Daily Observations from The Cromford Report
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.
|City||Annual Change in Annual Average $/SF May 2015||Annual Change in Annual Average $/SF May 2016||Annual Change in Annual Average $/SF May 2017||Current Trend in Appreciation Rate|
|Sun City West||4.5%||6.6%||7.9%||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:
|Rank||City||Annual Median Sales Price May 2016||Annual Median Sales Price May 2017||Change %|
|9||Sun City West||$205,000||$225,000||9.8%|
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.
|Rank||Dual Agent Name||Office||Closed Sides||Listing Agent||Selling Agent||Market Share||Dollar Revenue for Listings Closed (12 Months ending May 10, 2017)|
|1||Jacqueline Moore||OpenDoor Homes||1,383||1,355||28||0.581%||$307M|
|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|
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 Date||Peak Quarterly Average $/SF||Current Quarterly Average $/SF||Increase Required to Match Peak||Increase 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 Date||Peak Quarterly Average $/SF||Current Quarterly Average $/SF||Increase Required to Match Peak||Increase 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:
- Phoenix - 483 units
- Chandler - 285 units
- Mesa - 25 units
- Scottsdale - 10 units
- Paradise Valley - 8 units
- Unincorporated Pinal County - 6 units
- Tempe - 6 units
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:
|Rank||Dual Agent Name||Office||Closed Listings||Dollar 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|
|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|
|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.
|Rank||Selling Agent Name||Office||Closed Listings||Dollar 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|
|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:
- Mesa -249
- Phoenix - 230
- Gilbert - 207
- Peoria - 207
- Buckeye - 182
- Unincorporated Pinal County - 150
- Maricopa - 135
- Goodyear - 126
- Queen Creek - 110
- 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 plus||1Q 2015||1Q 2016||1Q 2017||YoY 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
- 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:
- Seattle 1.91%
- San Francisco 1.17%
- Dallas 1.07%
- San Diego 0.98%
- Portland 0.76%
- Charlotte 0.48%
- Boston 0.40%
- Atlanta 0.39%
- Los Angeles 0.39%
- Las Vegas 0.39%
- Denver 0.38%
- Phoenix 0.38%
- Detroit 0.28%
- Washington DC 0.22%
- Chicago 0.20%
- Minneapolis 0.13%
- Miami 0.04%
- New York -0.03%
- Cleveland -0.30%
- 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:
- Seattle 12.2%
- Portland 9.7%
- Dallas 8.8% (up 1 place)
- Denver 8.5% (down 1 place)
- Boston 7.6% (up 1 place)
- Tampa 6.9% (down 1 place)
- Miami 6.7%
- San Diego 6.5% (up 6 places)
- San Francisco 6.4% (down 1 place)
- Las Vegas 6.3% (down 1 place)
- Chicago 6.2% (up 2 places)
- Detroit 6.2% (down 2 places)
- Charlotte 6.1% (down 2 places)
- Minneapolis 5.9% (up 1 place)
- Atlanta 5.6% (down 2 places)
- Phoenix 5.3% (up 1 place)
- Los Angeles 5.1% (down 1 place)
- Cleveland 4.5% (up 1 place)
- Washington DC 4.1% (down 1 place)
- 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:
- Portland 31.4%
- Seattle 31.3%
- Denver 31.0%
- San Francisco 28.0%
- Dallas 27.7%
- Miami 23.5%
- Tampa 23.0%
- Las Vegas 19.1%
- Los Angeles 18.6%
- Atlanta 18.6%
- San Diego 18.4%
- Detroit 16.6%
- Boston 16.2%
- Charlotte 15.7%
- Phoenix 14.8%
- Minneapolis 12.2%
- Chicago 11.4%
- Cleveland 8.7%
- New York 7.7%
- 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.
- Carefree 85377 - 51.4%
- Rio Verde 85263 - 51.9%
- Paradise Valley 85253 - 52.2%
- Scottsdale 85262 - 53.1%
- Wickenburg 85390 - 55.4%
- Scottsdale 85266 - 56.5%
- Morristown 85342 - 56.6%
- Casa Grande 85194 - 59.8%
- Congress 85332 - 60.8%
- Phoenix 85003 - 60.8%
- Gold Canyon 85118 - 60.9%
- Phoenix 85054 - 61.2%
- Scottsdale 85255 - 61.3%
- Tonopah 85354 63.2%
- Scottsdale 85259 - 63.8%
- Fountain Hills 85268 - 64.3%
- Superior 85173 - 64.3%
- Eloy 85131 - 66.6%
- Apache Junction 85119 - 65.7%
- 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.
- Phoenix 85027 - 85.1%
- El Mirage 85335 - 84.8%
- Sun City 85351 - 84.7%
- Sun City West - 84.2%
- Chandler 85224 - 84.2%
- Peoria 85345 - 84.2%
- Chandler 85225 - 83.6%
- Mesa 85204 - 83.5%
- Mesa 85201 - 83.4%
- Peoria 85382 - 82.6%
- Tempe 85282 - 82.5%
- Sun City 85373 - 82.5%
- Mesa 85202 - 82.2%
- Tempe 85283 - 82.1%
- Avondale 85392 - 82.0%
- Chandler 85226 - 81.6%
- Gilbert 85233 - 81.6%
- Mesa 85210 - 81.5%
- Glendale 85302 - 81.5%
- 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)
- Chandler 85286 - 94.1%
- Phoenix 85013 - 66.7%
- Scottsdale 85254 - 54.3%
- Phoenix 85014 - 50.0%
- Scottsdale 85250 - 50.0%
- Gilbert 85296 - 50.0%
- Scottsdale 85258 - 48.7%
- Scottsdale 85255 - 47.7%
- Phoenix 85028 - 47.6%
- Paradise Valley 85253 - 47.2%
- Phoenix 85018 - 47.1%
- Tempe 85284 - 47.1%
- Gilbert 85298 - 46.9%
- Scottsdale 85259 - 46.5%
- Scottsdale 85262 - 45.9%
- Scottsdale 85260 - 45.6%
- Scottsdale 85251 - 44.7%
- Phoenix 85021 - 42.9%
- Phoenix 85048 - 42.9%
- 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;
- Tempe - up 10%
- Queen Creek - up 7%
- Chandler - up 6%
- Mesa - up 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):
- Youngtown 1.0
- El Mirage 1.2
- Tolleson 1.4
- Avondale 1.7
- Tempe 1.8
- Chandler 1.9
- Glendale 1.9
- Surprise 1.9
- Coolidge 2.0
- Sun Lakes 2.0
- Mesa 2.1
- Gilbert 2.1
- Maricopa 2.1
- Arizona City 2.1
- Sun City 2.2
- Florence 2.3
- Apache Junction 2.3
- Casa Grande 2.3
- Sun City West 2.3
- Tonopah 2.3
- Queen Creek 2.4
- Laveen 2.4
- Waddell 2.4
- Phoenix 2.5
- New River 2.5
- Peoria 2.7
- Goodyear 2.7
- Buckeye 2.7
- Wittmann 2.7
- Anthem 2.9
- Eloy 3.1
- Gold Canyon 3.7
- Litchfield Park 4.3
- Cave Creek 4.5
- Scottsdale 5.5
- Rio Verde 6.1
- Fountain Hills 6.2
- Paradise Valley 10.4
- Wickenburg 14.7
- 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 2017||Q1 New Listings 2016||Change|
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:
|City||Q1 Sales 2017||Q1 Sales 2016||Change|
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:
- Mesa +8.4%
- Sun Lakes +6.8%
- Tempe +6.2%
- Queen Creek +6.2%
- Gilbert +6.1%
- Chandler +4.8%
- 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:
|Area||Active Listings (excluding UCB & CCBS) April 1, 2017||Active Listings (excluding UCB & CCBS) April 1, 2016||Change|
|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
|City||Q1 New Listings 2017||Q1 New Listings 2016||Change|
|San Tan Valley||930||996||-7%|
|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:
|City||Q1 Sales 2017||Q1 Sales 2016||Change|
|San Tan Valley||632||584||+8%|
|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:
- Arizona City +15.9%
- Coolidge +10.2%
- Florence +9.7%
- Maricopa +9.7%
- Casa Grande +8.4%
- San Tan Valley +7.3%
- Apache Junction +6.8%
- Eloy +5.5%.
- 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:
- Phoenix 85012 - up 26.5% to $222.87
- Phoenix 85051 - up 19.0% to $106.40
- Casa Grande 85194 - up 18.8% to $117.90
- Phoenix 85040 - up 18.7% to $101.88
- Phoenix 85009 - up 18.2% to $105.29
- Phoenix 85016 - up 16.5% to $231.50
- Arizona City 85123 - up 16.1% to $80.24
- Phoenix 85035 - up 16.0% to $104.58
- Wickenburg 85390 - up 15.8% to $152.69
- Mesa 85201 - up 15.1% to $126.69
- Glendale 85307 - up 15.1% to $113.39
- Mesa 85213 - up 14.6% to $138.77
- Surprise 85387 - up 14.6% to $150.95
- Avondale 85323 - up 13.7% to $105.13
- Peoria 85345 - up 13.6% to $120.04
- Glendale 85306 - up 13.5% to $128.80
- Mesa 85202 - up 13.5% to $134.10
- Phoenix 85028 - up 13.1% to $190.71
- Florence 85132 - up 12.3% to $89.35
- 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:
- Carefree 85377 - down 9.7% to $217.25
- Scottsdale 85262 - down 7.9% to $252.85
- New River 85087 - down 4.1% to $134.78
- Tonopah 85354 - down 3.6% to $77.11
- Phoenix 85004 - down 2.6% to $278.54
- Waddell 85355 - down 0.5% to $110.44
- Scottsdale 85259 - down 0.2% to $223.69
- Phoenix 85042 - up 0.1% to $119.81
- Phoenix 85085 - up 0.2% to $139.82
- 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:
- Wittmann 85361 - up 199%
- Eloy 85131 - up 104%
- Youngtown 85363 - up 93%
- Surprise 85378 - up 88%
- Phoenix 85031 - up 84%
- Phoenix 85012 - up 76%
- Glendale 85302 - up 74%
- New River 85087 - up 71%
- Glendale 85307 - up 66%
- Avondale 85392 - up 65%
- Phoenix 85085 - up 60%
- Mesa 85201 - up 58%
- Peoria 85383 - up 55%
- Avondale 85323 - up 54%
- Mesa 85202 - up 53%
- Phoenix 85040 - up 52%
- Waddell 85355 - up 52%
- Mesa 85215 - up 51%
- Phoenix 85028 - up 47%
- 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:
- Mesa 85203 - down 19%
- Chandler 85226 - down 9%
- Phoenix 85053 - down 7%
- Phoenix 85013 - down 6%
- Phoenix 85042 - down 5%
- Fountain Hills 85268 - down 4%
- Cave Creek 85331 - down 4%
- Queen Creek 85142 - down 2%
- Phoenix 85004 - down 2%
- 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:
- Scottsdale 85257 - up 36%
- Scottsdale 85251 - up 33%
- Scottsdale 85260 - up 29%
- Rio Verde 85263 - up 29%
- Carefree 85377 - up 28%
- Scottsdale 85258 - up 27%
- Scottsdale 85259 - up 25%
- Phoenix 85016 - up 24%
- Phoenix 85054 - up 20%
- Scottsdale 85255 - up 20%
- Scottsdale 85262 - up 13%
- Scottsdale 85250 - up 11%
- Paradise Valley - up 11%
- Scottsdale 85266 - up 6%
- Scottsdale 85254 - up 6%
- Phoenix 85018 - up 5%
- Fountain Hills 85268 - down 4%
- 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 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:
|Period||Dollar Volume 2016||Dollar Volume 2017||Change %|
|Jan + Feb||$394,952,754||$566,954,928||43.6%|
This is far in excess of the growth in single-family homes, which was:
|Period||Dollar Volume 2016||Dollar Volume 2017||Change %|
|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:
- San Diego 0.80%
- Las Vegas 0.62%
- Seattle 0.59%
- Denver 0.48%
- Boston 0.40%
- Charlotte 0.39%
- Los Angeles 0.38%
- Washington DC 0.30%
- New York 0.29%
- Miami 0.26%
- Dallas 0.25%
- Chicago 0.17%
- Portland 0.13%
- Phoenix 0.01%
- Tampa -0.01%
- Atlanta -0.24%
- Detroit -0.40%
- San Francisco -0.41%
- Cleveland -0.48%
- 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:
- Seattle 11.3%
- Portland 9.7%
- Denver 9.2%
- Dallas 8.2%
- Tampa 8.1%
- Boston 7.0%
- Miami 6.7%
- San Francisco 6.3%
- Las Vegas 6.2%
- Detroit 6.2%
- Charlotte 6.0%
- Atlanta 5.9%
- Chicago 5.8%
- San Diego 5.7%
- Minneapolis 5.4%
- Los Angeles 5.3%
- Phoenix 5.1%
- Washington DC 3.9%
- Cleveland 3.9%
- 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:
- Portland 31.4%
- Seattle 31.3%
- Denver 30.5%
- Dallas 27.7%
- San Francisco 26.8%
- Miami 23.3%
- Tampa 22.7%
- Las Vegas 19.1%
- San Diego 18.6%
- Los Angeles 18.6%
- Atlanta 17.5%
- Detroit 16.6%
- Boston 16.2%
- Charlotte 15.7%
- Phoenix 14.2%
- Minneapolis 12.2%
- Chicago 10.3%
- Cleveland 8.7%
- New York 7.7%
- 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.
|Rank||Postal City||Annual Sales Rate 2017||Annual Sales Rate 2016||Change|
|9||San Tan Valley||4,043||3,434||17.7%|
|17||Sun City West||1,655||1,513||9.4%|
|31||Tucson (in Pinal)||468||449||4.2%|
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.
- Carefree 85377 - 547 days
- Scottsdale 85262 - 541 days
- Paradise Valley - 443 days
- Rio Verde 85263 - 408 days
- Wickenburg 85390 - 378 days
- Scottsdale 85266 - 315 days
- Scottsdale 85255 - 279 days
- Gold Canyon 85118 - 264 days
- Phoenix 85004 - 259 days
- Morristown 85342 - 253 days
Here is the current state of play with respect to the 3 month moving average $/SF in these locations:
- Carefree 85377 - $213.70 versus $247.99 - down 13.8%
- Scottsdale 85262 - $254.60 versus $268.62 - down 5.2%
- Paradise Valley - $385.06 versus $342.05 - up 12.6%
- Rio Verde 85263 - $166.16 versus $167.72 - down 0.9%
- Wickenburg 85390 - $154.21 versus $132.70 - up 16.2%
- Scottsdale 85266 - $236.85 versus $217.00 - up 9.1%
- Scottsdale 85255 - $275.07 versus $288.49 - down 4.7%
- Gold Canyon 85118 - $154.60 versus $163.40 - down 5.4%
- Phoenix 85004 - $275.05 versus $267.30 - up 2.9%
- 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).
