Daily observations from the Cromford Report for the Phoenix area real estate market statistics. Close
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Daily Observations from The Cromford Report

 

 October 2017

 

October 18 - Another active listings chart extract but this time for homes between $200,000 and $500,000:

Here we see that supply was a huge problem in mid 2013 but grew rapidly during 2014. Since then it has been surprisingly stable. However the sales rate has increased substantially over the past 2 years. A flat supply feels more and more inadequate in the face of a much larger sales volume. However at least the supply has not fallen back as sales increased.

We see that supply usually increases quickly during the first quarter and also during the fourth quarter with the annual low point usually occurring in September.

October 17 - Below is an image taken from the weekly active listings chart:

A price range filter has been selected to eliminate all listings over $200,000. UCB and CCBS listings are excluded from the counts.

Here we can see the huge reduction in supply that has occurred over the past 4 years. The seasonal pattern clearly shows up, but each year is much lower than the year before. It is starting to look as though there will not be much of a market below $200,000 before too long.

October 16 - As a follow up to our observation about appreciation rates on October 13, we are taking a look at the trends for the cities.

Cities showing a declining trend in appreciation rate:

  • Arizona City peaked at 17.9% in May but has retreated to 12.0% now.
  • Avondale peaked at 10.7% in July but has retreated to 9.2% now
  • Buckeye peaked at 9.9% in February but has retreated to 7.4% now
  • Fountain Hills was at 3.3% in January but has fallen to 0.7% now
  • Laveen has dropped from 10.4% in January to 7.4% now
  • Maricopa has declined steadily all year from 11.6% in January to 6.4% now
  • Phoenix has dropped from 7.4% in January to 5.2% now
  • Sun City West has dropped from 9.2% in January to 6.0% now
  • Tempe has dropped from 6.2% in January to 4.8% now
  • Tolleson has dropped from 11.2% in January to 7.3% now

Cities on an improving appreciation trend:

  • Anthem, relatively slow, has started to catch up, increasing from 1.6% in January to 3.9% now
  • Apache Junction has increased from 5.7% in January to 8.9% now
  • Casa Grande has increased from 6.1% in January to 9.7% now
  • Gold Canyon was at -0.7% in January and has increased dramatically to 7.1% now
  • Litchfield Park was at a low of 5.5% in May and has improved to 8.8% now
  • Mesa was at 5.8% in January and has advanced to 7.3% now
  • Paradise Valley has improved from -1.4% in January to 4.6% now
  • Peoria has increased from 5.2% in January to 7.1% now
  • Queen Creek has increased steadily from 7.0% in January to 8.2% now
  • Scottsdale has seen modest improvement from 2.7% in January to 3.6% now
  • Sun Lakes has increased from 3.7% to 5.9% now
  • Surprise has increased slowly but steadily from 6.7% in January to 7.7% now

Cities with little change in appreciation rates:

  • Cave Creek was at 4.6% in January and is at 5.2% now
  • Chandler was at 6.2% in January and is at 5.6% now
  • El Mirage was at 13.8% in January and is at 12.8% now
  • Gilbert was at 5.3% in January and is at 5.6% now
  • Glendale was at 6.9% in January and is at 7.0% now
  • Goodyear was at 6.3% in January and is at 6.9% now
  • Sun City was at 10.1% in January and is at 9.7% now

This is a pretty mixed picture with fortunes changing in many different directions. All the appreciation rates are now positive (two were negative in January) which is a good sign. However the slowdown in our largest city of Phoenix (about 25% of the total market) means the overall trend is very slightly lower at the moment.

October 13 - Changes in the annual appreciation rate (measured using the annual average $/SF) give us a good indication of whether the market has been heating up or cooling down. This is using closed sales prices so it is a trailing indicator rather than a leading indicator. By using the annual average we get a fairly non-volatile reading. The trends tend to stay in place for quite some time. By looking at the weekly chart for annual appreciation we can detect when those trends change direction. 

Here is what we have seen so far:

  1. Appreciation was below 2% and weakening in early 2002, but the trend turned around in the second quarter and reached 4% by the end of the year.
  2. The appreciation continued to increase slowly during 2003 reaching 5.6% by the end of the year.
  3. Appreciation started to go crazy as the market heated up during 2004 thanks to the widespread availability of easy credit. It exceeded 12% in December 2004.
  4. The bubble was in full expansion mode during 2005 with appreciation exceeding 36% at the end of 2005.
  5. Appreciation peaked at 37.2% in March 2006 and then collapsed down to 11% by the end of the year, as the bubble burst.
  6. The bubble continued to deflate reaching -5% in December 2007.
  7. The foreclosure wave took depreciation to new depths reaching -28% in December 2008.
  8. The appreciation rate hit a historic low in the summer of 2009 at -36.5% but then started rising again.
  9. During 2010, the appreciation rate climbed by to slightly positive at 0.6% but this trend ran out of steam during the fourth quarter of 2010.
  10. 2011 saw appreciation slide back down to -9% by 3Q but signs of new life emerged at the end of the year.
  11. In 2012 appreciation charged from -9% all the way up to 20%
  12. Appreciation peaked at 25% during the spring of 2013 and started to drift slowly down again.
  13. 2014 saw appreciation drop from over 20% to less than 9%.
  14. In 2015 the downward trend stopped in September at 4.1% and started rising slowly again, reaching 4.4% by the end of the year.
  15. During 2016 the appreciation rate improved to 5.4% by the end of the year, though all of that improvement occurred during the first 3 months of the year.
  16. In 2017 appreciation hit a maximum of 6.5% in September and has drifted slightly lower since then, currently at 6.3%

The second and third quarters of 2017 gave us a fairly strong positive direction but so far the fourth quarter has seen a change of trend to a slight downward drift. Since this is a trailing indicator it suggests the market has cooled a little since the spring. By examining the appreciation chart by city we can see where the cooling trend has occurred, and where it has not.

We should emphasize that when the rate of appreciation falls, prices are still rising, they are just not rising with quite so much speed. Only when the rate of appreciation goes negative are prices actually falling compared with the previous year. At the current 6.3% we are a long way above that point.

October 12 - The Cromford® Market Index for the single-family markets in the 17 largest cities by dollar volume is shown in the table below:

Although we are very much in a seller`s market the changes over the last month are mixed. We have 9 cities showing improvement for sellers and 8 showing deterioration.

Buckeye is one of the improving areas and is now comfortably over 110 in the seller`s market zone. Gilbert is catching up with Mesa and Chandler while Avondale has consolidated its place at the top of the table. Paradise Valley continues to improve.

The cities doing significantly less well are Fountain Hills and Cave Creek. The others losing ground are only down 4% or less.

October 11 - Let us take a look at how the single-family luxury market fared during the third quarter. We will count homes that were listed for $500,000 or more and closings through ARMLS only. Our comparison period will be the third quarter of 2016.

Supply:

Looking at active listings excluding those in AWC or CCBS status as of October 1, the total number declined by 4% from 4,096 to 3,946. The decline was 6% in the price range from $500,000 to $1 million, from 2,667 to 2,508. The price range from $1 million to $2 million increased slightly from 916 to 920 while the price range over $2 million increased 1% from 513 to 518.

Demand:

Third quarter closings were up a very strong 22% from 1,500 to 1,835. The increase was greatest over $2 million where closings rose 33% from 48 to 64. The range between $1 million and $2 million was next with an increase of 24% from 211 to 262. Between $500,000 and $1 million closings increased 22% from 1,241 to 1,509.

Supply versus Demand:

  • The price range from $500,000 to $1 million went from 6.5 to 5.0 months of inventory based on the quarterly sales rate
  • The price range from $1 million to $2 million went from 13.0 to 10.5 months of inventory
  • The price range over $2 million went from 32.1 to 24.3 months of inventory

Pricing:

  • Despite a significant improvement in the inventory position, the price range between $500,000 and $1 million only managed a 0.7% increase in average $/SF from $192.47 to $193.89
  • The price range from $1 million to $2 million fared worse, with the average $/SF dropping 1.2% from $280.84 to $277.39
  • The price range over $2 million saw a 14.3% decline in average $/SF from $455.43 to $390.34

The overall pricing for single-family homes over $500,000 declined 0.6% from $224.12 to $222.67

In summary, it was a great quarter for sales volume, but for pricing it was not good at all. Having said that, some ZIP codes did much better than others.

Average $/SF was at least 10% higher in 85018, 85020, 85234, 85250, 85254, 85298, 85377 and 85383 when compared with 3Q 2016. However several of these are ZIP codes with only a small number of luxury sales. The large ZIP codes did not do well, with 85255 down 4% and 85262 down 6%.

October 10 - We now have the preliminary September recording data for Maricopa County and can report the following data.

  • The overall monthly median sales price was $251,000, unchanged from August but up 3.3% from September 2016.
  • The new home median sales price was $331,188, up 3.1% from September 2016
  • The re-sale median sales price was $239,900, up 4.3% from September 2016
  • The total sales count was 8,933, up 1.5% from September 2016 (which benefited from an extra working day)
  • The new home sales count was 1,388, up 9.4% from September 2016
  • The re-sale home sales count was 7,545, up 0.2% from September 2016

New homes continue to out-perform re-sales in volume, but not in pricing.

Note that the median sales price for new homes and re-sales are not comparable since the average new home is much larger than the average re-sale home.

 

October 9 - On October 6 we published a comprehensive analysis by ZIP code of the annual change in annual average price per sq. ft. for single family homes in the Greater Phoenix area.

Today we are doing the same for condos & townhomes. There are far fewer ZIP codes that qualify based on our minimum 2,000 homes, but we need to apply this minimum to ensure the results are meaningful. Below this level the sample size is just too small to give us results we can truly rely on.

RankCityZIPCondos & TownhomesAppreciation RateCurrent Annual Average $/SF
1Phoenix 85014 3,527 24.2% $159.08
2Phoenix 85008 2,528 23.3% $135.92
3Phoenix 85015 3,300 20.8% $90.39
4Mesa 85201 3,597 19.4% $122.20
5Phoenix 85016 5,743 17.8% $225.91
6Glendale 85301 3,182 14.6% $73.07
7Mesa 85206 2,751 13.3% $128.18
8Mesa 85210 3.170 13.2% $118.33
9Mesa 85202 4,171 13.1% $114.97
10Tempe 85282 3,298 13.0% $138.57
11Scottsdale 85257 2,764 12.6% $141.94
13Sun City 85351 8,135 12.5% $91.96
14Chandler 85225 3,221 12.4% $135.83
15Phoenix 85032 4,246 11.6% $131.63
17Scottsdale 85251 12,063 11.5% $227.26
19Phoenix 85018 3,869 10.2% $179.82
20Phoenix 85022 3,290 10.2% $125.93
21Phoenix 85020 5,740 9.3% $147.00
22Fountain Hills 85268 4,579 8.7% $172.50
23Phoenix 85013 2,026 8.0% $158.45
24Scottsdale 85254 2,632 7.7% $247.83
25Tempe 85283 2,807 7.6% $141.50
26Mesa 85209 3,125 7.2% $141.02
27Scottsdale 85260 6,634 7.1% $191.05
28Phoenix 85044 2,402 7.0% $149.90
29Tempe 85281 5,350 6.0% $183.20
30Scottsdale 85250 6,125 5.5% $186.66
31Sun City West 85375 2,780 5.1% $108.82
32Chandler 85224 2,539 4.3% $149.09
33Scottsdale 85258 7,532 3.2% $210.38
34Scottsdale 85255 3,805 -1.0% $215.40

In general, condos and townhomes have appreciated faster than single-family homes over the past 12 months. Central areas of Phoenix and Mesa have seen the biggest rises. Least favorable was 85255 which saw a small decline. Pricing in 85301 remains far below average but is catching up.

October 6 - At the ZIP Code level, the monthly average price per square foot is not terribly useful. Most ZIP codes are too small to have sales rates that give us enough samples to get a realistic price per sq. ft. over just one month. The average ZIP code in Maricopa County has 9,718 single family homes, condos or townhomes. There are a few ZIP codes that are much larger than average. Examples would be 85255 with 19,121, 85308 with 21,286, 85383 with 20,389, 85351 with 20,626, 85375 with 18,650, 85225 with 19,538 and 85032 with 20,399. Others are tiny, such as 85004 with only 1,288 homes and 85034 with only 851.

The answer is to take averages over a longer time frame, such as a year. However with the tiny ZIP codes, even this yields too small a sample to be very useful. So ignoring ZIP codes with fewer than 2,000 single-family homes, here is the ranking of ZIP codes by the annual change in annual average $/SF for single-family homes:

RankCityZIPSingle Family HomesAppreciation RateCurrent Annual Average $/SF
1Phoenix 85009 8,208 18.9% $111.17
2Coolidge 85128 3,827 17.9% $70.76
3Wickenburg 85390 2,599 15.7% $148.29
4Phoenix 85040 6,245 13.8% $110.24
5Mesa 85201 6,552 13.3% $135.97
6Phoenix 85035 8,808 12.8% $108.34
7El Mirage 85335 9,439 12.8% $109.14
8Eloy 85131 2,690 12.3% $110.20
9Phoenix 85051 9.653 12.0% $113.86
10Phoenix 85041 15,428 12.0% $107.98
11Sun City 85351 12,491 11.6% $112.22
12Arizona City 85123 3,668 11.6% $80.57
13Phoenix 85031 5,816 11.5% $98.15
14Phoenix 85033 11,130 11.5% $107.48
15Florence 85132 6,339 10.9% $91.80
16Avondale 85323 10,139 10.6% $106.73
17Scottsdale 85250 3,382 10.5% $233.43
18Peoria 85345 14,734 10.3% $124.06
19Phoenix 85027 9,294 10.2% $143.57
20Buckeye 85326 16,945 10.0% $101.89
21Glendale 85301 7,165 9.9% $103.20
22Surprise 85387 5,029 9.8% $142.39
23Phoenix 85017 5,650 9.6% $103.97
24Mesa 85204 12,100 9.4% $136.55
25Casa Grande 85194 2,223 9.2% $123.24
26Phoenix 85006 5,090 9.1% $186.71
27Phoenix 85019 5,594 9.1% $104.72
28Phoenix 85043 7,764 9.1% $106.50
29Casa Grande 85122 13,044 9.0% $85.60
30Phoenix 85029 10,124 9.0% $123.98
31San Tan Valley 85143 13,701 9.0% $97.01
32Phoenix 85015 5,441 8.9% $145.03
33Phoenix 85037 12,226 8.8% $105.92
34Mesa 85213 8,393 8.8% $139.62
35San Tan Valley 85140 11,268 8.8% $110.30
36Phoenix 85053 7,809 8.7% $123.71
37Scottsdale 85257 7,239 8.7% $195.65
38Litchfield Park 85340 9.148 8.6% $126.68
39Surprise 85378 2,340 8.6% $121.47
40Glendale 85302 8,914 8.6% $116.71
41Apache Junction 85120 5,362 8.6% $123.72
42Apache Junction 85119 4,775 8.4% $134.96
43Chandler 85225 16,317 8.4% $149.17
44Surprise 85379 14,467 8.4% $109.85
45Goodyear 85338 16,631 8.3% $120.05
46Mesa 85215 5,084 8.2% $151.78
47Phoenix 85008 6,940 8.2% $159.85
48Maricopa 85139 4,643 8.0% $85.37
49Mesa 85212 10,852 8.0% $127.53
50Queen Creek 85142 19,969 8.0% $125.12
51Peoria 85381 7,207 7.9% $133.19
52Laveen 85339 12,399 7.9% $105.96
53Gilbert 85298 12,788 7.9% $153.37
54Avondale 85392 10.730 7.7% $113.85
55Mesa 85203 7,848 7.7% $132.59
56Tolleson 85353 9,723 7.5% $101.38
57Sun City 85373 7,089 7.5% $116.05
58Glendale 85310 7,043 7.4% $146.79
59Mesa 85208 8,324 7.3% $128.45
60Tempe 85281 5,557 7.3% $177.17
61Mesa 85209 11,109 7.1% $134.51
62Mesa 85202 6,943 7.1% $141.29
63Gold Canyon 85118 6,242 7.1% $157.81
64Glendale 85306 6,625 7.0% $132.27
65Surprise 85388 9,173 6.9% $107.70
66Mesa 85206 9,245 6.9% $132.82
67Peoria 85383 19,973 6.8% $144.87
68Mesa 85210 5,739 6.7% $135.75
69Tempe 85282 10,209 6.6% $153.45
70Scottsdale 85254 14,623 6.6% $202.84
71Phoenix 85007 3,011 6.6% $186.08
72Glendale 85303 7,895 6.6% $114.37
73Maricopa 85138 13,991 6.4% $89.16
74Waddell 85355 3,719 6.3% $115.21
75Phoenix 85028 7,165 6.2% $186.19
76Chandler / Sun Lakes 85248 13,608 6.2% $158.84
77Glendale 85308 20,170 6.2% $143.35
78Scottsdale 85251 5,574 6.1% $268.13
79Scottsdale 85266 5,711 6.0% $235.50
80Sun City West 85375 15,870 5.9% $131.65
81Gilbert 85234 14,569 5.9% $145.37
82Gilbert 85233 11,342 5.8% $146.81
83Phoenix 85023 7,976 5.8% $141.72
84Phoenix 85021 6,522 5.8% $173.86
85Phoenix 85032 16,153 5.8% $161.21
86Phoenix 85083 6,342 5.7% $138.78
87Phoenix 85024 7,124 5.7% $156.53
88Chandler 85226 11,108 5.6% $162.68
89Phoenix 85018 9,303 5.6% $289.95
90Surprise 85374 16,627 5.5% $134.55
91Glendale 85304 8,368 5.4% $122.31
92Gilbert 85296 14,257 5.3% $141.03
93Scottsdale 85260 9,118 5.2% $214.18
94Phoenix 85022 10,371 5.1% $153.27
95Mesa 85205 11,598 5.1% $136.25
96Chandler 85249 15,940 5.1% $147.06
97Chandler 85224 11,505 4.9% $153.62
98Scottsdale 85259 7,522 4.8% $225.40
99Cave Creek 85331 11,715 4.8% $186.90
100Anthem / Phoenix 85086 14,279 4.8% $145.72
101Phoenix 85016 6,858 4.8% $219.65
102Mesa 85207 14,399 4.8% $159.31
103Phoenix 85020 7,269 4.7% $185.68
104Glendale 85305 2,984 4.7% $118.52
105Phoenix 85042 10,513 4.7% $127.59
106Gilbert 85295 12,829 4.5% $135.48
107Paradise Valley 85253 6,668 4.3% $353.90
108Phoenix 85045 2,771 4.2% $149.32
109Phoenix 85014 4,105 4.2% $194.48
110Chandler 85286 12,352 4.1% $151.16
111Peoria 85382 12,874 4.0% $136.17
112Phoenix 85050 8,812 4.0% $178.57
113Goodyear 85395 11,204 3.9% $135.94
114Scottsdale 85258 6,395 3.9% $239.34
115Tempe 85283 9,312 3.5% $153.70
116Buckeye 85396 8,547 3.5% $121.86
117Phoenix 85013 4,221 3.0% $191.97
118Tempe 85284 6,009 2.9% $173.43
119Gilbert 85297 9,881 2.8% $138.21
120Phoenix 85085 6,417 2.2% $142.01
121Phoenix 85048 10,509 2.1% $159.32
122Phoenix 85044 10,796 1.2% $162.14
123Fountain Hills 85268 8,446 1.2% $201.21
124New River 85087 2,867 0.8% $139.12
125Scottsdale 85255 15,316 -0.1% $281.13
126Scottsdale 85262 6,964 -2.1% $264.33

These are meaningful numbers and tell us a number of stories.

Generally the more glamorous and sought after ZIP codes are doing the least well for appreciation. The prime examples would be 85255 and 85262 which are the only 2 ZIP codes that show depreciation over the past year.

The inverse is also generally true. It is hard to imagine 2 less glamorous ZIP codes than than 85009 and 85128 yet they are doing extremely well from an investment point of view.

There are notable exceptions to this pattern. One expensive ZIP code has experienced strong appreciation over the past 12 months, and that is 85250. There also some cheaper locations that have seen relatively weak appreciation, including 85087, 85297, 85396 and 85395.

Ahwatukee (85044, 85045, 85048) and Fountain Hills are obvious examples of areas that are appreciating slower than people might expect. In contrast, Wickenburg, Arizona City and Florence are appreciating much faster than people might have expected.

For the data in chart form by ZIP code see here.

October 5 - The Cromford Market Index table for the single-family markets in the 17 largest cities by dollar volume is shown below:

Here we see 9 cities improving for sellers and 8 deteriorating. A little more balanced than we have seen for some time.

The largest improvement by far is in Avondale which has consolidated its place at the top of the table one more.

Other cities showing good improvements for sellers are Gilbert, Paradise valley, Maricopa and Buckeye.

Fountain Hills, Cave Creek and Mesa are seeing the biggest pull backs.

This is still very much a seller's market with Buckeye now only hair's breadth away from exceeding the 110 mark.

October 4 - The overall supply has been very weak for a long time now, though the high-end remains well supplied with plenty of homes for sale. Some areas have changed quite a bit over the past year while other have remained stable. We can see the biggest changes by studying the Cromford® Supply Index for the individual cities. Ranking from lowest to highest supply we currently have:

  1. Arizona City - 39.5
  2. Tolleson - 42.6
  3. Avondale - 44.9
  4. El Mirage - 45.1
  5. Anthem - 47.3
  6. Sun City West - 48.8
  7. Apache Junction - 51.3
  8. Chandler - 53.6
  9. Sun Lakes - 54.4
  10. Mesa - 56.2
  11. Sun City - 57.0
  12. Glendale - 57.1
  13. Gilbert - 57.2
  14. Surprise - 58.6
  15. Phoenix - 65.5
  16. Gold Canyon - 65.5
  17. Laveen - 65.8
  18. Casa Grande - 67.4
  19. Queen Creek - 69.3
  20. Litchfield Park - 70.9
  21. Fountain Hills - 72.3
  22. Peoria - 73.9
  23. Maricopa - 74.2
  24. Goodyear - 75.1
  25. Scottsdale - 75.2
  26. Cave Creek 77.7
  27. Tempe - 80.9
  28. Paradise Valley - 84.3
  29. Buckeye - 104.0

Remember that 100 represents normal and only one city (Buckeye) has a supply that is higher than normal (for Buckeye).

The changes over the past year have been:

  1. Chandler - down 29%
  2. Sun Lakes - down 28%
  3. Casa Grande - down 26%
  4. Anthem - down 25%
  5. Arizona City - down 24%
  6. Gilbert - down 22%
  7. Apache Junction - down 17%
  8. Sun City West - down 17%
  9. Mesa - down 16%
  10. Cave Creek - down 14%
  11. Laveen - down 13%
  12. Queen Creek - down 12%
  13. Tempe - down 12%
  14. Tolleson - down 11%
  15. Litchfield Park - down 7%
  16. Surprise - down 7%
  17. Scottsdale - down 6%
  18. Avondale - down 5%
  19. Glendale - down 4%
  20. Paradise Valley - down 4%
  21. Gold Canyon - down 2%
  22. Peoria - down 2%
  23. Maricopa - down 2%
  24. Phoenix - unchanged
  25. Buckeye - up 1%
  26. Goodyear - up 6%
  27. Fountain Hills - up 7%
  28. Sun City - up 11%
  29. El Mirage - up 33%

For buyers the supply situation has deteriorated the most in the Southeast Valley and Pinal County, while parts of the Southwest Valley (Goodyear and Buckeye) have eased, along with the Sun City and El Mirage area, although supply remains very tight compared with normal.

October 2 - The percentage of trustee auctions being won by a third-party reached 68.9% in September. This is the highest level since the bubble era in October 2005.

The remaining 31.1% of auctions failed to catch a bid and reverted to the beneficiary (i.e. lender). There were 60 of these. There were only 14 in October 2005 because in the bubble era, investors were even more active than now, picking off pre-foreclosures before they even got to the auction.

October 1 - The multi-family permits issued in August for Maricopa and Pinal Counties amounted to 1,240, the highest total since September 2016. This robust total after several weak months brings the 12 month total up to 9,722, much higher than the Blue Chip Forecast for 2017 which was only 7,153 in the second quarter of this year. It seems that multi-family permits refuse to conform to expectations of a decline.

The City of Phoenix is now way out in front in multi-family permits year-to-date:

  1. Phoenix - 2386
  2. Mesa - 716
  3. Chandler - 664
  4. Glendale - 471
  5. Tempe - 413
  6. Peoria - 408
  7. Goodyear - 336
  8. Surprise - 135
  9. Unincorporated Pinal County - 66
  10. Paradise Valley - 20
  11. Scottsdale - 13
  12. Fountain Hills - 6
  13. Apache Junction - 4

Please note that the census definition of multi-family includes residential buildings from duplexes upwards.

September 2017

 

September 29 - Let us take another look at the single-family markets in the 17 largest cities and see how the Cromford® Market Index has changed over the past month:

We have 11 cities showing improved conditions for sellers and 6 deteriorating. Only Mesa and Cave Creek have deteriorated more than 2%, but this is enough to allow Avondale back into the top spot again.

Gilbert and Maricopa are the most improved after Avondale.

If Buckeye keeps on its current trend we will get all 17 cities in the seller's market zone over 110.

September 28 - I was wondering what size home had recovered pricing best compared with the peak levels of the housing boom. So using the ARMLS Sq. Ft. Ranges and selecting all closed listings in Greater Phoenix, I found the following:

Sq. Ft. RangePeak $/SFDate of PeakTrough $/SFDate of TroughCurrent $/SF% of Peak
Less Than 1,000 $170.80 Jan 2007 $52.88 Sep 2011 $136.77 80.1%
1,000 - 1,200 $174.12 Jan 2007 $59.41 Oct 2011 $145.62 83.6%
1,201 - 1,400 $169.58 Dec 2006 $64.28 Oct 2011 $144.13 85.0%
1,401 - 1,600 $165.42 Aug 2006 $65.50 Nov 2011 $140.43 84.9%
1,601 - 1,800 $166.20 Aug 2006 $69.85 Nov 2011 $140.59 84.6%
1,801 - 2,000 $168.17 Aug 2006 $74.03 Nov 2011 $140.41 83.5%
2,001 - 2,250 $171.63 Aug 2006 $74.45 Nov 2011 $137.79 80.3%
2,251 - 2,500 $180.31 Jul 2006 $77.73 Oct 2011 $138.42 76.8%
2,501 - 2,750 $189.56 Jul 2006 $84.89 Nov 2011 $141.02 74.4%
2,751 - 3,000 $204.60 Aug 2006 $92.90 Oct 2011 $148.19 72.4%
3,001 - 3,500 $206.27 Jun 2006 $90.33 Sep 2011 $148.21 71.9%
3,501 - 4,000 $223.69 Sep 2006 $98.97 Mar 2011 $153.53 68.6%
4,001 - 4,500 $237.28 Jul 2006 $108.17 Dec 2009 $166.34 70.1%
4,501 - 5000 $276.55 May 2006 $130.96 Mar 2011 $197.60 71.5%
5,001+ $392.30 Apr 2008 $202.51 Jul 2011 $279.18 71.2%

The $/SF numbers are annual averages.

The ranges 1,000 to 2,000 have recovered closest to the peak (83% to 85%) while homes over 2,750 still have a long way to go (68% to 73% of peak). Although prices did not fall as far for larger homes, they have not bounced back as much either. Though homes generally get more expensive on a $/SF basis as they get larger, the above table shows that this does not hold true under 2,500 sq. ft. at the moment.

Two data points stand out. Homes of 4,001-4,500 sq. ft. hit bottom much earlier in 2009 than the other ranges in 2011. Homes over 5,001 sq. ft. peaked much later than other homes size in 2008 rather than 2006.

September 27 - The new S&P/Case-Shiller® Home Price Index® report was published yesterday giving us numbers for the sales period May through July 2017. The 20 conurbations that are reported in detail are ranked below by the change in price index over the last month:

  1. Los Angeles 1.12%

    September 28 - I was wondering what size home had recovered pricing best compared with the peak levels of the housing boom. So using the ARMLS Sq. Ft. Ranges and selecting all closed listings in Greater Phoenix, I found the following:

    Sq. Ft. RangePeak $/SFDate of PeakTrough $/SFDate of TroughCurrent $/SF% of Peak
    Less Than 1,000 $170.80 Jan 2007 $52.88 Sep 2011 $136.77 80.1%
    1,000 - 1,200 $174.12 Jan 2007 $59.41 Oct 2011 $145.62 83.6%
    1,201 - 1,400 $169.58 Dec 2006 $64.28 Oct 2011 $144.13 85.0%
    1,401 - 1,600 $165.42 Aug 2006 $65.50 Nov 2011 $140.43 84.9%
    1,601 - 1,800 $166.20 Aug 2006 $69.85 Nov 2011 $140.59 84.6%
    1,801 - 2,000 $168.17 Aug 2006 $74.03 Nov 2011 $140.41 83.5%
    2,001 - 2,250 $171.63 Aug 2006 $74.45 Nov 2011 $137.79 80.3%
    2,251 - 2,500 $180.31 Jul 2006 $77.73 Oct 2011 $138.42 76.8%
    2,501 - 2,750 $189.56 Jul 2006 $84.89 Nov 2011 $141.02 74.4%
    2,751 - 3,000 $204.60 Aug 2006 $92.90 Oct 2011 $148.19 72.4%
    3,001 - 3,500 $206.27 Jun 2006 $90.33 Sep 2011 $148.21 71.9%
    3,501 - 4,000 $223.69 Sep 2006 $98.97 Mar 2011 $153.53 68.6%
    4,001 - 4,500 $237.28 Jul 2006 $108.17 Dec 2009 $166.34 70.1%
    4,501 - 5000 $276.55 May 2006 $130.96 Mar 2011 $197.60 71.5%
    5,001+ $392.30 Apr 2008 $202.51 Jul 2011 $279.18 71.2%

    The $/SF numbers are annual averages.

    The ranges 1,000 to 2,000 have recovered closest to the peak (83% to 85%) while homes over 2,750 still have a long way to go (68% to 73% of peak). Although prices did not fall as far for larger homes, they have not bounced back as much either. Though homes generally get more expensive on a $/SF basis as they get larger, the above table shows that this does not hold true under 2,500 sq. ft. at the moment.

    Two data points stand out. Homes of 4,001-4,500 sq. ft. hit bottom much earlier in 2009 than the other ranges in 2011. Homes over 5,001 sq. ft. peaked much later than other homes size in 2008 rather than 2006.

    Boston 1.11%
  2. New York 0.82%
  3. Detroit 0.80%
  4. Las Vegas 0.78%
  5. Cleveland 0.76%
  6. Chicago 0.74%
  7. Minneapolis 0.72%
  8. Seattle 0.65%
  9. Tampa 0.63%
  10. San Diego 0.62%
  11. Charlotte 0.61%
  12. Portland 0.59%
  13. Phoenix 0.59%
  14. Miami 0.58%
  15. San Francisco 0.56%
  16. Denver 0.55%
  17. Dallas 0.37%
  18. Washington 0.35%
  19. Atlanta 0.32%

Phoenix was in 10th place last month and has slipped to 14th this month. Not at all bubbly, I would say. Given the shortage of supply and the seller`s market in Phoenix, this percentage increase is very modest. This is even more true when we consider the national average of 0.73%. You can view the long term indexes here.

Looking at the year over year change we see:

  1. Seattle 13.5%
  2. Portland 7.6%
  3. Las Vegas 7.4%
  4. Dallas 7.3%
  5. Detroit 7.3%
  6. Denver 7.2%
  7. San Diego 7.1%
  8. Tampa 7.0%
  9. Boston 6.8%
  10. San Francisco 6.7%
  11. Charlotte 6.4%
  12. Los Angeles 6.1%
  13. Minneapolis 5.8%
  14. Phoenix 5.6%
  15. Atlanta 5.3%
  16. Miami 5.2%
  17. New York 3.9%
  18. Cleveland 3.8%
  19. Washington 3.3%
  20. Chicago 3.3%

Phoenix is again in 14th place, this time down from 12th place last month. In the context of the national average (5.9%), Phoenix`s 5.6% annual rise is thoroughly unexceptional.

Among the 20 cities that Case-Shiller reports, the following 8 have exceeded their price index levels during the housing boom:

  • Atlanta
  • Boston
  • Charlotte
  • Dallas
  • Denver
  • Portland
  • San Francisco
  • Seattle

The remaining 12 cities, including Phoenix, have yet to recover their peak price index levels from the housing boom.

September 26 - Although sales are generally stronger in 2017 than in 2016, there are a few places where that is not true. Surprisingly those few places include Gilbert and Chandler.

Here are the cities (with Phoenix broken into smaller regions) ranked by home sales growth (year-to-date) based on county recordings. The numbers include single family homes, condos and townhomes and are correct up to the end of August in each year:

RankCityYTD Sales 2015YTD Sales 2016YTD Sales 2017Growth 2016-2017
1 Phoenix - Downtown 203 167 309 85.0%
2 Waddell 218 201 265 31.8%
3 Paradise Valley 370 350 453 29.4%
4 Carefree 141 101 130 28.7%
5 Wickenburg 117 119 151 26.9%
6 Rio Verde 98 120 151 25.8%
7 Gold Canyon 356 354 439 24.0%
8 Youngtown 100 108 133 23.1%
9 Coolidge 161 182 223 22.5%
10 San Tan Valley 2246 2622 3188 21.6%
11 Buckeye 1817 2143 2554 19.2%
12 Maricopa 1334 1424 1661 16.6%
13 Phoenix - West 3844 3942 4595 16.6%
14 New River 209 144 166 15.3%
15 Arizona City 173 207 236 14.0%
16 Queen Creek 965 1293 1473 13.9%
17 Glendale 3485 3511 3980 13.4%
18 Peoria 3263 3708 4197 13.2%
19 Apache Junction 556 581 655 12.7%
20 Mesa 7069 8105 9098 12.3%
21 Tempe 1810 1876 2107 12.3%
22 Phoenix - Northeast 1148 1158 1294 11.7%
23 Florence 474 574 636 10.8%
24 Wittmann 69 74 82 10.8%
25 Phoenix - Far North 1262 1448 1597 10.3%
26 Surprise 2848 3045 3350 10.0%
27 Sun City 1703 1793 1965 9.6%
28 Scottsdale 6180 6415 6995 9.0%
29 Avondale 1101 1206 1306 8.3%
30 Casa Grande 807 845 914 8.2%
31 Phoenix - Biltmore & Arcadia 1442 1477 1594 7.9%
32 Cave Creek 655 669 720 7.6%
33 Phoenix - Northwest 2685 2952 3154 6.8%
34 Phoenix - East 682 778 830 6.7%
35 Litchfield Park 585 600 636 6.0%
36 Sun City West 1097 1105 1169 5.8%
37 Phoenix - North 2586 2715 2845 4.8%
38 El Mirage 541 487 510 4.7%
39 Goodyear 1801 1991 2048 2.9%
40 Phoenix - Ahwatukee 1346 1361 1385 1.8%
41 Phoenix - Uptown 867 940 957 1.8%
42 Fountain Hills 632 659 668 1.4%
43 Laveen 763 879 887 0.9%
44 Gilbert 4896 5225 5215 -0.2%
45 Chandler 3844 4703 4659 -0.9%
46 Anthem 363 384 379 -1.3%
47 Sun Lakes 446 458 432 -5.7%
48 Tolleson 553 612 568 -7.2%
49 Eloy 116 161 148 -8.1%

I imagine the top 10 is a surprise to many people. With all the downtown development and the fashion for urban living, Downtown Phoenix is no surprise at number 1. But Waddell, Paradise Valley, Carefree, Wickenburg, Rio Verde and Gold Canyon have not generally been regarded as hot-spots. What they do have is plenty of supply. Lack of supply is a boon for sellers but is not necessarily good for agents and brokers because poor supply can easily lead to poor sales growth.

Who would have expected a decline in sales in Chandler or Gilbert? In the Southeast Valley, it is Queen Creek, Apache Junction, Mesa and Tempe that have been growing fastest.

Given the large inflow of retirees, the lack of growth in Sun Lakes is a bit of surprise. New developments focused on the 55+ sector of the market have contributed to the rapid growth in places like Wickenburg, Rio Verde and San Tan Valley.

September 25 - One simple way of measuring the level of distress in the housing market is to count the number of HUD homes sold per month. In August 2017 there were 4 such sales, the lowest we have ever seen, and implying a very low level of distress among home-owners. Of course renters may be experiencing financial distress, but we know home owners with FHA loans are doing much better than usual in avoiding losing their homes to foreclosure.

To put the August 2017 total of 4 sales into context, remember that in August 2011 we saw 458 such sales.

September 24 - The overall Greater Phoenix market is starting to look even more favorable to sellers than it did last month, despite a slight decline in the Cromford® Market Index. Here are the reasons we say that:

 
  • growth in active listings is very small, and normally we see significant increases at this time of year
  • new listing counts are weakening relative to last year
  • the weekly pending listing chart has started to look stronger relative to 2016

The average price chart has looked quite weak for the last 3 months, but that is partly a result of seasonal effects and partly because of a decline in the average home size of homes that sold. We now expect the average price chart to look stronger for the next couple of months.

September 23 - The number of parcels in Maricopa County that are pending foreclosure just hit a new low point of 1,929. This is the smallest pre-foreclosure inventory we have ever recorded (from 2002 onwards). To put the current number in context we were at 5,880 in the last week of 2002 and 2,225 was the low point before the housing bubble burst. The high point during the foreclosure wave was 51,022.

We read earlier this week that Ed Delgado, President and CEO of Five Star, presented at the Federation of Certified REO Experts ("FORCE"). He claimed that REOs are going to increase in 2018. He believes micro bubbles are going to burst in Denver, Dallas, San Antonio, Las Vegas, Phoenix, Los Angeles and San Francisco. He predicts that delinquencies will rise and foreclosures will increase. You have to feel a little sorry for REO experts since the subject matter they specialize in is getting rarer and rarer. It is not surprising that they believe REOs will rise. People tend to believe what they want to believe.

The Cromford® Report is neutral on the REO subject. We just count them. But I would point out that a pre-requisite for REOs rising is for pre-foreclosures to rise significantly first. So if you are an REO expert (certified or not) the latest foreclosure pending numbers will be a big disappointment..

September 22 - Here is the table showing the Cromford® Market Index for the 17 largest single-family markets by dollar volume:

This is still looking favorable for sellers with 11 cities improving and 6 deteriorating for them.

Avondale is staging a a recovery and threatening to take back the number 1 spot it held for so long. A recent increase in supply is threatening to unseat Mesa from its present position at the head of the table.

Overall there is little for sellers to grumble about in this table, particularly those in the Northeast Valley. Buyers have our permission to complain, but we have little to no good news for them at the moment.

September 21 - People often focus on monthly median sales prices but these can be very volatile from month to month, especially for small or very diverse areas. For example, the monthly median sales price for Paradise Valley single-family detached homes has varied between $1,177,500 and $1,840,000 over the past 12 months which tells us little more than what we already know - Paradise Valley is rather expensive.

In contrast the annual median sales price is based on a much larger sample and tends to be a slow moving and reliable indicator. The same Paradise Valley has an annual median sales price that has only varied between $1,400,000 and $1,450,000 during the last 12 months and this tells us that prices are stable and changing very little.

Let us have a look at the annual median sales prices for single-family detached homes in the cities around the valley. They are ranked by percentage change from a year ago.

RankCityAnnual Median Sales Price September 2016Annual Median Sales Price September 2017ChangePeak 2005-2008Current Median % of Peak
1 Eloy $145,000 $208,000 +43.4% $210,000 99.1%
2 Wickenburg $227,000 $257,000 +13.2% $340,500 75.5%
3 El Mirage $155,000 $175,000 +12.9% $223,000 78.5%
4 Arizona City $103,000 $115,000 +11.7% $160,000 71.9%
5 Tolleson $180,000 $197,638 +9.8% $257,000 76.9%
6 Apache Junction $169,900 $185,450 +9.2% $216,500 85.7%
7 Sun City $165,000 $180,000 +9.1% $210,000 85.7%
8 Waddell $263,000 $287,000 +9.1% $529,000 54.3%
9 Maricopa $165,000 $179,900 +9.0% $258,650 69.6%
10 Wittmann $263,250 $287,000 +9.0% $355,000 80.9%
11 Avondale $192,000 $209,000 +8.9% $264,950 78.9%
12 Tonopah $159,995 $174,000 +8.8% $244,000 71.3%
13 Coolidge $113,000 $123,000 +8.8% $149,995 82.0%
14 Laveen $195,000 $212,000 +8.7% $299,900 70.7%
15 Sun City West $210,000 $227,500 +8.3% $262,950 86.5%
16 Buckeye $184,896 $199,950 +8.2% $255,000 78.4%
17 Florence $150,520 $162,500 +8.0% $203,900 79.7%
18 Mesa $225,000 $242,500 +7.8% $249,998 95.1%
19 Queen Creek $200,000 $214,900 +7.5% $259,900 82.7%
20 Glendale $212,000 $227,000 +7.1% $257,000 88.3%
21 Chandler $279,900 $299,652 +7.1% $315,000 95.1%
22 Gilbert $277,500 $297,000 +7.0% $330,000 90.0%
23 Sun Lakes $255,800 $272,500 +6.5% $320,000 85.2%
24 Scottsdale $492,250 $523,825 +6.4% $640,000 81.9%
25 Tempe $265,000 $281,000 +6.0% $295,000 95.3%
26 Carefree $717,500 $760,000 +5.9% $975,000 78.0%
27 Peoria $257,500 $272,500 +5.8% $286,500 95.1%
28 Phoenix $225,000 $238,000 +5.8% $255,000 93.3%
29 Casa Grande $159,000 $168,000 +5.7% $199,900 84.0%
30 Surprise $215,000 $226,853 +5.5% $268,000 84.7%
31 Youngtown $150,000 $157,500 +5.0% $193,000 81.6%
32 Goodyear $247,000 $257,000 +4.0% $300,000 85.7%
33 Anthem $285,000 $295,000 +3.5% $385,000 76.6%
34 Cave Creek $426,800 $439,000 +2.9% $537,000 81.8%
35 Litchfield Park $278,000 $285,500 +2.7% $330,000 86.5%
36 Fountain Hills $430,000 $439,000 +2.1% $565,000 77.7%
37 Gold Canyon $255,000 $257,000 +0.8% $312,000 82.4%
38 New River $325,000 $325,000 +0.0% $435,000 74.7%
39 Rio Verde $430,500 $428,750 -0.4% $759,900 56.4%
40 Paradise Valley $1,450,000 $1,435,000 -1.0% $2,000,000 71.8%

There are some special cases here. Eloy's market has changed since 2006 thanks to the development of Robson Ranch, moving prices substantially higher over the past 2 years. Waddell used to be a much smaller market with just a few more expensive homes. It is going to have a very hard regaining the peak median of 2006.

It is noticeable that some larger cities are within striking distance of their peak median. These include Tempe, Peoria, Chandler and Mesa. Phoenix is not so far behind.

It is also noteworthy that many of the more expensive cities that did not see as large a collapse in pricing still have a long way to go to regain their peak. Examples include Paradise Valley, Rio Verde, Fountain Hills, Anthem, Carefree.

It will probably surprise many to see that Coolidge and Apache Junction are closer to regaining their peak than Scottsdale.

September 20 - For Pinal County, the single-family market has seen almost as big a percentage drop in supply as the Southeast Valley over the last 12 months. Active listings are down 16% and down 23% for homes priced under $250,000. The market for homes over $500,000 is tiny in Pinal County, but we have seen an 11% decline in supply from 105 to 93 in the last 12 months. Mid-range supply has been healthier moving up 5% from 391 to 409 listings.

The overall quarterly sales rate is fairly stable, up just 4% from the same time last year. However the mid range has grown 39% while the bottom end has declined 2% and the high end has fallen14%.

Overall appreciation is a very strong 10.5% but almost all of that is generated by the price range under $250,000.The mid range is up only 3.8% and the homes over $500,000 actually lost 0.2%.

September 19 - In the Southeast Valley, active listing counts for single-family homes have dropped much more than the areas we discussed over the last few days. The annual change is -17% with even the highest priced range (over $500,000) down 11%. Listings under $250,000 are down a massive 40% since September 2016.

With this loss of supply, the quarterly sales rate has struggled to rise higher than last year and we are seeing only a 0.5% increase overall. The best price range for sales growth is over $500,000 which has seen a 30% increase from 377 to 490 for the 3 month period June through August. The mid-range from $250,000 to $500,000 has performed reasonably well with a 15% increase in sales from 3,292 to 3,797. The dismal supply below $250,000 has resulted in sales collapsing by 24% from 2,494 to 1,905.

As of September 1, 2017, there were only 22 days of inventory for homes under $250,000. As you might expect, these lower priced homes have appreciated at the fastest rate, namely 7.5% while those over $500,000 have only increased by 0.4% on a price per sq. ft. basis. The mid-range is rising more quickly at 5.6% per year.

September 17 - In the West Valley single-family market, we have a 1.6% decline in active listing counts compared to last year. However homes under $250,000 are down 20% while homes over $500,000 are up 3% and mid-range homes between $250,000 and $500,000 are up 14%. The quarterly sales rate follows a similar pattern with homes under $250,000 down 5%, those between $250,000 and $500,000 up 26% and the big change, those over $500,000 up 53%. Mind you the market for homes over $500,000 is not huge in the West Valley. The quarterly sales count increased from 100 to 153.

Overall appreciation based on quarterly $/SF was 8.0% and perhaps surprisingly, the highest rate was for those homes over $500,000 which increased 9.5% from $160.09 to $175.34. The lowest appreciation was for the mid-range at 4.6% while the low end under $250,000 enjoyed a 8.3% increase in average $/SF.

September 16 - In the City of Phoenix single-family market, we are only seeing a 1% decline in active listings compared to last year. However active listings for homes under $250,000 are down 8%, while those priced over $250,000 are up 3%. It is a similar story with sales numbers. Quarterly sales for homes under $250,000 are down 4% but sales of homes over $250,000 are up 16%.

The overall appreciation rate in Phoenix is 6.8%, with the range below $250,000 doing slightly better than average at 7.3%. Pricing per sq. ft. is up 4.3% for the mid range and up 2.1% for homes over $500,000.

September 15 - In the Northeast Valley single-family market we are looking at 5% fewer active listings than we had this time last year. However this drop is far from evenly spread across the price ranges. Over $1 million we have a 1% increase, between $500,000 and $1 million a 4% drop and under $500,000 a significant 18% fall.

We typically see 4 times as many sales under $500,000 as we do sales over $1 million, yet there is less than half the number of active listings below $500,000 (503) than over $1 million (1,055). Clearly the market will feel very different for buyers under $500,000 than for those with a budget over $1 million.

The supply over $1 million has not grown because of a lack of sales. Indeed, the quarterly sales rate for June through August was up a strong 32% from 222 to 293. With its limited supply, sales activity below $500,000 was weaker than in 2016 with a 10% drop in quarterly closings from 914 down to 823. Overall we see a modest 4% increase in sales across all price ranges.

As you might expect, appreciation is strongest for homes under $500,000 with the average $/SF moving up 5.3% from $184.08 to $193.81. For homes over $1 million the average $/SF fell 1.4% from $329.73 to $325.18. So despite the strong demand the excess supply prevented the high end of the market from enjoying the appreciation rates seen by the rest of the market.

September 14 - The Cromford® Market Index for the single-family markets in the 17 largest cities by dollar volume:

With the exception of Fountain Hills and Paradise Valley (two of the smallest markets in this list), there has been no change greater than 4% over the last month.

However the balance still favors sellers with 12 cities showing improving conditions for sellers and only 5 showing improvements for buyers. The Southeast Valley still looks strong with Chandler and Gilbert up 4% , but Tempe, Mesa & Queen Creek all slipped a little. Avondale has regained its footing and is now challenging Surprise for the highest ranked West Valley city.

September 11 - For single-family homes in the mid-price range the supply situation looks like this:

Price Range Active Sep 2015 Active Sep 2016 Active Sep 2017 2 Year Change 2015 Days of Inventory 2017 Days of Inventory
$250K-$275K 988 1,142 1,196 +21% 87 71
$275K-$300K 1,097 1,204 1,197 +9% 94 71
$300K-$350K 1,680 1,758 1,716 +2% 117 83
$350K-$400K 1,543 1,518 1,525 -1% 146 101
$400K-$500K 1,682 1,934 1,884 +12% 155 117
All the above 6,990 7,556 7,518 +8% 119 88

The number of active listings is 8% higher than 2 years ago and a shade lower than in 2016, so at first sight the market looks well-supplied. However the annual sales rate has increased 46% from 21,430 to 31,248 over the last 2 years, so the extra supply is completely overwhelmed by the growth in demand in this price range. Inventory has declined from 119 to 88 days which means sellers have a strong advantage and continued appreciation is in the short-term forecast.

September 10 - Above $500,000 the market conditions have improved for single-family homes up to $1.5 million. Above that price point the mood is rather different:. Let us take a look at supply above $500,000:

Price Range Active Sep 2015 Active Sep 2016 Active Sep 2017 2 Year Change 2015 Days of Inventory 2017 Days of Inventory
$500K-$600K 1,030 1,374 1,048 +2% 204 142
$600K-$800K 1,063 1,419 1,163 +9% 232 180
$800K-$1M 535 800 651 +22% 258 229
$1M-$1.5M 532 751 582 +9% 301 268
$1.5M-$2M 272 436 372 +37% 362 438
$2M-$3M 254 369 307 +21% 475 529
Over $3M 211 302 227 +8% 733 618
All the above 3,89 4,396 4,350 +12% 259 211

We have 12% more supply than 2 years ago, so there is still plenty of choice for buyers. However, the annual sales rate for homes over $500,000 has increased from 5,491 to 7,531, a rise of 37%. So here we can see that the growth in demand is much faster than the growth in supply and after a weak period since peaking in mid-summer 2015, prices in most luxury areas are starting to rise again, particularly for homes under $1.5 million. It is between $1.5 million and $3 million where the market starts to change for the worse.

Days of inventory have increased from 409 to 475 for single-family homes priced between $1.5 million and $3 million. In this price range annual sales have risen from 547 to 596, an increase of only 11%, while supply is up from 526 to 679, a rise of 29%. Now we see a problem. When supply increases as a faster rate than demand, sellers are at a disadvantage. Pricing for homes between $1.5 million and $3 million will have a hard time making substantial upward progress until this condition changes.

September 9 - Last year the minimum number of active listings across all areas and types but excluding UCB and CCBS was 19,186, the reading on September 1, 2016. This year the minimum reading was 17,315 which occurred on August 16. So our peak was about 10% lower than last year, but our autumn season increase started 2 weeks earlier.

Average days on market for these active listings is currently 113, down from 120 this time last year.

Last year we had seen 62,800 sales through ARMLS while this year to date total is 67,728, up 8.2% on 2016. This is a very healthy increase in sales volume, but the year over year comparison is weakening. Last month we had 9.2%, while July was 9.9% and June 11.1%.

September 8 - The Cromford® Market Index peaked at 158.3 on September 1 and is now starting to slip gently backwards. The reasons are that supply is no longer in decline and demand is slowly weakening. The changes are very small and hard to detect out in the marketplace, although some areas will be affected more than others. Last year we saw the peak CMI on September 23, three weeks later than in 2017.

September 7 - Once again we take a look at the Cromford® Market Index for the single-family markets in the 17 largest cities by dollar volume:

This paints a pretty picture for sellers with 12 cities improving and only 5 deteriorating compared with a month ago. However 6 of those 12 improvements were of only 1% and if we look at the changes over the last week, several of them have reached an inflection point and are now in decline. These include Mesa, Chandler, Surprise and Goodyear.

We often see the market weaken during September and October as more new listings arrive ahead of the influx of snowbird buyers. However, to put things in their proper context, we remain in a seller`s market with no index below 100 and only one (Buckeye) below 110.

September 6 - The preliminary August sales counts from the Maricopa County Recorder are now available. We see 9,899 in total, up from 9,167 in July and 9,353 in August 2016. That`s a 6% increase year over year, healthy but not as dramatic as we were seeing earlier in the year. As both August 2016 and August 2017 had 23 working days, the 6% is a fair comparison. The 8% increase over July 2017 is not so fair, since July only had 20 working days. The rate of sales per working day declined 6% between July and August, in line with normal seasonal patterns.

The overall median sales price in August was $251,000, up 5% from $238,888 a year ago. This includes single family, townhomes and condos.

For new homes, the sales count in August was up 15% from 2016 to 1,406. The new home median sales price was up just 1% to $319,430.

Re-sale counts grew 4% year over year and the re-sale median sales price was up 6% to $239,000.

Clearly new home sales are growing much faster than re-sales, though their median price is not increasing as fast. This is partly because we are seeing more new homes at the lower price points with smaller square footage.

September 5 - Phoenix as a whole only managed to rank 27th with 5.7% in the table of appreciation rates that we created yesterday. However we can find a wide range of rates within the city of Phoenix.

  1. 85004 19.7%
  2. 85009 19.0%
  3. 85035 13.4%
  4. 84040 13.3%
  5. 85041 12.1%
  6. 85051 12.0%
  7. 85031 11.5%
  8. 85033 11.2%
  9. 85006 10.5%
  10. 85007 10.5%
  11. 85019 10.0%
  12. 85027 10.0%
  13. 85029 10.0%
  14. 85037 9.9%
  15. 85043 9.3%
  16. 85053 9.2%
  17. 85008 8.7%
  18. 85003 7.7%
  19. 85017 7.4%
  20. 85015 7.2%
  21. 85032 6.7%
  22. 85024 6.5%
  23. 85021 6.1%
  24. 85054 6.0%
  25. 85023 5.7%
  26. 85028 5.4%
  27. 85083 5.3%
  28. 85018 5.2%
  29. 85042 4.8%
  30. 85012 4.7%
  31. 85045 4.5%
  32. 85014 4.4%
  33. 85020 4.4%
  34. 85022 4.3%
  35. 85085 4.1%
  36. 85050 4.1%
  37. 85013 3.8%
  38. 85016 3.6%
  39. 85086 3.4%
  40. 85048 2.7%
  41. 85044 0.8%

There were too few sales in 85034 to come up with a realistic appreciation rate.

The West Phoenix, Downtown and South Phoenix areas are generally dominating the top of the table, while Ahwatukee, North and Northeast Phoenix are clustered at the bottom.

September 4 - Appreciation has been gradually getting stronger over the past few months but it is not spread equally over the Greater Phoenix area. Here is a table ranking the cities by annual appreciation rate based on the change in the annual average $/SF between August 2016 and August 2017. The data is for single family homes only.

  1. Coolidge 14.0%
  2. El Mirage 13.9%
  3. Arizona City 12.4%
  4. Florence 10.7%
  5. Wickenburg 10.0%
  6. Avondale 9.8%
  7. Youngtown 9.7%
  8. Eloy 9.6%
  9. Sun City 8.7%
  10. Laveen 8.1%
  11. Litchfield Park 8.1%
  12. Casa Grande 8.0%
  13. Surprise 8.0%
  14. Tolleson 8.0%
  15. Apache Junction 7.9%
  16. Queen Creek 7.8%
  17. Goodyear 7.1%
  18. Glendale 6.9%
  19. Buckeye 6.8%
  20. Mesa 6.7%
  21. Sun City West 6.4%
  22. Gold Canyon 6.4%
  23. Peoria 6.2%
  24. Maricopa 6.1%
  25. Waddell 6.0%
  26. Gilbert 5.8%
  27. Phoenix 5.7%
  28. Chandler 5.5%
  29. Sun Lakes 5.4%
  30. Rio Verde 5.0%
  31. Tempe 4.8%
  32. Scottsdale 4.4%
  33. Paradise Valley 3.2%
  34. Anthem 3.0%
  35. Cave Creek 2.7%
  36. New River 2.7%
  37. Fountain Hills 0.9%
  38. Carefree 0.7%
  39. Wittmann -1.1%
  40. Tonopah -9.5%

Pinal County and the West Valley are well represented at the top of this list. Given that Queen Creek (which includes the unincorporated San Tan Valley area) encompasses a lot of Pinal County territory, we have to get down to 20th placed Mesa before we find a city or town from some other area.

The North Valley is dominating the bottom of the list with Anthem, Cave Creek, Carefree and New River at position 34 or lower. The Northeast Valley locations also remain near the bottom, despite significant improvement compared to this time last year.

September 3 - It is interesting to compare days of inventory by price range and how this has changed over the last year. Here is the chart for September 2017:

and here is what it looked like a year earlier:

As a buyer you would like as many days of inventory as possible, to give you more choice and put sellers under pressure from their competitors. In only 2 price ranges have we seen days of inventory increase - between $25K and $50K (up 31%) and between $1.5M and $2M (up 3%). The largest drops can be seen between $50K to $75K (down 58%) and over $3M (down 35%). The latter makes a big difference to the top end of the market. It is not due to a decrease in active listings, but to a large increase in the annual sales rate.

Significant falls in days of inventory apply all the way from $50K up to $1.5M. This is no surprise for the price ranges up to $500K, but unlike last year we are seeing major improvements between $500K and $1.5M.

All the above are for single-family detached properties within Greater Phoenix.

September 2 - At 7.9% the annual appreciation rate (based on monthly average $/SF) just hit the highest mark in August since June 2014. This is measured for all areas & types within the ARMLS database. The lowest point in between then and now was March 2015 with just 1.0%.

September 1 - In August we saw the largest number of Notices of Trustee Sales since August 2016, when there were 698. The August 2017 total of 689 was up 29% from July. Mind you, 15% of that increase was due to the trustees having 15% more working days in August over July. The remaining 14% was a real increase and is the first time in several years that we have seen any negative signals from foreclosures.

One month does not make a trend, but it does suggest we need to pay a little more than zero attention to the foreclosure notices over the next few months.

August 2017

August 31 - The Cromford® Market Index table for the single-family markets in the largest cities by dollar volume looks like this:

We see 10 cities improving for sellers over the last month and 7 cities showing deterioration.

The most significant deterioration can be seen in Avondale (now down to 6th place after staying in number 1 position for well over a year). Other cities with major drops are Glendale and Cave Creek.

Big improvements can be seen in Fountain Hills, Paradise Valley, Chandler, Scottsdale and Tempe.

All of these cities except Buckeye are in a seller`s market. Mesa is now well out in front though we are no longer seeing a big change compared with last week.

August 30 - The Cromford® Market Index for all areas & types has just about run out of upward momentum. Today it stands at 158.0, the same as 7 days ago. The Supply Index remains very low at 63.9 but shows little sign of going much lower. We usually start to see supply increase during September. Demand has been gently fading for some time and the Demand Index is close to normal at 100.9.

This year there has very little fluctuation in demand. The high point was 106.3 in early April. We are now at the lowest demand level since March 8, 2016.

Supply remains weak because we are simply not seeing enough new listings to replenish those that go under contract. However there has been a very slight increase in the number of new listings during the third quarter compared with last year. It would not surprise me if the current Supply Index reading of 63.9 turns out to be the lowest of the year. Last year the lowest point was 70.2 and was reached in mid September. If the Supply Index does drop further this year, it will no doubt be by a very small amount and it is very likely to be higher by the end of September.

August 29 - The S&P / Case-Shiller® Home Price Index® report for the period April through June was published today and based on the month to month changes here is a ranking of the 20 cities covered in detail:

  1. Detroit 1.45%
  2. Seattle 1.45%
  3. Las Vegas 1.00%
  4. Minneapolis 0.98%
  5. Portland 0.88%
  6. Chicago 0.87%
  7. San Diego 0.85%
  8. Charlotte 0.82%
  9. Denver 0.79%
  10. Phoenix 0.77%
  11. Dallas 0.76%
  12. Boston- 0.74%
  13. Los Angeles 0.70%
  14. San Francisco 0.68%
  15. Washington DC 0.66%
  16. New York 0.61%
  17. Cleveland 0.58%
  18. Atlanta 0.57%
  19. Tampa 0.48%
  20. Miami 0.44%

Phoenix is right there in the middle of the pack, but well below the national average of 0.95%.

Looking at the year over year changes, here is the ranking:

  1. Seattle 13.39%
  2. Portland 8.16%
  3. Dallas 7.66%
  4. Denver 7.59%
  5. Detroit 7.56%
  6. Las Vegas 7.25%
  7. San Diego 7.08%
  8. Tampa 6.88%
  9. Boston 6.24%
  10. San Francisco 6.06%
  11. Charlotte 6.03%
  12. Phoenix 5.79%
  13. Minneapolis 5.70%
  14. Los Angeles 5.61%
  15. Atlanta 5.23%
  16. Miami 4.96%
  17. New York 3.88%
  18. Chicago 3.25%
  19. Washington DC 3.07%
  20. Cleveland 2.86%

Phoenix is close to the middle again and almost exactly at the national average of 5.77%.

So in the longer term view Phoenix is performing very close to the national average, and slightly below average over the short term. Nothing very exciting there. Seattle is now the runaway spot for high appreciation.

August 28 - Though the single-family permit counts for July were healthy, the multi-family permit counts collapsed to just 85, down from 318 in July 2016.

The 12 month total is still elevated at 8,862 but has fallen for 3 consecutive months.

It is looking like April 2017 may have been the peak for multi-family permits in Maricopa and Pinal Counties. The 12 month total in April was 10,587, the fourth highest number in history.

August 27 - The Census Bureau has published the permit counts for July and the total single-family number for Maricopa and Pinal Counties is 1,844. This is up over 33% from 1,382 in July 2016, a big bounce back after last month's year over year decline. The average month over the last year has produced 1,629 permits so July has pulled us ahead of the the curve at last.

Phoenix has overtaken Mesa in the year to date permit count and the top 10 looks like this:

  1. Phoenix - 1,618 (1,512)
  2. Mesa - 1,550 (1,263)
  3. Unincorporated Pinal County - 1,246 (902)
  4. Buckeye - 1,228 (803)
  5. Peoria - 1,121 (952)
  6. Gilbert - 1,048 (1,043)
  7. Queen Creek - 709 (657)
  8. Goodyear - 684 (620)
  9. Maricopa - 674 (329)
  10. Scottsdale - 424 (466)

The numbers in parentheses are the equivalent counts from 2016 year to date. Only Scottsdale went backwards. The significant growth in Maricopa and Buckeye suggests that many builders are trying to address the supply shortage at the entry level.

August 26 - The market is getting more interesting. We have trends in both directions in both supply and demand, depending on which segment we are looking at. One of the most useful ways of measuring demand is looking at annual sales rates. Using annual sales rates removes the distortions caused by seasonal effects that we see when we look at monthly or quarterly sales rates. In a healthy market we expect to see gradually increasing annual sales rates. However in some parts of the market a lack of supply is crimping sales, while other segments are increasing or decreasing for reasons which are not obvious.

Annual sales rates are currently declining in the following:

  • Avondale
  • Chandler
  • Gilbert
  • Goodyear
  • Laveen
  • Sun Lakes

Annual sales rates are currently increasing in the following:

  • Arizona City
  • Cave Creek
  • Glendale
  • Gold Canyon
  • Mesa
  • Paradise Valley
  • Peoria
  • Queen Creek
  • Scottsdale
  • Sun City
  • Sun City West
  • Surprise
  • Tempe

Sun City is seeing the fastest rise in annual sales rates, up from 1,215 this time last year to 1,378 now.

Inexpensive to mid-price homes targeted for the over 55 age group are definitely a hot item at the moment.

August 25 - The Cromford® Market Index for the single-family markets in the 17 largest cities by dollar volume:

Here we see 10 cities improving for sellers over the past month and 7 deteriorating. Like last week, we are seeing some large changes over the month. Big gains for Fountain Hills, Paradise Valley, Chandler, Scottsdale, Gilbert, Mesa and Surprise are balanced by steep declines for Avondale, Glendale and Cave Creek.

16 of the 17 cities are seller's markets, the only exception being Buckeye which is a balanced market.

August 24 - Phoenix is the 5th largest city in the USA by population with 1,615,017 inhabitants according to the 2016 census estimate. It is the largest state capital city in the country by far, with Austin TX the next contender with only 947,890 inhabitants. Tucson is the next largest city in Arizona and ranks 33rd in the country with 530,706. Mesa is the 3rd largest city in Arizona and ranks 36th in the USA with 484,587. However Mesa is growing over 5 times as fast as Tucson and will probably overtake Sacramento, state capital of California within the next 5 years. Chandler is the 4th largest city in Arizona with 247,477 inhabitants and ranks 84th in the USA.

Scottsdale is the 5th largest city in Arizona with a population of 246,645 and ranks 85th in the USA. From a housing market perspective, Scottsdale is more significant because at around $240 its average price per sq. ft. is 71% higher than Mesa. This makes is the 2nd largest market by dollar volume in Central Arizona. Here is how the various ZIP codes within Scottsdale compare on a similar basis to yesterday's analysis of the days of inventory in Mesa:

  1. 85257 - 50.3 (65.9)
  2. 85250 - 55.0 (88.9)
  3. 85260 - 60.3 (98.7)
  4. 85251 - 80.5 (104.1)
  5. 85254 - 82.3 (90.0)
  6. 85258 - 85.1 (138.2)
  7. 85259 - 97.1 (147.1)
  8. 85255 - 151.5 (177.3)
  9. 85266 - 176.4 (216.4)
  10. 85262 - 260.9 (331.5)

There is obviously a big change as we move north of Bell Road. There are far more homes available to the north of Bell Road than to the south. However all of the inventory numbers are lower than the long term averages.

The situation in Scottsdale is very different from last year with far fewer homes available for sale especially below $1 million.

August 23 - We already know Mesa is an extremely strong seller's market at the moment with only 45.1 days of inventory. As the second largest city in our region by population, it makes sense to break it down into ZIP codes in the same way we did for Phoenix and try to figure out exactly what is going on.

  1. 85204 - 31.7 (43.4)
  2. 85206 - 36.6 (77.3)
  3. 85209 - 39.9 (70.1)
  4. 85205 - 39.4 (67.0)
  5. 85202 - 39.7 (46.8)
  6. 85201 - 40.8 (47.3)
  7. 85208 - 41.1 (94.0)
  8. 85210 - 42.7 (46.8)
  9. 85215 - 43.6 (120.5)
  10. 85203 - 49.6 (58.8)
  11. 85212 - 49.6 (73.8)
  12. 85213 - 65.0 (78.6)
  13. 85207 - 66.7 (99.7)

It is NOT simply a story of the low priced areas having less supply than the higher priced one. 85204 is at the top of the table, but we usually see 85210 and 85201 behaving similarly. Compared with the normal level, an extraordinarily low supply situation exists in 85205, 85206, 85208, 85209 and especially 85215. 85215 is one of the more expensive areas of Mesa but it does have a lot of subdivisions focused on the over 55 age group. Just as we saw with Sun City and Sun City West, 85215 sellers are benefiting from a strong inward migration of retirement age population.

The inventory chart for 85215 is one of the most remarkable collapses in supply we have ever seen. 85208 is not quite so impressive, but still a very scary chart for buyers. I recommend that you take a look at the Days of Inventory Tableau Chart and select 85215 or 85208 from the filters.

85207 and 85213 are the most expensive areas of Mesa and they have a higher inventory number, but both numbers are well below normal which indicates that even here buyers have a much less choice than usual. Unlike Phoenix, Mesa has no ZIP codes where the current reading is higher than the long term average. Mesa is clearly experiencing a much more serious supply shortage than the City of Phoenix..

August 22 - Phoenix is a big city and it landed yesterday at number 22 in the middle of our list based on days of inventory. So today let us break it down into ZIP codes and rank them according to the same measurement:

  1. 85027 - 24.8 (40.2)
  2. 85033 - 32.2 (51.6)
  3. 85019 - 33.0 (51.7)
  4. 85053 - 38.0 (48.2)
  5. 85031 - 41.5 (52.9)
  6. 85035 - 42.7 (50.1)
  7. 85037 - 45.0 (43.7)
  8. 85032 - 45.6 (64.1)
  9. 85040 - 47.0 (52.0)
  10. 85009 - 48.6 (70.0)
  11. 85029 - 49.1 (57.4)
  12. 85043 - 50.6 (46.9)
  13. 85022 - 51.7 (68.0)
  14. 85023 - 53.6 (62.2)
  15. 85017 - 55.6 (59.0)
  16. 85024 - 56.2 (55.6)
  17. 85042 - 56.5 (64.2)
  18. 85044 - 58.5 (72.5)
  19. 85051 - 58.5 (57.3)
  20. 85015 - 60.6 (72.8)
  21. 85041 - 60.8 (62.8)
  22. 85008 - 62.4 (63.1)
  23. 85014 - 62.4 (75.3)
  24. 85020 - 65.5 (82.9)
  25. 85028 - 70.1 (88.2)
  26. 85006 - 70.8 (64.6)
  27. 85083 - 71.6 (75.6)
  28. 85050 - 71.8 (69.8)
  29. 85013 - 76.2 (79.1)
  30. 85048 - 80.4 (82.1)
  31. 85021 - 85.2 (95.3)
  32. 85054 - 93.8 (138.8)
  33. 85085 - 96.6 (90.0)
  34. 85034 - 97.3 (80.9)
  35. 85016 - 99.7 (107.7)
  36. 85007 - 103.1 (110.7)
  37. 85018 - 103.7 (113.8)
  38. 85045 - 117.9 (105.5)
  39. 85012 - 167.4 (122.2)
  40. 85004 - 198.8 (154.7)
  41. 85003 - 203.1 (156.6)

Here we see the West Side of Phoenix with the lowest inventory though 85032 and 85040 are in the top 10. The locations with the highest inventory relative to demand are downtown, uptown, West Ahwatukee, Arcadia & the Biltmore District..

There are quite a few ZIP codes with more inventory than their long term average - unusual for the present time. These are 85037, 85043, 85024, 85051, 85006, 85050, 85085, 85034, 85045, 85012, 85004 and 85003. Phoenix contains more than its fair share of areas that are cool relative the overall market.

August 21 - Let us take stock of the current situation by looking at one of our favorite metrics - days of inventory. Here we will use inventory excluding the thousands of UCB and handfuls of CCBS listings and count only the listings in active status with no caveats. We will however use all property types. We will rank the cities by current days of inventory, where the lower the number the better the market is for sellers. We also give the long term average for comparison:

  1. Youngtown 27.4 (41.6)
  2. Sun City West 28.8 (94.3)
  3. Sun City 30.3 (88.2)
  4. Tolleson 32.2 (54.3)
  5. El Mirage 33.2 (38.2)
  6. Sun Lakes 33.8 (110.6)
  7. Mesa 45.1 (long term average 71.8)
  8. Avondale 45.2 (48.2)
  9. Chandler 46.1 (64,2)
  10. Gilbert 46.6 (63.2)
  11. Glendale 48.0 (56.5)
  12. Coolidge 51.5 (107.8)
  13. Arizona City 52.1 (111.0)
  14. San Tan Valley (Queen Creek in Pinal County) 52.6 (70.8)
  15. Laveen 53.5 (62.0)
  16. Tempe 55.2 (66.6)
  17. Surprise 56.2 (79.5)
  18. Anthem 57.0 (84.7)
  19. Peoria 60.1 (74.1)
  20. Casa Grande 63.6 (110.7)
  21. Maricopa 64.7 (84.4)
  22. Phoenix 65.1 (71.1)
  23. Florence 69.2 (151.6)
  24. Apache Junction 70.0 (112.6)
  25. Waddell 70.8 (97.4)
  26. Queen Creek (Maricopa County) 72.4 (88.1)
  27. Litchfield Park 73.3 (84.4)
  28. Goodyear 76.0 (85.4)
  29. Buckeye 80.5 (84.6)
  30. Eloy 98.7 (180.2)
  31. Gold Canyon 100.8 (186.3)
  32. Scottsdale 103.1 (136.0)
  33. Cave Creek 114.5 (134.8)
  34. Tonopah 116.8 (132.2)
  35. Fountain Hills 119.5 (166.8)
  36. New River 131.2 (128.9)
  37. Wittmann 148.4 (132.3)
  38. Rio Verde 179.5 (414.1)
  39. Carefree 214.1 (343.3)
  40. Paradise Valley 238.3 (288.0)
  41. Wickenburg 243.3 (362.5)

Areas that cater primarily to older buyers dominate the top of the chart for several reasons:

  • this is the time of year when listings are usually at their seasonal low point in these areas
  • population growth in Arizona is heavily skewed in favor of those over 50 and against those under 20
  • there is little to no new housing supply being built in these areas

Almost all areas are well below their long term average days of inventory. The only exceptions in the list above are Wittmann and New River.

