Greater Phoenix Residential Market: 2021 February Results
March 31, 2021
V.P. Business Development and
Real Estate Analyst Grand Canyon Title Agency
firstname.lastname@example.org Founder TheWilcoxReport.com
Median Purchase Price Explodes
Great Month for Sales
Not So Good Month for Listings
Results for Twenty-Six Cities
The information in this report was compiled from Arizona Regional Multiple Listings Services, Inc., data. The following results are for single-family resale homes in Greater Phoenix.
The median purchase price for a single-family resale home in February not only increased, it exploded. February’s median purchase price of $395,000 was $15,000 or four percent higher than January 2021. It was $63,000 or nineteen percent higher than February 2020. February 2021 marked the ninth consecutive month the median purchased price increased. The median monthly rent in February 2021 for a single-family resale home was $1,895. This was the same as January 2021, but is $245 or fifteen percent higher than February 2020. See Chart one.
The median purchase price is catching up with the median list price. Chart two shows the median list price of a single-family resale home in February was $399,900. This is $4,900 higher than the median purchase price. In February 2020 the median list price was $22,900 higher than the median purchase price.
February listings and sales of single-family resale homes. New monthly listings of single-family resale homes in February 2021 were 5,681. This is 839 or thirteen percent lower than February 2020. The average number of new monthly listings for the last three years in the month of February was 6,699. While new monthly listings in February 2021 were lower year-over-year, sales were higher. February 2021 sales we 5,293. This is 127 or three percent higher than February 2020. The only month of February this century to have more sales of single-family resale homes was in 2005.
How single-family resale homes were purchased this February is a little different than last February. There were more purchases with cash and conventional loans this February than last February. Cash purchases were 19.1% in February 2021 compared to 16.7% in February 2020. Conventional loan purchases were 57.9% this February compared to 55.5% last February. There were less purchases this February with a FHA or VA loan. FHA purchases were down almost four percent. FHA purchases were 9.5% in February 2021 compared to 13.4% in February 2020. VA loans were 5.9% in February 2021 compared to 6.9% last February. See Table one.
Why the year-over-year decrease in purchases with an FHA loan? A combination of reasons. The first reason may be that the maximum loan amount may not be high enough because of rising purchase prices. In 2021, the maximum FHA loan limit in Maricopa County is $368,000. As pointed out earlier, the median purchase price in February was $395,000. Another reason may be the cost of an FHA loan. An FHA loan requires a one-time up front mortgage insurance fee and a monthly mortgage insurance payment. Perhaps another cause for the decline in FHA loans may be the appraisal contingency. Many buyers are waiving the appraisal contingency in hopes of their offer being accepted. However, some sellers may be averse to accepting a contract with an FHA or VA because a buyer is not allowed to waive the appraisal contingency for these loans. Lines 109-110 of the AAR Residential Resale Real Estate Purchase Contract read, “Buyer has five (5) days after notice of the appraised value to cancel this contract and receive a return of the Earnest Money or the appraisal contingency shall be waived, unless otherwise prohibited by federal law.” Emphasis by author. According to Federal law a buyer may not waive the appraisal contingency on an FHA or VA loan. For more information on this topic follow the link to an article published by the Arizona Association of REALTORS. FHA and VA loans must have a financing contingency.
Table two shows February 2021 single-family resale home results for twenty-six cities located in either Maricopa or Pinal Counties. It compares year-over-year, sales, new listings, and median purchase price and median monthly rents. Thirteen cities had more sales. Twenty-one cities had less listings. All twenty-six cities had year-over-year median purchase price increases. Every city had year-over-year increases in median monthly rent. Note: the blanks in the median monthly rent columns indicate no monthly rentals or a very small number of rentals.
The median purchase price for a single-family resale home will be higher in March. It will break the $400,000 barrier. Maybe end March at $405,000.
Demand will continue to be much stronger than supply. Because of this many buyers will continue to make concessions in order to increase their probability of getting their offer accepted. Some buyers will waive the appraisal contingency and/or the loan contingency. Some will waive the inspection. I have seen earnest money non-refundable after contract acceptance. Before doing any of the aforementioned, have a serious discussion with your buyer and your broker.
The median purchase price is catching up with the median list price because so many contracts are written over list price.
Note: Starting soon will be monthly call for real estate agents to go over trends and strategies for competing in today’s residential marketplace. To receive notification, email me at FWilcox@gcta.com