One Year After Start of Pandemic – Luxury has Exploded
Homes Selling for 101% of List Price on Average
For Buyers:
With 54% of all sales closed over asking price so far in April, the average sale price per square foot is now
higher than the list price for every price range up to $1M. In a balanced market, homes typically sell within
97% of list price; that percentage is now 101%. This means that, for the past month or so, the majority of list
prices have been the starting price for where negotiations begin instead of a top price to work down from.
In past extreme seller markets, $5,000 over asking was typically enough to win a contract; that was true last
year as well when the market took off. However, last January the median over ask was $6,000; by February it
was 10,000; in March it was $11,000; and so far in April it’s $15,000. The highest was $905,000 over list price
closed in March (It was an auction for a 10-acre property in Cave Creek that sold for $2,255,000).
By price range, over 62% of homes listed between $250K-$400K closed over asking price; the percentage is
54% for sales between $400K-$600K; 47% between $600K-$900K; 30% between $900K-$2.5M; 9.5% over
$2.5M.
Putting an offer in over asking price may cause a buyer some anxiety, especially a first-time homebuyer. The
median sale price is now $360K. Since January, the sales price per square foot for a home between $300K-
$400K has appreciated 6%. That’s approximately 2% per month and the current sale price to list price ratio
within the price range is 102.4%. If this rate of appreciation continues in the short term, a buyer who paid
4% over asking price on a $360K home ($14,400 over) would recoup their investment through appreciation in
approximately 2 months.
For Sellers:
The luxury market has been exploding since last summer and continues to be at the strongest level ever seen
in Greater Phoenix. The number of listings under contract over $1M is up 156% over last year; but the num-
ber under contract between $2M-$3M is up 296% and over $3M is up 212%. In a typical market, sales prices
in this range would be landing around 93% of list price. However in the 2021 market, the sales price ratio is
averaging 98% of list.
The luxury market is also keeping up with the rest of the market in terms of marketing time. Prior to con-
tract, half of the contracts accepted valleywide in the last week were on the market 6 days or less. Over
$1M, the median was 12 days prior to contract. Over $2M, the median is 67 days.
The market over $1M is outperforming in terms of annual appreciation in sales price per square foot. The
median price for a 4,000-5,000 square foot home is running at $1.1M with an appreciation rate of 31%. The
median price for a 5,000-10,000 square foot home is $2.3M with an appreciation rate of 35%. For perspec-
tive, the median price of a 1,500-2,000 square foot home is $365K with an appreciation rate of 25%.
Commentary written by Tina Tamboer, Senior Housing Analyst with The Cromford Report
©2021 Cromford Associates LLC and Tamboer Consulting LLC