There are several locations in Pinal County that are dramatically below their long term average, including Coolidge, Florence, Arizona City, Casa Grande, Eloy and Gold Canyon.

August 20 - There are 37,463 people on the ARMLS roster, which is up 6.2% from a year ago when there were 35,280. There are 10 different types of people on the roster:

  1. Realtor (31,231)
  2. Designated Realtor (3,201)
  3. Office Staff (1,276)
  4. Affiliate Key (961)
  5. Appraiser (466)
  6. MLS Staff (200)
  7. Sales Person (91)
  8. Waiver (28)
  9. Affiliate (7)
  10. Vendor (2)

Last year the counts looked like this:

  1. Realtor (29,424)
  2. Designated Realtor (3,187)
  3. Office Staff (1,138)
  4. Affiliate Key (866)
  5. Appraiser (435)
  6. MLS Staff (182)
  7. Sales Person (49)
  8. Affiliate (4)

This shows a 6.1% growth in the Realtor category. Over the past year there has been 94,564 total closed listings through ARMLS, an 8.7% increase over the 86,975 in the year before that. In addition pricing has increased so that the total annual dollar revenue is running at $27,417,112,220, up from $23,616,060,825. The revenue is up 16.1%, which would tend to indicate that commissions are also up by a similar amount.

If we include Designated Realtors and Sales Persons we see a total of 34,523 people earning commissions compared with 32,660 last year, an increase of 5.7%

With 16.1% more commission shared by 5.7% more people, the average person is earning 9.8% more commission than this time last year.

Average dollars per person is currently $794,169, up from $723,088 this time last year.

So homes, having appreciated by an average of 6.6% are more affordable for the average realtor than they were a year ago, if not for everyone else.

August 19 - There has been a very slight increase in the number of new listings coming onto the market compared with a year ago. We now have 0.79% more new listings year-to-date than at the same point in 2016 and 1.4% more than during the third quarter to date last year. It's not much, just 204 more listings than in the July 1 to August 19 period last year, but there is a small sliver of comfort there for some buyers. We are not going to get excited though. We would probably need a sustained increase of around 5% to offer any substantial relief to the overall supply shortage. At the moment that is not looking likely.

August 18 - It is time again to take a look at the Cromford® Market Index for the single-family markets in the largest 17 cities by dollar volume:

There is much more change over the past month than than usual. It is change in both directions as the Southeast Valley and Northeast Valley get stronger while the Central Valley, West Valley and Pinal County get weaker.

Among the West Valley cities, Avondale has slipped the most, falling from an almost unassailable first place to 4th in just 3 weeks. Glendale too is becoming more favorable for buyers while Buckeye continues to move towards a balanced market.

Mesa and Chandler are leading the advance for the Southeast Valley with Gilbert and Queen Creek not far behind. They now dominate the top section of the chart with only Surprise putting up any resistance for the West Valley.

Cave Creek is the exception, but the other Northeast Valley cities are improving for sellers at a good pace. This includes Scottsdale (up 9%), Fountain Hills (up 13%) and Paradise Valley (up 11%).

Phoenix continues to slip gently lower with many of its less expensive areas losing some of the seller's advantage they have enjoyed for many years.

Maricopa is also slipping backwards and although they are not big enough to make the top 17, Casa Grande and Apache Junction are also deteriorating for sellers. Florence and Gold Canyon are improving however.

The shifts in the market correspond with price ranges. More supply is coming on stream for the price ranges from $125,000 to $200,000 while homes priced between $250,000 and $600,000 are getting harder to find. The latter range particularly favors areas like Scottsdale, Gilbert, Chandler and Mesa.

August 17 - Now that we have complete and corrected recordings for July 2016, I feel I should point out that the sales decline from June to July was the largest percentage we have seen in the last 7 years. So while supply remains a problem - it is stubbornly low - demand seem to be declining. Maybe buyers are getting discouraged by the lack of supply and the constant competition?

Here are the declines in closings for July compared with June:

  • 2011 - down 14%
  • 2012 - down 4%
  • 2013 - up 3%
  • 2014 - down 5%
  • 2015 - down 7%
  • 2016 - down 14%
  • 2017 - down 18%

This is not what happens in a bubble, but it is what happens when a market starts to run out of steam. It is far too early to be certain, but it would not be surprising if demand started to fade and get closer to the feeble supply. Rising prices are supposed to work like that. One month does not make a trend, however, and we shall have to see if the same sort of thing happens in August.

August 16 - Home ownership is often claimed to be a key part of the American Dream, but according to Wikipedia the USA ranks 41st in the world for home ownership rates, with 64.5% of homes being owner-occupied. Mind you this is one rung better than the UK on 63.5%. Mexico is ranked 16th and has a 80.0% home ownership rate and Canada is ranked 35th at 67.6%. So the USA has the lowest home ownership rate in North America.

You would probably not be likely to guess the top 10 ranking countries by home ownership.

  1. Romania 96.4%
  2. Singapore 90.8%
  3. Slovakia 90.3%
  4. Cuba 90.0%
  5. Croatia 89.7%
  6. Lithuania 89.4%
  7. India 86.6%
  8. Hungary 86.3%
  9. Russia 84.0%
  10. Poland 83.5%

August 15 - The total number of active listings for all areas and types, including those in UCB and CCBS status, is 21,657. This is the lowest we have recorded since August 2013. Only in 2004, 2005, 2012 and 2013 have active listings been this low before. While some areas & price ranges are doing better than others, the overall supply is very low representing only 84 days of inventory. We consider 120 to 150 days normal.

August 14 - There were 842 multi-family permits issued in June within Maricopa and Pinal Counties. This is a very similar number to the previous 3 months. However June 2016 had a colossal total of 2,131 permits, so the year over year comparison is rather weak. The year to date total at the half-way mark is 4,313, which is down 11% compared to last year. The 12 month rolling total stands at 9,095, which is high by historic standards but the lowest reading since October 2016.

 

Could it be that the multi-family building boom has passed its peak?

August 13 - It is time we looked at the rental market again. Across all areas & types we have 3,082 active listings (not including vacation rentals). That is only slightly lower (down 2.5%) than August 13, 2016 when we had 3,160. A year ago we were seeing 2,705 closed leases through ARMLS per month. This year we are closing 2,607 per month, down 3.6%, The supply stands at 1.2 months, the same as last year.

So last year we were short of supply and nothing much has changed, except for prices.

Last year the average lease was signed at 84.7 cents per sq. ft. per month This year we are looking at 88.3 cents. That is an increase of 4.3%. This is a significant increase when inflation is below 2%, and is very similar to the rate of increase we measured a year ago.

In conclusion, the rental market looks remarkably similar to a year ago.

August 12 - The Black Knight Financial Services Mortgage Monitor report for June tells us that all states are experiencing lower home loan delinquency than last year, with the exception of Alaska. For Arizona, we have 2.7% of first homes loan with some form of delinquent payment, whether it be a trivial or serious amount. Less than 90 days late is normally not considered seriously delinquent. We also have another 3% of loans that already in the foreclosure process. Last year these figures were 3.0% and 0.4% respectively.

States with extremely strong home appreciation are seeing some of the lowest delinquency rates (Washington, Colorado, Oregon, Idaho, California).

The worst states for loan delinquency are in the deep south - Mississippi, Louisiana and Alabama,

August 11 - Although it is subject to seasonal effects, the contract ratio is a useful tool for examining the state of a segment of the market. If the contract ratio is rising then the market is heating up and if it is falling the market is cooling. It is quite normal for the market to cool during the third quarter since the second quarter is when the peak buying takes place. So anywhere where the contract ratio is higher in August than it was at the beginning of June is bucking the trend and doing well. Here are how the price ranges compare (August 10 versus July 1, all property types):

Price RangeContract Ratio Jul 1, 2017Contract Ratio Aug 10, 2017% ChangeComments
Under $100K 69.3 67.7 -2.3% cooling off as normal
$100K-$125K 114.9 122.0 +6.2% getting hotter
$125K-$150K 145.2 130.6 -10.0% cooling off more than normal
$150K-$175K 140.4 122.4 -12.8% cooling off more than normal
$175K-$200K 117.5 117.8 +0.2% steady
$200K-$225K 98.0 97.3 -0.7% steady
$225K-$250K 82.9 103.3 +24.6 heating up much more than normal
$250K-$275K 76.9 80.0 +4.1% heating up
$275K-$300K 71.4 68.4 -4.2% cooling off as normal
$300K-$350K 62.8 62.5 -0.5% steady
$350K-$400K 51.6 54.0 +4.8% heating up
$400K-$500K 41.9 43.6 +4.1% heating up
$500K-$600K 33.0 36.5 +10.6% heating up much more than normal
$600K-$800K 28.7 30.3 +5.6% heating up
$800K-$1M 22.3 25.5 +14.1% heating up much more than normal
$1M-$1.5M 19.8 19.6 -1.0% steady
$1.5M-$2M 14.8 13.5 -9.0% cooling off as normal
$2M-$3M 10.0 8.1 -18.6 cooling rapidly
Over $3M 8.2 7.6 -8.2% cooling off as normal

 

We mentioned (on August 7) signs of cooling in the $150K to $200K price range for single family homes. However this is swamped by the heating up in several of the higher markets, particularly $225K-$250K and $350K-$1M.

Overall this table is unusually positive with the exception of the market over $1 million and between $125K and $175K.

August 10 - Let us take another look at the Cromford® Market Index for the single-family markets in the 17 largest cities by dollar volume:

 

 

Mesa has consolidated its lead over Avondale at the top of the table and we have 10 cities showing improvement for sellers and 7 showing deterioration. The West Valley again dominates the cities going backwards, with Avondale, Glendale, Peoria and Buckeye in retreat. However Surprise and Goodyear continue to improve.

 

The Northeast Valley is doing much better than at the start of the year, with Paradise Valley, Fountain Hills and Scottsdale all up sharply over the last month. Only Cave Creek has retreated.

 

The Southeast Valley is looking particularly healthy for sellers with Mesa, Chandler, Gilbert, Tempe and Queen Creek all posting strong advances. However Maricopa is now weakening.

 

Phoenix itself has been moving quietly backwards for many weeks now but remains a seller's market by a wide margin. Buckeye, adrift from the others at the bottom of the table, is looking like a balanced market with its exceptionally strong supply.

 

August 9 - Delving further into average time on market for monthly sales, we can see the following ZIP codes have the lowest average time on market for single-family homes:

 

  1. Phoenix 85004 - 19 (no sales in July 2016)
  2. Phoenix 85006 - 26 (down from 63 in July 2016)
  3. Phoenix 85009 - 28 (down from 50)
  4. Surprise 85378 - 29 (down from 40)
  5. Chandler 85224 - 30 (down from 52)
  6. Glendale 85307 - 31 (up from 28)
  7. El Mirage 85335 - 32 (down from 34)
  8. Mesa 85202 - 32 (down from 49)
  9. Mesa 85204 - 34 (down from 44)
  10. Avondale 85323 - 34 (down from 47)

 

At the other end of the scale we find:

 

  1. Rio Verde 85263 - 305 (up from 152)
  2. Scottsdale 85262 - 199 (down from 298)
  3. Paradise Valley 85253 - 190 (up from 143)
  4. Scottsdale 85266 - 179 (down from 226)
  5. Fountain Hills 85268 - 154 (up from 126)
  6. Casa Grande 85194 - 152 (up from 129)
  7. Wickenburg 85390 - 151 (up from 94)
  8. Phoenix 85003 - 150 (up from 88)
  9. Scottsdale 85255 - 138 (up from 128)
  10. Wittmann 85361 - 132 (up from 108)

August 8 - Average time on market for monthly sales across all areas & types is down to 66 days. This is the lowest level since 2013 and confirms the current market strength. Days on market is useless as a predictive tool but it is a reliable trailing indicator. It also allows us to compare different sectors:

  • Northeast Valley - 122 (129 last year)
  • Phoenix - 59 (61 last year)
  • Southeast Valley 56 (65 last year)
  • West Valley 60 (63 last year)

The above numbers are for single-family detached homes only.

All areas have improved but the Southeast Valley has improved the most.

August 7 - When the market is as strong as it has been of late, it is even more important to keep an eye out for any small signs of weakness, lest we get complacent. The bellwether locations are generally in the less expensive parts of the valley. For example, Maricopa and what we now call San Tan Valley (but was then still referred to as Queen Creek) both started to show very significant market weakness during the second half of 2005. It is still too early to determine its significance, but there are some signals to watch coming from these locations again.

Active listing counts (excluding UCB and CCBS) have been growing for the price range between $150,000 and $200,000 across the whole valley in the last few weeks, but in particular Maricopa 85138, San Tan Valley 85140 and 85143 have shown a sudden surge upwards from 191 to 253 in a matter of just 5 weeks. This is still not a lot of listings, since we had 311 this time last year, but the trend had been solidly downwards since the end of 2014. The size of the increase (32%) and the speed (5 weeks) makes us take notice and try to find out the underlying details. The Days of Inventory chart shows 32 days on July 1 turning into 41 days on August 5 and crossing the Annual Average line (35), a negative signal. July sales were 158, down from 178 in July 2016, an 11% drop and the first year over year decline in the sector since 2014. Indeed, we haven't seen negative signals in this small market sector since 2014.

The recent trend is nothing to get alarmed about just yet, but it is something to watch to see if it develops further or fades away.

August 6 - Here is a warning to anyone who is trying to count lender owned / REO properties on ARMLS. Fannie Mae has launched a doublethink campaign to force all its listing agents to delete the "Lender Owned/REO" special listing condition from Fannie Mae listings. This is apparently on the basis that Fannie Mae is not a lender. They just buy millions of mortgages.

Just as in George Orwell's 1984, "war is peace", "ignorance is strength" and now "Fannie Mae owned homes are not REOs".

Actually Fannie Mae does agree that they are REOs, but there is no special listing condition for REOs, only "Lender Owned/REO" and Fannie Mae is unable to interpret the slash as an OR, for reasons only they understand.

In Cromford Report statistics, all Fannie Mae listings are counted as REOs, whether they are marked as such in the listing or not. This is because we scan every listing remarks (both public and private) for the key words: Homepath, Fannie, Freddie, Homesteps, etc. We do not take the Special Listing Conditions as anything more than a suggestion. We are increasingly glad we do this.

In Cromford Public charts, we distinguish between 3 subtypes of REOs:

  1. HUD owned homes
  2. GSE owned homes (Fannie Mae, Freddie Mac, etc)
  3. Bank owned homes

The further down this list you go, the higher the average sales price.

August 4 - Very interesting changes are afoot in the Cromford® Market Index world. Below is the table for the largest single-family markets comparing today with this time last month.

The first big news is that we have a new number one at last. Mesa has finally displaced Avondale which until this week had sat at the top of the table ever since we first published it in January 2016. Avondale is the fastest deteriorating market over the past month, from a seller's perspective, though with a CMI of 183.5 it is still not a welcoming spot for buyers just yet. Demand has been weakening in Avondale while supply has been increasing, but they are still nowhere near the balance point.

Neighboring Glendale is also looking weaker and has slipped from third to fifth place. Buckeye is weaker too, adrift from the other 16 cities at the bottom of the table. Phoenix too is down, though only by a modest 3% over the last month. On the west side, Surprise is still doing well while Goodyear is making slow progress.

In the Eastern half of the valley, the market is gaining significant strength:

  1. Paradise valley up 14%
  2. Scottsdale up 9%
  3. Fountain Hills up 8%
  4. Tempe up 7%
  5. Gilbert up 6%
  6. Queen Creek up 6%
  7. Mesa up 5%
  8. Chandler up 5%

Other market indicators also suggest that we are seeing market strength shifting upmarket from the lowest price ranges to the mid-ranges. The price range from $300,000 to $500,000 is very healthy at the moment. For single-family homes in July 2017, it represented 31.2% of all dollars spent, up from 29.1% in July 2016, 26.9% in July 2015 and 24.7% in July 2014. The price ranges below $150,000 are now insignificant in size, with only 1.7% of the spending, but they are also in a cooling trend.

August 3 - We now have the Census Bureau counts for building permits in Arizona during June. For single-family permits, there was a slight slowdown despite the ongoing housing supply shortage. The census counted only 1,800 permits across Maricopa and Pinal Counties during June, which is down 7.5% compared with June 2016.

The 12 month total is 19,086, down from 19,232 last month.

The year-to-date (half-year) total is 10,423, which is up 7.2% compared with 2016 at this point, but still a long way behind the years 1996-2007. The lowest June year-to-date total during that period was 1997 when we saw 15,475. To be fair though, 2017 had the biggest first half-year since 2007.

Phoenix is making a brave attempt to catch up with Mesa in the permit stakes. Here are the year-to date numbers by city or named place:

  1. Mesa - 1,376
  2. Phoenix - 1,318
  3. Buckeye - 1,019
  4. Unincorporated Pinal County - 1,016
  5. Gilbert - 946
  6. Peoria - 920
  7. Goodyear - 607
  8. Queen Creek - 604
  9. Maricopa - 590
  10. Scottsdale - 367
  11. Surprise - 337
  12. Unincorporated Maricopa County - 335
  13. Chandler - 275
  14. Avondale - 112
  15. Glendale - 100
  16. Florence - 97
  17. Wickenburg - 92
  18. Eloy - 60
  19. Casa Grande - 51
  20. Paradise Valley - 42
  21. Litchfield Park - 40
  22. Fountain Hills - 37
  23. Tempe - 19
  24. Carefree - 18
  25. Cave Creek - 16
  26. Apache Junction - 15
  27. El Mirage - 5
  28. Tolleson - 3
  29. Coolidge - 1

It is easy to see why Buckeye has a lower Cromford® Market Index than most large cities. It is expanding its housing supply much faster relative to its existing population (64,629 in 2016). Buyers will find it much easier to buy in Buckeye than almost anywhere else in the valley.

Mesa is number one in permits but it remains under-supplied for homes and ranks second in our weekly CMI table for large cities. Although relatively unknown outside Arizona, Mesa's population is ranked 38 in the top 100 cities in the USA by population (it had 484,587 inhabitants in 2016). Mesa is larger than Atlanta GA, Miami FL, Minneapolis MN, Cleveland OH and New Orleans LA. It ranked only 53rd in 1990.

It is also see why San Tan Valley might feel it deserves to be incorporated. It is the dominant factor in the numbers for Unincorporated Pinal County and ranks almost as big as Buckeye for new home permits.

For large cities, Chandler and Glendale have issued very few single-family permits in 2017.

August 2 - The overall number of active listings (excluding UCB and CCBS) on ARMLS as of August 1 was 17,412. This is down 12% from 19,711 on August 1, 2016, so the overall trend is very much downwards, providing little relief or hope for buyers faced with the chronic shortage of properties for sale across all but the highest price levels. However there are some areas where active listing counts have increased over the past 12 months. The ZIP codes below are going against the overall trend in a big way, counting their single-family active listings (excluding UCB and CCBS):

  1. Fort McDowell 85264 - up 400% from 1 to 5
  2. Phoenix 85004 - up 150% from 2 to 5
  3. Phoenix 85051 - up 86% from 37 to 69
  4. Superior 85173 up 75% from 12 to 21
  5. Gila Bend 85337 up 67% from 3 to 5
  6. Phoenix 85037 - up 66% from 44 to 73
  7. Phoenix 85006 - up 53% from 32 to 49
  8. Mesa 85201 - up 48% from 23 to 34
  9. Phoenix 85033 - up 44% from 39 to 56
  10. Phoenix 85040 - up 43% from 21 to 30
  11. Phoenix 85024 - up 42% from 57 to 81
  12. Phoenix 85012 - up 41% from 22 to 31
  13. Phoenix 85031 - up 32% from 25 to 33
  14. Phoenix 85043 - up 32% from 47 to 62
  15. Peoria 85345 - up 27% from 62 to 79
  16. Tempe 85281 - up 25% from 44 to 56

This list is not long and includes some ZIP codes with tiny numbers (which means they can easily see a large percentage change). However it is biased towards the West Valley and Phoenix. It also includes a couple of previous areas in the Southeast Valley which have been through periods of very low inventory (85201 and 85281) and 3 spots way out of town (Superior, Gila Bend & Fort McDowell).

August 1 - While we all know that inventory is low, it is much lower in some areas than others. Examining the change in single-family active listing counts (excluding UCB and CCBS) for the various ZIP codes, we some enormous declines over the past 12 months in the following locations:

  1. Coolidge 85128 - down 50% from 70 to 35
  2. Gilbert 85233 - down 49% from 123 to 63
  3. Tonopah 85354 - down 43% from 21 to 12
  4. Mesa 85215 - down 41% from 83 to 49
  5. Casa Grande 85122 - down 40% from 203 to 122
  6. Glendale 85305 - down 39% from 41 to 25
  7. Chandler 85249 - down 38% from 272 to 170
  8. Chandler 85286 - down 38% from 179 to 111
  9. Gilbert 85234 - down 38% from 152 to 94
  10. Sun Lakes / Chandler 85248 - down 35% from 196 to 128
  11. Mesa 85212 - down 35% from 162 to 105
  12. Mesa 85208 - down 33% from 63 to 42
  13. Mesa 85206 - down 33% from 83 to 56
  14. Phoenix 85008 - down 33% from 67 to 45
  15. Apache Junction 85119 - down 32% from 97 to 66
  16. Scottsdale 85260 - down 32% from 162 to 111
  17. Glendale 85306 - down 32% from 50 to 34
  18. Phoenix 85013 - down 31% from 67 to 46
  19. Mesa 85207 - down 30% from 247 to 172
  20. Phoenix 85054 - down 29% from 24 to 17
  21. Phoenix 85027 - down 29% from 51 to 36
  22. Mesa 85209 - down 28% from 95 to 68
  23. Florence 85132 - down 27% from 151 to 110
  24. Gilbert 85296 - down 27% from 136 to 100
  25. Chandler 85226 - down 26% from 91 to 67
  26. Scottsdale 85259 - down 26% from 202 to 150
  27. Surprise 85388 - down 25% from 119 to 89

These are the only ZIP code with reductions of 25% or more. We note that there is a very strong representation from the Southeast Valley, while the West Valley and Phoenix are under-represented. The Northwest Valley is also largely absent, though 85259 and 85260 are notable exceptions. Coolidge, Casa Grande and Florence in Pinal County are places seeing a large drop over the last 12 months.

In previous years it has been the lowest price areas seeing the biggest drops in inventory. This is no longer the case and some of those areas have more homes for sale than they did a year ago. The list above is dominated by areas with mid-range house prices.

July 2017

July 30 - The Census Bureau has not released the building permit counts for June yet. It is unusual that they are this late. However the director, John Thompson, resigned in June and no replacement has been named by the president. The deputy director, Nancy Potok, left in January and has not been replaced either. It seems that under-funding and lack of leadership may be taking its toll on the timeliness and quality of the data we receive.

July 28 - Here is the usual table of Cromford® Market Index values for the single-family markets in the 17 largest cities by dollar volume:

Sellers will be delighted to see only 4 cities saw deteriorating market conditions out of 17. However the city of Phoenix was one of them and it has slowly slipped backwards for some time.

The West Valley was the primary loser over the last month with Avondale, Glendale and Buckeye getting less favorable for sellers. Surprise saw the biggest improvement out west. Buckeye is the friendliest place for buyers with its months of supply increasing from 2.3 to 2.8 over the past 30 days.

The Northeast Valley continues to improve for sellers, particularly in Paradise Valley and Scottsdale.

The Southeast Valley cities were all winners over the last month, particularly Queen Creek. Tempe is recovering from its slump over the past 3 months and Mesa is even starting to threaten Avondale's now traditional place at the top of the table.

July 27 - The Case-Shiller® Home Price Index® report issued July 25 is now reflected in the Case-Shiller chart on the Cromford Report. The latest index reflects sales between March and May 2017. The ranking based on month to month changes is as follows:

  1. Seattle 1.79%
  2. Las Vegas 1.35%
  3. Cleveland 1.30%
  4. Portland 1.26%
  5. Tampa 1.12%
  6. Los Angeles 1.05%
  7. Detroit 1.04%
  8. San Diego 1.02%
  9. Minneapolis 1.01%
  10. Washington DC 1.01%
  11. Chicago 0.98%
  12. Atlanta 0.93%
  13. Charlotte 0.92%
  14. Denver 0.92%
  15. Miami 0.81%
  16. Boston 0.79%
  17. Dallas 0.70%
  18. Phoenix 0.62%
  19. San Francisco 0.50%
  20. New York 0.15%

Phoenix slipped from 14th to 18th place over the last month and was a long way behind the national figure of 0.98%.

Based on year over year changes in the HPI we see:

  1. Seattle 13.31%
  2. Portland 8.90%
  3. Denver 7.89%
  4. Dallas 7.77%
  5. Detroit 7.57%
  6. Las Vegas 6.93%
  7. Tampa 6.77%
  8. San Diego 6.58%
  9. Boston 6.13%
  10. Charlotte 6.05%
  11. Phoenix 5.73%
  12. Minneapolis 5.73%
  13. Los Angeles 5.59%
  14. Cleveland 3.58%
  15. Atlanta 5.48%
  16. San Francisco 5.37%
  17. Miami 5.28%
  18. New York 4.01%
  19. Washington DC 3.59%
  20. Chicago 3.34%

The prediction last November by Realtor.com that Phoenix would be the hottest market in the US in 2017 is now looking on very shaky ground. At number 11 out of 20, we are very close to the national average at 5.58%

July 26 - Yesterday we ranked the top ten cities by home sales, but the picture is very different if we only look at homes in Active Adult communities - Age Targeted or Age Restricted:

  1. Sun City - 2,468
  2. Mesa - 1,635
  3. Sun City West - 1,617
  4. Buckeye - 1,003
  5. Surprise - 902
  6. Peoria - 778
  7. Sun Lakes - 633
  8. Goodyear - 509
  9. Tucson - 373 (Saddlebrooke & Eagle Crest Ranch are in Pinal County)
  10. Chandler - 273

San Tan Valley & Florence are bubbling under the top ten but Phoenix and Scottsdale do not make the top 10 when it comes to 55+ sales.

These statistics are taken from our Cromford® Public charts.

July 25 - In term of home sales, the top ten cities rank as follows over the past 12 months, according to recorded deeds in Maricopa & Pinal Counties:

  1. Phoenix - 29,039
  2. Mesa - 12,846
  3. Scottsdale - 9,867
  4. Gilbert - 7,775
  5. Chandler - 7,012
  6. Peoria - 6,001
  7. Glendale - 5,751
  8. Surprise - 4,586
  9. San Tan Valley - 4,345
  10. Buckeye 3,562

Glendale has slipped in this table over the last decade, overtaken by the faster-building Gilbert, Chandler & Peoria. San Tan Valley & Buckeye have overtaken Avondale, Tempe & Goodyear, again because of their fast intake of new homes.

We note that San Tan Valley is not really a city, just an unincorporated part of Pinal County with its future role as a city in the hands of its much smaller neighbors: Queen Creek, Florence and (to a lesser extent) Apache Junction.

July 24 - For some strange reason a few media outlets are reporting a rise in Canadian purchases of US real estate as if this is some big new trend. No, purchases by Canadians in Maricopa County are still dismal, just not quite as low as last year. Here are the totals for June in the last 7 years:

  • 2011 = 421
  • 2012 = 326
  • 2013 = 185
  • 2014 = 126
  • 2015 = 70
  • 2016 = 36
  • 2017 = 44

Seen in this context it would have been surprising if they had dropped even lower than the 36 we saw last year, but it would be a mistake to get excited about a 22% increase when it it is still the second lowest total in the last 7 years.

There were 150 Maricopa home sales by Canadians in June, more than 3 times the number of purchases, so we still have an exodus going on. However last year we saw 244 sales so the outward migration by our hockey-loving friends is slowing down.

July 23 - Although the monthly average price per sq. ft. is declining slowly at the moment (in line with normal seasonal trends), the annual rate of appreciation, as measured by the 12 month change in the monthly average $/SF, has just hit 8% for the first time since May 2014. Clearly the monthly average fell faster during the 3Q of 2016 than it is falling in the 3Q of 2017.

All of the above data refers to the numbers for all areas & types within the ARMLS database.

July 26 - Yesterday we ranked the top ten cities by home sales, but the picture is very different if we only look at homes in Active Adult communities - Age Targeted or Age Restricted:

  1. Sun City - 2,468
  2. Mesa - 1,635
  3. Sun City West - 1,617
  4. Buckeye - 1,003
  5. Surprise - 902
  6. Peoria - 778
  7. Sun Lakes - 633
  8. Goodyear - 509
  9. Tucson - 373 (Saddlebrooke & Eagle Crest Ranch are in Pinal County)
  10. Chandler - 273

San Tan Valley & Florence are bubbling under the top ten but Phoenix and Scottsdale do not make the top 10 when it comes to 55+ sales.

These statistics are taken from our Cromford® Public charts.

July 25 - In term of home sales, the top ten cities rank as follows over the past 12 months, according to recorded deeds in Maricopa & Pinal Counties:

  1. Phoenix - 29,039
  2. Mesa - 12,846
  3. Scottsdale - 9,867
  4. Gilbert - 7,775
  5. Chandler - 7,012
  6. Peoria - 6,001
  7. Glendale - 5,751
  8. Surprise - 4,586
  9. San Tan Valley - 4,345
  10. Buckeye 3,562

Glendale has slipped in this table over the last decade, overtaken by the faster-building Gilbert, Chandler & Peoria. San Tan Valley & Buckeye have overtaken Avondale, Tempe & Goodyear, again because of their fast intake of new homes.

We note that San Tan Valley is not really a city, just an unincorporated part of Pinal County with its future role as a city in the hands of its much smaller neighbors: Queen Creek, Florence and (to a lesser extent) Apache Junction.

July 24 - For some strange reason a few media outlets are reporting a rise in Canadian purchases of US real estate as if this is some big new trend. No, purchases by Canadians in Maricopa County are still dismal, just not quite as low as last year. Here are the totals for June in the last 7 years:

  • 2011 = 421
  • 2012 = 326
  • 2013 = 185
  • 2014 = 126
  • 2015 = 70
  • 2016 = 36
  • 2017 = 44

Seen in this context it would have been surprising if they had dropped even lower than the 36 we saw last year, but it would be a mistake to get excited about a 22% increase when it it is still the second lowest total in the last 7 years.

There were 150 Maricopa home sales by Canadians in June, more than 3 times the number of purchases, so we still have an exodus going on. However last year we saw 244 sales so the outward migration by our hockey-loving friends is slowing down.

h the monthly average price per sq. ft. is declining slowly at the moment (in line with normal seasonal trends), the annual rate of appreciation, as measured by the 12 month change in the monthly average $/SF, has just hit 8% for the first time since May 2014. Clearly the monthly average fell faster during the 3Q of 2016 than it is falling in the 3Q of 2017.

All of the above data refers to the numbers for all areas & types within the ARMLS database.

July 22 - So much for the idea that homes are getting smaller. The annual average home size of homes sold as of today is 1,967 sq. ft. This higher than all but one of the readings on this date in the last 16 years.

Back in 2002 we saw an average of only 1,762 sq. ft.

July 21 - We often complain about the measurement "Months of Supply" because it can be dramatically affected by seasonal factors. This is why we usually prefer "Days of Inventory" instead, which is based on the annual sales rate instead of the volatile monthly sales rate. However if we are comparing a number of geographic areas with each other at a fixed point in time, the Months of Supply is a perfectly valid tool and has the advantage of of reflecting the market as it was in the most recent month rather than the last 12 months.

So let us compare selected areas based on their Months of Supply as of yesterday and for added interest let us take a look at what the number was this time last year. In the table below we are going to exclude UCB and CCBS listings since although they are still technically active, we find that 65% of these listings are no longer being marketed in the real world (only on Zillow). We are including all property types in the numbers below.

RankAreaZIP CodesMonths of Supply 2016Months of Supply 2017Supply higher than last yearLarge reduction since last year
1 West Mesa 85201 85202 85203 85210 1.1 1.0    
2 Sun City & Sun City West 85351 85373 85375 1.4 1.0   yes
3 El Mirage & Youngtown 85335 85363 0.9 1.0 yes  
4 South Peoria 85345 85381 1.2 1.1    
5 Avondale 85323 85392 1.0 1.1 yes  
6 North Chandler 85224 85225 85226 1.3 1.2    
7 Maryvale & Far West Phoenix 85031 85033 85033 85037 1.3 1.2    
8 South Glendale 85301 85303 85305 85307 1.6 1.2   yes
9 San Tan Valley 85140 85143 1.5 1.2    
10 North Gilbert 85233 85234 85295 85296 1.4 1.3    
11 Laveen & Tolleson 85339 85353 1.8 1.3   yes
12 East Mesa 85204 85206 85208 85209 85212 1.6 1.3    
13 Tempe 85281 85282 85283 85284 2.0 1.4   yes
14 North Glendale 85302 85304 85306 85308 85310 1.6 1.4    
15 I17 & 101 85022 85023 85024 85027 85053 1.5 1.4    
16 Inner West Phoenix 85009 85015 85017 85019 1.5 1.4    
17 South & SW Phoenix 85040 85041 85042 84043 1.5 1.6 yes  
18 Northwest Phoenix 85021 85029 85051 1.7 1.6    
19 South Chandler & Sun Lakes 85248 85249 85286 2.5 1.6   yes
20 South Gilbert 85297 85298 1.8 1.6    
21 Apache Junction 85119 85120 2.7 1.7   yes
22 Northeast Mesa 85205 85207 85213 85215 2.4 1.7   yes
23 Queen Creek 85142 2.2 1.7   yes
24 51 Corridor 85020 85028 85032 2.1 1.7    
25 South Surprise 85374 85378 85379 85388 1.8 1.7    
26 Litchfield Park & Waddell 85340 85355 2.6 1.8    
27 Sky Harbor North 85006 85008 85034 2.0 1.8    
28 Maricopa 85138 85139 2.0 2.0    
29 South Scottsdale 85250 85251 85257 2.6 2.1    
30 North Surprise & Wittmann 85361 85387 1.7 2.1 yes  
31 North Peoria 85382 85383 2.5 2.2    
32 Florence & Coolidge 85128 85132 4.9 2.2   yes
33 Buckeye 85326 85396 2.3 2.4 yes  
34 Goodyear 85338 85395 2.0 2.4 yes  
35 Central Scottsdale 85254 85258 85260 3.2 2.4   yes
36 North Phoenix 85083 85085 2.4 2.5 yes  
37 Uptown Phoenix 85012 85013 85014 2.4 2.6 yes  
38 Ahwatukee 85044 85045 85048 2.2 2.6 yes  
39 Anthem & New River 85086 85087 4.0 2.6   yes
40 Casa Grande Area 85122 85123 85131 85193 85194 3.1 2.8    
41 Biltmore & Arcadia 85016 85018 3.3 2.9    
42 Cave Creek & Carefree 85331 85377 5.4 4.0   yes
43 Gold Canyon 85118 5.3 4.0   yes
44 Tonopah 85354 4.7 4.7    
45 Downtown Phoenix 85003 85004 85007 4.3 5.1 yes  
46 North Scottsdale 85255 85259 85262 85266 6.5 5.5   yes
47 Fountain Hills & Rio Verde 85263 85268 4.4 6.2 yes  
48 Paradise Valley 85253 13.9 7.5   yes
49 Wickenburg 85390 10.9 9.2   yes

There are 11 areas with more months of supply than a year ago. There are 16 areas with a large reduction since last year.

The most dramatic improvement can be seen in Florence and Coolidge. Anything below 2 months is evidence of a serious shortage of supply.

July 20 - The table below shows the Cromford® Market Index today and one month ago for the single-family markets in the largest 17 cities by dollar volume:

There is one more city showing deterioration than last week, but I would still call this a very favorable table for sellers, especially those in the Northeast Valley.

All but one of the deteriorating cities declined by only 2% or less, with only Glendale taking a hit of 6%.

Among the improving cities for sellers we have several with significant advances:

  1. Cave Creek - up 9%
  2. Paradise valley - up 9%
  3. Scottsdale - up 8%
  4. Surprise - up 8%
  5. Queen Creek - up 7%
  6. Maricopa - up 5%
  7. Mesa - up 5%

Every city is in the seller`s market zone over 110

July 19 - There has not been a lot of change in the data coming from the Ellie Mae Origination Report over the last few months. However the following trends have taken place:

  • The percentage of refinance loans has dropped sharply from 47% in January to 32% in June. This means purchases loans are even more dominant in the market at 68% last month.
  • Purchase loans are particularly dominant in the FHA sector. They comprise 81% of loans.
  • FHA has 22% market share with Conventional at 64%, VA at 10% and Other at just 4%.
  • The average purchase loan is taking 43 days to close, down from 46 days in June 2016.
  • Interest rates have been falling slowly since April, down from 4.4% to 4.27% for a 30 year loan.
  • VA rates remain lower than the overall market at 4.01%for a 30 year fixed loan, though this is higher than a year ago when it stood at 3.84%

July 17 - Well folks, it`s started. The annual price decline during the third quarter is underway as usual. Take a look at the daily chart for the monthly average price per sq. ft. We currently see the lowest reading in the last 2 months.

This does not mean that prices are really on a downward trend. It is a phenomenon caused by the significant fall-off in luxury home activity during the summer months. Since the regular market maintains more of its momentum, the average price and average $/SF both take a temporary hit until luxury home buyers return in greater volume in October. You can see this happen every year but some years the effect is drastic and in others it is a little muted. It always shows up in some form however.

July 15 - Probably the simplest and most useful indicator for the housing market is the Days of Inventory. This is the total number of active listings divided by the annual sales rate and multiplied by 365 to convert from years to days. This is not to be confused with the Average Days of Market which is one of the least useful indicators that is widely quoted but imparts little sense of market direction since it is a trailing indicator. Days of Inventory works in reverse (the lower the number the hotter the market) but is a leading indicator that is very useful for those wanting to know the direction of prices over the short term future.

Right now the Days of Inventory for the entire ARMLS database stands at 86. It was lower than this between April 2004 and November 2005 and between March 2012 and September 2012 and also between May and August 2013. However it is currently the lowest since August 2013 and well down from July 2016 when we saw 105.

The long term average is 149 and a figure of 86 confirms we are in a strong seller`s market but not at extreme levels. Between July 2004 and September 2005 we were below 60 which corresponded to the top of the bubble. The sharp increase from 31 in March 2005 to 67 in October was a reliable indication of the bubble popping.

Our favorite chart for Days of Inventory across the entire market is this one:

July 14 - This week we will also rank the rest of the secondary cities by their Cromford® Market Index (single-family only)

  1. Arizona City 266.3 (down from 317.4 last month)
  2. El Mirage 215.2 (down from 233.3 last month)
  3. Apache Junction 205.1 (up from 195.0 last month)
  4. Sun Lakes 181.0 (up from 136.2 last month)
  5. Tolleson 179.2 (up from 175.1 last month)
  6. Anthem 172.3 (up from 140.1 last month)
  7. Sun City 169.4 (up from 140.2 last month)
  8. Gold Canyon 153.0 (up from 122.3 last month)
  9. Casa Grande 150.2 (up from 143.7 last month)
  10. Sun City West 150.1 (up from 122.1 last month)
  11. Litchfield Park 136.7 (up from 125.4 last month)
  12. Laveen 125.1 (up from 122.8 last month)

Only 2 of these 12 cities showed any deterioration and these two were already at the head of the table. Both have added to supply over the last month whereas the story in the majority of these cities is a significant fall in active listings. This is particularly true for those that cater to the active adult and snowbird buyers. These tend to have fewer buyers during the summer, but they also see a huge drop in active listings. Because of the big drop in competition from other sellers, the summer is still a good time to have your home listed in these locations.

We note that every one of these 12 cities is in a seller`s market above 110.

July 13 - Another look at the Cromford® Market Index for the single-family markets in the 17 largest cities by dollar volume:

This week we see only 5 cities with lower readings than one month earlier and 12 showing improvement from a seller`s perspective.

The biggest winners are in the Northeast Valley - Cave Creek at 17%, Scottsdale at 9% and Paradise Valley at 8%, although Surprise and Queen Creek are not far behind.

Mesa seems to be outperforming its sister cities in the Southeast while Avondale remains at number one as it has for what seems like an eternity.

This is a very good looking table for sellers with only Glendale and Chandler holding out a tiny olive leaf for buyers.

July 12 - The luxury market over $500,000 has been under-performing the general market across the whole of the USA. In Greater Phoenix prices have not moved upwards as much as the market below $500,000 and in some places have declined slightly over the past 2 years. However the positive trends that we reported yesterday for the Northeast Valley are also impacting the luxury market as a whole.

For single family detached homes over $500,000, the annual sales rate has increased from 6,054 to 7,259 over the past 12 months. That is an increase of almost 20%, ahead of the rest of the market which has been partly constrained by low supply. Supply is not a problem at the top end, down just 0.6% between July 1, 2016 and July 1, 2017. However a higher sales rate with no increase in available supply is still good news for sellers and the number of days of inventory has dropped from 279 to 232. Average days on market for closed homes has come down from 142 to 136, unspectacular but still moving in the right direction from a seller`s perspective.

If we compare average price per sq. ft. for the second quarter with the same period in 2016, we find the following areas performed best (homes over $500K only):

  • Scottsdale 85251 - up 10%
  • Scottsdale 85254 - up 9%
  • Gilbert 85298 - up 9%
  • Scottsdale 85258 - up 8%

July 11 - The Northeast Valley has under-performed the rest of Greater Phoenix for the last 2 years but is now showing some encouraging signs. The annual single-family sales rate has increased from 6,508 to 7,009 since July 2016, a rise of 8%, while the number of active listings (excluding UCB & CCBS) has declined by 11%. This combination means that days of inventory have fallen from an above average 201 to a below average 168. This is good for sellers.

When days of inventory readings are below average we tend to see appreciation show up. Comparing the second quarter that has just finished with last year`s second quarter, the average price per sq. ft. for single-family homes is up 6.5%, the best result for any quarter in the last 2 years. Even homes over $1 million are up by 4.9%.

The effect is not uniform by geography however. It is the south and central parts of Scottsdale that have seen the strongest price trends. Again comparing 2Q 2016 with 2Q 2016, we see:

  • 85250 up 15%
  • 85251 up 12%
  • 85257 up 10%
  • 85254 up 9%
  • 85258 up 9%
  • 85260 up 6%

Not so good are:

  • 85268 down 2%
  • 85377 down 2%
  • 85255 down 2%

However parts of the far north have bounced back a bit after a dismal time in 2016.

  • 85266 up 8%
  • 85262 up 5%

The most positive sign is that supply is down from last year and that sales rates are now high enough to avoid the excesses of supply that we experienced in 2016. Sellers must hope that these sales rates can be maintained.

Existing owners are still down-sizing, but retiring baby boomers from out of state seem to be arriving to take their place in sufficient numbers.

July 9 - Average rental rates continued to climb for single-family detached homes over the past 3 months, reaching 84 cents per square foot per month during June. This calculation is based on leases closed through ARMLS, which is obviously not the majority of the market but represents a substantial sample with 1800 leases closed during June. This price is up 5% from last year and 15% from two years ago.

The picture is not so positive for townhouse / condo rentals, where price increases have stalled. These tend to rent for substantially more than detached homes on a square foot basis, with the average rent in June being $1.05 per square foot per month. This represents no increase over June 2016 though it is up 5% from two years ago.

Apartment-style rentals achieved $1.12 per square foot during June, down from $1.20 a year ago and landlords seem to have lost pricing power for this particular dwelling style. They are up less than 1% from two years ago.

It is interesting that single family homes are becoming cheaper relative to attached homes when purchased (on a square foot basis) but are moving closer in price to attached homes when leased (though they remain substantially cheaper to rent per sq. ft.).

July 8 - The monthly spreadsheet that we publish based on initial analysis of the Maricopa County recordings has been posted here.

This is compiled by Tom Ruff of the Information Market and for this month he has introduced a new format. As well as the median he has computed the low and high quartiles for prices for new homes, re-sales and the combination of the two.

Total sales for June came in at 11,230, down only slightly from the May number. New home sales hit 1,439, the highest total since December.

The overall median sales price is up 5.8% from June 2016 to $254,000. This is similar to our measurement in August 2007 and just 4.7% shy of the maximum of $266,523 that we measured in June 2006.

The new home median is up only 2.1% from a year ago while the re-sale median is up 4.8% to $240,000.

July 6 - Let us take another look at the Cromford® Market Index for the single-family markets in the 17 largest cities by dollar volume:

This is a pretty picture for sellers with 12 cities showing higher CMI readings than last month and only 5 lower. Mind you, the latter includes Phoenix, Chandler, Glendale and Gilbert, 4 of the 6 largest cities.

Chandler deteriorated the most (down 6%) while the largest improvements can be seen in Cave Creek, Scottsdale, Queen Creek and Surprise. The Northeast Valley is looking brighter for sellers than it has for a very long time, with inventory down compared to last year and a healthy increase in sales volumes.

We should also point out that all 17 cities are now in the seller`s market zone over 110.

July 5 - Yesterday we looked at the lower ranks of the luxury home market from $500,000 to $1,500,000 and the positive trends that are emerging. Today we are taking a look at the upper echelons from $1,500,000 upwards.

Let`s first take a look at the active listing numbers for single-family detached homes:

Price RangeActive Listings excl. UCB/CCBS July 2015Active Listings excl. UCB/CCBS July 2016Active Listings excl. UCB/CCBS July 2017Change in Last 12 Months
$1.5M - $2M 303 357 362 +1%
$2M - $3M 306 303 320 +6%
Over $3M 204 253 241 -5%

We have still see a lot more active listings (not under contract) than 2 years ago, and more than last year between $1.5M and $3M, but we also see a decrease from last year for the range over $3M.

As before, we have to place inventory in the context of the sales rate, so let`s look at the annual sales rates for the same time periods.

Price RangeAnnual Sales Rate July 2015Annual Sales Rate July 2016Annual Sales Rate July 2017Change in Last 12 Months
$1.5M - $2M 259 285 294 +3%
$2M - $3M 191 193 202 +5%
Over $3M 106 84 125 +49%

Here we see an increase in the sales rate for homes over $3Mover the past year. However the sales gains between $1.5M and $3M are relatively weak, especially in the context of rising inventory.

Once again, dividing the active listing count by the annual sales rate gives us the days of inventory when multiplied by 365:

Price RangeDays of Inventory July 2015Days of Inventory July 2016Days of Inventory July 2017Change in Last 12 Months
$1.5M - $2M 427 457 449 -2%
$2M - $3M 585 573 578 +1%
Over $3M 702 1,099 704 -36%

From a seller`s perspective the lack of any significant drop in days of inventory between $1.5M and $3M is bad news. However the situation over $3M is similar to mid-2015 and thus a big improvement over the state of play in mid-2016.

Price RangeAnnual Avg $/SF July 2015Annual Avg $/SF July 2016Annual Avg $/SF July 2017Change in Last 12 Months
$1.5M - $2M $316.86 $317.10 $308.25 -2.8%
$2M - $3M $383.82 $374.73 $383.34 +2.3%
Over $3M $552.16 $558.04 $562.31 +0.8%

The least fortunate price range is that between $1.5M and $2M.

The range between $2M and $3M has done rather better over the past 12 months but is still priced below 2 years ago.

The range over $3M has made some progress, albeit very modest in percentage terms.

The price increase are very modest so far, but show signs of acceleration over the past few months. You can see this is the annual average $/SF charts for Scottsdale

July 4 - The price range from $500,000 to $1,500,000 appears to be emerging from the doldrums. Ever since the summer of 2015, this sector of the market has under performed the lower price ranges in terms of price appreciation. However sales volumes have increased substantially in 2017 and have now started to make a significant dent in the inventory. This is encouraging news for sellers and means buyers have lost much of the bargaining power they enjoyed over the past 2 years.

Let`s take a look at the numbers for single-family detached homes:

Price RangeActive Listings excl. UCB/CCBS July 2015Active Listings excl. UCB/CCBS July 2016Active Listings excl. UCB/CCBS July 2017Change in Last 12 Months
$500K - $600K 949 1,128 1,003 -11%
$600K - $800K 1,020 1,145 1,138 -1%
$800K - $1M 556 706 632 -10%
$1M - $1.5M 533 629 597 -5%

We have still more active listings (not under contract) than 2 years ago, but we also see a healthy decrease from last year (though this is only small in the case of $600K to $800K).

We have to place inventory in the context of the sales rate, so let`s look at the annual sales rates for the same time periods.

Price RangeAnnual Sales Rate July 2015Annual Sales Rate July 2016Annual Sales Rate July 2017Change in Last 12 Months
$500K - $600K 1,796 2,164 2,625 +21%
$600K - $800K 1,632 1,920 2,261 +18%
$800K - $1M 702 858 994 +16%
$1M - $1.5M 636 603 760 +26%

Here we see some impressive increases in the sales rate over the past year. We also see gains between 2015 and 2016 except for the range $1M to $1.5M

Dividing the active listing count by the annual sales rate gives us the days of inventory when multiplied by 365:

Price RangeDays of Inventory July 2015Days of Inventory July 2016Days of Inventory July 2017Change in Last 12 Months
$500K - $600K 193 190 139 -27%
$600K - $800K 228 218 183 -16%
$800K - $1M 289 300 232 -23%
$1M - $1.5M 306 381 287 -25%

From a seller`s perspective these significant drops in days of inventory are good news, which is likely to translate into upward pricing pressure, something that has been largely absent until recently.

Price RangeAnnual Avg $/SF July 2015Annual Avg $/SF July 2016Annual Avg $/SF July 2017Change in Last 12 Months
$500K - $600K $170.85 $171.30 $174.95 +2.1%
$600K - $800K $195.52 $197.00 $198.86 +0.9%
$800K - $1M $218.23 $223.78 $224.77 +0.4%
$1M - $1.5M $259.95 $258.52 $262.15 +1.4%

The price increase are very modest so far, but show signs of acceleration over the past few months. You can see this is the annual average $/SF charts for Scottsdale.

July 3 - The most recent S&P / Case Shiller® Home Price Index® report was issued on June 27 and the last index reading covers sales between February and April 2017. The month to month changes look like this:

  1. Seattle 2.63%
  2. Portland 1.86%
  3. San Francisco 1.48%
  4. Atlanta 1.41%
  5. Las Vegas 1.36%
  6. Minneapolis 1.32%
  7. Detroit 1.29%
  8. Denver 1.28%
  9. Washington DC 1.20%
  10. Charlotte 1.06%
  11. Dallas 1.05%
  12. Chicago 1.03%
  13. San Diego 0.93%
  14. Phoenix 0.84%
  15. Los Angeles 0.72%
  16. Miami 0.56%
  17. Boston 0.49%
  18. New York 0.31%
  19. Tampa 0.03%
  20. Cleveland -0.06%

Phoenix remains in the lower half of the pack and is appreciating less quickly than the national average, which gained 0.95% between the May and June reports.

The year over year movements were as follows:

  1. Seattle 12.9%
  2. Portland 9.3%
  3. Dallas 8.4%
  4. Denver 8.2%
  5. Detroit 7.4%
  6. Las Vegas 6.8%
  7. Boston 6.7%
  8. San Diego 6.6%
  9. Minneapolis 6.3%
  10. Charlotte 6.1%
  11. Atlanta 5.8%
  12. Phoenix 5.7%
  13. Miami 5.4%
  14. Los Angeles 5.3%
  15. Tampa 5.0%
  16. San Francisco 5.0%
  17. Chicago 4.0%
  18. New York 3.8%
  19. Washington DC 3.6%
  20. Cleveland 3.4%

Phoenix is just a shade stronger in the year over year table, but still below the mid point. However it is slightly above the national average of 5.5%.

July 2 - There were a total of 799 multi-family permits issued in May 2017 within Maricopa and Pinal Counties. This is a very similar number of units to March and April, but it slightly down from May 2016, when there were 1,002.

The 12 month rolling average is still very high at 10,384, The all-time record is 10,787 in June 2006. Despite rumors of a slow down in multi-family construction, there is no evidence of one in the permit counts. However the locations are changing in favor of less expensive areas. This month we see a big contribution from Goodyear and nothing at all from Tempe or Scottsdale.

Year to date at the end of May we have seen 3,471 units across Maricopa and Pinal Counties. This is up 27% from 2016.

For 2017 year-to-date we see the following counts by geographic area:

  1. Phoenix 1,115
  2. Mesa 568
  3. Glendale 471
  4. Chandler 417
  5. Peoria 357
  6. Goodyear 326
  7. Surprise 135
  8. Pinal County 50
  9. Paradise Valley 12
  10. Scottsdale 10

Scottsdale and Tempe have gone very quiet but the West Valley has woken up.

July 1 - According to the US Census Bureau, there were 1,997 single family permits issued during May 2017. This is the largest monthly total since August 2007, almost 10 years ago.

The count is up 20% from May 2016 and pushes the annual rate up to 19,236, up 7% from 17,976 twelve months ago.

For 2017 year to date, the top ten geographic areas for single family permits have been:

  1. Mesa 1,164
  2. Phoenix 1,018
  3. Buckeye 859
  4. Unincorporated Pinal County - 856
  5. Gilbert - 775
  6. Peoria - 764
  7. Queen Creek - 512
  8. Goodyear - 503
  9. Maricopa - 494
  10. Scottsdale - 311

Given that the 856 permits for Unincorporated Pinal County are mostly in the San Tan Valley area, the 3 ZIP codes 85140, 85142 and 85143 are very strongly represented when we add in the 512 for the Town of Queen Creek to make 1,368 in total..

June 2017

June 30 - Time to look at the Cromford® Market Index for the single-family markets of the largest 17 cities:

This is a happy picture for sellers in much of the Northeast Valley and all of the West Valley.

We find big moves upward for Cave Creek, Scottsdale and Fountain Hills, while Avondale, Glendale, Surprise, Peoria, Goodyear and Buckeye all see advances.

The picture is mixed in the Southeast Valley, where Mesa and Queen Creek continue to do well. However, Chandler, Gilbert and Tempe are all weaker than last month at this time.

With all CMIs over 100 and all but one over 110, this clearly reflects a strong and improving market.

June 25 - When we want to get a overview of the state of the market, we like to use Days of Inventory as a guide and compare today`s number to that on the same date in years past.

Including active listings in UCB and CCBS status, we currently have 90 days of inventory across all areas & types within the ARMLS database. This compares with 110 on the same date in both 2016 and 2015 and 133 in 2014. The market is definitely more favorable to sellers when this number is lower. Thus we conclude that we have a much hotter market overall than in 2014 through 2016. However in June 2013 there were only 83 days of inventory so that was a more frenetic market and appreciation was running at a faster rate. 2012 was hotter still at 78 days.

We are within the normal range and those who think we are in another bubble should remember that in June 2005 we had only 37 days of inventory. I would suggest that fears of a bubble should be confined to times when the days of inventory measure drops below 60, as it did between July 2004 and September 2005. Having dropped significantly below 60, the rise above 60 in late September 2005 was a clear sign of the bubble bursting.

These days we are gently dropping back to levels not seen since 2013 which indicates a very strong, but perfectly normal housing market.

June 24 - Apologies for the scarcity of observations over the last 5 days. This was caused by a major power outage at my office at the same time as I relocated my family and pets to the UK. We escaped the 119 degree weather only to find the hottest June day in England in 40 years. However the English weather has returned to its cool norm now and power has been restored at my office in Mesa.

I am writing this from a little village called Woodhouse Eaves in England where we are installed in an old vicarage built in 1837, next to a church and graveyard. This is considered relatively modern in England as most churches are far older. By contrast in 1837 the whole of Arizona was still part of Mexico. The difference in the concept of age is one of the most obvious cultural differences between the UK and the USA.

Building techniques are also very different. In the Old Vicarage, the walls are of local stone and are about 2 feet thick. The roof is made of local Swithland slate which is sought after for its strength and longevity. Such materials tend to last several centuries before substantial maintenance is required.

June 18 - Phoenix has been the initial location for two of the new so-called iBuyer operations, Opendoor and OfferPad. There is another start-up (Knock) with a similar business model, but they are initially focused on Atlanta.

As of the end of March the 12-month total sales by these iBuyers in Greater Phoenix has reached 1,839. This is 1.5% of the total housing market of 121,379 units, a market which incidentally has grown by over 10% in the last 12 months. During the last 12 months the iBuyer share has split 21% / 79% in favor of Opendoor, though the OfferPad share has increased to 26% during the first 5 months of 2017 and 36% in May 2017. It seems that the gap between Opendoor and OfferPad is closing. Opendoor's first sale was in November 2014, 14 months prior to OfferPad's first sale, so they enjoyed first-mover advantage for quite some time.

It also appears that the iBuyer market share has peaked. In February 2017, they reached a combined 2.37% of units closed, and this has fallen in the following 3 months to 1.93%, 1.53% and 0.95%.

It is not altogether clear why they should be losing market share having gained it so quickly in 2016. Perhaps they are finding it more difficult to acquire homes in their target price range, which is towards the low end of the market where supply has been quickly disappearing. There are a number of other possible reasons, but rather than speculate I will try to find out and post further in this section of the Cromford Report if I am able to shed any light on the subject.

June 17 - The monthly median sales price for all areas & types is on a tear at the moment, as you can see from this chart. From $230,000 in mid April it has raced to $245,000 in just 8 weeks. That is an increase of 6.5% in just 2 months.

This is useful data if you are trying to persuade someone to make a move before prices get any higher. However April to June is the period each year when most of the progress is made. Last year we had $228,000 at the middle of June and we finished 2016 with $227,500. In 2015 we saw $214,900 in mid June and finished the year at $215,000

So it would not be unusual if this year behaves like 2016 and 2015 and we may still be close to $245.000 when we reach the end of December. If this is NOT the case and the median sales price continues to make further progress, that would suggest that 2017 has greater price momentum than usual. The next few weeks will be especially interesting to watch for that reason.

June 16 - Black Knight Financial Services continues to publish its Mortgage Monitor report, but it probably does not get as much attention as it used to when foreclosures were at their peak. In the USA as a whole, 4.9% of first position home loans were non-current at the end of April 2017, with 0.85% in some stage of foreclosure and 4.1% having missed at least one payment. At the peak of the foreclosure wave, 13.5% of first position home loans were non-current with 3.3% in foreclosure and 10.2% having missed at least one payment. The improvement in delinquency rates over the past 12 months was 8.7%

Arizona has lower delinquency than the USA as a whole. We have 3.2% of first position home loans non-current with just 0.3% in foreclosure and 2.9% having missed at least one payment. This represents an 8% improvement over April 2016. Most states have improved over the past 12 months, but there are a handful of exceptions. These include North Dakota, South Dakota, Nebraska, Louisiana, Wyoming and Alaska. You will probably notice that the common thread among these states in a high dependence on the fossil fuel energy business - oil gas and coal.

For the first time, Black Knight has included Puerto Rico and the US Virgin Islands among its list of states. Not looking good. Puerto Rico has far higher home loan delinquency than perennial top-ranking Mississippi. 17.3% of Puerto Rican home loans are non-current and 5.6% are in foreclosure. This reflects the dire state of the Puerto Rican economy. The US Virgin Islands (not to be confused with the British Virgin Islands) are not looking too brilliant either with 9.2% of loans non-current and 4.4% in foreclosure. It is just over a century since the USA purchased the islands from Denmark. Now that was a piece of real estate with a long time on market. It took 64 years between Denmark deciding to sell (following the abolition of slavery in 1848) and the USA agreeing to pay a sum of $25 million. The islands total 150 square miles so the cost per acre in 1916 was only $260.

June 15 - It is time for our weekly look at the Cromford® Market Index for the single-family markets in the 17 largest cities (by dollar volume)

We have 11 cities showing improving conditions for sellers and 6 deteriorating. Last week we predicted that there would be more green dots and fewer red one, and we are relieved to be proven correct.

Weaker conditions are concentrated in the Southeast Valley - Chandler down 8%, Gilbert down 5% and especially Tempe - down 17%. Mesa and Queen Creek are the lone holdouts and are still improving.

Paradise Valley had a good spring but is fading now that the triple digit temperatures are taking hold. It is the only one of the 17 cities not in the seller's market zone over 110.

Among the big improvers are Fountain Hills, Cave Creek, Buckeye and Glendale, with Scottsdale and Avondale not far behind.

The West Valley has regained its mojo with all its cities showing improvement and its star player Avondale now breaking through 200 again.

Phoenix itself is almost unchanged compared with last month.

June 14 - The single-family luxury home market is starting to split into 2 segments - under $1.5 million which is looking much stronger than last year - and over $1.5 million which continues to be plagued by abundant supply and lower growth in demand.


Price Range
Active June 2015 Active June 2016 Active June 2017 2 Year Change Current Days of Inventory
$500K-$600K 1,130 1,374 1,261 +12% 176
$600K-$800K 1,215 1,419 1,441 +19% 239
$800K-$1M 688 800 783 +14% 295
$1M-$1.5M 680 751 738 +9% 358
$1.5M-$2M 381 436 460 +21% 600
$2M-$3M 377 369 391 +4% 728
Over $3M 272 302 289 +6% 879
All the above 4,743 5,451 5,363 +13% 274

Overall, we have 13% more supply than 2 years ago, so there is still plenty of choice for buyers. However, the annual sales rate for homes over $500,000 has increased from 5,264 to 7,132, a rise of 35%. So here we can see that the growth in demand is faster than the growth in supply and after a weak period since peaking in mid-summer 2015, prices in most luxury areas are on the rise again, particularly for homes under $1.5 million. It is above $1.5 million where the market starts to change for the worse.

We can see that inventory is over 600 days from homes priced above $1.5 million, and here annual sales have risen from 547 to 596, an increase of only 9%, while supply is up by from 1,030 to 1,140, a rise of 11%. Now we see a problem. When supply increases at a faster rate than demand, sellers are at a disadvantage. Pricing will have a hard time making substantial upward progress until this condition changes.June 13 - On the thirteenth of each month we publish the small city snapshots for the following:

  • Carefree
  • Coolidge
  • Desert Hills
  • Eloy
  • Florence
  • New River
  • Rio Verde
  • Tonopah
  • Waddell
  • Wickenburg
  • Wittmann
  • Youngtown

Two of these barely fit our small city category these days. Florence has grown in size to justify being promoted to one of our secondary cities, while Desert Hills is really now just a suburb of Phoenix and is slowly disappearing into oblivion from a statistical point of view.

Being small these don't get a lot of attention, so I though we should review the more interesting things happening to some of the single-family markets in these small cities.

  • Carefree - 376 days of inventory, -5.3% appreciation in annual $/SF, -2.9% annual increase in annual median, contract ratio 16.1 - expensive and over-supplied with falling sales rate and unusually low listing success rate (46%). One of the most difficult places to be a seller, hence prices are falling
  • Coolidge - 55 days of inventory, 8.2% appreciation in annual $/SF, 9.0% annual increase in annual median, contract ratio 107.4 - very affordable and appreciating quickly - only 1.2 months of supply - underrated as investment opportunity
  • Eloy - 139 days of inventory, 7.0% appreciation in annual $/SF, 42.9% annual increase in annual median, contract ratio 36.1 - a relatively cool market, rapidly moving upmarket due to the growth of Robson Ranch
  • Florence - 93 days of inventory, 10.5% appreciation in annual $/SF, 10.9% annual increase in annual median, contract ratio 73.2 - a hot, affordable and expanding market with rapid appreciation
  • Rio Verde - 295 days of inventory, 8.8% appreciation in annual $/SF, 1.3% annual increase in annual median, contract ratio 18.7 - excess supply and little growth in sales means stable pricing
  • Tonopah - 105 days in inventory, -4.0% appreciation in annual $/SF, 4.3% annual increase in annual median, contract ratio 25.0 - a cool rural market, with volatile numbers due to low sales rate (45 a year)
  • Wickenburg - 275 days of inventory, 7.7% appreciation in annual $/SF, 3.1% annual increase in annual median, contract ratio 19.5 - a very cool and stable rural market, lower success rate than average (60%)
  • Wittmann - 157 days of inventory, -0.3% appreciation in annual $/SF, 9.8% annual increase in annual median, contract ratio 35.7 - a relatively cool and stable market
  • Youngtown - 21 days of inventory, 12.5% appreciation in annual $/SF, -1.1% annual increase in annual median, contract ratio 260.0 - only 0.4 months of supply, tiny area with extremely low supply and low prices

June 12 - Today I would like to make a broad comparison of the different regions within the Greater Phoenix area and compare how they have changed over the last year and since last month. The two key measures I am going to use are days of inventory and quarterly average price per sq. ft. We will focus on the single-family market since the condo/townhouse market is very small in a couple of these broader areas.

RegionDays of Inventory June 2016Days of Inventory May 2017Days of Inventory June 2017Annual ChangeQuarterly Average $/SF May 2016Quarterly Average $/SF May 2017Annual Change
Phoenix & North Valley 93 87 83 -10.7% $147.21 $153.95 +4.6%
Northeast Valley 225 213 191 -15.1% $235.44 $249.03 +5.8%
Southeast Valley 92 73 73 -20.7% $137.98 $144.98 +5.1%
West Valley 81 80 74 -8.6% $114.96 $123.56 +7.5%
Pinal County 119 88 82 -31.1% $95.67 $102.04 +6.7%

Note that Pinal County has shown the largest decline in days of inventory and hence the biggest swing in favor of sellers. The West Valley has seen the smallest swing, but it is still in favor of sellers and it was already a strong seller's market in June 2016.

The Southeast Valley has seen the second biggest swing in favor of sellers, but note that it is the only area that did not improve for sellers between May 2017 and June 2017.

Days of inventory is a leading indicator of the market whereas quarterly average $/SF is very much a trailing indicator.

The Northeast Valley has improved its pricing noticeably over the last 2 months, but we caution that the "third quarter effect", where pricing weakens between June and September, is more pronounced for the luxury market than for other price ranges.

June 10 - We seem to have reached the minimum level of new foreclosures in Maricopa County. For the past 11 months, the 90-day average for the number of new Notices of Trustee Sale has been at 20 per day (about 29 per working day). This is the lowest level since 2000 but there is currently no sign of it going any lower. I guess we could call this the "background level" of new foreclosure notices that will be filed even at the best of times. You can see this flat-lining in the chart here.

We not not reached a minimum in terms of completed foreclosures (Trustee Deeds). The current 90 day average across Maricopa County is 6 per day, down from 9 per day this time last year and still on a downward trend. We still have a long way to go to reach the minimum of 1 per day that we saw in 2006. This is because at the peak of the bubble, investors would ensure that any home that entered the foreclosure process would get plenty of purchase offers before it actually went to trustee sale. In those days negative equity was yet to be discovered as "a thing".

June 9 - Let us take another look at the Cromford® Market Index for the single-family markets in the 17 largest cities by dollar volume:

Here we see a slight majority of cities improving for sellers, with strong gains for Fountain Hills, Buckeye, Peoria, Glendale and Scottsdale.

8 out of the 17 show deteriorating conditions, though there are no cities with CMI below 100. Tempe remains on a weakening trend, while Paradise Valley and Chandler are faltering.

Geographically speaking, all of the East Valley cities lost some ground over the past month, while the Northeast Valley is looking better than it has for some time (except for Paradise Valley). The West Valley is regaining more of its mojo especially in the big cities of Glendale and Peoria.

The overall picture is still heavily biased in favor of sellers due to the weak supply situation and over the next 3 months that supply is going to get tighter still. With lenders' underwriting standards continuing to get looser, it is our bet that the supply will drop a little faster than demand, which always fades during the third quarter. Nothing is certain in this world, but we expect to see a few more green dots and fewer red ones in the weeks ahead.

June 8 - The Cromford® Market Index seems to be gaining at bit of its mojo back, having risen from 146.5 to 147.2 in the last 7 days. This is because the supply is now falling at a faster pace and we would expect it to continue to fall until the end of August. The Demand Index, meanwhile, has stopped its mild decline from the 106 level and is holding steady at 103 or thereabouts.

The consequent outlook is a mild improvement for sellers over the next month thanks to fewer competing sellers. Buyers are expected to thin out over the next few months also, but to a lesser extent.

So overall, the picture remains positive with no storm clouds on the horizon just yet. Appreciation will no doubt be interrupted by the third quarter effect, however, almost certainly resuming in the fourth quarter.

June 7 - Not every listing closed through ARMLS has actually been marketed on ARMLS. We are seeing more and more listings that are added retrospectively, after the deed has recorded. This may be done for various reasons, such as:

  • the listing agent wants to create a comp for future use by appraisers or other agents
  • the listing agent wants to claim credit for the successful transaction in regional or national statistic tables collected by the National Association of REALTORS® or others
  • the listing agent wants to give the selling agent credit for the sale

As this trend grows, the connection between listings under contract (i.e. pending, UCB or CCBS) and listings closed starts to break down. We get sales counts growing without a corresponding growth in listings under contract because these listings added after the fact appear to have never been in escrow. Many of you will have noticed that closed listings are up significantly from last year (11% year to date), but listings under contract are slightly lower (down 4% as of today).

I think there are multiple effects at play here:

  • listings spend less time in escrow because deals are getting completed more quickly in a busy market
  • lenders are able to get loans approved more quickly because underwriting standards are loosening
  • more listings are closed as soon as they are created, never hitting the market

There are at least 2 ways we can spot the last of these.

  • closed listings on the database that are completely missing from our daily log of active, UCB. TOM, CCBS or pending status listings
  • listings with 0 cumulative days on market or 0 agent days on market

The first category above is up 91% from last year. The second category is up 30%. The second category is about 7 times more common than the first in 2017.

There used to be a strong relationship between the under contract count and the monthly sales count the following month. The growing weakness in that relationship makes market trends a little more tricky to spot. At the national level we are seeing statements that demand is weakening because the pending listing counts are below expectations. We think this may be misguided. The way the market works now is generating more pocket listings and therefore artificially tamping down the pending listing count. Of course the pending listing count is already much lower than normal because so many listings under contract are being placed in UCB rather than pending status. Our estimate is that 67% of the UCB listings are not really available for sale, but would have been in pending status if not for the existence of Zillow.

We need to adjust our expectations of the under contract count and reset the relationship between that count and the expected sales count the following month.

June 6 - The preliminary numbers for Maricopa County recorded deeds are now available for May. Total sales volume was 11,274, the highest total since June 2006 and up 14% over May 2016. This includes single-family, condos and townhomes.

The overall monthly median sales price hit $250,000 for the first time since November 2007. The median for new homes was $325,324 which is unspectacular but up 1.3% from May 2016. The median sales price for new homes is being held back by higher volumes of entry level homes. Prices for similar homes are increasing far more than 1.3%. The median sales price for re-sales was $239.000, up from $225,000 last year.

