East Lark Court in Gilbert

This 5,000-square-foot home on East Lark Court in Gilbert recently sold for $2.3 million. Built in 2019, the three-bedroom, five-bath house in Whitewing at Germann Estates boasted a separate guest house, play and lap pool, gazebo and even a children’s play area. 

 

As we head closer to the holidays, we are starting to see a seasonal decline in inventory that certainly wasn’t on anyone’s holiday wish list. We had a short period of time where demand waned and new listings were coming to the market faster than expected and we thought we might be headed towards a balanced market. 

Much of the stress of the highly competitive market had caught up to our buyers and sellers, big companies were on the scene purchasing large quantities of inventory and the market did what it should have when frenzy hit and pumped the breaks. 

Our inventory has gone up and down just a few hundred homes over the last few months putting us in nearly the same situation we were in a year ago but with less new construction and more resale closings due to supply chain demands and labor shortages in the building cycle. 

We are no longer seeing the extreme scarcity of inventory we saw earlier in the year, but we are still sitting at about a third of the inventory that we would need to be in a true balanced market.

And until we get there, prices will continue to rise. In fact, prices rose a staggering 4 percent just over the last month and with contracts pending up, we’re expecting to report some strong numbers before we ring in the new year.  

With active listing counts down by 7 percent in Gilbert year over year, Zillow reporting much of its inventory from their failed iBuying program going to large market investors who intend to keep the properties as rentals.

And with builders selling less not due to demand but due to their inability to fill orders, we’re skipping into the third week of November with less than 8,000 homes available on the market.

 We know that it’s tough for our buyers to compete out there, especially in Gilbert, where we’ve got just 225 available single family homes compared to nearly twice that two years ago. 

Prices rising more than 27 percent year over year is difficult to swallow – and simply unaffordable for some. But our thriving town and continuous influx of people necessitates a reset as to what housing prices will be in Arizona for the long term.

Meanwhile, our sellers are looking for what could change their selling conditions. 

While inventory is low, we are watching things like increasing interest rates, lack of affordability, potential for slower population growth or household formation and the max conventional loan limit increasing for the sixth year in a row to $625,000 for conventional financing.

Arizona continues to rank in the top 10 states for population growth due to domestic migration and the Arizona Department of Economic Opportunity reporting in October that unemployment claims have dropped to a pre-pandemic level and incomes are up 3.4 percent year over year and rising.

It’s unlikely that any of these factors will create much of downward impact on our real estate market. Holiday shoppers are relentless about their home search with renewed energy and with both pending listings and listings under contract in Gilbert up by almost 7 percent, it appears a new home is on many people’s list. 

This time of year always brings on the speculation about what the housing market will look like in the coming year.

With the average dollar per square foot chart chugging upwards. Investors are still playing a big role in our market, though their shift in demand would start to quickly build up our inventory and we’d likely start to see a decrease in rental rates before we’d see a decrease in resale pricing. 

The more availability of rentals, the more competitive they’ll need to be for tenants. Then, the more likely the big buying of new rental properties by large companies will cease. It’s not imminent, but it is a likely next step. 

Mindy Jones, a Gilbert Realtor and owner of the Amy Jones Group at Keller Williams Integrity First, can be reached at 480-250-3857. Mindy@AmyJonesGroup.com or AmyJonesGroup.com.