2020 ENDS. 2021 BEGINS.
2021 begins with the inventory of homes for sale at the lowest number recorded in the last 20 years. As of January 10th, 2021 there were only 6,162 listings active in the MLS. To make matters even worse, that number is inflated because 10% of those properties are actually outside of the Greater Phoenix boundary. To put this in perspective, we would need around 30,000 properties on the market to be “balanced”. Supply is down a whopping 51%.
Why is our inventory so sparse? Many mistakenly believe the lack of homes for sale is due to too few homes coming on to the market in 2020 courtesy of the pandemic. In fact, new listings numbers for 2020 were equal to 2019 (or to be precise, up a meager 38 homes over 2019) coming in at 111,036 new listings. In fact, the actual culprit behind low supply was soaring demand. Demand rose 35% above normal between June and December of 2020.
Even sales of luxury properties over one million, surged after June. 2,575 homes over one million sold in 2020 – that’s up 48.7% compared to 2019. Very impressive numbers for the valley.
Arizona currently ranks 3rd in the nation for population growth (behind Texas and Florida per the 2020 Census). Not surprisingly, we are seeing California as our number one source for inbound migration. After a year of government lockdowns, riots and fires California is currently losing two people for every one person arriving.
As the valley’s population continues to swell, it will take time to increase the supply of homes sufficient to equal demand. In the meanwhile, prices will continue to rise and at some point will impact affordability. That impact eventually will slow demand. Once demand slows, inventory will begin to build and dampen rising prices. But that supply/demand correction cycle takes time. In the meantime, we expect 2021 to remain a strong market for sellers.
Russell & Wendy