The Gilbert Arizona Real Estate Market is Showing Significant Improvement
Gilbert, Arizona's real estate market is experiencing significant improvement in home sales activity with lower home inventory and higher home sales.
This improvement is due primarily to increased buyer demand for homes as a result of declining home prices, record-low interest rates, and the $8,000 “first-time homebuyer” tax credit offered by the Federal Government. Combined, these causes are generating substantial interest in buyers to purchase homes in Gilbert and surrounding areas such as Chandler.
To understand the changes currently taking place in the Gilbert housing market, there are three areas that require consideration—the number of Gilbert homes for currently for sale, the number of Gilbert homes under contract for purchase, and the number of Gilbert homes recently sold.
Available Inventory of Gilbert Homes Showing Modest Decline
Available Gilbert home inventory is at a three-year low. Though the rate of decline has been modest as compared to other Valley cities, the trend is consistent with that of neighboring Chandler and a good sign in the marketplace. In general, it appears that those cities that posted some of the strongest gains in home values are the same ones that are posting the strongest losses. Gilbert experienced some level of this as south Gilbert was particularly exposed given the timing of much of the home development there. However, compared to many of the outer-lying areas of the Phoenix area such as neighboring Queen Creek, Maricopa, and Surprise, Gilbert has generally been less impacted by the market downturn. In some sense, the Gilbert real estate market is largely like the Chandler real estate market but with notable elements of the more outer-lying real estate markets mentioned above.
Gilbert’s decline in inventory is largely due to an overall improvement in buyer demand rather than cancellations and expirations of property listings though foreclosure moratoriums may also contribute.
Buyer Demand for Gilbert Real Estate is Strengthening Rapidly
Current demand for Gilbert homes is showing impressive gains. In fact, Gilbert’s “pending” or under contract for sale activity is consistent with 2005 levels. Buyers are moving quickly to purchase homes in the Gilbert area which the data reflects and this activity is substantially stronger than that seen for nearby Chandler homes.
30.8% of the properties currently for sale in the Gilbert real estate market are under contract, a 13% point increase since November 2008. Put another way, for every 10 homes on the market, there are now 3 buyers vs. 1.7 buyers in November.
Comparing against prior years, Gilbert’s pending sales performance is showing results consistent with 2005 levels and surpasses that seen in 2006-2008 and 2002-2004 periods.
As mentioned earlier, buyers are being spurred on by three major factors. First, Gilbert home prices have declined to such an extent that home prices are again attracting attention. Second, interest rates are at historical lows with borrowers attaining loans with as little as 4.5%-5.0% interest rates. Third, “first-time homebuyers” are incentivized by a $8,000 federal tax credit for purchasing a home. Unlike the previous homebuyer tax credit established by the President and Congress, this tax credit does not have to be repaid.
This improvement in buyer demand is a primary driver working to reduce existing inventory to its current three year low as more buyers are stepping up to purchase Gilbert homes. However, foreclosure moratoriums may have some impact here as well.
Sales of Gilbert Homes Increasing
Gilbert home sales activity is currently tracking with 2007 sales activity. However, indicators point to sales gradually increasing given the higher number of pending properties. We should expect sales will begin to reach latter 2006 levels over the next 1-2 month timeframe. Indeed, the current sales trajectory for Gilbert homes looks very similar to the 2003 trend which then led into higher overall sales for the latter part of that year.
Gilbert Foreclosures & Short Sales
Gilbert, like many Valley communities, has been beset by short sales and foreclosures which have rocked the Gilbert real estate market and pushed prices down aggressively from market highs.
Across the Phoenix metropolitan area, the volume of foreclosures do present a trouble spot for the Gilbert real estate market. Indeed, the 90-day rolling average for the number of Trustee’s Sale notices issued daily continues to grow. As well, the number of actual Trustee’s Sale or foreclosure auction proceedings per day is growing. Together, the direction of these trends point to an increased number of foreclosed homes entering the marketplace in the near term, potentially creating additional pricing pressure for existing and new build homes.
Finally, moratoriums on foreclosures by Fannie Mae and Freddie Mac may be contributing to lower inventory as additional properties otherwise aren’t being added to the marketplace.
Gilbert Real Estate Outlook
Overall, the Gilbert real estate market is clearly experiencing substantial improvement in buyer demand resulting in lower inventory and higher future sales.
In the next 1-3 months, we should hope to see additional reductions of available Gilbert homes inventory given the high level of buyer demand. Though we could see a steady easing of pending sales activity as 2009 progresses, this trend should still maintain an overall higher level than that seen since 2006. Given this, Gilbert should post stronger sales results going forward than that seen since 2006.
In summary, the Gilbert real estate market appears to be developing a more solid foundation for further improvement resulting in reduced inventory, higher under contract sales activity, and higher actual home sales. Though more foreclosures loom in the marketplace, the outlook for the Gilbert real estate market is very promising for the moment.
About David Lorti
David Lorti is a professional Realtor for Thompson’s Realty in the Phoenix Real Estate Market. He holds a MBA and Certified Negotiation Expert designation and his insights have been quoted in numerous news outlets. His website, LortiHomesArizona.com, and blog, LortiHomesBlog.com, offer additional market insights on Ahwatukee Real Estate, Chandler Real Estate, Gilbert Real Estate and Gilbert Homes, and all parts of the Phoenix area.
