The steadily high demand for homes is sending desperate buyers in search of new houses instead of resales – but they shouldn’t expect developers will take any offer that comes along.
So says the Cromford Report, which closely monitors the Valley’s housing market.
“With the chronic shortage of re-sale homes, many buyers are turning to new-builds,” Cromford said last week. “Here they will not face multiple offers, but they may well find some builders are not accepting contracts except for homes that are near completion.”
The reason won’t make buyers happy.
“Prices are climbing steeply and some developers do not want to tie themselves to a fixed price until the home is almost complete,” it said. “The builders are experiencing an extreme seller’s market and buyers (and their agents) are likely to feel a little less appreciated than usual.”
Developers are finding themselves in the catbird seat.
Homes are moving so quickly on both the resale and new-build markets that developers “can also spend less on sales and marketing,” Cromford said.
Demand has not declined for months in the Valley’s market.
Active listings across Maricopa and Pinal counties for September were down 41 percent from September 2019 by 41.1 percent, excluding homes where the buyer’s offer was contingent on selling their own home and those that were under contract but where the seller was seeking back-up offers.
When those homes were added to active listings for September 2020, listings were down 24.4 percent from a year ago but up .9 percent from August because there were 73 more houses on the market last month, Cromford said.
More discouraging news for buyers involves price.
The median sales price for homes sold last month was $327,000 – up 17 percent from September 2019.
Yet, despite that, month sales last month were up 20.5 percent over September 2019.
“It is unusual for the number of listings under contract to be higher on Oct. 1 than Sept. 1, but this is what we see in 2020,” Cromford said. “Even more startling is the amount by which the number of listings under contract exceeds the 2019 level – 34 percent. The market was strong this time last year, but now it is on fire.”
“To be fair,” it added, “September had one extra working day in 2020 compared to 2019, but this does not take much away from the impressive number of closed listings.”
All of these trends prompted Cromford to warn that people who expect a rash of foreclosures in the Valley soon can expect disappointment,
“There have been a number of articles written predicting that home prices will fall next year because of the damage to the economy by the COVID-19 pandemic,” it said.
“This will cause some people, those who took those articles seriously, to be very surprised by the huge increase in pricing that is currently going on.”
Cromford predicts, “The upward price trend will continue for the near and medium term, making any price reductions in 2021 rather unlikely.”
In Maricopa County, it noted, foreclosures last month plummeted by 79 percent from September 2019.
Meanwhile, the upward trend in price is so steep that it predicts year-over-year increases will soon hit 20 percent.
“The economy has severely damaged the finances of a large number of people,” it said. “However, most of those people were unlikely to be in a position to buy a home anyway. Those who are in a position to buy a home have had their determination to do so increased dramatically by the pandemic. The gap between the haves and the have-nots is widening.”
It also cited recent data suggesting “there is unlikely to be the sort of foreclosure flood that we saw in 2007 through 2012.”
“We currently have no more than a molehill, it said, adding:
“The market is still showing no sign of weakness.”