STAT: 2021 in ReviewWe began 2021 in the throes of a pandemic with record-setting home sales metric. We ended 2021 the same way. As the pandemic trudges forward, ARMLS is happy to report its best
ARMLS STAT DECEMBER 2021 COMMENTARY BY TOM RUFF 8 ARMLS STAT DECEMBER 202
Dated: February 1 2022
STAT: 2021 in Review
We began 2021 in the throes of a pandemic with record-setting home sales metric. We ended 2021 the same way. As the pandemic trudges forward, ARMLS is happy to report its best year on record, shattering every housing metric 2020 established and then some. There were a few questions entering 2021, most notably, what would happen when the foreclosure and eviction moratoriums ended. But these were never really questions in our mind with 2021 playing out as anticipated. In our analysis, we anticipated a trickle at best but never a flood of new listings with the moratoriums ending. As 2021 concluded, not even a trickle materialized. 2021 reported the lowest foreclosure activity on record. Regarding prices, in last year’s year in review, we shared the following quote from Michael Orr of the Cromford Report, “Buyers cannot be blamed if they’re in despair about the lack of supply. We have less than half the number of active listings without a contract than we had a year ago. This time last year (2019), we described the lack of supply as shocking, so what do we call the current situation? We saw more new listings arrive during 2020 than during 2019, but only 1.4% more. The annual sales rate increased by 6%, so the extra supply proved thoroughly inadequate in the face of demand. Prices have accelerated due to the huge imbalance between supply and demand, yet we have only seen part of that reaction. Sales prices are a trailing indicator and lag the leading indicators by up to 15 months. We can therefore expect to see prices move even higher during the next 12 to 15 months with appreciation rates possibly rising over 20%.” Michael put the hammer on the nail as the median sales price rose 28.23% between December 2020 and December 2021.
At the start of every year, there are always conversations about what the next year will have in store and the unknowns that may play a part. There are always many housing predictions ranging from a crash to a boom. It’s called human nature, and this year is no different. Heading into 2022, new conversations emerge around inflation, the potential impact of rising interest rates, and the continued active presence of Wall Street monies and their impact on our market. But that’s what these are, unknowns. The potential rise in interest rates will be a hot topic this year. But predicting future mortgage rates is a fool’s errand. For the last four years, the expert consensus was for rising interest rates. In each of those years, the interest rates fell, however. Interest rates, inflation, heavy Wall Street activity in our market could impact our housing market in 2022 in subtle or maybe even not so subtle ways. Right now, it’s all just speculation. What we do know, we begin 2022 with the lowest number of active listings at year’s end on record. And, while we all know the 28% year-over-year increase in the median sales price last year is unsustainable, there is nothing holding back continued price gains in the short term. We know a change is coming, but there are two questions I can’t answer: When will our market moderate? Where will the increase in supply come from? We do know, it isn’t going to moderate tomorrow. New construction and distressed sales will not increase our supply as new construction did in 2004 and 2005, and distressed properties did in 2009, 2010 and 2011.
Shawn Schlegel, was appointed to the Arizona Association of REALTORS® Board of Directors during 2018 and is proud of that affiliation. Their strict Code of Ethics is something he lives daily....