How Covid Is Spurring Home Price Growth In The Valley
Once again, the Phoenix metro led the nation in home price growth, according to the S&P CoreLogic Case-Shiller Indices released on Tuesday.
With a year-over-year price increase of 13.8% in November, Phoenix beat the national gain of 9.5%, while Seattle was up 12.7%, followed by San Diego, at 12.3% growth.
This new data comes as no surprise to local real estate experts, nor to those seeking homes here, said Jim Belfiore, founder of Belfiore Real Estate Consulting in Phoenix.
“Prices are rising faster at this point than during any point since 2005,” Belfiore said.
The latest data reflects gains in new home prices of 1.8% to 2% monthly, he said.
“Affordability is quickly becoming a concern, but with lot supply and labor shortages, new home price gains are not likely to ease,” he said. “Neither are resale prices, with existing homes for sale hitting their lowest levels since late 2005 recently.”
Keith Burton, Realtor with The Rider Elite Team in Scottsdale, said metro Phoenix only has 18.5 days worth of inventory on the market.
“The Valley has 5,165 homes available after you back out the to-be-builts and under construction homes,” he said. “The West Valley of Phoenix has 1,282 homes available to sell.”
The average price of a home in Phoenix is $438,734, while the median price is $335,000, he said.
This was the 17th straight month that Phoenix had the strongest home price growth among the 20 cities reported in the Case-Shiller index, said Selma Hepp, chief economist for CoreLogic.
“Demand appears to be most robust in the low price where home prices are up 16% year-over-year in November,” she said. “Historically, low inventories and new record lows for mortgage rates at the end of 2020 helped spur demand, but also general migration to the region from other more expensive areas.”
The coronavirus pandemic is encouraging potential buyers to move from urban apartments to suburban homes, said Craig J. Lazzara, managing director and global head of Index Investment Strategy at S&P Dow Jones Indices.
“This may represent a true secular shift in housing demand, or may simply represent the acceleration of moves that would have taken place of the next several years anyway,” he said. “Future data will be required to address that question.”
Homebuilders can’t buy land fast enough to keep up with growing demand from potential homebuyers.