- El Mirage 85335 - 24 days
- Mesa 85210 - 28 days
- Chandler 85224 - 32 days
- Mesa 85202 - 32 days
- Youngtown 85363 - 33 days
- Chandler 85225 - 34 days
- Phoenix 85027 - 36 days
- Glendale 85302 - 37 days
- Tempe 85282 - 39 days
- 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
- El Mirage 85335 - $106.77 versus $94.69 - up 12.8%
- Mesa 85210 - $124.52 versus $119.77 - up 4.0%
- Chandler 85224 - $149.57 versus $144.40 - up 3.6%
- Mesa 85202 - $132.61 versus $119.57 - up 10.9%
- Youngtown 85363 - $96.81 versus $89.71 - up 7.9%
- Chandler 85225 - $144.51 versus $120.25 - up 20.2%
- Phoenix 85027 - $137.90 versus $125.04 - up 10.3%
- Glendale 85302 - $110.78 versus $99.96 - up 10.8%
- Tempe 85282 - $145.85 versus $137.11 - up 6.4%
- 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.
|Location||Dwelling Types||Days of Inventory March 2016||Days of Inventory March 2017||Change|
|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.
|Location||Dwelling Types||Days of Inventory March 2016||Days of Inventory March 2017||Change|
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.
- Southeast Valley - 81%
- West Valley - 80%
- Central and North Valley - 77%
- Pinal County - 75%
- Northeast Valley - 65%
Ignoring the tiniest locations, the most significant cities with very high success rates are:
- El Mirage - 91%
- Sun City - 88%
- Youngtown - 86%
- Avondale - 85%
- Sun City West 84%
The cities with the lowest success rates are:
- Carefree - 46%
- Paradise Valley - 47%
- Rio Verde - 52%
- Wickenburg - 54%
- 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:
- $100K to $150K - 87% (86% last year)
- $150K to $200K - 86% (87% last year)
- $200K to $300K - 84% (82% last year)
- $50K to $100K - 80% (82% last year)
- $300K to $500K - 73% (74% last year)
- Under $50K - 68% (79% last year)
- $500K to $1M - 63% (61% last year)
- $1M to $2M - 53% (48% last year)
- 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:
- Mississippi - 11.3% of loans non-current
- Louisiana - 9.8% of loans non-current
- Alabama - 7.9% of loans non-current
- 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:
|Rank||City||Current % List (Year to Mar 2017)||Long Term Average % List (Since 2001)||Difference|
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.
|Area||Average $/SF Dec 2015 - Feb 2017||Average $/SF Dec 2016 - Feb 2017||% Change|
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:
- El Mirage 85335 - 234 (up 16%)
- Mesa 85202 - 188 (up 45%)
- Mesa 85210 - 181 (up 70%)
- Glendale 85302 - 169 (up 56%)
- Phoenix 85027 - 160 (up 15%)
- Glendale 85306 - 153 (up 33%)
- Mesa 85201 - 145 (up 34%)
- Peoria 85345 - 143 (up 23%)
- Phoenix 85024 - 135 (up 149%)
- 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:
- Scottsdale 85266 - 14
- Scottsdale 85262 - 16
- Phoenix 85004 - 16
- Carefree 85377 - 16
- Wickenburg 85390 - 18
- Paradise Valley - 18
- Rio Verde 85263 - 20
- Scottsdale 85255 - 23
- Fountain Hills 85268 - 24
- Gold Canyon 85118 - 29
- Phoenix 85045 - 33
- Scottsdale 85259 - 33
- Apache Junction 85119 - 35
- Phoenix 85016 - 36
- 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:
- 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
- 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
- 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
- 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
- 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
- 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:
- Casa Grande
- Litchfield Park
- Sun City
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 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:
- Tampa 1.13%
- Miami 0.33%
- Seattle 0.59%
- Boston 0.56%
- Chicago 0.55%
- Washington 0.52%
- Cleveland 0.36%
- New York 0.35%
- Portland 0.30%
- Las Vegas 0.26%
- Los Angeles 0.25%
- San Diego 0.22%
- Dallas 0.20%
- Phoenix 0.18%
- Atlanta 0.16%
- San Francisco 0.14%
- Denver 0.11%
- Charlotte 0.08%
- Minneapolis -0.10%
- 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:
- Seattle 10.8%
- Portland 10.0%
- Denver 8.9%
- Tampa 8.4%
- Dallas 8.1%
- Miami 6.8%
- Boston 6.3%
- Atlanta 6.3%
- Detroit 6.2%
- Las Vegas 5.8%
- Minneapolis 5.7%
- San Francisco 5.7%
- Charlotte 5.6%
- San Diego 5.4%
- Los Angeles 5.4%
- Phoenix 4.9%
- Chicago 4.9%
- Cleveland 4.4%
- Washington 4.2%
- 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:
- Phoenix 85009 - up 73%
- Phoenix 85004 - up 45%
- Scottsdale 85250 - up 32%
- Phoenix 85035 - up 32%
- Fountain Hills - up 30%
- Phoenix 85007 - up 27%
- Mesa 85212 - up 25%
- Scottsdale 85266 - up 23%
- Wittmann 85361 - up 22%
- Phoenix 85045 - up 21%
- Sun City West 85375 - up 21%
- Phoenix 85048 - up 21%
- Rio Verde 85263 - up 20%
- Phoenix 85053 - up 20%
- Gilbert 85297 - up 19%
- Tempe 85284 - up 19%
- Phoenix 85006 - up 19%
- Phoenix 85003 - up 18%
- Phoenix 85050 - up 18%
- 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:
- Youngtown 85363 - down 48%
- Phoenix 85031 - down 30%
- Glendale 85306 - down 29%
- Casa Grande 85122 - down 29%
- Surprise 85378 - down 27%
- Phoenix 85017 - down 25%
- Glendale 85302 - down 24%
- Glendale 85307 - down 24%
- Superior 85173 - down 24%
- Glendale 85304 - down 22%
- Gilbert 85296 - down 21%
- Waddell 85355 - down 21%
- Phoenix 85040 - down 20%
- El Mirage 85335 - down 19%
- Glendale 85303 - down 18%
- Surprise 95379 - down 16%
- Apache Junction - down 16%
- Tempe 85283 - down 15%
- Maricopa 85138 - down 14%
- 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 Range||Days of Inventory Feb 24, 2016||Days of Inventory Feb 24, 2017||Change|
|$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%|
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:
- New York
- West Virginia
- 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:
- Utah 2.03%
- Nevada 1.95%
- Idaho 1.83%
- Florida 1.82%
- Washington 1.78%
- Oregon 1.71%
- Colorado 1.68%
- Arizona 1.66%
- Washington DC 1.61%
- Texas 1.58%
Over the longer term since April 2010, the top ten look like this:
- Washington DC 13.2%
- North Dakota 12.7%
- Texas 10.8%
- Utah 10.4%
- Colorado 10.2%
- Florida 9.6%
- Nevada 8.9%
- Arizona 8.4%
- Washington 8.4%
- 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:
- Gold Canyon - up 85% from 33 to 61
- Wittmann - up 85% from 13 to 24
- New River - up 82% from 17 to 31
- Waddell - up 69% from 16 to 27
- Carefree - up 55% from 11 to 17
- Tonopah - up 54% from 13 to 20
- Eloy - up 42% from 12 to 17
- Sun City West - up 41% from 107 to 151
- Youngtown - up 39% from 13 to 18
- 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:
- Fountain Hills - down 31% from 113 to 78
- Rio Verde - down 29% from 21 to 15
- Tolleson - down 26% from 70 to 52
- Paradise Valley - down 16% from 55 to 46
- Laveen - down 6% from 115 to 108
- Gilbert - down 5% from 529 to 500
- Chandler - down 5% from 497 to 474
- Coolidge - down 5% from 22 to 21
- Anthem - down 1% from 67 to 66
- 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 Range||Under Contract Feb 17, 2016||Under Contract Feb 17, 2017||Change %|
|$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%|
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:
- Coolidge 41.0%
- Wittmann 32.5%
- Florence 23.1%
- Wickenburg 21.5%
- Gold Canyon 18.5%
- Laveen 16.3%
- Buckeye 13.6%
- Chandler 13.2%
- Casa Grande 13.0%
- Maricopa 12.8%
- Queen Creek 11.5%
- Mesa 9.6%
- Apache Junction 9.4%
- Sun City 9.1%
- Goodyear 8.8%
- Gilbert 8.4%
- Cave Creek 8.0%
- Sun City West 7.9%
- Tonopah 7.9%
- Sun Lakes 7.4%
- Waddell 7.2%
- Tempe 6.6%
- Eloy 6.6%
- Peoria 6.3%
- Youngtown 5.2%
- Scottsdale 5.0%
- Surprise 4.5%
- Rio Verde 4.5%
- Phoenix 4.3%
- Anthem 4.2%
- Avondale 2.5%
- Tolleson 2.5%
- Litchfield Park 2.4%
- Glendale 1.8%
- Fountain Hills -0.6%
- Arizona City -3.0%
- El Mirage -4.2%
- Paradise Valley -9.5%
- Carefree -10.0%
- 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:
- Tampa 0.79%
- Denver 0.56%
- Miami 0.49%
- Boston 0.44%
- New York 0.40%
- San Diego 0.34%
- Phoenix 0.32%
- Las Vegas 0.31%
- Charlotte 0.27%
- Seattle 0.24%
- Washington 0.21%
- Dallas 0.17%
- Portland 0.16%
- Los Angeles 0.15%
- Minneapolis 0.11%
- Atlanta 0.02%
- Cleveland 0.00%
- Detroit -0.05%
- San Francisco -0.06%
- Chicago -0.82%
Phoenix comfortably beat the national average of 0.24%.
For the year over year changes the table looks like this:
- Seattle 10.4%
- Portland 10.1%
- Denver 8.7%
- Tampa 8.1%
- Dallas 8.1%
- Detroit 6.6%
- Miami 6.1%
- Atlanta 6.1%
- Las Vegas 6.0%
- Charlotte 5.9%
- San Diego 5.8%
- Los Angeles 5.5%
- Minneapolis 5.5%
- Boston 5.5%
- San Francisco 5.3%
- Phoenix 5.2%
- Chicago 4.0%
- Cleveland 3.8%
- Washington 3.7%
- 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:
- Gila Bend - 0.0
- Aguila - 0.0
- Stanfield - 0.0
- Fort McDowell - 0.0
- Carefree 85377 - 10.0
- Scottsdale 85266 - 10.1
- Wickenburg 85390 - 12.0
- Scottsdale 85262 - 12.8
- Paradise Valley - 13.0
- Congress - 16.7
- Morristown 85342 - 18.8
- Casa Grande 85194 - 19.1
- Rio Verde 85263 - 19.2
- Black Canyon City - 20.0
- Fountain Hills - 20.1
- Scottsdale 85255 -22.3
- Superior 85173 - 23.1
- Gold Canyon 85118 - 24.2
- Phoenix 85004 - 25.0
- Scottsdale 85259 - 25.2
- Phoenix 85013 - 26.5
- Cave Creek 85331 - 28.0
- Phoenix 85003 - 28.6
- 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:
- Mesa 85202 - 148.5
- Mesa 85210 - 147.6
- Peoria 85345 - 137.5
- El Mirage - 136.8
- Glendale 85304 - 129.7
- Glendale 85302 - 122.0
- Youngtown 85363 - 117.6
- Surprise 85378 - 117.2
- Chandler 85225 - 115.2
- Phoenix 85040 - 113.3
- Mesa 85201 - 109.1
- Phoenix 85031 - 107.3
- Phoenix 85027 - 106.4
- Phoenix 85053 - 104.7
- Phoenix 85037 - 104.5
- Gilbert 85296 - 103.7
- Phoenix 85032 - 103.2
- Chandler 85224 - 101.9
- Mesa 85204 - 101.8
- Chandler 85226 - 94.5
- Tempe 85283 - 93.8
- Mesa 85208 - 90.6
- Phoenix 85006 - 90.2
- Gilbert 85233 - 84.9
- Phoenix 85041 - 84.9
- Chandler 85286 - 82.7
- Gilbert 85234 - 82.6
- Glendale 85306 - 82.2
- Apache Junction 85120 - 81.6
- 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:
- Phoenix 4,493
- Tempe 1,486
- Chandler 1,143
- Gilbert 938
- Mesa 711
- Scottsdale 400
- Pinal County 162
- Goodyear 134
- Surprise 100
- 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:
|Rank||City||ZIP||Contract Ratio Feb 1, 2016||Contract Ratio Feb 1, 2017||Percentage Change|
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:
|Rank||City||ZIP||Contract Ratio Feb 1, 2016||Contract Ratio Feb 1, 2017||Percentage Change|
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 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:
- Cave Creek +19%
- Tempe +11%
- Queen Creek +10%
- Glendale +7%
- Mesa +7%
- Gilbert +6%
- 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.
- Coolidge - down 44%
- Wickenburg - down 33%
- Maricopa - down 30%
- Litchfield Park - down 27%
- Queen Creek - down 25%
- Sun Lakes - down 25%
- Chandler - down 24%
- Gilbert - down 24%
- Fountain Hills - down 21%
- Florence - down 19%
- Laveen - down 19%
- Casa Grande - up 18%
- Gold Canyon - down 16%
- Wittmann - down 16%
- Mesa - down 15%
- Goodyear - down 14%
- Anthem - down 14%
- Cave Creek - down 12%
- Tolleson - down 12%
- Peoria - down 10%
- Tonopah - down 10%
- Rio Verde - down 9%
- Tempe - down 7%
- Phoenix - down 4%
- Sun City West - down 4%
- Scottsdale - down 2%
- Sun City - down 1%
- Arizona City - up 1%
- Apache Junction - up 2%
- Buckeye - up 5%
- Paradise Valley - up 5%
- El Mirage - up 7%
- Glendale - up 8%
- Waddell - up 12%
- Eloy - up 16%
- Surprise - up 17%
- Avondale - up 18%
- Carefree - up 28%
- New River - up 121%
- 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:
- 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.
- 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:
- 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.
- Tempe - up 13%
- Queen Creek - up 9%
- Gilbert - up 8%
- Mesa - up 6%
- Chandler - up 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:
- Mesa 85213 - up 34% to $168.45
- Scottsdale 85251 - up 18% to $362.27
- Tempe 85284 - up 15% to $196.85
- Sun Lakes 85248 - up 13% to $193.02
- Queen Creek 85142 - up 12% to $159.15
- Mesa 85207 - up 11% to $176.55
- 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 $250,000||From $250,000 to $500,000||Over $500,000||All 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:
- Mesa 85201 +16.9%
- Mesa 85204 +13.4%
- Mesa 85213 +11.6%
- Mesa 85210 +10.4%
- Chandler 85249 +9.5%
- Gilbert 85233 +9.0%
- Gilbert 85298 +8.6%
- Queen Creek 85142 +8.3%
- Sun Lakes 85248 +7.8%
- Mesa 85208 +7.7%
The weakest appreciation was seen in:
- Phoenix 85044 -0.4%
- Mesa 85202 +1.3%
- Mesa 85205 +1.9%
- Gilbert 85297 +2.0%
- Phoenix 85045 +2.3%
- Phoenix 85048 +2.8%
- Mesa 85206 +3.1%
- Gilbert 85296 +3.4%
- Tempe 85283 +3.5%
- 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:
- 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
- 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 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.
|Rank||City||Days of Inventory Dec 2015||Days of Inventory Dec 2016||Change|
|7||San Tan Valley||83||61||-27%|
|31||Sun City West||67||72||+7%|
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:
- Tampa +0.93%
- San Francisco +0.58%
- Miami +0.49%
- Dallas +0.42%
- Atlanta +0.41%
- Phoenix +0.39%
- Cleveland +0.36%
- Washington DC +0.22%
- Seattle +0.18%
- Charlotte +0.17%
- San Diego +0.15%
- Boston +0.06%
- Minneapolis +0.06%
- Denver +0.00%
- Los Angeles -0.01%
- Las Vegas -0.08%
- Portland -0.08%
- Detroit -0.17%
- New York -0.20%
- 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:
- Seattle +10.66%
- Portland +10.27%
- Denver +8.29%
- Dallas +8.11%
- Tampa +7.81%
- Miami +6.46%
- Detroit +6.38%
- Charlotte +6.02%
- San Diego +5.90%
- Atlanta +5.98%
- Los Angeles +5.74%
- Las Vegas +5.72%
- Minneapolis +5.50%
- San Francisco +5.47%
- Phoenix +5.16%
- Boston +4.51%
- Cleveland +3.95%
- Chicago +3.95%
- Washington DC +3.41%
- 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:
- Phoenix - 498
- Mesa - 333
- Chandler - 209
- 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:
- Phoenix - 194
- Buckeye -152
- Mesa -130
- Peoria - 120
- Unincorporated Pinal County - 105
- 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:
- Maricopa +56.2%
- Gold Canyon +52.5%
- Casa Grande +40.3%
- Chandler +39.7%
- Goodyear +35.5%
- Fountain Hills +33.6%
- Gilbert +28.2%
- Sun Lakes +20.0%
- Queen Creek +19.2%
- Laveen +17.5%
- Mesa +17.2%
- Apache Junction +13.8%
- Buckeye +12.0%
- Peoria +11.9%
- Phoenix +11.6%
- Paradise Valley +10.0%
- Avondale +9.1%
- Tempe +8.7%
- Scottsdale +7.2%
- Cave Creek +3.2%
- El Mirage +2.8%
- Anthem +0.3%
- Litchfield Park -2.4%
- Tolleson -2.7%
- Sun City -3.0%
- Glendale -4.2%
- Arizona City -4.5%
- Surprise -12.8%
- 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.
