The number of permits taken out by home builders for new construction has substantially increased at the same time new home listings are on the rise, potentially signaling a shift to a buyer’s market.
According to a housing report released by RL Brown and an article in the Phoenix Business Journal, permits for new homes were up more than 57 percent in January compared to one year ago. The Scottsdale real estate research firm reported that builders took out 1,257 permits for new construction in Maricopa and Pinal counties in January 2016. That’s up 57.3 percent from the same month last year.
This follows a year of increased demand, as AZCentral.com reports that demand for new home permits was up more than 40 percent in 2015 over the previous year. The downside is that there aren’t enough framers and other workers to keep up with the new construction, resulting in builds taking up to nine months, versus six months as in previous years, to complete a new home.
RL Brown researchers also found existing home sales were up 11.6 percent from the total number of existing home sales in January 2015. They noted that 5,945 homes sold this January compared to 5,328 last January.
The number of new listings are up, too, according to the Cromford Report, a daily guide to the Phoenix area real estate market. The Cromford Report indicated that more listings were being added this year than in the last three years. In the first seven weeks, new listings were up seven percent over 2015.
The largest spike in new listings is in the 85322 zip code in Arlington, located west of Buckeye; that community saw a 150 percent increase in new listings. Phoenix zip code 85053 saw a 50 percent increase while the most-mentioned Scottsdale zip code, 85258, saw a 31 percent increase. Overall, the city of Scottsdale’s supply is up 16 percent in just one month.
New listings coupled with new construction is actually creating a problem for sellers—home prices are slightly dipping. AZCentral.com reported in the article on new home construction that the median price for an existing home was $201,500, down 1.7 percent from a year ago, and the median price for a new home was $249,850, down 1.1 percent.
According to the Cromford Report, demand for new and existing homes hasn’t changed, but the increased number of homes on the market has increased competition and resulted in the price cuts. If the current conditions continue, not only will sellers be more firmly in the drivers’ seat, but there will likely be a reduction in appreciation rates for the most affected areas.
If you’re planning to buy or sell your Scottsdale home this year, feel free to give us a call to chat about how the current market may affect your real estate plans.