New home unit volume increased by 26% from last year whereas re-sales volumes were up by 12%.

June 8 - The Cromford® Market Index seems to be gaining at bit of its mojo back, having risen from 146.5 to 147.2 in the last 7 days. This is because the supply is now falling at a faster pace and we would expect it to continue to fall until the end of August. The Demand Index, meanwhile, has stopped its mild decline from the 106 level and is holding steady at 103 or thereabouts.

The consequent outlook is a mild improvement for sellers over the next month thanks to fewer competing sellers. Buyers are expected to thin out over the next few months also, but to a lesser extent.

So overall, the picture remains positive with no storm clouds on the horizon just yet. Appreciation will no doubt be interrupted by the third quarter effect, however, almost certainly resuming in the fourth quarter.

June 7 - Not every listing closed through ARMLS has actually been marketed on ARMLS. We are seeing more and more listings that are added retrospectively, after the deed has recorded. This may be done for various reasons, such as:

  • the listing agent wants to create a comp for future use by appraisers or other agents
  • the listing agent wants to claim credit for the successful transaction in regional or national statistic tables collected by the National Association of REALTORS® or others
  • the listing agent wants to give the selling agent credit for the sale

As this trend grows, the connection between listings under contract (i.e. pending, UCB or CCBS) and listings closed starts to break down. We get sales counts growing without a corresponding growth in listings under contract because these listings added after the fact appear to have never been in escrow. Many of you will have noticed that closed listings are up significantly from last year (11% year to date), but listings under contract are slightly lower (down 4% as of today).

I think there are multiple effects at play here:

  • listings spend less time in escrow because deals are getting completed more quickly in a busy market
  • lenders are able to get loans approved more quickly because underwriting standards are loosening
  • more listings are closed as soon as they are created, never hitting the market

There are at least 2 ways we can spot the last of these.

  • closed listings on the database that are completely missing from our daily log of active, UCB. TOM, CCBS or pending status listings
  • listings with 0 cumulative days on market or 0 agent days on market

The first category above is up 91% from last year. The second category is up 30%. The second category is about 7 times more common than the first in 2017.

There used to be a strong relationship between the under contract count and the monthly sales count the following month. The growing weakness in that relationship makes market trends a little more tricky to spot. At the national level we are seeing statements that demand is weakening because the pending listing counts are below expectations. We think this may be misguided. The way the market works now is generating more pocket listings and therefore artificially tamping down the pending listing count. Of course the pending listing count is already much lower than normal because so many listings under contract are being placed in UCB rather than pending status. Our estimate is that 67% of the UCB listings are not really available for sale, but would have been in pending status if not for the existence of Zillow.

We need to adjust our expectations of the under contract count and reset the relationship between that count and the expected sales count the following month.

June 6 - The preliminary numbers for Maricopa County recorded deeds are now available for May. Total sales volume was 11,274, the highest total since June 2006 and up 14% over May 2016. This includes single-family, condos and townhomes.

The overall monthly median sales price hit $250,000 for the first time since November 2007. The median for new homes was $325,324 which is unspectacular but up 1.3% from May 2016. The median sales price for new homes is being held back by higher volumes of entry level homes. Prices for similar homes are increasing far more than 1.3%. The median sales price for re-sales was $239.000, up from $225,000 last year.

New home unit volume increased by 26% from last year whereas re-sales volumes were up by 12%.

June 5 - We have now added a new Tableau chart that shows the seasonal nature of new listings in Greater Phoenix. You can find it here.

The biggest month for new listings is January (the slowest month for closed sales). The slowest month for new listings is December.

For homes over $1 million, October is also a very busy month few new listings. July is very quiet, almost as slow as December.

June 4 - We have added a new Tableau chart that shows the seasonal nature of sales in Greater Phoenix. You can find it here.

It includes filters for Dwelling Type, Transaction Type, Price Range, County, City and ZIP Code. You can also adjust the years that are included (the default is 2001 through 2016. Be warned that if you include the current year it will distort the picture since not all months will be included.

May is the overall peak month for closed sales with 9.827%. However June is close behind and May and April quickly follow. By far the weakest month is January with only 6.174% of closed sales.

When we look exclusively at condo / townhouse sales, April is the peak month and May drops into second place. For mobile homes, March is the favorite month with April in second place.

For homes over $1 million, June is the biggest month and the drop between June and July is huge. This helps explain why we see average price per sq. ft. fall every year during the third quarter. September is the weakest month for sales of homes over $1 million.

June 3 - The S&P/Case-Shiller® Home Price Index® report for March came out on Tuesday and showed the following monthly changes for the 20 cities they focus on:

  1. Seattle 2.57%
  2. Charlotte 1.48%
  3. Minneapolis 1.41%
  4. Boston 1.36%
  5. Detroit 1.31%
  6. Denver 1.29%
  7. Dallas 1.23%
  8. Chicago 1.15%
  9. San Francisco 1.05%
  10. San Diego 1.02%
  11. Portland 1.02%
  12. Los Angeles 0.96%
  13. Atlanta 0.92%
  14. Washington DC 0.80%
  15. Las Vegas 0.78%
  16. New York 0.76%
  17. Phoenix 0.59%
  18. Miami 0.26%
  19. Cleveland -0.13%
  20. Tampa -1.01%

Food for thought for those who think Phoenix is appreciating too fast. Not only did we place only 17th out of 20, we were well below the national average of 0.81%.

The monthly drop in Tampa is unusual. I suggest we keep an eye on that one.

The more important 1 year change table looks like this:

  1. Seattle 12.3%
  2. Portland 9.2%
  3. Dallas 8.6%
  4. Denver 8.4%
  5. Boston 7.7%
  6. Detroit 7.0%
  7. Minneapolis 6.8%
  8. Charlotte 6.7%
  9. San Diego 6.5%
  10. Las Vegas 6.4%
  11. Miami 6.0%
  12. Phoenix 5.6%
  13. Atlanta 5.5%
  14. Los Angeles 5.4%
  15. San Francisco 5.1%
  16. Tampa 5.1%
  17. Chicago 5.1%
  18. Cleveland 4.4%
  19. Washington DC 4.2%
  20. New York 4.1%

Here we see Phoenix firmly in the middle of the pack and just below the national average of 5.7%.

I see no sign of the collapse in the San Francisco market that some have been forecasting. Seattle, Portland, Dallas and Denver remain the front runners, as they have for quite some time.

June 2 - Below is the regular weekly table where we show how the Cromford® Market Index has changed for the single-family markets in the 17 largest cities by dollar volume.

We remain in a seller's market overall with 8 cities showing improvement for sellers and 9 showing deterioration.

The last five months have seen the smallest overall change in the Cromford® Market Index since we started measuring it. However there are a few bigger moves in the specific cities.

The largest percentage change is in Tempe which has seen a sudden increase in active listings over the past 6 weeks. Although it is still a seller's market in Tempe, it has slipped from 4th place in this table down to 11th since April 20. It is not yet clear why this increase in supply has happened since most parts of the valley have seen a decline in active listings. Active listings (excluding UCB and CCBS) are up significantly in all four Tempe ZIP codes (85281, 85282, 85282 and 85284). In particular, 85281 has the highest number of active single-family listings at the start of a month since April 2014. In the neighboring areas of Ahwatukee in Phoenix 85044 and 85048 we also see a rising supply trend. This is particularly surprising since there is little new single-family construction going on in these areas.

Fountain Hills is the biggest percentage riser, benefiting from both a fall in supply and rising demand.

Most other cities are little changed with the next largest moves by Peoria (up 5%) and Chandler (down 5%).

In the Northwest, Paradise Valley has faded a bit after a good spring season while Scottsdale is showing some improvement with good sales volumes and a fall in supply.

The Southeast Valley has lost steam with the CMI for Queen Creek, Gilbert, Chandler and Tempe all down. Mesa is the only large city in the area showing a small advance.

Outside the large cities, we have to mention Arizona City which is currently showing a CMI of 279.7. Supply has crashed in Arizona City with only 30 single-family homes available without a contract. This is the lowest we have ever recorded. There were 91 as recently as December and the previous record low in 2005 was 32. The annual sales rate is now 247, its highest level since 2014. The annual average $/SF is currently rising by 17.2% a year and the monthly median sales price has reached $130,000, very low by most standards, but up more than 29% from $100,500 a year ago. Its peak monthly median sales price during the bubble years was $169,000 in April 2006.

June 1 - Opendoor and OfferPad are the two most prominent iBuyers of homes in the USA and both of them started operation in Phoenix. They have now been joined by Knock in Atlanta. Opendoor now operates in Dallas and in Las Vegas too (though to a very limited extent in the latter). They first started buying homes in Phoenix in August 2014 and I think now is a good to time to study their home buying and home selling in more detail. We are doing this primarily using recorded deeds rather than ARMLS data, since many of their purchases take place outside of the MLS. However the vast majority of their sales occur through the MLS.

 

First here is a chart showing the unit volume of purchases across Maricopa and Pinal Counties:

 

 

This chart will be updated monthly and will be available in the Cromford® Public section of our site along with several other charts related to iBuyers.

 

We note that Opendoor's strongest buying does not correspond with the peaks in the Phoenix market (March through May), but during the weaker months of June through November. This is probably a clever strategy since competition from other buyers is weaker. We also note that buying so far in 2017 has grown a relatively slow 14% from last year, with the last 2 months of March and April 2017 coming in lower than the corresponding months of 2016. Clearly the buying operation appears to be slowing in Phoenix. However the selling operation remains in top gear, as we shall see in subsequent observations. This means Opendoor's inventory of homes for sale has dropped significantly over the past 6 months. At the end of November they had 606 more home purchased than sold but at the end of April there were only 259 in stock, of which some 200 or so were listed on ARMLS while the rest were presumably in the process of getting ready for listing. This slower purchasing rate may also be because management were focused on expanding in Dallas which has grown very fast. Opendoor started selling homes in Dallas in September 2016 and reached a similar number of sales to Phoenix by February 2017, just 5 months later.

 

Another factor is that Opendoor homes have a median selling price which is around $210,000, lower than the market as a whole. As a business policy, they purchase and sell very few homes over $350,000. This means their supply is limited by the shortage of available homes at a suitable price and they may be finding it harder to grow their revenue in Phoenix as easily as they can grow by moving to other territories. Concentrating on lower end homes reduces business risk and lowers time on market, so it certainly makes good sense, especially for a start-up company.ay 2017

May 31 - Attached homes have been gaining popularity and market share over detached homes in 2017. This is a fairly new trend but one which is becoming firmly established and appears to be quite significant. You can see this is the ARMLS numbers, but it is even more obvious in the public record data we store in the Cromford® Public site. (The reason is that new homes are included in the public records but only a small percentage of new homes hit the MLS).

First, let us take a look at the ARMLS data. The year-to-date sales for May 28 is compared with the same period in 2016

Dwelling TypeClosed Listings YTD 2016Closed Listings YTD 2017Change
All Attached Homes 5,486 6,184 +12.7%
Single-Family Detached Homes 28,742 31,087 +8.2%
Mobile Homes 841 871 +3.6%

Single-family detached homes still dominate the market, unlike most large conurbations in the USA. However attached homes, mainly townhomes and condominiums but also including a few duplex, triplex and four-plex units, are growing sales faster. Sales are up almost 13% compared with single family sales up by just over 8%. Mobile homes lag behind at under 4% growth.

The growing demand for attached homes is also reflected in pricing

Dwelling TypeAverage $/SF YTD 2016Average $/SF YTD 2017Change
All Attached Homes $143.34 $159.07 +11.0%
Single-Family Detached Homes $141.44 $148.99 +5.3%
Mobile Homes $78.97 $$87.35 +10.6%

Not so long ago (2014), the average price per sq. ft. for attached homes was 2.3% lower than for attached homes. Now a significant gap has opened up. The gap first appeared in 2015 where we can see attached homes with a 1.4% pricing advantage for the same sq. ft. In 2016 this stayed roughly the same at 1.3%. But in 2017 so far, this gap has widened to 6.8% and is causing me to take more notice.

Some of this trend is due to the introduction of more luxury condos into the market, sometimes selling at very high $/SF, especially for the upper floors and most particularly for the top floor. However this would not be reflected in the numbers above if buyers were not responding enthusiastically. We see baby boomers in particular losing enthusiasm for large and remote detached homes and opting to move closer to the city centers and to properties with more shared facilities that they do not have to manage themselves.

Because the trend in favor of attached homes is reflected in both unit volumes and pricing, we are seeing an even stronger result when we look at dollar volumes:

Dwelling TypeDollar Volume YTD 2016Dollar Volume YTD 2017Change
All Attached Homes $1,011M $1,294M +28.0%
Single-Family Detached Homes $8,487M $9,722M +14.5%
Mobile Homes $84M $100M +18.5%

All segments are expanding, but attached homes are achieving almost twice the growth rate of detached homes in terms of dollars spent.

We should point out that single-family detached homes still represent an impressive 87.5% of the total dollar volume. However, this has declined from the 89.1% we saw in YTD 2014

May 30 - One of our favorite charts is the Annual Appreciation by Major City, based on annual average $/SF. You can find it here.

Avondale, Buckeye and Maricopa are at the top of the chart with appreciation rates around 9% to 10%.

We then see a big cluster between 6% and 7%, including Goodyear, Surprise, Queen Creek, Peoria, Mesa, and Glendale.

Phoenix is trending lower from a consistent 7.5% to around 5.8% and is one of the weaker performers in recent months. It is unusual that it is behaving differently from the cities in the cluster above.

Gilbert is very steady at 5.5% while Chandler is slightly weaker at 5%, where it matches Cave Creek which is on a rising trend.

Tempe used to be one the higher performers but has weakened in recent months. Appreciation has dropped from 8.4% last year to only 4.3% this week.

Scottsdale is steady at around 3%, a lower rate that all of the other big cities. This is because it is dominated by the luxury market which has seen much lower appreciation than the rest of the market. Despite this overall weak trend in luxury homes, Paradise Valley has improved significantly. Last year at this time it was showing negative appreciation, but has recovered to 5% as of this week. However it is one of the most volatile of the cities due to its relatively low annual sales count.

Fountain Hills is in last place with 0.7% having peaked at 4.4% last December.

May 29 - Another 828 multi-family units in Maricopa and Pinal Counties received building permits during April according to the Census Bureau. That brings the year-to-date total to 2,672, up from 1,730 last year. The rolling 12 month total has hit 10,587, a figure we have not seen since January 2008. Not much sign of any slowdown there, despite warnings from some quarters that lenders are losing interest in backing some of these projects.

The year-to-date multi-family permit counts look like this:

  1. Phoenix - 1,075
  2. Glendale - 471
  3. Chandler - 404
  4. Peoria - 357
  5. Mesa - 160
  6. Surprise - 135
  7. Unincorporated Pinal County - 38
  8. Paradise Valley - 12
  9. Scottsdale - 10
  10. Tempe - 6
  11. Apache Junction - 4

May 28 - The Census Bureau reports that 1,838 single-family building permits were issued in Maricopa and Pinal Counties during April, up 9.1% from 1,684 last year.

This brings the year to date total to 6,626 which is up only 8.3% from 6,120 last year. This is very modest by the standards of all the years from 1996 to 2007. The quietest of those years (1997) gave us 10,153 permits during the first four months and in 2017 we are down 35% from 20 years ago.

Based on current trends, we are not going to see new home building make any significant dent in the supply problem. With their cautious hats on, the developers probably like things that way. It keeps prices up and avoids any risk of overbuilding.

The current 12 month rolling average is 18,893, up 5.5% from 17,913 last year.

For those with a subscription to Cromford® Public, we provide the following Tableau charts for the period 1996 onwards:

  • monthly permit counts
  • quarterly permit counts
  • annual counts
  • year-to-date permits counts
  • rolling 12 month counts

Filters are provided for county and place name, as well as date ranges.

The top permit producing places year-to-date in Arizona are:

  1. Mesa - 872
  2. Phoenix - 793
  3. Buckeye - 694
  4. Unincorporated Pinal County - 623
  5. Peoria - 611
  6. Gilbert - 567
  7. Queen Creek - 446
  8. Goodyear - 412
  9. Maricopa - 399
  10. Unincorporated Pima County - 248

Glendale is particularly slow at 54 (less than Kingman and Prescott) and Avondale only slightly better at 74 (less than San Luis and Sahuarita). It is no wonder that supply is such a long term problem in these two cities.

May 25 - The Cromford® Market Index table for the single-family markets in the largest 17 cities is failing to provide sellers with encouragement this week:

Here we find 6 cities have improved over the past month while 11 have deteriorated. In addition, 4 of the improving cities were up by 1% or less, leaving only Peoria (6%) and Fountain Hills (12%).

To balance this, the deteriorating cities were mostly down by small percentages of 3% or less, with only Tempe (down 23%) showing a large change.

The market remains strongly favorable to sellers, with all cities having a CMI over 100 and all but 2 over 110. However there is no denying that the slight changes that are visible tend to be more favorable to buyers than sellers.

With only 3 cities making major moves over the last month, here are the headlines:

  • Tempe has seen a significant increase in available active listings (211 to 247 in the past month)
  • Fountain Hills has seen a drop in supply coupled with increased demand
  • Supply has tightened in Peoria

May 23 - When their listing gets an accepted offer, a large number of agents use Active - Under Contract Accepting Backup Offers (UCB) instead of the traditional Pending status these days. Today we have 8,048 listings in pending status and 5,177 in UCB (or CCBS) status.

One of the side effects of this is much higher days on market counts than we used to see. When a listing goes pending it stops accumulating days on market, but when it is in UCB status it is still on the market and continues to accumulate days on market. Today we see that pending listings have an average of 59 days on market while UCB (and CCBS) listings have an average of 80.

This increase in days on market is then reflected in the statistics for closed listings. Today we have an average of 71 cumulative days on market for listings closed in the last month. If it were back before the days of Zillow, this reading would be under 60.

This is another reason why do not recommend average days on market as an accurate way of measuring the state of the market.

May 22 - Subscriber Ben Graham suggested a number of areas for research, one of which was the relationship between single-level and multi-level homes with respect to pricing. He has a hunch that single-level single-family homes are about 20% more expensive than 2-level single-family homes on a $/SF basis. Based on all sales within Greater Phoenix on ARMLS, where the field "Floors" has an entry, then Ben is not far off the mark.

We find that single-level homes are 18% more expensive on a price per sq. ft. basis than 2-level homes. Mind you, they are 16% cheaper based on average price and 29% smaller based on average living space.

Homes with more than 2 levels are uncommon, but they are actually more expensive - 11% more expensive than single-level homes on a price per sq. ft. basis and 59% larger based on average living space.

May 21 - Here is a table showing the annual change in annual average price per sq. ft. for single family homes for various cities. The cities are ranked by the most recent annual rate of change.

CityAnnual Change in Annual Average $/SF May 2015Annual Change in Annual Average $/SF May 2016Annual Change in Annual Average $/SF May 2017Current Trend in Appreciation Rate
Arizona City 6.9% 8.2% 17.2% strengthening
El Mirage 7.3% 10.1% 13.9% flat
Avondale 5.8% 8.4% 10.0% strengthening
Laveen 6.0% 8.6% 9.6% weakening
Maricopa 5.5% 6.9% 9.5% weakening
Tolleson 10.9% 5.8% 9.2% weakening
Buckeye 5.5% 8.3% 8.8% weakening
Apache Junction 10.4% 6.4% 8.1% strengthening
Sun City 4.7% 10.9% 7.9% weakening
Sun City West 4.5% 6.6% 7.9% weakening
Casa Grande 8.3% 1.1% 7.8% weakening
Goodyear 5.6% 4.5% 7.5% strengthening
Mesa 4.2% 6.2% 7.0% strengthening
Surprise 4.9% 5.9% 6.9% flat
Queen Creek 5.7% 6.8% 6.7% flat
Peoria 3.5% 5.6% 6.4% strengthening
Glendale 5.8% 9.1% 6.1% weakening
Phoenix 6.8% 7.8% 5.9% weakening
Gilbert 2.3% 4.7% 5.5% flat
Litchfield Park 6.5% 4.8% 5.3% weakening
Paradise Valley 3.6% -1.5% 5.2% strengthening
Chandler 2.8% 5.6% 5.0% weakening
Cave Creek 3.5% 1.5% 4.7% flat
Tempe 4.7% 8.2% 4.2% weakening
Gold Canyon 12.8% -4.1% 3.6% strengthening
Sun Lakes 4.2% 3.1% 3.6% flat
Scottsdale 3.6% 1.2% 2.9% strengthening
Anthem 1.8% 5.5% 2.3% strengthening
Fountain Hills 2.3% 2.0% 0.4% weakening

It is interesting to note that some cities look quite different using this measure than the one based on median sales prices that we documented on May 19. If in doubt, we recommend the $/SF measure over the median measure.

May 20 - It may seem that the annual average price per sq. ft. is a dull measure and certainly I rarely get any questions about it. However its advantage is that it is an extremely stable and non-volatile measure, especially across a large geographic area. Although price is always a trailing rather than a leading indicator, the difference between the annual average $/SF today and last year is an excellent guide to how strong the market has been in the very recent past. This is our favorite way to measure appreciation.

Keeping things simple, let's look at the annual average $/SF for all areas & types, measured on a weekly basis in the chart here.

The gap between 2013 and 2014 closed during the latter part of 2014 indicating a significant weakening in the market. In 2015 the annual gap continued to close until May but started to widen from October onwards. The gap has been gently widening since then which indicates we are in a market that is gradually getting stronger. The current gap is 5.54%. Last year it was 5.31% and the year before 4.65%. However in May 2014 it was 16.23%. As long as the gap continues to widen, even just by a little bit, the market is displaying strength. If it starts to narrow, then it is reasonable to experience some concern about a slowdown. Of course, we will be looking out for that on your behalf and reporting it in our observations.

You can use this tool for smaller market segments, but it starts to lose its usefulness if you get down to very small areas with low sales volumes. The sample size is key to success with most statistics. Tomorrow we will look at the annual average $/SF for the larger cities, looking for relative strength and weakness in the recent past.

May 19 - Despite generally strong pricing the monthly median sales price for single-family homes in Phoenix is currently lower at $235,000 in mid May then it was at $240,000 at the end of May last year. You can see this in the weekly chart here. This illustrates that even for a large city like Phoenix, the monthly median sales price can be volatile and give strange results. For a more reliable view of the pricing trends, the annual median is a better guide. It can still be measured weekly, as it is here. We then see a consistent picture of increasing prices with the most recent being $234,000, up from $219,900 last year.

Here is a table raking the cities by the change in their annual median sales price for single-family homes over the past 12 months:

RankCityAnnual Median Sales Price May 2016Annual Median Sales Price May 2017Change %
1 Eloy $160,000 $208,000 30.0%
2 Arizona City $94,000 $110,000 17.0%
3 Apache Junction $162,000 $183,000 13.0%
4 El Mirage $148,000 $165,900 12.1%
5 Buckeye $175,000 $194,990 11.4%
6 Laveen $185,000 $205,000 10.8%
7 Tolleson $172,000 $190,500 10.8%
8 Coolidge $108,400 $119,900 10.6%
9 Sun City West $205,000 $225,000 9.8%
10 Sun City $160,000 $175,000 9.4%
11 Glendale $202,000 $220,000 8.9%
12 Avondale $185,000 $201,000 8.7%
13 Florence $145,250 $157,450 8.4%
14 Mesa $217,000 $235,000 8.3%
15 Peoria $248,500 $269,000 8.3%
16 Maricopa $160,000 $173,000 8.1%
17 Waddell $254,500 $275,000 8.1%
18 Chandler $270,388 $290,000 7.3%
19 Queen Creek $194,000 $208,000 7.2%
20 Wittmann $258,640 $277,000 7.1%
21 Litchfield Park $270,400 $289,500 7.1%
22 Gilbert $270,000 $289,000 7.0%
23 Phoenix $219,900 $234,000 6.4%
24 Surprise $208,000 $221,000 6.3%
25 Casa Grande $154,900 $164,500 6.2%
26 Tempe $258,950 $275,000 6.2%
27 Cave Creek $410,000 $432,776 5.6%
28 Sun Lakes $252,250 $266,000 5.5%
29 Tonopah $163,950 $172500 5.2%
30 Gold Canyon $250,000 $263,000 5.2%
31 Fountain Hills $422,500 $439,950 4.1%
32 Scottsdale $485,000 $505,000 4.1%
33 Goodyear $242,000 $250,000 3.3%
34 Anthem $289,000 $289,500 0.2%
35 New River $325,000 $324,000 -0.3%
36 Carefree $750,000 $743,584 -0.9%
37 Paradise Valley $1,425,000 $1,400,000 -1.7%
38 Rio Verde $435,000 $426,750 -1.9%
39 Wickenburg $245,000 $240,250 -1.9%
40 Youngtown $150,000 $143,750 -4.2%

We have 6 cities that went backwards over the past year based on their annual median sales price. Most surprising is Youngtown which is surrounded by cities that appreciated strongly.

May 18 - Taking another look at the Cromford® Market Index for the single-family markets in the largest cities by dollar volume, we find the following changes over the past month:

We clearly remain in a seller's market overall, with 15 of the cities over 110, but only 9 cities show improvement from a seller's perspective over the past month, with the remaining 8 deteriorating.

By far the greatest deterioration has been in Tempe which has seen a large increase in active listings. The remaining 7 deteriorating cities saw changes of 4% or less.

By far the greatest improvement has been seen in Fountain Hills, which has seen declining supply and improving demand. Other improving cities saw changes of 4% or less.

Overall the picture remains unusually stable.

May 14 - For the first time this year, new listings have opened up a lead over last year. It is not a big lead, but we have seen 47,805 additions versus 47,485 last year. This is only 0.67%, but the gap is slightly larger at 0.9% if we look at new listings in the second quarter.

This increase is clearly not large enough to cope with the higher demand this year, so the gap between supply and demand is greater than last year.

The year to date sales chart is quite impressive for 2017. It looks similar to 2010 and not too far behind 2005 and 2011, so ranks third of the last 16 years.

The chart above is a simplified version covering all areas & types. If you would like to apply some filters to this data, I recommend the Tableau long term sales chart. This has a tab at the top which allows you to switch to a sales year-to-date daily view.

May 13 - Recently within the Daily Observations we compiled tables of the top 20 listing agents, top 20 selling agents and top 20 dual agents in the year 2016 by dollar volume.

Now we are compiling a list of the most active agents by total revenue (listing sides plus selling sides). We are also bringing it up to date by calculating over the most recent 12 months, rather than the year 2016.

RankDual Agent NameOfficeClosed SidesListing AgentSelling AgentMarket ShareDollar Revenue for Listings Closed (12 Months ending May 10, 2017)
1 Jacqueline Moore OpenDoor Homes 1,383 1,355 28 0.581% $307M
2 Brian Bair OfferPad 595 541 54 0.272% $144M
3 Beth Rider Keller Williams Arizona Realty 481 433 48 0.268% $142M
4 Taylor Mize Pulte Homes 331 238 93 0.197% $104M
5 Kenny Klaus Keller Williams Integrity First 380 257 123 0.184% $97M
6 Robert Joffe Launch Real Estate 51 32 19 0.173% $92M
7 Jason Mitchell My Home Group Real Estate 196 50 146 0.171% $90M
8 Tracy Norton LGI Homes 457 261 196 0.165% $87M
9 Walt Danley Walt Danley Group 51 37 14 0.160% $84M
10 Janine Long Lockman & Long Real Estate 263 261 2 0.157% $83M
11 JoAnn Callaway Those Callaways 185 140 45 0.138% $73M
12 Dawn Farad Lennar Homes 197 197 0 0.133% $70M
13 Brett Tanner Keller Williams Realty Phoenix 305 157 148 0.130% $69M
14 Russell Shaw Realty ONE Group 276 210 66 0.126% $67M
15 Carin Nguyen Keller Williams Realty Phoenix 260 123 137 0.125% $66M
16 Lisa Lucky Russ Lyon Sotheby's International Realty 74 51 23 0.124% $66M
17 John Gluch Re/MAX Platinum Living 174 87 87 0.111% $59M
18 Andrew Bloom Re/MAX Platinum Living 100 66 34 0.110% $58M
19 Brandon Cleveland Taylor Morrison Homes 137 137 0 0.108% $57M
20 Bobby Lieb HomeSmart 110 89 21 0.106% $56M

Between them, OpenDoor and OfferPad represented 0.853% of the market volume over the past 12 months.

Note that several of these names represent teams with all the business being channelled through one lead name. Unfortunately I am unable to compile other team members together if they record transactions under different individuals, because ARMLS does not record team membership in their database.

May 12 - Today there are 38,274 names on the ARMLS roster which is up 6.9% from this time last year when we saw 35,806. Some of these names are affiliates, MLS staff members, office staff, appraisers, etc., so if we only count Agents, Brokers and Salespeople, the total count last year was 33,191 and we now have 35,358, an increase of 6.5%. The number of appraisers is up almost 11% to 477.

The annual sales rate through ARMLS has increased from 85,464 to 93,301 during the same 12 months. This is a rise of 9.2%. This means the average agent is handling 5.28 transaction sides (assuming each sales involves 2 agents, which is not true but will do for our purposes). This is an increase of 2.5% in transaction sides per agent. The average sales price over the past 12 months is $283,284, so the average agent is processing $1,495,034 in transaction volume. Assuming a typical commission of 3%, that amounts to $44,851 per average agent in commission. This is an increase of 8.5% over the same measurement in May 2016.

Of course many of the names listed were not mentioned in any transactions at all. 24,357 unique names appeared in ARMLS transactions in the last 12 months as either the listing agent, selling agent or both. This does not necessarily mean the remaining 11,001 names were completely inactive. Many teams process all their business through the team leader and the other team members names never appear on transactions.

The overall dollar volume has increased 15.6% over the last year. Of the 15.6% increase, our estimate is that 8.5% has flowed to agents as additional revenue per agent and the rest is accounted for by the increase in the agent population.

May 11 - Here is our regular look at the Cromford® Market Index for the single-family markets in the 17 largest cities by dollar volume:

May 11 - Here is our regular look at the Cromford® Market Index for the single-family markets in the 17 largest cities by dollar volume:

Improving cities outnumber deteriorating cities (for sellers) by 10 to 7.

The big movers over the past month are Tempe (down 14% due to a large increase in supply), Fountain Hills (up 11%), Paradise Valley (up 7%) and Avondale (down 6%).

The remaining 13 cities have moved up or down a relatively modest 4% or less.

The Southeast Valley (with the notable exception of Tempe) is still improving for sellers with Mesa and Gilbert leading the charge and Queen Creek & Chandler following up.

The West Valley is showing weakness, with flagship Avondale in danger of being overtaken by Chandler. Glendale, Goodyear and Buckeye all deteriorated and Peoria and Surprise were the only locations that managed small improvements.

The Northeast Valley is seeing some improvement after a long period of relative weakness, though it is dominated by Scottsdale which is still drifting slightly lower.

Improving cities outnumber deteriorating cities (for sellers) by 10 to 7.

The big movers over the past month are Tempe (down 14% due to a large increase in supply), Fountain Hills (up 11%), Paradise Valley (up 7%) and Avondale (down 6%).

The remaining 13 cities have moved up or down a relatively modest 4% or less.

The Southeast Valley (with the notable exception of Tempe) is still improving for sellers with Mesa and Gilbert leading the charge and Queen Creek & Chandler following up.

The West Valley is showing weakness, with flagship Avondale in danger of being overtaken by Chandler. Glendale, Goodyear and Buckeye all deteriorated and Peoria and Surprise were the only locations that managed small improvements.

The Northeast Valley is seeing some improvement after a long period of relative weakness, though it is dominated by Scottsdale which is still drifting slightly lower.

May 9 - Although we remain in a market very favorable to most sellers, the Cromford® Demand Index has started to move out of its very tight range between 105 and 107 by heading downwards. At 104.5 it has dropped to the lowest level since January 31. What is causing this (very slightly) negative indication? The answer lies in the number of listings under contract which is starting to look a little weak relative to last year (and the year before for that matter). There is nothing to be too concerned about here yet, but we designed the index to be very sensitive so that any changes or new trends would be observable quickly. The most recent high value was 106.3 on April 18, so we have not seen a big move yet. I would suggest that we keep an eye on this indicator, just in case something more significant develops.

May 8 - By far the most numerous foreign buyers in Central Arizona are Canadians. Between September 2009 and May 2013 we could rely on them to buy at least 200 homes every month, sometimes more than 500. Things started to drop off in June 2014 and reached a very low point in September 2016 with only 18 homes purchased. However activity has been picking up since then. Canadians are nowhere near as active as they once were, but year to date we have seen 208 purchases which is up 28% from 162 in the same period of 2016.

Meanwhile sales by Canadians average about 150 per month. So sales outnumber purchases by about 3 to 1 meaning there is still an exodus going on, just not at the very high ratio of 7 to 1 that we saw in March last year.

We have seen 516 completed sales by Canadians so far this year. 

May 7 - Today we are extending yesterday's analysis to determine which segments are closest to regaining their peak pricing before the housing crash.

Segment of the Market (ARMLS closed listings)Peak DatePeak Quarterly Average $/SFCurrent Quarterly Average $/SFIncrease Required to Match PeakIncrease in Last 12 Months
Phoenix (condos/townhouses) Aug 31, 2006 $186.70 $157.53 18.5% 15.9%
Scottsdale (condos/townhouses) Oct 24, 2007 $257.60 $209.80 22.8% 5.3%
Chandler / Gilbert / Mesa (condos/townhouses) May 23,2006 $161.65 $134.60 20.1% 10.5%
Avondale / Glendale / Peoria (condos/townhouses) Feb 15, 2007 $148.90 $106.46 39.9% 3.9%
Tempe (condos/townhouses) Jul 10, 2008 $209.06 $155.50 34.5% 9.7%
Paradise Valley 85253 (single-family-detached) Oct 4, 2006 $507.12 $353.47 43.5% 5.9%
Scottsdale 85251 (all types) Oct 11, 2007 $282.25 $241.13 17.1% 12.1%
Phoenix 85018 (all types) Apr 12, 2007 $305.27 $270.62 12.8% -2.4%
Scottsdale 85255 (all types) Feb 15, 2007 $334.44 $275.23 21.5% 4.7%
Scottsdale 86262 (all types) Jul 5, 2007 $391.91 $270.04 45.1% -2.4%
Carefree 85377 (all types) Oct 29, 2007 $356.99 $211.65 68.7% -8.9%
Cave Creek 85331 (all types) Mar 3, 2006 $258.73 $185.32 39.6% 4.4%
Phoenix 85016 (all types) Aug 31, 2006 $317.61 $233.41 36.1% 13.8%
West Phoenix (all types) May 27, 2007 $145.14 $109.44 32.6% 10.1%
South Phoenix (all types) Jun 29, 2006 $155.64 $112.91 37.9% 10.7%
Ahwatukee (all types) May 25, 2006 $208.67 $160.64 29.9% 3.3%
Northwest Phoenix (all types) Aug 21, 2006 $162.09 $133.07 21.8% 10.7%
Northeast Phoenix (all types) Apr 29, 2006 $198.32 $166.10 19.4% 7.7%
Central Phoenix (all types) Sep 14, 2007 $224.27 $194.03 15.6% 6.8%
Far North Phoenix / Anthem / New River (all types) May 28, 2006 $200.03 $144.68 38.3% 4.3%

 

Scottsdale 85251 is clearly a front-runner in this table and is still appreciating fast. Phoenix 85018 has also got closer to its peak than any other segment in the above list. However its quarterly average $/SF has actually declined in the last 12 months.

Phoenix condos and townhouses are a strong segment with very rapid appreciation in the past 12 months. Central Phoenix (all types) is also getting close to its peak, needing another 15.6% and achieving 6.8% in the past year.

The far Northeast Valley is having the hardest time regaining its peak, with Carefree 85377 and Scottsdale 85262 a long way below and going backwards in the past year.

May 6 - Yesterday we mentioned that in general, prices in Greater Phoenix still have a long way to go before they return to the peaks before the housing crash. We thought we would look into this in more detail and examine how each segment of the market is doing relative to the pricing at the peak of the market. Of course there is a lot of complexity in doing this because:

  • different segments peaked at different times. For example, 85143 hit its highest monthly average $/SF as early as October 2005, while 85253 hit its peak in November 2007, more than 2 years later.
  • when we look at small segments, the price volatility is often very high and we do not want to use a high spike as an unrealistic measuring point, or accept a sudden spike now as proof of a return to a new high.
  • median and average sales prices can be poor measurement tools if the median and average size of home has changed a lot since the peak. We need to compare apples with apples.

As an example of the last point, the peak median sales price in Maricopa County for new homes prior to the crash was $311,928 in July 2006, and that was surpassed as long ago as December 2013. But the median new home in December 2013 was 13% larger than the median home being sold in July 2006, because developers were no longer focusing on entry level homes. New homes regained their peak price consistently for the last 14 months if we were to misguidedly pay attention only to the monthly median sales price. But they have not regained the peak at all if we use the average price per square foot. The latter is a much more reliable measuring tool for this purpose. In March 2017, the average price per square foot for a new home in Maricopa County was $161.30, while in May 2016 it peaked at $184.22. New homes in Maricopa County still have 14% price appreciation to achieve before they regain the level of May 2006.

We can avoid volatility problems by taking a longer term average, such as an annual average. This avoids us paying attention to sudden spikes and troughs. However it also means recent increases are watered down by being mixed in with prices from the the last 12 months.

A reasonable compromise is to use quarterly averages, so this is what we have done in our analysis below. Today we will look at some pretty broad segments:

Segment of the Market (ARMLS closed listings)Peak DatePeak Quarterly Average $/SFCurrent Quarterly Average $/SFIncrease Required to Match PeakIncrease in Last 12 Months
All Areas & Types (whole ARMLS database) Jun 30, 2006 $189.30 $149.32 26.8% 6.3%
Greater Phoenix (all types) Jun 30, 2006 $189.22 $149.32 26.7% 6.3%
Maricopa County (all types) Jun 30,2006 $193.07 $154.69 24.8% 6.6%
Maricopa County (single-family detached) May 15, 2006 $194.76 $154.54 26.0% 5.8%
Maricopa County (condo/townhouse) Jul 6, 2006 $190.99 $161.84 18.0% 11.8%
Maricopa County (mobile homes) Jun 29,2006 $105.38 $90.30 16.7% 9.8%
Pinal County (all types) Feb 6, 2006 $142.85 $101.41 39.9% 6.5%
Phoenix (all types) May 27,2007 $182.02 $152.69 19.2% 6.0%
Northeast Valley (all types) May 15, 2006 $295.40 $238.73 23.7% 6.1%
Southeast Valley (all types) Jul 7, 2006 $176.47 $143.22 23.2% 6.1%
West Valley (all types) Jun 10, 2006 $158.36 $121.10 30.8% 7.7%
Greater Phoenix (all types) - Less than 1,500 sq ft Jul 1, 2006 $173.74 $142.77 21.7% 9.6%
Greater Phoenix (all types) - 1,500 to 2,000 sq ft May 2, 2006 $169.67 $140.28 21.0% 6.9%
Greater Phoenix (all types) - 2,000 to 3,000 sq ft Apr 3, 2006 $187.33 $142.57 31.4% 5.8%
Greater Phoenix (all types) - 3,000 to 4,000 sq ft Jun 13, 2006 $223.46 $151.05 47.9% 3.6%
Greater Phoenix (all types) - 4,000 to 5,000 sq ft Feb 19, 2006 $269.49 $182.40 47.8% 0.6%
Greater Phoenix (all types) - Over 5,000 sq ft Feb 10, 2008 $414.23 $289.15 43.3% 3.7%

 

It is very noteworthy that before the crash, condos & townhouses used to be cheaper than single-family homes on a $/SF basis, but that at present they are more expensive and are appreciating faster. As a result they have far less to go to get back to their peak level. Mobile homes have always been much more affordable than the other types, but they have recovered closer to their peak. They only have 16.7% to go and are currently appreciating faster than single family homes but not as quickly as condo/townhouse properties.

We also note that homes over 3,000 have a huge way to go (almost 50%) before reattaining their peak. They are also increasing in price the slowest , especially slow for homes between 4,000 and 5,000 sq. ft.

In 2017, it appears, from an appreciation point of view, to be an advantage for a home to be closer to the center of the valley, smaller than 2,000 sq. ft., affordable and either attached or mobile. Large, expensive single-family homes on the outskirts are appreciating the slowest. of all property types and have the furthest to go to reattain the heights before the housing crash.

May 5 - We have added a new Tableau chart that plots dollar volume by quarter. From this chart we can see that the first quarter of 2017 was almost as high as the first quarter of 2005 and 2006 as far as dollars closed through ARMLS. This does not mean the overall housing market is back to the same dollar volume, because far more homes were sold outside of the MLS in 2005 and 2006. We wait to see if the second quarter of 2017 can set a new all time record.

Prices are not back to the peak 2006 levels and I am somewhat surprised to see claims elsewhere that this is not too far away for Greater Phoenix. We still have a long way to go for most parts of the valley, especially if we are measuring the monthly average price per square foot. The current average $/SF for all areas & types is $151.29. This would have to increase by 26% to get back to the May 2006 peak of $190.61.

Those measuring monthly median sales prices do not have so far to go, but we are currently at $234,900 while the peak was $267,000 (attained on June 16, 2006). We need 14% appreciation to get back to the prior peak median sales price.

May 4 - We are taking another look at the Cromford® Market Index for the single-family markets in the 17 largest cities (by dollar volume):

Here we see a strong seller's market overall, but only a small improvement for sellers over the past month. There are 9 cities showing better conditions for sellers and 8 showing some deterioration. With the big cities of Phoenix, Mesa and Chandler all showing improvements, the overall change is still in favor of sellers.

The Southeast Valley continues to outperform the other areas of the valley (except much of Pinal County, which does not feature very strongly in this table due to most of its cities being relatively small). Mesa has overtaken Glendale since last week, while Gilbert has overtaken Tempe.

The West Valley is a weaker picture than usual with only Surprise showing any positive move over the last month and Buckeye slipping into last place.

The Northeast is looking more positive with Paradise Valley and Fountain Hills improving by 9% and 6% respectively and Cave Creek up 4%. However, the largest city in the Northeast, Scottsdale, is still languishing close to the bottom of the table with a fairly balanced market.

We have experienced a seller's market for a long time now and there is little in the above table to cheer buyers.

May 3 - We are clearly experiencing a hot market, but the questions are: how hot, and is it overheating?

One of our favorite measures of the current state of the market is the Contract Ratio. This compares the number of homes under contract with the number available for sale. We saw extremely high contract ratio numbers between 2011 and 2013, but that was a very different market from today because distressed sales were such a high percentage of the total. If we remove short sales, pre-foreclosures, bank owned homes, GSE owned homes and HUD homes from our analysis, we get a more realistic picture. The Tableau chart "Contact Ratio" allows us to do this and the resultant chart looks like this:

This is for all areas & dwelling types within Greater Phoenix and shows us that we have just hit a new high for normal sales, overtaking the previous high point of 67.1, but not by very much. The contract ratio is very seasonal and usually hits its highest level in May or June each year.

By selecting different filters on the contract ratio chart we can see which sectors of the market are the hottest.

  • Condos & townhouses have just reached 71.7, far higher than the 52.9 we saw in May 2013
  • Mobile homes are at 41.0, down slightly from last month but far above the years 2011-2016
  • Single family homes are at 67.4, lower than 73.8 in May 2013 and lower than 2012.

So we can see that single family market is doing well but is not as strong as the attached home market.

Among the price ranges for normal sales, those setting new records for 2011-2017 are between $100K and $300K:

  • $100K-$200K at 139.6, far higher than any previous month since 2010
  • $200K-$300K at 95.3, reaching new heights too
  • $300K-$400K at 61.4, not as hot as 2013
  • $400K-$600K at 42.6, not as hot as 2013 or 2012
  • $600K-$1M at 28.0, not as hot as 2013 or 2012
  • $1M to $2M at 15.4, the coolest year since 2011
  • Over $2M at 8.6, the coolest year since 2012

We can see clearly that the ranges above $1M are much cooler than the rest of the market and cooler than they were during the last 4 years.

Are we heading towards a bubble? Well the contract ratio in May 2005 was 174.34, so at 69.7 on May 1, 2017 we are nowhere near as overheated as were back in the bubble years. As long as we stay below 100, we are probably going to be safe from accusations of overheating.

May 2 - As I recorded the number of single-family active listings (excluding UCB & CCBS) by city for the start of May I was struck that some cities are experiencing unusually low numbers, although others are within normal ranges. Here are a few of the stand-outs:

 

  • Casa Grande - 197 is the lowest count since October 2012
  • Apache Junction - 96 is the lowest count since September 2012
  • Tolleson - 52 is the lowest count since May 2013
  • Arizona City - 45 is the lowest count since June 2012
  • Coolidge - 29 is the lowest count since July 2012
  • Florence - 123 is the second lowest count since September 2012

 

Note that 5 out of these 6 are in Pinal County. Supply is much lower in Pinal County than Maricopa County, relative to normal.

 

The counts by price range reveal some interesting numbers too

 

  • Under $100,000 - 77 listings - there were 9,497 in January 2011
  • Between $100,000 and $125,000 - 70 listings - there were 3,713 in January 2009
  • Between $125,000 and $150,000 - 155 listings - there were 3,790 in August 2008
  • Between $150,000 and $175,000 - 441 listings - there were 3,534 in August 2008

 

In all there are only 1,559 active listings under $200,000. There were 23,795 closed listings in 2016, so we have a current inventory of only 24 days for single-family homes under $200,000.

May 1 - The boom in apartment building continues accorded to the latest report by the Census Bureau. There were another 823 permits issued across Maricopa and Pinal counties during March. This makes the rolling annual count 10,010 which is the highest level since January 2008. Contributions in March were from:

  1. Phoenix - 483 units
  2. Chandler - 285 units
  3. Mesa - 25 units
  4. Scottsdale - 10 units
  5. Paradise Valley - 8 units
  6. Unincorporated Pinal County - 6 units
  7. Tempe - 6 units

April 2017 

 April 30 - Following on from the analysis of the top 20 listing agents and top 20 selling agents, it might be interesting to look at the top 20 agents who represented both sides of transactions in 2016. These are:

RankDual Agent NameOfficeClosed ListingsDollar Revenue for Listings Closed in 2016
1 Tracy Norton LGI Homes 224 $42M
2 Mize Taylor Pulte Homes 79 $24M
3 Scott Grigg Realty Executives 7 $21M
4 Joel Huston KB Homes 79 $20M
5 Mike Domer Re/Max Excalibur 2 $11M
6 Catherine Renshaw CalAtlantic Homes 29 $10M
7 Barbara Miller Russ Lyon Sotheby's International Realty 5 $8M
8 Chad Fuller K Hovnanian Homes 21 $8M
9 Clayton Denk David Weekley Homes 15 $8M
10 Bobby Lieb HomeSmart 13 $8M
11 Walt Danley Walt Danley Group 6 $8M
12 Mackey Martin Realty Executives 1 $7M
13 Carl Mulac AV Homes 24 $7M
14 Rusty Davis Russ Lyon Sotheby's International Realty 2 $7M
15 Robert Joffe Launch 5 $7M
16 Deborah Beardsley Silverleaf Realty 2 $6M
17 Jason Mitchell My Home Group 8 $6M
18 Michaelann Haffner Re/Max Infinity 16 $6M
19 Craig Tucker Maracay Homes 16 $6M
20 Allan Macdonald Russ Lyon Sotheby's International Realty 3 $6M

It is perhaps surprising that so many new home buyers allow the developer's agent to represent them. This is not necessarily an accurate reflection of the new home business overall, since the majority of new homes are sold without being listed on the MLS at all.

There were 6,182 transactions representing $1,766 million where one agent represented both parties. This represents about 7% of all transactions.

Tracy Norton, Mize Taylor, Walt Danley and Robert Joffe are the only names that appear in all 3 tables.

April 29 - Last month we provided a table of the top 20 listing agents. Now we will look at the other side of the transactions and list the top 20 selling agents with the largest dollar volume in 2016. The analysis is restricted to residential homes within the Greater Phoenix area, so it excludes out of area listings, but includes all property types.

RankSelling Agent NameOfficeClosed ListingsDollar Revenue for Listings Closed in 2016
1 Jason Mitchell My Home Group 151 $47M
2 Tracy Norton LGI Homes 224 $42M
3 Brett Tanner Keller William Realty Phoenix 165 $35M
4 Walt Danley Walt Danley Group 15 $33M
5 Carin Nguyen Keller Williams Realty Phoenix 141 $33M
6 Jeffery Hixson OpenDoor Homes 155 $31M
7 Scott Grigg Realty Executives 18 $30M
8 Kenny Klaus Keller Williams Integrity First 120 $29M
9 John Gluch Re/Max Platinum Living 80 $29M
10 Jared Parker Stunning Homes Realty 151 $25M
11 Taylor Mize Pulte Homes 79 $24M
12 James Wexler Realty Executives 30 $24M
13 Mike Domer Re/Max Excalibur 10 $21M
14 Joel Huston KB Homes 79 $20M
15 Shannon Cunningham Keller Williams Realty Professional Partners 88 $20M
16 JoAnn Callaway Those Callaways 54 $20M
17 Robert Joffe Launch 16 $19M
18 Sarah Parker Stunning Homes Realty 112 $19M
19 Susan Pellegrini Russ Lyon Sotheby's International Realty 25 $19M
20 Alan Kittelman Show Appeal Realty 97 $19M

 

There were also 1,085 sales worth $354M that had "nonmls" as the selling agent, meaning no ARMLS member represented the buyer. This amounted to 1.5% of all dollar revenue.

Jason Mitchell's market share is 0.19%

Walt Danley, Tracy Norton, Taylor Mize, Kenny Klaus, JoAnn Callaway, Robert Joffe and Brett Tanner appeared in both top 20 lists.

A total of 20,028 agents represented buyers in 2016 for at least one transaction, out of a total population of 37,122 ARMLS members at the end of 2016.

It is commonly suggested that 80% of the business is conducted by 20% of the agents. It actually took the top 8,069 selling agents to represent 80% of the buyers. This is 40% of the agents who represented anybody. However there were 37,122 ARMLS members in total, so 8,069 represents 22% of all the possible agents.

April 28 - For March 2017 the Census is reporting 1,985 single-family new home permits across Maricopa and Pinal counties for March. We have seen 4,788 for the first quarter, which is 7.9% more than the 4,436 we saw in the first quarter of last year.

This brings the 12 month rolling average up to 18,739. Last year at this point it was 17,871. That is only a 4.9% increase, much less than most people seem to be forecasting for the 2017 increase over 2016. The consensus forecast appears to be for 20% growth. The biggest quarter is usually the second, so maybe we shall see more aggressive numbers over the next few months.

The biggest contributors with new home permits in March 2017 were:

  1. Mesa -249
  2. Phoenix - 230
  3. Gilbert - 207
  4. Peoria - 207
  5. Buckeye - 182
  6. Unincorporated Pinal County - 150
  7. Maricopa - 135
  8. Goodyear - 126
  9. Queen Creek - 110
  10. Scottsdale 108

April 27 - It is time again for our weekly look at the Cromford® Market Index for the single-family markets in the 17 largest cities (by dollar volume):

The changes over the last month still favor sellers, but only moderately. There are 10 cities showing improving conditions for sellers and 7 showing deterioration.

Most of the deterioration is in the West Valley, with Avondale down 10%, Goodyear down 5%, Peoria down 3%, Glendale down 2% and Buckeye down 2%. Only Surprise managed an improvement.

The Southeast Valley continues to do better than average with Queen Creek up 7%, Gilbert up 6%, Mesa up 4%, Chandler up 2% and Tempe up 1%.

Fountain Hills has started to recover and may manage to claw its way off the bottom rung by overtaking Buckeye and/or Scottsdale which both saw mild deterioration.

Paradise Valley continues to do much better than it did in the first quarter while Avondale is coming down from the heights, perhaps to give some other city a chance of going top for the first time in over a year.

April 26 - Using the deeds recorded during the first quarter in Maricopa and Pinal Counties, let us take a quick look at the luxury market, which is here defined as homes that sold for $1 million and more. The underlying data comes from the Cromford Public section of the Cromford Report, since it is based on public records rather than ARMLS numbers.

Measurement for Market at $1M plus1Q 20151Q 20161Q 2017YoY Change
Total Million Dollar Units Closed 347 343 398 up 16%
Single Family Units Closed 326 332 348 up 5%
Condo / Townhouse Units Closed 21 11 50 up 355%
New Units Closed 49 64 97 up 52%
Re-sale Units Closed 298 279 301 up 8%
Scottsdale Dollar Volume $285M $275M $316M up 15%
Paradise Valley Dollar Volume $132M $151M $171M up 13%
Phoenix Dollar Volume $77M $97M $95M down 2%
Southeast Valley Dollar Volume $40M $31M $32M up 4%
Fountain Hills Dollar Volume $13M $16M $13M down 21%
Cave Creek & Carefree Dollar Volume $7M $13M $19M up 53%
West Valley Dollar Volume $7M $5M $10M up 122%
Average $/SF $330 $344 $347 up 0.8%
Average $/SF - Single-Family $325 $340 $331 down 3%
Average $/SF - Condo / Townhouse $472 $516 $547 up 6%

 

Overall, the first quarter of 2017 was a much busier quarter for million dollar homes than the same period in 2016. Fountain Hills and Phoenix were the only areas that declined. The West Valley, Cave Creek & Carefree saw the greatest percentage growth, but the largest luxury areas (Scottsdale, Paradise Valley) were both up by healthy percentages.

It is clear that the luxury condo/townhouse sector is where the majority of the growth occurred, jumping from 11 to 50 units, the highest we have seen in any quarter in history. Unit growth in the single family sector was a relatively modest 5%.

Prices rose only 0.8% based on average price per square foot, less than the annual rate of inflation. This confirms that despite the healthy increase in volume, there is little pricing power among sellers of luxury homes, thanks to the abundant inventory of active listings. In fact single family pricing fell by 3% over the last 12 months, but condo/townhouse pricing rose by 6% to an eye-watering $547 per sq. ft. It seems to be the attached jewel-boxes where pricing power still resides with the sellers, especially new home sellers given that the average price per sq. ft., for new condo/townhouse units reached $574 per sq. ft.. This is up 22% year over year, thanks to the very high end condo/townhouse developments that have opened since the early part of 2016. In fact there were 17 condo sales over $600 per sq. ft. with the highest at $762. The most expensive locations were:

  • Scottsdale Waterfront Residences
  • Plaza Lofts at Kierland Commons
  • Envy
  • Two Biltmore Estates
  • Enclave at Borgata
  • Esplanade Place

Portland on the Park also sold in volume during 1Q 2017 but at slightly lower prices per sq. ft. than the 6 developments mentioned above.

The first quarter of 2015 was similar to 2016, but the second quarter of 2015 was very strong, so this will make a more challenging comparison for 2Q 2017 when we come to measure that.

April 25 - The S&P / Case-Shiller® Home Price Index® report released today contains data for the 3 month period December 2016 through February 2017. Phoenix added 0.38% since last month, and in contrast to last month this was higher than the national average. The month to month changes for the 20 cities that are reported by Case-Shiller were as follows:

  1. Seattle 1.91%
  2. San Francisco 1.17%
  3. Dallas 1.07%
  4. San Diego 0.98%
  5. Portland 0.76%
  6. Charlotte 0.48%
  7. Boston 0.40%
  8. Atlanta 0.39%
  9. Los Angeles 0.39%
  10. Las Vegas 0.39%
  11. Denver 0.38%
  12. Phoenix 0.38%
  13. Detroit 0.28%
  14. Washington DC 0.22%
  15. Chicago 0.20%
  16. Minneapolis 0.13%
  17. Miami 0.04%
  18. New York -0.03%
  19. Cleveland -0.30%
  20. Tampa -0.52%

We were in 14th place last month, so moved up 2 notches. The national average was 0.24%.

The West Coast and Texas are clearly seeing greater pricing momentum than the rest of the country. Florida is unusually slow.

The year over year changes are as follows:

  1. Seattle 12.2%
  2. Portland 9.7%
  3. Dallas 8.8% (up 1 place)
  4. Denver 8.5% (down 1 place)
  5. Boston 7.6% (up 1 place)
  6. Tampa 6.9% (down 1 place)
  7. Miami 6.7%
  8. San Diego 6.5% (up 6 places)
  9. San Francisco 6.4% (down 1 place)
  10. Las Vegas 6.3% (down 1 place)
  11. Chicago 6.2% (up 2 places)
  12. Detroit 6.2% (down 2 places)
  13. Charlotte 6.1% (down 2 places)
  14. Minneapolis 5.9% (up 1 place)
  15. Atlanta 5.6% (down 2 places)
  16. Phoenix 5.3% (up 1 place)
  17. Los Angeles 5.1% (down 1 place)
  18. Cleveland 4.5% (up 1 place)
  19. Washington DC 4.1% (down 1 place)
  20. New York 3.2%

Phoenix was below the national average of 5.8% but rose 1 place by overtaking Los Angeles in the table. San Diego and Chicago were the biggest upward movers in the table compared to last month.

Seattle, Portland, Denver, San Francisco and Dallas have been outperforming the rest of the country for a long time now. The three year change in index looks like this:

  1. Portland 31.4%
  2. Seattle 31.3%
  3. Denver 31.0%
  4. San Francisco 28.0%
  5. Dallas 27.7%
  6. Miami 23.5%
  7. Tampa 23.0%
  8. Las Vegas 19.1%
  9. Los Angeles 18.6%
  10. Atlanta 18.6%
  11. San Diego 18.4%
  12. Detroit 16.6%
  13. Boston 16.2%
  14. Charlotte 15.7%
  15. Phoenix 14.8%
  16. Minneapolis 12.2%
  17. Chicago 11.4%
  18. Cleveland 8.7%
  19. New York 7.7%
  20. Washington DC 6.5%

Although some people have suggested the Phoenix market may be overheating, Phoenix has appreciated less than the USA national average of 16.0% over the last 3 years.

April 24 - The Commerce Department announced duties of up to 24% on softwood lumber imported from Canada. The tariffs will range from 3% to 24% on the 5 major producers and 20% on all others. 28% of all softwood used in home building in the USA is imported from Canada. This had been expected and lumber prices were already up by 30% over last year. This will add to cost pressures on home builders who are already struggling with the increased costs of land and labor. They will have great motivation to increase list prices if the market allows them to. At the moment the disparity between supply and demand suggests they will have enough pricing power to respond, but this will of course be bad news for new home buyers in the second half of 2017 and in 2018.

April 23 - I think it is time we reviewed the rental listings for some signs of what is happening in the rental market. We exclude vacation rentals from all our statistics.

Right now we have 2,566 active listings, and we had 2,489 this time last year. Little change there really, with a 3.1% increase. At least it is going in the right direction for tenants, but we are still way down from the 6,561 we had back in 2013. Condo and townhouse supply is up 5.9% and single-family only 1.0%

Leases are being signed through ARMLS at a rate of 2,163 a month, down 6% from 2,299 last year. This means we have 1.2 months of supply, up from 1.1 months last year.

The average closed rent is 85.7 cents per sq. ft. per month, which is up 5.0% from 81.7 cents this time last year. The rate of increase is still strong but has subsided from the heights that we saw last year and in 2015.

Overall I would conclude that the rental market is still hot, but is on a slight cooling trend now.

April 22 - It is getting a little uncanny. The year to date count of new listings added to the ARMLS database is 40,194. On April 22, 2016 the count was 40,193. So we have just 1 extra listing.

Mind you, we have 6.4% more ARMLS members and 5.5% more broker's offices than we had 12 months ago. So that 1 extra listing is spread across 2,286 extra agents and 253 extra brokers.

April 21 - I expect many people have noticed that the sales rate in 2017 has increased significantly over 2016. As of yesterday, year-to-date sales were up 13% across the entire ARMLS database. I wonder how many people have noticed that listings under contract are NOT up by a similar percentage. In fact they are slightly DOWN. We had 13,608 yesterday and 13,930 last year on April 20. That is a decline of just over 2%.

The two trends seem at first be a disconnect. How do sales go up when listings under contract are down? The answer is probably in the speed of closing. Despite all the grumbling when the new TILA-RESPA procedures were introduced, we have seen a decline in the number of days it takes to close a loan now that people have got used to the new processes. According to the most recent Ellie Mae Origination Insight report, the average number of days to close a purchase loan was 43 in March 2017. Back in the late 2015 and early 2016 we were seeing an average of 50 to 51 days. That means loan closing times are down about 14%. In turn this means listings are spending less time under contract. So we see more closings without having to increase the listings under contract pool.

April 20 - We take another look at the Cromford® Market Index for the single-family markets in the 17 largest cities by dollar volume:

The biggest deterioration over the last month is in Avondale, but it remains at the top of the table. This deterioration is mainly due to increasing supply, but demand has faded a little too. It remains top because demand still outstrips supply by a very wide margin.

The largest improvement over the last month occurred in Paradise Valley. Here there has been a significant strengthening in demand and a slight reduction in supply. It is looking much better for sellers than last quarter.

Of the largest markets, Phoenix, Mesa and Chandler all improved nicely while Scottsdale faded slightly. Overall the market continues to gently improve for sellers from an already favorable position. So there is little here that spells relief for buyers. Indeed, we have no city with a CMI under 100 (unlike last week) and 14 out 17 cities are in the seller's market zone.

April 19 - Yesterday we looked at the best ZIP codes for listing success rates.

Now for the bad news. Here are the 20 ZIP codes where it has been hardest to succeed with a listing since January 1, 2013. ZIP codes with less than 100 closed listing since January 1, 2013 are ignored.

  1. Carefree 85377 - 51.4%
  2. Rio Verde 85263 - 51.9%
  3. Paradise Valley 85253 - 52.2%
  4. Scottsdale 85262 - 53.1%
  5. Wickenburg 85390 - 55.4%
  6. Scottsdale 85266 - 56.5%
  7. Morristown 85342 - 56.6%
  8. Casa Grande 85194 - 59.8%
  9. Congress 85332 - 60.8%
  10. Phoenix 85003 - 60.8%
  11. Gold Canyon 85118 - 60.9%
  12. Phoenix 85054 - 61.2%
  13. Scottsdale 85255 - 61.3%
  14. Tonopah 85354 63.2%
  15. Scottsdale 85259 - 63.8%
  16. Fountain Hills 85268 - 64.3%
  17. Superior 85173 - 64.3%
  18. Eloy 85131 - 66.6%
  19. Apache Junction 85119 - 65.7%
  20. Phoenix 85012 - 65.9%

The overall average listing success rate is 75.1% since January 1, 2013. This is higher than the average since January 1, 2001, which is only 63%.

April 18 - We were wondering which areas were the easiest to sell homes. To find out we analyzed the listing success rate for every ZIP code within Greater Phoenix since January 1, 2013.

Here are the top 20 ZIP codes where agents have the greatest success with their listings. ZIP codes with less than 100 closed listings are ignored.

  1. Phoenix 85027 - 85.1%
  2. El Mirage 85335 - 84.8%
  3. Sun City 85351 - 84.7%
  4. Sun City West - 84.2%
  5. Chandler 85224 - 84.2%
  6. Peoria 85345 - 84.2%
  7. Chandler 85225 - 83.6%
  8. Mesa 85204 - 83.5%
  9. Mesa 85201 - 83.4%
  10. Peoria 85382 - 82.6%
  11. Tempe 85282 - 82.5%
  12. Sun City 85373 - 82.5%
  13. Mesa 85202 - 82.2%
  14. Tempe 85283 - 82.1%
  15. Avondale 85392 - 82.0%
  16. Chandler 85226 - 81.6%
  17. Gilbert 85233 - 81.6%
  18. Mesa 85210 - 81.5%
  19. Glendale 85302 - 81.5%
  20. Peoria 85381 - 81.3%

The West Valley, especially the northwestern areas are very dominant in this list. The inner Southeast Valley also makes a strong appearance.

If we confine our analysis to homes listed for more than $1 million, the most successful ZIP codes are shown below ( we have ignored ZIP codes with fewer than 5 sales over $1 million)

  1. Chandler 85286 - 94.1%
  2. Phoenix 85013 - 66.7%
  3. Scottsdale 85254 - 54.3%
  4. Phoenix 85014 - 50.0%
  5. Scottsdale 85250 - 50.0%
  6. Gilbert 85296 - 50.0%
  7. Scottsdale 85258 - 48.7%
  8. Scottsdale 85255 - 47.7%
  9. Phoenix 85028 - 47.6%
  10. Paradise Valley 85253 - 47.2%
  11. Phoenix 85018 - 47.1%
  12. Tempe 85284 - 47.1%
  13. Gilbert 85298 - 46.9%
  14. Scottsdale 85259 - 46.5%
  15. Scottsdale 85262 - 45.9%
  16. Scottsdale 85260 - 45.6%
  17. Scottsdale 85251 - 44.7%
  18. Phoenix 85021 - 42.9%
  19. Phoenix 85048 - 42.9%
  20. Glendale 85310 - 41.9%

Only the 3 ZIP codes at the top have a better than even chance of a listing selling. Although its volume of million dollar homes is not high, Chandler 85286 is quite remarkable with 16 successful closings out of 17 listings. the magic ZIP code of 85254 goes some way towards justifying its name by appearing at number 3.

April 17 - If we compare the total dollar volume during the first quarter of 2017 with the same period in 2016, we can see an interesting pattern by price range:

Note that the price range under $100,000 has declined due to lack of supply. The same lack of supply is constraining volumes between $100K and $200K. However above $200K and all the way up to $3 million, dollar volume is up by healthy amounts from 18% to 34%.

Above $3 million, there is no lack of supply, but there seems to be a surprising shortage of demand. This has caused dollar volume to decline 23% in stark contrast to the rest of the market.

April 16 - Few people are paying attention to delinquency rates these days, but the latest report from Black Knight Financial Services makes for interesting reading. The data relates to the month of February 2017. Arizona has 3.1% of its first position home loans in some form of delinquency (from 30 days late upwards). It also has another 0.3% of its loans in the foreclosure process. The total percentage of loans that are non-current is 3.4%, which is a 9.2% lower than last year. We are still one of the better states in the nation for loan currency, placing 42nd out of 51 states (including DC). Oregon and Washington have improved faster than Arizona and overtaken us, but Alaska has deteriorated and fallen behind us, so we rose in the non-currency table by 1 place since last year when we were 43rd.

Alaska stands out as showing initial signs of trouble, with a 18% increase in delinquency over the past year. North Dakota has deteriorated by 8.7%, but it still remains the state with the least percentage of non-current home loans in the nation. South Dakota, Louisiana and Vermont all saw very small deteriorations but all other states are improved since February 2016.

Black Knight provides an interesting map for delinquency rates (these excluded loans already in foreclosure). These days the gulf coast states of Mississippi, Louisiana and Alabama, together with West Virginia have the worst delinquency problems.

We note there are some counties in Mississippi with delinquency rates as high as 23% (Tallahatchie) or even 25% (Noxubee and Perry).

Mississippi, Louisiana and Alabama now have delinquency rates that are between 1.75 and 2 times the national average.

Black Knight also provides an interesting map of average loan to values. California is way out in front in terms of home equity with only 47% loan to value. New York is next with 50% and Washington DC has 51%, while Colorado, Oregon and Washington are comfortable at 53%. West Virginia and Missouri have the highest loan to value at 68%. Arizona is in the middle ground with an average of 62% loan to value.

You can read the whole report here.

April 15 - After 2 complete weeks of the second quarter, we have seen almost exactly the same number of new listings added to the ARMLS database as we saw in 2016. The growth from last year is just 0.1%. This is unusual. In 2016 there was 10.6% growth over the previous year. However it continues the trend that we saw during the first quarter where the difference between 2016 and 2017 was just 0.6%.

Basically, the supply is running at an equivalent rate to last year. This is inadequate to match the number of buyers because closings are running much higher than last year. So far in 2017 we have seen 14% more closings year to date than in the equivalent period in 2016. Because we have 14% more closings from the same supply, the listing success rate has to increase. We are running at 81.8% right now, compared with 78.2% last year. This compensates for about one third of the increase in closings. The other two thirds is leading to a drop in the available inventory. Unfortunately the drop in inventory is not uniform and is affecting some price ranges and locations much more than others.

April 14 - This is the time of year when pricing tends to make its major move - the second quarter. Yesterday the average price per square foot for all areas & types reached $150 for the first time since March 2008. This is a rise of 2.5% in just one month. By the time we get to late June, it is likely that the current momentum will have waned and we anticipate a sideways move or even a moderate retreat during the third quarter, followed by another recovery in the fourth quarter. Greater Phoenix's seasonal pattern is well established, but given the supply shortages it is not surprising that annual appreciation is nearly 7% at the middle of April.

April 13 - The table of Cromford® Report Index values for the single-family markets in the 17 largest cities (by dollar volume) is show below:

 

 

The Southeast Valley is certainly on a roll, with all its cities improving for sellers;

 

  1. Tempe - up 10%
  2. Queen Creek - up 7%
  3. Chandler - up 6%
  4. Mesa - up 5%
  5. Gilbert - up 3%

 

The West Valley is mixed with Surprise up 6% and Glendale improving 2%, but Avondale has weakened by 12% (something it can afford given its long term hold on the top of the table). In addition, Goodyear is down 7% and Peoria down 2%, so the West Valley is definitely falling behind the Southeast Valley from a seller's perspective..

 

Pinal County is also in great form, and Maricopa, its only representative in the top 17 (Queen Creek spans both Maricopa and Pinal), continues to rise up the table, gaining 3% over last month.

 

The Northeast Valley remains the weakest area, though Paradise Valley is making a fine recovery by advancing 10% and threatening to become a seller's market if it can breach 110 by maintaining its recent improvement in demand..

 

Phoenix has been pretty stable for many months but is now making a move in favor of sellers, up 5% since last month.

 

It is the mid-price ranges that are healthiest with high volumes and limited supply. The Southeast Valley is very much the province of the mid-price ranges from $250,000 to $600,000.

 

Volumes in the higher price ranges are much improved over last year but so far this has done little to help prices because of the excessive supply of active listings at price points over $1 million.

 

April 12 - Here are the cities ranked by single-family months of supply (based on their monthly sales rate):

 

  1. Youngtown 1.0
  2. El Mirage 1.2
  3. Tolleson 1.4
  4. Avondale 1.7
  5. Tempe 1.8
  6. Chandler 1.9
  7. Glendale 1.9
  8. Surprise 1.9
  9. Coolidge 2.0
  10. Sun Lakes 2.0
  11. Mesa 2.1
  12. Gilbert 2.1
  13. Maricopa 2.1
  14. Arizona City 2.1
  15. Sun City 2.2
  16. Florence 2.3
  17. Apache Junction 2.3
  18. Casa Grande 2.3
  19. Sun City West 2.3
  20. Tonopah 2.3
  21. Queen Creek 2.4
  22. Laveen 2.4
  23. Waddell 2.4
  24. Phoenix 2.5
  25. New River 2.5
  26. Peoria 2.7
  27. Goodyear 2.7
  28. Buckeye 2.7
  29. Wittmann 2.7
  30. Anthem 2.9
  31. Eloy 3.1
  32. Gold Canyon 3.7
  33. Litchfield Park 4.3
  34. Cave Creek 4.5
  35. Scottsdale 5.5
  36. Rio Verde 6.1
  37. Fountain Hills 6.2
  38. Paradise Valley 10.4
  39. Wickenburg 14.7
  40. Carefree 16.0

 

In this case, "Supply" includes listings in UCB and CCBS status, so the "real" supply of homes without a contract is much less than the numbers above suggest.

