How Sustainable is this Market?
From the Cromford Report, our favorite resource for Arizona real estate market data and trends, we can clearly see that the market keeps setting new records for dollar volume. The monthly figure for all areas & types is $4,518 million as of November 14 (in the Valley). This is up an astonishing 54% from the same time last year.
To put this in context, the dollar volume at the peak of the bubble in 2005 was $3,339 million which occurred during June that year. By June 2005 peak demand had already been detected and the market was sliding towards disaster as a slew of supply came onto the market from wise speculators getting out early. The current situation has market dynamics that bear little resemblance to 2005
I keep feeling a need to address buyer concerns that history may be repeating itself. It’s a legitimate question – how sustainable is the rapid rise of the market?
We previously addressed all the difference between then and now.
To name a few:
- Today is an equity market versus the ‘liar loans’ that fueled the 2004-6 runup.
- Bank qualifying criteria has normalized
- Today demand outpacing supply is also fueled by factors that are baked in –
- the demographic migration to sunny weather (pardon the ‘baked-in’ pun);
- the migration from large coastal city congestion (desire by many for more elbow room; safety concerns)
- a fundamental shift to work-from-home that allows people more freedom to choose where to live
- Today’s general housing shortage as Millennials, the largest population in the U.S. today are seeking the American Dream of homeownership
We don’t have a crystal ball, but these significant circumstances indicate that this is a much different scenario from all those years ago. For now, we continue to search for new inventory to sell, and continue to help our clients navigate their real estate transitions.
The post Cashman Partners Phoenix Area Real Estate Market Observation | November 2020 appeared first on Cashman Partners - Russ Lyon Sotheby's.