- Alaska - up 19.3% to 3.0%
- North Dakota - up 4.3% to 2.2%
- Louisiana - up 2.6% to 10.2%
- 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:
- Washington - down 23.7% to 3.3%
- Nevada - down 23.6% to 4.7%
- Oregon - down 22.4% to 3.2%
- 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:
- Chandler 85286 - down 46% to 49 days
- Phoenix 85048 - down 40% to 60 days
- Chandler 85249 - down 39% to 67 days
- Mesa 85206 - down 36% to 59 days
- Chandler 85225 - down 33% to 36 days
- Gilbert 85233 - down 30% to 42 days
- Gilbert 85296 - down 29% to 48 days
- Mesa 85209 - down 28% to 61 days
- Mesa 85215 - down 28% to 85 days
- Chandler 85224 - down 26% to 34 days
- Gilbert 85295 - down 26% to 43 days
- Mesa 85212 - down 22% to 64 days
- Mesa 85213 - down 22% to 67 days
- Mesa 85203 - down 20% to 45 days
- Sun Lakes 85248 (including Chandler 85248) - down 20% to 91 days
- Gilbert 85298 - down 20% to 79 days
- Mesa 85207 - down 19% to 113 days
- Mesa 85208 - down 17% to 66 days
- Mesa 85210 - down 16% to 39 days
- Tempe 85281 - down 16% to 68 days
- Phoenix 85045 - down 16% to 99 days
- Mesa 85201 - down 14% to 39 days
- Queen Creek 85142 (Maricopa County only) - down 14% to 90 days
- Mesa 85205 - down 12% to 65 days
- Tempe 85282 - down 11% to 43 days
- Gilbert 85234 - down 10% to 54 days
- Tempe 85283 (including Guadalupe) - down 10% to 59 days
- Phoenix 85044 - down 5% to 60 days
- Mesa 85202 - down 2% to 40 days
- Gilbert 85297 - down 2% to 49 days
- Tempe 85284 - down 1% to 88 days
- Chandler 85226 - flat at 42 days
- 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:
- Phoenix 85003 - up 242.2% from 27.3 to 93.3
- Wickenburg 85390 - up 158.5% from 7.7 to 20.0
- Phoenix 85045 - up 146.8% from 22.7 to 56.1
- Tempe 85281 - up 106.3% from 50.0 to 103.1
- Coolidge 85128 - up 83.9% from 31.4 to 57.7
- Peoria 85381 - up 76.5% from 43.7 to 77.0
- Scottsdale 85250 - up 72.8% from 26.9 to 46.5
- Maricopa 85138 - up 63.0% from 38.1 to 62.0
- Phoenix 85054 - up 62.0% from 55.6 to 90.0
- Phoenix 85048 - up 57.3% form 30.7 to 48.3
- Phoenix 85028 - up 51.9% from 46.7 to 71.0
- Phoenix 85015 - up 50.8% from 41.0 to 61.8
- Mesa 85206 - up 49.8% from 36.8 to 55.1
- Tonopah 85354 - up 47.1% from 20.0 to 29.4
- Phoenix 85023 - up 44.0% from 66.7 to 96.0
- Gold Canyon 85118 - up 43.9% from 12.3 to 17.6
- Chandler 85286 - up 40.7% from 47.0 to 66.1
- Scottsdale 85258 - up 40.4% from 20.0 to 28.1
- Phoenix 85014 - up 39.2% from 26.8 to 37.3
- Phoenix 85085 - up 38.5% from 40.4 to 56.0
- Gilbert 95297 - up 37.7% from 58.4 to 80.4
- Mesa 85213 - up 37.0% from 44.9 to 61.4
- Glendale 85308 - up 31.6% from 51.5 to 67.8
- San Tan Valley 85143 - up 30.1% from 50.0 to 65.0
- 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:
- Glendale 85307 - down 82.3% from 250.0 to 44.4
- Glendale 85306 - down 57.3% from 200.0 to 85.4
- Phoenix 85017 - down 54.3% from 114.3 to 52.2
- Mesa 85210 - down 51.9% from 120.8 to 58.1
- Phoenix 85008 - down 51.4% from 102.8 to 50.0
- Youngtown 85363 - down 47.9% from 122.2 to 63.6
- Phoenix 85022 - down 47.9% from 75.0 to 39.1
- Phoenix 85035 - down 47.2% from 87.8 to 46.4
- Rio Verde 85263 - down 46.5% from 18.5 to 9.9
- Phoenix 85009 - down 46.3% from 71.4 to 38.3
- Mesa 85202 - down 45.7% from 111.4 to 60.5
- Surprise 85388 - down 44.4% from 79.4 to 44.1
- Phoenix 85043 - down 43.1% from 129.2 to 73.4
- New River 85087 - down 42.6% from 36.5 to 21.0
- Glendale 85301 - down 39.8% from 67.4 to 40.6
- Glendale 85305 -down 39.6% from 58.8 to 35.6
- Apache Junction 85219 - down 38.5% from 44.2 to 27.2
- Glendale 85310 - down 38.2% from 63.6 to 39.3
- Phoenix 85029 - down 36.1% from 79.2 to 50.6
- Phoenix 85033 - down 34.9% from 90.0 to 58.6
- Tempe 85282 - down 31.9% from 86.2 to 58.7
- Phoenix 85083 - down 31.7% from 57.6 to 39.4
- Surprise 85379 - down 30.1% from 71.5 to 50.0
- Phoenix 85037 - down 29.8% from 136.1 to 95.5
- Wittmann 85261 - down 29.8% from 45.0 to 31.6
- Scottsdale 85262 - down 28.4% from 12.6 to 9.0
- Phoenix 85019 - down 26.2% from 72.7 to 53.7
- Phoenix 85042 - down 24.7% from 86.4 to 65.0
- Glendale 85303 - down 24.6% from 85.7 to 64.6
- Surprise 85374 - down 24.4% from 52.9 to 40.0
- Tolleson 85353 - down 24.0% from 96.2 to 73.0
- Surprise 85378 - down 22.9% from 125.0 to 96.4
- Avondale 85392 - down 21.6% from 103.3 to 81.1
- Queen Creek 85142 - down 20.7% from 55.1 to 43.7
- 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
- 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 Type||Annual Average $/SF Dec 1, 2014||Annual Average $/SF Dec 1, 2015||Annual Average $/SF Dec 1, 2016||2 Year Change %|
|Single Family Detached||$127.45||$132.99||$141.22||10.8%|
|Apartment Style / Flat||$136.47||$143.84||$150.40||10.2%|
|Gemini / Twin||$83.95||$92.81||$104.05||23.9%|
|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):
- Wittmann - from 73 to 104 - up 42.5%
- Coolidge - from 164 to 207 - up 26.2%
- Florence - from 458 to 560 - up 22.3%
- Laveen - from 825 to 985 - up 19.4%
- Chandler - from 3,959 to 4,614 - up 16.5%
- Buckeye - from 1,805 to 2,067 - up 14.5%
- Rio Verde - from 85 to 97 - up 14.1%
- Casa Grande - from 853 to 945 - up 10.8%
- Maricopa - from 1,501 to 1,661 - up 10.7%
- Apache Junction - from 584 to 639 - up 9.4%
- Gilbert - from 4,970 to 5,397 - up 8.6%
- Mesa - from 6,194 to 6,723 - up 8.5%
- Peoria - from 3,035 to 3,226 - up 6.3%
- Queen Creek - from 3,035 to 3,226 - up 6.5%
- Tempe - from 1,357 to 1,439 - up 6.0%
- Goodyear - from 1,820 to 1,928 - up 5.9%
- Wickenburg - from 136 to 144 - up 5.9%
- Eloy - from 88 to 93 - up 5.7%
- Phoenix - from 15,381 to 16,240 - up 5.6%
- Sun Lakes - from 514 to 542 - up 5.4%
- Surprise - from 3,173 to 3,328 - up 4.9%
- Anthem - from 609 to 638 - up 4.8%
- Waddell - from 244 to 255 - up 4.5%
- Sun City West - from 1,097 to 1,144 - up 4.3%
- Cave Creek - from 699 to 728 - up 4.1%
- Gold Canyon - from 392 to 406 - up 3.6%
- Sun City - from 1,193 to 1,227 - up 2.8%
- Tolleson - from 605 to 621 - up 2.6%
- Arizona City - from 219 to 224 - up 2.3%
- Scottsdale - from 4,789 to 4,892 - up 2.2%
- Glendale - from 3,652 to 3,721 - up 1.9%
- Avondale - from 1,348 to 1,371 - up 1.7%
- Fountain Hills - from 494 to 502 - up 1.6%
- Litchfield Park - from 593 to 600 - up 1.2%
- Youngtown - from 114 to 112 - down 1.8%
- El Mirage - from 641 to 597 - down 6.9%
- Tonopah - from 41 to 38 - down 7.3%
- Paradise Valley - from 370 to 339 - down 8.4%
- Carefree - from 105 to 83 - down 21.0%
- 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 Range||Days of Inventory Dec 2015||Days of Inventory Dec 2016||% Change|
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:
- Chandler up 67%
- Goodyear up 51%
- Avondale up 47%
- Peoria up 47%
- Queen Creek up 47%
- Gilbert up 38%
- Tempe up 31%
- Phoenix up 30%
- Scottsdale up 28%
- Mesa up 25%
- Glendale up 24%
- 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 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:
- Seattle 11.0%
- Portland 10.9%
- Denver 8.7%
- Dallas 8.0%
- Tampa 7.5%
- Miami 6.7%
- Charlotte 6.2%
- Los Angeles 5.9%
- Detroit 5.8%
- San Francisco 5.7%
- Las Vegas 5.6%
- San Diego 5.3%
- Atlanta 5.3%
- Phoenix 5.3%
- Minneapolis 5.3%
- Boston 4.3%
- Chicago 4.3%
- Cleveland 2.9%
- Washington DC 2.7%
- 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:
- Tampa 0.49%
- Miami 0.47%
- Las Vegas 0.46%
- Dallas 0.34%
- Charlotte 0.33%
- Denver 0.33%
- Los Angeles 0.29%
- Phoenix 0.26%
- Minneapolis 0.26%
- Washington DC 0.19%
- Atlanta 0.16%
- Boston 0.15%
- San Diego 0.11%
- New York 0.07%
- Portland 0.06%
- Chicago 0.01%
- Seattle 0.00%
- Detroit -0.11%
- Cleveland -0.36%
- 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:
- Youngtown - up 98% to 62 days from 31 last year
- New River - up 97% to 199 days from 101 last year
- Carefree - up 38% to 443 days from 321 last year
- West Phoenix - up 31% to 66 days from 50 last year
- Avondale - up 24% to 52 days from 42 last year
- Arizona City - up 20% to 165 days from 138 last year
- Surprise - up 15% to 86 days from 75 last year
- Sun City West - up 15% to 73 days from 64 last year
- Glendale - up 10% to 60 days from 54 last year
- 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:
- Chandler - down 28% to 57 days from 79 last year
- Ahwatukee - down 25% to 69 days from 92 last year
- Fountain Hills - down 25% to 152 days from 202 last year
- Sun Lakes - down 22% to 83 days from 105 last year
- Maricopa - down 22% to 77 days from 99 last year
- Queen Creek - down 20% to 74 days from 93 last year
- Apache Junction - down 19% to 106 from 132
- Gilbert - down 18% to 56 days from 68 last year
- Mesa - down 17% to 65 days from 78 last year
- Goodyear - down 17% to 75 days from 90 last year
- 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:
- Phoenix 2099
- Mesa 1811
- Gilbert 1400
- Peoria 1368
- Unincorporated Pinal County 1256
- Buckeye 1234
- Chandler 1081
- Queen Creek 950 (the Town of Queen Creek only)
- Unincorporated Maricopa County 889
- 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.
- 2004 - 45.2
- 2005 - 83.7
- 2012 - 95.3
- 2011 - 98.6
- 2016 - 104.6
- 2003 - 106.9
- 2015 - 111.3
- 2013 - 114.8
- 2014 - 134.4
- 2002 - 142.8
- 2009 - 164.8
- 2010 - 186.9
- 2006 - 227.3
- 2008 - 361.6
- 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:
- Cave Creek
- Paradise Valley
- Queen Creek
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 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:
- Carefree 85377 - 7.1%
- Scottsdale 85266 - 3.6%
- Phoenix 85045 - 2.9%
- Scottsdale 85262 - 0.1%
- Scottsdale 85259 + 1.1%
- Paradise Valley 85253 + 1.6%
- Scottsdale 85258 + 1.8%
- Gold Canyon 85118 + 3.0%
- Fountain Hills 86269 + 3.1%
- Scottsdale 85260 + 3.4%
- Phoenix 85003 + 3.5%
- Phoenix 85054 + 3.6%
- Scottsdale 85255 + 3.9%
- Phoenix 85048 + 4.2%
- Cave Creek 85331 + 4.6%
- Wickenburg 95390 + 4.7%
- Phoenix 85016 + 4.7%
- Scottsdale 85250 + 4.8%
- 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:
- Tonopah 85354 + 58.8%
- Phoenix 85009 + 48.3%
- Phoenix 85031 + 45.1%
- Phoenix 85019 + 44.1%
- Black Canyon City 85324 + 43.7%
- Phoenix 85017 + 42.4%
- Phoenix 85006 + 39.8%
- Phoenix 85035 + 37.1%
- Phoenix 85008 + 35.2%
- Phoenix 85033 + 33.7%
- Phoenix 85040 + 33.6%
- Glendale 85301 + 32.7%
- 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:
- Surprise -17%
- Paradise Valley -10%
- Cave Creek -9%
- Scottsdale -8%
- Fountain Hills -6%
- Queen Creek -6%
- Glendale -5%
Notable increases include:
- Chandler +6%
- 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:
|City||Oct 2015 Sales||Oct 2016 Sales||Change|
|Sun City West||112||112||flat|
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 Range||Average||2015||2016||% Change||Interpretation|
|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.