 

Buyers who want a more relaxed time should head to the areas ranked 32 or lower. The top 10 are extremely tough places to be a buyer right now.

April 11 - As of April 8, days of inventory for Greater Phoenix (excluding UCB and CCBS listings) stood at 74.8, the lowest level since September 2013. However this one number fails to explain the huge disparity between the bottom and top ends of the market. Here are the days of inventory for various price ranges:

  • under $100K - 49.9 days
  • $100K - $200K - 33.4 days
  • $200K - $300K - 54.6 days
  • $300K - $400K - 86.9 days
  • $400K - $500K - 128. 2 days
  • $500K - $1M - 218.6 days
  • $1M - $2M - 437.7 days
  • over $2M - 882.4 days

It is the $100K to $200K price range that is most stressed by the lack of supply, and within that range the $125K to $150K price range has only 28.3 days of inventory. This is the lowest level since 2005.

The range between $500K and $600K has dropped from 230.8 to168.8 days over the last 12 months, making this sector much more favorable to sellers.

Meanwhile the range over $3M has 1230.5 days of supply, up from 1129.8 this time last year, so sellers outnumber buyers to a huge extent at this rarified price point.

April 10 - In some parts of the valley, the market is so hot that a few people have been drawing parallels with 2005 and expressing fear of a bubble. While I agree that the Southeast Valley, Pinal County and parts of the Northwest Valley are much hotter than they have been for a while, the market is more akin to 2013 than 2005.

I think some people forget quite how ridiculous 2005 was. It was exactly 12 years ago that:

  • Days of Inventory stood at 28 (currently 85)
  • Months of supply was 0.9 (currently 2.8)
  • Annual appreciation rate was 27.9% (currently 6.8%)
  • Dollar volume was up 43.9% annually (currently up 14.6%)
  • Listing success rate was 84.3% (currently 81.9%)
  • Cromford® Supply Index was 41.4 (now 72.6)
  • Cromford® Demand Index was 129.5 (now 106.1)
  • Cromford® Market Index was 312.7 (now 146.1)
  • Average percent of list for closed listings was 99.16% (currently 97.69%)
  • New homes sales were 42,724 a year just in Maricopa County (currently 13,958)

The Greater Phoenix market has a long way to go before conditions get bubbly, and we should remember how few skeptics there were in 2005 that the market could ever go down. Now there are skeptics everywhere, which is a very good reason that another bubble is unlikely to develop. The next housing bubble is likely once everyone who experienced the last one has retired or passed away.

April 9 - Today we will look in more detail at the Southeast Valley, where active listings have fallen by the largest amount within Maricopa County.

Here are the changes in new listings by city:

City (within Maricopa County)Q1 New Listings 2017Q1 New Listings 2016Change
Mesa 2248 2185 +3%
Gilbert 1587 1767 -10%
Chandler 1402 1583 -11%
Ahwatukee (Phoenix) 531 567 -6%
Tempe 462 462 0%
Queen Creek 369 377 -2%
Sun Lakes 195 229 -15%
Apache Junction 3 12 -75%

We will ignore Apache Junction for now, since the majority of this city lies within Pinal County.

Mesa is the only major city showing more new listings in 2017 than 2016. Sun Lakes, Chandler and Gilbert are down by double digit percentages, a significant lack of supply.

Here are the changes in closed sales during the first quarter:

CityQ1 Sales 2017Q1 Sales 2016Change
Mesa 1670 1426 +17%
Gilbert 1126 1107 +2%
Chandler 1011 934 +8%
Ahwatukee (Phoenix) 335 304 +10%
Tempe 362 297 +22%
Queen Creek 230 251 -8%
Sun Lakes 139 128 +9%
Apache Junction 8 9 -11%

So although Mesa and Tempe saw no reduction in new listings, they have have been charging ahead in closed sales.

Overall it is a good time to be a seller in the Southeast Valley and the current annual appreciation rates look like this:

  1. Mesa +8.4%
  2. Sun Lakes +6.8%
  3. Tempe +6.2%
  4. Queen Creek +6.2%
  5. Gilbert +6.1%
  6. Chandler +4.8%
  7. Ahwatukee (Phoenix) +4.0%

So despite being the only major city with more new listing than last year, its extremely strong growth in sales has helped Mesa to rank top in terms of appreciation.

April 8 - Looking at the active listing counts for single-family detached homes at the end of the first quarter, we see that some areas have seen much larger declines since the same time last year:

AreaActive Listings (excluding UCB & CCBS) April 1, 2017Active Listings (excluding UCB & CCBS) April 1, 2016Change
Pinal County 1587 2166 -27%
Southeast Valley 3277 4179 -22%
Northeast Valley 3558 3912 -9%
West Valley 3860 3904 -1%
Phoenix & North Valley 2902 2902 0%

Pinal County has seen a huge fall in active listings of 27% and the Southeast Valley has also declined significantly by 22%. The Northeast valley has seen a more modest decline of 9% while the West Valley and Phoenix have seen very little change.

Since it has seen the biggest movement, let us look at Pinal County to see whether it was caused by a decline in new listings or a rise in sales.

  • New listings during Q1 - 2905 in 2016 and 2653 in 2017
  • Closed Sales during Q1 - 1643 in 2016 and 1916 in 2017

So there has been a rise of 17% in sales activity as well as a 9% fall in the number of new listings. These have combined to give us a steep 27% fall in active listings.

The rise in sales activity is about twice as significant as the fall in new listings, but both work to make life easier for sellers.

Has this been uniform across Pinal County?

First here are the changes in new listings

CityQ1 New Listings 2017Q1 New Listings 2016Change
San Tan Valley 930 996 -7%
Maricopa 609 646 -6%
Casa Grande 305 370 -18%
Florence 198 209 -5%
Apache Junction 194 240 -19%
Gold Canyon 202 202 0%
Arizona City 91 90 +1%
Coolidge 77 68 +13%
Eloy 27 55 -51%
All Other Locations 20 29 -31%

The steepest fall off in new listings is seen in Eloy, Apache Junction and Casa Grande, as well as the smaller locations. The other locations saw a drop that was below average for Pinal County.

Now let us look at the change in sales activity:

CityQ1 Sales 2017Q1 Sales 2016Change
San Tan Valley 632 584 +8%
Maricopa 411 340 +21%
Casa Grande 242 204 +19%
Florence 160 128 +25%
Apache Junction 164 138 +19%
Gold Canyon 145 109 +33%
Arizona City 70 67 +5%
Coolidge 51 39 +31%
Eloy 30 16 +88%
All Other Locations 11 18 -39%

The rise in sales activity is much higher in Eloy, Gold Canyon, Coolidge and Florence with Maricopa, Casa Grande and Apache Junction above average. San Tan Valley and Arizona City have seen relatively modest increases in sales, while the smaller locations have declined.

It is not surprising therefore that Pinal County has seen some of the strongest appreciation over the past year:

  1. Arizona City +15.9%
  2. Coolidge +10.2%
  3. Florence +9.7%
  4. Maricopa +9.7%
  5. Casa Grande +8.4%
  6. San Tan Valley +7.3%
  7. Apache Junction +6.8%
  8. Eloy +5.5%.
  9. Gold Canyon +0.2%

April 7 - We have the preliminary transaction data for March derived by the Information Market from the office of the Maricopa County Recorder. The numbers are just as impressive as the ARMLS numbers we released on April 2.

There were 10,818 closed sales for single-family homes, condos and townhomes, the largest number since June 2006. This is up 12% from March 2016, very similar to the percentage increase in closed listings.

The advantage that new homes have enjoyed over re-sales has fallen back to more normal levels- new homes grew by 15%, while re-sales by 12%, year over year. Because new home builders are increasingly addressing the lower mid-price ranges, the median price for new homes was $320,437, down from $336,000 last month, and only 2% higher than $315,229, which we saw in March 2016.

The re-sale median was up 6% from $217,000 to $230,000 over the past 12 months.

Almost the whole market seems to be participating in the improving trend in sales volumes. We note that the listing success rate for Scottsdale has improved from an overall 66% in 2016 to 73% during the first quarter of 2017. In a higher priced ZP code like 85255, we are currently measuring a success rate of 67%, up from only 59% in 2016.

April 6 - Time once again to take a look at the Cromford® Market Index for the single-family markets in the largest 17 cities:

This is generally a positive picture for sellers with 11 out of 17 cities showing sellers gaining bargaining power over the last month. Leading among these are Tempe, Paradise Valley, Surprise and Chandler. Paradise Valley has improved enough to jump from last place to 14th in just 2 weeks.

There are 6 cities where things have deteriorated for sellers, with Avondale and Goodyear the primary movers. Despite this, Avondale remains at the top of the table. Occupying 4 of the 5 bottom places, Northeastern cities are offering buyers the strongest bargaining power. However only Fountain Hills has dropped below the balanced 100 mark.

April 5 - Here are the significant ZIP codes with the highest rise in average sale price per square foot between Q1 of 2016 and Q1 of 2017. All dwelling types are included:

  1. Phoenix 85012 - up 26.5% to $222.87
  2. Phoenix 85051 - up 19.0% to $106.40
  3. Casa Grande 85194 - up 18.8% to $117.90
  4. Phoenix 85040 - up 18.7% to $101.88
  5. Phoenix 85009 - up 18.2% to $105.29
  6. Phoenix 85016 - up 16.5% to $231.50
  7. Arizona City 85123 - up 16.1% to $80.24
  8. Phoenix 85035 - up 16.0% to $104.58
  9. Wickenburg 85390 - up 15.8% to $152.69
  10. Mesa 85201 - up 15.1% to $126.69
  11. Glendale 85307 - up 15.1% to $113.39
  12. Mesa 85213 - up 14.6% to $138.77
  13. Surprise 85387 - up 14.6% to $150.95
  14. Avondale 85323 - up 13.7% to $105.13
  15. Peoria 85345 - up 13.6% to $120.04
  16. Glendale 85306 - up 13.5% to $128.80
  17. Mesa 85202 - up 13.5% to $134.10
  18. Phoenix 85028 - up 13.1% to $190.71
  19. Florence 85132 - up 12.3% to $89.35
  20. El Mirage 85335 - up 11.5% to $106.42

We see entrants from the central valley, the west, the southeast and Pinal County in this list.

The bottom ranked ZIP codes for price appreciation between Q1 2016 and Q1 2017 are:

  1. Carefree 85377 - down 9.7% to $217.25
  2. Scottsdale 85262 - down 7.9% to $252.85
  3. New River 85087 - down 4.1% to $134.78
  4. Tonopah 85354 - down 3.6% to $77.11
  5. Phoenix 85004 - down 2.6% to $278.54
  6. Waddell 85355 - down 0.5% to $110.44
  7. Scottsdale 85259 - down 0.2% to $223.69
  8. Phoenix 85042 - up 0.1% to $119.81
  9. Phoenix 85085 - up 0.2% to $139.82
  10. Scottsdale 85258 - up 0.6% to $222.94

April 4 - Let us try and get a picture of the sales growth that occurred in Q1 of 2017 by comparing it with Q1 of 2016.

For all property types within Greater Phoenix, we saw an overall 13.6% growth in closed listings from 13,214 in 2016 to 15,008 in 2017. Looking at dollar volumes, these grew by 21.3% from $3.6 billion to $4.4 billion.

The significant ZIP codes with the most growth in dollar volume were:

  1. Wittmann 85361 - up 199%
  2. Eloy 85131 - up 104%
  3. Youngtown 85363 - up 93%
  4. Surprise 85378 - up 88%
  5. Phoenix 85031 - up 84%
  6. Phoenix 85012 - up 76%
  7. Glendale 85302 - up 74%
  8. New River 85087 - up 71%
  9. Glendale 85307 - up 66%
  10. Avondale 85392 - up 65%
  11. Phoenix 85085 - up 60%
  12. Mesa 85201 - up 58%
  13. Peoria 85383 - up 55%
  14. Avondale 85323 - up 54%
  15. Mesa 85202 - up 53%
  16. Phoenix 85040 - up 52%
  17. Waddell 85355 - up 52%
  18. Mesa 85215 - up 51%
  19. Phoenix 85028 - up 47%
  20. Phoenix 85033 - up 47%

This list is dominated by the West Valley, particularly the Northwest Valley.

The following significant ZIP codes failed to participate in the overall trend in dollar volumes:

  1. Mesa 85203 - down 19%
  2. Chandler 85226 - down 9%
  3. Phoenix 85053 - down 7%
  4. Phoenix 85013 - down 6%
  5. Phoenix 85042 - down 5%
  6. Fountain Hills 85268 - down 4%
  7. Cave Creek 85331 - down 4%
  8. Queen Creek 85142 - down 2%
  9. Phoenix 85004 - down 2%
  10. Phoenix 85029 - flat

By "significant" we mean ZIP codes with at least 20 sales a year or an annual dollar volume of over $10 million.

For the Northeast Valley, we see growth in dollar volume as follows:

  1. Scottsdale 85257 - up 36%
  2. Scottsdale 85251 - up 33%
  3. Scottsdale 85260 - up 29%
  4. Rio Verde 85263 - up 29%
  5. Carefree 85377 - up 28%
  6. Scottsdale 85258 - up 27%
  7. Scottsdale 85259 - up 25%
  8. Phoenix 85016 - up 24%
  9. Phoenix 85054 - up 20%
  10. Scottsdale 85255 - up 20%
  11. Scottsdale 85262 - up 13%
  12. Scottsdale 85250 - up 11%
  13. Paradise Valley - up 11%
  14. Scottsdale 85266 - up 6%
  15. Scottsdale 85254 - up 6%
  16. Phoenix 85018 - up 5%
  17. Fountain Hills 85268 - down 4%
  18. Cave Creek 85331 - down 4%

Here we see the dominance of South and Old Town Scottsdale.

There are several ZIP codes that grew dollar volume but failed to grow average price per square foot. Carefree 85377, Scottsdale 85262 and Scottsdale 85259 all fall into that category. We will look at the Q1 price movements by ZIP code tomorrow.

April 3 - We should recognize March 2017 as one of the strongest months for closed listings, with 9,272 over all areas & types. This is the highest monthly total since May 2013 and the highest total for March since 2005, making it the second most successful March ever.

To be fair, March did contain 23 working days, the highest number we ever see in a month, so we should have expected a big number. But March 2016 also had 23 working days and only managed 8,363 closed listings.

You can see the big spike in context in the long term sales chart here:

Because it also benefits from the 6% appreciation since last year, the dollar volume chart is even more impressive. 

In this chart, dollar volume is at its highest monthly level since 2005.

April 2 - Multi-family permits are still running at a high rate - 9,270 per year for the 12 months ending on February 28.

In 2017 year-to-date, Glendale is leading the pack for permits with 471 units. The usual leader, Phoenix, has only contributed 244, with Surprise and Chandler supply the bulk of the remainder.

April 1 - For new listings 2017 has lagged slightly behind 2016 all the way through the first quarter, but just pushed in front on the last day of March, winning by a nose. We counted 32,291 new listings added to ARMLS during the first quarter of 2017 which is 0.6% ahead of 2016 with 32,199.

Both totals are well above 2015 which only saw 30,505 new listings added.

With closed sales running well ahead of 2016, this rate of new listings is insufficient to move the market balance in favor of buyers and sellers still have a strong advantage across the vast majority of the market.

March 2017

March 30 - Let us take another of our regular looks at the Cromford® Market Index for the single-family markets in the 17 largest cities:

Gradual improvement for sellers is apparent with 13 out of 17 cities showing better conditions for sellers than last month. The only exceptions are Avondale, Goodyear, Gilbert & Scottsdale.

The highest percentage improvements are for Surprise, Maricopa, Tempe, Paradise Valley, Mesa and Glendale.

Paradise Valley has managed to lift itself off the bottom rung in the table, to be replaced by Fountain Hills.

March 29 - For the first 2 months of 2017, spending on attached homes (townhomes and condominiums) has been growing much faster than spending on single-family homes. Based on total dollar volume for recorded deeds in Maricopa and Pinal counties, we see the following:

PeriodDollar Volume 2016Dollar Volume 2017Change %
January $181,506,902 $260,001,623 43.2%
February $213,455,852 $306,953,305 43.8%
Jan + Feb $394,952,754 $566,954,928 43.6%

This is far in excess of the growth in single-family homes, which was:

PeriodDollar Volume 2016Dollar Volume 2017Change %
January $1,597,337,667 $1,983,318,918 24.1%
February $1,829,948,260 $2,114,979,912 15.6%
Jan + Feb $3,428,285,927 $4,098,298,830 19.5%

This is strong growth by any standards but the shift in favor of attached homes is significant, from 10.3% to 12.2% market share.

The growth of attached new home sales was even larger, up from $41,649,073 in Jan-Feb 2016 to $118,210,394 in Jan-Feb 2017, a growth rate of 183.8%. Market share within the new home sector doubled from 6.7% in Jan-Feb 2016 to 13.4% in Jan-Feb 2017.

March 28 - The S&P / Case-Shiller® Home Price Index® report released today contains data for the 3 month period November 2016 through January 2017. There is not much excitement for Phoenix since the latest index value was almost the same as last month. The month to month changes for the 20 cities that are reported by Case-Shiller were as follows:

  1. San Diego 0.80%
  2. Las Vegas 0.62%
  3. Seattle 0.59%
  4. Denver 0.48%
  5. Boston 0.40%
  6. Charlotte 0.39%
  7. Los Angeles 0.38%
  8. Washington DC 0.30%
  9. New York 0.29%
  10. Miami 0.26%
  11. Dallas 0.25%
  12. Chicago 0.17%
  13. Portland 0.13%
  14. Phoenix 0.01%
  15. Tampa -0.01%
  16. Atlanta -0.24%
  17. Detroit -0.40%
  18. San Francisco -0.41%
  19. Cleveland -0.48%
  20. Minneapolis -0.59%

We were in 14th place last month too, and well below the national average of 0.16%, which slipped from 0.21%.

Forbes magazine led with the headline "Home Prices Are on a Tear in 2017, Says S&P Case-Shiller" but this is a gross overstatement. If anything, home price increases are on a slower trend compared to last month.

The year over year changes are as follows:

  1. Seattle 11.3%
  2. Portland 9.7%
  3. Denver 9.2%
  4. Dallas 8.2%
  5. Tampa 8.1%
  6. Boston 7.0%
  7. Miami 6.7%
  8. San Francisco 6.3%
  9. Las Vegas 6.2%
  10. Detroit 6.2%
  11. Charlotte 6.0%
  12. Atlanta 5.9%
  13. Chicago 5.8%
  14. San Diego 5.7%
  15. Minneapolis 5.4%
  16. Los Angeles 5.3%
  17. Phoenix 5.1%
  18. Washington DC 3.9%
  19. Cleveland 3.9%
  20. New York 3.2%

Phoenix was below the national average of 5.9% and fell from 16th to 17th place in the table.

Seattle, Portland and Denver have been outperforming the rest of the country for a long time now. The three year change in index looks like this:

  1. Portland 31.4%
  2. Seattle 31.3%
  3. Denver 30.5%
  4. Dallas 27.7%
  5. San Francisco 26.8%
  6. Miami 23.3%
  7. Tampa 22.7%
  8. Las Vegas 19.1%
  9. San Diego 18.6%
  10. Los Angeles 18.6%
  11. Atlanta 17.5%
  12. Detroit 16.6%
  13. Boston 16.2%
  14. Charlotte 15.7%
  15. Phoenix 14.2%
  16. Minneapolis 12.2%
  17. Chicago 10.3%
  18. Cleveland 8.7%
  19. New York 7.7%
  20. Washington DC 6.8%

Over the last three years, Phoenix has appreciated less than the USA national average of 16.3%.

March 27 - Single family permits are not growing as fast as home sales. In February the 12 month count rose to 18,551 for Maricopa and Pinal Counties combined. This compares with 18,491 in January, a very modest 0.3% increase month to month. In February 2016, the 12 month count was 17,512, so the annual increase is currently running at 5.9%. Not only is the annual growth much slower than the rate of closings, the rate of growth is slowing down. Between January and February 2016 the month to month change in the 12 month count was 2.2%, which is nearly 7 times faster growth than we are seeing this year.

We are not seeing new homes planned at the rate necessary to meet the current increase in demand. This suggests that supply will continue to tighten, lead times will lengthen and prices will have to rise. Underlying causes are builders struggling to maintain profit margins in the face of stubbornly high land costs and scarce skilled labor which is growing ever more expensive. Government actions to drive immigrant labor out of the country will probably make the labor shortage more acute and new homes harder to find. However it will shrink re-sale and rental housing demand a little since that labor force will no longer need somewhere to live in Arizona.

March 26 - The overall listing success rate is hovering just under 82%, a small but significant increase over the 78% we were experiencing this time last year. The market is not dramatically different but we are seeing fewer cancellations and expirations. This means sellers are in a somewhat better position than in March 2016.

March 25 - In 2017 year to date we have seen 29,926 new listings added to the ARMLS system. This is remarkably similar to the 29,925 we saw in 2016 at this point.

2017 got off to a slightly slow start for new listings but has now caught up. This is hardly good enough however since closings are far more numerous in 2017. As of today we have seen 19,098 closed listings, which is up a hefty 17.3% from this time last year. Clearly if closings are up over 17% and new listings are flat, then supply is going to feel scarcer than last year in the majority of areas and price ranges.

March 23 - Looking once again at the Cromford® Market Indexes for the single family markets within the largest cities we see:

Here we see a positive picture for sellers with improvements in their negotiation power in 12 out of 17 cities. Surprise, Maricopa, Tempe, Glendale and Mesa lead the group advancing.

The only cities with significant deterioration were Scottsdale, Goodyear and, Avondale. However the latter remains far ahead at the top of the table. With Paradise Valley improving we now have no cities in the zone below 100.

March 21 - In Maricopa County there were 468 purchases by Canadians between March 2016 and February 2017. In the same period there were 2,006 sales, so sales outnumbered purchases by 4.3. Sales are up 11% while purchases are down 39% from the prior year.

March 20 - Although the active listing counts, both with and without UCB and CCBS listings) are still inching up, the strong rate of closings is driving the short term measures of supply ever lower. Long term measures are stable however.

For all areas & types we have 101 days of inventory, equalling the highs reached earlier this year on February 13 and March 13. The short term months of supply reading is down to 3.3 months having peaked at 4.0 months in January and February. Both measures are lower than last year when we saw 121 and 4.1 respectively.

March 19 - The arrival rate of new listings has increased over the last 2 weeks relative to last year. We have now seen almost as many added as we did year to date in 2016. As a result the total number of active listings is still growing, although very slowly. We should reach the peak for 2017 over the next few weeks. Both the Cromford® Supply Index and the Cromford® Demand Index are very stable indicating little change in the balance between buyers and sellers.

March 18 - The table below ranks the cities by their annual sales rate at the beginning of March. This is based on public recordings, not the ARMLS data.

RankPostal CityAnnual Sales Rate 2017Annual Sales Rate 2016Change
1Phoenix 27,879 25,939 7.5%
2Mesa 12,293 10,731 14.6%
3Scottsdale 9,543 8,910 7.1%
4Gilbert 7,759 7,113 9.1%
5Chandler 7,047 5,859 20.3%
6Peoria 5,798 4,896 18.4%
7Glendale 5,502 5,112 7.6%
8Surprise 4,414 4,141 6.6%
9San Tan Valley 4,043 3,434 17.7%
10Buckeye 3,339 2,763 20.8%
11Goodyear 3,131 2,707 15.7%
12Tempe 2,753 2,589 6.3%
13Sun City 2,649 2,373 11.6%
14Maricopa 2,139 1,960 9.1%
15Queen Creek 1,966 1,652 19.0%
16Avondale 1,922 1,660 15.8%
17Sun City West 1,655 1,513 9.4%
18Laveen 1,333 1,126 18.4%
19Casa Grande 1,292 1,101 17.3%
20Cave Creek 1,021 936 9.1%
21Fountain Hills 917 914 0.3%
22Litchfield Park 911 814 11.9%
23Apache Junction 883 799 10.5%
24Tolleson 872 875 -0.3%
25Florence 851 743 14.5%
26El Mirage 746 740 0.8%
27Sun Lakes 659 612 7.7%
28Anthem 548 526 4.2%
29Gold Canyon 535 449 19.2%
30Paradise Valley 501 538 -6.9%
31Tucson (in Pinal) 468 449 4.2%
32Waddell 329 299 10.0%
33Arizona City 285 281 1.4%
34Coolidge 284 228 24.6%
35Eloy 235 199 18.1%
36New River 221 249 -11.2%
37Rio Verde 208 135 54.1%
38Wickenburg 199 166 19.9%
39Oracle 187 127 47.2%
40Youngtown 170 147 15.6%

Note that Peoria has overtaken Glendale, which was in 4th place back in 2000, having been surpassed by Chandler and Gilbert many years ago.

New River and Paradise Valley saw significant declines in unit sales volume, going against the trend. Arizona City, Tolleson and Fountain Hills were also much weaker than average.

Among the larger cities, Chandler, Mesa , Queen Creek, Buckeye, Goodyear, San Tan Valley, Avondale and Peoria benefited from powerful growth with Gilbert and Surprise taking a bit of a pause compared to recent years.

March 17 - Comparing the Cromford Market Index for the single-family markets in the 17 largest cities (by dollar volume) with the index one month ago, we get the following:

There are 11 markets that are improving for sellers and only 6 deteriorating. Overall this is a positive move in four weeks.

Scottsdale, Goodyear and Gilbert are the main cities with a negative trend, and Scottsdale has moved from a seller's market into a balanced market.

Maricopa and Surprise show the largest positive trend over the past month, with Tempe not far behind them.

March 16 - The Cromford® Market Index for all areas and types has been extremely stable over the last few weeks, holding a tight range between 144.4 and 145.0. The supply index is unchanged at 72.9 since February 27 while the demand index has hovered between 105.3 and 105.5. At the moment this lack of direction means sellers remain in charge across much of the market. Although average sales price per square foot has changed little since January, we are seeing a rise in the pending average $/SF, which has just climbed over $151 for the first time since March 2008. This suggests we are likely to see the usual second quarter rise in average sales prices start to make its move very shortly.

March 15 - In contrast to yesterday, here are the ZIP codes with the highest inventory. Buyers can afford to be quite choosy in these locations while sellers will need a great deal of patience.

  1. Carefree 85377 - 547 days
  2. Scottsdale 85262 - 541 days
  3. Paradise Valley - 443 days
  4. Rio Verde 85263 - 408 days
  5. Wickenburg 85390 - 378 days
  6. Scottsdale 85266 - 315 days
  7. Scottsdale 85255 - 279 days
  8. Gold Canyon 85118 - 264 days
  9. Phoenix 85004 - 259 days
  10. Morristown 85342 - 253 days

Here is the current state of play with respect to the 3 month moving average $/SF in these locations:

  1. Carefree 85377 - $213.70 versus $247.99 - down 13.8%
  2. Scottsdale 85262 - $254.60 versus $268.62 - down 5.2%
  3. Paradise Valley - $385.06 versus $342.05 - up 12.6%
  4. Rio Verde 85263 - $166.16 versus $167.72 - down 0.9%
  5. Wickenburg 85390 - $154.21 versus $132.70 - up 16.2%
  6. Scottsdale 85266 - $236.85 versus $217.00 - up 9.1%
  7. Scottsdale 85255 - $275.07 versus $288.49 - down 4.7%
  8. Gold Canyon 85118 - $154.60 versus $163.40 - down 5.4%
  9. Phoenix 85004 - $275.05 versus $267.30 - up 2.9%
  10. Morristown 85342 - $99.72 versus $100.10 - down 0.4%

Paradise Valley was aided by one extremely expensive home sale in January 2017 ($12.75M), but 6 of the 9 other locations above saw decreases in the average price per sq. ft.

March 14 - Based on the current number of active listings (excluding UCB and CCBS listings) and the annual sales rate, here are the ZIP codes with the least supply in the Greater Phoenix area (all dwelling types included).

  1. El Mirage 85335 - 24 days
  2. Mesa 85210 - 28 days
  3. Chandler 85224 - 32 days
  4. Mesa 85202 - 32 days
  5. Youngtown 85363 - 33 days
  6. Chandler 85225 - 34 days
  7. Phoenix 85027 - 36 days
  8. Glendale 85302 - 37 days
  9. Tempe 85282 - 39 days
  10. Mesa 85201 - 40 days

Last year this list was dominated by the West Valley, but in 2017 the Southeast Valley takes 6 of the top 10 slots. I would regard anything under 60 days as being very short of supply, so buyers are at a severe disadvantage in these locations.

What is happening to prices in these ZIP codes? Here are the 3-month moving average prices per sq. ft. compared to a year ago

  1. El Mirage 85335 - $106.77 versus $94.69 - up 12.8%
  2. Mesa 85210 - $124.52 versus $119.77 - up 4.0%
  3. Chandler 85224 - $149.57 versus $144.40 - up 3.6%
  4. Mesa 85202 - $132.61 versus $119.57 - up 10.9%
  5. Youngtown 85363 - $96.81 versus $89.71 - up 7.9%
  6. Chandler 85225 - $144.51 versus $120.25 - up 20.2%
  7. Phoenix 85027 - $137.90 versus $125.04 - up 10.3%
  8. Glendale 85302 - $110.78 versus $99.96 - up 10.8%
  9. Tempe 85282 - $145.85 versus $137.11 - up 6.4%
  10. Mesa 85201 - $127.21 versus $105.83 - up 20.2%

March 13 - On February 24, we examined days of inventory by price range, comparing this year with last year. Today we are doing the same thing but segmenting by dwelling type rather than price range.

 

LocationDwelling TypesDays of Inventory March 2016Days of Inventory March 2017Change
Greater Phoenix All 96 78 -19%
Greater Phoenix Single-family 93 77 -18%
Greater Phoenix Condo/Townhouse 98 74 -25%
Greater Phoenix Mobile Home 182 145 -20%

 

Here we see that the largest sector, single-family, representing about 80% of the market, has improved by 18% from a seller's perspective. However the smaller sectors have seen greater improvement. The inventory of condos & townhouses, in particular, is down 25% compared to a year ago and these attached homes have a greater imbalance between supply and demand. Mobile homes have improved for sellers by 20%, but still have substantially higher inventory at 145 days.

 

Let us also look at the figures by county.

 

LocationDwelling TypesDays of Inventory March 2016Days of Inventory March 2017Change
Maricopa County All 92 77 -17%
Pinal County All 131 85 -35%
Yavapai County All 368 298 -19%

 

The inventory in Pinal County has fallen much more dramatically than in Maricopa County, but still remains a little higher at the moment.

 

Yavapai County refers to the ARMLS territory only, namely Black Canyon City, Congress, Cordes Junction, Cordes Lakes, Crown King, Peeples Valley, Spring Valley and northern parts of Wickenburg and Morristown. Even though supply is plentiful here, it has fallen by the same percentage as Greater Phoenix as a whole.

March 12 - Extending our analysis of the listing success rate from yesterday, we are now going to compare the different geographic areas.

  1. Southeast Valley - 81%
  2. West Valley - 80%
  3. Central and North Valley - 77%
  4. Pinal County - 75%
  5. Northeast Valley - 65%

Ignoring the tiniest locations, the most significant cities with very high success rates are:

  1. El Mirage - 91%
  2. Sun City - 88%
  3. Youngtown - 86%
  4. Avondale - 85%
  5. Sun City West 84%

The cities with the lowest success rates are:

  1. Carefree - 46%
  2. Paradise Valley - 47%
  3. Rio Verde - 52%
  4. Wickenburg - 54%
  5. New River - 59%

The Southeast Valley is currently very consistent with Gilbert, Mesa, Chandler and Tempe all at 81 to 82%. Cave Creek has the highest success rate in the Northeast, but Scottsdale varies from a high of 81% in 85257 to a low of 48% in 85262.

March 11 - If you work mainly with luxury homes you may not be aware of how easy it is for most sellers these days. Of course it is still possible to make mistakes like pricing a home way too high, but the Listing Success Rate chart tells no lies.

The current overall reading is 80.8% for all areas & types, and since this includes expensive homes, it is a pretty high number. The last time we saw an overall listing success rate that high was June 2013. In those days investors were snapping up every distressed property they could find, and they were disappearing fast. To achieve a listing success rate over 80% requires a very healthy market.

To see how it plays out by market sector, you can use the Listing Success Rate Tableau chart (for Chandler and Gilbert), and I recommend that you check it out, including the many different tabs showing different views of the data.

We are going to review a few facts gleaned from the listing success rate.

Listing success by price range:

  1. $100K to $150K - 87% (86% last year)
  2. $150K to $200K - 86% (87% last year)
  3. $200K to $300K - 84% (82% last year)
  4. $50K to $100K - 80% (82% last year)
  5. $300K to $500K - 73% (74% last year)
  6. Under $50K - 68% (79% last year)
  7. $500K to $1M - 63% (61% last year)
  8. $1M to $2M - 53% (48% last year)
  9. Over $2M - 32% (47% last year)

It is getting harder to sell homes under $100K as well as homes over $2 million. From $100K up to $300K it is very easy - that is what a success rate over 82% means. $500K to $2 million is harder, but still easier than this time last year.

March 10 - In the most recent Black Knight Financial Services Mortgage Monitor Report. which focuses on January 2017, we can see that mortgage delinquencies fell again during 2016. For the country as a whole, 4.2% of first home loans had a payment late by more than 30 days and another 0.9% have entered the foreclosure process. One year earlier there were 5.1% of first home loans with a payment late by more than 30 days and an additional 1.3% were in foreclosure. This is an overall improvement of 18.6%, pretty impressive for one year.

Arizona behaved almost exactly like the country as a whole, with an improvement of 18.6%, leaving us with 3.1% of first home loans with a payment late by over 30 days and another 0.4% already in foreclosure. We used to have the lowest percentage in foreclosure, but now Colorado is down to 0.2%, while California, Minnesota and Michigan are at 0.3%.

New Jersey and New York have by far the highest percentage of homes in foreclosure, both with 2.8%. However they do not have the worst delinquency problems. That doubtful honor goes to the following southern states:

  1. Mississippi - 11.3% of loans non-current
  2. Louisiana - 9.8% of loans non-current
  3. Alabama - 7.9% of loans non-current
  4. West Virginia - 7.7% of loans non-current

The bright side for these states is that at least the delinquency rate is improving year over year. That cannot be said for Alaska where delinquency has worsened by 6.9%. It is the only state with a negative change, though Wyoming and North Dakota managed less than a 6% improvement. All three states have been affected by the loss of jobs in the energy sector.

The biggest fall in delinquency over last year can be found in Washington state (down 26.5%), followed closely by Colorado (down 26.2%).

March 9 - The slight downward trend in the Cromford® Market Index is being replaced a very slight upward trend. The Cromford® Market Index for the single-family markets 17 largest cities is also starting to improve a little.

Here we have 9 out of 17 cities with an improving trend from a seller's perspective and 8 with a deteriorating trend. You cannot get closer to a slight upward trend than that, but I suspect next week will have more cities showing improving CMIs.

The strongest positive moves were by Surprise, Maricopa, Avondale and Buckeye, so the West Valley is doing great for sellers at the moment, and Maricopa is getting its mojo back.

There is a mixed picture in the Southeast Valley with Tempe and Mesa moving ahead but Chandler, Queen Creek and (especially) Gilbert moving backwards.

The Northeast Valley takes 4 of the 5 bottom spots with Fountain Hills and Scottsdale under performing. With the market over $1 million looking relatively weak, we can expect a slower pace of improvement in the northeast.

March 8 - The percentage of final list price achieved at closing is another useful indicator of how the market is doing. It is not much use for forecasting, since it is a trailing indicator, but it is good for confirming the current situation. If a segment is achieving a higher percentage than average we can conclude that times are good, and vice versa.

Lets look at the top 17 cities and their single family markets:

RankCityCurrent % List (Year to Mar 2017)Long Term Average % List (Since 2001)Difference
1Avondale 98.85% 98.75% +0.10
2Queen Creek 98.61% 98.30% +0.31
3Buckeye 98.43% 98.08% +0.35
4Glendale 98.39% 98.23% +0.16
5Gilbert 98.33% 98.13% +0.20
6Maricopa 98.25% 97.71% +0.54
7Mesa 98.16% 97.79% +0.37
8Surprise 98.14% 98.03% +0.11
9Goodyear 98.14% 97.71% +0.43
10Chandler 98.00% 97.86% +0.14
11Peoria 98.00% 97.92% +0.08
12Tempe 97.79% 97.36% +0.43
13Phoenix 97.60% 97.45% +0.15
14Cave Creek 96.73% 96.54% +0.19
15Scottsdale 95.98% 95.26% +0.72
16Fountain Hills 95.66% 95.45% +0.21
17Paradise Valley 93.80% 91.92% +1.88

We note that all 17 cities are above their long term averages. Cities with higher prices tend to achieve lower percentages of list, though in this table Gilbert and Mesa are higher than that would suggest while Maricopa & Surprise are lower.

March 7 - When we look at the market for single family homes over $500,000 we see the following changes in the quarterly average price per sq. ft.

AreaAverage $/SF Dec 2015 - Feb 2017Average $/SF Dec 2016 - Feb 2017% Change
West Valley $172.13 $165.02 -4.1%
Phoenix $231.84 $230.62 -0.5%
Northeast Valley $355.87 $352.71 -0.9%
Southeast Valley $163.90 $173.57 +5.9%

The Southeast Valley sticks out like a sore thumb and has done for several months now. This is the only large area where homes over $500,000 have been selling for much higher average prices per sq. ft. than last year. There are certainly a few spots in the Northeast Valley and Phoenix that have done the same, such as Arcadia and Old Town Scottsdale, but when we consider the larger areas, these favorable trends are dragged down by the weak price trends in North Scottsdale, Paradise Valley, Fountain Hills, Carefree and the Biltmore District. The $/SF ratio between the northeast and the southeast has closed from 2.17:1 to 2.03 :1 over the past 12 months.

Again restricting our analysis to homes over $500,000 we can find some pretty steep rises in the quarterly average price per sq. ft. in the following southeastern ZIP codes:

  • Mesa 85213 - up 26% from $131.68 to $165.85
  • Gilbert 85298 - up 19% from $150.29 to $178.37
  • Mesa 85207 - up 11% from $168.59 to $187.86
  • Tempe 85284 - up 6% from $182.27 to $193.26
  • Gilbert 85234 - up 6% from $161.58 to $171.78

All of these areas offer the buyer a good choice of large luxury style homes at relatively cheap prices, luxury homes for the budget conscious, if you like. Since this has become a visible phenomenon over the past 6 months, I wonder if there is a correlation between this favorable price trend and the creation of high-tech jobs in the Southeast Valley particularly along Rural Road. The jobs pay above-average salaries and for lower-end luxury home buyers who care about getting the maximum house for their money (and living close to a freeway so they can get to work easily), the Southeast Valley has been looking pretty inexpensive for the last several years. Of course that advantage could erode if prices continue to rise faster than the Phoenix area as a whole. As you can see in the table above, there is still a big price gap between the southeast and the northeast (and Phoenix), so the southeast still has a lot of room to run before its price advantage is gone.

March 6 - Here are the ZIP codes where the contract ratio (all dwelling types) is higher than in March 2016 and unusually high too:

  1. El Mirage 85335 - 234 (up 16%)
  2. Mesa 85202 - 188 (up 45%)
  3. Mesa 85210 - 181 (up 70%)
  4. Glendale 85302 - 169 (up 56%)
  5. Phoenix 85027 - 160 (up 15%)
  6. Glendale 85306 - 153 (up 33%)
  7. Mesa 85201 - 145 (up 34%)
  8. Peoria 85345 - 143 (up 23%)
  9. Phoenix 85024 - 135 (up 149%)
  10. Chandler 85225 - 135 (up 4%)

In these ZIP codes the supply of active listing (excluding UCB and CCBS) is woefully small compared with the number of listings under contract (Pending, UCB or CCBS).

The opposite is true of the list below which comprises the 20 ZIP codes with the lowest contract ratios:

  1. Scottsdale 85266 - 14
  2. Scottsdale 85262 - 16
  3. Phoenix 85004 - 16
  4. Carefree 85377 - 16
  5. Wickenburg 85390 - 18
  6. Paradise Valley - 18
  7. Rio Verde 85263 - 20
  8. Scottsdale 85255 - 23
  9. Fountain Hills 85268 - 24
  10. Gold Canyon 85118 - 29
  11. Phoenix 85045 - 33
  12. Scottsdale 85259 - 33
  13. Apache Junction 85119 - 35
  14. Phoenix 85016 - 36
  15. Cave Creek 85331 - 36

These are the locations where sellers will need the most patience.

March 5 - With overall supply down from last year, most areas are seeing higher contract ratios. The contract ratio is a direct measure of how hot or cold a particular market is. It is a seasonal measurement, so month to month comparisons are not always so useful, but a comparison from year to year is always telling. We are looking for the exceptions today, segments where the contract ratio has perversely gone down compared to a year ago. Here they are:

  1. Phoenix & North Valley has a lot of spots that are cooler than last year:
    • 85003 - down 28% from 57 to 41
    • 85004 - down 11% from 18 to 16
    • 85006 - down 36% from 92 to 58
    • 85009 - down 31% from 68 to 47
    • 85012 - down 17% from 56 to 47
    • 85014 - down 15% from 68 to 58
    • 85016 - down 5% from 38 to 36
    • 85017 - down 7% from 105 to 98
    • 85021 - down 15% from 58 to 49
    • 85029 - down 5% from 118 to 112
    • 85033 - down 34% from 132 to 87
    • 85035 - down 36% from 117 to 75
    • 85037 - down 25% from 136 to 103
    • 85040 - down 12% from 111 to 98
    • 85042 - down 33% from 88 to 59
    • 85043 - down 30% from 184 to 129
    • 85045 - down 29% from 46 to 33
    • 85048 - down 3% from 52 to 51
    • 85050 - down 17% from 54 to 45
    • 85051 - down 13% from 99 to 86
    • 85053 - down 4% from 120 to 116
    • 85086 - down 5% from 53 to 50
  2. Pinal County has just a few cooler spots, just:
    • 85128 - down 8% from 56 to 51
    • 85142 - down 6% from 71 to 66
    • 85173 - down 28% from 23 to 17
  3. Southeast Valley has very few cooler spots, the vast majority being considerably hotter than in 2016
    • 85203 - down 4% from 95 to 91
    • 85226 - down 4% from 118 to 114
    • 85234 - down 1% from 86 to 85
    • 85296 - down 5% from 119 to 113
  4. Northeast Valley is mostly warmer than last year with a couple of exceptions
    • 85266 - down 16% from 17 to 14
    • 85268 - down 11% from 27 to 24
  5. West Valley - has a few more cooling areas, but the majority are hotter than last year
    • 85304 - down 47% from 163 to 86
    • 85310 - down 11% from 61 to 54
    • 85323 - down 2% from 117 to 115
    • 85339 - down 15% from 89 to 76
    • 85353 - down 17% from 120 to 100
    • 85363 - down 50% from 300 to 150
    • 85373 - down 20% from 71 to 57
    • 85379 - down 1% from 99.4 to 98.8
    • 85381 - down 18% from 75 to 66.1

So we see that, perhaps unexpectedly, Phoenix has proportionally more areas that are cooler than a year ago.

The above analysis included all dwelling types in each area.

March 4 - Sometimes it is insightful to consider how times have changed.

In February 2017 there were no distressed sales at all recorded through ARMLS in

  • Coolidge
  • Florence
  • Fountain Hills

Coolidge and Florence, in particular, used to be plagued by lender owned properties and short sales. In October 2009, 96% of sales in Coolidge were distressed, with 44 REOs, 6 short sales and just 2 normal sales. Florence's worst month was November 2008 with only 7% of sales normal. There were 22 REOs, 3 short sales and just 2 normal sales. Fountain Hills was never quite so badly affected. Its worst month was October 2010, when only 27% of sales were normal with 15 REOs, 9 short sales and 9 normal sales.

You can see the changes reflected in pricing.

In Coolidge, average price per square foot has risen from $35.38 in October 2009 to $66.70 in February 2017, a recovery of 89%.

In Florence, average price per square foot has risen from $46.12 in November 2008 to $90.50 in February 2017, a recovery of 96%

In Fountain Hills, average price per square foot has risen from $134.75 in October 2010 to $206.68, a recovery of 53%

You can see the latest percentages of distressed sales by city here. Casa Grande is the only one to exceed 10% and surprisingly, Paradise Valley is in second place at over 9%.

Just 12 months ago in February 2016, there were 6 cities with 10% or more of sales distressed:

  • Avondale
  • Casa Grande
  • Laveen
  • Litchfield Park
  • Sun City
  • Tolleson

None of the cities were completely free from distressed sales in February 2016, so the trend of falling distress levels is still continuing.

March 3 - We now have the preliminary Maricopa County closing numbers for February and they are looking pretty good. Total sales are up 12% over February 2016 (similar to the gain in ARMLS sales). However new build closings are up 26% year on year, whereas re-sales are up only 10%. Neither of these are too shabby, but new homes continue to build market share from 12.3% of unit sales in February 2016 to 13.9% in February 2017.

The new build median sales price is up 7% while the re-sale median is up 8%, with the overall median up 7%.

At $336,000 the new build median in February is the highest ever recorded in Maricopa County. This is NOT because new home pricing is really the highest ever, it is because the new home builders are selling very few small homes. On a price per square foot basis, new homes still have some way to go to match the pricing of 2006. The median sales price for new homes in June 2006 (the peak ) was only $266,523 because at that point there were huge numbers of entry-level new homes being sold to people who should never have qualified for a home loan.

The re-sale median was $225,900 which is still lower than June 2016 and September 2016, so no records there.

March 2 - The Cromford® Market Index for single-family market in the 17 largest cities is shown in the table below along with its value one month ago:

14 of the 17 cities are in the seller's market zone over 110, but only 6 out 17 showed an improvement in conditions for seller's over the last month. Many of the cities barely moved their index and the only major changes were:

  • Surprise up 11%, overtaking Peoria
  • Avondale up 10% extending its lead at the top of the table
  • Fountain Hills down 12%, now in a balanced market

March 1 - The National Association of Realtors (NAR) issued a statement yesterday referring to pending home sales weakening in January. This is based on their "Pending Home Sales Index" which takes the number of homes that go under contract and optionally adjusts the number for seasonality. If you examine their numbers in detail you will notice that the seasonal adjustment makes all the difference. For the west of the country NAR starts with an unadjusted 20.4% rise compared with last month and a 1.2% increase compared with last year. After applying the seasonal adjustment, these numbers become a 9.8% fall and a 0.4% decrease respectively.

This just has me scratching my head in wonder. I personally think NAR's seasonal adjustment may be distorting the real picture here, rather than adding clarity.

As far as our pending listings in ARMLS are concerned, we currently have 7,694 which is up from 7,410 on the same day in 2016, a rise of 3.8%. Since both measurements were taken on the same day we do not need to apply a seasonal adjustment of any sort.

This is a healthy increase, but not as strong as the rise in closed sales. We can probably make a better comparison by adding in the UCB listings, since about 65% of UCB listings are not really accepting backups, but are in a quasi-pending state.

When we do this we see a growth from 11,954 to 12,503, an increase of 4.6%.

There is no mechanism I can find that suggests that pending home sales are weakening. On the contrary, they are getting significantly stronger and have been doing so since the start of the year.

Maybe Phoenix is doing better for new contracts than the rest of the west?

Or maybe NAR's interpretation of their own data is not quite right?

Either way, there is absolutely no sign of any weakness in the pace of contract signings in Greater Phoenix thus far in 2017.

February 2017

February 28 - The new S&P/Case-Shiller® Home Price Index® was published today and covers sales during the period October to December 2016. The ranking for month to month price movements was as follows:

  1. Tampa 1.13%
  2. Miami 0.33%
  3. Seattle 0.59%
  4. Boston 0.56%
  5. Chicago 0.55%
  6. Washington 0.52%
  7. Cleveland 0.36%
  8. New York 0.35%
  9. Portland 0.30%
  10. Las Vegas 0.26%
  11. Los Angeles 0.25%
  12. San Diego 0.22%
  13. Dallas 0.20%
  14. Phoenix 0.18%
  15. Atlanta 0.16%
  16. San Francisco 0.14%
  17. Denver 0.11%
  18. Charlotte 0.08%
  19. Minneapolis -0.10%
  20. Detroit -0.19%

Phoenix fell below the national average of 0.21% and slipped down the table from 7th to 14th place.

For the year over year changes the table looks like this:

  1. Seattle 10.8%
  2. Portland 10.0%
  3. Denver 8.9%
  4. Tampa 8.4%
  5. Dallas 8.1%
  6. Miami 6.8%
  7. Boston 6.3%
  8. Atlanta 6.3%
  9. Detroit 6.2%
  10. Las Vegas 5.8%
  11. Minneapolis 5.7%
  12. San Francisco 5.7%
  13. Charlotte 5.6%
  14. San Diego 5.4%
  15. Los Angeles 5.4%
  16. Phoenix 4.9%
  17. Chicago 4.9%
  18. Cleveland 4.4%
  19. Washington 4.2%
  20. New York 3.1%

Rising in this table are Miami, Boston, Minneapolis and San Francisco. Seattle, Portland and Denver continue to hold the top 3 spots. Phoenix stayed in 16th place but unlike last month, fell below the national average of a 5.3% annual increase. So although we are still in a strong seller's market, Phoenix is not appreciating quite as fast as the average for the USA as a whole. We are not making much of a splash these days unlike 2011-2013 during the "coiled spring rebound era".

February 27 - Yesterday we looked at the ZIP codes that had seen a decline in supply since the start of the year. Today we will do the opposite and look at the ZIP codes with the highest growth in supply since Jan 1:

  1. Phoenix 85009 - up 73%
  2. Phoenix 85004 - up 45%
  3. Scottsdale 85250 - up 32%
  4. Phoenix 85035 - up 32%
  5. Fountain Hills - up 30%
  6. Phoenix 85007 - up 27%
  7. Mesa 85212 - up 25%
  8. Scottsdale 85266 - up 23%
  9. Wittmann 85361 - up 22%
  10. Phoenix 85045 - up 21%
  11. Sun City West 85375 - up 21%
  12. Phoenix 85048 - up 21%
  13. Rio Verde 85263 - up 20%
  14. Phoenix 85053 - up 20%
  15. Gilbert 85297 - up 19%
  16. Tempe 85284 - up 19%
  17. Phoenix 85006 - up 19%
  18. Phoenix 85003 - up 18%
  19. Phoenix 85050 - up 18%
  20. Phoenix 85018 - up 18%

Generally we are seeing the largest growth in supply in the more expensive parts of town. Geographically, Central Phoenix, Ahwatukee and the Northeast are getting plenty of new supply.

Interesting that 85035 is up while neighboring 85031 is down. The same applies to 85297 and 85296 and also 85284 and 5283.

The highest growth in Pinal County is for Maricopa 85139 (16%) and San Tan Valley 85140 (10%).

February 26 - The number of active listings (excluding UCB and CCBS) has increased by 5.3% since January 1. Last year the same period gave us an increase of 14.5%. We can conclude that buyers are going to have a harder time this spring than in 2016 due to less choice in many areas. We have more buyers competing for fewer properties. There are in fact many locations where we have fewer active listings than when we started the year. The biggest declines in supply are in:

  1. Youngtown 85363 - down 48%
  2. Phoenix 85031 - down 30%
  3. Glendale 85306 - down 29%
  4. Casa Grande 85122 - down 29%
  5. Surprise 85378 - down 27%
  6. Phoenix 85017 - down 25%
  7. Glendale 85302 - down 24%
  8. Glendale 85307 - down 24%
  9. Superior 85173 - down 24%
  10. Glendale 85304 - down 22%
  11. Gilbert 85296 - down 21%
  12. Waddell 85355 - down 21%
  13. Phoenix 85040 - down 20%
  14. El Mirage 85335 - down 19%
  15. Glendale 85303 - down 18%
  16. Surprise 95379 - down 16%
  17. Apache Junction - down 16%
  18. Tempe 85283 - down 15%
  19. Maricopa 85138 - down 14%
  20. Phoenix 85034 - down 14%

The West Valley is heavily represented here, especially the northwest including Glendale, Surprise, El Mirage & Youngtown. Pinal County is also seeing lower supply in Casa Grande, Apache Junction, Maricopa & Superior.

February 25 - After almost catching up with 2016 two weeks ago, new residential listings added to the ARMLS data have started to fall behind last year again. As of this morning we have seen 19,301 additions since the start of the year and this is 1.6% lower than last year. However we must remember that the first quarter of last year was very strong for new listings, so the rate in 2017 is still pretty healthy. It is 5.5% higher than the 2015 year to date number and very similar to the 2014 year to date number.

The shortfall has mostly come in the last week with a 10% drop in the number of new listings compared to a year ago. The 4 week total is a less volatile measure and is currently 3.6% below the rate of 2016.

It would not normally be a big problem that active listings were running 3.6% below the prior year rate, but with sales currently running 17.4% higher than 2016 year to date, the shortfall in supply should be a concern for most buyers.

February 24 - Using days of of inventory as our guide we can see the following changes since last year:

Price RangeDays of Inventory Feb 24, 2016Days of Inventory Feb 24, 2017Change
Under $100K 68 65 -3%
$100K - $125K 49 42 -15%
$125K - $150K 43 36 -15%
$125K - $175K 49 37 -25%
$175K - $200K 63 47 -25%
$200K - $225K 67 50 -26%
$225K - $250K 77 57 -26%
$250K - $275K 85 60 -29%
$275K - $300K 92 73 -22%
$300K - $350K 120 83 -31%
$350K - $400K 130 106 -18%
$400K - $500K 169 130 -23%
$500K - $600K 231 173 -25%
$600K - $800K 277 236 -15%
$800K - $1M 378 338 -11%
$1M - $1.5M 456 418 -8%
$1.5M - $2M 643 579 -10%
$2M - $3M 765 746 -2%
Over $3M 1178 1342 +14%

Only one price range is weaker than last year - homes over $3 million. The greatest improvement (-31%) from a seller's perspective was for homes between $300K and $350K.

February 23 - It is time once again to take a look at the Cromford® Market Index for the single family markets in the 17 largest cities.

At first sight this is a little discouraging for sellers who are now used to a market favoring them so strongly.

Only 5 of the 17 cities are showing improving market conditions for sellers and 4 out of these 5 are in the West Valley.

Paradise Valley has improved by 4% but this is a consolation prize because it is still stuck firmly in last place. Plentiful supply and weak demand growth means it is still below the balanced 100 number.

Fountain Hills continues to trend lower and could easily join Paradise Valley below the 100 mark in the near future.

However, let us remember anything over 110 is in a seller's market and 14 of the cities qualify for that designation. The top 6 cities I would describe a heavily favoring sellers over buyers.

The market is still looking healthy overall and it could just be taking a breather before advancing once more during the critical spring season. Supply is low except for the high end but demand is a little patchy, so we are watching it closely.

February 22 - We are starting to get the first estimates from the US Census Bureau for population changes between July 2015 and July 2016. The only data released so far is statewide, but shows:

  • Total population of Arizona grew by 113,506 (up from 99,282 in for July 2014 - July 2015)
  • There were estimated to be 87,204 births (down from 87,385)
  • There were estimated to be 56,564 deaths (up from 53, 233)
  • Natural increase (births minus deaths) was 30,640 (down from 34,152)
  • Net domestic migration was 61,544 (up from 45,934)
  • Net international migration was 14,861 (down from 17,344)

The Census Bureau also provides the cumulate total for the period April 2010 to July 2016 (6 years and 3 months)

  • Total population of Arizona grew by 538,770
  • There were estimated to be 539,307 births
  • There were estimated to be 320,404 deaths
  • Natural increase (births minus deaths) was 218,903
  • Net domestic migration was 223,380
  • Net international migration was 81,853

Total population growth is increasing with the most recent 12 month period contributing 21% of the 6.25 year total. The main reason for this is inward domestic migration, especially for retirees. Florida and Arizona are becoming major destinations for those reaching the age of 65. This is confirmed by reports from the moving companies.

Natural growth is on a downtrend in Arizona. With a drop of 10% in a single year we are seeing the same effects as elsewhere in the developed world. Lower birth rates and increasing death rates are to be expected for the foreseeable future. At the moment the rise in the death rate is more significant than the drop in the birth rate. This is because our median age is rising fast as the retired population expands extremely quickly.

Net international migration is volatile, but is well below the 20,542 we saw in 2011. It is becoming less significant to the overall population growth.

The latest net domestic migration number is huge and is the primary driver of increased housing demand. 61,544 is up 34% from the prior year and up almost 9-fold from the figure in 2011.

The Arizona housing market is benefitting greatly from net domestic migration, but for every person who moves here from elsewhere in the USA, there is a corresponding negative effect to the housing demand in some other state.

States with declining populations between July 2015 and July 2016 include:

  • Connecticut
  • Illinois
  • Mississippi
  • New York
  • Pennsylvania
  • Vermont
  • West Virginia
  • Wyoming
  • and Puerto Rico (not a state but treated like one by the Census Bureau) - this had by far the fastest decline at 1.8%

Over the longer term since April 2010, only Puerto Rico (-8.4%), West Virginia (-1.2%), Vermont (-0.2%) and Illinois (-0.2%) have seen declines, but the list of states with declining population is likely to grow over the next 20 years.

The top states for population growth between July 2015 and July 2016 are:

  1. Utah 2.03%
  2. Nevada 1.95%
  3. Idaho 1.83%
  4. Florida 1.82%
  5. Washington 1.78%
  6. Oregon 1.71%
  7. Colorado 1.68%
  8. Arizona 1.66%
  9. Washington DC 1.61%
  10. Texas 1.58%

Over the longer term since April 2010, the top ten look like this:

  1. Washington DC 13.2%
  2. North Dakota 12.7%
  3. Texas 10.8%
  4. Utah 10.4%
  5. Colorado 10.2%
  6. Florida 9.6%
  7. Nevada 8.9%
  8. Arizona 8.4%
  9. Washington 8.4%
  10. Idaho 7.4%

The states with heavy dependence on energy production (North Dakota and Texas) have experienced decelerated growth.

Arizona has not changed places in the table, but Utah, Nevada, Idaho, Oregon, Florida and Washington have all seen rises in their ranking.

February 21 - Examining the single family market over $1 million, we see the annual average $/SF moving up between 2015 and 2016 for the following areas:

  • Scottsdale 85251 - $405.60 (up 9%)
  • Scottsdale 85255 - $373.14 (up 4%)
  • Phoenix 85018 - $367.93 (up 5%)
  • Scottsdale 85250 - $338.27 (up 13%)
  • Carefree 85377 - $313.84 (up 11%)
  • Scottsdale 85254 - $266.34 (up 10%)
  • Fountain Hills 85268 - $265.41 (up 4%)

But we also see declines here:

  • Paradise Valley 85253 - $361.97 (down 3%)
  • Scottsdale 85262 - $351.73 (down 1%)
  • Phoenix 85016 - $300.99 (down 10%)
  • Cave Creek 85331 - $293.55 (down 1%)
  • Scottsdale 85266 - $271.02 (down 12%)

Beware of reading too much into the percentage changes for 85377 and 85250, because these ZIP codes have very low sales volumes over $1 million (14 and 6 respectively in 2016). The pricing can be volatile due to the low number of samples.

Generally I would say areas very close to shops, restaurants and entertainment are attracting more buyers than usual.

February 20 - The average rent for homes leased through ARMLS last month was 84.9 cents per square foot. This is up 8% from February 20, 2016 when it was 78.6 cents. Obviously a lot of rentals are leased outside of ARMLS, but with 2,345 leases closed on ARMLS per month this represents a decent sample for analysis. The number of closed leases is down 8% from a year ago. The number of active listings (excluding vacation rentals) is currently 2542, up 11% from 2,290 a year ago. However this still only represents 1.1 months of supply. For prospective tenants, that is not a good number, but at least it is better than the 0.9 months that we experienced this time last year.

A more typical supply for our market is between 2 and 3 months, which is what we measured between 2010 and 2012. Supply of rental listings on ARMLS was still 2 months at the start of 2014 but declined that year and has been much lower since then.

Demand exceeds supply and continues to do so, though not quite to as great extent as in the first half of 2016.

You can see the resultant effect on lease rates here:

February 19 - Examining January's sales through ARMLS for single family homes within Greater Phoenix, we see some big swings in market share by price range over the last year. We are comparing dollar volume between January 2017 and January 2016.

  • Dollar volume for homes below $150,000 has collapsed from 6.0% market share to just 3.3%
  • Dollar volume for homes from $150,000 to $250,000 has remained constant at roughly 28% market share
  • Dollar volume for homes between $250,000 and $400,000 has grown from 28.7% to 31.1%
  • Dollar volume for homes between $400,000 and $1,000,000 has also grown from 24.9% to 26.3%
  • Dollar volume for homes over $1 million has dropped from 12.1% to 10.8% market share

The above does not quite explain all the complexity. We also note that:

  • From $175,000 to $300,000 we are seeing growth in market share.
  • From $300,000 to $350,000 market share is stable at just over 9%
  • Market share grows again for $350,000 up to $1.5 million
  • Market share falls for $1.5 million and upwards.

Overall, the top and bottom end of the market are both losing market share while the mid range all the way from $175,000 to $1.5 million is growing market share.

The strongest growth in market share was for homes between $350,000 and $400,000 - these increased their share of the market by 22%

Among the luxury ranges the price sector from $1.5 million to $2 million lost the most market share - down by 24%.

February 18 - Yesterday we looked at the annual change in the number of listings under contract by price range. Today we will home in on the geographic areas that are seeing the highest and lowest percentage changes.

The top gainers over 2016 are:

  1. Gold Canyon - up 85% from 33 to 61
  2. Wittmann - up 85% from 13 to 24
  3. New River - up 82% from 17 to 31
  4. Waddell - up 69% from 16 to 27
  5. Carefree - up 55% from 11 to 17
  6. Tonopah - up 54% from 13 to 20
  7. Eloy - up 42% from 12 to 17
  8. Sun City West - up 41% from 107 to 151
  9. Youngtown - up 39% from 13 to 18
  10. Avondale - up 36% from 107 to 146

Some excellent news there for Gold Canyon and Carefree, neither of which had a particularly good year in 2016.

At the other end of the scale we find:

  1. Fountain Hills - down 31% from 113 to 78
  2. Rio Verde - down 29% from 21 to 15
  3. Tolleson - down 26% from 70 to 52
  4. Paradise Valley - down 16% from 55 to 46
  5. Laveen - down 6% from 115 to 108
  6. Gilbert - down 5% from 529 to 500
  7. Chandler - down 5% from 497 to 474
  8. Coolidge - down 5% from 22 to 21
  9. Anthem - down 1% from 67 to 66
  10. Florence - flat at 74 both years

February 17 - Listings under contract is another useful measure for determining demand. However you need to compare today's figure with that from previous February 17s, because the number varies a lot by season and during the month. Historical data counts are almost impossible to find unless you log all the ARMLS data every day as we do.

For all areas & types within the ARMLS database we can see that today's number of 11,615 is 3% higher than February 17, 2016 when it was 11,305. This tells us that overall demand is slightly higher than last year, but not dramatically so.

If we restrict our analysis to normal listings within Greater Phoenix, we see an increase from to 9,907 to 10,546. This is a more significant 6%. Excluding short sale and pre-foreclosures helps a lot because these listings tend to stay under contract for a long time awaiting approval from lenders. Over the last year, those under contract have dropped from 959 to 628, a fall of 35%.

We can use these numbers to see how demand has changed by price range:

Price RangeUnder Contract Feb 17, 2016Under Contract Feb 17, 2017Change %
Under $100K 593 402 -32%
$100K TO $125K 507 353 -30%
$125K to $150K 996 714 -28%
$150K to $175K 1,392 1,115 -20%
$175K to $200K 1,322 1,456 10%
$200K to $225K 976 1,096 12%
$225K to $250K 956 1,195 25%
$250K to $275K 736 792 8%
$275K to $300K 696 776 12%
$300K to $350K 870 927 7%
$350K to $400K 568 773 36%
$400K to $500K 683 850 24%
$500K to $600K 355 435 23%
$600K to $800K 288 370 28%
$800K to $1M 153 152 -1%
$1M to $1.5M 111 111 0%
$1.5M to $2M 49 47 -4%
$2M to 43M 36 38 6%
Over $3M 18 13 -28%

We note that contracts under $175K are well down on last year, probably constrained by the lack of supply in these price ranges.

We also see that the healthiest growth in demand is between $350K and $800K. Above this mark demand drops off sharply and is down 2% overall. Under contract counts are 28% down for homes over $3 million. For homes over $5 million they are down 80% from 5 to 1.

February 16 - Let us have another look at the Cromford® Market Index for the single family markets in the 17 largest cities (by dollar volume):

11 out of 17 cities saw at least some deterioration in the market from a seller's perspective over the last month, though that is to be expected during a period when new listings tend to arrive in large numbers. The most significant changes were:

  • Fountain Hills - down 15%
  • Maricopa - down 12%
  • Goodyear - down 5%
  • Phoenix - down 5%

6 cities saw improvement in the market from a seller's perspective, most of these being in the West Valley, with Surprise and Glendale deserving special mention.

The Southeast Valley remains very strong, though there has not much change over the past month in any of the cities in this area.

Paradise Valley is still the weakest city from a seller's perspective, but it has shown some improvement over the past month.

February 15 - The most recent Ellie Mae Origination Insight Report covers loans closed in January 2017 and is the first to reflect the higher interest rate environment. You might expect refinances to drop in relation to purchase loans, but that is not what Ellie Mae is reporting. The re was little change between December and January with re-finances increasing from 46% to 47% of all closed loans.

Adjustable rate mortgages almost always gain popularity when rates increase and at 5.4% of all loans, this is the highest percentage since October 2015. The average 30 year loan interest rate was 4.31%, up from a low of 3.75% in September, but not much different from the 4.30% we saw in January 2016.

Overall there is not much sign of a significant change despite the increased interest rates.

February 14 - Probably the most under-used statistic that we really like is the annual sales rate. Most people look at it once per year, given that it is an annual measurement. However, we recalculate it every day and study it on a weekly basis to detect changes in the market.

The overall annual sales rate for all areas & types in the ARMLS database is 90,739 as of Feb 14, up 7.4% from 84,464 last year on the same date. This is a healthy increase over 12 months and shows that the market is expanding. The primary reason is that people have been improving their credit scores and are qualifying for home loans more readily as a result. This is a result of all the foreclosures and short sales that are now getting old enough to drop out of the credit score formula.

For Greater Phoenix only, the ARMLS annual sales rate has increased from 82,695 to 88,748, a rise of 7.3%, almost the same percentage as for all areas & types.

Lender owned sales (REOs) have however dropped from 3,071 to 1,981 per year, down 35%, while short sales and pre-foreclosures have fallen from 2,568 to 1,950 per year, a somewhat less dramatic decrease of 24%. To compensate for these falls, the normal transactions have increased from 77,056 to 84,817, a rise of 10%.

The rise in sales volume has not been consistent across all areas. Here are the cities ranked by annual sales increases in single family homes:

  1. Coolidge 41.0%
  2. Wittmann 32.5%
  3. Florence 23.1%
  4. Wickenburg 21.5%
  5. Gold Canyon 18.5%
  6. Laveen 16.3%
  7. Buckeye 13.6%
  8. Chandler 13.2%
  9. Casa Grande 13.0%
  10. Maricopa 12.8%
  11. Queen Creek 11.5%
  12. Mesa 9.6%
  13. Apache Junction 9.4%
  14. Sun City 9.1%
  15. Goodyear 8.8%
  16. Gilbert 8.4%
  17. Cave Creek 8.0%
  18. Sun City West 7.9%
  19. Tonopah 7.9%
  20. Sun Lakes 7.4%
  21. Waddell 7.2%
  22. Tempe 6.6%
  23. Eloy 6.6%
  24. Peoria 6.3%
  25. Youngtown 5.2%
  26. Scottsdale 5.0%
  27. Surprise 4.5%
  28. Rio Verde 4.5%
  29. Phoenix 4.3%
  30. Anthem 4.2%
  31. Avondale 2.5%
  32. Tolleson 2.5%
  33. Litchfield Park 2.4%
  34. Glendale 1.8%
  35. Fountain Hills -0.6%
  36. Arizona City -3.0%
  37. El Mirage -4.2%
  38. Paradise Valley -9.5%
  39. Carefree -10.0%
  40. New River -17.8%

Many remote locations are showing remarkable growth in sales activity, particularly in the far northwest and far southeast.

Six of the 40 cities have markets that are contracting, particular noteworthy being Paradise Valley and Carefree, our 2 most expensive cities.

February 13 - A major statistical record was broken in January 2017 when MLS listing 5522429 changed to closed status. At $12,750,000 this is the most expensive residential sale ever recorded in the ARMLS database.

The property was 5901 E Edward Lane in the Tilyou Ranchito subdivision in Paradise Valley, built in 2007.

Congratulations to Robert Joffe of Launch Real Estate who represented the seller and Jay Pennypacker of Russ Lyon Sotheby's International Realty who represented the buyer. It was listed at $13,500,000 and you might be surprised to see for a home in this price range, that it was only on the market for 37 days. However it had been listed twice previously starting in May 2015 and at one time the price requested was $14,500,000, so the story is really a little more complicated.

The previous record of $12,500,000 had held since September 2000 and belonged to a property in Cave Creek with 225 acres.

At just over $900 per square foot, 5901 E Edward Lane does not top the table on a price per sq. ft. basis. In fact it ranks only 56th in Maricopa County by that measure.

February 12 - In Maricopa County we now have the fewest foreclosures pending that we have ever recorded (and we started in 2001). The county total stands at 2,248 and the lowest record previously was 2,253 in May 2006.

Not only do we have the lowest foreclosure activity, the trend is for it to get quieter still. We have seen pending foreclosures decline 26% in the last year and 4% in the first 6 weeks of 2017.

February 11 - We count how many new residential listings are added to the ARMLS database each day and as of this morning there has been 14,462 new additions year to date in 2017. This is almost exactly the same as on February 11, 2016 when we had counted 14,469. Both of these are 6% higher than in 2015 when we had seen only 13,668.

Unfortunately for buyers, the same number of new listings as last year will not be adequate, since the sales rate in 2017 is much higher than 2016. As of yesterday we had seen 16% more closed listings year to date than in 2016.

During the period Jan 1 to Feb 11, 2016, the number of active listings (excluding UCB and CCBS) grew from 20,073 to 22,455, a rise of 12%. This year the count grew from 19,397 to 20,424 a rise of only 5%.

Homes for sale are going to seem thinner on the ground than last year. Although this is bad for buyers, it is good for sellers and will provide fuel for home price inflation. The appraisal industry can only apply limited braking power when supply and demand are out of balance.

