Phoenix West Valley Real Estate Market Report by City September 2020

Hows the Market?? Here is your West Valley Market Report for September 2020. Hope you are all making the best of this crazy wild ride we are on and staying healthy. I like to look on the positive side of everything and I can say that our family has really enjoyed card games and board games more than ever and my hubby is really becoming a great cook! I hope you all have found some positive things to come out of all this too!
So let’s get to it, how is the market doing, well I can tell you that the pandemic hasn’t slowed homes sales at all. Maricopa county overall had a 20.3% increase in sales over last year. All West Valley cites except for two also had increased sales. Laveen had incredible sales with 41.5% increase over last year, Goodyear increased 22.4%, Peoria 18.5%, Phoenix 11.6%, Buckeye 10.8%, Avondale 4.8% and Glendale 4.4%. Litchfield Park was down by -6.7% and El Mirage was down -20% over last year.
Whats most incredible about the strong home sales is that the inventory is down on average 30% from last year. Homes are selling very quickly, average days on market 29 days and some cities its selling faster at 17-21 days. Many homes are seeing multiple offers, we listed a home on Saturday to Sunday had 48 showings, with 20 offers by Monday evening, selling $20,000 over asking price. Side note this home had a pool and that is a huge selling feature for homes in AZ. We have seen homes selling well over asking price as the buyers “fleeing” CA and WA (thats their word, not mine) and they are fleeing with some cash in hand and willing to pay cash over appraisal because our homes are still much more affordable than many other areas in the country.
Median home price in Maricopa County is up to $327,500 thats a 12.36% increase over last year. All west valley cites experienced increased home values. Click on the chart below to see how your city is doing.
Market Insights: I wanted to discuss something that I have heard over and over, perhaps questions you have even pondered…. are we in another bubble and is it going to pop like the mortgage crisis?? Although no one has a crystal ball and crazy things can happen at anytime as we have all seen this year, I would like to share with you my opinion on this subject.
First and foremost the biggest driver for the increasing home values is the low supply of homes for sale. Maricopa county has only 1.64 months of inventory, all west valley cites are 1 month or less of inventory.  As more and more industry and jobs are coming here, along with those folks “fleeing” their home states to relocate here, there are far more buyers than homes for sale and that will continue to keep the inventory low and press prices upward.
Another thing I hear a lot is that the pandemic job losses, will certainly bring on the foreclosures and drive prices back down. I really don’t think we will see the foreclosures like before and here are a couple of reasons why. First and foremost, most homeowners have lots of equity with the last few years having 8-10% increases, they should be able to sell with out facing foreclosure.
Secondly, it is far harder to qualify for a home loan, much scrutiny goes into debt to income, loan to value and many buyers have a down payments so they aren’t getting into homes they cant afford. Nor do with have adjustable rate loans, with fixed interest rates, no more increasing monthly payments, which adjustable interest rates were a big reason so many homeowners lost their homes.
Since we are talking about foreclosures, I would like to add that the banks got smarter towards the end of the mortgage crises. In the beginning the thought was, “lets just get through these foreclosures as quickly as we can” and so they FLOODED the market with inventory, which drove the prices down. As an example in September 2008 we shot up to 12.9 months of inventory, there were not enough buyers to absorb those sales for almost 1 year. At our peak, the inventory was at 18months, this is what dropped home values. As listing agents for Wells Fargo and a few other banks, I still remember when they started to hold back foreclosing, slowed listing their inventory in order to lower the inventory levels, and help prices make their way back up. So I certainly don’t think they would flood the market again, they learned their lesson. Side not the Median home price in Sept 2008 in Maricopa County was $170,100.
Lastly, the appraisal industry is now regulated unlike during the mortgage boom of 2004-2007 where anything appraised for any amount. Home values higher than cost of living and inflation is a recipe for disaster and thats what happened. Very specific guidelines and much scrutiny with appraisals now, appraiser and lender underwriters  review the final appraisals, this helps to suppress home values to keep with inflation. In the current market we are seeing multiple offers and homes selling over list price, but the buyers are having to pay that cash over appraisal, which means they are not financing 110% of the mortgage. So they still have that money in the equity of the home and would be able to sell and recover that money.
Over all the AZ economic growth is still strong with many industries still bringing jobs which leads to more buyers. Our property taxes are still considered low by national standards. Cost of living is very affordable, along with our beautiful winters, we should continue to see growth in AZ for a while. At least thats my hopeful opinion as I look at the numbers and the direction AZ is moving in.

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