Market Update: 2020 In Review

Was 2020 A Record Setting Year?

U.S. Census Bureau Releases New AZ Population Numbers

Let’s recap 2020 by number of sales, new listings, median purchase price, median monthly rent and dollar sales volume for single-family resale homes in Greater Phoenix. I will compare these categories to 2019. And I will compare some of these categories quarter by quarter in 2020 for trends. Additionally, the U.S. Census Bureau released in December their state population numbers. Find out in this report where Arizona ranked in numeric population increase.

There was a demand to own right out of the gate at the start of 2020. Sales were fifteen percent higher in January 2020 over January 2019. The total number of sales in the first quarter of 2020 finished ten percent higher than first quarter 2019. 2020 new listings in the first quarter were not up right out of the gate. They were seven percent less than first quarter 2019. These results were all pre-COVID-19 except for some COVID-19 related fallout at the end of March which did reduce some sales and new listings. Overall, the 2020 first quarter had increased demand and a decreased supply. This was the fuel for the 2020 acceleration of home appreciation. In January the median purchase price was $320,000. By March it was $335,000 for a gain of $15,000 or five percent in just two months. Then something happened.

COVID-19. The shutdown. An unknown future. This caused both listings and sales to take a tumultuous tumbling. 2020 second quarter new listings were down seventeen percent and sales were down twenty-three percent compared to the same time last year. When comparing the second quarter of 2020 to the first quarter of 2020, new listings were eleven percent less; sales were higher but only by four percent or 704 more sales. To put in perspective the affect COVID-19 had on second quarter 2020 sales and how weak they were, let’s look at 2019 numbers. In 2019, second quarter sales were forty-eight percent or 6,935 higher than in the 2019 first quarter. Historically the second quarter generally has more sales than any other quarter of a year. But not in 2020.

Once some fear resided, and because real estate activity in Arizona was classified as an  essential service, things changed in  the 2020 third  quarter. Year-over-year,  2020 third quarter listings were thirteen percent higher and  they were nineteen percent higher than 2020 second  quarter. Sales had better results. Year-over-year third quarter sales increased thirteen percent. But 2020 third quarter sales were a whooping thirty-four percent or 5,534 higher than the 2020 second quarter! The real estate market once again had life.

Now for 2020 fourth quarter results. 2020 fourth quarter new listings outperformed the fourth quarter of 2019 by eight percent more listings. Even though there were more new listings the second half of 2020 than 2019, it did not feel like it. The reason being that days on market kept decreasing in 2020. Many homes once listed were gone in a flash. This decrease in days on the market kept the level of active listings at any one time very low. In November 2019, agent days on market were fifty-two compared to thirty-six in November 2020. When comparing new listings in the 2020 fourth quarter to the 2020 third quarter they were down twenty-one percent. Historically the fourth quarter, out of all the quarters of a year, has the least number of new listings. 2020 was no different in this aspect. Sales had better numbers. 2020 fourth quarter year-over-year sales were twenty-four percent higher, but compared to the 2020 third quarter were less ten percent. Again, this followed a historic seasonal pattern.

Overall, in total 2020 single-family resale home sales in Greater Phoenix were about two and a half percent or 1,827 higher than 2019. Total 2020 new listings were close to two percent, or 1,524 lower than 2019.

Median Purchase Price. As mentioned earlier, the median purchase price from January to March increased by $15,000 or five percent ending at $335,000 in March. Then by May, because of the COVID-19 storm, it retreated by eight thousand or two percent to $327,000. In June it was $340,000 setting a new median purchase price record. But the median purchase price did not stop going up in June. It increased each month thereafter, thus setting new records each month. December’s median purchase price for a single-family resale home in Greater Phoenix was $375,000. The seventh consecutive record-breaking month. Overall, the median purchase price in 2020 was $43,500 or fourteen percent higher than 2019. This was the highest year-over-year increase in seven years.

Dollar Sales Volume. Dollar sales volume for single-family resale homes was thirty-two billion. A record. 2019 had the previous record at twenty-seven billion. In 2005 it was twenty-six billion.

Median Monthly Rent. Not only did the median purchase price climb in 2020, so did the median monthly rent. December’s median monthly rent was $1,850. This was twelve percent increase over December 2019’s median monthly rent of $1,650.

U.S. Census Bureau Releases New State Population Numbers. In December, the U.S. Census Bureau came out with their annual population report. Amongst all fifty states, Arizona finished third in numeric population increase for the second consecutive year. According to the Census Bureau Arizona gained 129,558 people or an average of 355 people per day. Arizona’s population is now 7,421,401. Texas was number one in numeric population gain at 373,965 and Florida was number two with a gain of 241,256. The top three states for numeric population loss were New York down 126,355, Illinois down 79,487 and California down 69,532 people. Any surprise?

Conclusion

So, what will the start of 2021 look like for the single-family resale home market? Expect the tremendous demand momentum in the second half of 2020 to carry over into 2021. Demand will gain velocity in January when more buyers start buying and more sellers list their homes. Overall, active listings will remain low in the first quarter. Expect competition everywhere.