February 10 - Using the deeds recorded by Maricopa County in January 2017 we can deduce the following facts:

  • Total recordings for single family homes & condos were up 21% over January 2016
  • The median sales price was up 5.4% since last year from $223,000 to $235,000
  • New home closings were up 47.5% from 602 to 888
  • The median sales price for new homes was up 9.4% from $302,498 to $330,874
  • Re-sales closings were up 17.7%
  • The median sales price for re-sales increased 5.2% from $212,000 to $223,000
  • The median sales price for re-sales was at its lowest mark since April 2016

February 9 - After a strong start to the year, the market is hesitating to decide where it goes next. We can see this in the Cromford® Market Index table for the single-family markets in the largest 17 cities:

Here we see 9 cities with deteriorating conditions for sellers compared to January 9, primarily because supply has increased while demand has remained flat, However there are almost as many cities with improving conditions for sellers. There are only a handful of big swings over the last month

  • Fountain Hills continues its descent from the heights of the fall of 2016 and is now in the balanced zone
  • Maricopa is not doing as nicely for sellers as it was in the fourth quarter of 2016, but remains a seller's market
  • Surprise is bouncing back after a weak fourth quarter
  • Glendale is challenging Chandler for the number 2 spot

February 8 - The S&P/Case-Shiller® Home Price Index® that was published last week covers sales during the period September to November 2016. The ranking for month to month price movements was as follows:

  1. Tampa 0.79%
  2. Denver 0.56%
  3. Miami 0.49%
  4. Boston 0.44%
  5. New York 0.40%
  6. San Diego 0.34%
  7. Phoenix 0.32%
  8. Las Vegas 0.31%
  9. Charlotte 0.27%
  10. Seattle 0.24%
  11. Washington 0.21%
  12. Dallas 0.17%
  13. Portland 0.16%
  14. Los Angeles 0.15%
  15. Minneapolis 0.11%
  16. Atlanta 0.02%
  17. Cleveland 0.00%
  18. Detroit -0.05%
  19. San Francisco -0.06%
  20. Chicago -0.82%

Phoenix comfortably beat the national average of 0.24%.

For the year over year changes the table looks like this:

  1. Seattle 10.4%
  2. Portland 10.1%
  3. Denver 8.7%
  4. Tampa 8.1%
  5. Dallas 8.1%
  6. Detroit 6.6%
  7. Miami 6.1%
  8. Atlanta 6.1%
  9. Las Vegas 6.0%
  10. Charlotte 5.9%
  11. San Diego 5.8%
  12. Los Angeles 5.5%
  13. Minneapolis 5.5%
  14. Boston 5.5%
  15. San Francisco 5.3%
  16. Phoenix 5.2%
  17. Chicago 4.0%
  18. Cleveland 3.8%
  19. Washington 3.7%
  20. New York 2.4%

In this picture, Phoenix is in the bottom 25% of the pack, but close to the national average of 5.3%.

February 7 - The other side of the coin from yesterday's post - the table of ZIP codes with the lowest single-family Contract Ratios indicates where there is the most choice for buyers and sellers have the least bargaining power:

  1. Gila Bend - 0.0
  2. Aguila - 0.0
  3. Stanfield - 0.0
  4. Fort McDowell - 0.0
  5. Carefree 85377 - 10.0
  6. Scottsdale 85266 - 10.1
  7. Wickenburg 85390 - 12.0
  8. Scottsdale 85262 - 12.8
  9. Paradise Valley - 13.0
  10. Congress - 16.7
  11. Morristown 85342 - 18.8
  12. Casa Grande 85194 - 19.1
  13. Rio Verde 85263 - 19.2
  14. Black Canyon City - 20.0
  15. Fountain Hills - 20.1
  16. Scottsdale 85255 -22.3
  17. Superior 85173 - 23.1
  18. Gold Canyon 85118 - 24.2
  19. Phoenix 85004 - 25.0
  20. Scottsdale 85259 - 25.2
  21. Phoenix 85013 - 26.5
  22. Cave Creek 85331 - 28.0
  23. Phoenix 85003 - 28.6
  24. Eloy 85131 - 28.9

Here we see no appearance by any Southeast Valley ZIP codes and none in the West Valley until we reach as far as Morristown. There are a few cold spots in Central Phoenix and a lot of cold spots in the Northeast Valley, especially a long way north of the 202. Many tiny towns on the fringes of the valley are also seeing very low contract ratios. Pinal County has a smattering of cold spots too. Paradise Valley appears at number 9 in this table, but because there are no inexpensive single-family homes in the 85253 ZIP-code, we never see high contract ratios in PV, even in a booming market. The highest we have recorded was 32.3 in June 2012, and PV has not been higher than 20 since August 2015.

If you are a buyer looking for a bargain and fed up with competing against other buyers, you have your best chance of a successful offer in the 24 locations above.

February 6 - Let us take a look at the ZIP codes with the highest Contract Ratios. These will generally be the most difficult spots for buyers to find what they want and the easiest for sellers to achieve a sale:

  1. Mesa 85202 - 148.5
  2. Mesa 85210 - 147.6
  3. Peoria 85345 - 137.5
  4. El Mirage - 136.8
  5. Glendale 85304 - 129.7
  6. Glendale 85302 - 122.0
  7. Youngtown 85363 - 117.6
  8. Surprise 85378 - 117.2
  9. Chandler 85225 - 115.2
  10. Phoenix 85040 - 113.3
  11. Mesa 85201 - 109.1
  12. Phoenix 85031 - 107.3
  13. Phoenix 85027 - 106.4
  14. Phoenix 85053 - 104.7
  15. Phoenix 85037 - 104.5
  16. Gilbert 85296 - 103.7
  17. Phoenix 85032 - 103.2
  18. Chandler 85224 - 101.9
  19. Mesa 85204 - 101.8
  20. Chandler 85226 - 94.5
  21. Tempe 85283 - 93.8
  22. Mesa 85208 - 90.6
  23. Phoenix 85006 - 90.2
  24. Gilbert 85233 - 84.9
  25. Phoenix 85041 - 84.9
  26. Chandler 85286 - 82.7
  27. Gilbert 85234 - 82.6
  28. Glendale 85306 - 82.2
  29. Apache Junction 85120 - 81.6
  30. Avondale 85392 - 80.8

The North and Northeast are conspicuous by their absence and we have only one entry in the top 30 from Pinal County. However the inner West Valley and inner Southeast Valley are both well represented, along with South Phoenix.

February 5 - December 2016 was another strong month for multi-family building permits, with a total of 1,127 units across Maricopa & Pinal counties. This brings the 12-month total to 9,645, the highest since January 2008 and well above most forecasts.

The annual totals for cities with more 20 permits were:

  1. Phoenix 4,493
  2. Tempe 1,486
  3. Chandler 1,143
  4. Gilbert 938
  5. Mesa 711
  6. Scottsdale 400
  7. Pinal County 162
  8. Goodyear 134
  9. Surprise 100
  10. Paradise Valley 46

It is not often we report multi-family permits for Paradise Valley.

February 4 - The US Census Bureau has withdrawn its building permit survey web pages as part of a "streamlining" exercise. Fortunately they are still making the underlying permit data available for download in data files and we are able to compile these files into several different interactive charts for our Cromford Public subscribers.

There were 1,421 single-family permits issued for Maricopa and Pinal counties in December 2016. For the first time since January 2015 we saw a negative year-over-year change, because December 2015 gave us 1,433 permits. The relatively meager total for December is surprising given that new home closings have been growing much faster than permits. Total new home sales grew from 10,661 to 14,080 between 2015 and 2016, an increase of 32%. However single-family permits grew from 16,768 to 18,387, an increase of only 10%.

Unless there is a substantial increase in permit rates, we should expect longer lead times for new homes, coupled with prices rising more swiftly.

We know that land prices are currently too high for many builders to achieve their planned gross margins, and labor costs are rising because of shortages of skilled workers throughout the construction trades. It should not be surprising that developers are unwilling to meet the growing demand for new homes if they are unable to generate the profits that their executives and shareholders expect. For us, this will probably mean more supply constraints which will be bad news for buyers and good news for sellers of existing homes, at least those in the price ranges primarily served by developers, namely $200,000 to $600,000.

Footnote: The census bureau uses a different definition of "single-family" from the rest of us. Generally, detached, semi-detached, duplex and townhomes are all counted as single-family by the census bureau. Condos are also included among single-family if they do not share utilities and have ground to ceiling walls separating the units. Multi-family permits, according to the census bureau, are those issued for apartment buildings and for condos that share utilities or do not have ground to ceiling walls separating the units.

February 3 - Today we take another look at the Cromford® Market Index for the single-family market in each of the 17 largest cities

The picture is still a positive one with 10 out of the 17 cities showing an improvement in the negotiating power for sellers over the last month. However there also 7 cities showing some deterioration in that negotiation power. The most significant of these negatives moves was in Fountain Hills which has fallen all the way from 2nd place to 15th over the past 3 months.

Most improved was Glendale which has moved up to third place. Surprise is also recovering from a weak patch and has overtaken Scottsdale. Maricopa has faded after a strong move during the fourth quarter of 2016, while Tempe and Queen Creek are still improving nicely.

Paradise Valley is still below 100, but has improved since last week so is looking less likely to become a buyer's market with a reading below 90 in the immediate future.

February 2 - Yesterday we looked at the most improved ZIP codes for sellers using the contract ratio. Today we will do the opposite - search for the weakest contract ratio trends by ZIP code:

For the single-family markets, here are some of the ZIP codes with negative trends for sellers:

RankCityZIPContract Ratio Feb 1, 2016Contract Ratio Feb 1, 2017Percentage Change
130Youngtown 85363 900 118 -87%
129Phoenix 85017 113 43 -61%
128Glendale 85303 90 48 -47%
127Scottsdale 85266 18 10 -45%
126Phoenix 85043 118 67 -43%
125Glendale 85307 125 71 -43%
124Phoenix 85013 45 26 -41%
123Phoenix 85027 179 106 -40%
122Phoenix 85035 66 40 -39%
121Phoenix 85033 83 52 -37%
120Mesa 85203 110 73 -33%
119Phoenix 85042 87 58 -33%
118Phoenix 85009 77 53 -31%
117Surprise 85378 167 117 -30%
116Phoenix 85014 81 57 -29%
115Phoenix 85050 75 54 -28%
114Chandler 85226 131 95 -28%
113Phoenix 85034 100 75 -25%
112Phoenix 85004 33 25 -25%
111Mesa 85201 144 109 -24%

Some formerly hot spots in the Southeast Valley have cooled down, like 85201, 85203 and 85226, but many of these weaker areas are in Phoenix, particularly West and Central Phoenix.

Scottsdale 85266 looks particularly weak with a contract ratio of 10, the lowest in the Northeast Valley and the lowest we have seen for 85266 since 2009.

February 1 - We are seeing interesting contrasts between areas. Some have seen a drop in active listings coupled with a rise in listings under contract. This clearly indicates improving conditions for sellers, and the drop in active listings is unusual for a January to February comparison. A statistic that captures these trends is the Contract Ratio, which compares the number of listings under contract with the number of active listings. By comparing the contract ratio on February 1, 2017 with its value on February 1, 2016, we can see which areas are seeing the strongest or weakest trends.

For the single-family markets, here are some of the most improved ZIP codes for sellers:

RankCityZIPContract Ratio Feb 1, 2016Contract Ratio Feb 1, 2017Percentage Change
1Avondale 85395 24 47 +96%
2Chandler 85286 44 83 +87%
3Phoenix 85021 30 56 +86%
4Mesa 85215 31 57 +81%
5Phoenix 85031 59 107 +80%
6Glendale 85305 44 79 +79%
7Phoenix 85048 28 50 +75%
8Peoria 85345 81 138 +70%
9Maricopa 85138 33 54 +65%
10Casa Grande 85122 33 54 +63%
11Tempe 85283 57 94 +63%
12Glendale 85302 75 122 +63%
13Phoenix 85008 43 70 +62%
14Sun City 85373 43 69 +60%
15Phoenix 85044 49 77 +59%
16Chandler 85225 74 115 +56%
17Phoenix 85085 32 50 +54%
18Scottsdale 85260 31 47 +51%
19Maricopa 85139 45 67 +49%
20Mesa 85202 100 148 +48%

Some of these, such as 85202 and 85345 were already hot last year, so a strong improvement percentage suggests that buyers are going to have a hard time in these ZIP codes.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

     
         
         
         

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

     
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

     
         
         
         
         
         
         

 

 

 

 

 

 

 

 

    
       
       
       
       
       
       
       
       
       
       
       
       
       
       
       
       
       
       
       

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    
       
       
       
       
       
       
       
       
       
       
       
       
       
       
       
       
       
       

 

 

 

 

 

 

      
           
           
           
           
           
           
           
           
           
           
           
           
           
           
           
           
           
           
           

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

   
     
     
     
     

 

 

       
       
       
       
       
       
       
       
       
       
       
       
       
       
       
       
       
       
       
       

 

 

 

 

 

 

 

 

 

 

     
         
         
         
         
         
         
         
         
         
         
         
         
         
         
         
         
         
         
         
         
         
         
         
         
         
         
         
         
         
         
         
         
         
         
         
         
         
         
         
         
         

 

 

 

     
         
         
         
         
         
         
         
         
         
         
         
         
         
         
         
         

 

 

 

     
         
         
         
         
         
         
         
         
         
         
         
         
         
         
         
         
         
         
         
         
         
         
         
         
         
         
         
         
         
         
         
         
         
         
         
         
         
         
         
         
         
         
         

 

 

 

 

 

     
         
         
         
         
         
         
         
         
         
         
         
         
         
         
         
         
         

 

 

     
         
         
         
         
         
         
         
         
         
         
         
         
         
         
         
         
         
         
         
         
         
         
         
         
         
         
         
         
         
         
         
         
         
         
         
         
         
         
         
         
         
         
         
         

 

 

    
       
       
       
       
       
       
       
       
       
       

 

 

    
       
       
       
       
       
       
       
       
       
       
       
       
       
       
       
       
       
       
       

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    
       
       
       
       
       
       
       
       
       
       
       
       
       
       
       
       
       
       
       
       
       
       
       
       

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    
       
       
       
       
       
       
       
       
       
       
       
       
       
       
       
       
       
       
       

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

     
         
         
         
         
         
         
         
         
         
         
         
         
         
         
         

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

       
             
             
             
             
             
             
             
             
             
             
             
             
             
             
             
             
             
             
             

 

 

 

 

 

 

 

 

 

 

 

 

 

 

      
           
           
           
           
           
           
           
           
           
           
           

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

   
     
     
     
     
     
     
     
     
     
     
     
     
     
     
     
     
     
     
     
     
     
     
     
     
     
     
     
     
     
     
     
     
     
     
     
     
     
     
     

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

     
         
         
         

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

January 2017

January 26 - The Cromford® Market Index for the single-family markets in the 17 largest cities now looks like this:

Overall we still see a very positive picture for most sellers with only 5 out of the 17 deteriorating over the last month.

Top among the improving cities for sellers was Cave Creek, followed by Queen Creek, Tempe, Glendale & Peoria.

Paradise Valley and Fountains Hills were weaker again, joined by Buckeye, Maricopa and Chandler. However the last 2 of these are taking a breather after strong improving trends over the past few months.

January 20 - Daily observations will be delayed and less frequent while Mike is travelling throughout the UK until January 31. Normal service will resume as soon as possible.

January 19 - Let us take another look at the Cromford® Market Index for the 17 largest cities and their single-family markets:

This is another pretty sight for sellers and not very promising for buyers. 13 cities out of 17 improved their seller's negotiating power over the last month, several by quite large amounts.

The big positive swings were:

  1. Cave Creek +19%
  2. Tempe +11%
  3. Queen Creek +10%
  4. Glendale +7%
  5. Mesa +7%
  6. Gilbert +6%
  7. Phoenix +6%

Chandler has cooled off a bit in the last 2 weeks so allowing the next few cities a chance to catch up.

The balance continues to lie in buyer's favor in Paradise Valley, though while it stays above 90, I would still describe it as a balanced market.

Cave Creek has overtaken Fountain Hills, replacing it as the most seller-friendly part o the Northeast Valley.

January 18 - In contrast to yesterday's post, here are the locations that were below average in terms of annual sales growth:

Most areas saw at least some growth, but sellers in Carefree appear to have a few demand problems to worry about (not so Carefree after all, then).

New River also stands apart from the crowd with a substantial fall in annual sales.

January 17 - Here is a table of the areas where the home sales in 2016 exceeded 2015 by more than the average for the Greater Phoenix area as a whole:

This is based on sales recorded in Maricopa and Pinal Counties.

January 16 - We all seem to be talking about interest rates as if they have moved substantially higher, but the latest report from Freddie Mac shows that so far in 2017 they have only moved lower.

  • Jan 12, 2017
    • 30 year Fixed 4.12%
    • 15 Year Fixed 3.37%
    • 5 Year ARM 3.23%
  • Jan 5, 2017
    • 30 Year Fixed 4.20%
    • 15 Year Fixed 3.44%
    • 5 Year ARM 3.33%
  • Dec 29, 2017
    • 30 Year Fixed 4.32%
    • 15 Year Fixed 3.55%
    • 5 Year ARM 3.30%

At the beginning of 2016 they were:

  • Jan 7, 2016
    • 30 Year Fixed 3.97%
    • 15 Year Fixed 3.26%
    • 5 Year ARM 3.09%

So the latest rates are up year over year by only 0.15% for 30 year fixed rate loans, 0.11% for 15 year fixed and 0.14% for 5 year ARMs. Admittedly rates were lower during much of 2016 with a sharp tick upwards in November, but we can hardly expect major market movements from these tiny year over year changes. Once again, I must point out that no-one has proven to be very good at interest rate forecasts. We seem to have pundits surprised more often than we have the pundits' views confirmed.

In any case the loan application approval rate is far more important factor in determining demand than the interest rate, and that approval rate continues to have a favorable trendlin

January 15 - Today we will try to rank the major, secondary and small cities by the movement in days of inventory between mid-January 2015 and now. This is for single-family homes only.

  1. Coolidge - down 44%
  2. Wickenburg - down 33%
  3. Maricopa - down 30%
  4. Litchfield Park - down 27%
  5. Queen Creek - down 25%
  6. Sun Lakes - down 25%
  7. Chandler - down 24%
  8. Gilbert - down 24%
  9. Fountain Hills - down 21%
  10. Florence - down 19%
  11. Laveen - down 19%
  12. Casa Grande - up 18%
  13. Gold Canyon - down 16%
  14. Wittmann - down 16%
  15. Mesa - down 15%
  16. Goodyear - down 14%
  17. Anthem - down 14%
  18. Cave Creek - down 12%
  19. Tolleson - down 12%
  20. Peoria - down 10%
  21. Tonopah - down 10%
  22. Rio Verde - down 9%
  23. Tempe - down 7%
  24. Phoenix - down 4%
  25. Sun City West - down 4%
  26. Scottsdale - down 2%
  27. Sun City - down 1%
  28. Arizona City - up 1%
  29. Apache Junction - up 2%
  30. Buckeye - up 5%
  31. Paradise Valley - up 5%
  32. El Mirage - up 7%
  33. Glendale - up 8%
  34. Waddell - up 12%
  35. Eloy - up 16%
  36. Surprise - up 17%
  37. Avondale - up 18%
  38. Carefree - up 28%
  39. New River - up 121%
  40. Youngtown - up 146%

Those cities with a high percentage decrease have the largest shift towards favorable conditions for sellers.

Once again, we are seeing the most favorable trends for the Southeast Valley and many parts of Pinal County. However Litchfield Park, Wickenburg, Fountain Hills, Laveen, Wittmann, Goodyear, Anthem and Cave Creek are looking good by this analysis too.

Several cities at the bottom of the list had extremely favorable conditions for sellers this time last year but have cooled off a bit over the last 12 month. These include Youngtown, Avondale, Surprise, Glendale. and El Mirage.

Those who have written off Coolidge for the past 10 years might want to take a second look.

January 14 - Now that the weekly charts have 2 measurement points for the year, it makes sense to check how 2017 is doing compared with previous years 2001 through 2016.

  • for the monthly sales rate, 2017 is running in 4th place out of 17, beaten by the bubble year of 2005 and the REO-dominated years of 2011 and 2012. There is a notable increase in sales volume over 2013 through 2016
  • the monthly average price per sq. ft. is standing at $145.36 , placing 2017 in 4th place after 2006, 2007 and 2008.
  • listings under contract are looking strong compared with 2014 through 2016, but weaker than 2010 through 2013 when they were affected by large number of short sales hanging around forever awaiting approval
  • the dollar volume chart looks much stronger than every other year except 2006
  • for days of inventory, 2017 ranks fourth with 2005, 2012 and 2013 showing even tighter supply versus demand

January 13 - It is time to pay some attention to some of those small cities that rarely get a mention. A few of them are showing interesting developments:

Showing strongly positive trends are:

  1. Coolidge - every single indicator in the Coolidge snapshot is showing green in the year over year column. Annual average $/SF is up almost 13% and we have only 2.2 months of supply.
  2. Florence - the annual sales rate has increased from 461 to 578 over the past year and the annual average $/SF has risen a solid 9%. Supply is reasonable at 4.1 months, but down from 7 last year at this time.

Looking like sellers are having a rough time in:

  1. Wickenburg - annual average $/SF is down nearly 5% over the past year even though annual sales volume rose from 133 to 155. Wickenburg's snapshot is dominated by red indicators.

January 12 - Let us take our second look in 2017 at the Cromford® Market Indexes for the single-family markets in the 17 largest cities:

For 13 of the 17 cities we see a green circle indicating an improving situation for sellers. Since they are already in a seller's market this is clearly bad news for buyers, who are losing more of what little negotiation power they had.

In line with everything we have seen for the past 3 months, there is nothing but good news for the Southeast Valley and Pinal.

  1. Tempe - up 13%
  2. Queen Creek - up 9%
  3. Gilbert - up 8%
  4. Mesa - up 6%
  5. Chandler - up 6%
  6. Maricopa - up 2%

Supply is looking tighter across all 6 of these cities.

The Northeast Valley is looking a bit more like rough sailing for sellers, with the notable exception of Cave Creek. It appears that Paradise Valley is in danger of slipping below 90 which would represent a buyer's market. Fountain Hills has deteriorated fast from its former high flying position at number 2 as recently as November, One bright spot is that Scottsdale managed a small 1% improvement and looks like it is safe from slipping into the balanced zone below 110, at least for now.

In the West Valley it is favorable news for Avondale, Glendale, Goodyear and Peoria, but not so good for Buckeye and Surprise.

Overall this table indicates a very good start for the year from a seller's perspective, and for the majority of agents who are seeing a high level of activity for the time of year.

January 11 - We have been noting relative strength in the Southeast Valley for a few months now, and this trend is underscored by a detailed examination of the high end market over $500,000. Comparing average price per square foot for the fourth quarter of 2016 with the fourth quarter of 2015, we see the following impressive price advances:

  1. Mesa 85213 - up 34% to $168.45
  2. Scottsdale 85251 - up 18% to $362.27
  3. Tempe 85284 - up 15% to $196.85
  4. Sun Lakes 85248 - up 13% to $193.02
  5. Queen Creek 85142 - up 12% to $159.15
  6. Mesa 85207 - up 11% to $176.55
  7. Cave Creek 85331 - up 11% to $207.62

For the Southeast Valley to have 5 entries in the top 7 is very unusual. Although the luxury sales volume is very modest in the Southeast Valley compared with the Northeast Valley, the buying public appeared to be giving more respect to some of the lesser known luxury locations, such as Mesa's Citrus Area (85213), Las Sendas (85207), South Tempe and Queen Creek.

On the other hand, the Ahwatukee area of 85048 is a little out of favor, with the average $/SF slipping 6% to $181.13 between Q4 2015 and Q4 2016.

We also note that Old Town Scottsdale (85251) is far outperforming the rest of Scottsdale.

January 10 - In the latest issue of the Black Knight Financial Services Mortgage Monitor, some surprising facts are revealed:

  • 39 million Americans with home loans now owe less than 80% of their home's value
  • There is a total of $4.6 trillion in untapped home equity (below 80% of home value)
  • The amount of untapped home equity is the highest since 2006
  • At current rates of growth we are within 6 months of the previous high point in 2006

As interest rates rise we should expect lenders to start becoming aggressive in the marketing of HELOC products to allow home owners to tap into this untapped equity.

January 9 - In the Southeast Valley, the differences in appreciation rates between price ranges started to disappear during the fourth quarter of 2016. Looking at the single-family market during October to December 2016, we see the following numbers compared with the same period in 2015:

 Below $250,000From $250,000 to $500,000Over $500,000All Price Ranges
Change in Active Listing Counts (excluding UCB & CCBS) -26% -13% +7% -13%
Change in Quarterly Sales -2% +35% +48% +18%
Change in Average Price per Square Foot +8% +5% +6% +7%

 

We have been seeing drops in inventory for the low end for a very long time and active counts were again down by 26% at the end of December. This shortage of supply has made it hard to keep sales volume growing and indeed quarterly sales slipped by 2%. In the mid-range, supply was down slightly but sales volume grew by 35% so there was still upward pressure on pricing. At the high end over $500,000 we saw increased supply, but sales volume jumped by 48% so here too we saw much stronger appreciation than we were experiencing 12 months ago.

Overall we saw a very healthy increase of 7% across the entire market. However we now see all price ranges participating, not just the low end. In fact the high end slightly out-performed the mid-range.

The top ZIP codes for appreciation in average $/SF between 4Q 2015 and 4Q 2016 were:

  1. Mesa 85201 +16.9%
  2. Mesa 85204 +13.4%
  3. Mesa 85213 +11.6%
  4. Mesa 85210 +10.4%
  5. Chandler 85249 +9.5%
  6. Gilbert 85233 +9.0%
  7. Gilbert 85298 +8.6%
  8. Queen Creek 85142 +8.3%
  9. Sun Lakes 85248 +7.8%
  10. Mesa 85208 +7.7%

The weakest appreciation was seen in:

  1. Phoenix 85044 -0.4%
  2. Mesa 85202 +1.3%
  3. Mesa 85205 +1.9%
  4. Gilbert 85297 +2.0%
  5. Phoenix 85045 +2.3%
  6. Phoenix 85048 +2.8%
  7. Mesa 85206 +3.1%
  8. Gilbert 85296 +3.4%
  9. Tempe 85283 +3.5%
  10. Tempe 85281 +3.6%

January 8 - A whole week has gone by in the new year, so we can start looking at the new listings to see what the most recent supply looks like. There are actually two different ways to count new listings. The first is based on when the listings first become visible after an MLS number is assigned (first download date) and the second is when the listing is created (list date). Downloading all the listings every day means that we can see new listings as they become visible. Using the value given for list date gives us somewhat different numbers since listings are often created some time in advance of being made active and therefore visible. A single listing may be created on December 28, for example, but not become visible until January 5.

2,317 listings have become newly visible in 2017 so far which is 13.3% higher than last year and 19.1% higher than 2015. Clearly we are seeing more sellers than in the last 2 years.

Based on the list date, we see 2,191 new listings across Greater Phoenix date in 2017, which is up 4.7% from 2,092 last year and up 8.6% from 2,017 in 2015. These are still quite modest numbers by historic standards. The 2015 number is the lowest we have ever seen and the 2017 is the fourth lowest for the years 2001 through 2017.

Nevertheless, buyers will be pleased to have a few more listings to choose from. Sellers need not be too concerned about the extra supply since the annual sales rate is up about 7.5%, so we really need about 10% more listings just to stay where we are. We need more new listings than we get sales because some 20% to 25% of all listings get cancelled or expire.

January 7 - My favorite charts for monitoring the market, and making sure it does not surprise me, are the weekly charts that are updated every Saturday. Of special interest to me are:

  • active listings weekly
  • Cromford® Market Index weekly
  • days of inventory weekly
  • annual sales weekly
  • under contract weekly

We can see that the active listings are starting off 2017 at almost the same point as they did in 2016. You could be forgiven for thinking this means that inventory is roughly the same. However there are 2 points to make here:

  1. the active listing count is the same but the annual sales rate is much higher (90,336 versus 84,066), so the same number of listings will sell out faster
  2. the active listings are not in the same locations as last year; we have more in the West Valley and fewer in the Southeast Valley, for example.

We can see that the days of inventory chart starts off the year at a lower point than last year (94 instead of 100) because the annual sales rate was significantly higher in 2016 than it was in 2015. This also influences the Cromford® Market Index which starts the year noticeably higher than it did in 2016.

We also see the the number of listings under contract is a little higher than it was at the start of 2016 (8,049 versus 7,734), suggesting that demand is a little higher too.

You might think that the monthly sales chart would be more useful than the annual sales chart. However the monthly sales counts are influenced by seasonality and the number of working days in each month. This causes the monthly sales numbers to give us a lot of noise in the signal. The annual sales rate numbers are almost all signal and barely any noise. This is the way analysts like their data. My advice is to watch the annual sales rate closely.

January 6 - The initial numbers are in for Maricopa County recordings in December. The first thing that struck me about them was the new home sales total. At 1,535 this was the highest monthly total since 2007. Who says December is a quiet month?

The median sales price for new homes was $324,227, up 4.8% from 309,299 in December 2015. However it was only 3.7% above the monthly median for December 2014 and 1.4% above the median sales price in December 2013. New homes have not seen a lot of movement if we are looking only at the median sales price. However the average new home has got smaller over the past few years so the average price per square foot shows a more positive picture, and we shall come back to review this on another day.

The resale median sales price came in at $225,000 yet again. Although we have bounced around a bit, we ended the year with the same median sales price as in May.

Because new homes are gaining considerable market share from re-sales, the overall median made good progress over the past 12 months, rising 5.9% from $230,000 to $243,500. New homes took 17.7% of the unit sales, up from 15.6% in December last year and the highest percentage since October 2008.

Given the strong increase in closed sales, you would think new home builders would be celebrating. However they are struggling to make good margins even with the higher volume because land prices have risen faster than home prices and labor costs are escalating due to the chronic shortage of construction labor. With the proposed massive increase in government infrastructure construction (not to mention the border wall), we could find the construction labor shortage becomes even more extreme over the next few years.

January 5 - The first Cromford® Market Index comparison of 2017 is a positive one for most sellers. Here is the table showing how the single-family markets in the largest 17 cities have fared over the past month:

 

 

Things are great for the top 9 cities in the table. They are not only in the top 9, but they are improving too. The Southeast Valley is really making life easy for sellers and hard for buyers with Tempe up 16%, Gilbert up 9%, Chandler up 8% and Mesa up 4% and squeezing into the top 4 by overtaking Glendale. The West Valley is mixed with Avondale still way out on top and improving by another 11%. Glendale, Peoria and Goodyear made small improvements, but Surprise continued to look relatively weak and Buckeye slipped another 6%.

 

The Northeast Valley is the under-performing area with Paradise Valley slipping below 100 and in last place. Fountain Hills continues to deteriorate fast while Scottsdale sees only slight deterioration. The most positive move in the Northeast was in Cave Creek which improved by a strong 12%.

 

Maricopa continues its progress up the chart slowly but steadily, while the most important city of all, Phoenix showed a strong positive move, up 6%.

 

Given the less attractive interest rates buyers are facing, this is a reassuring picture for sellers. We must remember that higher interest rates do not just discourage buyers. They discourage sellers too, since in many cases they would be paying off low interest loans and taking out higher interest loans, not something to be done lightly. We therefore expect both supply and demand to be affected negatively by higher rates. It is the balance between supply and demand that is crucial. It is the cities with CMI values over 130 that are in the strongest shape for price increases over the next several months..

January 4 - At this time of year a crucial thing to watch is the number of new listings being added to the ARMLS database. We have to be careful since it is unfair to compare any period of less than 7 days. This is due to the weekly cycle, where far more listings are added on Thursday and Friday than on other days of the week. Over the past 7 days (Dec 29 to Jan 4) we have seen 1,447 new listings, which is a middle-of-the-road number compared to prior years. The equivalent in 2016 was 1,266 and in 2015 we saw 1,306. But in 2014 there were 1,528, in 2013 1,549 and in 2012 1,534. So we are seeing more listings over the past week than in 2015 and 2016 but less than 2012 through 2014.

An even more reliable indicator is the 28 day count of new listings. This is currently at 5,628, whereas last year we saw 5,118 and in 2015 we had 5,054. So we are up 10% from 2015 and 11% from 2016. In 2014 we had 5,495, in 2014 we saw 5,886 and in 2013 we had the most at 6,489.

If we continue with this current pace then we should have enough new listings to cope with the increased sales rate, which is up by about 7% from last year. In 2016 we saw strong flow of new listings during the first 2 months of the year and by the beginning of March we were up 8% over 2014. However the pace dropped during March and we ended 2016 with only 5% more new listings than 2015. This was inadequate to match the 7% increase in sales rate, meaning that the market favored sellers by a greater amount at the end of 2016 than at the start of the year.

We generally need more new new listings than we have closed sales since about 20% to 35% of listings get cancelled or expired instead of closing. In stronger markets the percentage closing increases but rarely exceeds 80% for extended periods.

January 3 - How does December 2016 compare to all the other Decembers we have measured over the years?

  • Monthly Sales Count = 7,191 - 5th highest (after 2010, 2004, 2011 and 2009)
  • Annual Sales Count = 90,027 - 3rd highest (after 2005 and 2004)
  • Average Sales Price = $282,067 - 4th highest (after 2006, 2005 and 2007)
  • Median Sales Price = $225,000 - 4th highest (after 2006, 2005 and 2007)
  • Monthly Average Price per Square Foot = $144.79 - 4th highest (after 2005, 2006 and 2007)
  • Annual Average Price per Square Foot = $141.43 - 4th highest (after 2006, 2007 and 2005)
  • Dollar Volume = $2.028B - 2nd highest (after 2005)

So, thanks to the 5th strongest sales count and the 4th strongest pricing, we just had the second best December for dollar volume in the last 16 years.

January 2 - Yesterday we looked at the overall supply and demand numbers. Today we will look at specific price ranges to see how the supply situation differs. Here we are looking at the total number of active listings (including UCB and CCBS) for single family homes.

Once again the big percentage annual declines in supply are in the lower price ranges:

  • Under $25K - down 25%
  • $25K to $50K - down 25%
  • $50K to $75K - down 38%
  • $75K to $100K - down 45%
  • $100K to $125K - down 42%
  • $125K to $150K - down 40%
  • $150K to $175K - down 21%

Below $125K the annual sales rate has dropped by a larger percentage than the drop in active listings. This sector has become so small that it is no longer of any great significance to us. It is only 1% of the market by value. Back in 2010 45% of all unit sales were under $125K. The extent of the change between 2010 and 2017 is remarkable.

If we look only at homes priced over $175,000, supply is up 3%, even though overall supply is down 2%. There is a complex pattern for the increases. The largest percentage increases are for the following:

  • $600K to $800K - up 15%
  • $175K to 4200K - up 10%
  • $1.5M to $2M - up 10%
  • $200K to $225K - up 7%
  • Over $3 M - up 7%
  • $400K to $500K - up 6%
  • $500K to $600K - up 4%

The following ranges are barely changed:

  • $225K to $250K - up 2%
  • $800K to $1M - up 2%
  • $250K to $275K - up 1%
  • $1M to $1.5M - no change
  • $275K to $300K - down 1%

Supply has also declined for these:

  • $300K to $350K - down 3%
  • $350K to $400K - down 4%
  • $2M to $3M - down 4%

With the background of an overall 7% increase in the annual sales rate, there are no price ranges that are looking dramatically over supplied. The least favorable range is $600K to $800K where the annual sales rate is up only 9% while the supply is up 15%.

For sellers, the situation is most favorable for the price ranges $250K through $350K. Here we see little change in the total supply compared with the beginning of last year, but the annual sales rate has gone up more than 24%. In that context, the same supply level as last year starts to look rather meager.

January 1 - The year 2017 has started with 19,397 active listings (excluding UCB and CCBS) for all areas and types. This is down 3.4% from 20,073 on January 1, 2016. There was a sudden drop of 2.8% of all listings between December 31 and January 1, an effect which occurs in all years due to a large number of expirations at the end of the year. The effect was slightly smaller than last year when 3.5% of all listings disappeared.

So supply is starting a little weaker than it was last year, at a time when the annual sales rate is up by just over 7%. It is hard to see prices stabilizing in this environment unless demand drops. We started the year with 4,885 pending listings, barely changed from 4,865 in 2016. However we have 2,916 listings in UCB status, compared with 2,810 in January 2016. That is almost a 4% advantage to 2016.

Weaker supply and stronger demand suggest appreciation rates may be a little faster in 2017 than 2016. However the segments affected may very well be different from last year.

 

December 2016

 

December 31 - Foreclosures are the first thing to be finalized for the year, especially easy when the last day falls on a weekend. During 2016 there were a total of 8,017 Notices of Trustee Sale issued in Maricopa County. This is down 14% from the 9,310 we had in 2015. It is a good time to remember that we had 10,712 notices in the month of March 2009 alone and 103,342 for the year of 2009. This puts the 8,017 for this year into perspective.

2016 saw the lowest number of Notices of Trustee Sales in any year since 2001, when we started counting.

Trustee Deeds numbered 3,412 for Maricopa County in 2016, down 20% from 4,275 in 2015. Unlike Notices, the Trustee Deed count is nowhere near the lowest we have seen. The lowest year for Trustee Deeds was 1,072. In those days, Notices of Trustee Sale resulted in multiple approaches by investors trying to buy the homes prior to the auction, because the homes generally had plenty of equity. For some of the investors that turned out to be pretty bad timing, buying at the top of the market.

We still have a significant number of homes with negative equity and when these get a Notice of Foreclosure Sale, it is unlikely that any investor is going to be interested until the trustee sale takes place and the existing lien is wiped away.

Having said this, our Trustee Deed count in 2016 is the lowest for any year since 2001, except for the bubble years of 2005 and 2006.

December 30 - We can use the Days of Inventory (active listing count divided by the annual sales rate) to tell us which cities are in a better or worse situation for sellers than they were last year. In the table below we excluded UCB and CCBS listings from the active counts, but we included all property types.

RankCityDays of Inventory Dec 2015Days of Inventory Dec 2016Change
1Wittmann 149 94 -37%
2Coolidge 133 87 -35%
3Wickenburg 425 294 -31%
4Chandler 68 49 -28%
5Maricopa 98 71 -28%
6Fountain Hills 203 146 -28%
7San Tan Valley 83 61 -27%
8Sun Lakes 117 85 -27%
9Laveen 74 57 -23%
10Litchfield Park 105 81 -23%
11Gilbert 62 49 -21%
12Mesa 75 59 -21%
13Queen Creek 101 80 -21%
14Goodyear 87 69 -21%
15Anthem 89 71 -20%
16Casa Grande 140 119 -15%
17Florence 151 135 -11%
18Peoria 78 70 -10%
19Cave Creek 154 139 -10%
20Gold Canyon 256 233 -9%
21Rio Verde 337 310 -8%
22Apache Junction 121 113 -7%
23Phoenix 73 68 -7%
24Tolleson 45 42 -7%
25Eloy 171 159 -7%
26Scottsdale 149 142 -5%
27Tempe 57 56 -2%
28Sun City 58 58 0%
29Paradise Valley 323 326 +1%
30Waddell 97 101 +4%
31Sun City West 67 72 +7%
32Buckeye 84 90 +7%
33Glendale 52 656 +8%
34Arizona City 128 140 +9%
35Surprise 75 85 +13%
36Avondale 37 43 +16%
37El Mirage 24 31 +29%
38Carefree 314 442 +41%
39New River 98 174 +78%
40Youngtown 16 66 +313%

 

We used the name San Tan Valley to refer to the places within ZIP Codes 85140, 85142 and 85143 which lie within Pinal County. For Queen Creek we restricted our analysis to Maricopa County locations.

Some of the areas of the West Valley suffered extreme shortages of supply in 2015 that have now started to abate. Examples include Youngtown, El Mirage, Avondale, Surprise, Glendale, Buckeye, Sun City West and Waddell.

The unusual shortages we currently see are in Chandler and Gilbert, where 49 days is a very low reading for the time of year. Mesa and Tempe are not far behind.

Pinal County is improving sharply for sellers (particularly in Coolidge, Maricopa and San Tan Valley)

Wickenburg and Wittmann are not exactly hurting for supply, but the days of inventory has dropped significantly in both locations since this time last year.

Among the more expensive locations, Carefree is the one with the most difficulty for sellers compared to last year, while Fountain Hills is the most improved.

December 29 - The last Cromford® Market Index table of 2016 paints a pretty picture for the majority of the market, with 11 out of 17 cities improving their balance in the seller's favor.

The top 8 cities have all seen an improving situation for sellers over the last month thanks to a significant fall in active listings. The Southeast Valley is a great spot for sellers with Chandler, Gilbert, Mesa and Tempe taking 4 of the top 6 spots and on an improving trend, especially for Tempe.

The West Valley is more mixed with Avondale and Glendale taking the remaining 2 spots in the top 6, but Buckeye and Surprise sitting near the bottom of the table.

The Northeast valley fares the worst, with Fountain Hills crashing back to 9th place having been among the leaders a few weeks back. Paradise Valley has also weakened over the last month and remains in last place.

However we still have none of the 17 largest cities below 100, the neutral point.

December 28 - There are just over 20,000 active listings on ARMLS, excluding UCB & CCBS. There were just under 21,000 on the same day last year. There are another 3,281 listings in UCB or CCBS status, up from 3,096 last year, reflecting the popularity of UCB status which continues to be used widely instead of Pending, even when backup offers are unwelcome.

Including UCB & CCBS, we have 95 days of inventory based on the annual sales rate. This is the lowest number of days of inventory since September 2013, and 10 fewer than last year at this time.

All in all, we will be starting 2017 with a pretty dismal inventory from a buyer's perspective. Even though supply is plentiful in parts of the luxury market, the overall level of supply is inadequate to meet the current level of buyers' demand.

We can therefore feel confident that prices are going to rise yet again in the next few months. This is a three month outlook. After that the forecast will depend on the levels of supply and demand that we see during the first quarter of 2017.

December 27 - The last Tuesday of the month means it is time for the S&P/Case-Shiller® Home Price Index® report. The latest one refers to the prices for sales between August and October 2016. The table of 20 cities based on the month to month change is as follows:

  1. Tampa +0.93%
  2. San Francisco +0.58%
  3. Miami +0.49%
  4. Dallas +0.42%
  5. Atlanta +0.41%
  6. Phoenix +0.39%
  7. Cleveland +0.36%
  8. Washington DC +0.22%
  9. Seattle +0.18%
  10. Charlotte +0.17%
  11. San Diego +0.15%
  12. Boston +0.06%
  13. Minneapolis +0.06%
  14. Denver +0.00%
  15. Los Angeles -0.01%
  16. Las Vegas -0.08%
  17. Portland -0.08%
  18. Detroit -0.17%
  19. New York -0.20%
  20. Chicago -1.06%

Placed at number 6 out of 20, Phoenix is well above the national average of +0.22%.

Measured over 12 months the changes are as follows:

  1. Seattle +10.66%
  2. Portland +10.27%
  3. Denver +8.29%
  4. Dallas +8.11%
  5. Tampa +7.81%
  6. Miami +6.46%
  7. Detroit +6.38%
  8. Charlotte +6.02%
  9. San Diego +5.90%
  10. Atlanta +5.98%
  11. Los Angeles +5.74%
  12. Las Vegas +5.72%
  13. Minneapolis +5.50%
  14. San Francisco +5.47%
  15. Phoenix +5.16%
  16. Boston +4.51%
  17. Cleveland +3.95%
  18. Chicago +3.95%
  19. Washington DC +3.41%
  20. New York +1.70%

On a year over year basis, Phoenix is slightly below the national average of 5.61%

December 26 - As we expected, the huge advantage that 2016 was showing over 2015 in sales rate during November has disappeared in December. On November 25, the monthly sales rate was running over 28% higher than the year before. However most of this was due to the effect of TRID delaying sales in the fourth quarter of 2015. By the second half of December the TRID effect had dissipated. We now see only an 8.6% advantage for 2016 over 2015 in the monthly sales rate as of December 26. This 8.6% is the underlying increase in sales which we think is mostly due to the higher approval rate on loan applications rather than an increase in the number of people making those same loan applications.

December 25 - Those like me, who thought the peak in multi-family construction might be behind us, should probably have another think after the November report about permits from the Census Bureau.

There were 1,144 multi-family units permitted during November, compared with only 409 in November 2015. Although the monthly fluctuations are quite extreme, the 12 month rolling annual count is relatively stable and is now reading 9,290, which is the highest figure we have seen since 2007. The previous peak in late 2014 looked safe as of the spring of this year, but recent counts have been surprisingly strong.

Major contributions this November were from:

  1. Phoenix - 498
  2. Mesa - 333
  3. Chandler - 209
  4. Surprise - 100

December 24 - November was a strong month for single family permits in Maricopa and Pinal counties. We counted 1,355 which is up 23% from 1,099 in November 2015. The year-to-date count is 16,966 which is up only 11% from the year to date total in 2015. Since closings on single family new homes have reached 34% higher than last year at this time, the number of permits is not keeping up the pace.

As we have mentioned several times, the overall shortage of supply has been getting more extreme in Chandler, Gilbert and Tempe. These locations feature only weakly in the new permits. Gilbert was top city for many years but has now slumped to 7th place in November with only 99 permits. Chandler comes in 9th with 70. With few vacant land locations, Tempe is way behind with only 10 permits.

The top permit locations in November were:

  1. Phoenix - 194
  2. Buckeye -152
  3. Mesa -130
  4. Peoria - 120
  5. Unincorporated Pinal County - 105
  6. Goodyear 100

Looks like there will be plenty of supply in Buckeye, Peoria and the North Valley in 2017. However I am growing concerned that buyers will have a very hard time in the Southeast Valley given the unusually weak supply trends of the past 3 months. Only Mesa seems to be keeping up with demand.

December 23 - There are not many days left in this year, and it looks like we will have seen just under 5% more listings created and added to the ARMLS database in 2016 compared with 2015. This additional supply might have swamped the market and been a severe problem for sellers. However we have instead seen an increase in the annual sales rate of just under 7%. So instead, the supply has failed to keep up with the ability of buyers to takes the homes off seller's hands. This is largely because buyers are, on average, better qualified in 2016 than 2015, with stronger credit scores and greater ability to find the necessary down payments. As a result the Cromford® Market Index is ending the year above 143 having ended 2015 in the low 130's.

Of course not everywhere is seeing stronger conditions for sellers than this time last year. We can rank the cities by how much the CMI has changed over the past year:

  1. Maricopa +56.2%
  2. Gold Canyon +52.5%
  3. Casa Grande +40.3%
  4. Chandler +39.7%
  5. Goodyear +35.5%
  6. Fountain Hills +33.6%
  7. Gilbert +28.2%
  8. Sun Lakes +20.0%
  9. Queen Creek +19.2%
  10. Laveen +17.5%
  11. Mesa +17.2%
  12. Apache Junction +13.8%
  13. Buckeye +12.0%
  14. Peoria +11.9%
  15. Phoenix +11.6%
  16. Paradise Valley +10.0%
  17. Avondale +9.1%
  18. Tempe +8.7%
  19. Scottsdale +7.2%
  20. Cave Creek +3.2%
  21. El Mirage +2.8%
  22. Anthem +0.3%
  23. Litchfield Park -2.4%
  24. Tolleson -2.7%
  25. Sun City -3.0%
  26. Glendale -4.2%
  27. Arizona City -4.5%
  28. Surprise -12.8%
  29. Sun City West -15.2%

22 out of 29 cities are in the positive zone. The Northwest Valley (Sun City, Sun City West, Surprise, Glendale) and inner Southwest Valley (Tolleson, Litchfield Park) are the most obvious areas that have deteriorated for sellers. Pinal County has seen strong improvement except in Arizona City. The Southeast Valley looks very much stronger than at the end of 2015.

Remember that changes in the CMI indicate future pricing trends not current ones, since it is very much a leading rather than a trailing indicator.

December 22 - When we look at the Cromford® Market Index for the single family markets in the largest 17 cities, we still see a mixed trend.

All 17 are still above 100, but the bottom 3 are in the balanced zone between 90 and 100. We have 9 cities deteriorating and 8 improving, but Phoenix itself has risen 2% over the last month and this gives a positive boost for the overall market since Phoenix typically accounts for 25% of sales.

The Southeast Valley continues to be the most improved spot for sellers, with Chandler, Gilbert, Tempe & Queen Creek all making strong progress. Mesa slipped 1% but remains in a relatively strong 5th place. The Northeast Valley has improved for buyers with all cities showing falls in their CMI, Cave Creek, Paradise Valley and Fountain Hills showing the heaviest declines. With the exception of Avondale and Buckeye, the West Valley cities also weakened slightly for sellers.

December 21 - The average price per square foot for pending listings has exceeded $150 for the past 5 days, a big jump from $147.11 as recently as December 6.

The last time this number was over $150 was on March 27, 2008.

This means there is a reasonable chance that the average $/SF for closed sales ends the year on a high again.

December 20 - The Black Knight Financial Services Report for October shows an increasingly mixed picture for loan delinquency among the states. While the USA as a whole continues to improve and the non-current loan rate is near normal at 5.3%, a handful of states are seeing deterioration compared with a year ago.

  1. Alaska - up 19.3% to 3.0%
  2. North Dakota - up 4.3% to 2.2%
  3. Louisiana - up 2.6% to 10.2%
  4. Wyoming - up 1.9% to 4.2%

These are no doubt affected by the continuing difficulties in the energy sector.

Arizona has improved by 12.3% to a non-current rate of 3.5%, well below the long term average.

The states with the largest improvement year over year are:

  1. Washington - down 23.7% to 3.3%
  2. Nevada - down 23.6% to 4.7%
  3. Oregon - down 22.4% to 3.2%
  4. Colorado - down 19.9% to 2.4%

We note that 3 of these 4 states contain major cities that are among the top performers in the Case-Shiller Home Price Index table (Seattle, Denver and Portland). Las Vegas is not in the list of 20 cities monitored closely by Case-Shiller.

December 19 - We know from the Ellie Mae report that loan approvals are increasing as a percentage of applications. The question that arises is whether lenders are lowering their standards, or borrowers are improving their credit ratings.

The average FICO score for a closed loan was 730 in October 2016, with a 78% loan to value and front-end debt-to-income ratio of 24% and back end debt to income ratio of 37%. A year earlier the FICO score was 722, LTV was 80, and 25 and 39 were the DTI ratios. So the closed loans actually averaged a higher standard than a year ago.

So the answer is pretty clear. Lenders are not lowering their standards. Instead, borrowers are improving their credit ratings and are also putting slightly more into down payments. This improvement happened between 2014 and 2016, and has been particularly strong over the last 12 months.

December 18 - We still measure the number of pending foreclosures each day, even though most people pay little attention to foreclosures these days. Our measurements show why most people are uninterested. There are fewer pending foreclosures now than in any December since we started measuring in 2001. There will never be zero foreclosures, but 2,387 for the whole of Maricopa County is extremely low compared with the maximum reading we have seen. That was 51,022 at the end of 2009. Today's reading is not the lowest ever, since in April 2006 we had only 2,255. This was the calm before the storm. By the end of 2006 the number has risen ominously to 4,089. You would have found it hard at that point to find anyone who would believe it would rise to over 50,000.

December 17 - With little prospect for a cut in interest rates and the likelihood of further rises, many home buyers could be kicking themselves for not buying in 2016 while they had the chance. As recently as October it was possible to get a 30 year fixed loan at 3.42% according to Freddie Mac's interest rate survey. Today we are looking at 4.18%.

For a $200,000 loan that translates to a payment of principal & interest of $976 per month. In October that same loan would have cost just $889 a month. This is a rise of almost 10% in a matter of weeks. The purchases prices at price points below $300,000 are still moving north at a brisk pace, so a home purchase in 2017 is likely to be a lot more expensive than it would have been n 2016.

If interest rates continue to climb, as many are forecasting, it is not impossible we could see 5% reached before the end of 2017. That would make the principal & interest payment for a $200,000 loan rise to $1,270. This is a 43% increase from the payment corresponding to a 3.42% rate, and this could potentially be happening in a little over a year.

Millennials are likely to be squealing if this were to happen, and they probably will not take kindly to being reminded by baby boomers that 8% is the long term average rate for a 30-year fixed loan. The monthly payment at 8% is $1,664. Mind you, it was last at 8% in August 2000, so it is easy to forget what it was like.

Economists have been predicting interest rate rises for the last 4 years and each year they have been wrong. It appears that 2017 may possibly be the year in which the forecasts finally come true, but no-one knows that for sure, even Janet Yellen.

Anyone who thinks rising interest rates cause home prices to fall will discover that is a false premise and has never been borne out by historical example. Home prices depend on supply versus demand. Higher interest rates are likely to cause lenders to be more interested in approving loans and a higher approval rate leads to increased demand. The shortage of construction labor is going to put a lid on additional supply, so unless there is an external change (e.g. a massive population shift) non-luxury home prices in Greater Phoenix are likely to continue rising in 2017, especially for the low end and lower mid-ranges up to $300,000.

December 16 - We are taking another look at the Cromford® Market Index for the 17 largest cities and their single family markets:

 

The green arrows have the advantage, outnumbering the red ones by 9 to 8. The overall market favors sellers by a wide margin, as all indexes are over 100.

 

Avondale remains way out in front and has opened up its lead by moving 8% higher over the last month. It's demand index is 98.2, little changed, but its supply index has fallen back down to 48.2. We have not seen adequate supply in Avondale since early in 2011.

 

Cave Creek and Paradise Valley have weakened over the last month. In Cave Creek, supply has increased while demand has dropped sharply. It is now a balanced market having been a seller's market as recently as late November. Paradise Valley's supply is close to normal but its demand has weakened in recent weeks. Scottsdale is seeing a similar trend but not quite so pronounced.

 

Tempe has seen the largest improvement for sellers, with Gilbert doing quite well also. In fact both Gilbert and Chandler are strongly favorable for sellers at the moment with very weak supply in many areas.

 

Glendale, Mesa and Fountain Hills are seeing a cooling trend but remain well inside the seller's market zone.

December 15 - We do not yet have an Ellie Mae Origination Insight Report that reflects the much higher interest rate environment since early November, but their last 4 reports about mortgages for July through October are still interesting reading.

The most obvious trend is that the closing rate has increased. We have always maintained that it is the loan closing rate that drives the demand in the housing market, not the interest rate. The interest rate determines what you can afford. The closing rate determines whether you get a loan at all. When anyone can get a loan, the market gets bubbly. When hardly anyone can get a loan, the market goes squishy and is dominated by cash buyers.

For conventional purchase loans, the closing rate has increased from 70.8% in October 2015 to 77.2% in October 2016. The closing rate has been over 70% since July 2015. In October 2013 the closing rate was only 67.1% and in October 2014 it was 67.9%. I think we can conclude there is an obvious trend here. Conventional purchase loans are getting approved at a rate that is 9% higher than last year. Have you noticed that annual sales are up by about 7% from last year on ARMLS? They are up almost 10% in the public records because new homes have been doing so well. The new home annual sales rate is up almost 30%. A lot of the extra loan approvals are for loans on new homes.

We did not need any more buyers or loan applications to achieve a 9% growth in sales. The higher approval rate turns 9% of latent demand into real actionable demand, by approving buyers who would otherwise have been declined their loans.

What about the other types of loans, I hear you ask. Well conventional loans represent 68% of all loans, so the others are not so important. But FHA loans (with 20% market share) are getting approvals at 72.9%, up from 66.5% last year. So we can see the same story there; in fact the closing rate is up 9.6%. For VA loans, representing 9% of the market, they are getting closed at 76.6%, up from 72.9% last year. Not quite such a big increase, at 5.1%, but VA loans have had a noticeable advantage in higher closing rates until now.

We observe that the Cromford® Demand Index has increased from 99.0 at the end of October 2015 to 107.9 at the end of October 2016. Although the CDI does not use the loan closing rate as an input, we believe there is a direct link between the increased loan closing rate and the increased demand reflected in the CDI numbers.

December 14 - From yesterday's chart we can easily see that sellers are gaining an advantage in the Southeast Valley thanks to a combination of falling supply and increasing demand. This is far in excess of the trends in other regions of Greater Phoenix. Now let us look at which parts of the Southeast Valley are benefitting most from this trend. A quick way to do this is to examine the Days of Inventory for each area. A large percentage fall from this time last year is an indicator of a trend that is strongly favorable to sellers. So we see:

  1. Chandler 85286 - down 46% to 49 days
  2. Phoenix 85048 - down 40% to 60 days
  3. Chandler 85249 - down 39% to 67 days
  4. Mesa 85206 - down 36% to 59 days
  5. Chandler 85225 - down 33% to 36 days
  6. Gilbert 85233 - down 30% to 42 days
  7. Gilbert 85296 - down 29% to 48 days
  8. Mesa 85209 - down 28% to 61 days
  9. Mesa 85215 - down 28% to 85 days
  10. Chandler 85224 - down 26% to 34 days
  11. Gilbert 85295 - down 26% to 43 days
  12. Mesa 85212 - down 22% to 64 days
  13. Mesa 85213 - down 22% to 67 days
  14. Mesa 85203 - down 20% to 45 days
  15. Sun Lakes 85248 (including Chandler 85248) - down 20% to 91 days
  16. Gilbert 85298 - down 20% to 79 days
  17. Mesa 85207 - down 19% to 113 days
  18. Mesa 85208 - down 17% to 66 days
  19. Mesa 85210 - down 16% to 39 days
  20. Tempe 85281 - down 16% to 68 days
  21. Phoenix 85045 - down 16% to 99 days
  22. Mesa 85201 - down 14% to 39 days
  23. Queen Creek 85142 (Maricopa County only) - down 14% to 90 days
  24. Mesa 85205 - down 12% to 65 days
  25. Tempe 85282 - down 11% to 43 days
  26. Gilbert 85234 - down 10% to 54 days
  27. Tempe 85283 (including Guadalupe) - down 10% to 59 days
  28. Phoenix 85044 - down 5% to 60 days
  29. Mesa 85202 - down 2% to 40 days
  30. Gilbert 85297 - down 2% to 49 days
  31. Tempe 85284 - down 1% to 88 days
  32. Chandler 85226 - flat at 42 days
  33. Mesa 85204 - up 3% to 38 days

The top 16 ZIP codes in this table have seen a 20% or more drop in days of inventory since this time last year, and because days of inventory is a slow moving indicator, this is a significant positive sign for sellers. Only one ZIP code has added inventory, Mesa 85204. This was formerly an extremely hot ZIP code behaving more like the inner West Valley than the Southeast. Like the West Valley, the lowest price areas have cooled slightly over the last year. However, we cannot regard 38 days as very excessive inventory. It's just not quite as low as 37 days.

December 13 - I am looking at how the Southeast Valley and Pinal County are improving for sellers compared with the rest of the market. From the chart below you can see that the overall market saw a slight decline in active listings between December 1, 2015 and December 1, 2016. The quarterly sales rate for September through November was 16% stronger in 2016 than 2015.  The Southeast Valley had the strongest increase in sales rate at 20%, while Phoenix & the North Valley had the weakest at 10%. The big difference for the Southeast Valley is the dramatic 12% fall in active listings since 12 months ago. In contrast the West Valley has seen a strong increase of 7%.

From a seller's perspective,  the Southeast Valley is significantly out-performing the overall market, as is Pinal County, though to a lesser degree. The West Valley has weakened because of increased inventory while the Northeast Valley, Phoenix and the North Valley  are slightly under-performing the sales growth seen in the overall market."

December 12 - Interest rates have moved higher quickly over the last month, with the most recent Freddie Mac report showing 4.13% for a 30-year fixed. This is 18 basis points higher than this time last year and 20% higher than the 3.44 reading we saw in July and August. Sudden interest rate rises like this tend to increase the sales rate as borrowers try to lock in their existing loan commitments. The sales rate then tends to fall back as the market adjusts to the higher cost of ownership for buyers who were unable to lock in lower rates. We can see that the sales rate was very high for the time of year over the last four weeks, and this is a typical reaction. Listings under contract readings are currently rather weak given the sales rate, again typical of a period just after a significant rise in interest rates.

How fast the under contract count rises in 1Q 2017 will very key. This will determine if the positive effect of less stringent loan qualification rules is balancing out the negative impact of higher borrowing costs.

December 11 - The Cromford® Demand Index has fallen slightly over the past month from 108.5 to 107.2. This may seem odd to people who have noticed that the monthly sales rate is up by about 21% from this time last year. The reason is that we use a combination of monthly sales rate plus pending listing counts plus UCB counts (adjusted for invalid UCB usage by agents) to compute the demand index. By that measure demand is somewhat weaker than the sales rate would suggest.

The CDI was only 99.0 on December 11, 2015, so demand is definitely up from last year. However we had 9,480 listings under contract then and we have 9,566 now. This is only a 1% increase, much less impressive than the increase in closed sales. Until we get to the end of December we will have to suffer the distortions caused by the introduction of TRID during the fourth quarter of 2015

December 10 - New FHA loan limits were announced for 2017, but the changes are not going to make a big difference for Arizona. The 2017 limit is going up from $271,050 to $275,665 in all Arizona counties except Maricopa and Pinal, where it has been increased a little more, from $271,050 to $279,450, and Coconino, where it is unchanged at $362,250.

The $8,400 increase for Maricopa and Pinal is just over 3%. This is far less than the annual increase in average price per sq. ft. that we have seen for homes under $300,000, which is 8.2% based on public record data. This means slightly fewer buyers are likely to qualify for FHA loans in 2017 than in 2016 and the change is therefore a mildly negative factor for demand. Obviously it would have been worse if the limit had not been increased at all. However the cheaper homes that FHA loans are designed for have appreciated far more than more expensive homes. The FHA loan limit would have been increased to about $293,000 if it were tied to average price per sq, ft. for homes at or below $300,000.

Arizona is slightly disadvantaged in the HUD calculations because we have so few counties and Maricopa and Pinal Counties provide 66% of the state's housing. HUD uses median sales price for a county and MSA as their primary guide in calculating the FHA loan limit.

December 9 - Let us have another look at how the Cromford® Market Index is doing for the single family markets in the 17 largest cities.

15 out 17 cities are in a seller's market with just 2 in the balanced zone between 90 and 110. So the comments below are relative to an overall positive situation for sellers. The trend however is mixed rather than positive.

We see a very balanced picture, and not quite as healthy as I would have expected if you had asked me for an outlook two months ago. We have one city, and the most important one, Phoenix, standing absolutely still, and then eight cities improving for sellers and eight cities deteriorating. Cave Creek, Paradise Valley, Mesa, Surprise and Scottsdale have been going backwards and look distinctly weaker than last month. Avondale is back to its winning ways and remains way out in front. Tempe has had an excellent month while Gilbert and Buckeye have seen a decent improvement. Maricopa and Chandler also continue to develop quite nicely and steadily for sellers.

Among the next batch of 12 intermediate sized cities, the picture is more negative as we see the following very short list of cities showing improvement for sellers over the last 4 weeks:

  • El Mirage - up 14% from 220.0 to 250.6 - the most seller friendly part of Central Arizona

The list of intermediate cities with deterioration is much longer:

  • Arizona City - down 16%
  • Litchfield Park - down 16%
  • Sun Lakes - down 15%
  • Anthem - down 10%
  • Sun City West - down 10%
  • Sun City - down 7%
  • Gold Canyon - down 6%
  • Tolleson - down 5%
  • Casa Grande - down 4%
  • Apache Junction - down 1%
  • Laveen - down 1%

In 2015 we had a very strong December after two weak months in October and November. So my expectations after 2 stronger months in October in November was that the CMI trend would look better than this.

I wait with interest to see if December can get a little more impressive than it is was during the first week. It is still early days, so we could still see a surge into the finishing line on December 31.

December 8 - Although I cannot pretend that the ARMLS rental database is a true reflection of the entire rental market, it is giving us some signs of a mild slowdown in the rental market from the intensity of the last few years. The total number of active listings was 3,269 on December 6, which is only slightly higher than the 3,191 on December 2015. However the monthly closed lease rate is down from 2,307 to 1,977. This means we have 1.7 months of supply instead of 1.4 months last year.

The average monthly lease price per square foot was 78 cents on December 6, 2015, and this has moved up to 82.8 cents, a rise of just over 6%. However we hit a peak of 85.6 cents on July 1, 2016 and the trend has been downwards since then.

The average asking price is $1,918 per month, up from $1,818 last year, but down from a peak of $2,105 on May 30, 2016.

Average days on market for closed leases is up to 34 having been as low as 25 in June and just above the 33 days in early December last year.

Overall I would say it looks slightly easier to find a 

December 7 - So now we are looking for the locations where the Contract Ratio has improved the most for sellers. These places have seen a decline in active listings or an increase in listings under contract or both, sufficient to show an increase of 30% or more in the Contract Ratio since this time last year:

  1. Phoenix 85003 - up 242.2% from 27.3 to 93.3
  2. Wickenburg 85390 - up 158.5% from 7.7 to 20.0
  3. Phoenix 85045 - up 146.8% from 22.7 to 56.1
  4. Tempe 85281 - up 106.3% from 50.0 to 103.1
  5. Coolidge 85128 - up 83.9% from 31.4 to 57.7
  6. Peoria 85381 - up 76.5% from 43.7 to 77.0
  7. Scottsdale 85250 - up 72.8% from 26.9 to 46.5
  8. Maricopa 85138 - up 63.0% from 38.1 to 62.0
  9. Phoenix 85054 - up 62.0% from 55.6 to 90.0
  10. Phoenix 85048 - up 57.3% form 30.7 to 48.3
  11. Phoenix 85028 - up 51.9% from 46.7 to 71.0
  12. Phoenix 85015 - up 50.8% from 41.0 to 61.8
  13. Mesa 85206 - up 49.8% from 36.8 to 55.1
  14. Tonopah 85354 - up 47.1% from 20.0 to 29.4
  15. Phoenix 85023 - up 44.0% from 66.7 to 96.0
  16. Gold Canyon 85118 - up 43.9% from 12.3 to 17.6
  17. Chandler 85286 - up 40.7% from 47.0 to 66.1
  18. Scottsdale 85258 - up 40.4% from 20.0 to 28.1
  19. Phoenix 85014 - up 39.2% from 26.8 to 37.3
  20. Phoenix 85085 - up 38.5% from 40.4 to 56.0
  21. Gilbert 95297 - up 37.7% from 58.4 to 80.4
  22. Mesa 85213 - up 37.0% from 44.9 to 61.4
  23. Glendale 85308 - up 31.6% from 51.5 to 67.8
  24. San Tan Valley 85143 - up 30.1% from 50.0 to 65.0
  25. Florence 85132 - up 30.0% from 33.9 to 44.1

Many of these areas are those that were suffering last year and have recovered quite a bit of momentum. Phoenix 85045 is a prime example, badly affected by the construction of the 202 freeway extension. Wickenburg too, has recovered somewhat from a very low 7.7 last year. Other examples include Coolidge and Gold canyon, both of which have come through some hard times are showing signs of recovery.

We see very few areas in the West valley, which for the past 4 years has been the hottest part of town. Most of the locations are in the Central or Southeast Valley with several from Pinal County too.

December 6 - Overall the market is warmer than it was at this time last year, with the Contract Ratio measuring 46.01 today and 43.19 on December 6, 2015. This is an advantage of 6.8%, which is down from an advantage of 11.4% three months ago. So although the market is showing improvement over last year by this measure (one of our favorites), it has lost some of that advantage over the recent past. We shall try to find out where this advantage has been lost. Examining those ZIP codes where the contract ratio has substantially declined from last year, we find the following:

  1. Glendale 85307 - down 82.3% from 250.0 to 44.4
  2. Glendale 85306 - down 57.3% from 200.0 to 85.4
  3. Phoenix 85017 - down 54.3% from 114.3 to 52.2
  4. Mesa 85210 - down 51.9% from 120.8 to 58.1
  5. Phoenix 85008 - down 51.4% from 102.8 to 50.0
  6. Youngtown 85363 - down 47.9% from 122.2 to 63.6
  7. Phoenix 85022 - down 47.9% from 75.0 to 39.1
  8. Phoenix 85035 - down 47.2% from 87.8 to 46.4
  9. Rio Verde 85263 - down 46.5% from 18.5 to 9.9
  10. Phoenix 85009 - down 46.3% from 71.4 to 38.3
  11. Mesa 85202 - down 45.7% from 111.4 to 60.5
  12. Surprise 85388 - down 44.4% from 79.4 to 44.1
  13. Phoenix 85043 - down 43.1% from 129.2 to 73.4
  14. New River 85087 - down 42.6% from 36.5 to 21.0
  15. Glendale 85301 - down 39.8% from 67.4 to 40.6
  16. Glendale 85305 -down 39.6% from 58.8 to 35.6
  17. Apache Junction 85219 - down 38.5% from 44.2 to 27.2
  18. Glendale 85310 - down 38.2% from 63.6 to 39.3
  19. Phoenix 85029 - down 36.1% from 79.2 to 50.6
  20. Phoenix 85033 - down 34.9% from 90.0 to 58.6
  21. Tempe 85282 - down 31.9% from 86.2 to 58.7
  22. Phoenix 85083 - down 31.7% from 57.6 to 39.4
  23. Surprise 85379 - down 30.1% from 71.5 to 50.0
  24. Phoenix 85037 - down 29.8% from 136.1 to 95.5
  25. Wittmann 85261 - down 29.8% from 45.0 to 31.6
  26. Scottsdale 85262 - down 28.4% from 12.6 to 9.0
  27. Phoenix 85019 - down 26.2% from 72.7 to 53.7
  28. Phoenix 85042 - down 24.7% from 86.4 to 65.0
  29. Glendale 85303 - down 24.6% from 85.7 to 64.6
  30. Surprise 85374 - down 24.4% from 52.9 to 40.0
  31. Tolleson 85353 - down 24.0% from 96.2 to 73.0
  32. Surprise 85378 - down 22.9% from 125.0 to 96.4
  33. Avondale 85392 - down 21.6% from 103.3 to 81.1
  34. Queen Creek 85142 - down 20.7% from 55.1 to 43.7
  35. Tempe 85284 - down 20.3% from 37.5 to 29.9

All the above are at least 20% weaker than December 2015 as measured by their contract ratio.

Much of the formerly high-flying Northwest Valley is seeing a significant negative change from this time last year, with higher inventories and lower demand. This is particularly true of Surprise and Glendale plus many western areas of Phoenix. As a result we would expect lower rates of appreciation in the Northwest and inner West Valley in 2017. These areas have large numbers of rental homes and it is possible that landlords will lighten their portfolios in 2017 and 2018.

The contract ratio of 9.0 for Scottsdale 85262 is the lowest we have seen since 2009 and confirms a remarkable lack of buying interest for the very large number of homes for sale in this ZIP code. Rio Verde is also much weaker than last year although it typically has very low contract ratio readings at all times.

The contract ratio of 46.4 for Phoenix 83035 is the lowest we have seen since 2011. The Maryvale area is looking much softer than a year ago with 85035 showing the highest number of active listings since early 2014 and the lowest number of pending listings since 2008.

To balance these weaker areas there are many that are stronger and we will examine these in depth tomorrow.

December 5 - Which type of home has appreciated most over the past 2 years? There are 8 types defined by ARMLS

  • Single family detached
  • Townhouse
  • Apartment Style / Flat
  • Gemini / Twin
  • Patio Home
  • Manufactured / Mobile
  • Loft Style
  • Modular Prefab

Unfortunately two different agents can often disagree about what type a specific house is, so the use of these terms is inconsistent. Putting that aside for a moment, it is clear that certain types have appreciated faster than others over the past 24 months. We eliminated 2 types from consideration because they are relatively rare and the data is too sparse to be statistically reliable. These are loft style and modular / prefab.

For the other types we see the following:

Dwelling TypeAnnual Average $/SF Dec 1, 2014Annual Average $/SF Dec 1, 2015Annual Average $/SF Dec 1, 20162 Year Change %
Single Family Detached $127.45 $132.99 $141.22 10.8%
Townhouse $119.04 $128.21 $139.68 17.4%
Apartment Style / Flat $136.47 $143.84 $150.40 10.2%
Gemini / Twin $83.95 $92.81 $104.05 23.9%
Patio Home $150.71 $157.80 $162.30 7.7%
Manufactured / Mobile $66.39 $70.19 $79.10 19.1%

 

Generally, the pattern reflects what has been happening to price ranges. So the most expensive house type as far as price per sq, ft,. is concerned, Patio Homes, had the lowest appreciation rate.

