As the West Valley stands at the beginning of the spring home-buying season, the inventory of available houses is continuing to dwindle, according to the website closely analyzing the metro Phoenix housing market.
“The current situation is even more remarkable than last month,” the Cromford Report said last week, reporting active listings in February totaled less than 12,000 homes – down 35.1 percent from February 2019 and down 1.4 percent from last month.
Cromford said its analysis of available housing on the market shows the inventory shortage is particularly severe in Avondale, Glendale and Peoria, though Goodyear and Buckeye are only a little better.
“The lack of supply was described as shocking at the start of 2020, so I am starting to run out of adjectives to adequately describe the current state of supply. It is almost (but not quite) unheard of to see supply drop between January 1 and February 1,” it added.
In virtually every city in the Valley, the website said, the market continued to increase its favorability toward sellers – at buyers’ expense.
Moreover, demand is increasing – a harbinger of even worse news for homebuyers in the coming months, Cromford said.
“This is a truly extraordinary state of affairs reflecting above-average demand meeting severely restricted supply,” it said, adding
“Economics 101 teaches us lower supply and higher demand is a recipe for higher prices. So far, the reaction of pricing has been muted. However, you should not expect it to stay this way.
“The spring selling season has just started and by the time we get to June a significant upward adjustment in pricing is likely.”
Supply of homes between $100,000 and $225,000 has fallen disastrously, according to Cromford’s data, which show declines of well over 40 percent from a year ago.
To illustrate the inventory crisis, Cromford picked Chandler, where there are only about 200 active listings.
“The average for Chandler over the last 20 years is 1,019,” it said, calling it a record low.
It also forecast a worsening situation for buyers, noting:
“Mortgages are becoming easier to qualify for in many different ways, so demand is likely to increase. Yet there is no sign of more supply coming along to satisfy it. In this situation, the market is likely to become both frenzied and frustrating.”
One of the ways the website uses to illustrate supply and demand is an index based on trends in pending, active and sold listings compared with historical data over the previous four years.
Values below 100 indicate a buyer’s market, while those are favorable to sellers.
On this chart, Phoenix shows an index of 257 – making the city the sixth seller-friendliest market in the Valley.
Avondale topped the list with a seller-friendly reading at 421, followed, in order, by Chandler (358), Gilbert (350), Glendale (300) and Mesa (287) to round up the five Valley markets where buyers can expect little inventory – and even less room to haggle over price.
In this ranking, Peoria lands on the ninth seller-friendliest list while Goodyear is 13th and Buckeye 17th.
“Once again we have 16 out 17 cities still improving for sellers, despite the extreme advantage sellers have enjoyed for many months,” Cromford said of its latest market index readings.
“Scottsdale is the only exception and even here the move in favor of buyers is very modest,” it added.
“Selling a home around $200,000 to $300,000 is easier than falling off a log,” it said. “Successfully buying a home at this price is a major challenge.”
The Cromford Report’s data for the West Valley show buyers are paying a premium to snap homes off the market in relatively short periods of time.
For example, in Glendale ZIP code 85302, 85 homes were sold in the last four months for an average $252,627 with an average length on the market of only 38 days.
Nearby Glendale ZIP code 85303, 90 homes took only an average 55 days to sell at an average price of $268,171.
In Peoria ZIP 85345, a whopping 170 homes sold for an average price of $254,627 with an average length of only 34 days on the market.
Avondale ZIP code 85392 saw 189 homes change owners in the last four months for an average price of $279,958 and an average stay on the market of only 48 days.