May 2018
Residential Market Update
Published in Arizona Journal of Real Estate & Business
Fletcher R. Wilcox
Fletcher R. Wilcox is the author of TheWilcoxReport.com. He is V. P. of Business Development and a Real Estate Analyst for Grand Canyon Title Agency. Fletcher can be reached at FWilcox@GCTA.com and 602.648.1230.
2018 Dollar Sales Volume Hits All-Time High for a First Quarter
Strong demand to own a home in the first quarter of 2018 led to the highest dollar sales volume ever for a first quarter. The previous first quarter with the highest dollar sales volume was in 2005. First quarter dollar sales volume for both 2005 and 2018 was over five billion dollars with 2018 being 445 million higher than 2005. Dollar sales volume measures the strength or weakness of a market. It is comprised by adding the sale price of each sale for a total. The dollar sales volume in this report is for previously owned single family home sales in Maricopa County. Previously owned single family home sales are eighty percent of residential sales making it the most popular residential product for buyers.
When comparing first quarter 2018 to first quarter 2017 there were 16,227 sales in 2018 which was four percent higher than the 15,602 sales in 2017. The median sale price in first quarter 2018 was $277,000 compared to $255,000 in 2017 for a five percent increase.
Demand to Own Fueled by Population, Job and Wage Growth
Population Growth: According to the U.S. Census Bureau Maricopa County for the second year in a row was ranked the number one county with the greatest increase in population. The population of Maricopa County increased by 73,650 in the 2017 rankings, or 202 people a day. Finishing second was Clark County, Nevada with a population increase of 47,355 or 130 per day.
Job Growth: In 2007 there were 1,865,800 people employed in Maricopa County. Three years later in 2010 – there were 225,700 less people working. Back then many people that lost their jobs stopped making their mortgage payments. Mortgage payments not made lead to foreclosure notices. Foreclosures notices lead to cheap REO sales driving down home values. This is far from the situation today. In 2017 there were 325,900 more people employed than in 2010. With a growing number of employed people, and since everyone has to live somewhere, the sheer number of employed people creates a lot of competition for existing inventory. Prediction: By the end of 2018, the average monthly number of people employed will be over 2,000,000 per month for the first-time!
Rising Wages: At the time of writing this article only wage information for Arizona was available. Maricopa County which is located in Arizona has seventy-one percent of all employed workers in the state. According to the U.S. Bureau of Economic Analysis the average state earnings for the fifty states increased 3.1% in 2017. Earnings are defined as wages and salaries. Arizona earnings were above average. Arizona had the third highest earnings at 4.8 percent, behind only Idaho and Washington. Leading Arizona’s earnings was healthcare with an increase of 6.4 percent.
Conclusion
There is a lot of news that positively affects the Maricopa County real estate market. Population, job and wage growth should continue to increase. These increases will keep the fierce competition amongst buyers for single family homes at the most popular price ranges. Also, because of the sheer dollar sales volume of the market, expect increased competition amongst real estate companies as more of them, some with new business models, enter our market for a piece of the dollar action. I do expect 2018 will end as one of the best years ever for the Maricopa County real estate market.
Fletcher R. Wilcox
Fletcher R. Wilcox is the author of TheWilcoxReport.com. He is V. P. of Business Development and a Real Estate Analyst for Grand Canyon Title Agency. Fletcher can be reached at FWilcox@GCTA.com and 602.648.1230
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