However the least expensive home type, Manufactured / Mobile, did not have the highest appreciation rate, only the second highest. The honor for highest appreciation rate goes to Gemini / Twin Homes with an astounding 23.9% gain over 24 months.

December 4 - Thanks to the several factors, but especially the slowdown in closings that occurred in October and November 2015 after the introduction of new TRID procedures, the annual sales rate has ticked up sharply for most parts of the market. We can compare cities and see how much benefit they are seeing in their annual sales rate (single family sales only):

  1. Wittmann - from 73 to 104 - up 42.5%
  2. Coolidge - from 164 to 207 - up 26.2%
  3. Florence - from 458 to 560 - up 22.3%
  4. Laveen - from 825 to 985 - up 19.4%
  5. Chandler - from 3,959 to 4,614 - up 16.5%
  6. Buckeye - from 1,805 to 2,067 - up 14.5%
  7. Rio Verde - from 85 to 97 - up 14.1%
  8. Casa Grande - from 853 to 945 - up 10.8%
  9. Maricopa - from 1,501 to 1,661 - up 10.7%
  10. Apache Junction - from 584 to 639 - up 9.4%
  11. Gilbert - from 4,970 to 5,397 - up 8.6%
  12. Mesa - from 6,194 to 6,723 - up 8.5%
  13. Peoria - from 3,035 to 3,226 - up 6.3%
  14. Queen Creek - from 3,035 to 3,226 - up 6.5%
  15. Tempe - from 1,357 to 1,439 - up 6.0%
  16. Goodyear - from 1,820 to 1,928 - up 5.9%
  17. Wickenburg - from 136 to 144 - up 5.9%
  18. Eloy - from 88 to 93 - up 5.7%
  19. Phoenix - from 15,381 to 16,240 - up 5.6%
  20. Sun Lakes - from 514 to 542 - up 5.4%
  21. Surprise - from 3,173 to 3,328 - up 4.9%
  22. Anthem - from 609 to 638 - up 4.8%
  23. Waddell - from 244 to 255 - up 4.5%
  24. Sun City West - from 1,097 to 1,144 - up 4.3%
  25. Cave Creek - from 699 to 728 - up 4.1%
  26. Gold Canyon - from 392 to 406 - up 3.6%
  27. Sun City - from 1,193 to 1,227 - up 2.8%
  28. Tolleson - from 605 to 621 - up 2.6%
  29. Arizona City - from 219 to 224 - up 2.3%
  30. Scottsdale - from 4,789 to 4,892 - up 2.2%
  31. Glendale - from 3,652 to 3,721 - up 1.9%
  32. Avondale - from 1,348 to 1,371 - up 1.7%
  33. Fountain Hills - from 494 to 502 - up 1.6%
  34. Litchfield Park - from 593 to 600 - up 1.2%
  35. Youngtown - from 114 to 112 - down 1.8%
  36. El Mirage - from 641 to 597 - down 6.9%
  37. Tonopah - from 41 to 38 - down 7.3%
  38. Paradise Valley - from 370 to 339 - down 8.4%
  39. Carefree - from 105 to 83 - down 21.0%
  40. New River - from 199 to 151 - down 24.1%

Annual sales rates are non-volatile things so a big movement is very important.

Changes in the smaller cities are less significant but it takes a massive swing to move a city like Chandler up 16.5%. That indicates a very strong market, with Buckeye and Maricopa not too far behind.

December 3 - Days of inventory for all areas & types has dropped sharply in the last week thanks to a lot of active listings disappearing at the end of November. We currently have a reading of just over 100, down from 109 this time last year and 131 in 2014.

It is interesting to see how days of inventory has changed for each price range over the last year:

Price RangeDays of Inventory Dec 2015Days of Inventory Dec 2016% Change
Under $100K 46 59 +31%
$100K-$125K 42 53 +26%
$125K-$150K 42 40 -5%
$150K-$175K 61 51 -16%
$175K-$200K 71 66 -7%
$200K-$225K 75 70 -7%
$225K-$250K 86 71 -17%
$250K-$275K 95 78 -18%
$275K-$300K 102 82 -20%
$300K-$350K 120 95 -21%
$350K-$400K 138 116 -16%
$400K-$500K 187 143 -13%
$500K-$600K 209 179 -14%
$600K-$800K 236 244 +3%
$800K-$1M 332 310 -7%
$1M-$1.5M 382 376 -2%
$1.5M-$2M 512 497 -3%
$2M-$3M 776 651 -16%
Over $3M 1,012 1,149 +13%

 

We note the increases in inventory under $125K, between $600K and $800K and over $3 Million.

Looking best from a seller's perspective are the lower inventory level between $150K and $600K and between $2 Million and $3 Million.

December 2 - The Cromford® Market Index for the single family markets in the largest 17 cities has moved as follows over the past month:

The cities with deteriorating markets for sellers outnumber those with improving markets by 11 to 6. However in 3 cases (Goodyear, Phoenix, Peoria) the deterioration is extremely small, so a tiny change could swing the balance in other direction by 8 to 9.

The expensive areas of Cave Creek, Paradise Valley and Scottsdale are providing most of the negative momentum, although Fountain Hills is still high in the table, thanks to its superior supply situation.

The top improvers are Tempe, Avondale, Chandler and Gilbert.

Chandler is suffering from weak inventory trends in 85224, 85249 85286 and especially 85225, which is improving the negotiation power for sellers. Similar things are afoot for sellers in Gilbert 85233, 85234 and 85295.

December 1 - The closed sales numbers for November 2016 are looking huge compared with November 2015:

  1. Chandler up 67%
  2. Goodyear up 51%
  3. Avondale up 47%
  4. Peoria up 47%
  5. Queen Creek up 47%
  6. Gilbert up 38%
  7. Tempe up 31%
  8. Phoenix up 30%
  9. Scottsdale up 28%
  10. Mesa up 25%
  11. Glendale up 24%
  12. Surprise up 23%

These are single family sales numbers for the 12 largest cities.

This is deceptive however.

In November 2015 the title companies were struggling with the new closing procedures introduced by TRID and closed sales were unusually low. Listings under contract were piling up. At the time we estimated that 500 listings failed to close and slipped from November into December.

Also November 2016 had one more working day (19) than November 2015 (18). This means we should expect 5.6% more sales if the market were in the same state of play.

These factors mean the volume increase is overstated by about 16%. The true increase in sales rate is about 16% overall.

Still not too shabby.

November 2016

November 30 - On November 21 we suggested that the active listing count was likely to peak on Sunday November 20 and we can now confirm this to be the case. That peak was 21, 684 and we are already down to 21,105 (excluding UCB listings). We are currently losing supply at the rate of roughly 300 listings a week and would expect a downward trend throughout the remaining weeks of the year. This means that although we saw a rise in the flow of new listings in 2016, the increased sales rate was able to cope with the extra supply. We are likely to start 2017 with a similar number of active listings as we had on Jan 1, 2016.

November 29 - The S&P / Case-Shiller® Home Price Index® report was released today for the 3 month period ending in September 2016. The year over year changes were as follows:

  1. Seattle 11.0%
  2. Portland 10.9%
  3. Denver 8.7%
  4. Dallas 8.0%
  5. Tampa 7.5%
  6. Miami 6.7%
  7. Charlotte 6.2%
  8. Los Angeles 5.9%
  9. Detroit 5.8%
  10. San Francisco 5.7%
  11. Las Vegas 5.6%
  12. San Diego 5.3%
  13. Atlanta 5.3%
  14. Phoenix 5.3%
  15. Minneapolis 5.3%
  16. Boston 4.3%
  17. Chicago 4.3%
  18. Cleveland 2.9%
  19. Washington DC 2.7%
  20. New York 1.8%

At 5.3% Phoenix remains just below the national average of 5.5% and thus completely unexceptional. The table is quite similar to last month, though Seattle has replace Portland at the top. Charlotte and Detroit are moving up while San Francisco and San Diego have moved down.

The month over month changes look like this:

  1. Tampa 0.49%
  2. Miami 0.47%
  3. Las Vegas 0.46%
  4. Dallas 0.34%
  5. Charlotte 0.33%
  6. Denver 0.33%
  7. Los Angeles 0.29%
  8. Phoenix 0.26%
  9. Minneapolis 0.26%
  10. Washington DC 0.19%
  11. Atlanta 0.16%
  12. Boston 0.15%
  13. San Diego 0.11%
  14. New York 0.07%
  15. Portland 0.06%
  16. Chicago 0.01%
  17. Seattle 0.00%
  18. Detroit -0.11%
  19. Cleveland -0.36%
  20. San Francisco -0.42%

After a brief exciting spell at number one last month, Phoenix is back to the boring 8th position.

Comparing the month to month change with the same figure for 2015 we can see that Phoenix, Los Angeles, Atlanta, Chicago, Boston, Detroit, Minneapolis, Charlotte, Las Vegas, Washington, Tampa, New York and Cleveland are all showing stronger moves than last year.

San Diego, San Francisco, Denver, Miami, Portland, Dallas & Seattle are showing less positive moves than in 2015 and it appears that many of these former high flyers may be slowing down.

November 28 - Following yesterday's observation, here are some of the areas where the comparison of days of inventory with last year is not so favorable for sellers:

  1. Youngtown - up 98% to 62 days from 31 last year
  2. New River - up 97% to 199 days from 101 last year
  3. Carefree - up 38% to 443 days from 321 last year
  4. West Phoenix - up 31% to 66 days from 50 last year
  5. Avondale - up 24% to 52 days from 42 last year
  6. Arizona City - up 20% to 165 days from 138 last year
  7. Surprise - up 15% to 86 days from 75 last year
  8. Sun City West - up 15% to 73 days from 64 last year
  9. Glendale - up 10% to 60 days from 54 last year
  10. Paradise Valley - up 5% to 336 from 319 last year

In general the West Valley has cooled off while the Southeast Valley has warmed up.

November 27 - Days of Inventory (available inventory divided by the annual sales rate) is one of our favorite measures and comparing November 27, 2016 to November 27, 2015 allows us to check which parts of the market have strengthened or weakened over the last year.

Here are some areas showing the biggest improvements from a seller's perspective:

  1. Chandler - down 28% to 57 days from 79 last year
  2. Ahwatukee - down 25% to 69 days from 92 last year
  3. Fountain Hills - down 25% to 152 days from 202 last year
  4. Sun Lakes - down 22% to 83 days from 105 last year
  5. Maricopa - down 22% to 77 days from 99 last year
  6. Queen Creek - down 20% to 74 days from 93 last year
    1. Apache Junction - down 19% to 106 from 132
  7. Gilbert - down 18% to 56 days from 68 last year
  8. Mesa - down 17% to 65 days from 78 last year
  9. Goodyear - down 17% to 75 days from 90 last year
  10. Anthem - down 11% to 79 days from 89 last year

All the above are for all property types and exclude UCB listings.

November 26 - Looking at the sales recorded by the counties, I am struck by the acceleration in the price of new homes over the past 3 months. We cannot see that from ARMLS data because so few new home sales are processed through the MLS. If we look across the whole of Maricopa and Pinal counties, the monthly average in October reached $158.12 per square foot for new homes, up from $146.69 in October 2015. This is a 7.8% increase over 12 months. The prior 12 months only generated an increase of 2.8% and the year before than just 3.0%.

You might be thinking that new homes are getting larger, but you would be wrong. On average new homes are 0.8% smaller than a year ago and 1.9% smaller than 2 years ago.

No, they are responding to increased demand by achieving higher prices. In October 2015, new homes only enjoyed a 6.8% premium in average price per square foot over normal resales. In October 2016 that advantage has jumped to 11.2%.

November 25 - The Cromford® Market Index for the single-family markets in the largest 17 cities continues to show a mixed picture:

We have roughly half (8) of the cities showing an improving situation for sellers. The main examples are Avondale, Chandler, Tempe & Gilbert. The Southeast Valley has had an unusual pattern of declining active listing counts during the months of October and November.

Among the cities that have been deteriorating for sellers (9 in number), the main examples are Cave Creek, Surprise, Scottsdale, Paradise Valley, Queen Creek, Mesa and Glendale.

From Thanksgiving onward, we usually get a decline in supply. If the ranking table starts to improve for sellers as a result, this would be normal. If it fails to improve between Thanksgiving and the New Year, then this would be a troubling sign.

November 24 - If the single family permits were unspectacular, the multi-family permits in October were downright feeble. At 251 they were down 42% from October 2015. These monthly numbers are very volatile - we had 1,562 in September 2016. The rolling annual average still stands at a very respectable 8,555, so there is no need to get alarmed yet.

Surprisingly the main contribution in October was 132 units from Goodyear. The usual contenders were very quiet otherwise.

November 23 - We counted 1,401 single family permits across Maricopa and Pinal counties during October 2016. This is up only 1% from October 2015 and this a much lower growth rate than we had been seeing earlier in the year. Year to date after 10 months we have reached 15,611 which is up just under 10% from 2015.

Given the strong growth in new home sales, the slower growth in permits is a little surprising. Maybe home builders are being extra cautious in this cycle.

The top locations for YTD 2016 are:

  1. Phoenix 2099
  2. Mesa 1811
  3. Gilbert 1400
  4. Peoria 1368
  5. Unincorporated Pinal County 1256
  6. Buckeye 1234
  7. Chandler 1081
  8. Queen Creek 950 (the Town of Queen Creek only)
  9. Unincorporated Maricopa County 889
  10. Goodyear 837

Scottsdale is some way behind at 613.

November 22 - The Phoenix Business Journal recently ran a story about investor owned houses in Maricopa County, as it has the largest number of these in the USA. Maricopa is one of the largest counties in the USA, so it is not surprising. By the way, the data source, ATTOM, is the new name for RealtyTrac. It is good that their name no long implies that they are skilled at tracking realty, since they were the primary source of the false shadow inventory mythology.

My estimate for investor owned homes is slightly lower than ATTOM's - 242,000 is my best guess, of which 69,000 are estimated to be owned by out of state landlords. Second homes are counted separately. Currently rental vacancy rates are very low, but if forced deportations are to come, as promised by the new administration, I believe the housing market is right to be nervous. It all depends on the speed and scale of the deportations. I have no idea what the new administration really intends to do about undocumented residents, and the administration may not know either at this stage. In the worst case there could be a rush to the exits by landlords that could be potentially devastating to prices. It would also reduce the need for new construction and consequently land prices. On the positive side it would release construction workers to work on infrastructure projects. Except that there are estimated to be 800,000 construction workers who are undocumented.

I have been pointing out the (unintended?) consequences of a reduced population on the housing market for some time and I am very concerned. If it happens it will show up in the rental market first. Both multi-family and sfr/condo vacancy rates will rise.

November 21 - Last year active listings (excluding UCBs) hit their 4Q peak on Sunday November 22 at 21,890 and then headed downwards to reach 20,073 on January 1, 2016.

This year Thanksgiving is 2 days earlier than last year and we can reasonably expect Sunday November 22 to be our peak at 21,684. This is slightly below last year, but not so much that it matters. It comes after we have seen a 4% increase in new listings, balanced by a 6% increase in sales.

Nothing spectacular there, just healthy.

I wonder whether we will drop below 20,000 active listings on Jan 1, 2017.

November 20 - The monthly sales rate as of November 20 is a staggering 26% higher than it was this time last year. However we must remember that last year we were suffering the effects of the TRID changes in closing processes for sales involving lenders. Sales were weak during October and November 2015 as a result, while listing under contract piled up. The effect disappeared quickly during the first quarter of 2016 when everyone got used to the new processes. However for the fourth quarter of 2016 we are beating the fourth quarter of last year by a comfortable margin.

November 19 - We often point out that "days of inventory" is one of the most powerful and predictive measures in the housing market. By using the annual sales rate we get rid of seasonal sales trends and the lower the number gets the stronger the market is for sellers.

Let us compare the days on inventory for the entire market (all areas & types on ARMLS) for this week in November for every year back to 2002 and rank the years by how favorable they were to sellers.

  1. 2004 - 45.2
  2. 2005 - 83.7
  3. 2012 - 95.3
  4. 2011 - 98.6
  5. 2016 - 104.6
  6. 2003 - 106.9
  7. 2015 - 111.3
  8. 2013 - 114.8
  9. 2014 - 134.4
  10. 2002 - 142.8
  11. 2009 - 164.8
  12. 2010 - 186.9
  13. 2006 - 227.3
  14. 2008 - 361.6
  15. 2007 - 373.8

So we are in the 5th strongest year for sellers. 2004 and 2005 were very bubbly and 2011 and 2012 were during the coiled spring bounce back. This is best normal year for sellers of the last 15 years.

November 18 - Here is the regular table of Cromford® Market Index numbers for the single family markets in the top 17 cities:

We still have more cities (10) that are deteriorating for sellers than improving (7)

The chief offenders in the deterioration are:

  • Surprise
  • Cave Creek
  • Scottsdale
  • Paradise Valley
  • Queen Creek
  • Glendale

We see weakness mostly in the Northeast and West Valley due primarily to growing supply trends.

The cities that are looking best for sellers are:

  • Chandler
  • Avondale
  • Tempe

Chandler and Tempe have declining supply trends, whereas Avondale has had unusually low supply for longer than we can remember (my memory is not so good these days). I guess that means it is no longer unusual. Whatever the reason, it is still very tough to be a buyer in Avondale. El Mirage is even worse, though it does not make are top 17 list.

November 17 - Looking at the other end of the spectrum, the following have been the weakest ZIP codes for $/SF appreciation over the last 2 years:

  1. Carefree 85377 - 7.1%
  2. Scottsdale 85266 - 3.6%
  3. Phoenix 85045 - 2.9%
  4. Scottsdale 85262 - 0.1%
  5. Scottsdale 85259 + 1.1%
  6. Paradise Valley 85253 + 1.6%
  7. Scottsdale 85258 + 1.8%
  8. Gold Canyon 85118 + 3.0%
  9. Fountain Hills 86269 + 3.1%
  10. Scottsdale 85260 + 3.4%
  11. Phoenix 85003 + 3.5%
  12. Phoenix 85054 + 3.6%
  13. Scottsdale 85255 + 3.9%
  14. Phoenix 85048 + 4.2%
  15. Cave Creek 85331 + 4.6%
  16. Wickenburg 95390 + 4.7%
  17. Phoenix 85016 + 4.7%
  18. Scottsdale 85250 + 4.8%
  19. Phoenix 85083 + 4.9%

All the rest are above 5% over 2 years.

Eight out of the top ten are in the Northeast Valley, and twelve out of the top twenty.

November 16 - Which ZIP codes have seen the strongest appreciation over the past 2 years? We can answer that using the Tableau 12-month moving average price per square foot chart, comparing the figure for November 2014 with November 2016.

The high flyers are as follows:

  1. Tonopah 85354 + 58.8%
  2. Phoenix 85009 + 48.3%
  3. Phoenix 85031 + 45.1%
  4. Phoenix 85019 + 44.1%
  5. Black Canyon City 85324 + 43.7%
  6. Phoenix 85017 + 42.4%
  7. Phoenix 85006 + 39.8%
  8. Phoenix 85035 + 37.1%
  9. Phoenix 85008 + 35.2%
  10. Phoenix 85033 + 33.7%
  11. Phoenix 85040 + 33.6%
  12. Glendale 85301 + 32.7%
  13. Youngtown 85363 + 30.1%

Everywhere else is below 30%.

The inner West Valley accounts for 8 of these high flyers with East Phoenix taking 2 slots, South Phoenix 1 spot and 2 far-flung rural areas.

I am willing to bet no-one guessed Tonopah for number 1. But it started at only $49.48 so there was still a coiled-spring effect as it bounced back to $78.58 per sq. ft.

By far the most expensive of the high flyers is Phoenix 85006 which jumped from $123.93 to $173.28 to rank number 7 overall.

Among the luxury ZIP codes, 85251 came top with a 16.9% gain over 2 years from $194.49 to $227.40, while 85018 came second with 14.0% over 2 years, from $230.82 to $263.09.

85251 ranks 47th overall while 85018 ranks 67th overall.

All these numbers include all types of properties, not just single family.

November 15 - For anyone who wants to see a positive signal in demand, take a look at the daily chart for annual sales:

Ignore the short term zigs and zags and focus on the distinct change in the slope from mid October onwards. This is because 2016 has been stronger than 2015 for sales closed since mid October.

November 14 - In the Northeast Valley, the overall market is more subdued than the rest of the Phoenix area, because there are relatively few homes under $250,000. For single family homes, supply compared to a year ago is as follows:

  • Under $500,000 - down 6%
  • Between $500,000 and $1,000,000 - up 5%
  • Over $1,000,000 - up 4%

Quarterly sales numbers are looking very good because the comparative period from August through October 2015 was weak.

  • Under $500,000 - up 11%
  • Between $500,000 and $1,000,000 - up 5%
  • Over $1,000,000 - up 37%

Appreciation is running at 4.3% for the sector under $500,000, but -0.2% for $500,000 to $1 million. The sector over $1 million is showing 6.0% appreciation rate thanks to a particularly strong performance by home sales over $2 million.

November 13 - In the Central Valley (Phoenix, including Anthem & New River) we see a picture than is different from both the Southeast Valley and West Valley. For single family supply compared to a year earlier we see:

  • Under $250,000 - down 3%
  • Between $250,000 and $500,000 - down 1%
  • Over $500,000 - up 22%

Clearly the growth in supply is all above $500,000. Overall supply grew by 3%.

Quarterly sales are flat under $250,000 but growing above this mark:

  • Under $250,000 - down 1%
  • Between $250,000 and $500,000 - up 23%
  • Over $500,000 - up 12%

Overall sales are up 7% from a year ago.

With the ongoing lack of supply below $250,000, appreciation is quite strong at 10% for this price range. The adequate supply between $250,000 and $500,000 has produced an average appreciation rate of 4%. The excessive supply over $500,00 has meant that prices have declined by 2% over the past 12 months.

November 12 - In contrast to the Southeast Valley, where single-family supply had declined in all price ranges, the West Valley has supply increasing across the board:

  • under $250,000 - up 6% compared to last year
  • $250,000 to $500,000 - up 13% compared to last year
  • over $500,000 - up 2% compared to last year

However quarterly sales are up nicely in the upper 2 ranges:

  • under $250,000 - up 1% compared to last year
  • $250,000 to $500,000 - up 34% compared to last year
  • over $500,000 - up 14% compared to last year

The action below $250,000 is a new development. We have not seen supply grow like this for a long time and even though 6% is not large growth, it suggests there is a changing situation in the West Valley. It is especially surprising that we do not see sales increasing by at least as much.

The supply increase is patchy however. We see a large increases in:

  • Glendale 85301 - up 52%
  • Glendale 85302 - up 39%
  • Glendale 85306 - up 40%
  • Peoria 85345 - up 39%
  • Surprise 85378 - up 146%
  • Surprise 85379 - up 55%
  • Surprise 85387 - up 44%

Glendale, Peoria and Surprise are all seeing declines in their Cromford® Market Index, especially Surprise.

Other areas have seen supply go down, for example:

  • Glendale 85304 - down 10%
  • Laveen 85339 - down 14%
  • Litchfield Park 85340 - down 14%
  • Tonopah 85354 - down 22%
  • Avondale 85395 - down 12%

November 11 - The Cromford® Market Indexes for the single family markets in the largest 17 cities are in the table below:

Still giving a slightly negative readout, we see 7 cities improving and 10 deteriorating.

Notable declines are to be found in:

  1. Surprise -17%
  2. Paradise Valley -10%
  3. Cave Creek -9%
  4. Scottsdale -8%
  5. Fountain Hills -6%
  6. Queen Creek -6%
  7. Glendale -5%

Notable increases include:

  1. Chandler +6%
  2. Avondale +5%

This is probably the most negative table we have seen since the first quarter, caused by increasing inventory particularly in the more expensive locations as well as Surprise. However there are still no cities below 100 and seller's remain in charge of the market.

Chandler stands out as the most improved market with inventory falling and increased demand. Goodyear and Maricopa also continue to look strong.

November 10 - The Southeast Valley is looking like a very strong market these days. We have fewer active single family listings in ALL price ranges and sales volume in the last 3 months is up 13% from a year ago. Segmenting by price range we see:

  • Below $200K - supply down 25%, sales down 7%, pricing up 7%
  • $200K-$500K - supply down 8%, sales up 33%, pricing up 4%
  • Over $500K - supply down 2%, sales up 38%, pricing up 2%

Almost all the key data trends are favorable and there is no longer any ZIP code showing negative appreciation, even 85045 is up 2.1%.

The strongest areas for appreciation are currently Mesa 85201 (+14.0%), Mesa 85204 (+12.6%) and Gilbert 85297 (+10.4%).

November 9 - Yesterday's observation was about rental homes in all areas & types. If we look separately at single family homes and condos / apartments there are some further deductions we can make.

The current number of active single family rental listings on ARMLS is 2,158. This is actually down from 2,291 last year, but it is a lot higher than the 1,243 we saw on March 16, 2016. The single family rental inventory has increased from 37 to 45 days while the average price per sq. ft. has risen 6% from 74.5 cents to 79 cents. However the price peaked at 81.7 cents in July and has declined since then.

The number of attached (condo, townhouse, apartment, etc.) rental listings on ARMLS is 1,188. This is up from 1,007 last year and the minimum of 816 on February 28, 2016. We now have 69 days of inventory when we only had 52 at this point last year. The condo rental market appears to be slowing down a bit as inventory rises while the average price per sq. ft. has risen 7% from $1.025 to $1.092 over the past 12 months.

November 8 - It is a very long time since were able to say this. There are more rental listings on ARMLS than there were a year ago. 3,360 is not a huge number by historical standards, but it is bigger than 3,313, which is what we had on November 8, 2015. Supply of rentals through ARMLS is no longer on a downward trend.

The lowest point reached was 2,117 on March 14. So we are up 56% in 7 months.

The current monthly average lease price per sq ft for all areas & types is 84.4 cents. A year ago it was 78.7 cents. That is an annual increase of 7.2%. However all of that increase took place between November 8, 2015 and June 3, 2016. We have seen no upward trend in rental rates since May, with the number stuck in neutral between 84 cents and 86 cents.

This would appear to be a change in market conditions that may cause landlords to consider a change of strategy. We should be on the lookout for signs of former rental homes coming onto the market for sale in larger numbers than we have seen for many years.

November 7 - Several reports have suggested that single female buyers are becoming a larger part of the housing market. This is one of the few demographic subjects where we have good data. When we examine deeds and affidavits of value, we cannot tell the age, race, religion, sexual preferences or much else about the buyer and seller. However we can tell if the property is being purchased by an unmarried, divorced or married man, unmarried, divorced or married woman or a married or unmarried couple, of whatever combination of sexes. These facts are mentioned right there in the wording of the deed. These days it is no longer valid to assume that a married couple is of opposite sex, but statistically speaking the numbers of same sex couples making home purchases is still small.

So can we see any trends in the numbers for Maricopa and Pinal counties? We decided to exclude distressed sales and focus only on normal sales, new homes and the flip part of a fix and flip.

1. The percentage of sales to single women, or married women purchasing as their sole and separate property has indeed increased as follows:

  • 2011 - 22.5% of all purchases
  • 2012 - 22.6%
  • 2013 - 22.7%
  • 2014 - 23.5%
  • 2015 - 24.0%
  • 2016 - 24.8% (to the end of September)

2. The percentage of sales to single men, or married men purchasing as their sole and separate property has also increased:

  • 2011 - 32.3%
  • 2012 - 33.7%
  • 2013 - 34.4%
  • 2014 - 34.2%
  • 2015 - 34.9%
  • 2016 - 34.9%

The growth for single men seems to have stalled since 2013 however, which is when the growth in single women buyers started to grow. There is a slightly faster growth for single women over single men, but it is not dramatically different. I would conclude that the reports about increasing numbers of single female buyers are valid.

3. The percentage of sales to couples has declined as follows:

  • 2011 - 45.2%
  • 2012 - 43.8%
  • 2013 - 43.0%
  • 2014 - 42.4%
  • 2015 - 41.1%
  • 2016 - 40.2%

This is a clear trend. Sales to couples remain the largest sector, but it is in a steep declining trend. This corresponds to a decline in birth rates that we have already commented on.

Another trend we observed is that couples with the wife mentioned first increased from 2.5% to 3.7% of purchases. Couples with the husband mentioned first dropped from 42.7% to 36.6%. Not quite sure what that tells us, but I am sure Cromford Report subscribers will have some interesting theories.

November 6 - If we segment the market by property type, the fastest appreciation over the last 12 months has been experienced by mobile homes. The annual average price per sq. ft. for mobile homes is up 12% from November 2015. A year ago we saw 12% over November 2014 too. Over the past 5 years the average $/SF has more than doubled from $35.57 to $79.18. This far outpaces the appreciation of more traditional homes. Only 1,736 mobile home listings closed in the last year across Greater Phoenix, making this segment pretty small - just 2% of the total market.

The slowest appreciation has been experienced by patio homes, which are up only 2.6% from a year ago, as measured by the annual average $/SF. The five year movement from $109.22 to $161.67 represents a gain of 48%. This is less than half the appreciation achieved by the mobile home segment. Patio homes represent 1.6% of the overall market.

November 5 - The pricing charts are looking positive from a seller's perspective these days. Not so much in the case of medians, but the average price and average price per sq. ft. charts have gained a new momentum in the last few weeks. Buyers may be dismayed, but sellers who need cheering up can take a look at the weekly $/SF for the overall market:

November 4 - October was unusually strong for closed sales, but it was not equally strong across the geographic areas. We are showing 7,103 closed listings in ARMLS for October across all areas & types, From public records in Maricopa County we count 8,409 single family and condo/ townhouse sales. The latter is up 13% compared with October 2015 and is the highest number for any October since 2006. The Southeast Valley cities of Chandler, Gilbert and Mesa made a powerful contribution to the total, as did Goodyear, Buckeye and Sun City. Even Paradise Valley, Cave Creek & Tolleson grew by large percentages, though their unit numbers are relatively small. Phoenix, Scottsdale, Sun City West and Queen Creek, did not participate strongly in the trend.

Looking at various cities and their sales transactions in the public records we see the following growths over 2015:

CityOct 2015 SalesOct 2016 SalesChange
Goodyear 189 267 +41.3%
Sun City 143 198 +38.5%
Paradise Valley 30 38 +26.7%
Chandler 485 606 +24.9%
Gilbert 506 627 +23.9%
Cave Creek 79 96 +21.5%
Tolleson 76 92 +21.1%
Buckeye 196 231 +17.9%
Mesa 819 964 +17.7%
Peoria 408 472 +15.7%
Avondale 134 154 +14.9%
Tempe 196 223 +13.8%
Glendale 406 461 +13.5%
Surprise 298 337 +13.1%
Phoenix 2144 2241 +4.5%
Scottsdale 698 729 +4.4%
Sun City West 112 112 flat
Queen Creek 160 145 -9.4%

November 3 - Here is the usual weekly table showing the Cromford® Market Index for the single family markets in the 17 largest cities:

We have 10 of the 17 showing a deterioration in negotiation power for sellers. These include the more expensive locations (Paradise Valley, Scottsdale, Fountain Hills and Cave Creek) with a uniform decline of 7% over the last month. This is due to a build up in inventory, which is often seen at this time of year. Buyers get more choice as well as more negotiation power when this happens.

The large decline for Surprise is unexpected (a surprise?) but follows a 17% increase in active listings, far bigger than any other city in the list.

Active listings actually declined in Gilbert, Chandler and Tempe, which helped their sellers. The Southeast Valley has seen smaller increases in inventory than normal for the time of year.

Maricopa, Goodyear and Avondale continue to improve, while Glendale, Peoria and Queen Creek have faded a little.

November 2 - Today we are taking a look at the Contract Ratio to see which segments of the single family market are hotter or cooler than last year. The following table compares the contract ratio on November 1 for 2015 and 2016. Higher numbers mean either more homes under contract or fewer home available, or both. This is good for sellers. Lower number mean the opposite.

Price RangeAverage20152016% ChangeInterpretation
Under $100K 159.0 84.1 56.2 -33.2% far below average and much cooler than last year
$100K to $125K 141.1 112.6 94.5 -16.1% far below average and cooler than last year
$125K to $150K 111.3 125.0 109.2 -12.6% slightly below average and cooler than last year
$150K to $175K 94.2 92.5 103.3 11.7% above average and hotter than last year
$175K to $200K 75.6 69.4 84.2 21.3% above average and hotter than last year
$200K to $225K 61.0 66.3 70.1 5.7% above average and a little hotter than last year
$225K to $250K 53.8 56.0 67.5 20.5% above average and hotter than last year
$250K to $275K 52.3 53.3 63.1 18.4% above average and hotter than last year
$275K to $300K 45.6 44.5 56.7 27.4% above average and hotter than last year
$300K to $350K 40.5 37.9 47.5 25.3% above average and hotter than last year
$350K to $400K 35.6 30.3 41.1 35.6% above average and hotter than last year
$400K to $500K 30.3 29.1 33.0 13.4% above average and hotter than last year
$500K to $600K 24.7 23.1 27.5 19.0% above average and hotter than last year
$600K to $800K 21.0 20.1 21.8 8.5% about average and slightly warmer than last year
$800K to $1M 16.0 13.8 18.4 33.3% above average and hotter than last year
$1M to $1.5M 13.9 11.8 15.2 28.8% above average and hotter than last year
$1.5M to $2M 11.7 8.8 11.2 27.3% still below average but not as cold as last year
$2M to $3M 7.8 8.2 8.3 1.2% a little above average, similar to last year
Over $3M 4.8 4.4 4.9 11.4% about average, but not as cool as last year

Last year at this time, we were going through a distinct cooling period for a couple of months, so the comparison this year is favorable.

The market is surprisingly cool under $150K. Supply is low but buyer interest seems to have weakened in the last year. Over $150K, the market is consistently hotter than last year at this time.

The luxury market is in a better state than this time last year but remains relatively subdued between $1.5M and $2M.

The biggest improvement for sellers in in the range $350K to $400K, which is good news for new home developers.

November 1 - From time tome we like to check how Arizona is doing compared with the other states. For this purpose, the Core Logic Home Price Insights Report is a useful source.

According to Core Logic's report, which is based on data at the end of September, Arizona was one of the 5 states with the furthest to go to reach the height of pricing at the peak of the housing bubble.

  1. Nevada 31.4% below peak
  2. Florida 22.5% below peak
  3. Arizona 22.0% below peak
  4. Connecticut 19.1% below peak
  5. Maryland 18.7% below peak

There are now 15 states (plus the District of Columbia) which are making new price highs, having exceeded the levels at the peak of the bubble:

  • Arkansas
  • Colorado
  • Iowa
  • Indiana
  • Kansas
  • Kentucky
  • Louisiana
  • North Carolina
  • Nebraska
  • New York
  • Oregon
  • Tennessee
  • Texas
  • Utah
  • Washington

Core Logic provides 12 month forecasts for home price appreciation, though their track record for getting them correct is not brilliant. For what it's worth, Arizona is among the highest group:

  1. California 9.0%
  2. Nevada 8.9%
  3. New Hampshire 7.1%
  4. Florida 7.0%
  5. Arizona 6.6%
  6. Michigan 6.3%
  7. Oregon 6.1%

The lowest appreciation is forecast for the states most affected by the fall in energy prices:

  1. North Dakota 1.7%
  2. Wyoming 1.7%
  3. Texas 2.6%
  4. Montana 2.8%
  5. Oklahoma 3.1%
  6. Mississippi 3.1%
  7. Louisiana 3.4%

These are still positive however.

In the last 12 months two states have experienced negative home price appreciation: Alaska -0.3% and Connecticut -1.4%. Core Logic is forecasting that this will reverse over the net year, since they forecast 5.4% and 4.8% for these two states.

October 2016

October 31 - September saw a lull in Notices of Trustee Sale but October went back to normal with 644 across Maricopa County. There were 726 in October 2015, so we are still on a slow downward trend despite the odd bump from month to month. Year to date we are down 27% compared with last year at 6,792 after 10 complete months.

Completed trustee deeds dropped slightly in October compared with September, down to just 239 across Maricopa County. Year to date we have 2,913 which is down 43% compared to last year at this time. Last month's total is down 96% from the peak in March 2010.

October 30 - Last year at this time we entered a 6 week period with a notable decline in the monthly sale rate, enough to take us 5% below the equivalent monthly sales rate for November 2014. In contrast this year, we are seeing an uptick in the monthly sales rate. As of today we are 14% ahead of October 30, 2015. That is the highest annual percentage growth in sales since August 2015.

 

October 29 - If the single family permits for September were a little underwhelming, the multi-family permits made up for it, with a total of 1,562 across Maricopa and Pinal. The is the fifth highest monthly total we have recorded in the last ten years. Big contributions came from:

 

  1. Phoenix 498
  2. Chandler 429
  3. Scottsdale 373
  4. Mesa 170
  5. Tempe 82

 

Unusually the permits included a a four-plex in Paradise Valley, with a construction cost over $2 million.

 

October 28 - The single family building permit count for September was 1,467 across Maricopa and Pinal counties. This is only a very slight increase on the 1,455 we saw in September last year and represents a bit of a cooling off. Having risen quickly from 975 in January 2015 to 1,489 in March 2016, the rolling 12 month average has stalled at about 1,510 per month and has barely changed for the last 7 months.

 

The year to date counts for the top 10 areas are:

 

  1. Phoenix 1,914
  2. Mesa 1,639
  3. Gilbert 1,276
  4. Peoria 1,250
  5. Unincorporated Pinal County 1,124
  6. Buckeye 1,111
  7. Chandler 998
  8. Queen Creek 850
  9. Unincorporated Maricopa County 814
  10. Goodyear 786

 

 

October 27 - This week we are really seeing the effect of incoming supply in the Cromford® Market Index for the single family markets in the 17 largest cities:

We have 12 out of 17 cities deteriorating for sellers, with significant rises in supply for Surprise, Paradise Valley, Fountain Hills and Scottsdale.

The Southeast Valley is getting off lightly with only very modest growth in supply, particularly in Chandler and Mesa.

Goodyear is looking stronger than it has for a very long time while Maricopa continues to improve despite the highest annual appreciation rate of the 17. A high appreciation rate eventually leads to suppression of demand.

And OMG, Avondale has started to go back up again, increasing the gap at the top of the table. I have to admit it is getting boring having the same city at number 1 for so long. However I am sure sellers in Avondale just love it.

October 26 - We have been pointing out the serious long term effects of demographic changes for some time and it appears we are not alone. The Federal Reserve Board has a Division of Research and Statistics and Monetary Affairs and they recently published a paper entitled Understanding the New Normal: The Role of Demographics.

The Washington Post published an article on the paper here. We are experiencing the after-effects of the post-war baby boom with a significant slowdown in the growth of the labor force.

The conclusion is that demographics are the primary cause of slow growth in the economy and that anemic GDP growth is likely to remain with us for a long time.

October 25 - The S&P / Case-Shiller® Home Price Index® report was released today for the 3 month period ending in August 2016. The year over year changes were as follows:

  1. Portland 11.7%
  2. Seattle 11.4%
  3. Denver 8.8%
  4. Dallas 8.1%
  5. Tampa 7.6%
  6. Miami 7.1%
  7. San Francisco 6.7%
  8. Los Angeles 5.8%
  9. San Diego 5.8%
  10. Charlotte 5.8%
  11. Detroit 5.7%
  12. Las Vegas 5.2%
  13. Atlanta 5.2%
  14. Phoenix 5.2%
  15. Minneapolis 5.2%
  16. Boston 4.1%
  17. Chicago 4.1%
  18. Cleveland 2.9%
  19. Washington DC 2.3%
  20. New York 1.7%

At 5.2% Phoenix is just below the national average of 5.3% and thus completely unexceptional. The top 3 remain the same as last month though they are slowing down a little.

The month over month changes look like this:

  1. Phoenix 0.59%
  2. New York 0.58%
  3. Tampa 0.55%
  4. Dallas 0.50%
  5. Seattle 0.50%
  6. Chicago 0.49%
  7. Minneapolis 0.46%
  8. Portland 0.45%
  9. Detroit 0.44%
  10. Miami 0.42%
  11. Charlotte 0.42%
  12. San Francisco 0.41%
  13. Los Angeles 0.37%
  14. Washington DC 0.36%
  15. Denver 0.33%
  16. Boston 0.31%
  17. Atlanta 0.23%
  18. San Diego 0.13%
  19. Las Vegas 0.12%
  20. Cleveland 0.06%

Now we see a reason to get excited. Phoenix is number 1 for home price appreciation month to month, up from 5th place last month.

October 24 - "The Presidential race already having an impact on the Phoenix-area housing market". ???

Like Jim Belfiore, I am not seeing any evidence of this in the overall housing market. In fact the listings under contract chart confirms that there is more buyer contracting activity than at the same time last year. If there is any hesitation it is probably going to be in a few sectors of the luxury market, which is only a very small percentage of the total. Homes over $1 million represent less than 1.5% of unit sales. However they represent 8.5% of homes listed for sale. So there are far fewer buyers to go round and they are more likely to being distracted by politics.

I have never seen the housing market distracted by an election, and although I dearly wish this one would just stop already, I don't believe it is having an appreciable effect now.

Of course policy decisions taken after an election could potentially have a major effect on the housing market.

October 23 - The statistics based on public records for Maricopa & Pinal counties are now complete for September and reveal the following:

  • Normal single family resales were up 5.8% compared with September 2015
  • New single family homes were up 29.7%
  • Distressed single family sales were down 23%
  • Total dollar volume increased by 15.4% for single family homes
  • Total dollar volume increased by 19.3% for condo / townhouses
  • Average price per sq. ft. for single family homes grew 6.7% to $140.29
  • Average price per sq. ft. for condo / townhouses grew 8.7% to $146.71

October 22 - The influx of new listings that we see every year from late September to Thanksgiving tends to put some downward pressure on the Cromford® Market Index, because supply inevitably grows. We just don't have the sales rate to eat up all the new listings at this time of year. However we would not take this as a negative sign this year. The "springiness" in the weekly sales chart and pending listing chart both look more impressive this year than any since 2012 and the Listing Success Rate is much stronger than usual for the time of year.

There is nothing very remarkable or dramatic going on, but the small signs I see point to additional market strength rather than weakness.

October 21 - The Canadian dollar is currently worth about 75 cents US, down roughly 25% from 2012 and 2013 when it ranged between 95 cents and $1.03. This makes homes in Arizona much more expensive than they were a few years ago, if you are converting funds to or from Canadian currency. In the first 9 months of 2016 we have seen an exodus of Canadian-based homeowners with 1,736 selling up and only 333 purchasing within Maricopa County, a net loss of 1,403 homeowners.

In the same 9 months of 2015 we saw a net loss of 679 (1,323 sales and 644 purchases) and in 2014 we saw a gain of 250 (820 sales and 1,070 purchases).

The boom years of 2012, 2013 and 2014 gave us net gains of 3,327, 2,572 and 986 respectively, so the current exit rate is less than half the arrival rate of 2012.

I do not know if we have reached the peak Canadian exit rate, but we are currently losing about 7% of home-owning Canadians per year, something we have never seen before.

October 20 - Today we look once more at the Cromford® Market Index for the single family markets in the largest 17 cities within Greater Phoenix.

These numbers reflect the swing away from sellers that we usually see during October and November due to declining sales rates and increasing new listings. We see 11 cities deteriorating for sellers and 6 improving. The overall change is not huge however and the market remains in good health.

The Southeast Valley looks strongest with Mesa, Chandler and Tempe among the 6 improving areas. Gilbert and Queen Creek declined however. The Northeast Valley is affected most by the new supply with Scottsdale, Paradise Valley and Fountain Hills moving backwards. Cave Creek managed a small gain.

The West Valley is mixed with Glendale improving, but Surprise, Goodyear, Buckeye and Peoria all weakened for sellers with a stronger supply trend than we have seen for some time. Buckeye is the only city that is not a seller's market among these 17.

October 19 - Looking at the broader regions within Greater Phoenix, we see inventory rising fastest in the Northeast and slowest in the Southeast. The change in days of inventory over the past month was as follows:

RegionDays of Inventory 9/1/16Days of Inventory 10/1/16
Southeast 82 84
Northeast 176 187
Phoenix 87 90
West 80 84

 

October 18 - The biggest difference between 2015 and 2016 has been the market share gains made by new homes over re-sales. Based on year to date sales at the end of August, overall dollar volume is up by 13.6% for single family and townhouse / condo properties across Maricopa and Pinal Counties. However new home dollar volume is up by 34.6% while re-sales are up by only 10.3%. In market share terms new homes have grown from a 13.6% share to 16.1%. New home developers have done more in 2016 to address the lower price ranges and unit counts are up 33% year to date.  Analyzing by city we see the following unit sales growth:

City New Homes YTD 2015 New Homes YTD 2016 % Change
Mesa 734 1,205 64%
Peoria 743 1,114 50%
Phoenix 803 976 22%
Gilbert 990 946 -4%
Chandler 370 765 107%
Buckeye 523 744 42%
Queen Creek 432 595 38%
San Tan Valley 414 571 38%
Goodyear 465 545 17%
Scottsdale 253 332 31%
Surprise 261 257 -2%
Laveen 147 233 59%
Maricopa 192 205 7%
Florence 139 203 46%
Cave Creek 114 129 13%
Tolleson 78 116 49%
Avondale 44 107 143%
Glendale 39 102 162%
Litchfield Park 100 77 -23%

 

October 17 - Tina Tamboer has been conducting research into the fix and flip market and has published her findings in a Powerpoint presentation that you can download from our web site:

2016-10 Fix and Flip Market.

October 11 through October 16 - Due to vacation, the only observations I have been making are of beautiful Lake Powell. Here is a picture my wife Andrea took of the sunset on October 12. Taken with a Samsung S7 Edge cell phone from the deck of our houseboat timeshare.

Perhaps it will encourage more people to move to Arizona?

October 10 - The Black Knight Financial Services Mortgage Monitor report for August has been released and shows the vast majority of states continue to experience lower delinquency rates than for August 2015. The only exception is North Dakota, with a 6.2 increase in non-current loans. Other fossil-fuel dependent states are seeing lower delinquencies but only small declines. These include Louisiana, West Virginia, Wyoming and Alaska.

As you might expect the greatest percentage drops in delinquency are found in states where the housing market is buoyant. These include Washington, Colorado, Oregon, Idaho, Nevada and Florida, all showing declines in delinquency of over 20%.

Arizona is in the middle with a decline of 11%. We are starting to rise up the delinquency table because states like Washington and Oregon are losing their delinquent loans faster than we are.

October 9 - Today we are examining pricing across the Central Valley, comparing 3Q 2016 with 3Q 2015 for all property types.

CityZIPQuarterly Average $/SF 3Q 2015Quarterly Average $/SF 3Q 2016% Change
Phoenix   $136.77 $146.36 7.0%
  85003 $237.47 $210.37 -12.9%
  85004 $179.67 $196.87 8.7%
  85006 $150.54 $178.39 15.6%
  85007 $166.12 $164.05 -1.3%
  85008 $126.35 $146.46 13.7%
  85009 $80.05 $96.33 16.9%
  85012 $182.06 $219.21 16.9%
  85013 $161.82 $184.99 12.5%
  85014 $148.82 $172.42 13.7%
  85015 $111.57 $120.23 7.2%
  85016 $193.76 $198.85 2.6%
  85017 $79.72 $92.44 13.8%
  85018 $256.01 $253.03 -1.2%
  85019 $82.78 $97.02 14.7%
  85020 $156.51 $158.23 1.1%
  85021 $163.11 $158.18 -3.1%
  85022 $134.73 $143.06 5.8%
  85023 $123.12 $132.24 6.9%
  85024 $140.21 $155.05 9.6%
  85027 $117.89 $129.22 8.8%
  85028 $172.09 $177.39 3.0%
  85029 $104.15 $118.88 12.4%
  85031 $74.25 $89.85 17.4%
  85032 $134.11 $151.03 11.2%
  85033 $83.90 $95.21 11.9%
  85034 $114.80 $102.98 -11.5%
  85035 $90.38 $99.77 9.4%
  85037 $86.40 $99.54 13.2%
  85040 $89.25 $99.13 10.0%
  85041 $90.74 $99.82 9.1%
  85042 $109.21 $122.46 10.8%
  85043 $89.73 $100.13 10.4%
  85050 $164.43 $172.83 4.9%
  85051 $91.03 $98.86 7.9%
  85053 $104.63 $113.43 7.8%
  85054 $198.94 $194.68 -2.2%
  85083 $129.43 $131.76 1.8%
  85085 $135.65 $142.32 4.7%
  85086 $135.04 $138.04 2.2%
New River 85087 $123.35 $137.86 10.5%

Dramatic variations in appreciation occur from a low of -11.5% in 85034 to a high of 17.4% in 85031.

It is noteworthy that 85018 made a much weaker showing in 3Q 2016 than in the previous 8 quarters. Generally speaking the south and west of Phoenix showed the strongest pricing trends, though some spots in the north (e.g. 85024, 85032) also did well.

October 8 - Today we are examining pricing across the Northeast Valley, comparing 3Q 2016 with 3Q 2015 for all property types.

CityZIPQuarterly Average $/SF 3Q 2015Quarterly Average $/SF 3Q 2016% Change
Carefree 85377 $250.29 $198.69 -20.6%
Cave Creek 85331 $171.19 $181.54 6.0%
Fountain Hills 85268 $183.25 $184.00 0.4%
Paradise Valley 85253 $318.85 $324.25 1.7%
Rio Verde 85263 $155.97 $187.66 20.3%
Scottsdale   $212.30 $219.84 3.6%
  85250 $191.72 $185.37 -3.4%
  85251 $190.32 $221.87 14.2%
  85254 $184.81 $191.18 3.3%
  85255 $246.19 $264.80 7.0%
  85257 $157.87 $173.67 9.1%
  85258 $213.77 $217.84 1.9%
  85259 $204.02 $210.06 2.9%
  85260 $191.18 $196.50 2.7%
  85262 $270.81 $259.47 -4.4%
  85266 $224.91 $223.24 -0.7%

Far fewer ZIP codes exist in the Northeast Valley, but four of them showed negative appreciation when comparing 3Q sales in 2015 and 2016. Carefree had only 18 sales in 2016 compared with 34 in 2015 so the very weak pricing is based on a low sample. The same is true of Rio Verde but with the opposite effect. Sales grew from 17 to 29 and pricing showed an abnormal jump.

Yet again 85251 was an outstanding price performer in the Northeast Valley.

October 7 - Today we are examining pricing across the West Valley, comparing 3Q 2016 with 3Q 2015 for all property types.

CityZIPQuarterly Average $/SF 3Q 2015Quarterly Average $/SF 3Q 2016% Change
Avondale   $95.97 $104.98 9.4%
  85323 $88.23 $101.10 12.7%
  85392 $101.49 $108.84 6.8%
Buckeye   $95.94 $102.70 7.1%
  85326 $85.16 $94.95 10.3%
  85396 $114.07 $117.18 2.7%
El Mirage 85335 $88.69 $101.62 14.6%
Glendale   $114.42 $122.19 6.8%
  85301 $76.61 $87.56 12.5%
  85302 $98.04 $108.61 9.7%
  85303 $99.22 $113.34 12.5%
  85304 $107.17 $121.94 12.1%
  85305 $104.91 $116.86 10.2%
  85306 $109.69 $125.18 12.4%
  85307 $97.88 $108.20 9.5%
  85308 $130.04 $136.62 4.8%
  85310 $141.90 $137.17 -3.5%
Goodyear   $111.42 $120.77 8.4%
  85338 $105.57 $114.66 7.9%
  85395 $120.77 $130.88 7.7%
Laveen 85339 $92.42 $100.11 8.3%
Litchfield Park 85340 $110.73 $116.58 5.3%
Peoria   $122.34 $127.93 4.6%
  85345 $102.76 $113.84 9.7%
  85381 $119.03 $124.35 4.3%
  85382 $123.08 $130.64 5.8%
  85383 $130.48 $132.99 1.9%
Sun City   $90.64 $98.60 8.8%
  85351 $86.67 $92.62 6.4%
  85373 $98.52 $107.51 8.4%
Sun City West 85375 $115.13 $123.90 7.1%
Surprise   $105.55 $111.71 5.8%
  85374 $120.21 $124.09 3.1%
  85378 $98.97 $113.15 12.5%
  85379 $96.51 $105.18 8.2%
  85387 $129.19 $129.30 0.1%
  85388 $94.51 $101.67 7.0%
Tolleson 85353 $87.49 $96.88 10.7%
Tonopah 85354 $69.85 $71.47 2.3%
Waddell 85355 $102.74 $104.53 1.7%
Wickenburg 85390 $124.66 $112.31 -9.9%
Wittmann 85361 $96.97 $113.47 17.0%
Youngtown 85363 $86.07 $96.74 12.4%

Once more we see very few ZIP codes declining (only 85310 and 85390) while 12 appreciated by more than 10%.

October 6 - It is time again to look at how the Cromford Market Index has fared for the single family market in the 17 largest cities.

Declining cities outnumber advancers by 10 to 7, but the picture is more balanced than that comparison suggests. 6 of the 10 declining cities fell by 2% or less leaving only Avondale, Surprise, Goodyear and Buckeye cooling by more than 2%. We note that these are all in the West Valley.

Strong advances can be seen in Cave Creek, Glendale, Chandler, Paradise Valley and Tempe. Overall we would say the market remains similar to a month ago with almost all areas and sectors in a seller's market.

October 5 - Today we are examining pricing across Pinal County, comparing 3Q 2016 with 3Q 2015 for all property types.

CityZIPQuarterly Average $/SF 3Q 2015Quarterly Average $/SF 3Q 2016% Change
Apache Junction   $106.92 $115.22 7.8%
  85119 $112.04 $121.08 7.5%
  85120 $102.67 $110.84 7.4%
Casa Grande   $75.91 $81.53 7.4%
  85122 $72.85 $78.41 7.1%
  85194 $60.13 $71.66 16.1%
Coolidge 85128 $53.74 $57.89 7.7%
Eloy 85131 $93.77 $101.95 8.7%
Florence 85132 $77.96 $84.23 8.0%
Gold Canyon 85118 $145.09 $143.23 -1.3%
Maricopa   $74.55 $84.09 12.8%
  85138 $76.37 $85.43 10.6%
  85139 $69.55 $79.45 12.5%
Queen Creek (including San Tan Valley)   $98.64 $105.30 6.8%
  85140 $95.17 $101.80 6.5%
  85142 $110.04 $117.54 6.4%
  85143 $85.21 $89.31 4.6%

By far the most expensive part of Pinal County, Gold Canyon 85118 was the only ZIP code in this area to show negative appreciation over the last 12 months.

October 4 - Today we are examining pricing across the Southeast Valley, comparing 3Q 2016 with 3Q 2015 for all property types.

CityZIPQuarterly Average $/SF 3Q 2015Quarterly Average $/SF 3Q 2016% Change
Ahwatukee   $151.54 $156.29 3.0%
  85044 $148.50 $159.18 6.7%
  85045 $147.76 $147.12 -0.4%
  85048 $155.33 $156.81 0.9%
Apache Junction   $106.92 $115.22 7.8%
  85119 $112.04 $121.08 7.5%
  85120 $102.67 $110.84 7.4%
Chandler   $138.55 $145.90 5.3%
  85224 $137.04 $149.33 8.2%
  85225 $129.94 $139.16 6.6%
  85226 $142.62 $154.43 7.7%
  85249 $135.50 $138.70 2.3%
  85286 $143.04 $148.95 4.0%
Gilbert   $131.01 $138.27 5.5%
  85233 $133.60 $142.18 6.0%
  85234 $133.80 $138.01 3.1%
  85295 $127.82 $131.58 2.9%
  85296 $129.95 $136.99 5.1%
  85297 $126.51 $139.25 9.1%
  85298 $135.64 $143.37 5.4%
Mesa   $121.24 $128.02 5.6%
  85201 $108.66 $119.67 9.2%
  85202 $116.80 $127.31 8.3%
  85203 $117.95 $125.67 6.1%
  85204 $112.38 $129.52 13.2%
  85205 $122.10 $129.50 5.7%
  85206 $119.57 $120.37 0.7%
  85207 $146.67 $150.94 2.8%
  85208 $103.72 $117.57 11.8%
  85209 $118.76 $123.25 3.6%
  85210 $118.24 $124.84 5.3%
  85212 $116.59 $119.52 2.5%
  85213 $126.13 $126.75 0.5%
  85215 $130.75 $135.72 3.7%
Queen Creek (including San Tan Valley)   $98.64 $105.30 6.8%
  85140 $95.17 $101.80 6.5%
  85142 $110.04 $117.54 6.4%
  85143 $85.21 $89.31 4.6%
Tempe   $145.57 $153.79 5.6%
  85281 $155.09 $166.85 7.0%
  85282 $132.03 $142.93 7.6%
  85283 $140.26 $144.28 2.8%
  85284 $161.27 $164.84 2.2%
Sun Lakes 85248 $126.93 $131.47 3.6%

Influenced by the 202 extension, 85045 was the only ZIP code in this area to lose ground over the last 12 months.

October 3 - Pricing was weaker during the third quarter, as is usually the case every year, but shows signs of strengthening during the fourth quarter. Indeed, September was a much stronger month for prices than July and August. Looking at the quarterly averages by price range for the Greater Phoenix market (all property types) we see the following:

Price RangeQuarterly Average $/SF 3Q 2015Quarterly Average $/SF 3Q 2016% Change
Up to $150K $87.49 $93.70 7.1%
$150K to $200K $104.17 $110.48 6.1%
$200K to $250K $118.65 $123.36 4.0%
$250K to $300K $128.54 $131.90 2.6%
$300K to $400K $138.70 $141.81 2.2%
$400K to $500K $153.60 $155.56 1.3%
$500K to $750K $181.06 $184.05 1.6%
$750K to $1M $225.33 $218.14 -3.2%
$1M to $2M $285.12 $272.68 -4.4%
Over $2M $395.24 $435.09 10.1%

We note that the luxury market over $2 million (albeit small with only 59 transactions during the third quarter) did a lot better from a pricing perspective than the luxury market under $2 million. Between $750K and $2 miilion average price per square foot declined. Between $400K and $750K prices kept roughly in line with inflation. Between $250K and $400K prices moved upwards by a little more than inflation. The market below $250K (which had almost 13,000 unit sales during the quarter), appreciated by more than twice the rate of inflation. Some geographical areas comfortably exceeded the highest rate shown here. We will look at prices by geography shortly.

October 2 - The number of Greater Phoenix single family active listings (excluding UCB and CCBC) by price range on October 1, 2016 compared with October 1, 2015 is as follows (single family only):

Price RangeOctober 2015October 2016Growth
Under $100K 233 145 -38%
$100K-$125K 214 116 -46%
$125K-$150K 519 320 -38%
$150K-$175K 871 753 -14%
$175K-$200K 1,118 1,134 1%
$200K-$225K 920 1,018 11%
$225K-$250K 1,095 1,256 15%
$250K-$275K 825 911 10%
$275K-$300K 1,004 1,031 3%
$300K-$350K 1,533 1,498 -2%
$350K-$400K 1,382 1,349 -2%
$400K-$500K 1,544 1,728 12%
$500K-$600K 955 1,024 7%
$600K-$800K 958 1,094 14%
$800K-$1M 545 637 17%
$1M-$1.5M 540 589 9%
$1.5M-$2M 290 350 21%
$2M-$3M 283 291 3%
$3M+ 215 242 13%

The shortage of homes under $175,000 continues to drive prices up quickly at the bottom of the market.

After a pleasant fall in supply for luxury home sellers over the third quarter, they must brace themselves for the likelihood of a lot more competition arriving over the next 2 months and during the first quarter of 2017.

October 1 - Sellers will be hoping that we do not see too much of an increase in active listings between August and the end of November. Looking at the changes between September 1 and October 1, we can see a few ZIP codes where it looks like they will be disappointed. The active listing counts have not risen too much overall, but in the following ZIP codes we see relatively large increases in active single family listings for just one month:

  • Phoenix 85034 +100%
  • Fort McDowell 85264 +100%
  • Phoenix 85033 +55%
  • Mesa 85208 +47%
  • Superior 85173 +45%
  • Youngtown 85363 +38%
  • Sun City West 85375 +32%
  • Phoenix 85014 +31%
  • Sun City 85351 +31%
  • Glendale 85302 +30%
  • Rio Verde 85263 +27%
  • Eloy 85131 +26%
  • Phoenix 85023 +25%
  • Phoenix 85006 +24%
  • Gilbert 85296 +24%
  • Phoenix 85051 +23%
  • Gold Canyon +23%
  • Gilbert 85297 +23%
  • Scottsdale 85250 +23%
  • Gilbert 85234 +22%

 

 

September 2016

September 30 - Even now there are those who would have you believe there is a wave of foreclosures coming along or a secret haul of REOs about to be released. Some suggest short sales are about to explode. There is absolutely no truth to any of these rumors. These people probably also believe that vaccines cause autism and that global warming is a hoax, so using factual evidence is not going to work on them. However for our subscribers I can report that the REO database in Maricopa County is down to a mere 1,100 parcels. September's count of completed trustee sales in Maricopa County was a miniscule 230, 42% below 2015 and down from a peak of 5449 in March 2010. New notices of trustee sale amounted to just 544 in September, half of what we used to see in 2002 and down 95% from the peak of 10,712 in March 2009.

September 29 - This week the table of Cromford® Market Index values for the single family markets in the largest 17 cities shows more cities deteriorating for sellers than improving. This is the first time we have seen this situation since the first quarter and is due to the usual seasonal effects. We expect supply to increase between September and November, yet so far the increase has been fairly small in most areas. The 55+ areas are seeing the strongest growth in supply, but again this is normal for the time of year.

Big movers include Cave Creek and Paradise Valley to the upside. There are no double digit movers to the downside, though Avondale has descended from dizzy heights to almost join the rest of the pack.

September 28 - Single family permits for new homes in August gave us no surprises. There were 1,637 in Maricopa and Pinal, only 6% more than August 2015. As such this is a modest increase compared with earlier months.

Year to date totals for 2016 (with 2015 in parentheses) are:

  1. Phoenix 1,750 (1,459)
  2. Mesa 1,461 (1,110)
  3. Gilbert 1,153 (1,359)
  4. Peoria 1,105 (1,029)
  5. Unincorporated Pinal County 1,005 (1,008)
  6. Buckeye 967 (702)
  7. Chandler 924 (705)
  8. Queen Creek 755 (699)
  9. Goodyear 720 (891)
  10. Unincorporated Maricopa County 699 (543)

Scottsdale has slipped out of the top 10 to be replaced by Unincorporated Maricopa County.

September 27 - It is the time of the month for the S&P/Case-Shiller® Home Price Index® numbers and this month's release covers sales between May and July 2016. Month over month changes look like this:

  1. Portland +1.16%
  2. Chicago +0.92%
  3. Denver +0.89%
  4. Detroit +0.83%
  5. Phoenix +0.78%
  6. Tampa +0.73%
  7. Dallas +0.68%
  8. San Diego +0.65%
  9. Boston +0.64%
  10. Minneapolis +0.64%
  11. Los Angeles +0.58%
  12. Seattle +0.56%
  13. New York +0.55%
  14. Las Vegas +0.52%
  15. Cleveland +0.50%
  16. Miami +0.41%
  17. Atlanta +0.39%
  18. Washington DC +0.37%
  19. Charlotte +0.35%
  20. San Francisco -0.02%

Phoenix is much higher up this list than it has been for many months. Portland and Denver continue their very strong run, while Chicago and Detroit have improved to join them. Seattle and San Francisco are showing unexpected weakness compared with the recent past.

The year over year table looks like this:

  1. Portland +12.40%
  2. Seattle +11.19%
  3. Denver +9.42%
  4. Dallas +8.33%
  5. Tampa +7.76%
  6. Miami +7.05%
  7. San Diego +6.03%
  8. San Francisco +6.01%
  9. Los Angeles +5.50%
  10. Las Vegas +5.39%
  11. Detroit +5.34%
  12. Charlotte +5.33%
  13. Atlanta +5.28%
  14. Phoenix +5.19%
  15. Minneapolis +4.99%
  16. Boston +4.20%
  17. Chicago +3.71%
  18. Cleveland +2.45%
  19. Washington DC +2.02%
  20. New York +1.74%

Phoenix is looking less impressive in this longer term view. Portland, Seattle and Denver are the top three as usual. These are all primary destinations for millennials.

September 26 - The Cromford® Market Index has run out of momentum and is likely to drift sideways or a little lower over the next 2 months. At 151.1, it has the same reading as a week ago and the Supply Index has slowly started to rise from its minimum of 70.2. The Demand Index is almost stationary at 106.3. Unless something happens to spur more demand we expect little change between now and the end of the year.

September 25 - Distressed sales are still contracting. During August the total number of distressed single family sales dropped another 20% from August 2015 while non-distressed sales grew by 14%. Reversions to beneficiary actually rose by 14% from 133 to 149 but true distressed sales dropped as follows:

  • third party purchases at trustee sale - down 9% from 180 to 164
  • HUD sales - down 57% from 30 to 13
  • bank owned homes - down 33% from 141 to 94
  • GSE owned homes - down 23% from 53 to 41
  • short sales & pre-foreclosures - down 16% from 210 to 177

September 25 - Distressed sales are still contracting. During August the total number of distressed single family sales dropped another 20% from August 2015 while non-distressed sales grew by 14%. Reversions to beneficiary actually rose by 14% from 133 to 149 but true distressed sales dropped as follows:

  • third party purchases at trustee sale - down 9% from 180 to 164
  • HUD sales - down 57% from 30 to 13
  • bank owned homes - down 33% from 141 to 94
  • GSE owned homes - down 23% from 53 to 41
  • short sales & pre-foreclosures - down 16% from 210 to 177

September 24 - Looking at the public record data for the month of August, we can see that once again, new homes are grabbing market share. Among single family homes recorded deeds grew by 34% over August 2015 while the total only grew by a (still healthy) 14%. Examining dollar volume, single family grew by 22% overall while condos and townhomes grew by 31%. The single family market is still almost 10 times as large as the attached home market.

September 23 - This is the time of year when active listing counts start to climb, but so far the incoming listings are surprisingly light, especially considering how heavy they were during the first quarter. New listings since the beginning of September (all areas & types) are down 1.1% compared to 2015 but up 2.7% compared with 2014.

September 22 - The Cromford® Market Index for the single family markets in the 17 major cities show we are still in a favorable market for sellers:

Admittedly we have 8 cities showing some deterioration with 9 improving, but the percentage improvements tend to be much larger than the percentage deteriorations.

The more expensive cities are recovering from a disappointing first half year and have shown significant increases in their CMI over the last 2 months. The least expensive cities, such as Avondale, Surprise, Queen Creek, Maricopa and Buckeye are all lower over the last month, though only Avondale has shown a significant cooling off. Avondale could stand to lose some steam and is still top of the table, which is starting to get boring.

September 21 - Within the luxury market for single family homes over $1 million, most areas of the valley have seen a declining average price per sq ft over the last 12 months. However there are two exceptional areas bucking that trend. The first is immediately south and east of Camelback Mountain in ZIP codes 85018 and 85251 where the annual average has soared from $350 to around $380 per sq ft in the last 6 months. Most of this area is known as Arcadia and is shared by the cities of Phoenix and Scottsdale. The second exceptional area is the 85255 ZIP code which has seen a more gentle rise from around $360 to over $370 per sq. ft. over the last 2 years.

Paradise Valley has lost its crown as the most expensive ZIP code for million dollar homes with the annual average $/SF dropping from $375 in the summer of 2015 to just $354 this month. 85253 lies in fourth place with 85251, 85018 and 85255 all showing a higher average $/SF for homes over $1 million. Of course, these ZIP codes contain far more homes under $1 million than does Paradise Valley, so if we measure pricing for ALL homes within the ZIP code, 85253 still comes out ahead. Nevertheless it is clear that Arcadia and the DC Ranch area are currently very much in fashion with million dollar home buyers and are getting more attention in 2016 than they used to.

September 20 - It may be surprising how many countries are now in Stage 5 of Demographic Transition. This is situation where the birth rate is exceeded by the death rate. This is not because of abnormally high death rates. In fact these are generally lower than at any time in history. Armed conflict is actually at an all time low, despite all the violence that fills the headlines. Medicine reaches almost everywhere in the world. It is the birth rate which is reaching new lows, including here in America.

Here are the countries where the 2015 birth rate was lower than the death rate, according to the CIA World Fact Book

CountryBirth Rate (per 1,000)Death Rate (per 1,000)Net Migration (per 1,000)
AUSTRIA 9.41 9.42 +5.56
BELARUS 10.70 13.36 +0.7
BOSNIA & HERZEGOVINA 8.87 9.75 -0.38
BULGARIA 8.92 14.44 -0.29
CROATIA 9.45 12.18 +1.39
CZECHIA (CZECH REPUBLIC) 9.63 10.34 +2.33
ESTONIA 10.51 12.40 -3.60
GERMANY 8.47 11.42 +1.24
GREECE 8.66 11.09 +2.32
HUNGARY 9.16 12.73 +1.33
ITALY 8.74 10.19 +4.10
JAPAN 7.93 9.51 0.00
LATVIA 10.00 14.31 -6.16
LITHUANIA 10.10 14.27 -6.27
MOLDOVA 12.00 12.59 -9.67
MONACO 6.65 9.24 +3.83
POLAND 9.74 10.19 -0.46
PORTUGAL 9.27 11.02 +2.67
ROMANIA 9.14 11.90 -0.20
RUSSIA 11.60 13.69 +1.69
ST PIERRE et MIQUELON 7.42 9.72 -8.49
SERBIA 9.08 13.66 0.00
SLOVENIA 8.42 11.37 +0.37
UKRAINE 10.72 14.46 -2.25

There are only 2 countries outside Europe in this list and only one in North America, the tiny French islands of St. Pierre et Miquelon. The former Eastern Bloc is well represented, but they have been joined by Portugal, Greece, Monaco, Italy and Germany.

Some of these countries (e.g. Austria, Czechia, Monaco, Portugal, Italy) are maintaining their population growth purely by strongly positive net migration. However even though Germany has been making headlines for its intake of migrants, the numbers were insufficient in 2015 to overcome the disparity between births and deaths. The same is true of Russia, Belarus, Croatia, Greece, Hungary and Slovenia.

The countries with the worst problems are those with negative net migration as well as deaths exceeding births. In Ukraine and Bulgaria, depopulation is giving rise to an every increasing number of ghost towns. Real estate is likely to lose value rapidly in this environment.

This list is getting longer each year (Austria just joined it), and it is likely to continue to expand over time to include all of Europe and much of the developed world, especially as the baby boomers exceed 80 years of age. This will not be a popular piece of advice, but we should be watching out for similar developments in the USA over the next 50 years. The trends are already starting to be seen in the US census numbers,

September 19 - The chart below describes the 5 stages of Demographic Transition.

We could describe the 5 stages as:

Stage 1 = Pre-industrial (e.g. USA in 1800)

Stage 2 = Developing (e.g. Afghanistan)

Stage 3 = Industrial (e.g. Mexico)

Stage 4 = Post-Industrial (e.g. USA today)

Stage 5 = Decline (e.g. Japan)

In many ways it is good that the human population stabilizes and even declines. This could prevent the exhaustion of the world's natural resources. However our economies are based on assumptions of continual growth in GDP and this assumption underlies such things as the capitalist system, social security and eventual repayment of national debt. In a country with declining population all of these things become very difficult to sustain.

