Chandler saw a decline of nearly 13% in home sales volume last month, with 367 homes that closed, vs October 425 last year. The dip is somewhat surprising considering how strong a year Chandler has seen so far with it being the city’s hottest year on record, outside of the boom year of 2005 and bust year of 2011. However, it seems to be attributed to the fact that inventory is low and there are not many choices for homebuyers, as evidenced by the under 2-month supply available (3-6 month supply is considered normal). This percentage has been trending higher over the past several months.
The median home sales price was $291,000, up from $274,995.
Homes closed at an average of $157/square foot vs. $150 in 2016.
The current pending home sales price for all homes under contract stands at $305,000 and $163 per square foot after just 27 days of being on the market, indicating prices should trend up for November. There are 443 homes scheduled to close in the next 30-45 days, with available inventory of 641 listings.
We are seeing a very diverse group of homebuyers and sellers, predominantly Millennial first-time homebuyers, followed by trade-up/downsizing buyers (who are generally selling their homes and not renting them out); some investors are selling off properties they purchased after the market crash and seeing healthy profits, but not enough to keep up with the fierce demand we are seeing.
With the amount of noticeable pent-up buyer demand heading into the Winter months, the market will need more inventory to accommodate this need. The most logical place where this could come from would be investors who purchased rental properties during the market “bust” year of 2011. This, however, is unlikely, as the demand for rental homes is strong, and the long-term future of rent prices in the area are expected to increase, as well as anticipated home price appreciation.
Distress inventory (defined as short sales, HUD homes, or foreclosures) remains at extremely low levels, with 2% of all closed listings fitting into this category. At present, 5% of homes under contract are distress, and 1.7% of active listings are either short sale or foreclosure. The higher percentage coming from the pending/under contract category should not be alarming, because with short sale listings it often takes months to obtain bank approval, so we have many in the pipeline that are stacking up on top of each other. These homes are highly unlikely to all close in the same month. We are seeing buyers take a financially conservative approach, evidenced by the fact that many are choosing to purchase below the maximum loan amount they can quality for.
The number of home options in Chandler remains severely limited, especially in the $350,000 and under mark. Chandler remains a hyper seller’s market with multiple offers frequently showing up in the lower price ranges. We are also seeing very strong/healthy activity in the $350-500k category, as well as homes priced slightly over the half million mark.
With low inventory in place, and somewhat slowing seasonal demand, prices are likely to increase slightly through the holiday season. Demand will continue to remain healthy, as Realtor.com projects Phoenix to be the hottest market in the U.S in 2017, and we are certain seeing tangible evidence of this. A recent azcentral article noted valley housing expert Tom Ruff stating that we are on track to have our best “normal” real estate year in history.
New construction homes continue to be in strong demand as well. A record number of buyers are currently the in process of building homes, with an average wait time of 7 – 9 months for completion. The amount of available land to build in Chandler continues to shrink, as builders focus on maximizing profits with multi-family housing and single-family homes on smaller lots. Chandler’s population currently stands around 252,000, and experts project the city’s population to top out at around 300,000 in the next couple of decades.
Although a seller’s market (multiple offers situations are not uncommon), buyers continue to negotiate closing cost concessions, as well as repairs during the inspection period, with offers near or at list price. Builder incentives (money towards closing costs or upgrades) are granted when their preferred lender is utilized.