The Cromford Report: Inventory Remains Low While Median Sales Price & Luxury Sales Are Up!

Rent or buy? The age old question remains but perhaps current circumstances make it easier to make a decision favoring purchasing over renting a home. Both the median sales price and monthly rental rate went up by 18% but when you consider that a 1,500-2,000 sqft home rents at a monthly median of $1,850 (a $250 increase from last year) versus roughly $1,600-$1,700 per month to purchase with 10% down for the same property (backed by a historically low 30-year fixed mortgage rate), buying becomes the all the more attractive option.

However, between steadily declining home affordability and a housing shortage in the Greater Phoenix area, buying now than later becomes all the more sensible. Inventory remains low, down by 61% from the same time last year, with the number of new listings slowing down and developers still struggling to catch up. Compared to other cities, a Greater Phoenix family with a median annual income of $72,300 could afford 60.6% of homes that closed in the 4th Quarter of 2020, still within the normal range of 60-75% for home affordability despite a gradual decline. Expect strong competition from other buyers but as you can see, the sooner you can close on a home the better with conditions still this favorable.

On the other hand, it's definitely a good time to be homeseller. Regardless of the price range, area or property type, homes are getting snapped up left and right with closings so far this month going over 37% of the asking price. To illustrate, homes sold below the $600K price range appreciated annually between 7% and 11% while those in the $600K and $1M range went up 5% to 7%.

But things look a little more exciting in the luxury market, thanks to California announcing this past summer that income and other taxes might increase. Home sales above the $1M price range in the Greater Phoenix area swelled over the last year, up 102% in the $1M - $3M range and over 140% for properties above $3M. In addition, appreciation rates based on annual sales in the $1M - $2M price range rose 5% - 6.5% while those over $2M increased 2% - 5%. But perhaps the most noteworthy development is Gilbert's emergence in the luxury real estate market. While Paradise Valley and Scottsdale come to mind when thinking about luxury real estate and Arizona, Gilbert made its mark in 2020 by joining the top 5 cities for sales over $1M.

The Cromford Report: Inventory Remains Low While Median Sales Price & Luxury Sales Are Up!