- Nevada 31.4% below peak
- Florida 22.5% below peak
- Arizona 22.0% below peak
- Connecticut 19.1% below peak
- 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:
- North Carolina
- New York
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:
- California 9.0%
- Nevada 8.9%
- New Hampshire 7.1%
- Florida 7.0%
- Arizona 6.6%
- Michigan 6.3%
- Oregon 6.1%
The lowest appreciation is forecast for the states most affected by the fall in energy prices:
- North Dakota 1.7%
- Wyoming 1.7%
- Texas 2.6%
- Montana 2.8%
- Oklahoma 3.1%
- Mississippi 3.1%
- 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 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:
- Phoenix 498
- Chandler 429
- Scottsdale 373
- Mesa 170
- 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:
- Phoenix 1,914
- Mesa 1,639
- Gilbert 1,276
- Peoria 1,250
- Unincorporated Pinal County 1,124
- Buckeye 1,111
- Chandler 998
- Queen Creek 850
- Unincorporated Maricopa County 814
- 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:
- Portland 11.7%
- Seattle 11.4%
- Denver 8.8%
- Dallas 8.1%
- Tampa 7.6%
- Miami 7.1%
- San Francisco 6.7%
- Los Angeles 5.8%
- San Diego 5.8%
- Charlotte 5.8%
- Detroit 5.7%
- Las Vegas 5.2%
- Atlanta 5.2%
- Phoenix 5.2%
- Minneapolis 5.2%
- Boston 4.1%
- Chicago 4.1%
- Cleveland 2.9%
- Washington DC 2.3%
- 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:
- Phoenix 0.59%
- New York 0.58%
- Tampa 0.55%
- Dallas 0.50%
- Seattle 0.50%
- Chicago 0.49%
- Minneapolis 0.46%
- Portland 0.45%
- Detroit 0.44%
- Miami 0.42%
- Charlotte 0.42%
- San Francisco 0.41%
- Los Angeles 0.37%
- Washington DC 0.36%
- Denver 0.33%
- Boston 0.31%
- Atlanta 0.23%
- San Diego 0.13%
- Las Vegas 0.12%
- 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:
|Region||Days of Inventory 9/1/16||Days of Inventory 10/1/16|
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|
|San Tan Valley||414||571||38%|
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:
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.
|City||ZIP||Quarterly Average $/SF 3Q 2015||Quarterly Average $/SF 3Q 2016||% Change|
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.
|City||ZIP||Quarterly Average $/SF 3Q 2015||Quarterly Average $/SF 3Q 2016||% Change|
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.
|City||ZIP||Quarterly Average $/SF 3Q 2015||Quarterly Average $/SF 3Q 2016||% Change|
|Sun City West||85375||$115.13||$123.90||7.1%|
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.
|City||ZIP||Quarterly Average $/SF 3Q 2015||Quarterly Average $/SF 3Q 2016||% Change|
|Queen Creek (including San Tan Valley)||$98.64||$105.30||6.8%|
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.
|City||ZIP||Quarterly Average $/SF 3Q 2015||Quarterly Average $/SF 3Q 2016||% Change|
|Queen Creek (including San Tan Valley)||$98.64||$105.30||6.8%|
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 Range||Quarterly Average $/SF 3Q 2015||Quarterly 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%|
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 Range||October 2015||October 2016||Growth|
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 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:
- Phoenix 1,750 (1,459)
- Mesa 1,461 (1,110)
- Gilbert 1,153 (1,359)
- Peoria 1,105 (1,029)
- Unincorporated Pinal County 1,005 (1,008)
- Buckeye 967 (702)
- Chandler 924 (705)
- Queen Creek 755 (699)
- Goodyear 720 (891)
- 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:
- Portland +1.16%
- Chicago +0.92%
- Denver +0.89%
- Detroit +0.83%
- Phoenix +0.78%
- Tampa +0.73%
- Dallas +0.68%
- San Diego +0.65%
- Boston +0.64%
- Minneapolis +0.64%
- Los Angeles +0.58%
- Seattle +0.56%
- New York +0.55%
- Las Vegas +0.52%
- Cleveland +0.50%
- Miami +0.41%
- Atlanta +0.39%
- Washington DC +0.37%
- Charlotte +0.35%
- 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:
- Portland +12.40%
- Seattle +11.19%
- Denver +9.42%
- Dallas +8.33%
- Tampa +7.76%
- Miami +7.05%
- San Diego +6.03%
- San Francisco +6.01%
- Los Angeles +5.50%
- Las Vegas +5.39%
- Detroit +5.34%
- Charlotte +5.33%
- Atlanta +5.28%
- Phoenix +5.19%
- Minneapolis +4.99%
- Boston +4.20%
- Chicago +3.71%
- Cleveland +2.45%
- Washington DC +2.02%
- 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
|Country||Birth Rate (per 1,000)||Death Rate (per 1,000)||Net Migration (per 1,000)|
|BOSNIA & HERZEGOVINA||8.87||9.75||-0.38|
|CZECHIA (CZECH REPUBLIC)||9.63||10.34||+2.33|
|ST PIERRE et MIQUELON||7.42||9.72||-8.49|
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:
- Scottsdale 85255 - $737 million a year
- Paradise Valley 85253 - $539 million a year
- Scottsdale 85262 - $389 million a year
- Phoenix 85018 - $348 million a year
- Scottsdale 85259 - $255 million a year
- Scottsdale 85266 - $222 million a year
- Scottsdale 85254 $163 million a year
- Scottsdale 85258 - $155 million a year
- Cave Creek 85331 - $151 million a year
- Scottsdale 85260 - $150 million a year
- Fountain Hills 85268 - $141 million a year
- Chandler 85249 - $119 million a year
- Peoria 85383 - $96 million a year
- Phoenix 85016 - $93 million a year
- Mesa 85207 - $92 million a year
- Scottsdale 85251 - $83 million a year
- Gilbert 85298 - $72 million a year
- Anthem 85086 - $67 million a year
- Sun Lakes 85248 - $65 million a year
- 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:
- North Dakota - non-current loans up 21.5%
- Alaska - non-current loans up 6.1%
- Wyoming - non-current loans up 2.5%
- 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.
- Sun City
- Casa Grande
- Sun City West
- Litchfield Park
- Arizona City
- Sun Lakes
- Paradise Valley
- 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:
- Queen Creek
- El Mirage
- Apache Junction
- Cave Creek
- Fountain Hills
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:
- Phoenix 85034 -33.7% ($85.46 to $56.66)
- Arlington 85322 -11.4% ($88.04 to $77.99)
- Phoenix 85004 -7.8% ($192.67 to $178.04)
- Casa Grande 85194 -6.3% ($118.40 to $110.94)
- Gila Bend 85337 -5.1% ($51.63 to $49.02)
- Paradise Valley 85253 -4.9% ($354.88 to $337.60)
- Scottsdale 85262 -4.5% ($281.58 to $268.81)
- Gold Canyon 85118 -3.6% ($153.68 to $148.09)
- Eloy 85131 -3.2% ($100.45 to $97.26)
- 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:
- Superior 85173 +23.8% ($47.17 to $58.38)
- Phoenix 85031 +22.9% ($70.71 to $86.88)
- Phoenix 85009 +22.8% ($75.45 to $92.62)
- Phoenix 85017 +20.3% (78.36 to $94.26)
- Morristown 85342 +20.2% ($95.71 to $115.03)
- Phoenix 85040 +20.0% ($80.14 to $96.16)
- Phoenix 85019 +20.0% ($79.62 to $95.54
- Phoenix 85033 +18.3% ($80.91 to $95.69)
- Glendale 85301 +19.1% ($79.65 to $94.03)
- 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:
- Superior 85173 +82% from $32.02
- Phoenix 85031 +251% from $24.72
- Phoenix 85009 +275% from $24.68
- Phoenix 85017 +242% from $27.58
- Morristown 85342 +57% from $73.81
- Phoenix 85040 +151% from $38.37
- Phoenix 85019 +220% from $29.88
- Phoenix 85033 +230% from $29.04
- Glendale 85301 +185% from $33.03
- 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 Range||August 2015||August 2016||Growth|
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 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:
- El Mirage 26
- Avondale 42
- Arizona City 42
- Laveen 45
- Tolleson 50
- Tempe 51
- Glendale 53
- Gilbert 55
- Mesa 64
- Phoenix 64
- Surprise 66
- Buckeye 67
- Apache Junction 68
- Chandler 71
- Queen Creek 72
- Sun City 72
- Peoria 75
- Goodyear 77
- Sun City West 77
- Maricopa 81
- Anthem 84
- Litchfield Park 76
- Casa Grande 88
- Cave Creek 96
- Sun Lakes 119
- Scottsdale 124
- Fountain Hills 142
- Gold Canyon 152
- 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:
- Portland 12.6%
- Seattle 11.0%
- Denver 9.2%
- Dallas 8.9%
- Tampa 7.9%
- Miami 6.9%
- San Francisco 6.4%
- San Diego 6.4%
- Atlanta 5.8%
- Las Vegas 5.7%
- Los Angeles 5.3%
- Detroit 5.1%
- Phoenix 5.1%
- Minneapolis 5.1%
- Charlotte 5.1%
- Boston 4.7%
- Chicago 3.3%
- Cleveland 2.5%
- Washington DC 2.0%
- 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:
- San Francisco 69.0%
- Phoenix 60.0%
- Las Vegas 58.9%
- Miami 52.4%
- Portland 50.9%
- Seattle 47.8%
- Los Angeles 47.7%
- Denver 46.9%
- Detroit 46.6%
- San Diego 45.7%
- Tampa 41.5%
- Dallas 41.1%
- Minneapolis 32.3%
- Atlanta 29.4%
- Charlotte 24.4%
- Boston 22.4%
- Washington DC 16.6%
- Chicago 14.1%
- Cleveland 9.9%
- 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:
- Arizona City - up 17.3% to $100,000
- Apache Junction - up 13.3% to $169,900
- Tolleson - up 12.4% to $179,900
- Sun City - up 12.2% to $165,000
- Glendale - up 11.9% to $210,000
- Avondale - up 11.8% to 190,000
- Sun City West - up 11.7% to $210,000
- Surprise - up 11.4% to $215,000
- Buckeye - up 11.3% to $182.500
- El Mirage - up 10.9% to $152,000
- Laveen - up 10.8% to $195,000
- Anthem - up 10.4% to $289,900
- Phoenix - up 9.7% to $224,900
- Maricopa - up 9.3% to $165,000
- Mesa - up 9.0% to $223,000
- Queen Creek - up 8.8% to $199,900
- Tempe - up 7.9% to $263,250
- Litchfield Park - up 7.8% to $275,000
- Goodyear - up 7.0% to $245,995
- Casa Grande - up 6.7% to $159,000
- Cave Creek - up 6.3% to $425,000
- Peoria - up 5.7% to $255,000
- Scottsdale - up 4.8% to $492.500
- Gilbert - up 4.6% to $275,000
- Chandler - up 4.6% to $277,250
- Fountain Hills - up 3.3% to $428,500
- Gold Canyon - up 2.4% to $255,950
- Sun Lakes - up 1.4% to $255,400
- 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:
|County||Median Age July 2010||Median Age July 2015||5 Year Change in Population Under 5||5 Year Change in Population of 65 and Over|
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:
- Cochise -4.1%
- Santa Cruz -2.0%
- La Paz -1.4%
- Gila -0.7%
- 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:
|City||Contract Ratio Now||Contract Ratio Last Year||Days of Inventory Now||Days of Inventory Last Year||Implications||Current 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 Range||Annual Avg $/SF July 2014||Annual Avg $/SF July 2015||Annual Avg $/SF July 2016||2 year change||1 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%|
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:
- Gold Canyon - down 4.7%
- Paradise Valley - down 4.6%
- 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:
- Wickenburg - up 0.2%
- Scottsdale - up 0.9%
- Eloy - up 1.9%
- Desert Hills - up 2.6%
- Fountain Hills - up 2.6%
- Cave Creek - up 3.2%
- Sun Lakes - up 3.4%
- Anthem - up 3.5%
- 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%:
- Coolidge - up 4.6%
- Waddell - up 5.0%
- Carefree - up 5.1%
- Gilbert - up 5.3%
- Litchfield Park - up 5.4%
- Chandler - up 5.5%
- Goodyear - up 5.5%
- Florence - up 5.6%
- Mesa - up 6.6%
- Surprise - up 6.6%
- Peoria - up 6.8%
- Queen Creek - up 6.8%
- Tempe - up 7.1%
- Apache Junction - up 7.5%
- Sun City West - up 7.6%
- Phoenix - up 7.8%
- Glendale - 7.9%
- New River - up 8.1%
- Avondale - up 8.8%
Lastly we have a group that have comfortably over performed in appreciation over the past 12 months:
- Laveen - up 10.2%
- Buckeye - up 10.2%
- El Mirage - up 10.5%
- Sun City - up 10.6%
- Maricopa - up 10.8%
- Tolleson - up 12.5%
- Tonopah - up 13.9%
- Arizona City - up 14.0%
- Wittmann - up 16.8%
- 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.
- 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.
- 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.
