The West Valley’s shortage of homes for sale is beyond critical.
Some communities are actually close to running out of houses to sell, according to the Cromford Report, which monitors the Phoenix Metro housing scene.
“A surge in demand coupled with an unusually weak supply of new listings is creating an almost surreal market,” it said last week. “In many segments, buyers outnumber sellers many times over.”
Cromford said it also is exhausting adjectives to describe 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.
In the West Valley, inventory was in the single digits in El Mirage, where only eight homes were available last week. Only 20 were available in Tolleson.
It isn’t much better in Avondale, the hottest submarket in the Valley, where only 35 houses are for sale. And Glendale, the state’s seventh-largest city, has only 147 homes up for grabs.
“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 “are also less skewed in favor of sellers,” it said.
Cromford uses a number of factors to come up with a number that shows the balance—and imbalance—between buyers and sellers.
The closer its Cromford Index is to 100, the more even the balance, the higher that number is, the more strongly the market is favoring sellers.
To show how tilted the West Valley market is right now toward sellers, consider this: Avondale has a Cromford Index of 432 and Glendale 357.
That’s well above Phoenix’s 256 and even Peoria’s 196 Cromford Index number.
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.
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.”
To make matters even more discouraging for buyers, prices are continuing to rise.
“The few sellers who panicked at the start of the pandemic and sold without regard to getting the highest prices are now cleared from the market,” Cromford said, noting that the biggest driver of prices remains the scarcity of homes.