New "Normal" of Greater Phoenix Home Sales
We keep hearing people ask, when will the housing marking return to normal?” And we have to answer
that question with another question “What is Normal?”
This is John Schloz with HomeSmart
We are currently in a real estate market where the demand for homes exceeds our supply of homes for
sale. If it feels like that’s normal, here’s why:
Over the past 21 years, Greater Phoenix has been in a seller’s market for almost 62% of the time.
We’ve been in a a balanced market for 22% of the time and a buyer’s market for 17% of the time.
A seller’s market sure feels like normal.
Due to increased competition, in this seller’s market, buyers are more often paying more than asking
price, sometimes even more than an appraised value.
In a “normal” seller’s market, we see 15 - 20% of listings sell over asking price for a median over asking
price was $2,500. For the last year, we’re seeing between 40-60% of homes selling over asking price
with the median between $10,000 - $20,000
Is this the new normal?
Another great measure of the market is contract ratio. That’s The number of homes in escrow vs the
number of homes for sale. This is the chart For the month of February over the last decade, we can see
that the ratio has grown dramatically, indicating a higher level of demand versus supply. In addition,
census data shows vacancy rates of both single family homes and rentals are at an all time low. Houses
are in short supply.
Here’s the crazy part: new listings to the market hasn’t changed much over the last decade. We had
more homes hit the market in 2021 than we’ve seen since 2011. And the number of sales per year
continues to grow, with 2021 setting a record at over 105 thousand sales.
These conditions also affect affordability. Local Economist Elliott Pollack has indicated this type of
market is not going anywhere soon unless there’s a large influx of new construction.
“People are not only being priced out of buying a home,” he warns, “they’re also priced out of renting.”
If you’re waiting for the market to get back to normal, you may need to settle in. This may the new
normal for a while.
There are ways to compete in this market. Remember, we sold more houses last year than ever before.
Let me help you before rising prices and interest rates price you out of the market for a new home.