Luxury home market booms; low supply, buyers flush with cash are factors
PHOENIX - According to Zillow's latest market report, home values in the Phoenix area are up 20%, and homes are only on the market for about seven days before getting sold. Meanwhile, the average home is now worth $355,000, and inventory is down 28%.
The luxury home market in the Phoenix area also soaring, with real estate experts saying the number of million-dollar home sales has from 2020 to 2021 has more than quadrupled. Buyers with cash are scooping up million-dollar houses, and experts say the luxury home market will stay hot at least through the end of 2021.
Seller describes red-hot housing market
"I've never seen anything like this in my life," said Larry Olsen, who sold his Central Phoenix home less than 24 hours after it was listed.
"It was one of those things where they made an offer you couldn’t refuse, and there’s no contingencies whatsoever, no appraisal, no inspection, nothing, because that’s what people have to be willing to do in order to purchase," said Olsen.
A few years ago, Olsen purchased his home for about $800,000, and his home was sold for more than $1 million. He said he never imagined getting such a huge return on his home.
"This was 60%, 70%, 80%," said Olsen. "This was unheard of."
Buyers with cash are flooding luxury home market
"The average home sale in [Paradise Valley] alone: $3 million. That’s crazy," said Bobby Lieb with Homesmart.
During the past year, buyers flush with cash have flooded the luxury home market.
"[April 2020], we had 182 sales over a million dollars. This last April, we had 606 sales over a million dollars," said Tina Tamboer with Cromford Report. "That is a 233% increase."
Along with the influx of buyers from in and out of state, home values continue to climb, increasing 20% in the past year. Experts say this is not a housing bubble, as the demand for home far outpaces the supply currently.
"We don't have enough right now. That's why we’re not going to see a bubble," said Tamboer. "The bubble means are we at risk of having vacancies. The number one risk to housing values is always vacancies."
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