September 18 - Yesterday I looked at a small city in the USA whose population decline has led to weak home prices. Today let us look at Japan, the third largest economy in the world, but the first and primary example of a long term declining population. Has their weak population trend been followed by a decline in home prices? A resounding yes is the correct answer. Although prices can be high in parts of Tokyo and elsewhere (just as they are in New York, London, Shanghai or Moscow) prices for the country of Japan as a whole have been on a down trend for the last 25 years. Look at the chart below using data from the Federal Reserve Bank of Dallas. This shows the "real home price index" for Japan, which is adjusted for inflation.

The home price index for the US is shown in comparison (based in the index produced by the FHFA).

With the index at 83.16, home prices in Japan have declined close to the lowest level since records started, when adjusted for inflation. They are almost 50% below the peak level reached in 1991.

September 17 - I have mentioned many times that the fundamental driver of housing demand is population growth. If the population declines then we do not need so many homes. If we get a situation where population starts to fall then it is natural for home prices to go into a long term slow decline in real terms. We have seen this within the USA is areas like the western part of upstate New York (e.g. cities such as Elmira). Between 2010 and 2015, 41 of the 50 counties of upstate New York lost population. You might think of New York itself as expensive, and it certainly is in Manhattan. But upstate New York has very cheap housing and these homes are unlikely to show long term appreciation while population continues to exit for other states. The median sales price in Elmira NY is $86,920 and the average price per sq. ft is $62. It has very affordable housing, but the climate does leave a lot to be desired once you have gotten used to Arizona.

People often tell me that jobs are the real driver of housing. This is not really correct. Job growth will often spur population growth since people will move to a city for a job. However people will also move to a city to retire. In fact much of the population growth in Greater Phoenix since 2010 is due to the increase in people over 65. Most of these people do not have a job and are not seeking one. They are moving for the climate and for leisure activities. Certainly there has been migration into Arizona for jobs, but some people of working age have left Arizona for work elsewhere, particularly those who do not have a legal right of residency. Many of those in the construction industry in 2008 are never coming back. Despite widespread belief to the contrary, detailed research suggests there has been net migration from Arizona to Mexico since 2010, not the other way round. This is probably because the economy in Mexico is growing faster and creating jobs faster than in Arizona. This does not mean our housing market has suffered, because the influx of retired people and second home buyers (e.g. Canadians, Californians, Washingtonians) has more than compensated for any loss of working age population to other US states, Mexico and Central America.

Job growth has helped the housing market in Central Arizona, but it is not the number one driver of demand. That would be population growth. This is why I am so concerned about birth rates dropping fast. This can lead to population declines over the long term, especially if deaths start to exceed births. This will not affect the housing market in the short or even medium term, but is likely to have a long term impact.

September 16 - The Census Bureau recently reported that the median household income surged 5.2% in 2015 from 2014. This is the largest jump ever reported, from $53,718 to $56,516. Despite this the median income has still not regained its high point of $57,909 attained in 1999.

With women now obtaining college degrees in much higher numbers than men, it is not surprising to see earnings for women rising 2.7% while men's only rose 1.5%. A significant gender wage gap still exists, but it is closing.

The biggest message for me is that median household incomes did not rise at all in rural areas. Rural areas are seeing job losses and depopulation, which is obviously bad for rural housing markets.

The median household income in major cities surged by a remarkable 7.3% in a single year. This is likely to drive home prices higher in urban and close-in suburban areas.

September 15 - The Cromford® Market Index for the single family market in the 17 largest cities is telling us something about the luxury market.

We notice that the best positive moves for sellers are in Paradise Valley, Cave Creek and Scottsdale. These three cities have experienced weaker pricing trends than the rest of the valley over the last year, but remember that the Cromford® Market Index is a leading indicator while price is a trailing indicator. The CMI is saying that the current balance between buyers and sellers has swung significantly in favor of the sellers and this is likely to affect pricing going forward unless the situation is quickly reversed. Why are these three cities doing better? Well in Paradise Valley the change has taken place over the last 7 weeks with the Demand Index recovering strongly from 84.5 to 118.7 today. At the same time the Supply Index has dropped from 102.0 to 88.6. So we have a strengthening of demand and a fall in supply, a powerful combination which is likely to cheer up those sellers who have been facing negative appreciation for the last year.

The Demand Index has improved in Scottsdale (100.3 to 109.9 in 7 weeks) and in Cave Creek (102.5 to 121.1)

In the West Valley, the trends are mixed for sellers, with Avondale, Goodyear and Surprise deteriorating for sellers while Buckeye, Peoria and Glendale improved.

In the Southeast, Gilbert, Chandler and Tempe all improved for sellers while Mesa and Queen Creek eased up just a little.

Phoenix has been cooling recently and looks in danger of being overtaken by Scottsdale next week.

September 14 - A chart published by Motley Fool using data from the Census Bureau shows us the average net worth of an American, segmented by age group.

A message to the millennials out there. The equity in their own home represents 84% of the net worth of the average person 65 year or older. If you do not own a home you are building no home equity.

If you do not start building home equity at a young age, it can be difficult to catch up later. Please don't say I didn't warn you.

September 13 - Which ZIP codes have the most luxury home transactions? Well if we define luxury single family homes as those that sell for $500,000 or more the top 20 ZIP codes based on annual closed ARMLS listings up to August 31, 2016 are:

  1. Scottsdale 85255 - $737 million a year
  2. Paradise Valley 85253 - $539 million a year
  3. Scottsdale 85262 - $389 million a year
  4. Phoenix 85018 - $348 million a year
  5. Scottsdale 85259 - $255 million a year
  6. Scottsdale 85266 - $222 million a year
  7. Scottsdale 85254 $163 million a year
  8. Scottsdale 85258 - $155 million a year
  9. Cave Creek 85331 - $151 million a year
  10. Scottsdale 85260 - $150 million a year
  11. Fountain Hills 85268 - $141 million a year
  12. Chandler 85249 - $119 million a year
  13. Peoria 85383 - $96 million a year
  14. Phoenix 85016 - $93 million a year
  15. Mesa 85207 - $92 million a year
  16. Scottsdale 85251 - $83 million a year
  17. Gilbert 85298 - $72 million a year
  18. Anthem 85086 - $67 million a year
  19. Sun Lakes 85248 - $65 million a year
  20. Queen Creek 85142 - $65 million a year

ZIP codes are not created equal in size. In fact 85255 has an unfair advantage being enormous in comparison with most others in our area. In contrast, Carefree 85377 is tiny so does not make the top 20.

September 12 - The Black Knight Financial Services Mortgage Monitor is always worth a read. The latest report is based on July 2016 and for the first time in a long while we see some states with worse home loan delinquency rates than they had one year ago. These states are:

  1. North Dakota - non-current loans up 21.5%
  2. Alaska - non-current loans up 6.1%
  3. Wyoming - non-current loans up 2.5%
  4. West Virginia - non-current loans up 1.8%

All four of these states are heavily dependent on the energy sector (oil, gas and coal), so this delinquency deterioration is almost certainly due to the job losses that have occurred in conjunction with low energy pricing over the past 24 months.

Arizona has a 3.6% non-current rate, down by 5.3% from this time last year. Washington and Oregon, with their booming economies and booming housing markets, have moved past Arizona with improvements of 18.9% and 18.6% respectively.

Colorado is positioned to become the next state with the lowest delinquency rate of all, as North Dakota finally gives up that spot.

Nevada has seen the largest drop in delinquency over the past year, down by 20.3%.

September 11 - One of the best charts for showing price strength or weakness for a city is the annual appreciation chart for major cities. Here we see the single family markets compared among 17 cities based on the change in their annual average price per sq. ft. This chart uses weekly measurements and you can compare any set of cities but if we switch them all on we see they divide into 5 distinct groups at the moment:

1. The leaders:

  • Maricopa at 11.6%
  • Buckeye at 9.6%
  • Avondale at 9.5%

2, The main pack bunched together:

  • Glendale at 7.4%
  • Queen Creek at 7.3%
  • Phoenix at 7.3%
  • Tempe at 7.0%
  • Surprise at 6.7%
  • Peoria at 6.7%

3. Another bunch just behind them:

  • Goodyear at 6.1%
  • Mesa at 6.0%
  • Chandler at 5.7%
  • Gilbert at 5.5%

4. The laggards:

  • Cave Creek at 3.1%
  • Fountain Hills at 2.4%
  • Scottsdale at 1.4%

5. And trailing far behind:

  • Paradise Valley at -4.5%

It may surprise you how much this chart changes over time. Only a year ago, Paradise Valley was top at 9.3%, though a year before that it was at the bottom again at 3.9%.

Since September 2015 we have seen Glendale on top for a long time to be overtaken by Buckeye in June and then Maricopa at the end of July.

September 10 - More observations from the Maricopa County recorded deeds in August 2016, compared to August 2015:

  • the percentage of single family homes that were purchased to become rentals fell from 11.1% to 10.5%
  • the percentage of condo/townhouse homes that were purchased to become rentals rose from 20.4% to 22.4%
  • the percentage of homes of all types that were purchased to become rentals fell from 12.3% to 12.1%

Rental sales are below the long term average and the percentage is getting unusually low for single family homes. However condos & townhomes have retained more of their popularity with landlords.

September 9 - Looking at the Maricopa County recorded deeds in August (rather than the closed ARMLS listings), we see the following when comparing August 2016 with August 2015:

  • the percentage of re-sale single family and condo homes purchased to become rentals was 13.4% in both months - no change
  • the percentage of new single family and condo homes purchased to become rentals was 2.9% in both months - no change
  • the percentage of all single family and condo homes purchased to become rentals went down from 12.3% to 12.1%
  • the percentage of single family and condo sales that were newly constructed increased from 11.1% to 13.0%
  • the percentage of single family and condo homes that were purchased as second homes went down from 8.9% to 8.7%

While new homes are rapidly gaining market share at the expense of re-sales, primary residences are slowly gaining market share at the expense of second and vacation homes. In other words, Canadians and other snowbirds are slowly moving out and being replaced by local full time residents.

September 8 - Here are all the major and secondary cities where the Cromford® Market Index is lower than at the same time last year.

  1. Glendale
  2. Surprise
  3. Avondale
  4. Tempe
  5. Buckeye
  6. Sun City
  7. Casa Grande
  8. Sun City West
  9. Litchfield Park
  10. Arizona City
  11. Sun Lakes
  12. Paradise Valley
  13. Gold Canyon

The West Valley is not as strong for sellers as it was this time last year. These areas have seen the largest percentage price increases and price increases are supposed to cool the market.

The 55+ areas are also cooler than they were this time last year.

September 7 - Overall the market is in a similar position to last year at this time, as measured by the Cromford® Market Index. Here are all the major and secondary cities that have a Cromford® Market Index higher than at the same time last year:

  1. Phoenix
  2. Mesa
  3. Scottsdale
  4. Chandler
  5. Gilbert
  6. Peoria
  7. Queen Creek
  8. Goodyear
  9. Maricopa
  10. El Mirage
  11. Apache Junction
  12. Anthem
  13. Laveen
  14. Cave Creek
  15. Fountain Hills
  16. Tolleson

Most of the East Valley looks good by this measure.

September 6 - As a counterpoint to yesterday's post, we now take a look at the ZIP codes at the bottom of the appreciation table:

  1. Phoenix 85034 -33.7% ($85.46 to $56.66)
  2. Arlington 85322 -11.4% ($88.04 to $77.99)
  3. Phoenix 85004 -7.8% ($192.67 to $178.04)
  4. Casa Grande 85194 -6.3% ($118.40 to $110.94)
  5. Gila Bend 85337 -5.1% ($51.63 to $49.02)
  6. Paradise Valley 85253 -4.9% ($354.88 to $337.60)
  7. Scottsdale 85262 -4.5% ($281.58 to $268.81)
  8. Gold Canyon 85118 -3.6% ($153.68 to $148.09)
  9. Eloy 85131 -3.2% ($100.45 to $97.26)
  10. Scottsdale 85266 -3.2% ($232.27 to $224.92)

A lot of these are ZIP codes with low (85131, 85194) or very low (85004, 85034, 85322, 85337) transaction counts, so even when we look at annual averages, their appreciation rates can be very volatile. This does not apply to 85253, 85262, 85266 or 85118. These are active and very important ZIP codes and here we see real signs of the significant weakness in the upper end of the luxury market that has been evident since August 2015. These are not the only luxury areas that have depreciated. 85016 and 85260 were just outside the list of 10 at -1.4% and -0.5%. The largest luxury ZIP code of all, 85255, just squeezed itself into positive territory at +1.0%.

Not all luxury ZIP codes fared badly however. We see 85251 at +12.0% and 85018 at +5.1%. Proximity to shopping and trendy restaurants seem to be increasingly important in today's market.

September 5 - We would like to shine the spotlight on the ZIP code appreciation chart. This is for single family homes only and uses the annual average sales price per square foot as of September 1 2016, comparing it with September 1, 2015. We see some interesting ZIP codes at the top of the appreciation table:

  1. Superior 85173 +23.8% ($47.17 to $58.38)
  2. Phoenix 85031 +22.9% ($70.71 to $86.88)
  3. Phoenix 85009 +22.8% ($75.45 to $92.62)
  4. Phoenix 85017 +20.3% (78.36 to $94.26)
  5. Morristown 85342 +20.2% ($95.71 to $115.03)
  6. Phoenix 85040 +20.0% ($80.14 to $96.16)
  7. Phoenix 85019 +20.0% ($79.62 to $95.54
  8. Phoenix 85033 +18.3% ($80.91 to $95.69)
  9. Glendale 85301 +19.1% ($79.65 to $94.03)
  10. Youngtown 85363 +17.2% ($79.97 to $93.71)

These ZIP codes in the top ten are all relatively inexpensive even now and have been appreciating some 5 times as fast as the overall valley. They are also appreciating faster than rents are rising, so it is possible some of the landlords in these areas may decide to try to cash out their capital gains at some point. If they bought properties at the low point, many are looking at some pretty startling percentage increases. Here are the gains from the minimum level:

  1. Superior 85173 +82% from $32.02
  2. Phoenix 85031 +251% from $24.72
  3. Phoenix 85009 +275% from $24.68
  4. Phoenix 85017 +242% from $27.58
  5. Morristown 85342 +57% from $73.81
  6. Phoenix 85040 +151% from $38.37
  7. Phoenix 85019 +220% from $29.88
  8. Phoenix 85033 +230% from $29.04
  9. Glendale 85301 +185% from $33.03
  10. Youngtown 85363 +137% from $39.56

Of course these increase ignore the costs of refurbishment. At the time of the market bottom, most of these homes were in poor condition and needed a lot of TLC to get them back into rentable or saleable condition. However those people brave enough to take on the risk and the work have been paid back handsomely.

September 4 - Although the Cromford® Market Index for all areas & types reached 150 a few days ago, it looks unlikely to make much further upward movement in the weeks ahead. This is the time of year when supply starts to creep up so we doubt that the Cromford® Supply Index is going to drop below 70. The Cromford Demand Index has been stationary around 106 for some time and looks like it may settle back just a little. This means we are expecting the CMI to stay in the high 140s to low 150s for the foreseeable future. This is not bad news. We do not want a strong market to get too strong. We have all seen where that takes us, back in the heady days of 2004 and 2005.

September 3 - You do not have to actually read any of the words or numbers in a snapshot to get a good idea of how the market is doing. You can get a general picture by examining which color is dominant in the trend symbols. The ST symbols show the short term trend and the LT symbols show the long term trend. They are green when the change between last month and this month (ST) or between the same month last year and this month (LT) is favorable for sellers. They are red when it is favorable for buyers. So for example we can see that things are not very good for sellers in the price range $2 million to $3 million:

While sellers are having a great time in the price range from $250,000 to $275,000:

 

September 2 - The monthly sales counts for August compare with August 2015 as follows (single family only):

Price RangeAugust 2015August 2016Growth
Under $100K 119 87 -27%
$100K-$125K 213 97 -54%
$125K-$150K 567 380 -33%
$150K-$175K 681 667 -2%
$175K-$200K 722 830 15%
$200K-$225K 544 611 12%
$225K-$250K 551 697 26%
$250K-$275K 374 521 39%
$275K-$300K 415 519 25%
$300K-$350K 453 622 37%
$350K-$400K 335 448 34%
$400K-$500K 342 495 45%
$500K-$600K 152 217 43%
$600K-$800K 155 158 2%
$800K-$1M 63 67 6%
$1M-$1.5M 44 62 41%
$1.5M-$2M 26 23 -12%
$2M-$3M 13 9 -31%
$3M+ 6 5 -17%

Under $150K, sales have collapsed since last year due to lack of supply. The shortage of homes under $150,000 has also caused the median sales price to rise much faster than the underlying rise in home values.

Given that most new single family homes sell between $225K and $600K, we observe that re-sale volume increases in this limited price range are similar to the increases experienced by developers.

Sales are relatively weak between $600K and $1M and particularly lackluster over $1.5M but look good between $1M and $1.5M, thanks in part to an easy comparison. August 2015 was particularly poor for the luxury market, immediately following a steep decline in the stock market.

September 1 - The month starts with another look at the Cromford® Market Index for the single family markets in the largest 17 cities.

Some interesting changes have been going on since August 1. The cities improving the most for sellers are the expensive ones, in stark contrast to the earlier months of 2016. Paradise Valley is up a surprising 43% while Scottsdale is up 14%, Cave Creek up 14% and Fountain Hills up 7%. All have seen big drops in their active listing counts over the past couple of months. However much of the decline has been due to cancellations, so we will have to wait and see if these cancelled listings come back onto the market in the fall. Meanwhile sellers who are still in the market have much less competition which drastically improves their negotiation power.

The rest of the market is mostly treading water, with the exception of Maricopa, up 8% and Gilbert up 5%. Avondale saw the steepest decline but it is still way out in front. If El Mirage was one of the top 17 cities then it would be placed even higher than Avondale.

August 2016

August 31 - Average days on market is a very popular statistic but one which we rarely use in the Cromford Report. It has a number of problems:

  • Are we talking days on market only for closed listings? We should be
  • Average days on market for active listings tends to go down as supply rises - contrary to what most people expect. We recommend that you ignore this statistic as it is a very unreliable indicator.
  • Average days on market is not a leading indicator. It is much like pricing in that it confirms what we already know. When the market is good it will be low, but when the market gets weaker it will be quite some time before the average days on market starts to grow. When the market is weak but improving, average days on market will be slow to show the improvement
  • Some agents go to great lengths to artificially reset a listing's days on market to zero, thus invalidating the accuracy of the data
  • The increased use of UCB status means average days on market has been increasing artificially over the last few years

Overall we do not recommend that you pay much attention average days on market. It would not be in our top 20 of data points to watch.

However for those who still like it, here are the current average days on market for closed sales of single family homes in the major and secondary cities:

  1. El Mirage 26
  2. Avondale 42
  3. Arizona City 42
  4. Laveen 45
  5. Tolleson 50
  6. Tempe 51
  7. Glendale 53
  8. Gilbert 55
  9. Mesa 64
  10. Phoenix 64
  11. Surprise 66
  12. Buckeye 67
  13. Apache Junction 68
  14. Chandler 71
  15. Queen Creek 72
  16. Sun City 72
  17. Peoria 75
  18. Goodyear 77
  19. Sun City West 77
  20. Maricopa 81
  21. Anthem 84
  22. Litchfield Park 76
  23. Casa Grande 88
  24. Cave Creek 96
  25. Sun Lakes 119
  26. Scottsdale 124
  27. Fountain Hills 142
  28. Gold Canyon 152
  29. Paradise Valley 204

Pretty much what you would expect.

August 30 - Another S&P/Case-Shiller® Home Price Index® report has been released this morning. This one covers sales in the 3 month period April through June 2016. Based on the annual change in the HPI here is the ranking table for the 20 cities covered by the report:

  1. Portland 12.6%
  2. Seattle 11.0%
  3. Denver 9.2%
  4. Dallas 8.9%
  5. Tampa 7.9%
  6. Miami 6.9%
  7. San Francisco 6.4%
  8. San Diego 6.4%
  9. Atlanta 5.8%
  10. Las Vegas 5.7%
  11. Los Angeles 5.3%
  12. Detroit 5.1%
  13. Phoenix 5.1%
  14. Minneapolis 5.1%
  15. Charlotte 5.1%
  16. Boston 4.7%
  17. Chicago 3.3%
  18. Cleveland 2.5%
  19. Washington DC 2.0%
  20. New York 2.0%

Most of these percentages are just a tad lower than last month. The exceptions are Portland, Seattle, Miami,Tampa, Charlotte and Las Vegas. Phoenix is at the national average of 5.1%, completely unexceptional

Examining the extent of the bounce from the bottom, here is how the index has changed since August 2011, 5 years ago:

  1. San Francisco 69.0%
  2. Phoenix 60.0%
  3. Las Vegas 58.9%
  4. Miami 52.4%
  5. Portland 50.9%
  6. Seattle 47.8%
  7. Los Angeles 47.7%
  8. Denver 46.9%
  9. Detroit 46.6%
  10. San Diego 45.7%
  11. Tampa 41.5%
  12. Dallas 41.1%
  13. Minneapolis 32.3%
  14. Atlanta 29.4%
  15. Charlotte 24.4%
  16. Boston 22.4%
  17. Washington DC 16.6%
  18. Chicago 14.1%
  19. Cleveland 9.9%
  20. New York 7.6%

The West Coast and Mountain West has out-performed the rest of the USA though Florida has had a strong recovery too.

Note that oft-ridiculed Detroit has been a strong performer since August 2011, coming out ahead of San Diego and Dallas.

August 29 - The summer dip in prices seems to reaching an early end this year with the average $/SF for pending listings across all areas & types up to $146.93 today. That is the highest number we have seen since April 3, 2008 and it augers well for average sales $/SF pricing in September and October.

August 28 - There were only 318 multi-family units given building permits in July, a big drop from 793 a year ago. These multi-family numbers can be very volatile, and we just saw 2,131 in June, so it is a bit early to call it a slowing down. In fact we have seen 5,181 year to date which is higher than the 4,219 year to date last year at this point.

Almost all the units in July were generated by Chandler, although Phoenix, Tempe and Gilbert are the leaders for year-to-date totals.

August 27 - July was a lighter month for single family permits with 1,382 across Maricopa & Pinal counties. This is down from July 2015 when we saw 1,623.

The year to date total at the end of July is 11,106, well above last year's 9.852 at the same point. The deceleration in July was partly caused by the low number of working days in July so we will probably see a recovery in August.

August 26 - Ranking the major & secondary cities by their annual percentage change in annual median sales price (single family only) we find the following:

  1. Arizona City - up 17.3% to $100,000
  2. Apache Junction - up 13.3% to $169,900
  3. Tolleson - up 12.4% to $179,900
  4. Sun City - up 12.2% to $165,000
  5. Glendale - up 11.9% to $210,000
  6. Avondale - up 11.8% to 190,000
  7. Sun City West - up 11.7% to $210,000
  8. Surprise - up 11.4% to $215,000
  9. Buckeye - up 11.3% to $182.500
  10. El Mirage - up 10.9% to $152,000
  11. Laveen - up 10.8% to $195,000
  12. Anthem - up 10.4% to $289,900
  13. Phoenix - up 9.7% to $224,900
  14. Maricopa - up 9.3% to $165,000
  15. Mesa - up 9.0% to $223,000
  16. Queen Creek - up 8.8% to $199,900
  17. Tempe - up 7.9% to $263,250
  18. Litchfield Park - up 7.8% to $275,000
  19. Goodyear - up 7.0% to $245,995
  20. Casa Grande - up 6.7% to $159,000
  21. Cave Creek - up 6.3% to $425,000
  22. Peoria - up 5.7% to $255,000
  23. Scottsdale - up 4.8% to $492.500
  24. Gilbert - up 4.6% to $275,000
  25. Chandler - up 4.6% to $277,250
  26. Fountain Hills - up 3.3% to $428,500
  27. Gold Canyon - up 2.4% to $255,950
  28. Sun Lakes - up 1.4% to $255,400
  29. Paradise Valley - up 0.9% to $1,437,500

August 25 - The Cromford® Market Indexes for the single family markets in the largest 17 cities confirm we are still in a favorable situation for sellers:

Only 4 of the 17 cities showed any deterioration and the major decline was in Avondale, which could stand some cooling down after what seems like an eternity at the top of our table.

Perhaps the biggest surprise is the strengthening of Paradise Valley which is no longer at the bottom of the table thanks to an expected big decline in supply and an unexpected improvement in demand.

Tempe is probably another surprise, now at the bottom of our table thanks to its supply index rising to its highest level since 2014.

Overall this is a positive picture for sellers with 15 cities in a seller's market and 2 in the balanced zone between 90 and 110.

August 24 - The demographic situation in the 15 Arizona counties is as follows:

CountyMedian Age July 2010Median Age July 20155 Year Change in Population Under 55 Year Change in Population of 65 and Over
Apache 32.5 34.2 -9.2% +19.7%
Cochise 39.6 40.8 -5.1% +14.6%
Coconino 30.9 30.9 -8.0% +32.1%
Gila 47.9 49.7 -2.7% +17.4%
Graham 31.7 32.6 -7.3% +12.4%
Greenlee 34.9 33.6 +4.6% +10.7%
La Paz 54.0 55.4 -9.6% +11.7%
Maricopa 34.7 36.1 -3.0% +27.0%
Mohave 47.8 50.4 -15.7% +20.6%
Navajo 34.7 36.5 -10.9% +24.2%
Pima 37.7 38.4 -4.7% +21.8%
Pinal 35.4 38.7 -21.1% +46.9%
Santa Cruz 35.6 37.1 -11.8% +22.2%
Yavapai 49.4 52.6 -12.2% +26.0%
Yuma 33.7 34.6 +0.9% +19.3%

The 21% decline in under 5s in Pinal County is very ominous for the elementary schools in that county, representing a 6,297 reduction from 29,882 in 2010 to 23,585 in 2015. At the same time the growth in retirees is phenomenal, with 47% more people at 65 plus and 60% more at 85 plus. Pinal county has shown a huge swing from young to old with a 3.3 year increase in the median age over just 5 years. This is due to a combination of growing 55+ active adult communities attracting people from far afield and a low fertility rate for the existing population.

Retirees are already dominant in Gila, Yavapai and especially La Paz counties.

A third of the counties lost population overall, which is a negative sign for their housing markets. These are:

  1. Cochise -4.1%
  2. Santa Cruz -2.0%
  3. La Paz -1.4%
  4. Gila -0.7%
  5. Apache -0.1%

Tiny Greenlee was the fastest growing county at 14.3% and was the only county with a healthy growth in under 18s. Maricopa was the second fastest growing county at 8.9%, with Pinal third at 7.2%.

It should be noted that Greenlee may not have done so well between 2015 and 2016 due to the fall in copper prices. The Morenci mine is by far the largest employer in the county.

Graham county is the youngest with a median age of 32.6, though even here the number of children under 5 has declined by 7.3%.

August 23 - The Census Bureau provides population estimates by age group and county for every July 1, although we do not yet have any numbers for 2016.

In Maricopa County, the number of children under 5 dropped 3% between 2010 and 2015 reflecting the lower birth rates we have been experiencing over the past several years. Although we experienced almost 9% overall growth in population between 2010 and 2015 in Maricopa County, this growth was heavily skewed towards the adult population, especially those of retirement age. Ages under 18 only grew by 2%, while those of working age (18-64) grew by 8% and those of retirement age (65+) grew by an astonishing 27%. The median age in Maricopa County increased from 34.7 to 36.1, a 4% increase in just 5 years. The trend appears to be widespread and accelerating.

This shift towards an aging population is not a small, insignificant change. It is a dramatic change compared with Arizona's experience prior to 2007. A lot of this change is probably caused by the unusually low immigration rates we have seen since 2007. In the distant past immigrant parents have tended to have larger families than native born parents and so contributed disproportionately to growing Arizona's economy. Retirees contribute relatively little to growing the local economy as they are usually not fertile and not working.

I would conclude that the last thing we need for our economy right now is another disincentive to have children. Cue the Zika virus, something of greater economic significance than the Ebola virus that caused many people to freak out last year. We tend to respond far more urgently to something patently horrific and sudden, even if it has no significant real impact on our lives. Our response to something important and dangerous but increasing only gradually gave rise to the "boiling frog" theory. In fact, frogs have proven to be cleverer than we thought. However so far we humans seem to have largely ignored the potential deceleration in our economy that low fertility rates are likely to create.

August 22 - The fraction of the United States population age 60 or over will increase by 21 percent between 2010 and 2020, according to an academic study published in 2014 by the Rand Corporation. Between 2010 and 2050 the fraction will grow by 39%. Coupled with the historically large reduction in fertility rates that is currently underway, we are witnessing huge changes in the demography of the nation. These demographic changes are likely to have detrimental effects on the economy and sectors of the housing market may be significantly affected going forward.

We already see explosive growth in Arizona population counts for people over 60 while the population under 18 (and especially under 5) is in decline. This is unexpected given that we have a relatively large number of women of child bearing age. It is generally accepted that people tend to consume more than they earn during their later years, but consume less than they earn while they are in their working years. It is very possible that the shift towards an older population is the primary cause of the relatively slow growth in GDP in the USA. It follows that similar effects are likely to be at work in other developed countries. We have not experienced an era like this before, so there is little experience to draw on just yet. However, I believe the rapidly changing demographics are likely to become the most significant factor driving housing demand over the next ten to fifteen years.

August 21 - The price action for most areas of the valley look nothing like Arcadia. As a contrast to yesterday's post here is the annual average price per sq. ft. for all types of homes in the Biltmore district:

This is more typical of other high priced areas. Prices recovered from 2012 through the middle of 2015 but have been going sideways since. There is a long way to go before prices regain the levels of 2008. Note however that the high point for Biltmore was significantly higher than for Arcadia, so that target is far more difficult to achieve.

August 20 - We commented a few days ago how ZIP codes 85251 and 85018 are doing rather better than most towards regaining the price level of the peak during the bubble. If we focus exclusively on Arcadia, which straddles both these ZIP codes, then the situation is even more positive. Mind you, we are talking here of the real Arcadia, not the much larger region that some sellers like to call Arcadia these days. No homes south of the canal for us.

Here is the annual average $/SF chart for Arcadia single family homes:

Not only has Arcadia comfortably exceeded the annual average peak of $335 that it hit in February 2008 (much later than most parts of the valley), it has stormed through to $377, thanks to strong sales of homes over $2 million.

We used to see a few single family homes selling for less than $500,000 in Arcadia, but there were none at all in the last 3 months. This is the first time we have seen that happen.

August 19 - The Cromford® Market Index ceases to work quite so well with small market segments, so for smaller cities we turn to other measurements to determine how those segments are faring. Days of inventory and the contract ratio are two of our favorite indicators. Here is how the smaller cities are doing as measure by those statistics:

CityContract Ratio NowContract Ratio Last YearDays of Inventory NowDays of Inventory Last YearImplicationsCurrent Situation
Sun City 67 81 54 49 Cooler than last year Seller's market
El Mirage 219 207 41 42 Similar to last year Seller's market
Casa Grande 42 43 137 108 Cooler than last year Balanced market
Apache Junction 51 59 100 91 Cooler than last year Seller's market
Anthem 56 49 107 104 Mixed signals Seller's market
Laveen 92 86 86 88 Slightly hotter than last year Seller's market
Sun City West 77 77 54 55 Almost identical to last year Seller's market
Litchfield Park 44 47 112 113 Similar to last year Balanced market
Tolleson 127 83 62 78 Hotter than last year Seller's market
Arizona City 32 49 112 85 Cooler than last year Balanced market
Sun Lakes 49 64 71 73 Cooler than last year Seller's market
Gold Canyon 21 25 131 139 Cooler than last year Balanced market
Florence 46 38 135 133 Slightly hotter than last year Balanced market
Coolidge 45 29 146 158 Hotter than last year Balanced market
New River 22 61 198 100 Much cooler than last year Buyer's market
Carefree 13 22 348 301 Cooler than last year Buyer's market
Rio Verde 27 19 236 174 Mixed signals Balanced market
Wickenburg 20 9 335 306 Mixed signals Balanced market
Waddell 65 51 131 110 Mixed signals Balanced market

 

August 18 - The single family market in the top 17 cities continues on its healthy trend, as evidenced by the Cromford® Market Index for today and last month at this time:

We see 13 out of 17 cities showing improved negotiation power for sellers and only 4 showing improved negotiation power for buyers.

Among the latter are Avondale, Glendale and Tempe where inventory has increased substantially over the last month.

The top improving city is Paradise Valley, now well over the 100 mark having languished in the buyer's market zone until very recently.

August 17 - Rent rises seems to be easing up a little, with the current annual increase "only" 4.6%. We have become used to seeing 6% to 10% rises over the last 2 years, so maybe the rental market is coming off the boil just a bit.

The lowest number of rental listings ever seen on ARMLS (2,117) occurred on March 14. We have recovered to 3,132 as of yesterday, so prospective tenants have 48% more choice than they had in March. There is always a seasonal swing like this, however, so I am not quite ready to pronounce this as a significant change just yet. In 2015, we went from 2,962 on March 14 to 3,352 on August 17, which is a rise of only 13%. I would say we have some evidence that the most extreme shortages of rental homes are now in the past, based on admittedly limited ARMLS data.

I have heard several credible rumors that institutional owners may be planning to lighten their portfolios over the coming 2 years. If so, this would be sweet relief for the purchase market. We could certainly do with (say) 10,000 additional affordable homes coming back onto the market. However if those 10,000 homes are currently occupied by tenants, we still have a problem of where those tenants are going to live.

August 16 - During July, a total of 31 Maricopa County homes were purchased by Canadians. That is the lowest sales total in 10 years and represents only a.035% share of the market. With the current strength in the dollar, few foreigners are venturing into the Phoenix market to buy. During the same month of July, 167 homes were sold by Canadians, so we now see sales outnumber purchases by over 5 to 1.

The net change of -136 Canadian owners contrasts strongly with the last several years:

  • July 2016 -136
  • July 2015 -108
  • July 2014 +12
  • July 2013 +78
  • July 2012 +223
  • July 2011 +307
  • July 2010 +310

August 15 - Buckeye has been making news by claiming it has issued more single family permits than in any year in history. This is true - it has issued 706 so far this year, comfortably exceeding the total for the whole of 2015 (509). However, prior to 2009, the majority of permits counted in the area now occupied by the City of Buckeye, were classified by the Census Bureau as belonging to unincorporated Maricopa County. Back in the bubble years, Buckeye was not issuing many permits, the county was doing it instead.

In 2006, unincorporated Maricopa County areas including large parts of what is now part of Buckeye issued a total of 3,167 permits. Buckeye issued only 14 permits in 2006. This year so far the county has issued only 499, far less than in 2006 and far less than Buckeye in 2016.

Due to the huge annexations made by Buckeye we are not really comparing apples with apples here.

August 14 - In the recent couple of years the market trends have been determined far more by price range rather than the traditional location (location, location). This is contrary to normal market behavior. We are not used to our fastest appreciating markets being those with the worst performing schools and the highest rates of crime. However a few numbers will easily prove my point: The figures below are for all property types within Greater Phoenix.

Price RangeAnnual Avg $/SF July 2014Annual Avg $/SF July 2015Annual Avg $/SF July 20162 year change1 year change
Up to $200,000 $88.46 $93.17 $101.00 14.2% 8.4%
$200,000 to $300,000 $119.61 $121.86 $126.47 5.7% 3.8%
$300,000 to $400,000 $136.91 $138.80 $141.68 3.5% 2.1%
$400,000 to $500,000 $154.37 $155.99 $158.00 2.4% 1.3%
$500,000 to $600,000 $173.41 $175.94 $176.03 1.5% 0.1%
$600,000 to $800,000 $197.54 $200.60 $201.08 1.8% 0.2%
$800,000 to $1M $221.07 $224.08 $227.15 2.8% 1.4%
$1M to $1.5M $267.66 $265.92 $265.59 -0.8% -0.1%
$1.5M to $2M $305.50 $323.04 $324.61 6.3% 0.5%
$2M to $3M $367.57 $383.68 $384.89 4.7% 0.3%
Over $3M $505.34 $509.28 $513.29 1.6% 0.8%

I highlighted in red the price ranges which went backwards in dollars adjusted for inflation (which was 1.01% this year and 0.12% 12 months ago).

I am not sure why the $800,000 to $1M range should be doing better than those either side of it. It is faring as well as the $400,000 to $500,000 range. The rest of the ranges from $500,000 upwards have not performed so well over the past 24 months. The range between $1M and $1.5M shows the weakest trend here.

In terms of unit sales through ARMLS, the price ranges at or below $500,000 comprise 93% of the total market while those above $500,000 comprise only 7%. So it is fair to say that the market as a whole is keeping housing assets appreciating well ahead of inflation. This becomes even more true as you head down market.

The picture changes when we look at supply rather than demand. Among the active listings on ARMLS within Greater Phoenix today, listings over $500,000 comprise 24%, and those of $500,000 or less only 76%.

August 13 - The ranking of 41 local cities by annual average price per square foot has been updated and published today.

In this table we see 3 cities that have depreciated over the past 12 months:

  1. Gold Canyon - down 4.7%
  2. Paradise Valley - down 4.6%
  3. Rio Verde - down 1.6%

After this group we see cities with positive appreciation but well below the average for Greater Phoenix as a whole:

  1. Wickenburg - up 0.2%
  2. Scottsdale - up 0.9%
  3. Eloy - up 1.9%
  4. Desert Hills - up 2.6%
  5. Fountain Hills - up 2.6%
  6. Cave Creek - up 3.2%
  7. Sun Lakes - up 3.4%
  8. Anthem - up 3.5%
  9. Casa Grande - up 3.6%

Following these under performers we find a lot of cities in the average to moderately above average range of 4.5% to 9%:

  1. Coolidge - up 4.6%
  2. Waddell - up 5.0%
  3. Carefree - up 5.1%
  4. Gilbert - up 5.3%
  5. Litchfield Park - up 5.4%
  6. Chandler - up 5.5%
  7. Goodyear - up 5.5%
  8. Florence - up 5.6%
  9. Mesa - up 6.6%
  10. Surprise - up 6.6%
  11. Peoria - up 6.8%
  12. Queen Creek - up 6.8%
  13. Tempe - up 7.1%
  14. Apache Junction - up 7.5%
  15. Sun City West - up 7.6%
  16. Phoenix - up 7.8%
  17. Glendale - 7.9%
  18. New River - up 8.1%
  19. Avondale - up 8.8%

Lastly we have a group that have comfortably over performed in appreciation over the past 12 months:

  1. Laveen - up 10.2%
  2. Buckeye - up 10.2%
  3. El Mirage - up 10.5%
  4. Sun City - up 10.6%
  5. Maricopa - up 10.8%
  6. Tolleson - up 12.5%
  7. Tonopah - up 13.9%
  8. Arizona City - up 14.0%
  9. Wittmann - up 16.8%
  10. Youngtown - up 18.7%

All except 2 of the top performers are in the West Valley (some far outside the central areas such as Wittmann & Tonopah). The 2 exceptions are both in Pinal County.

Generally speaking the least expensive areas have been appreciating fastest while the most expensive areas have appreciated the least. There are a few exceptions to this rule but the effect is very widespread,

August 12 - The Black Knight Financial Services Mortgage Monitor Report for June has been published and there is not much good news inside for people who love foreclosures. For Arizona they report 0.4% of homes in some stage of foreclosure and 3.0% of loans more than 30 days late. The total of 3.4% is far below the long term average of around 5%.

The average for the nation as a whole is 5.4%. There are still a few black spots.

  1. Mississippi - 10.1% of loans are late but only another 1.1% of loans are in the foreclosure process. What is wrong with MS? - they just don't seem to take action on delinquency like other states. Either way, only 88.8% of first home loans are in a healthy current state.
  2. Louisiana - 7.9% of loans are late but only another 1.3% are in the foreclosure process. Similar to Mississippi, but not quite as extreme.
  3. New Jersey - 4.8% of loans are late and another 3.9% are in the foreclosure process. New Jersey has by far the highest percentage of its homes in foreclosure.

North Dakota is the only state that got worse over the last 12 months, no doubt due to the depression in the oil and gas business. However it still has the lowest delinquency rate in the nation. Its nearest rival is Colorado.

August 11 - More very interesting changes can be seen in the table of Cromford® Market Index values for the single family markets in the largest 17 cities:

Overall we still see a very positive picture with 11 cities improving conditions for sellers and only 6 deteriorating.

Our top position city, Avondale, is still very much a seller's market, but now declining as the higher pricing starts to bring listings under contract counts down from their extremely high levels.

The market in Tempe is surprisingly poor for sellers relative to the surrounding areas. Tempe has almost 44% more active listings (excluding UCB) than it had this time last year while under contract listings are down by 6%. It had the second largest percentage decline in its CMI over the last month.

Scottsdale is making good progress with a big fall in active listings over the last month and slightly more listings under contract than at this time last year.

Paradise Valley is also improving for sellers with lower inventory and rather more contracting activity then usual for this time of year. It is back into the balanced zone and out of the buyer's market it has been in for a few months.

August 10 - Now for Pinal County. Here are the percentages below the peak $/SF attained for single family homes:

  1. Eloy 85131 -10%
  2. Apache Junction 85120 -27%
  3. Gold Canyon 85118 -29%
  4. Queen Creek -29%
  5. Apache Junction 85119 -30%
  6. San Tan Valley 85140 -30%
  7. Casa Grande 85194 -31%
  8. San Tan Valley 85143 -37%
  9. Florence 85132 -37%
  10. Casa Grande 85122 -37%
  11. Arizona City 85123 -40%
  12. Maricopa 85138 -43%
  13. Coolidge 85128 -44%
  14. Maricopa 85139 -45%

In general Pinal County has further to go to recover the price heights attained during the housing bubble. One exception is Eloy, but this is largely due to current Active Adult sales within Robson Ranch. These are priced much higher than the average homes in Eloy and the community was not in operation during the bubble years.

August 9 - For the Southeast Valley, the percentage below the peak in $/SF pricing for single family homes is as follows:

  1. Tempe 85282 -15%
  2. Chandler 85286 -15%
  3. Tempe 85281 -16%
  4. Tempe 85283 -16%
  5. Chandler 85224 -18%
  6. Mesa 85210 -18%
  7. Mesa 85202 -18%
  8. Chandler 85226 -19%
  9. Tempe 85284 -20%
  10. Chandler 85225 -21%
  11. Mesa 85204 -21%
  12. Mesa 85203 -21%
  13. Mesa 85205 -21%
  14. Mesa 85206 -22%
  15. Gilbert 85233 -22%
  16. Phoenix 85044 -22%
  17. Gilbert 85234 -23%
  18. Gilbert 85297 -23%
  19. Chandler 85249 -23%
  20. Sun Lakes 85248 -24%
  21. Mesa 85209 -24%
  22. Mesa 85208 -24%
  23. Phoenix 85048 -25%
  24. Mesa 85212 -25%
  25. Mesa 85207 -25%
  26. Gilbert 85296 -25%
  27. Mesa 85201 -26%
  28. Mesa 85213 -27%
  29. Gilbert 85295 -27%
  30. Gilbert 85298 -27%
  31. Mesa 85215 -29%
  32. Phoenix 85045 -32%

Generally we can see that Tempe has recovered closest to its peak while Ahwatukee has the furthest to go, especially as we travel west..

August 8 - Turning to the Northeast Valley, here is how far single family pricing is below the peak of 8-10 years ago:

  1. Scottsdale 85251 -2%
  2. Scottsdale 85257 -8%
  3. Scottsdale 85250 -15%
  4. Scottsdale 85255 -15%
  5. Scottsdale 85258 -20%
  6. Scottsdale 85254 -21%
  7. Scottsdale 85260 -24%
  8. Fountain Hills 85268 -26%
  9. Carefree 85377 -26%
  10. Cave Creek 85331 -27%
  11. Scottsdale 85259 -27%
  12. Scottsdale 85262 -28%
  13. Paradise Valley -29%
  14. Scottsdale 85266 -31%
  15. Rio Verde 85263 -36%

South Scottsdale and Old Town Scottsdale are clearly the top performers in this group and beat any area from the West Valley or Central & North Valley that we examined over the last 2 days.

August 7 - Extending yesterday's exercise into the Central & North Valley, here are how far below the peak we are in the various ZIP codes (single family homes only):

  1. Phoenix 85018 -12%
  2. Phoenix 85013 -12%
  3. Phoenix 85014 -13%
  4. Phoenix 85006 -14%
  5. Phoenix 85015 -18%
  6. Phoenix 85003 -18%
  7. Phoenix 85021 -18%
  8. Phoenix 85008 -19%
  9. Phoenix 85020 -20%
  10. Phoenix 85007 -20%
  11. Phoenix 85028 -21%
  12. Phoenix 85032 -21%
  13. Phoenix 85054 -21%
  14. Phoenix 85024 -23%
  15. Phoenix 85050 -23%
  16. Phoenix 85027 -24%
  17. Phoenix 85012 -24%
  18. Phoenix 85022 -24%
  19. Phoenix 85023 -25%
  20. Phoenix 85016 -25%
  21. Phoenix 85053 -26%
  22. Phoenix 85085 -26%
  23. Phoenix 85029 -26%
  24. Phoenix 85042 -27%
  25. Phoenix 85083 -29%
  26. Anthem 85086 -29%
  27. Phoenix 85051 -30%
  28. Phoenix 85019 -32%
  29. New River 85087 -33%
  30. Phoenix 85031 -34%
  31. Phoenix 85017 -35%
  32. Phoenix 85033 -35%
  33. Phoenix 85041 -35%
  34. Phoenix 85043 -36%
  35. Phoenix 85004 -37%
  36. Phoenix 85037 -37%
  37. Phoenix 85040 -37%
  38. Phoenix 85035 -38%
  39. Phoenix 85009 -39%
  40. Phoenix 85034 -62%

Phoenix 85018 is helped by the popularity of Arcadia.

August 6 - As we prepare the ZIP code snapshots it is interesting to see which ZIP codes have moved closest to the peak prices during the housing bubble. Most are still a substantial way below those maximum prices. However the variation among the ZIP codes is quite noticeable..

The percentage in the table below is comparing the current average $/SF for single family homes in the West Valley with the peak for that same ZIP code in the mid 2000's:

  1. Sun City West -21%
  2. Surprise 85374 -25%
  3. Glendale 85308 -25%
  4. Glendale 85306 -25%
  5. Avondale 85392 -26%
  6. Glendale 85304 -26%
  7. Peoria 85382 -26%
  8. Sun City 85373 -26%
  9. Sun City 85351 -26%
  10. Peoria 85381 -27%
  11. Glendale 85310 -27%
  12. Glendale 85302 -27%
  13. Peoria 86383 -28%
  14. Surprise 85378 -29%
  15. Peoria 85351 -29%
  16. Surprise 85387 -31%
  17. Litchfield Park 85340 -31%
  18. Wittmann 85361 -31%
  19. Surprise 85388 - 32%
  20. Surprise 85379 -32%
  21. Glendale 85303 -32%
  22. Glendale 85301 -32%
  23. Tonopah 85354 -32%
  24. Glendale 85305 -33%
  25. Wickenburg 85390 -35%
  26. Goodyear 85338 -35%
  27. Youngtown 85363 -36%
  28. Tolleson 85353 -36%
  29. Laveen 85339 -36%
  30. Avondale 85323 -37%
  31. Glendale 85301 -37%
  32. Buckeye 85396 -38%
  33. El Mirage 85335 -38%
  34. Buckeye 85326 -41%
  35. Goodyear 85395 -45%
  36. Waddell 85355 -49%

August 5 - July saw the lowest percentage of all-cash purchases since September 2008, during the George W Bush presidency. At 17.0%, all-cash deals last month were well down from 18.6% in June and 19.8% in July 2015. The peak for all-cash deals was February 2011 when we saw 41.9%. At last the market seems to trending back down towards a normal level of financed purchases, which I would class as 8% to 12%.

August 4 - There are some very interesting developments in the Cromford® Market Index numbers for the 17 largest cities and their single family markets.

Fountain Hills has jumped all the way to the number 2 slot having been as low as number 15 as recently as May. This is caused by a large drop in the number of homes for sale as sellers have taken many homes off the market for the summer. We probably should not get too excited because quite a few of these are likely to get relisted in time for the arrival of the snowbirds in the fall. However demand has picked up in Fountain Hills. This may be partly due to significant softening in prices. List prices have been on a downward trend for 8 months and sales prices during July were the lowest since January. Some people may be thinking that falling prices are a bad sign, but we must remember that lower prices stimulate demand and the number of homes under contract is looking encouraging.

The situation has also improved for sellers in Scottsdale. Supply has dropped from almost 2,500 (excluding UCB) 3 months ago to well under 2,000 today. Demand has also softened a bit but sellers are now in a better position because of the less intense competition.

Maricopa has reached its highest spot for a very long time. Months of supply is down to 2.3 and the appreciation rate is approaching 11%.

Avondale has cooled a little - the supply has increased from just 37.5% of normal to 40% of normal. However it remains way out in front at the top of the table and appreciation in Avondale is running at 8.7% based on the annual average $/SF.

Tempe is making a surprisingly weak showing, but a look at the active listings count shows us Tempe has almost 50% more listings than it had 12 months ago, while the sales rate has barely changed at all.

Paradise Valley is rapidly clawing its way back towards the neutral zone between 90 and 110 and is the only city currently in a buyer's market.

Overall we have 10 cities showing improvement for sellers and 7 deteriorating. This is positive but the closest to neutral we have seen in many months.

August 3 - If we look at the monthly average sales price per square foot for July we see a rather unimpressive number of $138.27 for all areas & types. Unimpressive because the figure for January was $139.24, so we have gone backwards by one dollar in six months. Those who who would like to see more signs of progress may turn to the median sales price which has moved up from $210,000 to $225,00 over the same 6 months.

This illustrates how you can often see conflicting signals for the same market. The median is being forced higher by the shortage of inventory at the bottom end, resulting in lower sales volumes of cheaper homes. The average price per square foot is losing out because of weak sales at the higher end of the market. These expensive homes pull the average higher and they have been losing market share to the mid-range.

August 2 - Preliminary reports from Maricopa County recording for July show similar trends to those we mentioned yesterday from the ARMLS closings. Recorded deeds in Maricopa County declined 3% from July 2015. The 10% drop in working days between July 2015 and July 2016 is the entire explanation for this anomaly. Expect the situation to reverse in August which has 23 working days in 2016 compared with only 21 in 2015.

The overall median sales price came in at $235,000 which is up 6.8% from July 2015 but down 2.1% from June 2016.

New home sales were up 16.5% from July last year but re-sales were down by 4.5%. The median sales price for new homes increased by 1.1% to $318,660 while than for re-sales rose by 6.7% since July 2015. New homes are gaining market share, but their prices have not increased very much.

August 1 - The average price of homes sold during July has tumbled over 4% compared with June but this need not set off alarm bells. We expect high end homes to take a lower share of the market during the summer and we note that the average sq. ft. fell by 2% over the same period. Sales volume is down 13% too, and even down 3% compared with July 2015. This is explained by the fact that July 2015 contained 2 more working days than July 2016, a 10% difference in the amount of time that title companies were processing deeds.

July's numbers make it difficult to tell the signal from the noise. However experience tells us that July always looks bad compared with June every year, so we should keep calm and wait for the summer to be over before drawing any conclusions. In fact just about all the other signals says most of the market remains in generally good shape.

July 31 - Multi-family permits totalled 2,131 in June which is the highest monthly total since February 2007. It is also more than twice as high as any of the previous 5 months of 2016. The year to date total is 4,863 which comfortably exceeds the 3,426 of June YTD 2015 but falls a little shy of the 2014 number.

Tempe (790 units), Phoenix (637) and Gilbert (615) were the big participants in June. This is a notable event for Gilbert as this city does not normally report a significant number of new multi-family permits.

July 30 - June was a bumper month for single family building permits. There were 1,665 for Maricopa County and 281 for Pinal. The total of 1,946 is the largest we have seen since August 2007 almost 9 years ago.

The increase over July 2015 was 17%. For the first half of 2016 we have a total of 9,724, up 18% from the first half of 2015. The 12 month rolling average is now 1,522 which equates to 18,264, though I would not be surprised if we exceeded 20,000 for the whole of 2016.

For the last 6 months the top areas for single family permits have been:

  1. Phoenix 1,305
  2. Mesa 1,097
  3. Gilbert 940
  4. Peoria 845
  5. Unincorporated Pinal County 756
  6. Chandler 753
  7. Buckeye 706
  8. Queen Creek 572
  9. Goodyear 533
  10. Unincorporated Maricopa County 499

July 29 - I recommend taking a look at the interactive visualization tool at the following web site:

http://populationpyramid.net/

This population pyramid shows clearly the distribution of population by age group (and gender), for the past and present as well as future projections. This is a useful since population growth is the most fundamental driver of housing demand. The chart above covers all countries of the world, but does not allow us to dig deeper into how the different states within the USA are doing.

For developing countries, the pyramid tends to have a wide base and a thin top. This is due to high birth rates and lower life expectancy. An example would be Burundi:

The population of Burundi is projected to grow from the present 11,552,000 to 62,661,000 by 2100. This will create massive demand for housing in Burundi, especially as life expectancy rises and economic well being improves.

In contrast, the United States of America looks like this:

A falling birth rate means there are fewer children under 20 than we would have expected in the past. We also see the bulge of the baby boomers between 50 and 59 and the Millennials (echo boomers) between 20 and 29. This looks very different from the USA of 1961 when baby boomers were still children:

The consequences of the change in balance between children and adults are important. If this trend gets out of hand we could end up like Japan where the base of the pyramid is too thin to support a healthy economy.

With its very low immigration rate, Japan's population is projected to fall from the present 126,323,000 to 83,174,000 by 2100. This is a decline of 34%. It is already suffering a glut of abandoned, decaying, unwanted houses (akiya).

A healthy housing market needs a steadily growing population. If that population growth is not powerful enough through births exceeding deaths then inward migration is the alternative driver. However that inward migration is most beneficial to the economy when it is made up of younger people. Migration of retirees is not a long term solution due to their lower life expectancy. At the country level, immigration needs to exceed emigration if the total fertility rate drops below the replacement level of 2.075 per female. The total fertility rate rate of the USA is 1.8 and falling. The population of the USA is projected to rise from the present 324,118,000 to 450,384,000 by 2100, but almost all of this rise is due to immigration being forecast to exceeding emigration. If Americans were to rely on births alone, the population would decline, with negative consequences for housing.

Any change which reduces population can have negative consequences for the housing market. This includes major wars, epidemic illnesses (e.g. influenza in 1918), mass exodus (e.g. Detroit down 60% since 1950) and severe curbs on immigration. Changes that promote population growth increase the long term health of the housing market.

July 28 - The Cromford® Market Index for the single family markets in each of the largest 17 cities looks like this:

We see an improving situation for sellers in 12 of the 17 cities. Bottom of the table Paradise Valley has at last changed direction and so has top of the table Avondale. 14 of the 17 are in a seller's market.

The huge improvement for sellers in Fountain Hills is caused by the drastic fall in active listings (excluding UCB and CCBS). These peaked at 331 at the end of March but the count is down to just 203 today. When selling it is great to have less competition, even if this is a relatively quiet time for buyers.

Maricopa and Goodyear are also seeing large positive moves over the past month.

July 27 - Comparing the first half of 2015 and the first 6 months of 2016, we see the following trends by price range, based on all recorded deeds in Maricopa & Pinal counties for single family and condo/ townhomes:

  • Under $200K - sales are down 5.9% but average price per sq. ft. is up 8.4% to $100.36 - price segment suffers from inadequate supply
  • Between $200K and $500K - sales are up 24.7% and average price per sq. ft. is up 2.5% to $136.98 - demand and supply are both booming
  • Between $500K and $1M - sales are up 18.2% but average price per sq. ft. is down 0.3% to $199.64 - demand is up but supply is excessive
  • Between $1M and $2M - sales are flat and average price per sq. ft. is also flat at $298.12 - demand and supply are both flat with supply excessive
  • Over $2M - sales are down 8.1% but average price per sq. ft. is up 3.1% to $460.68 - excessive supply, weaker demand but average $/SF holding thanks to new home sales gaining share

If we exclude new homes, re-sales over $3M are still holding their price with a rise of 0.6%, but sales are down over 12%.

The new home sector helps to make price trends look better in all sectors except under $200K. If we exclude new homes then

  • Between $200K and $500K - sales are up 21.9% and average price per sq. ft. is up 2.2% to $138.10
  • Between $500K and $1M - sales are up 15.2% but average price per sq. ft. is down 0.7% to $202.43
  • Between $1M and $2M - sales are down 3.3% and average price per sq. ft. is down $295.52

However, we note that excluding new homes surprisingly increases the average $/SF for the ranges from $200K to $1M, but reduces it under $200K and over $1M.

People tend to assume that new homes are more expensive than re-sales. This is very true for the small custom sector over $1M and for homes under $200K. In fact for homes over $2M the $/SF premium for new builds was as much as 30% during the first half of 2016. However builders may be surprised to learn that the average price per sq. ft. of new homes between $200K and $1M closed during the first half of 2016 was lower than the average price for re-sales:

  • Between $200K and $500K - re-sales averaged $138.10 while new homes averaged $132.46
  • Between $500K and $1M - re-sales averaged $202.43 while new homes averaged $188.64

This is probably partly because new homes in these prices ranges are concentrated in those areas with land that builders can afford (e.g. Mesa, Gilbert, Peoria, Pinal County, etc.). Re-sales have a much stronger market share in locations with expensive land like Scottsdale, Phoenix and Tempe.

July 26 - Another S&P/Case-Shiller® Home Price Index® report has been released this morning. This one covers sales in the 3 month period March through May 2016. Based on the annual change in the HPI here is the ranking table for the 20 cities covered by the report:

  1. Portland 12.5%
  2. Seattle 10.7%
  3. Denver 9.5%
  4. Dallas 9.0%
  5. Tampa 7.7%
  6. Miami 6.6%
  7. San Francisco 6.5%
  8. San Diego 6.4%
  9. Atlanta 6.3%
  10. Boston 5.6%
  11. Detroit 5.6%
  12. Los Angeles 5.4%
  13. Phoenix 5.4%
  14. Las Vegas 5.2%
  15. Minneapolis 5.2%
  16. Charlotte 5.0%
  17. Chicago 3.7%
  18. Cleveland 2.5%
  19. Washington DC 2.4%
  20. New York 2.0%

We looked at the CoreLogic index for the states a few days ago and the Case-Shiller numbers released today have the same story - the hottest parts of the country for housing are the Pacific Northwest and Colorado. Dallas and Florida are also strong and California above average.

Phoenix is pretty much average with its 5.4%, given that the national HPI increase is 5.1% and the 20 city HPI increased 5.2%. The Northeast and Mid-West are under-performing.

Taking a longer term view, here is how the index has changed since May 2016, 10 years ago:

  1. Denver 32.9%
  2. Dallas 32.8%
  3. Portland 15.2%
  4. Seattle 14.3%
  5. Charlotte 12.3%
  6. Boston 6.0%
  7. San Francisco 4.2%
  8. Atlanta -1.3%
  9. San Diego -9.7%
  10. Los Angeles -8.9%
  11. Cleveland -9.2%
  12. Minneapolis -10.9%
  13. Detroit -13.9%
  14. Washington DC -14.0%
  15. New York -16.1%
  16. Chicago -18.8%
  17. Tampa -23.3%
  18. Miami -23.5%
  19. Phoenix -29.5%
  20. Las Vegas -36.2%

The USA as a whole is down just 2.0% from May 2006. However the areas with the biggest speculative bubbles, Las Vegas, Phoenix and Miami, are the furthest away from their 2006 pricing levels. The biggest success stories over the last 10 years are Denver, Dallas, Portland, Seattle and Charlotte, This has a lot to do with the kind of jobs that have been created in these cities.

July 25 - We have been forecasting a fall in the average price per sq. ft. for the third quarter and there is now strong evidence to back this up. Take a look at the short term chart for list and sales $/SF. There is no doubt that the peak occurred in the third week of June and we have dropped from almost $143 to around $138 over the past 4 or 5 weeks. With the pending listing $/SF also trending slightly lower we would not expect any significant signs of buoyancy in the pricing numbers until the daily maximum temperatures drop below 100 degrees again.

July 24 - It has been a while since we looked at the rental statistics. The average closed lease rate across all areas & types within ARMLS is 85.1 cents per sq. ft. per month. Last year it was 81.0 cents so that is an annual increase of 5.1%. Two years ago the number was 75.0 cents and in July 2013 it was 69.6 cents. So we have seen rents rise 22.3% in the last 3 years, dramatically faster than the increase in average wages. Consequently the typical tenant has a lot less to spend on things other than housing.

Obviously this situation is very good for landlords and creates some motivation for tenants to become home owners. However high rents reduce disposable income and so impairs the ability to exercise that motivation to buy. It also reduces the demand for other goods and services. Tenants tend to feel less wealthy than they did 3 years ago unless they have improved their earnings through promotion or job switching. This goes some way to explain why a significant number of people think the economy is doing poorly when almost all the actual numbers are quite positive. Wealth is draining away from tenants but expanding for real estate property owners. With that background it is counter-intuitive that renting has become more popular even for people who can afford to own.

There were 2,998 active rental listings yesterday, down from 3,291 on July 23, 2016 and 4,474 on July 23, 2014. In 2008 at this point there were 8,525. Supply appears to be very tight and failing to improve.

The average asking price for active rentals is $2,046, up from $1,822 last year and $1,643 the year before that. Supply of affordable rentals (at least through the MLS) is unusually low.

July 23 - Occasionally it is useful to compare the market in Arizona with the other states and we turn to CoreLogic's MarketPulse Report to see how prices are behaving. Ranking the states by the year over year change in their Home Price Index we see for May 2016:

  1. Oregon 11.0%
  2. Washington 10.1%
  3. Colorado 9.4%
  4. Nevada 7.8%
  5. Utah 7.5%
  6. Florida 7.3%
  7. Idaho 7.0%
  8. Texas 7.0%
  9. California 6.3%
  10. Arizona 5.8%
  11. Tennessee 5.8%
  12. Michigan 5.7%
  13. Georgia 5.6%
  14. Rhode Island 5.4%
  15. Montana 5.3%
  16. South Carolina 5.2%
  17. Minnesota 5.1%
  18. Hawaii 5.0%
  19. Nebraska 4.6%
  20. Massachusetts 4.5%
  21. West Virginia 4.5%
  22. Wisconsin 4.3%
  23. Missouri 4.1%
  24. North Carolina 4.0%
  25. Wyoming 4.0%
  26. Indiana 3.9%
  27. Kansas 3.9%
  28. Kentucky 3.8%
  29. Maine 3.8%
  30. Louisiana 3.6%
  31. Mississippi 3.6%
  32. Iowa 3.5%
  33. New Hampshire 3.4%
  34. New York 3.4%
  35. New Mexico 3.3%
  36. South Dakota 3.3%
  37. Illinois 3.0%
  38. Ohio 2.8%
  39. Arkansas 2.5%
  40. Washington DC 2.3%
  41. Alaska 2.2%
  42. Alabama 2.1%
  43. Oklahoma 2.0%
  44. Virginia 2.0%
  45. Vermont 1.9%
  46. North Dakota 1.1%
  47. Maryland 1.0%
  48. Delaware 0.2%
  49. Pennsylvania -0.1%
  50. New Jersey -0.2%
  51. Connecticut -0.9%

Arizona is placed in the top 20%. However we are a long way behind Oregon, Washington & Colorado. These states are on top because they are very popular with the Millennial generation. Population growth is the most fundamental driver of housing demand. The age group that is producing children is the most important one for the housing market. Although Millennials have alarmingly low fertility they make up for that in the top 3 states through in-migration.

Arizona's headline population growth number is strong, but it is disturbing that the growth is so concentrated in the older age groups. Our population growth for the under 18 is negative and for the Millennial generation it is very disappointing. If we want a very healthy long term housing market we need to be successful at attracting more younger people, not retirees like me.

July 22 - June was another great month for new home sales with a total of 1,431 closed recordings across Maricopa and Pinal counties. This was up 24% from 1,150 in June 2015. Counting cities with sales of 20 units or more per month, the strongest growth rates over last year were in the following:

  1. Chandler - up 136% from 50 to 118
  2. Mesa - up 91% from 106 to 202
  3. Florence - up 85% from 20 to 37
  4. Buckeye - up 61% from 70 to 113
  5. Peoria - up 53% from 105 to 161
  6. Laveen - up 50% from 24 to 36
  7. Scottsdale - up 37% from 43 to 59
  8. Queen Creek - up 24% from 71 to 88
  9. San Tan Valley - up 17% from 69 to 81
  10. Phoenix - up 8% from 119 to 129

Mesa was the top city for total new builds, with a strong showing from Eastmark (70 closings by AV Homes, CalAtlantic, Maracay, Mattamy, Meritage, Taylor Morrison, Woodside and William Ryan). Lehi Crossing (William Lyon & Taylor Morrison) saw 26 closings.

Former star Gilbert dropped 32% from 172 to 117. Maricopa was also down 29% from 35 to 25 while Goodyear declined 26% from 91 to 67 and Surprise down 16% from 50 to 42..

July 21 - At first sight the Cromford® Market Index table for the single family markets in the top 17 cities looks a little less positive than last week.

There are 7 cities with deteriorating markets for sellers and 10 improving. This compares with 5 and 12 last week. However most of the deteriorations were by very small percentages of 1 or 2%. Only Avondale and Tempe dropped by a significant percentage. In contrast there were some huge positive changes:

  • Fountain Hills +36%
  • Maricopa +18%
  • Goodyear +13%
  • Scottsdale +10%

Fountain Hills jumped from 9th place to 7th, swapping places with Chandler. Queen Creek swapped places with Tempe. Maricopa swapped places with Cave Creek.

Avondale remains way out in front with only 1.5 months of supply (including UCB) while Paradise Valley remains detached at the bottom with 17.2 months of supply.

Overall we are still in an improving trend for sellers, even though most of this is due to a drop in supply rather than an improvement in demand.

July 20 - Part 2 of our investigation about OpenDoor's operation sin Greater Phoenix shows that for the homes sold so far, the total dollars received less total dollars paid for those 570 homes was $5,216,037. Why were there only 570 when yesterday we counted 572? Well two of the recorded deeds were duplicated at the county. This is not an uncommon occurrence, but it is not always easy to detect.

So we see an average gross margin of $9,151 per home. Obviously it is not OpenDoor's business model to make the majority of their income from the difference between the amount paid and the amount received for the homes, since the gross margin comes out at 3.8%. This is less than the fee that OpenDoor charges to the sellers which varies between 6% and 12% of their offer price, depending on ZIP code and home type.

The largest positive gain was $190,580 and largest loss was $83,000. The median difference was $9,990.

The average time between acquisition and disposal was 118 days. The minimum was 20 days and maximum 412 days.

The most expensive home purchased was $550,000 and the least expensive was $89.300.

The most expensive home sold was $566,375 and the least expensive was $112,800.

The average time that an unsold home had been in inventory is 64 days.

July 19 - The start-up company OpenDoor started its operations in Phoenix with its first purchase of a home in August 2014. We took a look at the recorded transactions within Maricopa and Pinal and found:

Up to the end of June 2016 OpenDoor had purchased 981 homes in Maricopa and Pinal counties with a total purchase price of $235,539,721. The average price was $240,102.

Up to the end of June 2016 OpenDoor had sold 572 of those homes to new owners with a total sales price of $145,449,368 - the average price being $254,282.

So as of July 1, this implies OpenDoor had 981-572 = 409 homes in inventory.

July 18 - You should not conclude that the whole of the UK is priced like Central London. Once you get beyond the commuter zone for London (which is now about 100 miles), rural properties can be relative bargains.

If I were to try buy 88 acres of attractive buildable land in a nice part of Gilbert (say) I could easily be looking at $15,000,000 or more. For about one third of that price I could be the owner of 88 acres in rural Shropshire, England and get as a free bonus:

  • a huge historic mansion dating from the early 1700s
  • 64 bedrooms and nearly 40,000 of living space
  • a dedicated private chapel that seats 150
  • 2 residences for the grounds keepers
  • private lake
  • amazing halls and library

At $121 per sq. ft. of living space, this is cheaper than Gilbert pricing and you get about 81 extra acres that you don't need for the house and garden.

For those interested here is the listing information:

http://www.rightmove.co.uk/property-for-sale/property-44107735.html

July 17 - The currency exchange rate between the US dollar and British pound remains about 14% lower than it did immediately before the Brexit referendum. This means that to buyers with US currency, real estate in London has dropped 14% in price. This does not mean it is necessarily a bargain. For example here is a big newly built apartment in Knightsbridge opposite Hyde Park:

http://www.rightmove.co.uk/new-homes-for-sale/property-41117193.html

This is $10 million cheaper than it was a month ago, but it is still a $82.5 million apartment.

The price per sq. ft. is $9,181, over 15 times the price we normally see for the most expensive homes in Phoenix.

July 16 - At this stage of the year it is becoming very noticeable that 2016 is remarkably similar to 2015 so far. In fact we have not seen 2 consecutive years so similar before. This is apparent when you compare the weekly charts for days inventorydollar volumemonths of supplyactive list price per sq. ft.listing success ratelistings under contractpending listings, and sales per month.

The weekly days inventory chart shows almost identical readings for 2015 and 2016 from week 22 to week 29 (now).

The months of supply chart has both years readings almost the same from week 9 to week 29 (now)

July 15 - Appreciation rates are one of the most important and talked-about subjects in real estate. However there are many different ways to define and measure them, so it is possible for someone to select the method to get the best or worst result according to their desires. We try to be as fair as possible to give a realistic guide to how prices are moving.

Essentially, we are trying to determine how much a home has increased or decreased in value over 12 months. The problem is that almost never is a specific home sold or appraised on 2 dates that are 12 months apart, so we almost never really measure what we are seeking. Instead we measure the prices of homes that did sell and then try to compare those prices with the prices of a different set of homes that sold 12 months earlier.

Questions then arise:

How do we measure prices for the set of homes that sold?

  • average price
  • median price
  • average price per square foot
  • median price per square foot

All of these have pros and cons, but usually we prefer to use average price per square foot

How large a set of homes are we going to consider for comparison? If we are looking at the whole of Greater Phoenix we have enough samples in a month (usually 5,000 to 10,000) to get a reasonably consistent measure from one date to the next. However if we are looking at a small market segment, the readings will be horribly volatile and appear to be almost random over time . The answer is to extend the time period for the sales to 3 months, 6 months or even a year.

In general we believe the fairest way to measure appreciation is to use the annual average price per square foot and compare it with the same data point 12 months earlier. The change in the two numbers gives us our appreciation rate.

