Homebuyers facing ‘feeding frenzy’ amid short supply The Chandler Arizonan

Homebuyers facing ‘feeding frenzy’ amid short supply

Homebuyers facing ‘feeding frenzy’ amid short supply
City News

By Paul Maryniak
Arizonan Executive Editor

Homebuyers are facing a steadily worsening market in Chandler and much of the Valley as the inventory of homes for sale plummets and prices continue to soar.

“The market is becoming so lop-sided it is approaching absurdity,” said the Cromford Report, which closely monitors the housing market in Maricopa and Pinal counties, which said the median sales price in June was $305,000 – up 9.3 percent from the same time last year and up 4.1 percent from May.

Inventory of re-sale homes fell by 26.5 percent Valley-wide from May to June and the outlook isn’t much better for new homes, according to Cromford, which noted:

“The lack of supply is driving many buyers towards new homes instead of re-sales. New homes are selling faster than last year and faster than they can be built, so supply will shortly become a major problem for the developers too.”

Some communities are actually close to running out of houses to sell, according to the Cromford Report, which monitors the Phoenix Metro housing scene.

In Chandler, 85228 had no active listings earlier this month and 85224 had only 16 homes on the market. The Chandler ZIP code with the most listings was 85248, where 104 were on the market.

Among the most astonishing ZIP codes is Chandler’s 85224.

Cromford developed an index showing the 10 hottest markets in the Valley, indicating that the higher the number above 100 the hotter. Chandler’s 85224 had a rating of 1525 – second highest in Maricopa County and only behind El Mirage’s ranking of 1600.

Cromford also reported that inventory of available homes for sale plunged 91 percent in 85224 between June 2019 and last month.

“Supply is crashing,” Cromford said. “Without an improvement in supply, life will become ever more difficult for buyers while sellers will be dealing with many competing offers even if demand were to decline substantially.

“For sellers this is a nice problem to have, but for buyers the level of competition from other buyers presents a massive obstacle to them achieving their goals,” it added.

Late last month, the report said, “A surge in demand coupled with an unusually weak supply of new listings is creating an almost surreal market. In many segments, buyers outnumber sellers many times over.”

Cromford said it also is exhausting adjectives to described the “colossal” imbalance between buyers and inventory.

“In many cities the supply of active listings without a contract is dwindling to levels not seen since the bubble year of 2005,” it said.

“Calling it a feeding frenzy does not do it justice,” the Cromford Report stated, adding that even the luxury home market is shaking out of its sluggishness.

The 55-and-over communities, with the exception of Sun Lakes, “are also less skewed in favor of sellers,” it said.

Sun Lakes showed a relative scarcity of homes for sale, Cromford reported and so buyers likely would not find many bargains – or much bargaining power.

Additionally, some sellers report being inundated by offers – sight unseen – within hours of listing their homes. In many cases, those offers were as much as $10,000 above the listing price.

Cromford warns that the nearly historic sellers’ market means that buyers have to be extra careful.

“In this environment things can get very frenetic and stressful,” it said. “Decision time is often very short and mistakes can result. Buying a home is one of the biggest decisions a buyer will make so I hope they will take time out to think carefully and not get caught up in the frenzy.”

The rapid change in the market surprised Cromford.

It said that as recently as May 21, Valley cities “were moving in favor of buyers.”

“The change in direction has been sudden and violent,” it said. “This is not normal.”

In the last two months, Valley inventory has plummeted, dropping from 6,653 available homes to 3,496.

“That is a decline of over 47 percent and so far no end is in sight for this trend,” it said, adding:

“At the moment the supply of homes for sale is collapsing, making things extraordinarily tough for buyers, who must compete with each other for the few homes offered for sale.”

In Phoenix, only 1,285 homes were on the market on June 16 – a sharp difference from the historic average of more than 4,500. The 421 that were for sale in Mesa around the same time was a third of what usually is available.

Gilbert and Chandler showed even bigger imbalances, with only 255 and 237 houses for sale, respectively, as compared to an historical average of around 1,100.

Despite the widespread loss of jobs driven by the pandemic, the Valley’s housing market is reflecting a nationwide scarcity of inventory, according to Realtor.com.

Experts partly attribute that to historically low mortgage rates as well as a downturn in new construction – although even new construction has not been as adversely affected by the recession as it had been after 2008, experts say.

Also fueling the imbalance in the Valley between sellers and buyers is a continuing influx of newcomers from other parts of the country, especially California.

“At the moment the supply of homes for sale is collapsing, making things extraordinarily tough for buyers who must compete with each other for the few homes offered for sale,” Cromford said, adding:

“At the start of the pandemic, we saw a moderate bump in supply as a few investors sold in a panic, particularly those who owned vacation rentals who suddenly lost almost all their bookings. But now we are seeing a chronic shortage of entry-level and mid-range homes turn into a feeding frenzy for the few properties that remain on sale.”

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