Phoenix – Ahwatukee-Foothills Real Estate Market Update – February 1, 2020
After strong growth in 2018 and 2019, the Ahwatukee Real Estate market is off to a sluggish start in January 2020. In the period from January 1 to January 31, 2020, 97 Ahwatukee-Foothills properties closed escrow at an average price of $345,818. The number of properties that closed escrow in January 2020 is up 29% over the 75 properties that closed escrow in the same period in 2019. However, the price of an average Ahwatukee-Foothills property slid 2.25% in January, when compared to the $353,794. average sale price in January of 2019.
In December 2019, 133 Ahwatukee-Foothills properties closed escrow at an average price of $383,793. The January 2020 average property value slid 8.4% from the $383,793. average sale price in December. The drop in the average price of an Ahwatukee-Foothills property is a surprise. After months of steady growth, it is not what we expected.
At the time of writing this article, February 1, 2020, there are 123 active listings in the Ahwatukee-Foothills market. Throughout 2019 our average listing inventory was around 160 to 170 units. Only 120 properties came on the market in January. The 123 active listings will be depleted in 1.23 months at the sales rate of 97 units we saw in January. As we have said previously, anything under a 6-month inventory is considered a strong seller’s market. With the active listing inventory at 1.23 months, the Ahwatukee-Foothills market remains a strong seller’s market.
The entire Phoenix market has been functioning with one of the lowest active listing inventories in the country. The buyer demand for properties is high. The law of supply and demand would dictate that low inventory and high demand would drive prices up. Since this is not the case in our current market, I can surmise that perhaps the low inventory of quality homes is limiting sales as buyers wait for properties that meet their needs. Could the January price drop be the result of a slow start after the lull of the holidays? One month does not define a market. As always it will be interesting to see where this market goes.
We addressed the ongoing concern about a recession or economic slowdown looming in some detail last month. Given the softening in the average property value in January, we want to reiterate that, while most economists and financial experts are predicting an economic slowdown, most are anticipating that it will be on the order of a typical adjustment that is expected with the normal ebb and flow of our economy. When Phoenix and Ahwatukee-Foothills homeowners hear the words recession or economic slowdown, they are gripped in fear by the memories of the “Great Recession of 2007 and 2008. Property values were decimated and short sales and foreclosure were all too common.
Unlike the great recession of 2007 and 2008, which was precipitated by instability in the housing market, caused by speculation and banking and home finance irregularities, the anticipated slowdown is not expected to be precipitated by problems in the housing market. More importantly, it is anticipated that the anticipated slowdown will not have a significant impact on the housing market and property values. Most authors are predicting that, in spite of an economic slowdown, housing values on the national level should increase at a rate of 3% to 5%. There may be local and regional differences and aberrations, however, it is anticipated that the housing sector will still expand and values will increase by 3% to 5% during the anticipated slowdown.
Our local economy is strong. Additionally, several factors will further buoy our housing market during a slowdown. According to the U.S. Census Bureau, the population for the city of Phoenix rose by nearly 15% from 2010 to 2019. That’s well above the nation’s growth rate for this same time-period. It is anticipated that during 2020, Phoenix will be ranked as the fourth largest city in the country. This population growth should bode well for the local housing market for the foreseeable future.
On a national, regional and local level, the United States-Mexico-Canada Agreement was signed last week. The New York Times states that the United States-Mexico-Canada Agreement provides “stronger protections for workers and the digital economy, expanded markets for American farmers and new rules to encourage auto manufacturing in North America.” This will dramatically impact Arizona and Phoenix. A stronger economy and an increased population will impact the local housing market positively.
Mortgage rates have been at record lows for months and there is little talk of increases in interest rates. Most of the conversation around interest rates is that they will decrease further to new record lows. Lower interest rates will make housing more affordable and increase prices as demand increases.
Despite the low inventory of homes for sale and the fact that home-price appreciation appears to be slowing in the Ahwatukee-Foothills area, most experts agree that real estate prices will continue to climb for the foreseeable future. With a strong state and local economy, increasing population growth, a new strong trade agreement that impacts hundreds of thousands of Arizona workers and low mortgage rates, we are well-positioned regionally and locally to weather the anticipated slowdown in the national economy. Our housing market appears prepared to thrive and grow beyond the 3% to 5% growth rates predicted during the anticipated economic slowdown. This would positively impact the Ahwatukee-Foothills housing market. 2020 might be a good time to buy or sell a home in the Metro-Phoenix area and Ahwatukee-Foothills.
Disclaimer: This report contains opinions and predictions from various sources. As such, this article is intended to present an honest overview of the consensus of opinions concerning how the economy and the housing market are anticipated to perform. However, it is not to be construed as financial advice or the basis for investment decisions.
Pick your real estate agent wisely!
I am available for any questions
Henderson Real Estate
*Ahwatukee Foothills is the official name of an Urban Village in Phoenix. Ahwatukee Foothills lies south of South Mountain Park. “Ahwatukee Foothills” is comprised of zip codes 85044, 85045 and 85048. Some confusion occurs when some folks refer to Old Ahwatukee as “Ahwatukee” and “Ahwatukee Foothills” as a separate entity. So, for clarity, when we use the term “Ahwatukee” we are referring to the entire area designated “Ahwatukee Foothills,” including (85044, 85045, and 85048) unless otherwise noted.