In a year of challenging economic struggles across the United States, with many metropolitan real estate markets tanking in the early months of 2020, the combination of record-low interest rates and increasing demand continue to make it a seller’s market. The national median home price in September was $313,000, 15% higher over last year’s prices.
The combination of low supply and higher prices should be offsetting for buyers, but in Phoenix the demand is reaching new heights. According to Metro Realty, September had 17% more listings than September of 2019, with monthly average sales price per square foot up 17.1% over last year.
Short supply and high demand
The health crisis, higher unemployment and market uncertainty have made sellers tentative. But the combination of steady population growth in Phoenix proper and the suburbs in Valley of the Sun, and a reluctance of builders to jump in after being burned severely by the housing market collapse of 2008, have also contributed to the shortage of inventory.
In spite of this, last July saw over 3,000 single family permits filed, the largest number since March of 2007. While this may provide some relief for buyers, the demand continues to be strong, boosting sale prices significantly. In August, 35% of homes throughout the Arizona Regional MLS sold over asking price.
Another trend affecting the market started in August, with a 17% surge in listings under contract for over $600,000. As contract activity usually declines in the second half of the year, this spike in the luxury market has been attributed to the “wealth flight”. Companies and their employees, worried about potential tax hikes in income and corporate taxes in states like California, are choosing to move to Phoenix in order to take advantage of the city’s lower cost of living and taxes.
Reviewing contracts and investment opportunities
With businesses finding Phoenix more attractive, the demand for commercial real estate transactions will likely be increasing. Real estate appreciation continues upward and the demand for commercial, condo and rental properties is making investment opportunities extremely attractive going into 2021.
When contemplating investment and commercial real estate opportunities, it is important to find an experienced real estate attorney who can help negotiate terms of sale and draft or review contracts to protect your interests down the road.