Renewed Buyer Enthusiasm
March 19, 2015
Written by Michael Orr
The Greater Phoenix housing market has been in the doldrums ever since the summer of 2013. With low sales numbers and a relatively weak level of supply there has been little excitement for sellers or buyers. However activity measured by the Arizona Regional Multiple Listing Service (ARMLS) shows that everything changed after the 2015 Super Bowl.
The first sign of an uptick in demand is often when the number of listings “under contract” starts rising. They always rise between January and March every year, so we have to compare 2015 with 2014 to see the real effect. By looking at the number of listings under contract on February 23, 2015 and comparing with the same day in 2014, we can see impressive growth for most, but not all, price ranges. We exclude distressed listings because these are now constrained by low supply, having dropped in number due to the low levels of delinquency and foreclosures.
Based on normal listings under contract across Maricopa and Pinal Counties we find:
Homes priced below $150,000:
- Up 7% from 1,940 to 2,077
Homes priced from $150,000 to $250,000:
- Up 35% from 2,527 to 3,406
Homes priced from $250,000 to $400,000:
- Up 38% from 1,582 to 2,176
Homes priced from $400,000 to $600,000:
- Up 33% from 586 to 780
Homes priced from $600,000 to $1,500,000:
- Up 12% from 406 to 454
Homes priced over $1,500,000:
- Down 10% from 98 to 88
Overall, normal listings under contract are up 26%. Clearly the price ranges from $150,000 to $600,000 are seeing a large increase in buyer activity which is showing up as more showings, more offers and far more signed contracts than last year. Below $150,000 and above $600,000 the effect is more muted, and above $1,500,000 we are seeing reduced buyer activity compared with 2014.
We believe that this is a very healthy development for the market and is probably caused, at least in part, by two major factors:
- Lenders have slowly started to relax their previously tight underwriting guidelines
More people who were foreclosed or completed a short sale are returning to home ownership
These factors have caused the number of available listings to peak quite early in the year on February 7. Supply is now starting to fall just as demand is increasing. If this trend continues throughout the spring season, 2015 is likely to be a much better year than 2014 for home sellers.
We would like to thank the Arizona Regional Multiple Listings Service (ARMLS) for permission to use their data in preparing this analysis.