- 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:
- Eloy 85131 -10%
- Apache Junction 85120 -27%
- Gold Canyon 85118 -29%
- Queen Creek -29%
- Apache Junction 85119 -30%
- San Tan Valley 85140 -30%
- Casa Grande 85194 -31%
- San Tan Valley 85143 -37%
- Florence 85132 -37%
- Casa Grande 85122 -37%
- Arizona City 85123 -40%
- Maricopa 85138 -43%
- Coolidge 85128 -44%
- 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:
- Tempe 85282 -15%
- Chandler 85286 -15%
- Tempe 85281 -16%
- Tempe 85283 -16%
- Chandler 85224 -18%
- Mesa 85210 -18%
- Mesa 85202 -18%
- Chandler 85226 -19%
- Tempe 85284 -20%
- Chandler 85225 -21%
- Mesa 85204 -21%
- Mesa 85203 -21%
- Mesa 85205 -21%
- Mesa 85206 -22%
- Gilbert 85233 -22%
- Phoenix 85044 -22%
- Gilbert 85234 -23%
- Gilbert 85297 -23%
- Chandler 85249 -23%
- Sun Lakes 85248 -24%
- Mesa 85209 -24%
- Mesa 85208 -24%
- Phoenix 85048 -25%
- Mesa 85212 -25%
- Mesa 85207 -25%
- Gilbert 85296 -25%
- Mesa 85201 -26%
- Mesa 85213 -27%
- Gilbert 85295 -27%
- Gilbert 85298 -27%
- Mesa 85215 -29%
- 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:
- Scottsdale 85251 -2%
- Scottsdale 85257 -8%
- Scottsdale 85250 -15%
- Scottsdale 85255 -15%
- Scottsdale 85258 -20%
- Scottsdale 85254 -21%
- Scottsdale 85260 -24%
- Fountain Hills 85268 -26%
- Carefree 85377 -26%
- Cave Creek 85331 -27%
- Scottsdale 85259 -27%
- Scottsdale 85262 -28%
- Paradise Valley -29%
- Scottsdale 85266 -31%
- 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):
- Phoenix 85018 -12%
- Phoenix 85013 -12%
- Phoenix 85014 -13%
- Phoenix 85006 -14%
- Phoenix 85015 -18%
- Phoenix 85003 -18%
- Phoenix 85021 -18%
- Phoenix 85008 -19%
- Phoenix 85020 -20%
- Phoenix 85007 -20%
- Phoenix 85028 -21%
- Phoenix 85032 -21%
- Phoenix 85054 -21%
- Phoenix 85024 -23%
- Phoenix 85050 -23%
- Phoenix 85027 -24%
- Phoenix 85012 -24%
- Phoenix 85022 -24%
- Phoenix 85023 -25%
- Phoenix 85016 -25%
- Phoenix 85053 -26%
- Phoenix 85085 -26%
- Phoenix 85029 -26%
- Phoenix 85042 -27%
- Phoenix 85083 -29%
- Anthem 85086 -29%
- Phoenix 85051 -30%
- Phoenix 85019 -32%
- New River 85087 -33%
- Phoenix 85031 -34%
- Phoenix 85017 -35%
- Phoenix 85033 -35%
- Phoenix 85041 -35%
- Phoenix 85043 -36%
- Phoenix 85004 -37%
- Phoenix 85037 -37%
- Phoenix 85040 -37%
- Phoenix 85035 -38%
- Phoenix 85009 -39%
- 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:
- Sun City West -21%
- Surprise 85374 -25%
- Glendale 85308 -25%
- Glendale 85306 -25%
- Avondale 85392 -26%
- Glendale 85304 -26%
- Peoria 85382 -26%
- Sun City 85373 -26%
- Sun City 85351 -26%
- Peoria 85381 -27%
- Glendale 85310 -27%
- Glendale 85302 -27%
- Peoria 86383 -28%
- Surprise 85378 -29%
- Peoria 85351 -29%
- Surprise 85387 -31%
- Litchfield Park 85340 -31%
- Wittmann 85361 -31%
- Surprise 85388 - 32%
- Surprise 85379 -32%
- Glendale 85303 -32%
- Glendale 85301 -32%
- Tonopah 85354 -32%
- Glendale 85305 -33%
- Wickenburg 85390 -35%
- Goodyear 85338 -35%
- Youngtown 85363 -36%
- Tolleson 85353 -36%
- Laveen 85339 -36%
- Avondale 85323 -37%
- Glendale 85301 -37%
- Buckeye 85396 -38%
- El Mirage 85335 -38%
- Buckeye 85326 -41%
- Goodyear 85395 -45%
- 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:
- Phoenix 1,305
- Mesa 1,097
- Gilbert 940
- Peoria 845
- Unincorporated Pinal County 756
- Chandler 753
- Buckeye 706
- Queen Creek 572
- Goodyear 533
- Unincorporated Maricopa County 499
July 29 - I recommend taking a look at the interactive visualization tool at the following web site:
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:
- Portland 12.5%
- Seattle 10.7%
- Denver 9.5%
- Dallas 9.0%
- Tampa 7.7%
- Miami 6.6%
- San Francisco 6.5%
- San Diego 6.4%
- Atlanta 6.3%
- Boston 5.6%
- Detroit 5.6%
- Los Angeles 5.4%
- Phoenix 5.4%
- Las Vegas 5.2%
- Minneapolis 5.2%
- Charlotte 5.0%
- Chicago 3.7%
- Cleveland 2.5%
- Washington DC 2.4%
- 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:
- Denver 32.9%
- Dallas 32.8%
- Portland 15.2%
- Seattle 14.3%
- Charlotte 12.3%
- Boston 6.0%
- San Francisco 4.2%
- Atlanta -1.3%
- San Diego -9.7%
- Los Angeles -8.9%
- Cleveland -9.2%
- Minneapolis -10.9%
- Detroit -13.9%
- Washington DC -14.0%
- New York -16.1%
- Chicago -18.8%
- Tampa -23.3%
- Miami -23.5%
- Phoenix -29.5%
- 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:
- Oregon 11.0%
- Washington 10.1%
- Colorado 9.4%
- Nevada 7.8%
- Utah 7.5%
- Florida 7.3%
- Idaho 7.0%
- Texas 7.0%
- California 6.3%
- Arizona 5.8%
- Tennessee 5.8%
- Michigan 5.7%
- Georgia 5.6%
- Rhode Island 5.4%
- Montana 5.3%
- South Carolina 5.2%
- Minnesota 5.1%
- Hawaii 5.0%
- Nebraska 4.6%
- Massachusetts 4.5%
- West Virginia 4.5%
- Wisconsin 4.3%
- Missouri 4.1%
- North Carolina 4.0%
- Wyoming 4.0%
- Indiana 3.9%
- Kansas 3.9%
- Kentucky 3.8%
- Maine 3.8%
- Louisiana 3.6%
- Mississippi 3.6%
- Iowa 3.5%
- New Hampshire 3.4%
- New York 3.4%
- New Mexico 3.3%
- South Dakota 3.3%
- Illinois 3.0%
- Ohio 2.8%
- Arkansas 2.5%
- Washington DC 2.3%
- Alaska 2.2%
- Alabama 2.1%
- Oklahoma 2.0%
- Virginia 2.0%
- Vermont 1.9%
- North Dakota 1.1%
- Maryland 1.0%
- Delaware 0.2%
- Pennsylvania -0.1%
- New Jersey -0.2%
- 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:
- Chandler - up 136% from 50 to 118
- Mesa - up 91% from 106 to 202
- Florence - up 85% from 20 to 37
- Buckeye - up 61% from 70 to 113
- Peoria - up 53% from 105 to 161
- Laveen - up 50% from 24 to 36
- Scottsdale - up 37% from 43 to 59
- Queen Creek - up 24% from 71 to 88
- San Tan Valley - up 17% from 69 to 81
- 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:
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:
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 inventory, dollar volume, months of supply, active list price per sq. ft., listing success rate, listings under contract, pending 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:
|City||Appreciation Using Annual $/SF||Appreciation Using Annual Median|
|Sun City West||8.2%||10.9%|
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:
- 85034 +26.0%
- 85031 +25.5%
- 85009 +23.7%
- 85007 +21.&%
- 85040 +21.7%
- 85017 +19.9%
- 85019 +18.2%
- 85035 +18.0%
- 85006 +17.1%
- 85042 +15.7%
- 85004 +15.5%
- 85033 + 15.5%
- 85008 +14.0%
- 85037 +13.2%
- 85029 +12.1%
- 85015 +11.9%
- 85013 +11.4%
- 85032 +11.1%
- 85051 +10.9%
- 85043 +10.5%
- 85022 +10.0%
- 85018 +9.9%
- 85087 +9.6%
- 85020 +9.4%
- 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 Range||Annual Change in Active Listings||Annual Change in Quarterly Sales Rate||Annual Appreciation in $/SF||Comments|
|$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:
- Phoenix 85031 +23.2%
- Phoenix 85009 +23.0%
- Phoenix 85017 +21.0%
- Phoenix 85040 +19.9%
- Phoenix 85008 +19.3%
- Glendale 85301 +19.2%
- Youngtown 85363 +18.7%
- Phoenix 85019 +18.5%
- Phoenix 85006 +18.3%
- Wittmann 85361 +17.5%
- Phoenix 85035 +17.4%
- Phoenix 85033 +17.4%
- Phoenix 85015 +14.6%
- Tempe 85281 +14.0%
- Phoenix 85042 +13.5%
- Glendale 85303 +12.8%
- Phoenix 85037 +12.3%
- Surprise 85378 +12.3%
- Sun City 85851 +12.2%
- 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:
- Scottsdale 85266 -4.2%
- Gold Canyon 85118 -3.8%
- Paradise Valley 85253 -3.6%
- Phoenix 85045 -2.5%
- Scottsdale 85262 -2.4%
- Scottsdale 85260 -1.5%
- Rio Verde 85263 -1.4%
- Phoenix 85054 -0.7%
- Phoenix 85016 -0.5%
- Scottsdale 85255 +0.1%
- Wickenburg 85390 +0.5%
- Scottsdale 85258 +1.4%
- Phoenix 85012 +1.4%
- Scottsdale 85259 +1.4%
- Mesa 85215 +1.6%
- Eloy 85131 +1.6%
- Cave Creek 85331 +1.8%
- Sun Lakes 85248 +1.9%
- Fountain Hills 85268 +2.5%
- 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
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):
- Phoenix - 1,065 (813)
- Mesa - 886 (636)
- Gilbert - 815 (831)
- Chandler - 646 (367)
- Peoria - 620 (620)
- Unincorporated Pinal County - 567 (547)
- Buckeye - 538 (374)
- Queen Creek - 452 (368)
- Goodyear - 427 (553)
- Unincorporated Maricopa County - 367 (274)
- 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:
- Avondale - up 2.8% from $103.18 to $106.02
- Chandler - up 2.0% from $155.30 to $158.36
- Gilbert - up 0.8% from $145.91 to $147.02
- Queen Creek - up 0.6% from $118.14 to $118.79
- Goodyear - up 0.4% from $128.32 to $128.88
- Peoria - up 0.3% from $145.12 to $145.49
- Tempe - down 0.1% from $176.80 to $176.71
- Glendale - down 0.2% from $133.74 to $133.49
- Mesa - down 0.6% from $149.27 to $148.33
- Phoenix - down 0.7% from $184.35 to $182.99
- Scottsdale - down 3.1% from $317.83 to $307.93
- 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:
- Tolleson - 99.34%
- El Mirage - 98.95%
- Avondale - 98.83%
- Laveen - 98.67%
- Waddell - 98.56%
- Queen Creek - 98.43%
- Buckeye - 98.35%
- Surprise - 98.30%
- Youngtown - 98.29%
- Glendale - 98.26%
- Apache Junction - 98.25%
- Gilbert - 98.23%
- Goodyear - 98.11%
- Maricopa - 98.09%
- Peoria - 98.03%
- Litchfield Park - 97.97%
- Mesa - 97.95%
- Chandler - 97.92%
- Tempe - 97.81%
- Anthem - 97.77%
- Florence - 97.71%
- Wittmann - 97.66%
- Desert Hills - 97.66%
- Sun City West - 97.61%
- Sun City - 97.57%
- Phoenix - 97.54%
- New River - 97.42%
- Casa Grande - 97.13%
- Coolidge - 97.11%
- Sun Lakes - 97.06%
- Arizona City - 96.85%
- Eloy - 96.79%
- Cave Creek - 96.48%
- Gold Canyon - 96.18%
- Fountain Hills - 95.95%
- Scottsdale - 95.94%
- Tonopah - 95.38%
- Rio Verde - 94.50%
- Carefree - 94.36%
- Wickenburg - 93.87%
- 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:
- Seattle +2.1%
- Chicago +2.0%
- Minneapolis +1.9%
- Washington +1.8%
- Portland +1.7%
- Charlotte +1.7%
- Boston +1.5%
- San Francisco +1.5%
- Denver +1.4%
- Detroit +1.3%
- Atlanta +1.3%
- Dallas +1.3%
- Miami +1.1%
- Cleveland +1.0%
- Tampa +0.9%
- San Diego +0.8%
- Los Angeles +0.8%
- Phoenix +0.7%
- Las Vegas +0.6%
- 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:
- Portland +12.3%
- Seattle +10.7%
- Denver +9.5%
- Dallas +8.7%
- Tampa +7.8%
- San Francisco +7.8%
- Atlanta +6.5%
- Miami +6.4%
- San Diego +6.3%
- Los Angeles +5.9%
- Detroit +5.7%
- Las Vegas +5.7%
- Boston +5.7%
- Phoenix +5.5%
- Charlotte +5.0%
- Minneapolis +4.8%
- Chicago +3.1%
- Cleveland +2.9%
- New York +2.6%
- 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 Types||2002||2006||2011||2016|
Phoenix Metropolitan Area
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
$150K - $200K
$200K - $250K
$250K - $300K
$300K - $400K
$400K - $500K
$500K - $600K
$600K - $800K
$800K - $1M
$1M - $2M
$2M - $3M
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 Listings||Week 26, 2015||Week 26, 2016||% Change||# Change|
|$150K - $175K||
|$175K - $200K||
|$200K - 250K||
|$250K - $300K||
|$300K - $400K||
|$400K - $500K||
|$500K - $600K||
|$600K - $800K||
|$800K - $1M||
|$1M - $1.5M||
|$1.5M - $2M||
|$2M - $3M||
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.
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.
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.
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.
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:
- Glendale 85301 - up 20.3%
- Youngtown 85363 - up 15.6%
- Sun City 85351 - up 14.2%
- Tolleson 85353 - up 14.0%
- 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:
- Twin homes - up 12% from $89 to $99 per sq. ft.
- Mobile homes - up 11% from $68 to $76 per sq. ft.
- Townhouses - up 9% from $123 to $134 per sq. ft.
- Single family detached - up 5% from $131 to $138 per sq. ft.
- Apartment-style homes - up 4% from $141 to $146 per sq. ft.
- 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:
- Gilbert - up 168% from $9.6M to $25.8M
- Chandler - up 163% from $12.9M to $34.0M
- Cave Creek - up 106% from $11.3M to $23.2M
- 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:
- Scottsdale - up 3% from $522M to $536M
- 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:
- Fountain Hills - up 19%
- Avondale - up 16%
- Cave Creek - up 9%
- Mesa - up 7%
- Paradise Valley - up 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:
- sold for $7,400,000 (original list $9,495,000) in February - 15,112 sq ft - $490 per sq. ft. - 165 days on market
- 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
- 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
- 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
- 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)|
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:
- Portland 12.3%
- Seattle 10.9%
- Denver 10.0%
- San Francisco 8.5%
- Dallas 8.5%
- Tampa 7.6%
- Atlanta 6.5%
- Los Angeles 6.5%
- Miami 6.3%
- Detroit 6.2%
- San Diego 6.2%
- Las Vegas 6.1%
- Phoenix 5.6%
- Charlotte 4.3%
- Minneapolis 3.9%
- Boston 4.3%
- Cleveland 2.8%
- New York 2.7%
- Chicago 1.9%
- 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:
- Seattle 2.39%
- San Francisco 2.27%
- Denver 1.60%
- Portland 1.50%
- Dallas 1.41%
- Tampa 1.08%
- Atlanta 1.07%
- Miami 1.05%
- San Diego 1.04%
- Boston 1.02%
- Chicago 1.01%
- Charlotte 0.89%
- Washington DC 0.80%
- Minneapolis 0.77%
- Los Angeles 0.72%
- Las Vegas 0.69%
- Detroit 0.67%
- Phoenix 0.28%
- Cleveland 0.06%
- 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:
- Phoenix - up from 90 to 103 units closed
- Scottsdale - up from 39 to 78
- Mesa - down from 56 to 54
- Chandler - up from 5 to 12
- San Tan Valley - up from 0 to 9
- Goodyear - down from 14 to 6
- Cave Creek - down from 9 to 4
- Tempe - up from 0 to 4
- Fountain Hills - down from 8 to 3
- Buckeye - down from 6 to 3
- 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:
- Chandler - up 134% from 130 to 304 units closed
- Laveen - up 74% from 62 to 108
- Mesa - up 61% from 322 to 517
- Peoria - up 53% from 345 to 527
- Buckeye - up 49% from 217 to 324
- Florence - up 46% from 59 to 86
- Queen Creek (Maricopa County only) - up 44% from 197 to 283
- Goodyear - up 44% from 190 to 273
- Scottsdale - up 43% from 111 to 159
- San Tan Valley (including parts of Queen Creek in Pinal County) - up 39% from 181 to 252
- Maricopa - up 32% from 77 to 102
- Phoenix - up 29% from 357 to 459
- Surprise - up 28% from 101 to 129
- Gilbert - up 8% from 392 to 424
- 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:
- Phoenix - 241
- Mesa - 225
- Gilbert - 177
- Chandler -163
- Goodyear - 118
- Peoria -113
- Buckeye - 108
- Unincorporated Pinal County - 106
- Unincorporated Maricopa County - 102
- 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:
- HomeSmart, Scottsdale (added 6.9% to go from 970 to 1,037 agents)
- Realty ONE Group, Goodyear (added 6.7% to go from 254 to 271 agents)
- 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:
- Peoria 85383 - 463 at an average of $139.68 per sq. ft.
