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Real Estate Services by Jon Griffith

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Market Snapshot, April 11, 2022

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Here are some facts about today’s real estate market:

We are and have been in a seller’s market since 2014.  There are currently 4,231 active homes for sale in the entire Arizona Regional MLS system.  There are 749 homes that are listed as “coming soon” which are not technically Active in the MLS.  9,764 homes are under contract.  6,984 homes were listed in the past 30 days.

The average list price for single family detached (SFD) homes in the valley is $697,446.  

Of all of the SFD homes that have sold, the average sale price is $626,214 and as an average, homes are closing at 102% of asking price.

If we reduce our sampling of sold properties to only the sweet spot, which is 3 Bedroom/2 Bath, then we have a total of 2,146 sold SFD homes in the past 30 days with an average sale price of $466,060 at an average 103% of asking price.

On average, we are seeing only 24 days from the time these homes hit the market to the time they close escrow.  A typical conventional sale takes approximately 30 days, although some lenders can close faster than that.  When a home closes quickly, it’s usually due to terms that are favorable to the seller.  Some of these favorable conditions include buyers who are investors with cash who can close quickly with no contingencies, appraisals, repairs, etc.  Some of these buyers are not just small investors, but large firms who are snatching up properties as investments.

When buyers are buying solely as a financial investment, you can rest assured that they’re not terribly concerned about the emotional investment, which makes it very difficult for the average home buyer who actually needs a home to find a home, because that investor can financially outperform the average buyer and offer much more favorable terms to the sellers.

Even if the price seems too high on a property, as is the case in these times, there’s going to be someone who is willing to pay more than you even if it means they might take a loss on the property.  It doesn’t make much sense, but it happens, and as long as the supply is short and demand is high, upward pressure will continue.

Offers that are less than asking price based upon the current conditions and historical data, regardless of one’s opinion of price, will likely be rejected.

August Market Wrap Up

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August 2008, a mere 3 years since the height of our most recent over-inflated boom, has come to a close.

In August, we saw 5833 properties sell at an average sales price of $254,920. The average asking price on properties that sold in August was $245,818 and it took an average of 113 days for those to sell. Homes currently on the market have been so for approximately 94 days on average.

In the Rental market, we currently see a total of 8,905 properties available for lease. In August, 2030 properties were leased at an average rental asking price of roughly $1300/month.

We currently have 51,807 active listings on the MLS with 42,479 of those being Single Family Detached.  Last Monday, this number was at 43,705, representing a 2.8% decrease in the number of homes on the market.

The average sales price for the week ending 8/31/08 was up 14.79% to $280,430 and the number of homes sold in this same period almost doubled to 2110.  Keep in mind that statistics and business that we see recorded today is a result of market conditions and activity in the past.  That is what makes forecasting so difficult.  We never know what the future results of our current actions will be.

It’s taking about 109 days to sell a home across the MLS.  The average asking price fell slightly from the previous week to $408,001.

Will We Hit 2003 Pricing?

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Sampling of a North Phoenix neighborhood sales history.
Sampling of a North Phoenix neighborhood sales history.

It’s hard to say whether or not our market is continuing to correct. I have updated my Market Statistics page this evening and as you can see from the graph below, we are at 2004 pricing. Draw a line from 2001 to our current average sales price today and you’ll see that we’re where we should be. The unrealistic gains are still falling off in certain market areas and people who sell now are still profiting, albeit not nearly as much as they could have.

If you’ll recall, everyone kept saying, “where would you go,” when asked if they should sell back in 2005. Not many people saw that we’d fall back to where we were in 2004. My question for the masses is whether or not we’re going to see an over correction, pushing prices into the 2003 range.

Interpreting Statistics: Sold Price vs. Asking Price

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Know what the statistics represent before making a decision.
Know what the statistics represent before making a decision.

Statistics help us know what happened so we might prepare for what could happen based on the patterns we’ve observed.  It is very easy to manipulate statistics to show results that will help us gain your trust and confidence.  One of the statistics that I’ve been looking at in the Valley is the percentage of sold price versus asking price.

When a home receives an offer, those of us who think statistically and mathematically will quickly determine what the percentage of the asking price the offer represents.  On a home that is listed for $300,000, if someone offers $285,000 they have submitted a 95% offer.  This information can be very useful for the buyer to determine what to offer the seller.  If the buyer were to look at this from the percentage angle as opposed to the dollar amount, and they were willing to put in a 90% offer, we’d know that their offer is going to be $270,000.  What the seller does at this point is up to the seller, but that’s not the point of this article.

With thousands of sales every month, it is becoming easier for us to compare your property to the rest of the market.  One of the comparisons we look at is the sold price to asking price, which helps our sellers understand what to expect when they receive an offer.  What has often been overlooked is the percentage result we obtain by determining the sold price versus the original asking price.  Most reports that we run are defaulted to show the list price at the time of sale, not the list price at the time the property was listed.

I conducted a simple comparison on 16 properties of a subdivision in the west valley that were all comparable properties.  In order to obtain enough results, I had to go back two years.  I compared the sold to list price of each property and then averaged the results.  What it showed was that on average, the properties that were selling in that neighborhood were selling for approximately 95.6% of their list price.

After calculating the percentage based on the original list price, which is the price for which the seller originally wanted to list their home,  the results showed that the sold price was actually  88.8% of the original list price.

Without conducting your own statistical analysis, it is difficult to understand what someone might be attempting to show you if they don’t disclose how they came up with their numbers.  On one hand, you could pitch to your buyer that it’s likely the seller will settle upon a price that is around 95% of the asking price.  Likewise, you could show a potential seller that their asking price is far too high and that they could expect on average to settle for 88% of their original asking price.

Make sure you know when you are presented with statistics what those statistics are actually measuring, and which statistics really matter to you.

Market Update as of August 18th

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As of the beginning of the week we had a total of 54,674 homes for sale, including all residential property types. By the end of the day on Sunday, our levels had dropped 1.6% to 53,767. The average asking price at the beginning of the week was $408,161 which increased less than one percent. Average days on market decreased by 5.1%.

1256 properties were sold over the past week which was 18.6% more than was sold the previous week. Word is getting out. It’s time to buy.

For properties that sold last week, the average asking price actually increased 2.83% over the previous from $241,098 to $247,941. The actual average SOLD price of the 1256 properties that sold last week was $237,968, 1.4% less than the previous week at $241,268. Those properties on average were on the market 116 days.