We talk to countless people who really want to buy an urban condo but are afraid. They worry that prices are going to go down further and hurt them as the eroding market has hurt so many others.
Here are some great numbers that put the current Phoenix real estate market into perspective. This data is for real estate in general, not urban high rises and lofts specifically. However, the numbers reinforce our opinion that with all things considered (i.e. the very real possibility of higher interest rates, the very real possibility of inflation, and a real increase in buyer interest among our clients) that now is a good time to buy. Please understand that our optimistic opinion does not apply to all high rises and lofts. There are definitely some risky situations out there. But in general things look much much better.
The numbers below show what has happened since January 2002 in the greater Phoenix real estate market.
- Currently there are 6,314 properties actively listed for sale on the Phoenix MLS.
- The highest number of listings since January 2002 was 11,591 in November 2008; almost twice today's number.
- The lowest number of listings was 1,190 in March 2005.
- The number of active listings has dropped steadily since November 2008 until July 2009 where they have staid pretty steady at 6,000.
CONCLUSION - Inventory, the number of properties currently for sale is at the level of a "normal market." This means that the number of buyers and sellers are relatively equal. This means that the days of "beating up sellers" are probably over so we expect prices move up.
DAYS ON MARKET
- The number of "days on market" for properties actively for sale in Phoenix is currently 110 days.
- The high was 484 in June 2008.
- The low was 19 days in March 2005.
- During the "normal" market of 2002-2004 properties took an average of 100 days to sell.
CONCLUSION - Days on Market are way down to a level seen in the "normal" market of 2002 to 2004. This supports our opinion that the number of buyers and sellers have reached parity or balance. However, we do believe that today's number is heavily influenced by the very high number of foreclosure properties which are selling very quickly. Nonetheless, one can see that the number of days to sell has come way down and supports our optimistic outlook.
- Currently the number of "pending sales" (properties which have a buyer but the transaction has not yet closed) is at 2,598.
- The high was 3,272 in May 2009.
- The low was 530 in January 2008.
CONCLUSION - The current number of pending sales is significantly higher (25 to 50%) than the numbers in 2004 and 2005 which is a great thing. Please note that the number of pending sales is down today vs. May of this year. However, please know that real estate sales in Phoenix are almost always slower in the fourth quarter of the year vs. the first two quarters of the year. I'm sure you'll agree that few people want to shop for a home and move during the holidays.
- Currently the number of properties that close each month is 1,761.
- The high was 2,380 in January 2009.
- The low was 404 in January 2008.
- Current sales velocity is equivalent to 2004 and 2005.
CONCLUSION - Yes the number of closings today is lower than January 2009 but again understand that few people want to shop for homes or move during the holidays. Sales are almost always lower this time of year. Expect a nice jump in the number of sales in January 2010.
AVERAGE SALES PRICE
- Currently the average sales price in Phoenix is $146,598.
- The high was $343,229 July 2007.
- The low was $102,845 in March 2009.
CONCLUSION - The average price has GONE UP 43% in the last eight months and today's average prices are almost 15% lower than those in 2002. Buying at 2002 price levels means nothing IF prices are still going down. But if prices are going up, which the data suggests AND you can buy at 2002 levels then now may in fact be the time to buy.
AVERAGE SALES PRICE PER SQUARE FOOT
- The current average price per square foot is $83.06.
- The high was $185.29 April 2007.
- The low $64.40 per square foot in May of 2009.
CONCLUSION - Current prices per square foot are up approximately 29% since just six months ago but still approximately 18% lower than in 2002. Again, prices are going up but you can still buy at or below 2002 prices.
STATE OF THE MARKET
So there you have it, data that suggests that we "hit the bottom" in real estate in early 2009 and that prices and sales activity are going up. You can believe what you read in the newspaper and see on the evening news OR you can form your own opinions based on the numbers. Fitz and I have been pretty conservative in our opinions of the real estate market during these tough times; certainly more conservative than any of our peers. We have NOT been banging the drum telling everyone to buy, buy, buy just so we could make a commission. We have instead been very skeptical of a "recovery". However, we now see things differently. We believe the numbers. We believe that prices have bottomed and are going up. We believe that the worst is behind us. We also truly believe that interest rates will be going up soon. We also truly believe that inflation is on its way. If we are right then, in general, now is the time to buy.
I say "in general" because we believe that there are exceptions to this statement. Some high rise and loft buildings are still very risky and are many months, if not years, from recovering. YOU STILL NEED AN EXPERT ON YOUR SIDE to help you find the good "buys" and to identify the stable high rise and loft buildings. Don't trust your investment to a part time agent or one who does not specialize in the urban niche. You still need the experts at We Know Urban Realty. Call us for help.