Looking back at Phoenix Housing Market in 2021 & predicting 2022

Hello and welcome to 2022's first edition of Merrill's Monday Morning Market Madness. Today, I’m going to be taking a look at obviously what our current monthly supply of inventory numbers are but then just doing a quick review of what some of the major numbers were in 2021 and a look ahead at what we expect to see in 2022. So,  right now active on the market, we have 5,705 listings there are 9,594 that are currently pending 8,062 that have sold in the past 30 days which gives us a month's supply of inventory of 0.71 which is a little lower than we have been trending we've been in the low six 0.6s  but because no homes have been able to close for the past three days in a row with the holiday weekend so the third the c30 number then the whole number of homes that have sold in the past 30 days is a little lower because we're down a couple of business days but the 5,705 active listings just to give that some perspective you know 2020 was a pretty crazy year, we saw average price average home prices increased by more than 20 percent and we started 2020 with 6011 active listings so we actually have 300 fewer active listings today which is you know not a huge dip but it's about five percent fewer active listings now than we had at the same time last year.

So,  we're kind of because of how low inventory is and it's even lower now than it was a year ago we're expecting to continue to see a pretty tough year from an inventory standpoint the very very few homes available for sale is going to continue to be upward pressure on prices. So, in December this number was crazy in December we saw 9,310 homes close in our MLS in the month of December which the five-year average like looking back at the previous five years the five-year average for the number of homes that closed in December was 7,718. So pretty significant increase over the average again we're really not seeing a slip in demand at all demand remains higher than normal with 9,310 closings in December which historically has been one of the slowest months of the year of all the homes that closed in December the average sales price was five hundred and twenty-nine thousand and forty-three dollars that the average in December of 2020 was 432 000 so an average increase in prices from December of 2020 to December of 2021 is 22.3 percent so how about for the whole year so for the whole year we saw a total of hundred and ten thousand four hundred and eighty-eight closings.

Just for fun, I know this was that's probably not relevant to anybody other than it's just interesting total volume of 54 billion six hundred million now 2020 which was a little funky because of covid but 2020 shattered all the records for the most number of homes sold the highest volume 2020 had a 105,000 closing so, we actually in 2021 sold 5,000 more homes than we did in 2020 and obviously the vault with average prices having increased as much as they did crushed the volume the 2020 volume was 41 billion so we saw an increase in sales volume in the Phoenix metro area of 13 billion dollars and this is just mls sales by the way not looking at you know private sales or anything like that so these all these stats that I always share are from the MLS so with an increase of 13 billion dollars and of course there's always a lot of  off mls especially with all the eye buyer activity lots of  lots of off mls sales so huge increase you know a lot of money from other markets 13 billion dollars to be exact more than the previous year came into came into Phoenix so another thing that was interesting so the average price in 2020 for the whole year was 394 000. the average price for the whole year in 2021 was 494 000. so pretty much exactly uh in an average uh sales price increase from 2020 to 2021 of 100 000 and then the other stat that I found incredibly fascinating because 2020 was a crazy year it's not like 2020 was you know uh all slow 2020 the market was insane that year and I want to say average prices increased in 2020 I'd have to go back and look but they increased by more than 10 in 2020 and then they, of course, increased by more than 20 in 2021 but um the average days on market in 2020 was 50. 

So,  we all took all the homes that closed in 2020 the average time on the market was 50 days the average days on market in 2021 was only 31 days so a very very dramatic significant drop in the average days on market in 2021. Homes were selling almost twice as fast in 2021 and remember we're going into 2022 with even less, not by a lot but even fewer homes available today than there were at the beginning of 2021 so that is why we are expecting another really wild ride now the national association of realtors gathered a group of 20 top economic and housing analysts and asked them to predict their you know what they expect for the housing market in 2022 and their national prediction for home values across the country is 5.7. I maintain that in the Phoenix area we are going to see at least 10 if not closer to 15 percent a because, for a major amount you know why would we be doing so much more than the national average well number one, our inventory situation is direr than a lot of the areas across the country. The whole country is seeing an inventory shortage but it's really severe here, number two,  affordability as it compared to the other major metropolitan areas you know especially along the west coast you know you think about all the places in California and Portland and Seattle and Denver and Salt lake city and a lot of those markets,  Phoenix is still more affordable than most of those destinations and then, of course, I believe we'll continue to see quite a few people coming from California for you know affordability and for political reasons and you know all of that so I maintain that we're going to see average prices increase in the Phoenix area by more than 10 percent.

So, again nationally they're expecting about six percent which honestly is pretty close to what inflation is right now it's actually slightly less than what inflation is right now unless inflation slows down that's really just housing maintaining inflation and I think Phoenix is going to do a lot more than that I honestly think that it'll be closer to 15 no one's got to crystal ball, of course, the one major factor that I think will play a role uh in home values that it makes it hard to predict is interest rates right now interest average interest rates are at almost is roughly three percent exactly i think i saw i looked at it this morning 3.1 or or where what was it as 3.11 is average interest rates this morning according to Freddie Mac's website which is pretty much it's been right around three percent i mean sometimes we dip below some sometimes we dip above we were as high as three-point one eight percent but at three-point you know at three point one percent affordability is still pretty strong.  Obviously,  it's getting harder and harder every day especially for first-time homebuyers but when rates go above four percent you know that could have a dramatically negative impact on the housing market not to the point where I think home values would fall but definitely to the point where home values would probably stop rising at you know such a dramatic pace everyone is expecting interest rates to rise throughout the year of 2022 as the fed does more to try to combat inflation typically when you have high inflation you usually have higher interest rates we have a really unique anomaly right now where we have high inflation and super low-interest rates and that probably can't continue so, a lot of people are expecting rates to go up in 2022 so if you're thinking of doing making a move I would do it as early in 2022 as possible uh although what I've read is that rates probably even throughout 2022 will by the end of the year I think I saw that the average predicted rate is still like 3.9 so so economists are predicting rates will stay below four percent throughout the entire year but they will inch up throughout the year as long as rates stay below four or even four and a half I think the market's gonna stay very very strong so there you have it demand remains high supply is lower than ever and we are getting ready to head into a very very busy year for 2022. 

So I hope you found this information helpful if you would like to get an update regarding what's going on more specifically in your neighborhood or more specifically um you know the value of your home or anything like that or you to want to see some specific stats that i haven't shared i would be more than happy to look that up if it's a stat I'm able to obtain I love looking into this stuff and helping people out so please feel free to reach out to me and I hope you found this helpful and you all have a great day have a great week have a great year!

What does this mean to you? If you're even a little bit interested in learning more about participating in the Phoenix housing market as a seller, buyer, or investor... you NEED to know this stuff! Or at least work with someone who is obsessed with the market stats. Reach out to me today so we can start working on making your real estate dreams a reality!