- Gilbert 85298 - 302 at $141.46
- Queen Creek 85142 - 283 at $123.12 (Maricopa section only)
- Mesa 85212 - 257 at $132.08
- Buckeye 85396 - 181 at $134.73
- Goodyear 85338 - 164 at $120.16
- Chandler 85249 - 147 at $143.26
- Buckeye 85326 - 143 at $107.44
- Phoenix 85085 - 126 at $152.50
- Goodyear 85395 - 109 at $150.27
- Laveen 85339 - 108 at $109.66
- Chandler 85286 - 106 at $150.54
- Mesa 85209 - 77 at $141.24
- Mesa 85207 - 76 at $164.06
- Phoenix 85041 - 64 at $104.48
- Surprise 85379 - 60 at $109.40
- Tolleson 85353 - 58 at $106.68
- Cave Creek 85331 - 56 at $202.43
- Gilbert 85295 - 52 at $137.62
- 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:
- San Tan Valley 85140 - 131 at an average of $126.31
- Maricopa 85138 - 102 at $94.80
- Florence 85132 - 86 at $100.27
- San Tan Valley 85143 - 73 at $105.64
- Queen Creek 85142 - 48 at $110.35
- Oracle 85623 - 35 at $191.20
- Eloy 85131 - 32 at $151.07
- Tucson 85739 - 23 at $144.72
- Red Rock 85145 - 17 at $89.73
- Casa Grande 85122 - 9 at $93.07
- Casa Grande 85194 - 9 at $135.70
- Apache Junction 85119 - 8 at $147.45
- Apache Junction 85120 - 3 at $110.94
- 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:
- Glendale +9.1%
- Avondale +8.4%
- Tempe +8.2%
- Buckeye +8.2%
- Phoenix +7.7%
- Maricopa +6.9%
- Queen Creek +6.9%
- Mesa +6.3%
- Surprise +5.9%
- Chandler +5.6%
- Peoria +5.5%
- Gilbert +4.6%
- Goodyear +4.5%
- Fountain Hills +2.1%
- Cave Creek +1.5%
- Scottsdale +1.2%
- 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:
- Florence 85132 +17.1%
- Maricopa 85138 +11.8%
- Queen Creek 85142 +11.5%
- Maricopa 85139 +9.3%
- San Tan Valley 85140 +8.8%
- Apache Junction 85120 +8.7%
The weakest places for appreciation are:
- Gold Canyon 85118 -5.8%
- Coolidge 85128 +1.3%
- Apache Junction 85119 +1.4%
- 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:
- Scottsdale 85257 +13.0%
- Scottsdale 85254 +10.4%
- Carefree 85377 +7.8%
- Fountain Hills 85268 +7.4%
- Scottsdale 852517 +5.3%
The weakest places for appreciation are:
- Scottsdale 85266 -13.1%
- Rio Verde 85263 -4.2%
- Scottsdale 85260 -4.1%
- Paradise Valley 85253 -4.1%
- Scottsdale 85255 -1.3%
- Cave Creek 85331 -0.5%
- Scottsdale 85250 +0.2%
- Scottsdale 85259 +0.5%
- Scottsdale 85258 +1.8%
- 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:
- Phoenix 85004 +55.0% (very volatile due to small sample and huge range of price values)
- Phoenix 85040 +27.1%
- Phoenix 85031 +25.1%
- Phoenix 85007 +20.0%
- Phoenix 85017 +18.9%
- Phoenix 85033 +18.5%
- Phoenix 85009 +18.0%
- Phoenix 85020 +16.5%
- Phoenix 85006 +16.4%
- Phoenix 85037 +15.9%
- Phoenix 85035 +15.3%
- Phoenix 85042 +15.2%
- Phoenix 85014 +15.0%
- Phoenix 85015 +14.8%
- Phoenix 85019 +14.8%
- Phoenix 85013 +14.7%
- Phoenix 85029 +14.3%
- Phoenix 85008 +14.1%
- Phoenix 85007 +13.9%
- Phoenix 85043 +12.7%
- Phoenix 85027 +12.1%
- Phoenix 85051 +11.7%
- Phoenix 85041 +11.1%
- Phoenix 85022 +10.0%
The weakest places for appreciation are:
- Phoenix 85016 -10.6%
- Phoenix 85021 -1.3%
- Phoenix 85028 -0.6%
- 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:
- Glendale 85301 +22.5%
- Youngtown 85363 +18.8%
- Tolleson 85353 +15.7%
- Sun City 85351 +15.3%
- Glendale 85303 +14.1%
- Glendale 85302 +12.1%
- Buckeye 85326 +11.6%
- Peoria 85345 +11.3%
- Laveen 85339 +11.2%
The weakest places for appreciation are:
- Glendale 85310 -1.1%
- Peoria 85381 +0.9%
- Peoria 85383 +3.2%
- 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:
- Tempe 85281 +16.3%
- Mesa 85204 +15.2%
- Chandler 85224 +13.4%
- Mesa 85208 + 12.8%
- Tempe 85283 +12.1%
- Mesa 85201 +11.6%
- Mesa 85210 +11.5%
The weakest appreciation is in
- Mesa 85207 -2.3%
- Phoenix 85045 -1.7%
- Chandler 85286 +1.0%
- Phoenix 85048 +1.6%
- 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:
- Buckeye +17%
- Peoria +8%
- Avondale +7%
- 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)|
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:
- New Jersey 4.3%
- New York 3.7%
- Hawaii 3.5%
- Maine 2.7%
- Florida 2.6%
- New Mexico 2.4%
- Delaware 2.3%
- District of Columbia 2.2%
- Rhode Island 2.2%
- 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 and Pinal counties is confirmed as 1,797, which is the highest monthly total since August 2007. It is also an increase of 25% over March 2015.
For the first quarter of 2016 we can now show 4,436 single family permits in total, up 33% from 3,333 last year and the highest number since 2007, when there were 8,710. The top locations so far in 2016 are:
- Phoenix 656 - up 47% from 445 in Q1 2015
- Mesa 478 - up 76% from 271
- Gilbert 468 - down 1% from 475
- Peoria 374 - up 22% from 307
- Unincorporated Pinal County 358 - up 37% from 261
- Chandler 340 - up 73% from 196
- Buckeye 314 - up 64% from 191
- Queen Creek 239 up 24% from 192
- Scottsdale 212 - up 13% from 187
- Goodyear 200 - down 17% from 242
- Maricopa 200 - up 36% from 147
So Mesa and Chandler are the two cities with the fastest growth in new home construction while Goodyear and Gilbert are decelerating.
May 8 - Rental listings are getting scarcer, probably because it is so easy to fill a rental with a tenant without resorting to creating an ARMLS listing. So far in 2016 we have seen 12,039 new rental listings (we exclude vacation rentals). This is down 13% from the 13,844 we saw during the same period in 2015. In turn this was down 13% from the 15,937 in 2014, which was also down 17% from the 19,154 in 2013. Since 2013 new rental listings have declined by 37%.
May 7 - At the opposite end to yesterday's observation, here are the ZIP codes with the least improvement in pricing over the past year.
- Gold Canyon 85118 -4%
- Phoenix 85045 -3%
- Casa Grande 85194 -3%
- Scottsdale 85266 -2%
- Scottsdale 85260 -1%
- Paradise Valley 85253 -1%
- Rio Verde 85263 -1%
- Cave Creek 85331 -1%
- Phoenix 85015 0%
- Scottsdale 85255 0%
- Phoenix 85054 +1%
- Fountain Hills 85268 +1%
- Scottsdale 85258 +1%
- Carefree 85377 +1%
- Scottsdale 85262 +2%
- Gilbert 85298 +2%
- Scottsdale 85259 +2%
- Phoenix 85048 +2%
- Phoenix 85028 +2%
- Sun Lakes 85248 +2%
With a few exceptions, this list is dominated by many of the most desirable locations in the valley, with the best schools and lowest crime rates. It seems counter-intuitive that the most sought after locations would have the weakest pricing trends. However, it is all about the supply. Across most of the USA we now have an excess of higher end homes going up for sale, too many for normal demand to keep up with. Prices are falling because sellers of luxury homes are competing with each other. Prices are rising at the lowest priced locations because buyers are competing with each other.
May 6 - We often get asked about which ZIP codes have appreciated the most, so here is a list of the top 20 gainers in annual average $/SF over the pat year. We have omitted the smallest ZIP codes which have an insufficient number of transactions to give us a good reading. Only single family homes are included in the calculations.
- Phoenix 85006 +22%
- Phoenix 85031 +22%
- Phoenix 85017 +21%
- Wittmann 85361 +20%
- Phoenix 85008 +19%
- Phoenix 85009 +18%
- Phoenix 85035 +18%
- Phoenix 85040 +18%
- Phoenix 85019 +17%
- Phoenix 85033 +17%
- Glendale 85301 +16%
- Youngtown 85361 +16%
- Glendale 85303 +15%
- Mesa 85210 +14%
- Tempe 85281 +13%
- Phoenix 85051 +13%
- Phoenix 85014 +13%
- Phoenix 85015 +13%
- Glendale 85302 +13%
- Sun City 85351 +12%
We note that the list is dominated by inexpensive locations in the center and inner west valley.
May 4 - As appreciation rates have declined from the huge numbers (both negative and positive) during the disruptive period of 2003-2013, it has become more obvious that our usual method for calculating appreciation is less useful for smaller segments of the market. Our method has been to take the monthly average price per square foot and compare it with the same measurement one year earlier. This works quite well for the entire market but as you break the market into smaller segments, the volatility in their monthly average $/SF become excessive. Therefore we are changing our method to use the annual average $/SF instead of the monthly average to measure appreciation for all segments of the market. We will still use our original method for measuring the entire market (all areas & types).
Using the new method here is a ranking of the cities by appreciation rate, based on the 12 month change in their annual average $/SF for single family detached homes.
- Tonopah 27.0%
- Wittmann 19.7%
- Youngtown 16.3%
- Tolleson 10.8%
- Eloy 10.7%
- Sun City 10.5%
- El Mirage 9.8%
- Glendale 9.8%
- Avondale 8.7%
- Waddell 8.2%
- Laveen 8.1%
- Florence 7.8%
- Tempe 7.8%
- Buckeye 7.5%
- Arizona City 7.4%
- New River 7.4%
- Phoenix 7.3%
- Maricopa 7.2%
- Coolidge 7.1%
- Queen Creek 7.0%
- Mesa 6.6%
- Sun City West 6.4%
- Surprise 6.4%
- Apache Junction 6.3%
- Anthem 5.7%
- Chandler 5.5%
- Peoria 4.8%
- Gilbert 4.7%
- Desert Hills 4.7%
- Goodyear 4.4%
- Wickenburg 4.4%
- Litchfield Park 3.4%
- Sun Lakes 2.9%
- Casa Grande 1.6%
- Scottsdale 1.4%
- Carefree 1.3%
- Fountain Hills 0.5%
- Cave Creek -0.5%
- Rio Verde -0.5%
- Paradise Valley -0.7%
- Gold Canyon -3.9%
We note that 10 out of the top 11 cities are in the West Valley. The lone exception is Eloy, where prices are being helped a lot by new home sales in the Active Adult community Robson Ranch. Prices in Robson Ranch are much higher than the average home with a postal address in Eloy
6 out of the bottom 7 cities are in the Northeast Valley. In fact all of the northeastern cities are in the bottom 7. This underscores how badly the luxury market has been affected by excessive supply. If you were to remove all sales over $500,000 you would get a different picture of the Northeast Valley:
- Paradise Valley 26.1% (but only 3 sales a year were under $500,000)
- Carefree 8.5%
- Scottsdale 5.5%
- Fountain Hills 4.6%
- Cave Creek 1.0%
- Rio Verde 0.0%
We can disregard the Paradise Valley number since there is almost no market in PV under $500,000. The appreciation numbers for Carefree, Scottsdale and Fountain Hills are perfectly respectable for the market under $500,000. However Cave Creek & Rio Verde seem to be stuck in neutral even for the lower price ranges. Gold Canyon is also neutral at 0.3% if we exclude homes over $500,000, but as with Cave Creek & Rio Verde, neutral is better than the negative appreciation we see when we include all homes.
All the above numbers are based on ARMLS closings, not total recorded deeds.
May 3 - Ellie Mae has introduced what they call their "Millennial Tracker™" , which provides some statistics about mortgages closed by millennial borrowers (born 1980-1999). For the Phoenix metro area, they report that:
- millennials comprise 26% of all borrowers
- 45% of millennial borrowers were married
- average age was 29
- average loan amount was $195,966
- 85% of loans were for purchase and 15% for refinancing
- 52% of loans were conventional with 47% FHA and 1% VA
- average loan took 45 days to close
- average FICO score for successful borrower was 716
- average appraised value was $225,199
- average loan-to-value was 89%
In the Tucson metro area, only 22% of borrowers were millennials.
Across the country the percentage of borrowers who were millennials varied from lows of 10% (Sarasota FL and Myrtle Beach SC) to 45% (Laredo TX). The northeast and mid west has the highest percentage of millennial borrowers. Most of California has low percentages, probably because of extremely high prices. For example San Francisco is 16%, Los Angeles 16% and San Diego 17%.
All this data relates to the first quarter of 2016 and you can examine for yourself here.
May 2 - April was not a good month for the super-luxury market. Only 5 listings over $3 million closed escrow compared with 19 in April 2015. The average price per square foot was down 8% from last April and dollar volume was only $16 million, not impressive after 2015's monster total of $81 million. The only bright spot in this rarified market is that we have 18 pending listings, one more than last year. That means we can justifiably hope for a stronger May and/or June. We certainly need a few strong months because at 5 sales per month we now have 65 months of supply enough to last until the fourth quarter of 2021.
May 1 - The Census Bureau still reports that their detailed database by county or place is "unavailable due to maintenance". After two months I have to assume something very bad has happened to it and they are having trouble recovering from backup. In the meantime we have to make do with totals for the state and for the metropolitan areas. The Phoenix-Mesa-Scottsdale metro is showing 1,797 permits for single family homes for March. This is 25% higher than the 1,438 they reported for March 2015. So far this year we have seen 4,436 in the first 3 month which is up 33% from last year.
If the remaining 3 quarters kept up this differential we would see more than 22,000 permits for the whole year. However it remains to be seen if this pace will continue to hold.
April 30 - If we check out the weekly dollar volume chart today we see a very impressive spike with the highest total since April 2006. As unusually large as $2.687 billion is for a monthly dollar volume, we must remember that the month we are measuring on April 30 contains two end-of month monster days. This is because the last day of April falls on a Saturday. The irregular nature of the calendar generates a number of these anomalies where we sometimes get two and sometimes zero month end days inside the measured period. Having said that, the previous short term record in April 2006 benefitted from the same effect. The real record high occurred in June 2005 when we saw $3,339 billion dollars spent through ARMLS. This peak was not caused by an anomaly but represented the height of buying fueled by extremely loose lending standards. Given that a large amount of housing was purchased outside of ARMLS in 2005, this peak is really only a fraction of total spent that month.
