale price of $415,136 in 2020.

 Metro Phoenix and Ahwatukee homeowners were hit hard by declining home values between 2007 and 2009.

The current hot market is reminiscent of the market we experienced leading up to the real estate debacle. 

But now is not then.

The numbers are showing that current demand remains incredibly high. Inventory started to increase since August. Bidding wars are now common and homes are still selling above asking prices. 

Mortgage interest rates have remained at record lows. 

Experts believe that this market will continue until buyers are forced to the sidelines because they can no longer afford the escalating prices.

So is there any end in sight? Will the real estate bubble burst?

In the current market, institutional buyers and speculators are buying properties virtually sight-unseen. 

Demand is outpacing the rate of new-home construction. 

In my opinion, as long as interest rates remain relatively low and demand remains high, the number of units sold and the average sale price will continue to increase in both the Ahwatukee and Metro Phoenix market. 

The biggest variable is the rampant increase in the rate of inflation. 

When this market does slow down, it will be a result of out-of-control inflation and prices surpassing the ability of buyers to afford to make the payments. 

Most importantly – and of the most concern to me – is the increasing inflation rate.

Unchecked inflation is currently the most pressing factor in the stability of the real estate market. 

Treasury debt levels have never been higher as economic stimulus and massive infrastructure debt increases. 

These factors will increase taxes, create dramatic increases in consumer costs, reduce consumer spending and put downward pressure on home prices and the volume of homes sold. 

So, despite the booming real estate market, inflation should be on the watchlist for all buyers and sellers as well as those contemplating getting into or out of the market.

Ahwatukee resident Allen Henderson is a broker and owner of Henderson Real Estate. Reach him at 480-392-2090 or Allen@HomesAhwatukee.co 





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