Ahwatukee home

had a conversation with my friend Steve O’Brien at AZ Auto Air recently and he asked, “What is going on in the (real estate) market.”

An Ahwatukee resident, he is curious like everybody else about the real estate market. With prices jumping upwards month after month, gun-shy homeowners who remember the real estate meltdown of 2008 are concerned that another bubble is about to burst.

Last month, I addressed reports in the local Phoenix media that the “Phoenix real estate market is seeing increases in the number of listings and that the housing market is cooling.” 

Despite the reports, we didn’t see a dip or slowdown in the Ahwatukee market in April or May and the market still performed at record levels in June. The average sale price of an Ahwatukee property in June stayed steady at $542,780 – compared to the $543,297 average in May.

There were 59 properties listed on July 1. On average in 2021, 161 properties are selling per month in Ahwatukee. The listing inventory of 59 properties would be depleted in about 11 days. As we have seen for many months demand is outstripping supply in Ahwatukee, the entire metro area, and many real estate hot spots around the country.

The 179 Ahwatukee properties that sold last month crept ahead of 168 properties sold in June 2020. 

The Ahwatukee real estate market expanded in the first six months of 2021 with 965 Ahwatukee homes sold – far outpacing the 760 Ahwatukee homes sold in the first half of 2020 by 21 percent.

The average sale price of an Ahwatukee property sold in the first six months of 2021 increased to $505,106 from the $395,829 average value of Ahwatukee properties sold in the same period in 2020. 

This puts the average value of an Ahwatukee property 28 percent higher in 2021 than for the same period in 2020.

Most urban areas across the country are reporting market conditions similar to what we are seeing in the metro-Phoenix market. Demand is high and the record low inventory levels are pushing prices steadily higher. In many markets, including our own, we are seeing homebuyers offering over the asking price to get a property. Bidding wars are common.

So, is there any end in sight? Are we about to see  prices crash as we saw when the real estate bubble burst in 2008?

The current market, while similar to the market leading up to the 2008 crash, is decidedly different. In the days leading up to the 2008 crash, there was a lot of speculation in the real estate market. 

Speculators were building properties at a pace that outstripped the demand. The mortgage market, in retrospect, was unregulated in many ways and lenders were doing creative lending. It was the wild west of real estate and when it stopped, it crashed.

It brought down individuals and banks. It required a huge bailout by the government (really the taxpayers) and incredibly, nobody went to jail.

The current situation, with rapidly rising prices and lines to make offers on properties, is remarkably different. Mortgage reforms that were put in place after the crash of 2008 have become laxer, but today’s market is responding primarily to the lack of inventory and the high demand.

The fact that the mortgage interest rates have remained at record  lows has allowed the market to continue. Most experts believe this market will continue to expand until people are forced to the sidelines because they can no longer afford the escalating prices.

I am not hearing much from the real estate analysts about the high inflation rates we have recently started to see. Inflation will have the effect of pushing up the cost of all consumer items, including properties. 

The quantity of treasury funds in circulation has increased, creating the usual inflationary pressures that will drive up interest rates. The U.S. dollar has weakened significantly since the pandemic began. As the dollar weakens, foreign investors can demand higher yields. This increases the interest rates across the board. The resulting rate increases push the cost of borrowing for a mortgage loan higher and buyers have less buying power.

These factors will put downward pressure on home prices if they continue. In my opinion, inflation should be on the watchlist for all homebuyers and sellers. 

The year to date, snapshot of the Ahwatukee market shows us the bigger picture.

Many frustrated buyers are looking for homes in Ahwatukee. The lack of listing inventory is pushing prices steadily upward as many, if not most, buyers make offers over the asking price in the anticipation of multiple offers.

We always encourage home sellers to price their properties realistically. However, in the current market, we are seeing sellers price their properties above the comparable sales values and still receive multiple offers over the asking price. 

In this market, it is reasonable and permissible to list a property over the recent comparable sales, to test the market. Always keep in mind, however,  that the property will usually have to appraise if the buyer is applying for a loan. 

There were seven sales of Ahwatukee properties over $1 million in June 1 at an average sale price of $1,425,000. They were on the market an average of 57 days and 22 percent required a price reduction.

Here are the statistics of June 2021 sales in Ahwatukee in other price ranges:

  $600,000-$999,999, 64 sales at an average price of $663,172 and an average 22 days on the market.

$500,000-$599,000, 29 sales at  an average price of $551,530 and 55 days on the market.

$400,000-$499,000, 55 sales with an average price of $466,468 and 20 days on the market.

$300,000-$399,000, 32 sales at  an average price of $374,412 and 19 days on the market.

Under $300,000: 19 sales at an average price of $268,917 and 22 days on the market.

In the short term, and perhaps even the long term, it is probable that rising prices will be the single biggest factor in slowing down the real estate market. As prices increase, many buyers will be priced out of the market, demand will fall, supply will increase and prices will drop. We are not seeing this currently in the Ahwatukee real estate market but the potential exists.

If you have any questions or need a free professional consultation, Ahwatukee Realtor Allen Henderson can be reached at 480-392-2090.

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