April 29 - After 4 full weeks in the second quarter we see that new listings are still arriving faster than normal. The count so far this quarter is 9.4% higher than last year and 8.7% above the 2014 level. The price ranges with the highest increase in new listings compared with last year are:
- $400,000 to $499,000 - up 19% from 650 to 772
- $225,000 to $249,999 - up 16% from 773 to 898
- $500,000 to $599,999 - up 14% from 348 to 395
- $175,000 to $199,999 - up 12% from 881 to 989
- $350,000 to $399,999 - up 11% from 611 to 681
The extra supply below $200,000 will be welcomed by buyers, but it is not such a happy picture below $175,000
- Up to $99,999 - down 36% from 632 to 405
- $100,000 to $124,999 - down 34% from 465 to 306
- $125,000 to $149,999 - down 28% from 864 to 619
- $2,000,000 to $2,999,999 - down 17% from 52 to 43
- $1,500,000 to $1,999,999 - down 12% from 60 to 53
The luxury market between $1.5M and $3M needs less supply, so the fall in new listings compared to last year is good news for sellers. The huge fall in supply under $175,000 is even worse than it looks for buyers in this range because we were already in a very weak supply situation last year.
April 28 - We are taking another look at how the Cromford® Market Index has fared in the single family markets of our largest 17 cities.
We see 12 cities with improved prospects for sellers compared with a month earlier and 7 that have deteriorated. Three of the latter are cities that have appeared weak for some time: Cave Creek, Fountain Hills and Paradise Valley, all dependent to some extent on the over-supplied luxury sector. To these we add a couple of Southeast Valley cities, Mesa & Chandler, in which the market is still very favorable to sellers but not quite as much as in March.
Meanwhile the West Valley goes from strength to strength with the Southwest getting its turn in the spotlight. The top gainers since last month are:
- Buckeye - up 18%
- Goodyear - up 13%
- Avondale - up 10%
April 27 - There are many different ways to measure the size of a real estate company. Taking stock of who has the most valuable active listings in Maricopa County, here are the standings as of yesterday:
|Rank||Company||Broker||Total Price of Maricopa County Homes Listed for Sale on ARMLS||Market Share by Listed $|
|1||Russ Lyon Sotheby's International Realty||Deems Dickinson||$1,633M||13.5%|
|3||Realty ONE Group||Jim Sexton||$705M||5.8%|
|4||Realty Executives||Gerry Russell||$599M||4.9%|
|5||Berkshire Hathaway Home Services||Charles McLean||$589M||4.9%|
|6||Coldwell Banker||Martha Appel||$486M||4.0%|
|7||West USA Realty||Dale Hillard||$388M||3.2%|
|8||Launch Real Estate||Suzanne Johnson||$328M||2.7%|
|9||RE/MAX Fine Properties||Sandy Karpen||$256M||2.1%|
|10||Walt Danley Group||Thomas Snyder||$226M||1.9%|
|11||RE/MAX Excalibur||Gary Greenacre||$209M||1.7%|
|12||DPR Realty||Matthew Deuitch||$174M||1.4%|
|13||Silverleaf Realty||Mike Sweeney||$146M||1.2%|
|14||Keller Williams Arizona Realty||Jim Dunning||$144M||1.2%|
|15||RE/MAX Platinum Living||Jay Macklin||$135M||1.1%|
|16||West USA Realty Revelation||Angela Fazio||$134M||1.1%|
|17||My Home Group||Jereme Kleven||$130M||1.1%|
|18||Keller William Realty Phoenix||Michelle Reed||$113M||0.9%|
|19||Keller Williams East Valley||Shane Dodd||$104M||0.9%|
|20||North & Co.||Michele Williamson||$82M||0.7%|
There are another 1,473 companies with active listings, but the top 20 represent about 63% of active listings by total dollar value. The top 100 represent 81%.
We plan to look at company market share in different dimension in future onservations.
April 26 - The latest S&P/Case-Shiller® Home Price Index® numbers came out this morning, covering sales that closed between December 2015 and February 2016. The national number showed a very modest change month to month of 0.20% and a more substantial year over year change of 5.29%. The gains overall in the last several months have been very slight , only 0.27% in total over a period of 6 months. This unimpressive advance, however, was still higher than the change in the Consumer Price Index between the same period (August to February), which declined 0.5%. During the 6 months before that, the HPI jumped by 5.0% while the CPI increased by 1.5%.
Over the past year the 20 metro areas reported by Case-Shiller rank as follows:
- Portland 11.9%
- Seattle 11.0%
- Denver 9.7%
- San Francisco 9.3%
- Dallas 9.0%
- Tampa 7.8%
- Los Angeles 6.8%
- Detroit 6.5%
- Las Vegas 6.4%
- San Diego 6.4%
- Miami 6.2%
- Atlanta 6.1%
- Phoenix 6.0%
- Charlotte 4.2%
- Minneapolis 4.0%
- Boston 3.7%
- Cleveland 3.6%
- New York 2.1%
- Chicago 1.8%
- Washington DC 1.4%
The west coast continues to appreciate the fastest, with Denver also very strong. Phoenix is in the middle of this pack of 20, but beat the overall average for the USA.
When we look at the month to month change we see:
- San Francisco 1.06%
- Seattle 1.06%
- Denver 0.94%
- Portland 0.75%
- Los Angeles 0.70%
- Tampa 0.59%
- Dallas 0.52%
- Atlanta 0.37%
- Charlotte 0.35%
- Phoenix 0.27%
- Las Vegas 0.21%
- Detroit 0.10%
- Miami 0.08%
- San Diego 0.06%
- Boston -0.08%
- Washington DC -0.20%
- Chicago -0.31%
- Minneapolis -0.44%
- New York -0.47%
- Cleveland -0.60%
Here the strength of the west coast is even more obvious compared to the declines of the east coast and upper mid west. Phoenix is right in the middle of the pack once again.
You can see both the long term and short trends in all 20 of the major metro areas here:
April 25 - Comparing sales revenue for the the first quarter, we see a generally positive picture for 2016 over 2015. The following is for both single family and townhouse/condo sales:
Below $150,000 sales fell due to a lack of supply, not a lack of demand. Between $1 million and $3 million the comparison is not so great, but it is hardly weak. The problem in the luxury market is not lack of demand but excessive supply. In fact above $3 million we saw very strong growth in sales revenue. Throughout the mid-range from $150,000 to $600,000, the picture looks very rosy with all segments growing by at least double figures and one ($250,000 to $275,000) growing by almost a third..
April 24 - The always helpful Jim Belfiore has responded (on a Sunday too) and confirmed that the Census Bureau permit numbers for February in the downloaded text file are Year To Date. So here is the information we have for February:
The total number of single family permits issued in February 2016 for Maricopa & Pinal counties is 1,405. This is 7 larger than the 1,398 shown for the Phoenix-Mesa-Scottsdale metro area, but it is not clear if part of these 2 counties does not count as part of the metro area, or if there has been a small clerical error. The total is up 37% from February 2015. It was up 30% for the whole of Arizona, which means it was up only 12% for the 13 counties outside of Maricopa and Pinal.
The cities ranked as follows in February:
- Phoenix 170
- Mesa 158
- Gilbert 149
- Peoria 129
- Unincorporated Pinal County 122 (mainly San Tan Valley)
- Chandler 105
- Unincorporated Maricopa County 96
- Buckeye 91
- Queen Creek 84
- Scottsdale 70
Gilbert seems to have lost the top spot that it held for several years, but the Southeast Valley as a whole is very strong with 4 cities in the top 10. Outside of Maricopa & Pinal counties, the strongest city for permits was Marana with 60.
The 12 month average for Maricopa & Pinal counties has increased to 17,508, the highest figure since April 2008.
April 23 - The Census Bureau is still struggling to repair its broken permit database and in the meantime they are making text files available. The numbers in this text file for February are so colossal I think they may have combined January and February together. I am checking with Jim Belfiore to see what he has for February and will publish the permit data as soon as I can confirm the data released by the Census Bureau is accurate.
April 22 - The Ellie Mae Origination Insight Report shows that the average time to close a loan has fallen back in March 2016 to the same level as a year ago. This means we can safely assume the delay because of TRIS are now behind us. On average, purchase loans take 3 to4 days longer than refinance loans. VA loans typically take about 4 days longer than FHA or convention loans.
Good news for borrowers is that closing rates have increased for purchase loans to 75.1%, the highest rate since August 2011. There has not been much of a change in the average FICO scores for closed loans, so this suggests that FICO scores are increasing among the loan applications.
April 21 - The Cromford® Market Index for the market as a whole appears to be stuck in a rut around 130 to 131. However there is much more action when we look at the single family market in the largest 17 cities (by dollar volume).
This is a positive picture overall and we see very favorable trends for sellers in the least expensive cities, particularly the Southwest Valley and Pinal County:
- Goodyear - up 15%
- Buckeye - up 14%
- Maricopa - up 11% (but flattening out in the last week)
- Avondale - up 10%
We see unfavorable trends for sellers in the most expensive cities, especially Paradise Valley, Fountain Hills and Cave Creek. North Scottsdale is also doing poorly due to excessive inventory levels, but is balanced by Central and South Scottsdale, both of which are enjoying strong demand and relatively weak supply. Hence Scottsdale as a whole has been able to generate a small improvement of 2% over the last month.
Phoenix, Mesa, Chandler and Gilbert would all see higher rises in their CMI if they were not being dragged down by their luxury markets. For example Las Sendas and the Citrus Sub Area are having a negative effect on the figures for the City of Mesa while the Biltmore Distinct, Ahwatukee Foothills and Northeast Phoenix are affecting the City of Phoenix's statistics negatively. Tempe too is being dragged down by its more expensive southern area (85284).
It is all about supply or the lack of it. Demand is pretty good across all segments. The luxury segment has far too much supply and the affordable end of the market has far too little. The mid-range is the Goldilocks segment with just about the right amount for market balance.
April 20 - For the Northeast Valley we see three very strong ZIP codes for single family appreciation between 1Q 2015 and 1Q 2016:
- Scottsdale 85251 - 19%
- Scottsdale 85257 - 17%
- Carefree 85377 - 17%
The following were the weakest areas by the same measurement:
- Scottsdale 85266 - down 9%
- Scottsdale 85262 - down 3%
- Rio Verde 85263 - down 2%
- Cave Creek 85331 - down 1%
- Paradise valley 85253 - flat
April 19 - In Phoenix and the North Valley there are a lot of ZIP codes showing very strong appreciation for single family homes when we compare 1Q 2016 with 1Q 2015:
- Phoenix 85031 - 28%
- Phoenix 85040 - 27%
- Phoenix 85033 - 24%
- Phoenix 85019 - 23%
- Phoenix 85008 - 23%
- Phoenix 85014 - 20%
- New River 85087 - 19%
- Phoenix 85009 - 18%
- Phoenix 85017 - 18%
- Phoenix 84042 - 18%
The majority of these are relatively inexpensive ZIP codes, though 85008, 85014, 85087 and 85042 are all over $100 per sq. ft.
All is not sweetness and light however. We see negative appreciation in 3 ZIP codes:
- Phoenix 85012 - down 5%
- Phoenix 85016 - down 3%
- Phoenix 85028 - down 2%
While these are 3 of the most expensive locations in Phoenix, there are other expensive locations that saw good appreciation during the same period, namely:
- Phoenix 85020 - 14%
- Phoenix 85007 - 13%
- Phoenix 85003 - 13%
- Phoenix 85013 - 13%
- Phoenix 85018 - 9%
- Phoenix 85021 - 9%
The market is getting very complicated with most segments advancing strongly while some retreat.
April 18 - In the Southeast Valley we see the following high appreciation areas comparing 1Q 2016 with 1Q 2015:
- Tempe 85281 - 16%
- Tempe 85283 - 16%
- Mesa 85201 - 15%
- Mesa 85204 - 13%
- Mesa 85205 - 12%
- Mesa 85208 - 12%
- Chandler 85224 - 12%
- Chandler 85225 - 10%
- Mesa 85210 - 10%
- Mesa 85202 - 10%
While these are not quite as impressive as the West Valley areas we looked at yesterday, they are well above the valley average. Notice that these are mostly the older parts of Mesa, Chandler and Tempe with relatively little new construction.
The worst performing ZIP codes for appreciation in the Southeast Valley are among the more expensive areas:
- Mesa 85207 - down 5%
- Phoenix 85045 - down 2%
- Tempe 85284 - down 1%
- Phoenix 85048 - flat
- Mesa 85215 - flat
April 17 - In the West Valley we some impressive appreciation numbers when comparing 1Q 2016 with 1Q 2015. For the single family market the top ZIP codes were:
- Tonopah 85354 - 27%
- Glendale 85301 - 23%
- Youngtown 85363 - 21%
- Wittmann - 20%
- Sun City 85373 - 18%
- Glendale 85307 - 18%
- Sun City 85351 - 15%
- El Mirage 85335 - 15%
- Glendale 85303 - 14%
- Tolleson 85353 -13%
However when we look exclusively at homes priced over $500,000, the picture has turned far more negative in the last month. First quarter sales are down 14% while active listings are up 24%. This means the situation for the, admittedly small, luxury market in the West Valley is now favoring buyers. The average price per sq. ft. for sales of homes over $500,000 has dropped 4% from $172 to $165 over the last 12 months..
April 16 - While the low end of the market labors under weak supply conditions and the mid range continues to look strong, the upper end of the market has got a fair assortment of trouble spots. If we segment by price among the primary luxury areas of the valley, we see the following:
A. $500K to $1M
Supply is up 19% compared to April 2015 while sales during the first quarter were up a strong 16%. Despite the increase in sales the additional inventory is forcing sellers to agree to weaker pricing. The average price per square foot for first quarter sales was down 2.4% from $198 to $194 per sq. ft. compared with 1Q 2015.
B. $1M to $2M
Supply is up 18% while sales during the first quarter were up 9%. Despite this imbalance sellers seem to have more backbone in this price range and have eked out a 2.1% gain from $283 to $288 per sq. ft. between 1Q 2015 and 1Q 2016.
C. Over $2M
Supply is 7% higher than last year while first quarter sales were up 15%. This is the best of the three segments for sellers and they achieved a 2.5% gain from $426 to $437 per sq. ft. between 1Q 2015 and 1Q 2016.
Since segment A is by far the largest in terms of unit sales, the overall appreciation for homes over $500,000 was an insipid -0.5% between 1Q 2015 and 1Q 2016.
Note that all of the above numbers are for single family homes only.
Based on 1Q 2015 to 1Q 2016 comparisons, the weakest ZIP codes for luxury price trends are currently 85016, 85048, 85142, 85207, 85213, 85262, 85266, 85286 and 85383.
The strongest ZIP codes for luxury price trends are currently 85018, 85020, 85248, 85251, 85254, 86255, 85258, 85259, 85268, 85284 and 85377.
April 15 - It is becoming clear that a lot of owners of re-sale homes over $500,000 are getting into a selling mood. In Maricopa County we have 11% more active listings over $500,000 than we had this time last (excluding new homes).
I wondered if this increase in selling is because of
- lifestyle changes, or
- changes in investment outlook
Remote owners will tend to look on their homes as investments. Owner-occupiers tend to regard their homes as where they live (what economists call shelter).
I found that the number of remote owners who have their homes listed for sale is almost exactly the same as last year. However the owner-occupiers have increased their listings by 18%.