Here are some examples for single family homes, using our preferred method and for comparison using the annual median:

CityAppreciation Using Annual $/SFAppreciation Using Annual Median
Youngtown 19.3% 56.9%
Wittmann 17.5% 1.6%
Arizona City 12.8% 17.5%
Tolleson 11.6% 9.4%
El Mirage 10.8% 11.1%
Sun City 10.5% 12.4%
Laveen 10.3% 8.5%
Buckeye 9.6% 10.4%
Avondale 9.1% 12.2%
Maricopa 9.1% 8.7%
Glendale 8.5% 9.4%
Sun City West 8.2% 10.9%
Apache Junction 8.1% 11.3%
Tempe 7.7% 8.3%
Phoenix 7.4% 10.2%
Waddell 7.3% 4.5%
New River 7.1% 3.7%
Queen Creek 7.0% 9.1%
Peoria 6.7% 6.2%
Coolidge 6.4% 5.0%
Surprise 6.4% 11.5%
Mesa 6.3% 9.0%
Carefree 6.1% -0.7%
Chandler 5.7% 3.8%
Gilbert 5.6% 4.2%
Goodyear 5.2% 6.5%
Florence 5.1% 9.0%
Litchfield Park 4.8% 8.4%
Anthem 3.7% 10.4%
Sun Lakes 3.0% 0.1%
Eloy 2.6% 10.3%
Casa Grande 2.5% 4.7%
Fountain Hills 2.3% 5.3%
Cave Creek 2.1% 2.1%
Scottsdale 1.0% 5.2%
Wickenburg 0.9% 4.1%
Rio Verde -3.0% -6.9%
Paradise Valley -3.1% -1.6%
Gold Canyon -4.7% 1.6%

We draw your attention to how different the two columns are for certain cities.

July 14 - We are taking another look at the Cromford® Market Index for the single family markets in the 17 largest cities.

 

 

We have 12 cities improving for sellers and 5 deteriorating. Avondale has increased its lead out in front while Paradise Valley is falling even further behind.

 

Avondale has only 141 active listings (excluding UCB & CCBS) with 198 under contract and a monthly sales rate of 138. Even including the UCB & CCBS listings we have just 1.5 months of supply.

 

Paradise Valley has 348 active listings (excluding UCB & CCBS) with 45 under contract and a monthly sales rate of 23. Including the UCB & CCBS listings we have 17.2 months of supply.

 

The other 15 cities are clustered between 101 and 155, with Fountain Hills, Maricopa, Goodyear and Scottsdale the standout gainers this week.

 

The Southeast Valley has cooled a little with Tempe, Mesa & Chandler all moving slightly backwards.

July 13 - The Black Knight Financial Services Mortgage Monitor report for May 2016 is here and shows us that loan delinquencies have been falling in 50 out 51 states (+DC). The sole exception is North Dakota. It has seen a 7.1% rise in non-current loans since May 2015, but since it has the lowest delinquency rate of any state, it is not time to panic.

Arizona has 3.0% of first home loans with a late payment (30 days or more) but not yet in foreclosure. To that we can add 0.4% of loans that are already in foreclosure, for a total of 3.4% of loans that are non-current. This is down by 13.9% since last year when we saw 4.0% non-current. There are just 8 states in a better position than Arizona for loan delinquency and these are California, Idaho, Alaska, Montana, South Dakota, Minnesota, Colorado and North Dakota.

Excluding North Dakota's negative showing, Wyoming has had the lowest positive change over the past year, undone by the fall in the price of coal.

July 12 - In the Central and North Valley (Phoenix, Anthem, New River) the luxury market numbers are looking better than elsewhere thanks to the local popularity of the Anthem

area, much of which falls within ZIP code 85018.

All the following ZIP codes are reporting an average price per sq. ft. for single family home sales in Q2 2016 that is at least 8% higher than 2015:

  1. 85034 +26.0%
  2. 85031 +25.5%
  3. 85009 +23.7%
  4. 85007 +21.&%
  5. 85040 +21.7%
  6. 85017 +19.9%
  7. 85019 +18.2%
  8. 85035 +18.0%
  9. 85006 +17.1%
  10. 85042 +15.7%
  11. 85004 +15.5%
  12. 85033 + 15.5%
  13. 85008 +14.0%
  14. 85037 +13.2%
  15. 85029 +12.1%
  16. 85015 +11.9%
  17. 85013 +11.4%
  18. 85032 +11.1%
  19. 85051 +10.9%
  20. 85043 +10.5%
  21. 85022 +10.0%
  22. 85018 +9.9%
  23. 85087 +9.6%
  24. 85020 +9.4%
  25. 85027 +9.0%

July 11 - In the West Valley, the single family market below $250,000 has 4% less supply than in July 2015 and the second quarter saw 5% fewer closed sales. Nevertheless, pricing jumped almost 10% between Q2 2015 and Q2 2016.

Pricing increases were modest between $250,000 and $500,000, up just 1.2%. This despite sales moving up by 27% compared with Q2 2015. Despite the increase in sales, we finished the second quarter with 19% more supply than in July 2015.

Above $500,000 sales volume jumped from 79 in Q2 2015 to 118 in Q2 1016, a rise of 49%. Supply also rose, but only by 11%. Despite the large increase in sales, pricing drifted lower by 0.7% between Q2 2015 and Q2 2016.

July 10 - In the Southeast Valley, the single family market is looking strong. The luxury market over $500,000 is dominated by homes under $1 million, so the problems over $1 million are having very little effect on the market in the southeast. Due to a lack of supply (down another 8% compared with July 2015) Q2 2016 sales under $250,000 are down by 7% but appreciation is almost 8%.

In the mid-range between $250,000 and $500,000, supply is good, up by 7% compared to July 2015. However Q2 sales are up by an impressive 21%. This has led to an annual appreciation rate of 3.5%.

Above $500,000 supply is up 6% but demand has improved in the last 2 months leading to an increase of 29% in Q2 closed sales compared with Q2 2015. Appreciation has jumped from -0.9% last month to 2.0% this month.

Overall it has been a very satisfactory quarter for sellers in the Southeast Valley.

July 9 - The market below $500,000 is still doing very well, but above this price point things are not so good for sellers. Recently the market below $1 million has improved a little, but unfortunately the market over $2 million has deteriorated. If we divide the single family luxury home market into 3 price ranges:

  • $500,000 to $1 million
  • $1 million to $2 million
  • Over $3 million

Then we see the following:

Price RangeAnnual Change in Active ListingsAnnual Change in Quarterly Sales RateAnnual Appreciation in $/SFComments
$500,000 to $1 million +17% +16% +0.7% Demand has risen almost as much as supply - reasonable market for sellers
$1 million to $2 million +18% -1% -1.2% Significant rise in supply is not matched by a rise in demand - poor market for sellers
Over $2 million +10% -14% -2.9% Significant rise in supply and an even more significant drop in demand - very poor market for sellers

Until recently the problem was mostly excess supply, but in the second quarter demand dropped for homes over $2 million compared to the same period in 2015.

The ZIP codes with the weakest price trends for luxury homes (based on the second quarter prices for 2016 versus 2015) are:

  • Phoenix 85016
  • Phoenix 85021
  • Queen Creek 85142
  • Paradise Valley 85253
  • Scottsdale 85255
  • Scottsdale 85258
  • Scottsdale 85259
  • Scottsdale 85260
  • Scottsdale 85262
  • Scottsdale 85266
  • Chandler 85286
  • Cave Creek 85331

All of these are showing negative appreciation rates overall for the price range over $500,000.

There are some brighter spots in:

  • Phoenix 85018
  • Phoenix 85020
  • Phoenix 85028
  • Phoenix 85048
  • Phoenix 85050
  • Anthem 85086
  • Mesa 85213
  • Sun Lakes 85248
  • Fountain Hills 85268
  • Tempe 85284
  • Carefree 85377
  • Peoria 85383

In these areas we see appreciation rates of 7% or more for homes over $500,000. However most of these have relatively low sales volumes for homes over $500,000. The big 3 ZIP codes for luxury (85253, 85255, 85262) are all in the first group above, with appreciation rates of -8%, -2% and -3% respectively.

July 8 - In Maricopa County during June there were 1,908 all-cash purchases and 8,377 financed purchases. The latter is the highest total of loans closed since March 2007. The all-cash purchases represented 18.6% of the unit sales which is the lowest percentage since September 2008.

Interest rates remain extremely low, so we should not be surprised that financing is gaining market share. It is probably more surprising that the all-cash rate is still almost 19% when a typical number between January 1999 and the end of 2007 was between 6% and 12%

July 7 - We are taking another look at the Cromford® Market Index for the single family markets in the largest 17 cities:

Lots of good news here for sellers, particularly in Fountain Hills, Maricopa, Goodyear, Avondale, Cave Creek and Scottsdale. All of these have seen a strong percentage increase in their CMI ratings. You can instantly tell how much Maricopa has improved by looking at its Snapshot:

Notice the predominance of green symbols in both the short term and long term columns

The really rough spot is Paradise Valley which has a contrasting snapshot with overwhelmingly negative symbols.

Not only is Paradise Valley at the bottom of the CMI table of 17, it had the worst month to month change of -4%. It is now a serious buyer's market and further price depreciation can be expected.

The lower end of the luxury market has been improving recently and this has helped the CMI scores for Scottsdale, Fountain Hills and Cave Creek. It does not help Paradise Valley very much because the vast majority of homes in Paradise Valley are priced well above the "lower end of the luxury market".

July 6 - The Maricopa County Recorder processed 10,285 residential sales deeds in June (single family & condo), which is the highest monthly total since August 2006. 88% of those were re-sales while 12% were new homes. The new home total was up 27% from June 2015, while the re-sale total was up only 3%. The combined total was up 6%.

Median prices continue to increase, with $229,000 the latest number, but a large part of that is due to the fall off in low end volume caused by the very short supply of homes for sale

Home values are not going up as fast as the median sales price. In fact the average price per sq. ft. is starting to fall slightly at the same time that the median is rising, something that tends to happen during each third quarter. The average price per sq. ft. is usually a more accurate guide to changes in home values than the median sales price.

July 5 - Now we have the annual appreciation by ZIP code charts available, we can review the top and bottom ZIP codes for price appreciation for single family homes.

Some ZIP codes have so few sales that even an annual average is extremely volatile. Examples of this include 85004 and 85034. Among the major ZIP codes with reliable appreciation readings we see prices have risen the fastest in the following:

  1. Phoenix 85031 +23.2%
  2. Phoenix 85009 +23.0%
  3. Phoenix 85017 +21.0%
  4. Phoenix 85040 +19.9%
  5. Phoenix 85008 +19.3%
  6. Glendale 85301 +19.2%
  7. Youngtown 85363 +18.7%
  8. Phoenix 85019 +18.5%
  9. Phoenix 85006 +18.3%
  10. Wittmann 85361 +17.5%
  11. Phoenix 85035 +17.4%
  12. Phoenix 85033 +17.4%
  13. Phoenix 85015 +14.6%
  14. Tempe 85281 +14.0%
  15. Phoenix 85042 +13.5%
  16. Glendale 85303 +12.8%
  17. Phoenix 85037 +12.3%
  18. Surprise 85378 +12.3%
  19. Sun City 85851 +12.2%
  20. Phoenix 85051 +12.2%

Here we are dominated by the inner Northwest Valley and Central, West and South Phoenix. North Tempe and Wittmann also make an appearance.

The lowest appreciation can be seen in the following:

  1. Scottsdale 85266 -4.2%
  2. Gold Canyon 85118 -3.8%
  3. Paradise Valley 85253 -3.6%
  4. Phoenix 85045 -2.5%
  5. Scottsdale 85262 -2.4%
  6. Scottsdale 85260 -1.5%
  7. Rio Verde 85263 -1.4%
  8. Phoenix 85054 -0.7%
  9. Phoenix 85016 -0.5%
  10. Scottsdale 85255 +0.1%
  11. Wickenburg 85390 +0.5%
  12. Scottsdale 85258 +1.4%
  13. Phoenix 85012 +1.4%
  14. Scottsdale 85259 +1.4%
  15. Mesa 85215 +1.6%
  16. Eloy 85131 +1.6%
  17. Cave Creek 85331 +1.8%
  18. Sun Lakes 85248 +1.9%
  19. Fountain Hills 85268 +2.5%
  20. Tempe 85284 +2.6%

Clearly the weakest appreciation is currently found in the most expensive locations. There are a few exceptions to this rule. Phoenix 85016 is running at a healthy +6.3% and Phoenix 85020 (+8.7%) and Phoenix 85021 (+8.1%) are doing even better. In Scottsdale, 85257 is doing great at +10.4% while 85250 is also doing well at +8.3%. 85251 has cooled off a little down from 9.7% to 4.7% over the last month.

July 4 - We can already see signs of the usual weakness in pricing during the summer, in the daily list price

 and price per sq. ft. 

charts. For most cities, prices remain comfortably higher than at this time last year, but there are two notable exceptions:

  • at $338.18 the annual average $/SF for Paradise Valley single family homes is 3.6% down from $350.77 in early July 2015. The annual average in Paradise Valley has been trending slowly but steadily lower since August 2015 and appears to be headed back to 2014 levels in the mid $330s.
  • at $148.95 the annual average $/SF for Gold Canyon single family homes is 3.8% down from $154.87 in early July 2015. The annual average in Gold Canyon have been trending lower since February 2016 and is now barely above the level of December 2014.

A few months ago it looked like Fountain Hills and Cave Creek might be headed the same way, but both of these have seen stronger pricing in the past 2 months. All the other major and secondary cities are seeing their annual average $/SF continue to move higher to varying degrees. Scottsdale would have a pricing problem if we were to look only at North Scottsdale, but pricing in South and Old Town Scottsdale is sufficiently buoyant to counteract the issues in the North.

July 3 - We are getting mixed signals from the single family permits from May. There was a total of 1,658 across Maricopa & Pinal counties, which is up only 4% from 1,591 in May last year. There has a slight decline since we peaked at 1,797 in March. The current 12 month rolling average is 1,498 per month which implies an annual total of 18,000. Based on the strong growth in the first 3 months of the year we were hoping to exceed 20,000 for the year. That is starting to look rather optimistic.

So far this year the totals by city have been as follows (with last year's YTD numbers in parentheses):

  1. Phoenix - 1,065 (813)
  2. Mesa - 886 (636)
  3. Gilbert - 815 (831)
  4. Chandler - 646 (367)
  5. Peoria - 620 (620)
  6. Unincorporated Pinal County - 567 (547)
  7. Buckeye - 538 (374)
  8. Queen Creek - 452 (368)
  9. Goodyear - 427 (553)
  10. Unincorporated Maricopa County - 367 (274)
  11. Scottsdale - 338 (389)

Strong growth can be seen in Phoenix, Mesa, Chandler. Buckeye, Queen Creek and Unincorporated Maricopa County.

Declines compared to last year are appearing in Scottsdale and Goodyear.

July 2 - We often see a swift decline in the average list price per square foot for active listings during the third quarter each year and this trend usually starts during June. Looking at the 12 major cities we see the following changes for single family homes over the past 120 days:

  1. Avondale - up 2.8% from $103.18 to $106.02
  2. Chandler - up 2.0% from $155.30 to $158.36
  3. Gilbert - up 0.8% from $145.91 to $147.02
  4. Queen Creek - up 0.6% from $118.14 to $118.79
  5. Goodyear - up 0.4% from $128.32 to $128.88
  6. Peoria - up 0.3% from $145.12 to $145.49
  7. Tempe - down 0.1% from $176.80 to $176.71
  8. Glendale - down 0.2% from $133.74 to $133.49
  9. Mesa - down 0.6% from $149.27 to $148.33
  10. Phoenix - down 0.7% from $184.35 to $182.99
  11. Scottsdale - down 3.1% from $317.83 to $307.93
  12. Surprise - down 3.8% from $124.25 to $119.49

It is not a surprise to see the weakness in Scottsdale, but the decline in average asking prices in Surprise is quite startling and out of line with the other West Valley cities.

As usual Avondale makes it to the top of the table again. It is the most affordable of the major cities by quite a large margin.

July 1 - A useful comparison tool for housing markets is the average percentage of final list price achieved by closed sales over the last 12 months. For single family homes we currently rank the cities as follows:

  1. Tolleson - 99.34%
  2. El Mirage - 98.95%
  3. Avondale - 98.83%
  4. Laveen - 98.67%
  5. Waddell - 98.56%
  6. Queen Creek - 98.43%
  7. Buckeye - 98.35%
  8. Surprise - 98.30%
  9. Youngtown - 98.29%
  10. Glendale - 98.26%
  11. Apache Junction - 98.25%
  12. Gilbert - 98.23%
  13. Goodyear - 98.11%
  14. Maricopa - 98.09%
  15. Peoria - 98.03%
  16. Litchfield Park - 97.97%
  17. Mesa - 97.95%
  18. Chandler - 97.92%
  19. Tempe - 97.81%
  20. Anthem - 97.77%
  21. Florence - 97.71%
  22. Wittmann - 97.66%
  23. Desert Hills - 97.66%
  24. Sun City West - 97.61%
  25. Sun City - 97.57%
  26. Phoenix - 97.54%
  27. New River - 97.42%
  28. Casa Grande - 97.13%
  29. Coolidge - 97.11%
  30. Sun Lakes - 97.06%
  31. Arizona City - 96.85%
  32. Eloy - 96.79%
  33. Cave Creek - 96.48%
  34. Gold Canyon - 96.18%
  35. Fountain Hills - 95.95%
  36. Scottsdale - 95.94%
  37. Tonopah - 95.38%
  38. Rio Verde - 94.50%
  39. Carefree - 94.36%
  40. Wickenburg - 93.87%
  41. Paradise Valley - 91.91%

We note that 9 out of the top 10 cities are in the West Valley and 6 out of the bottom 10 are in the Northeast valley.

June 30 - The market seems to be behaving quite nicely for sellers. When we look at the Cromford® Market Index for the single family market in our 17 largest cities we see a pretty picture:

14 out of the 17 cities are improving for sellers with only 3 moving slightly backwards (Glendale, Gilbert & Paradise Valley).

There has been a nice recovery in Cave Creek and Fountain Hills taking both above the 100 mark but still within the neutral zone between 90 and 110.

Avondale is still desperately short of inventory,a situation that also applies to some of the smaller cities in the West Valley, such as El Mirage. However we have seen more listings arrive in El Mirage over the last month and its market index is down from a ridiculous 395 to to a merely crazy 281.

11 of the 17 cities are seller's markets now that Queen Creek has joined that club. Only Paradise Valley remains a buyer's market with Maricopa having moved into the neutral zone since last month.

June 29 - There has been much discussion about Brexit in the last week. I am flattered that so many people care about the dysfunctional politics of my native land. However it is my opinion that the effect of Brexit on the Greater Phoenix housing market will be minimal. Among the possible minor impacts:

  • interest rates are more likely to stay low
  • interest rates are more likely to change slowly
  • the luxury market may take a small temporary hit due to perceived risk in the stock market
  • businesses highly dependent on exports to Europe may see lower revenues due to currency fluctuations (there are very few of these in Arizona)

The Greater Phoenix housing market is in an expansionary phase and demand from the UK is barely noticeable at the best of times. Demand from the whole of Europe is very small. So any fall in demand from Europe will be barely detectable.

I would agree that the effect of Brexit will be significant for the UK and in my opinion it will be strongly negative for the UK economy as a whole. It will be mildly negative for the other 27 EU countries too. On the bright side, if you have any interest in British real estate it just got significantly cheaper for people holding US dollars, and it could get quite a bit cheaper yet. London and the South East is prohibitively expensive even with the weaker pound, but as you move north and west, property gets much more affordable. Wales and Scotland plus the North East and North West of England are now quite attractively priced, especially if you are looking in rural locations and fancy a large piece of land to go with your home.

Many aspects of Brexit are up in the air (almost all of them in fact) so we shall have to wait and see how this shambles works out. At the moment there is a vacuum of leadership across the entire political spectrum. After the UK has scored an "own goal" against its economy and England has lost to Iceland in the Euro 2016 soccer championship, there is much hand wringing going on. That a country with a population of over 65 million people playing a sport they invented should be soundly beaten by a tiny country with fewer inhabitants than the City of Mesa is a major disgrace. Not since England lost to the United States in the 1950 soccer world cup have we been so deservedly ashamed of ourselves.

Maybe I will pretend I am from Australia from now on

June 28 - A word of warning from Mike Orr - if you are ever tempted to rent a satellite internet link to stay in touch with work from a remote location (like Lake Powell) my strong advice it to forget about it. I did this last week while on a week's vacation and it was a very painful experience. In under 65 minutes I checked about 10% of my incoming emails and managed to rack up a data usage bill of almost $1,300. At about $20 per minute, it is just impossible to justify. On the bright side it makes the normal cell phone company charges seem like a bargain. Unfortunately cell phone coverage is zero in most of the Lake Powell side canyons, so satellite is the only option. Better to go off the grid, in my opinion, so that is what I did. My apologies to anyone who wished I had responded more quickly to emails. I hope Tina Tamboer looked after you well.

In the meantime, I am back and we have a new S&P/Case-Shiller® Home Price Index® report to consider. This one covers the three months February through April 2016.

Phoenix price movements are lackluster compared to the other 19 cities than Case-Shiller reports.

The 20 cities rank as follows based on the month to month change in the HPI:

  1. Seattle +2.1%
  2. Chicago +2.0%
  3. Minneapolis +1.9%
  4. Washington +1.8%
  5. Portland +1.7%
  6. Charlotte +1.7%
  7. Boston +1.5%
  8. San Francisco +1.5%
  9. Denver +1.4%
  10. Detroit +1.3%
  11. Atlanta +1.3%
  12. Dallas +1.3%
  13. Miami +1.1%
  14. Cleveland +1.0%
  15. Tampa +0.9%
  16. San Diego +0.8%
  17. Los Angeles +0.8%
  18. Phoenix +0.7%
  19. Las Vegas +0.6%
  20. New York +0.3%

We note that Phoenix is only 2 rungs off the bottom of the ladder, the same position as last month.

Here is how the cities rank based on the annual change in the HPI:

  1. Portland +12.3%
  2. Seattle +10.7%
  3. Denver +9.5%
  4. Dallas +8.7%
  5. Tampa +7.8%
  6. San Francisco +7.8%
  7. Atlanta +6.5%
  8. Miami +6.4%
  9. San Diego +6.3%
  10. Los Angeles +5.9%
  11. Detroit +5.7%
  12. Las Vegas +5.7%
  13. Boston +5.7%
  14. Phoenix +5.5%
  15. Charlotte +5.0%
  16. Minneapolis +4.8%
  17. Chicago +3.1%
  18. Cleveland +2.9%
  19. New York +2.6%
  20. Washington +1.9%

Phoenix has slipped from 13th to 14th place. We note that the top 3 cities are all favorites with Millennials, underscoring how Millennial behavior is becoming increasingly important to the housing market. Phoenix is growing its population but is attracting fewer young adults and has a much weaker birth rate than we were used to for the years from 1945 to 2005. We are seeing strong growth in people over 65, but this does nothing to improve the birth rate and is a much less positive development for our local economy than a similar growth in those of child bearing age.

June 27 - Yesterday we looked at the median sized home purchased by price range. Today we look at the median sized home purchased by Major City over the same time frame. Interestingly, even at the height of sales price per square foot in 2006, buyers still purchased larger homes in many cities. Scottsdale has seen the only decline in median size since 2002. Everywhere else buyers are purchasing larger homes today compared to 14 years ago. Too see more size trends by price and city, check out the "Median Sized Home Sold" tab at the top of the Sales Price Per Square Foot chart HERE.

MEDIAN SQUARE FEET PURCHASED BY MAJOR CITY - All Property Types2002200620112016
Avondale
1,716sf
1,691sf
1,857sf
1,909sf
Chandler
1,615sf
1,714sf
1,789sf
1,836sf
Gilbert
1,884sf
1,917sf
1,991sf
2,041sf
Glendale
1,667sf
1,623sf
1,689sf
1,710sf
Goodyear
1,778sf
1,871sf
2,038sf
2,090sf
Mesa
1,470sf
1,460sf
1,524sf
1,569sf
Peoria
1,606sf
1,657sf
1,781sf
1,870sf
Phoenix
1,503sf
1,472sf
1,504sf
1,584sf
Queen Creek
1,812sf
1,916sf
2,011sf
2,066sf
Scottsdale
2,020sf
1,987sf
1,988sf
1,954sf
Surprise
1,536sf
1,722sf
1,898sf
1,870sf
Tempe
1,545sf
1,498sf
1,485sf
1,592sf
Phoenix Metropolitan Area
1,607sf
1,632sf
1,715sf
1,762sf

 

June 26 - The size of home buyers can afford for their budget has changed over the last 15 years since the peak of price in 2006 and the bottom in 2011. Here's a brief history on the median sized homes sold by price range during those times. When prices and/or interest rates fluctuate, buyers adjust what they buy in terms of size or location. While the square footage purchased fluctuates within price ranges, the overall median sized home purchased has been increasing over time. Too see more size trends by price and city, check out the "Median Sized Home Sold" tab at the top of the Sales Price Per Square Foot chart HERE.

MEDIAN SQUARE FEET PURCHASED BY PRICE RANGE - All Property Types
2002
2006
2011
2016
Under $150K
1,335sf
984sf
1,513sf
1,186sf
$150K - $200K
1,805sf
1,184sf
2,021sf
1,548sf
$200K - $250K
2,154sf
1,434sf
2,275sf
1,715sf
$250K - $300K
2,413sf
1,673sf
2,541sf
1,976sf
$300K - $400K
2,733sf
1,963sf
2,783sf
2,294sf
$400K - $500K
3,035sf
2,279sf
3,053sf
2,647sf
$500K - $600K
3,380sf
2,615sf
3,400sf
2,942sf
$600K - $800K
3,750sf
2,871sf
3,760sf
3,263sf
$800K - $1M
4,109sf
3,348sf
4,173sf
3,750sf
$1M - $2M
5,035sf
3,950sf
5,167sf
4,407sf
$2M - $3M
6,205sf
5,309sf
6,500sf
5,963sf
Over $3M
8,306sf
7,300sf
8,436sf
7,267sf
Overall
1,607sf
1,632sf
1,715sf
1,762sf

 

June 25 - Year-to-date new listings are up 5.3% over week 26, 2015. So far ARMLS has recorded 60,228 new property listings compared to 57,201 this time last year. The most dramatic measure is the drop in new listings under $150,000 at 25.2% below last year and equating to 3,036 fewer new listings for buyers to choose among. This loss was made up in new listings between $200,000 and $300,000 which increased 20% over last year equating to an increase of 2,969 more new properties for sale. This shift in inventory composition is one reason why the median sales price has been rising faster than the sales price per square foot. Currently the median sales price is

YTD New ListingsWeek 26, 2015Week 26, 2016% Change# Change
Under $150K
12,052
9,016
-25.2%
-3,036
$150K - $175K
5,666
5,665
No Change
-1
$175K - $200K
5,603
6,135
+9.5%
+532
$200K - 250K
8,730
10,446
+19.7%
+1,716
$250K - $300K
6,277
7,530
+20.0%
+1,253
$300K - $400K
8,070
9,104
+12.8%
+1,034
$400K - $500K
3,918
4,569
+16.6%
+651
$500K - $600K
2,163
2,492
+15.2%
+329
$600K - $800K
1,963
2,308
+17.8%
+345
$800K - $1M
1,011
1,099
+8.7%
+88
$1M - $1.5M
854
926
+8.4%
+72
$1.5M - $2M
387
418
+8.0%
+31
$2M - $3M
326
312
-4.3%
-14
Over $3M
181
208
+14.9%
+27
Total
57,201
60,228
+5.3%
+3,027

 

June 24 - Continuing the discussion regarding the "bubble talk" in our media this month, overall price appreciation in the Phoenix Metropolitan area is not close to the appreciation rate of 2005. Even the current 11.1% appreciation rate for sales under $175,000 from June 2015 to June 2016 is lower than 2005's past overall rate of 33%. Currently the average sales price per square foot is where it would have been had our market experienced a 2-3% annual appreciation rate every year since January 2002.

 

June 23 - There's been more talk about housing bubbles in the media again, such as this article on CNBC written earlier this month, Experts sharply divided over whether surging home prices signal new bubble. There are key differences between today's market and the price surge of 2005, which was followed by the crash of 2008. Here are a few:

100% FINANCING vs. Down Payments
Bubble 2005: 100% financing was easily attainable for investors and consumers alike with little verification of income. This reduced the risk for investors. With none of the investors’ money invested, the lenders took on all the financial risk when the investments failed.

TODAY: 100% financing is scrutinized. Most investors have purchased with cash in last 7 years, and most borrowers are required to contribute a down payment. As a result, if there is a downturn in appreciation, equity positions will encourage homeowners to stay put instead of abandoning their investment.

ADJUSTABLE RATES vs. Fixed Rates
Bubble 2005: Adjustable rates and interest only payments were rampant between 5.5-6.5%, available at purchase or through refinancing. When interest rates rose, consumers’ payments rose with them to unaffordable levels. Since all of their payments went to interest instead of equity, many owed more than their home was worth and were forced into foreclosure instead of selling through traditional methods.

TODAY: The majority of loans issued are fixed between 3-4%, either through purchase or refinance over the last 6 years. If rates increase, these interest rates and payments will stay the same. Payments include both principle and interest to ensure a build up of equity. This, combined with positive appreciation over the past 6 years, provides a significant equity buffer to weather a potential downturn and reduce the risk of abandonment.

APPRAISALS
Bubble 2005: Appraisals and appraisers were not scrutinized by lenders, removing a significant barrier to unsustainable price appreciation. Many appraisers were uncharacteristically liberal in their valuations as they were dependent on referrals from the real estate community, not the underwriters.

TODAY: Appraisals are highly scrutinized and appraisers are conservative with valuations, creating a resistance to unsustainable, unverifiable appreciation. Appraisers are chosen by the underwriter, not the borrower or any commissioned party dependent on the close of the sale. This removes any undo pressure on the appraiser to value the property at contract price.

INVESTORS
Bubble 2005: Investors purchased homes with no intention of living in them or renting them out, often selling vacant properties amongst themselves at soaring profits with no monetary investment on their part.

TODAY: The vast majority of homes owned by investors are either free-and-clear or have significant equity. Instead of being vacant, they are rented and providing cash flow. The fear of investors “dumping” their real estate investments en masse and abandoning vacant properties is irrational when vacancy rates are at historical lows . There are few reasons for an investor to abandon a free-and-clear property while it’s generating income.

 

June 22 - The ARMLS membership continues to grow since we began tracking it more closely in March. As of today, there are 36,336 total members. Of those members, 91.6%, or 33,275, are classified as a Designated Realtor, Realtor or Sales Person in the state of Arizona. This segment has grown by 4.8%, 1,532 members, in 15 weeks. That's an average of 102 per week.

Overall, there are more sales and more listings under contract, which is good news for the industry. However, more Realtors and affiliates entering the marketplace increases the competition for those sales.

June 21 - Listings Under Contract (which include Pending, UCB and UCCB statuses) as of the end of Week 25 this year are coming in 7.2% higher compared to Week 25 of last year. The most obvious change is a 30.8% drop in listings under contract under $150,000 equating to 833 fewer contracts. Offsetting the loss of transactions under $150,000 is the increase in those between $200,000 and $300,000, up 27% combined and equating to 844 more contracts in escrow. Listings Under Contract is an indicator for future sales volume, so expect good news for summer closings in June.

Listings Under Contract
Week 25 2015
Week 25 2016
% Diff
# Diff
Under $150K
2,701
1,868
-30.8%
-833
$150K - $175K
1,306
1,366
+4.6%
+60
$175K - $200K
1,215
1,469
+20.9%
+254
$200K - $250K
1,835
2,302
+25.4%
+467
$250K - $300K
1,265
1,642
+29.8%
+377
$300K - $400K
1,499
1,710
+14.1%
+211
$400K - $500K
682
837
+22.7%
+155
$500K - $600K
322
394
+22.4%
+72
$600K - $800K
314
364
+15.9%
+50
$800K - $1M
139
148
+6.5%
+9
$1M - $1.5M
104
116
+11.5%
+12
$1.5M - $2M
49
57
+16.3%
+8
$2M - $3M
42
40
-4.8%
-2
Over $3M
24
16
-33.3%
-8
Total
11,497
12,329
+7.2%
+832

 

June 20 - West Phoenix, South Phoenix and the Southeast Valley continue to have the majority of fastest selling times in the Phoenix Metro area.

85034 in Phoenix (surrounding Sky Harbor Airport) currently has the lowest average days on market for sales in the last 90 days at 18.5 days followed by Youngtown 85363 at 21.8 days

85264 Fort McDowell and 85263 Rio Verde have the two highest average days on market at 302 and 205 days respectively closely followed by 85377 Carefree at 202 days.

http://public.tableau.com/shared/GH4JP77ZH?:toolbar=no&:display_count=no

June 19 - The Southeast Valley is another area that illustrates the contrast between the entry level, mid range and high end sectors for appreciation. Using ARMLS single family sales for March through May in 2016 and comparing with the same 3 months in 2015 we see the following appreciation rates based on average price per sq. ft.

  • under $250,000 - up by 8.4%
  • between $250,000 and $500,000 - up by 2.0%
  • over $500,000 - down by 0.9%

The only ZIP code that is showing negative appreciation is Phoenix 85045 (West Ahwatukee) with -0.6%. Others with appreciation well below average are:

  • Mesa 85207 - up 1.4%
  • Mesa 85215 - up 1.4%
  • Phoenix 85048 - up 1.9%

The fastest upward movement over the last 12 months can be found in:

  • Tempe 85281 - up 19.2%
  • Chandler 85224 - up 13.7%
  • Mesa 85204 - up 12.5%
  • Mesa 85203 - up 10.8%
  • Mesa 85208 - up 10.7%

June 18 - If we look at the average price for ARMLS closings it looks as though we are experiencing a strong increase in price over the past month. The same message jumps out from the median sales price chart.

I don't want to rain on the parade, but the chart for average price per sq. ft. is much more realistic. It is moving higher but from week 10 (March) to week 25 (June) we have only risen from $140.90 to $142.45, an increase of 1.1%.

The reason the other charts are looking so good is that lower price homes are selling in unusually low volumes because there are not enough of them on the market. The average size of home that sold in the last month is 1,997 sq. ft. Three months ago we saw only 1,932 sq. ft. So the current average home is 3.5% bigger than three months ago. The average and median do not tell us this and do not make any adjustments for it.

Calculating price per sq. ft. is a lot much difficult but it is worth it you want to be realistic about underlying changes in home values.

June 17 - The West Valley is a good illustration of the difference between 3 price segments in the single family home market. During the 3 months March through May 2016 we saw the following changes in average price per square foot compared with a year earlier:

  • Below $250,000 - up 10.1%
  • Between $250,000 and $500,000 - up 1.2%
  • $500,000 and over - down 3.0%

The overall average appreciation rate is 7.3%. but this is obviously misleading. It is too low to represent the entry range accurately and far too high for the rest of the market.

Among the top performing ZIP codes for appreciation we find:

  1. Glendale 85301 - up 20.3%
  2. Youngtown 85363 - up 15.6%
  3. Sun City 85351 - up 14.2%
  4. Tolleson 85353 - up 14.0%
  5. Glendale 85303 - up 13.7%

The top 2 ZIP codes were the lowest price areas one year ago, but they are catching the rest of the pack.

Even though Glendale had the highest appreciating ZIP code, it also had the lowest - Glendale 85310 went backwards by 5.6%. It was the only ZIP code in the West Valley with negative appreciation. Last year it was the most expensive ZIP code with an average price of $142.74. This year it has fallen back to $134.70 and been overtaken by Peoria 85383 at $136.76, Goodyear 85395 at $135.52 and Glendale 85308 at $136.27.

We can see that in general the lowest priced areas are appreciating the fastest and the highest priced areas are usually appreciating the least.

June 16 - We are taking another look at the single family markets in the 17 largest cities to see how their Cromford® Market Index values have changed over the past month:

We see a strong advantage for sellers, and it is getting stronger in 14 out of 17 cities. Paradise Valley remains the weakest market and it is not improving fast enough to catch up. However the usual lower supply during the third quarter will help a bit.

Cave Creek and Fountain Hills have improved quickly for sellers over the past month and are now above the neutral 100 mark, as is Scottsdale.

Maricopa is on an improving trend and its snapshot is looking very positive.

Avondale continues to open up a lead on all the other major cities, with a contract ratio of 164.8 and just 1.2 months of supply. Very tough to be a buyer in Avondale.

All in all, the bulk of the market is still looking strong and on an improving trend. 11 cities are seller's markets, 4 are neutral and 2 are buyer's markets.

June 15 - If we look at the single family market in the Northeast Valley over the last 3 months (March through May) and compare with the same period one year ago, we can see that the market under $500,000 remains quite healthy. Admittedly sales are down 2% but active listings are also down 2% and appreciation averages 5% based on price per sq. ft. Between $500,000 and $1 million sales are up 4% but supply is up a strong 16%, so appreciation is fairly weak at 1%. It is in the market over $1 million where the bad news is concentrated. Sales are down 5% while active listings are up 10%. As you would expect, prices have a hard time in this environment and they have declined an average of 4% since last year.

South Scottsdale (85257) and Old Town (85251) are doing very well indeed, with pricing up 12% in the former and 16% in the latter. However the pricing picture is discouraging for sellers for several northeastern ZIP codes:

  • 85266 - down 10%
  • 85260 - down 4%
  • 85253 - down 3%
  • 85259 - down 1%
  • 85258 - flat

June 14 - The Census Bureau Quickfacts table for Arizona has some interesting statistics.

The total population estimate for July 1, 2015 is stated to be 6,828,065. This is up 1.4 % from 6,731,484 on July 1, 2014, Although this represents a total of 96,581 added to Arizona's population in 12 months it is also a lower percentage rate than many would like to see. Population growth fuels the economy, especially the economy tied to housing. The population figure for April 1, 2010 (census count rather than estimate) is 6,392,307. We have therefore seen a growth of 435,758 in just over 5 years, or 6.8%. This is better than many other states but far below the rates of growth that Arizona experienced between 1945 and 2007.

The balance in the population has been shifting dramatically away from children and towards retirees. The percentage of the population by age group changed as follows between April 1, 2010 and July 1, 2014:

  • Persons under 5 years of age - down from 7.1% to 6.4% - a 10% fall in just over 4 years
  • Persons under 18 years of age - down from 25.5% to 24.1% - a fall of 5.5% in just over 4 years
  • Persons 65 years and over - up from 13.8% to 15.9% - a rise of over 15% in just over 4 years

So although we added 339,177 people between April 1, 2010 and July 1, 2014, we ended up with 23,039 fewer children under 5 and 7,751 fewer children under 18. At the same time we added 188,168 people aged 65 and over and 158,760 people between 18 and 65.

We may be in danger of following in the footsteps of Japan with plummeting fertility rates and falling school head counts.

June 13 - One way to measure supply is to calculate the ratio of homes for sale to the total number of homes in an area. For example, in Maricopa County, 1 in 75 single-family homes are for sale. We can see that the supply of homes for sale (without a contract) is abundant in the following locations:

Rank City ZIP Code Homes for Sale
1 Aguila 85320 1 in 11
2 Scottsdale 85262 1 in 14
3 Carefree 85377 1 in 16
4 Paradise Valley 85253 1 in 17
5 Rio Verde 85263 1 in 18
6 Scottsdale 85266 1 in 23
7 Morristown 85342 1 in 24
8 Wickenburg 85390 1 in 24
9 Scottsdale 85255 1 in 27
10 Fort McDowell 85264 1 in 29
11 Fountain Hills 85268 1 in 31
12 Buckeye 85396 1 in 31
13 Scottsdale 85259 1 in 33
14 Phoenix 85018 1 in 35
15 Phoenix 85054 1 in 36

In most of these areas, sellers are having a hard time due to the competition from other sellers. Phoenix 85018 is an exception because demand is stronger than ever for homes in this increasingly trendy area. Nearby 85008, 85014, 85251 and 85257 are also seeing strong demand and fast turnover.
At the other end of the scale, supply is chronically weak in the following areas:

Rank City ZIP Code Homes for Sale
116 Glendale 85302 1 in 229
117 Gila Bend 85337 1 in 241
118 Phoenix 85051 1 in 241
119 Phoenix 85037 1 in 249
120 Mesa 85210 1 in 250
121 Phoenix 85031 1 in 253
122 Glendale 85306 1 in 254
123 Phoenix 85017 1 in 258
124 Mesa 85201 1 in 295
125 Phoenix 85033 1 in 309
126 Glendale 85307 1 in 311
127 El Mirage 85335 1 in 314
128 Phoenix 85019 1 in 328
129 Phoenix 85040 1 in 344
130 Phoenix 85004 1 in 473

Even with weak demand, prices will rise when supply is as scarce as this.

June 12 - We already know that appreciation is strongest for the least expensive homes at the moment. Contrary to what you might expect, prices are rising the fastest in areas with the highest crime rates, worst performing schools and worst reputations. Most areas with the highest levels of desirability and either appreciating very slowly or depreciating. There are a few exceptions; Arcadia springs to mind.

In the same way the least expensive dwelling types (on a price per sq. ft. basis ) are appreciating the fastest and those with the highest price per sq. ft. are slowest to rise in price. Comparing the annual average $/SF between June 1 2015 and June 1, 2016 we see the following:

  1. Twin homes - up 12% from $89 to $99 per sq. ft.
  2. Mobile homes - up 11% from $68 to $76 per sq. ft.
  3. Townhouses - up 9% from $123 to $134 per sq. ft.
  4. Single family detached - up 5% from $131 to $138 per sq. ft.
  5. Apartment-style homes - up 4% from $141 to $146 per sq. ft.
  6. Patio homes - up 1% from $156 to $157 per sq. ft.

June 11 - Fix and flips appear to be attracting attention again after a quiet period during the first half of 2015. Mind you we are nowhere near the peak that we saw in 3Q 2012 when flip sales were 12% of the total market across Maricopa and Pinal counties. In the spring of 2015 we reached a low of below 5% of the market and have since recovered to around 6%.

Since 2012 the median acquisition cost for a flip has risen 55% from $91,250 to $141,250, while the median sq. ft. has dropped from 1,650 to 1,545. On the other hand the median gross profit has increased 22% from $35,144 to $43,150.

June 10 - Examining the market at $800,000 and over we see some interesting trends in the size of the market in various cities.

The overall revenue for January through April, including all recorded deeds in Maricopa & Pinal, changed as follows over the last 2 years:

  • 2014 - $1.012B
  • 2015 - $1.113B (up 10% year over year)
  • 2016 - $1.134B (up 2% year over year)

Strong growth in luxury home spending between 2014 and 2015 was followed by very modest growth between 2015 and 2016. However the growth was outstanding in the following cities between 2014 and 2016:

  1. Gilbert - up 168% from $9.6M to $25.8M
  2. Chandler - up 163% from $12.9M to $34.0M
  3. Cave Creek - up 106% from $11.3M to $23.2M
  4. Phoenix - up 73% from $115.5M to $199.6M

Of course these are relatively small markets for the price range of $800,000 and over, compared with Scottsdale and Paradise Valley. These did not expand much at all however:

  1. Scottsdale - up 3% from $522M to $536M
  2. Paradise Valley - down 1% from $220M to $218M

Several other secondary luxury markets lost steam between 2014 and 2016:

  • Glendale - down 45% from $5.4M to $2.9M
  • Mesa - down 43% from $27.9M to $15.9M
  • Peoria - down 38% from $13.3M to $8.2M
  • Rio Verde - down 100% from $3.4M to zero
  • Fountain Hills - down 12% from $30.8M to $27.2M
  • Carefree - down 12% from $19.0M to $16.8M

We must remember this is a comparison for January through April only, as we do not have all the deeds for May just yet.

June 9 - The Cromford Market Index for the single family market in the largest 17 cities is still looking positive:

We have 12 cities improving over the last month, with the following most significant:

  1. Fountain Hills - up 19%
  2. Avondale - up 16%
  3. Cave Creek - up 9%
  4. Mesa - up 7%
  5. Paradise Valley - up 6%
  6. Goodyear - up 5%

Only Buckeye saw a significant deterioration for sellers, down 5%, but another 4 cities saw slight moves towards neutrality.

Overall the market is improving for sellers with the high end market helped by a large number of cancellations, as sellers take their homes off the market, probably just for the summer.

June 6 - Looking at the Greater Phoenix super luxury market at $6 million and above we see 5 sales through ARMLS so far this year:

  1. sold for $7,400,000 (original list $9,495,000) in February - 15,112 sq ft - $490 per sq. ft. - 165 days on market
  2. sold for $7,200,000 (original list price $8,750,000) in April - 7,181 sq. ft. - $1,003 per sq. ft. - 2,141 days on market
  3. sold for $6,250,000 (original list price $6,750,000) in February - 10,567 sq. ft. - $591 per sq. ft. - 27 days on market
  4. sold for $6,175,000 (original list price $8,750,000) in February - 12,929 sq. ft. - $478 per sq. ft. - 386 days on market
  5. sold for $6,000,000 (original list price $7,195,000) in January - 9,221 sq. ft. - $651 per sq. ft. - 427 days on market

There were another 2 sales between $5 million and $6 million

There were 6 sales of $6 million or more in the same period in 2015 and another 5 between $5 million and $6 million.

The dollar volume for homes over $5 million has declined 38% year over year from $71.6 million to $44.1 million.

We are not the only location that is seeing a drop in buying activity for the highest price sector of the market. Reports from other locations suggest that big mansions in the rest of the USA and in part of the UK are seeing much lower activity.

June 5 - In an interesting development, the percentage of home purchases that were all-cash in Maricopa County fell to its lowest level since October 2008 in May 2016. The percentage was 19.5%, down from 20.9% in April.

In May 2015 this percentage was 21.3%, so this supports the theory that some lenders are being a little less restrictive in their loan underwriting.

June 4 - The number of Realtor® agent records in the ARMLS database has grown significantly over the last year. Here are the counts we have seen over the past few years:

Year Agent Count in June Annual Sales Rate Sales per Agent Annual Dollar Volume Dollars per Agent Average Commission per Agent (assuming average of 6% per closing)
2010 27,362 90,073 3.29 $15.372 B $561,801 $33,708
2011 25,445 100,482 3.95 $15.826 B $621,969 $37,318
2012 24,733 89,030 3.60 $17.195 B $695,225 $41,714
2013 25,018 85,070 3.40 $19.828 B $792,549 $47,553
2014 26,829 76,538 2.85 $19.194 B $715,420 $42,925
2015 28,109 84,080 2.99 $22.133 B $787,399 $47,244
2016 30,156 85,902 2.85 $23.057 B $764,591 $45,876

We note that 2013 was the "best" year for average commissions and that 2014 was probably the most disappointing. Despite the increase in volume between 2015 and 2016, average commissions per agent are likely to be down about 3% this year compared with last year, because we have 7% more agents and only 4% more sales revenue. Since we are less than half way through 2016, it is possible the 2016 numbers may change significantly by year end.

Of course a large number of agents process no sales at all each year and a small number of agents is responsible for a very large percentage of the total revenue.

June 3 - The recorded deeds for Maricopa County in May show continued strong growth for new homes, up 39% from May 2015. The median sales price of $321,108 is also up a healthy 4.1% from May 2015.

Re-sales, meanwhile, are up a modest 6% in unit volume and a more impressive 7% in median sales price.

New homes took an 11% percent share of the market, up from 9% a year ago.

All these numbers are for sales that recorded with an Affidavit of Value and include condos and townhomes as well as single family homes.

June 2 - Taking another look at the single family markets in the 17 largest cities we find that the Cromford® Market Index has changed as follows over the last month:

This is another pretty picture with only 3 of the 17 cities showing any deterioration for sellers. Buckeye is this week's biggest loser dropping from a seller's market to a balanced market, thanks to weaker demand and a slight increase in supply measurements.

Fountain Hills and Paradise Valley have improved a lot, but they really needed to. Paradise Valley remains a buyer's market but Fountain Hills has risen from a buyer's market to the balanced zone between 90 and 110.

Mesa has jumped to third place while Avondale is still opening up an even greater lead at the top of the table.

June 1 - A couple of statistics that came out this morning suggest a stronger market.

Only 182 homes were purchased by third parties at trustee sales in Maricopa County during May. However this represents 65% of all the auctions, so only 98 properties went back to the beneficiary (or lender). This is the lowest monthly total of REOs created since October 2006, almost 10 years ago. Also 65% is the highest percentage of properties catching a bid since April 2006, more than 10 years ago.

The total dollar volume of homes closed through ARMLS during May was $2.464 billion. This is up 10% from May 2015 and the highest monthly total since June 2006

May 31 - The latest S&P/Case-Shiller® Home Price Index® numbers came out this morning, covering sales that closed between January and March 2016. The national number showed a larger month to month change of 0.72% but a slightly lower year over year change of 5.15%. More gains were made in the last month than in the prior 7 months. Clearly the latest batch includes enough spring sales (from March) to restart the appreciation race. This will probably continue over the next 2 months

Over the past year the 20 metro areas reported by Case-Shiller rank as follows:

  1. Portland 12.3%
  2. Seattle 10.9%
  3. Denver 10.0%
  4. San Francisco 8.5%
  5. Dallas 8.5%
  6. Tampa 7.6%
  7. Atlanta 6.5%
  8. Los Angeles 6.5%
  9. Miami 6.3%
  10. Detroit 6.2%
  11. San Diego 6.2%
  12. Las Vegas 6.1%
  13. Phoenix 5.6%
  14. Charlotte 4.3%
  15. Minneapolis 3.9%
  16. Boston 4.3%
  17. Cleveland 2.8%
  18. New York 2.7%
  19. Chicago 1.9%
  20. Washington DC 1.5%

The west coast continues to appreciate the fastest, with Denver also very strong. Phoenix is below the middle of this pack of 20, but again beat the overall average for the USA.

When we look at the month to month change we see:

  1. Seattle 2.39%
  2. San Francisco 2.27%
  3. Denver 1.60%
  4. Portland 1.50%
  5. Dallas 1.41%
  6. Tampa 1.08%
  7. Atlanta 1.07%
  8. Miami 1.05%
  9. San Diego 1.04%
  10. Boston 1.02%
  11. Chicago 1.01%
  12. Charlotte 0.89%
  13. Washington DC 0.80%
  14. Minneapolis 0.77%
  15. Los Angeles 0.72%
  16. Las Vegas 0.69%
  17. Detroit 0.67%
  18. Phoenix 0.28%
  19. Cleveland 0.06%
  20. New York 0.01%

Phoenix was close to the bottom of this table. Those who predicted a dramatic slowing in appreciation for the San Francisco market last year appear to have been mistaken. I am looking at you, Zillow.

May 30 - Looking specifically at condo / townhouse new homes we see the following changes between the first 4 months of 2015 and the same period in 2016:

  1. Phoenix - up from 90 to 103 units closed
  2. Scottsdale - up from 39 to 78
  3. Mesa - down from 56 to 54
  4. Chandler - up from 5 to 12
  5. San Tan Valley - up from 0 to 9
  6. Goodyear - down from 14 to 6
  7. Cave Creek - down from 9 to 4
  8. Tempe - up from 0 to 4
  9. Fountain Hills - down from 8 to 3
  10. Buckeye - down from 6 to 3
  11. Maricopa - flat at 1

Gilbert (4), Litchfield Park (2), Surprise (2) and Apache Junction (1) made the list in 2015 but there have been no condo or townhouse closings so far this year.

May 29 - Because new home sales are the fastest growing segment of the market, we will take a closer look at figures from the first 4 months of the year and compare them with January through April 2015.

Using only those cities with at least 50 new homes closed in both periods we see the following growth:

  1. Chandler - up 134% from 130 to 304 units closed
  2. Laveen - up 74% from 62 to 108
  3. Mesa - up 61% from 322 to 517
  4. Peoria - up 53% from 345 to 527
  5. Buckeye - up 49% from 217 to 324
  6. Florence - up 46% from 59 to 86
  7. Queen Creek (Maricopa County only) - up 44% from 197 to 283
  8. Goodyear - up 44% from 190 to 273
  9. Scottsdale - up 43% from 111 to 159
  10. San Tan Valley (including parts of Queen Creek in Pinal County) - up 39% from 181 to 252
  11. Maricopa - up 32% from 77 to 102
  12. Phoenix - up 29% from 357 to 459
  13. Surprise - up 28% from 101 to 129
  14. Gilbert - up 8% from 392 to 424
  15. Cave Creek - unchanged at 56 in both years

Almost making this list is Tolleson up 74% from 30 to 58.

May 28 - A new record has been set this past week - the lowest number of foreclosure notices we have ever seen in Maricopa County for a 30-day average. Just 29 per working day between April 27 and May 26. The previous low was 30 and set in April 2006.

May 27 - Below is the ranking table of the Cromford® Market Index for the single family markets in the largest 17 cities.

This is the first time we have ever seen the city of Phoenix doing worse than any other city during a monthly comparison period. It has not dropped much, from 134.2 to 131.4, and is still comfortably inside the "seller's market" zone. However every other city either improved of just deteriorated by a very tiny amount.

The situations in Fountain Hills and Paradise Valley have improved greatly thanks to a drop in the number of active listings and an uptick in demand measurements.

Avondale is still way out in front thanks to its ridiculously poor supply. We have to go back to 2011 to find a Supply Index reading over 100 in Avondale.

Apart from the places already mentioned Mesa and Goodyear are seeing the strongest percentage improvement over last month.

So what is going on in Phoenix? Well supply is still rising, which is unusual for the time of year, not by a lot but in this respect Phoenix is out of step with most of the other cities in our region.

May 25 - The Census Bureau has finally got its permit database back online so we are able to report the April single family permits for Maricopa and Pinal counties. The total during the month was 1,684, which is only 3% higher than for April 2015. The total year to date after 4 months is 6,120, which is 23% higher than last year, so April presents a much slower growth over last year than we saw during the first quarter. It is still the largest total for April since 2007.

The individual areas rank as follows:

  1. Phoenix - 241
  2. Mesa - 225
  3. Gilbert - 177
  4. Chandler -163
  5. Goodyear - 118
  6. Peoria -113
  7. Buckeye - 108
  8. Unincorporated Pinal County - 106
  9. Unincorporated Maricopa County - 102
  10. Queen Creek - 98

Compared with March, we see growth in Mesa, Goodyear and unincorporated Maricopa County. The other 7 areas declined a little.

May 24 - Good news from the National Association of REALTORS®. REALTORS are getting younger!

The median age of a REALTOR reduced from 57 in 2014 to 53 in 2015, the lowest since 52. This means a lot more young people are joining the real estate industry. Given that the median age of a person in the labor force is 42, we have some way to go before the significant age gap is eliminated. The median experience level also fell from 12 years to 10 years. With 20% of NAR members reporting 1 year or less of experience that is a lot of new blood since 2014.

In the 2014 report 40% of REALTORS were 60 or older. This has dropped to 31% in 2015.

Not so good news is that the median income of NAR members dropped from $45,800 in 2014 to $39,200 in 2015. There is a strong correlation between years of experience and income level.

We have been observing large increases in the number of ARMLS members over the past two months. Today we topped 36,000 entries in the agent database. As recently as March 24, we saw fewer than 35,000. That is an increase of 500 a month. All of the top 20 offices (by number of agents) except 1 saw increases in the number of agents. The highest increases were at:

  1. HomeSmart, Scottsdale (added 6.9% to go from 970 to 1,037 agents)
  2. Realty ONE Group, Goodyear (added 6.7% to go from 254 to 271 agents)
  3. Revelation Real Estate, Chandler (added 6.0% to go from 448 to 475 agents)

Among the smaller offices by agent count, Launch Real Estate, Scottsdale grew 21% from 88 to 107 agents. My Home Group, Tempe grew 12% from 200 to 223 agents and My Home Group, Scottsdale grew 29% from 149 to 192 agents. Show Appeal Realty, Scottsdale grew by 13% from 112 to 127 agents, as did Keller Williams Realty Professional Partners, Goodyear from 87 to 98 agents.

Many other offices grew significantly but the ones mentioned in the paragraph above seem to be recruiting at the fastest rate among those starting with at least 80 agents to begin with.

May 23 - New homes in Maricopa County have been selling even better than in Pinal County, with closed unit volume for the first 4 months of 2016 up an astonishing 41% from the same period last year. The number of closings was 3,787 versus 2,690. Average new home pricing stands at $366,693 across Maricopa County for April, down 5.6% from $388,317 in April 2015. However this is mostly due to a 4.9% fall in the average home size from 2,594 sq. ft. to 2,468 sq. ft.

The busiest ZIP codes were:

  1. Peoria 85383 - 463 at an average of $139.68 per sq. ft.
  2. Gilbert 85298 - 302 at $141.46
  3. Queen Creek 85142 - 283 at $123.12 (Maricopa section only)
  4. Mesa 85212 - 257 at $132.08
  5. Buckeye 85396 - 181 at $134.73
  6. Goodyear 85338 - 164 at $120.16
  7. Chandler 85249 - 147 at $143.26
  8. Buckeye 85326 - 143 at $107.44
  9. Phoenix 85085 - 126 at $152.50
  10. Goodyear 85395 - 109 at $150.27
  11. Laveen 85339 - 108 at $109.66
  12. Chandler 85286 - 106 at $150.54
  13. Mesa 85209 - 77 at $141.24
  14. Mesa 85207 - 76 at $164.06
  15. Phoenix 85041 - 64 at $104.48
  16. Surprise 85379 - 60 at $109.40
  17. Tolleson 85353 - 58 at $106.68
  18. Cave Creek 85331 - 56 at $202.43
  19. Gilbert 85295 - 52 at $137.62
  20. Gilbert 85296 - 51 at $131.64

Among the expensive ZIP codes, the busiest for new home closings were Scottsdale 85255 with 47 at an average of $321.04 per sq. ft. and Scottsdale 85251 with 43 at $335.05 per sq. ft.

May 22 - The new home business has been picking up in Pinal County. During the first 4 months of 2016 there were 578 deeds for newly constructed homes filed by the Pinal County Recorder, up 24% from 466 during the same 4 months of 2015. In 2015 we saw a very slight decline over the same period in 2014.

The busiest ZIP codes were:

  1. San Tan Valley 85140 - 131 at an average of $126.31
  2. Maricopa 85138 - 102 at $94.80
  3. Florence 85132 - 86 at $100.27
  4. San Tan Valley 85143 - 73 at $105.64
  5. Queen Creek 85142 - 48 at $110.35
  6. Oracle 85623 - 35 at $191.20
  7. Eloy 85131 - 32 at $151.07
  8. Tucson 85739 - 23 at $144.72
  9. Red Rock 85145 - 17 at $89.73
  10. Casa Grande 85122 - 9 at $93.07
  11. Casa Grande 85194 - 9 at $135.70
  12. Apache Junction 85119 - 8 at $147.45
  13. Apache Junction 85120 - 3 at $110.94
  14. Gold Canyon 85118 - 2 at $257.13

The overall average price per sq. ft. was $118.29 so far this year. This is actually down slightly from last year when we saw $119.23. Last year the average home was 2,129 sq ft. This has dropped slightly to 2,111 sq. ft. As well as being mostly cheaper than in Maricopa County, new homes are considerably smaller on average in Pinal. Red Rock, Casa Grande and Maricopa offer the cheapest price per sq. ft.

The pricing for 85140, 85739, 85131 and 85623 is influenced to the upside by a strong showing by 55+ age restricted or age targeted communities. The homes in these areas tend to be much more expensive than similar homes outside of the 55+ subdivisions, because of all the additional community facilities provided by the developer.

May 21 - I recommend the appreciation chart for major cities based on the annual average sales price per square foot. It is a trailing indicator but gives us a very good impression of how prices have been behaving over the past 24 months. At the moment we see the following ranking for the largest 17 cities:

  1. Glendale +9.1%
  2. Avondale +8.4%
  3. Tempe +8.2%
  4. Buckeye +8.2%
  5. Phoenix +7.7%
  6. Maricopa +6.9%
  7. Queen Creek +6.9%
  8. Mesa +6.3%
  9. Surprise +5.9%
  10. Chandler +5.6%
  11. Peoria +5.5%
  12. Gilbert +4.6%
  13. Goodyear +4.5%
  14. Fountain Hills +2.1%
  15. Cave Creek +1.5%
  16. Scottsdale +1.2%
  17. Paradise Valley -1.4%

Fountain Hills and Cave Creek have both improved over the last few weeks but were weak before that. Paradise Valley peaked at +9.3% last August but has seen a worsening trend since then. Scottsdale has been very steady at 1% to 2%, but this hides higher appreciation in the south and negative appreciation in the north. Everywhere else is showing strong and steady gains in pricing, particularly the central areas and inner west valley.

May 20 - Although most luxury markets in Greater Phoenix, and across the USA are not being very helpful to sellers at the moment, there is one major exception. That would be Arcadia - the area south of Camelback and split between 85018 and 85251. We do not count locations south of the canal.

Sales of homes over $2 million were up 180% during the 3 month period February through April 2016, compared to a year earlier. That is a rise from 5 to 14 homes, with an average sales price per square foot up from $520.75 to $581.75 (up almost 12%). There were even two homes that closed for more than $1000 per sq. ft. and sold for $11.2 million and $7.2 million.

The overall average for Arcadia has reached $413.87 per sq. ft. which is significantly above the level of Paradise Valley, which fell to $336.11 during the same period. There were also 5 newly constructed homes that closed during the last 3 months, averaging $532.21 per sq. ft.

No wonder agents are using their imagination and attempting to extend the boundaries of Arcadia to the south and west.

May 19 - Taking another look at the single family markets in the 17 largest cities we see the following changes in the Cromford® Market Index over the past month:

Improving markets dominate with 14 of the 17, but Phoenix is one of the markets that has deteriorated slightly, and as it represents a quarter of the total market, we should watch this trend carefully.

Fountain Hills and Paradise Valley are starting to recover from their recent slump while Scottsdale is clawing its way back toward 100 again. The Southwest (Avondale. Goodyear and Buckeye) are still improving nicely for sellers.

May 18 - Our last analysis by area will look at the single family market in Pinal County, comparing pricing between Feb and Apr 2016 with one year earlier.

  • Homes under $250,000 - average rise of 7.7% in $ per sq. ft.
  • Homes between $250,000 and $500,000 - average rise of 4.2% in $ per sq. ft.
  • Homes over $500,000 - average fall of 5.5% in $ per sq. ft.

The fastest appreciation is to be found in:

  1. Florence 85132 +17.1%
  2. Maricopa 85138 +11.8%
  3. Queen Creek 85142 +11.5%
  4. Maricopa 85139 +9.3%
  5. San Tan Valley 85140 +8.8%
  6. Apache Junction 85120 +8.7%

The weakest places for appreciation are:

  1. Gold Canyon 85118 -5.8%
  2. Coolidge 85128 +1.3%
  3. Apache Junction 85119 +1.4%
  4. Casa Grande 85122 +1.7%

May 17 - Turning our attention to the single family market in the Northeast Valley, we see lower appreciation rates between Feb - Apr 2015 and Feb - Apr 2016. This is because a much larger share of the northeastern market is dominated by luxury homes that are in plentiful supply.

  • Homes under $500,000 - average rise of 5.8% in $ per sq. ft.
  • Homes between $500,000 and $1,000,000 - average rise of 0.0% in $ per sq. ft.
  • Homes over $1,000,000 - average fall of 2.2% in $ per sq. ft.

The fastest rising prices are to be found in:

  1. Scottsdale 85257 +13.0%
  2. Scottsdale 85254 +10.4%
  3. Carefree 85377 +7.8%
  4. Fountain Hills 85268 +7.4%
  5. Scottsdale 852517 +5.3%

The weakest places for appreciation are:

  1. Scottsdale 85266 -13.1%
  2. Rio Verde 85263 -4.2%
  3. Scottsdale 85260 -4.1%
  4. Paradise Valley 85253 -4.1%
  5. Scottsdale 85255 -1.3%
  6. Cave Creek 85331 -0.5%
  7. Scottsdale 85250 +0.2%
  8. Scottsdale 85259 +0.5%
  9. Scottsdale 85258 +1.8%
  10. Scottsdale 85262 +2.0%

May 16 - Today we are looking at Phoenix and the North Valley to see what happened to single family prices between Feb - Apr 2015 and Feb - Apr 2016.

  • Homes under $250,000 - average rise of 10.6% in $ per sq. ft.
  • Homes between $250,000 and $500,000 - average rise of 3.9% in $ per sq. ft.
  • Homes over $500,000 - average rise of 1.6% in $ per sq. ft.

The small rise in pricing for homes over $500,000 is a better performance than the outer areas of the valley..

The fastest rising prices are to be found in a long list of ZIP codes, mostly in the center, west and south of Phoenix:

  1. Phoenix 85004 +55.0% (very volatile due to small sample and huge range of price values)
  2. Phoenix 85040 +27.1%
  3. Phoenix 85031 +25.1%
  4. Phoenix 85007 +20.0%
  5. Phoenix 85017 +18.9%
  6. Phoenix 85033 +18.5%
  7. Phoenix 85009 +18.0%
  8. Phoenix 85020 +16.5%
  9. Phoenix 85006 +16.4%
  10. Phoenix 85037 +15.9%
  11. Phoenix 85035 +15.3%
  12. Phoenix 85042 +15.2%
  13. Phoenix 85014 +15.0%
  14. Phoenix 85015 +14.8%
  15. Phoenix 85019 +14.8%
  16. Phoenix 85013 +14.7%
  17. Phoenix 85029 +14.3%
  18. Phoenix 85008 +14.1%
  19. Phoenix 85007 +13.9%
  20. Phoenix 85043 +12.7%
  21. Phoenix 85027 +12.1%
  22. Phoenix 85051 +11.7%
  23. Phoenix 85041 +11.1%
  24. Phoenix 85022 +10.0%

The weakest places for appreciation are:

  1. Phoenix 85016 -10.6%
  2. Phoenix 85021 -1.3%
  3. Phoenix 85028 -0.6%
  4. Phoenix 85054 +1.3%

May 15 - Turning our attention to the West Valley single family market, we see even more contrast between the low and high end of the market.

  • Homes under $250,000 - average rise of 10.4% in $ per sq. ft. between Feb - Apr 2015 and Feb - Apr 2016
  • Homes between $250,000 and $500,000 - average rise of 1.2% in $ per sq. ft.
  • Homes over $500,000 - average fall of 5.0% in $ per sq. ft.

The fastest rising prices are to be found in:

  1. Glendale 85301 +22.5%
  2. Youngtown 85363 +18.8%
  3. Tolleson 85353 +15.7%
  4. Sun City 85351 +15.3%
  5. Glendale 85303 +14.1%
  6. Glendale 85302 +12.1%
  7. Buckeye 85326 +11.6%
  8. Peoria 85345 +11.3%
  9. Laveen 85339 +11.2%

The weakest places for appreciation are:

  1. Glendale 85310 -1.1%
  2. Peoria 85381 +0.9%
  3. Peoria 85383 +3.2%
  4. Surprise 85374 +3.8%

All other areas are over 5%

May 14 - Today we are taking a closer look at the pricing patterns in the Southeast Valley. Comparing price per sq. ft., during the last 3 months (Feb thru Apr) with the same months in 2015, we see the following for single family homes:

  • Homes under $250,000 - average rise of 9.0% in $ per sq. ft.
  • Homes between $250,000 and $500,000 - average rise of 3.1% in $ per sq. ft.
  • Homes over $500,000 - average fall of 3.3% in $ per sq. ft.

Clearly this means we are seeing better pricing in the least expensive areas while prices decline in the more luxurious locations. This is confirmed by the an analysis by the fastest appreciating ZIP codes:

  1. Tempe 85281 +16.3%
  2. Mesa 85204 +15.2%
  3. Chandler 85224 +13.4%
  4. Mesa 85208 + 12.8%
  5. Tempe 85283 +12.1%
  6. Mesa 85201 +11.6%
  7. Mesa 85210 +11.5%

The weakest appreciation is in

  1. Mesa 85207 -2.3%
  2. Phoenix 85045 -1.7%
  3. Chandler 85286 +1.0%
  4. Phoenix 85048 +1.6%
  5. Mesa 85215 +1.6%

May 13 - During the first 4 months of this year we saw 32,177 sales recorded in Maricopa County with an Affidavit of Value. 99.3% of these sales were to people giving a USA address. Only 212 buyers (0.7%) gave a foreign address.

In 2015, the equivalent number was 29,019, so sales are up by almost 11%. However sales to people with foreign addresses are down by 45%. Canadians represent 77% of all foreign buyers in 2016, down from 93% in the first 4 months of 2015. Foreign buyers excluding Canadians have almost doubled from 25 to 48, but this is still a tiny number (0.15%) of the overall market.

Chinese buyers have grown from 6 to 10 units, but these units are very low priced - averaging just $127,260 per home. We can see no sign of the Chinese buyers of luxury properties that have been active in California and other coastal areas. The few Chinese buyers in Phoenix are mostly investing in rental condominiums.

A few foreign buyers have purchased luxury homes. By far the most expensive property going to a foreign-based buyer (a $6 million home in Arcadia) was bought by a company registered in Guadalajara, Mexico.

We also see lone buyers of luxury homes over $1 million from Switzerland and Spain. That is pretty much it. With the Canadians selling more homes than they are buying, our local market is almost completely dominated by domestic buyers.

May 12 - This week the Cromford® Market Index table for the single family markets in the 17 largest cities is looking better for sellers everywhere except Cave Creek:

I admit that the change in Phoenix is also negative for sellers, but a change of less than 2% is hardly statistically significant. The West Valley is still improving fastest with most of the big movers located west of I-17:

  1. Buckeye +17%
  2. Peoria +8%
  3. Avondale +7%
  4. Goodyear +7%

Sellers in Paradise Valley and Fountain Hills get some relief at last from the discouraging trends of the past several month, and Queen Creek continues its improving trend.

May 11 - We often get asked about the total number of single family homes and condo / townhouse properties in our area. Here are the total numbers of parcels with those "use types" reported by the Maricopa County assessor in each tax year. Note that the numbers established about 15 months prior to the corresponding calendar year.

Tax Year Active Single Family Parcels (Use Types 01, 86, 87) Active Condo / Townhouse Parcels (Use Types 07, 85)
2000 705545 132013
2001 715460 132788
2002 746308 135760
2003 776881 138549
2004 833618 142298
2005 842257 138586
2006 914525 152930
2007 952418 172010
2008 979543 180194
2009 994907 189945
2010 1003253 192784
2011 1009549 193620
2012 1010255 194486
2013 1014658 194873
2014 1023336 193863
2015 1032564 194011
2016 1041363 194139
2017 1049867 195116

The number of parcels is not quite the same as the number of properties, since some homes sit on multiple parcels and some parcels contain multiple homes.

You can see how little the inventory of homes has grown since tax year 2010 (measured October 2008), especially for condos & townhomes.

May 10 - The Black Knight Financial Service Mortgage Monitor report for March shows a dramatic fall in delinquency over the past 2 months. There is something of a seasonal pattern in these numbers and January to March is the time of year when the delinquency rate tumbles almost every year. However it is significant that the total delinquency rate for the USA is now at pre-housing crisis levels and the 30-day delinquency rate is the lowest in well over 15 years.

For Arizona we have 2.9% of first home loans delinquent and 0.5% in foreclosure, making 3.4% of loans non-current. The long term average is 5%. Arizona ranks 43 out 51 states (including DC) for non-current loans and 49 out of 51 for homes in foreclosure.

For those who like working foreclosures, Arizona is not a very productive location any more. The best spots would be:

  1. New Jersey 4.3%
  2. New York 3.7%
  3. Hawaii 3.5%
  4. Maine 2.7%
  5. Florida 2.6%
  6. New Mexico 2.4%
  7. Delaware 2.3%
  8. District of Columbia 2.2%
  9. Rhode Island 2.2%
  10. Connecticut 2.1%

May 9 - The detailed single family permit counts have finally been released for March by the US Census Bureau. The total for Maricopa