Jobs = Population Growth = Housing Growth!
Red Hot Phoenix Real Estate Market in 2020
I’ve been following the Cromford Report for nearly 10 years now as they are one of the few sources that focus on real time (daily) supply and demand here in Maricopa County. This allows the Cromford Report to accurately predict short term (6-12 month) home price movement in the valley.
The Cromford Index measures the relationship of current supply against current demand for any given market. An index near 100 means that supply and demand are in balance with each other and we can expect prices to stay relatively flat. Anything below 90 is considered a buyer’s market and numbers above 110 are considered a seller’s market.
The current supply/demand index for the Phoenix Metro Area reads at 217- a red hot sellers market. This is the highest the index has been since 2005, when it hit a record 323 valley-wide. The lowest number the index has hit was 34, which happened in early 2007- just before the real estate crash.
While demand (and mainly false demand) was what moved prices back in 2005, the major driver of home prices this cycle has been the lack of supply. The current supply number measures at under half of what is needed to meet current demand, and unfortunately that number continues to decrease starting off 2020.
Maricopa County was the fastest growing county in the nation last year and new home construction has simply not been keeping up with this growth. This will change in coming years, but that process takes time. In the short term, we can expect continued extreme low supply and subsequent price growth.
Current demand actually measures in at “normal” with an index at 103. Demand has remained pretty steady recently, but many economists predict that demand will continue to increase in the valley due to job growth and Millennial household formation.
All Markets are not equal, but still pretty good
While most areas of the valley are doing well, the hottest markets right now are in the east valley. The Cromford Index for Chandler and Gilbert both measured in at 340 this week, while Mesa came in at 289. In Chandler there are nearly 2 homes under contract for every 1 home for sale, and the market is just getting hotter.
All major cities came in above a 150 indicating strong seller markets throughout.
Below is a chart showing the current Cromford Index for each major city.
There is my State of The Housing Market speech. As always, we are here to handle all of your real estate needs. If you have questions regarding anything in real estate, or know someone looking to buy or sell a home, please give us a call.