Market Update: January 2020 Results; New Population Numbers for Arizona; Revised AAR Residential Resale Purchase Contract
March 3, 2020
V.P. Business Development & Real Estate Analyst, Grand Canyon Title Agency
Higher in January 2020 compared to January 2019 were sales of single-family resales in Greater Phoenix or Maricopa County. There were 4,416 sales of single-family resales in January 2020 which were 553 or fourteen percent higher than January 2019 sales of 3,863. The median purchase price was higher. In January 2020, it was $320,000 which was $29,500 or ten percent higher than January 2019. If 2020 is anything like the last several years, the median purchase price of a single-family resale by the end of 2020 will be in the range of $340,000. Dollar sales volume was just under $400,000,000 higher this January than last January.
This is what was lower. First, was the average number of days a property was on the market before going under contract. January 2020 average agent days on market known as ADOM were 58 days compared to 67 days in January 2019. This represents a faster paced, quicker turnaround of listings to sales. In January 2020, thirteen percent of sales had an ADOM of five days or less compared to nine percent of sales in January 2019. As for new monthly listings, there were one thousand less this January compared to last January. Total new listings in January 2020 were 6,589 which were 1,004 or thirteen percent less than the 7,593 in January 2019. There were 213 new listings per day in January 2020 compared to 245 in January 2019. The number of new listings this January were the lowest in years. The average number of new monthly listings for the month of January for the previous five years
The estimated months of supply continues to be very low in the most popular price ranges. For homes priced under $500,000, the estimated months of supply is from less than one month to two months. This indicates a continued strong seller’s market in the most popular price ranges.
Table One is a synopsis of January 2020 results. Table Two shows by price range the following: January sales, ADOM, ADOM five days or less, active inventory and estimated months of supply. Chart One shows the median purchase price for a single-family resale month by month from January 2014 through January 2020.
U.S. Census Bureau Releases State Population Numbers
On December 30, 2019 the U.S. Census Bureau released their state population numbers. Table Three shows that Arizona had the third-highest year-over-year numeric population increase. Arizona’s year-over-year increase in population was 122,693 or a gain of 330 people per day. Also according to the U.S. Census Bureau Arizona tied for second in year-over-year population percentage increase of 1.7 percent. And since 2010 Arizona’s population has increased by 886,429 people. This is a lot of people. This is one major reason why the demand to own is high and home values should increase in 2020.
Changes to the AAR Residential Resale Real Estate Purchase Contract
On February 1, 2020, the Arizona Association of REALTORS released a revised edition of the Residential Resale Real Estate Purchase Contract. This is the first revision since February 2017. There are three revisions this year. The first one is that the Solar Lease / Solar Loan Assumption Addendum will be added to Section 1f which contains a list of possible Addenda. Second, with the growth of smart home devices, Section 1g, which identifies existing fixtures and personal property that convey with the sale will now include smart home devices, access to which shall be transferred (i.e., video doorbell, automated thermostat). These products if affixed to the premises are to stay with the home. The seller is to provide the buyer with the means to operate the devices. The third revision is in section 2j Seller Concessions. There are often disputes between buyers and sellers as to what a seller concession can pay. This will help clarify and reduce these disputes. The AAR Risk Management committee expanded seller concession to include all buyer costs as allowed by their lender. Section 2j will now read as follows:
SELLER CONCESSIONS (if any): In addition to the other costs Seller has agreed to pay herein, Seller will credit Buyer % of the Purchase Price OR $ (Seller Concessions). The Seller Concessions may be used for any Buyer fee, cost, charge, or expenditure to the extent allowed by Buyer’s lender.
January 2020 results for sales of single family resales in Greater Phoenix showed higher year-over-year sales, a higher median purchase price, and higher dollar sales volume, while less new listings and a decrease in agent days on the market. These results indicate that the 2020 residential market will remain robust and competitive. It will be robust in that the median purchase should continue to go up because high demand. High demand to own is being fueled by Arizona finishing third amongst all states in population increase. Sales in 2020 will be as high as inventory will allow. A sign that competition will stay firm is that homes now have shorter agent days on the market. Buyers are recognizing, sooner than later, the need to write an offer and not wait if a home is priced right. Even though year-over-year inventory was down this January compared to last January, buyers still have more home choices today than they did in November or December. January’s new monthly listings of 6,589 are much higher than when they were 3,817 in December and 5,336 in November.
If you want more information on the recent changes to the AAR Residential Resale Real Estate Purchase Contract, sign up for the Broker Summit (March 27th ) at the Arizona School of Real Estate & Business.