27% Appreciation?! You read that correctly.

 Annual appreciation (measured using the monthly average price per sq. ft.) has exceeded 27% today and is clearly going higher still. If we compare 2021 with 2005 we see the following chart:

Both years started around 17%. In 2021 we are almost but not quite keeping pace with 2005, which had reached 30.2% by week 16. We have reached 27.9% at the same point.

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What some are worried about is remembering what happened in 2006:

Two words should always be on the tip of your tongue in any conversation where there's fear of history repeating itself:

Supply and Demand.

Demand is steady, but not extraordinary. 

It's about Supply. 

This you know. Painfully! 

However, Supply is the factor that's not going to change any time soon. And it's not just local. It's national and international. 

A primary reason: New construction fell way behind the population growth during the 'bad years' and now in housing 'golden age' new home construction can't keep up.

The resale story is compounded by seller fears of not finding that next abode in this hyper competitive market.

That's your message. 

Considering Demand: It's primarily about demographics, with the largest segment of the population, the millennials, chasing the dream of homeownership, albeit a little later than historic norms, exacerbating the frenzy. 'My clock is ticking, ticking, ticking...' from My Cousin Vinny!

Price range matters:

Keep in mind the traditional maxim that up to a 6 month supply is a sellers market. The chart below tells you everything you need to know:

We can remember a 5-year supply in the uber luxury segment. Today we see less than a 2-month supply under $1.5M.

Stunning!

Sustainable?

Collateral Analytics bank grade 5-year forecasts for every area we run statewide shows another 2 years of the same, after which it only moderates to the historical 'norm' (around 5% per year long term).

Note: The top gray line is the Phoenix-Mesa-Chandler (Core Based Statistical Area) representing the greater metro.

So that's the story. It's epic, which is why we keep slicing and dicing.