Not easily forgotten is the winter of 2020, which emerged the reality of a worldwide pandemic not seen in my lifetime. In February 2020, appreciation in the Phoenix and Scottsdale Area real estate market was nearly 10%. There was a six-year period from 2014 to 2020 that had annual appreciation averaging around 5%. That was a normal market.

And then, the pandemic hit. As you can see by the chart below, right after that February, coinciding with the pandemic, immediately the annual (based on monthly) appreciation dropped in March to 8.5%, April to 6.8%, and May to 4.5%. In the midst of this new pandemic, everyone – yes, everyone, expected this to happen – and worsen.

But then, the incredible unforeseen happened. Our market, as well as most metropolitan markets in the U.S., began to soar. Demand took off. Listing inventory, after a brief increase in that 2020 winter, began dropping. Multiple offers and bidding wars became the normal storyline – everywhere. By October of 2020, the annual appreciation rate based on Monthly Price Per Square foot (PSF) hit 19.1%. In February of 2021, that rate was up to 23%. In April it increased to 32%, and it peaked at 38.4% the next month (May 2021).

One year later, as the pandemic is normalizing, folks are now doing what we thought they’d do at the beginning of the pandemic – sell in droves. More listings have been added (11,845) to the Arizona Regional Multiple Listing Service (MLS) in the past 4 weeks than any other 4-week period in the history of the Phoenix MLS, per the Cromford Report.

We are currently getting 34% more new listings than average every 28 days. If this rate continues, it is estimated that a balanced market will return this August. Some of our cities are close to experiencing that balance now.

All this is good news for buyers. What’s not been good news of course is the escalation of mortgage rates – now in the 6% range. Someone reminded me the other day that my real estate career goes back to the 18% mortgage rates in the 80’s. Of course, the huge difference between now and then is the high price of current housing. 18% mortgage rates, which of course halted real estate sales then, happened when the U.S. home median price was under $90,000.

Are we in a meltdown, or will the market pull up? Our counsel to buyers is to take advantage of more homes on the market to find that right one. When inflation gets tamed and comes down to acceptable levels, this market will again change. When will inflation get tamed? That’s the question before us.