This suggests that the growing motivation for listing a home for sale is some kind of lifestyle change, not a change in investment outlook. A lot of the owners of these higher priced homes are baby boomers. There are at least two effects which I think may be causing them to have more homes listed for sale:
- empty nest downsizing
- illness or death (moving in with relatives or leaving the home to beneficiaries)
It is very hard to obtain hard numbers for these lifestyle changes, but if any subscribers have concrete examples to support (or disprove) my theory I would love to hear from them.
April 14 - The worst areas for price appreciation at the moment are almost all at the most expensive end of the market. When we refer to the city ranking table, we see the following at the top:
- Paradise Valley +1.9%
- Carefree -0.9%
- Scottsdale +1.9%
- Fountain Hills -0.7%
- Cave Creek -0.3%
- Rio Verde +1.9%
These locations, the six most expensive places in the Greater Phoenix area, all show lower appreciation than any of the other cities with 2 exceptions in Pinal County:
- Gold Canyon -3.7%
- Casa Grande +0.8%
Of course, Gold Canyon is the most expensive location in Pinal County, but ranks only 9th in the overall table. It is bottom of the table for appreciation.
This is convincing evidence of weakness in the luxury sector of the market in contrast to the entry-level and mid-range of the market which are seeing relatively strong appreciation.
The top appreciating locations are all relatively small and inexpensive:
- Tonopah +27.9%
- Wittmann +18.0%
- Eloy +16.6%
- Youngtown +14.1%
- Sun City +10.4%
- El Mirage +10.4%
April 13 - We are seeing the largest improvements in the situation for sellers in the lower priced and outer areas. Looking at the Cromford® Market Index and how it has moved over the last month for the single family market, the impressive locations are:
- El Mirage - CMI up 38%
- Apache Junction - CMI up 28%
- Gold Canyon - up 21%
- Sun City - CMI up 20%
- Maricopa - CMI up 16%
- Goodyear - CMI up 14%
- Avondale - CMI up 12%
- Litchfield Park - up 11%
- Surprise - CMI up 10%
- Buckeye - CMI up 10%
- Arizona City - CMI up 10%
- Glendale - CMI up 10%
Some of these are improving from relatively weak situations, notably Maricopa & Gold Canyon, but the speed of the change is impressive.
It is a story about the supply, mostly. There are so few properties available under $200,000 that buyers are having to search further and further from the center of the valley in order to find something to buy that does not already have piles of competing offers.
April 12 - In contrast to yesterday's observation, here are the most expensive places to rent a home in the Greater Phoenix area. The values are the average monthly rent per square foot for leases documented within the ARMLS database over the past 12 months (April 2015 to March 2016). The figures in parentheses are the rates for the 12 months from April 2014 to March 2015.
- Scottsdale 85251 - $1.39 ($1.30)
- Paradise Valley 85253 - $1.25 ($1.17)
- Phoenix 85004 - $1.24 ($1.21)
- Phoenix 85003 - $1.21 ($1.12)
- Phoenix 85012 - $1.18 ($1.21)
- Phoenix 85016 - $1.17 ($1.07)
- Scottsdale 85255 - $1.16 ($1.11)
- Phoenix 85018 - $1.16 ($1.07)
- Phoenix 85054 - $1.09 ($1.03)
- Scottsdale 85258 - $1.09 ($1.06)
- Scottsdale 85250 - $1.09 ($1.03)
- Tempe 85281 - $1.07 ($1.03)
- Scottsdale 85254 - $1.06 ($1.00)
- Scottsdale 85260 - $1.04 (99c)
- Scottsdale 85259 - $1.02 (96c)
- Scottsdale 85257 - $1.00 (94c)
- Scottsdale 85266 - 99c (96c)
- Phoenix 85014 - 99c (82c)
- Wickenburg 85390 - 98c (77c)
- Phoenix 85013 - 98c (92c)
Since these are annual averages, the most recently documented rents have already increased in several areas. For example, in the last quarter we saw:
- Scottsdale 85251 at $1.45
- Scottsdale 85004 at $1.36
- Wickenburg 85390 at $1.33
Rents in Wickenburg have risen the fastest, probably because of the extreme shortage of homes to rent. There are plenty of homes for sale in Wickenburg, but very few rental listings.
April 11 - If you are seeking a rental property at the lowest possibly monthly lease rate, then here are the twenty locations that had the lowest average lease price per square foot over the past 12 months:
- Gila Bend 85337 - 45c
- Casa Grande 85122 - 47c
- Coolidge 85128 - 48c
- Arizona City 85123 - 49c
- Tonopah 85354 - 50c
- Maricopa 85138 - 52c
- Maricopa 85139 - 52c
- San Tan Valley 85143 - 52c
- Florence 85132 - 53c
- Buckeye -85326 - 55c
- Laveen 85339 - 56c
- San Tan Valley 85140 - 56c
- Surprise 85398 - 57c
- Tolleson 85353 - 58c
- Eloy 85131 - 59c
- Phoenix 85041 - 59c
- Waddell 85355 - 59c
- Surprise 85388 - 60c
- Surprise 85379 - 60c
- Phoenix 85043 - 60c
April 10 - If we use the 12 month average sales price per square foot chart and filter the price ranges so that only homes listed at $500,000 or higher are shown, then we see that the average $/SF reached a peak of $237 in August last year and has been moving sideways to slightly lower since then. It was $233 last month and so far in April is running at under $232. This reflects the oversupply in the higher price ranges.
Why are we seeing so many active listings above $500,000?
A theory put forward by several national analysts, particularly Stephen Kim of Barclays, is that a long term secular change is under way. They believe a wave of empty nesters is seeking to downsize, and now that the market has recovered from the crisis of 2006-2009 they are planning to do so in growing numbers. If a large number of baby boomers want to sell their suburban luxury homes at the same time, we are going to see an imbalance of supply and demand. Today's younger buyers appear to prefer density and proximity to urban facilities like shops, restaurants and entertainment. Far fewer of them play golf. In any case, can enough of the younger generations afford to live in suburban luxury even if they wanted too? Baby boomers are the ones with the equity. Generation X was badly hit by the foreclosure wave and many of the Millennials are still deciding what they want. We are seeing a rise in discretionary renting, where older homeowners sell their large homes and move into smaller rental homes. They appear to prefer upgrades and amenities to square footage. They are probably using their home equity as a source of funds to enjoy their retirement.
What we are seeing from the Greater Phoenix numbers lends some credibility to this theory.
April 9 - The monthly median sales price for all areas & types on ARMLS has hit its highest point since February 2008 at $217,900. However the monthly average sales price is currently at only $267,224, 2.4% below the 2015 peak of $273,818 reach on July 7 last year.
It may seem strange that the median and average are doing different things, but this is because they are measuring different things. Since last year, the number of sales under $200,000 has dropped precipitously due to the shortage of homes for sale at this price level, The absence of all these inexpensive homes in the mix will cause the median to trend higher, even if there had been no change in home pricing. When calculating the median every home sold has equal impact, no matter how large and expensive it might be.
When we calculate an average price, the more expensive a home is, the more it affects the average. Sales of expensive homes have not increased in number as much as the mid-range. This tends to pull the average down even if there had been no underlying change in pricing.
In reality there has been a change in pricing, and this is best seen by examining the monthly average price per sq. ft.
The median chart is giving us too optimistic a picture while the average chart is too pessimistic. The $/SF chart is a more balanced reflection of what is going on with pricing.
April 8 - It looks as though the slowdown in new listings that we reported at the end of March was just a temporary lull. We are now seeing them rise again. We have seen over 10,000 new listings for every 28 day period in 2016 from January 30 onwards apart from 3 days - March 31 to April 2 - so the temporary lull coincided with the week after Easter.
In 2015 we NEVER saw more than 10,000 new listings in any 28 day period, and the last time before that was April 17, 2014.
Of course the supply of new listings continues to be poorly matched to the price ranges where they are most needed.
Across Greater Phoenix, during the first quarter of 2016, we saw 7% more new listings than in the first quarter of 2015. However we also saw 7% more closed sales, so these numbers are nicely matched. They are not so nicely matched when we analyze by price segment:
|Price Range||Change in New Listings||Change in Closed Listings||Comment on Change 2015 to 2016||Ratio of New Supply to Quarterly Sales Q1 2016|
|Up to $100K||-28%||-28%||balanced||1.4|
|$125K-$150K||-20%||-16%||new supply dropped relative to sales||1.2|
|$150K-$175K||-1%||+14%||sales rose much faster than new supply||1.3|
|$175K-$200K||+12%||+15%||sales rose slightly faster than new supply||1.5|
|$200K-$225K||+19%||+22%||sales rose slightly faster than new supply||1.5|
|$225K-$250K||+23%||+19%||new supply rose slightly faster than sales||1.6|
|$250K-$275K||+26%||+32%||sales rose faster than new supply||1.5|
|$275K-$300K||+15%||+17%||sales rose slightly faster than new supply||1.7|
|$300K-$350K||+15%||+21%||sales rose faster than new supply||1.8|
|$350K-$400K||+17%||+3%||new supply rose much faster than sales||2.1|
|$500K-$600K||+23%||+18%||new supply rose faster than sales||2.5|
|$600K-$800K||+33%||+18%||new supply rose much faster than sales||2.8|
|$1M-$1.5M||+16%||-15%||new supply rose while sales fell||3.7|
|$1.5M-$2M||+12%||+22%||sales rose faster than new supply||3.7|
|Over $3M||+27%||+37%||sales rose faster than new supply||5.5|
Supply shortages are most acute in the ranges where the ratio of new supply to closed sales is 1.6 or less. This includes all the ranges up to $275K but from $225K to $250K we did see some improvement for buyers over last year.
Below $275K we therefore see continued strong appreciation, short times on market and low cancellation and expiry rates.
From $275K to $350K we see very healthy market conditions with new supply and closed sales both up significantly from last year.
From $350K-$400K the growth in supply was strong, but sales growth was much weaker than average, suggesting there may be a few problems developing for sellers. However from $400K to $500K the percentage growth in new listings was matched by the growth in closed sales. I would describe this sector of the market as normal, healthy and growing, with no major shortages of buyers or sellers.
From $500K to $800K new supply outstripped the growth in sales, so even though there was a healthy increase in volume we see more competition building between sellers.
From $800K to $1M the increases were balanced but we do see 3 times as many new listings as we see closed sales. This is likely to mean higher cancellation and expiry rates and long times to sell ahead. It also means minimal upward pressure on pricing.
The issue for sellers with homes priced over a million is that the number of new listings outpaced sales by at least 3.4 to 1. This is not unusual for this segment, where new listings comfortably exceed closed sales at all times. The bad news is that sales were slightly down (-1.4%) from last year, primarily due to surprisingly poor performance by the segment from $1M to $1.5M. Yet new listings were up almost 15% for homes over $1M. This is a good situation for luxury home buyers, but it is not very good news for sellers who would like to see some appreciation. The current market environment over $1 million is consistent with a flat to slight downward trend in prices, long times on market and high rates of cancelled and expired listings. There some very fashionable locations (close to urban centers) where this does not apply, but the bulk of the luxury market has reasonably good demand but excessive supply. Because of the good demand, agents will be happy with the transaction volume, but sellers are likely to be disappointed with the sales prices that can be achieved, and how long it takes to achieve them. These sellers hear about prices rising both locally and nationally, but unfortunately it does not apply to them.
There are currently 2,087 homes for sale priced over $1 million across Greater Phoenix. Last year's peak was 1,880 and back in 2012 we had only 1,204. The current annual sales rate for homes listed over $1 million is 1,225, slightly down from a peak of 1,253 in August 2015. So that means we have more than 20 months of supply, more than enough to give buyers an excellent selection to choose from and a solid advantage in most negotiations.
April 7 - Most of the city snapshots are overwhelmingly showing green, indicating that the market has improved for sellers since last month and last year. The main exceptions to this picture are:
- Paradise Valley - excessive supply and weakening sales
- Cave Creek - high supply and weak pricing
- Casa Grande - high supply and weak pricing
- Rio Verde - excessive supply and weak sales
Particularly strong are:
- Goodyear - only 7 red indicators out of 82
- Glendale - only 11 red indicators out of 82
- El Mirage - only 11 red indicators out of 72
- Queen Creek - only 12 red indicators out of 82
- Buckeye - only 12 red indicators out of 72
- Maricopa - only 13 red indicators out of 72
- Laveen - only 14 red indicators out of 72
- Avondale - only 15 red indicators out of 82
- Sun City - 15 red indicators out of 72
- Sun City West - only 15 red indicators out of 72
- Gilbert - only 15 red indicators out of 82
- Apache Junction - only 16 red indicators out of 72
The Cromford® Market Index for the single family market in the top 17 cities has moved favorably for sellers in most cases over the last month:
Fountain Hills and Paradise Valley have gone backwards for sellers while Maricopa has yet again improved faster than anywhere else to jump to 15th place. This has also been a very good month for the West Valley with Goodyear, Avondale, Surprise, Buckeye and Glendale all coming on strong.
13 improving cities out of 17 is a positive picture and following a very strong month for sales volume, this is shaping up to be a healthy spring for the housing market. The only big negative is that it is really tough going for anyone looking for an affordable home to buy or rent - not enough supply and too much competition from other buyers. Do not expect this to change any time soon. If you can work from home or tolerate a long commute, the easiest answer is to live in Buckeye, Maricopa, Florence or San Tan Valley, or other outer locations where homes and rents are still relatively cheap and supply is still available. This may change as more people get the same idea.
Large, expensive homes in the outer suburbs are likely to see excessive supply for a long time as the down-sizing trend for baby boomers gathers momentum. This is particularly true for older homes. So another out-of-the-box option for people struggling to find somewhere affordable is to team up with several others and share the rent or purchase of a much larger home further from the downtown areas. This will probably be receiving far less attention from buyers or prospective tenants, so securing a home will be that much easier. Careful though. Joint tenancy can be tricky unless you all get along really well.
April 6 - During the first quarter of 2016, Canadians purchased only 110 homes (single family or condo) in Maricopa County. This is the lowest quarterly total since 2007 and down 61% from the first quarter of 2015. The peak time for Canadian purchases was the second quarter of 2011 when we saw 1,454 deeds recorded for Canadian buyers and they represented 5% of the market. That suggests that Canadians are pretty smart, since 2Q 2011 was close to the cheapest time to buy a home in the last 20 years.
Canadian sellers outnumbered Canadian buyers by almost 5 to 1 during the first quarter of 2016. There were 526 completed sales by Canadian owners in Maricopa County. This is not quite a record since the second quarter of 2015 was slightly higher at 561. I would expect Canadian sellers to set an absolute new record high during the second quarter of 2016.
The 526 Canadian sales represent 2.3% of all sales during the quarter. So although Canadians are adding to the supply, they are not having an overwhelming impact. Almost all the other 97.7% of sales were by US residents and nationals. Apart from Canadians the impact of foreign buyers and sellers on the Maricopa County market is extremely small.
April 5 - The basic March 2016 numbers are in for Maricopa County recordings with Affidavits of Value and they are looking very positive. We count a total of 9.639 closed transactions for single family and condo properties which represents a 12% increase over March 2015. Since March 2015 was 17% higher than March 2014, this is a big 31% increase over 2 years. The year over year unit volume increase was even more impressive for new homes, up a startling 50%, making the re-sale market's gain of 8% look paltry in comparison. New home market share has risen from 9.7% in March 2015 to 12.7% in March 2016. Before getting too excited we should remember that this is nowhere the peak of the market, when new homes represented 40.6% of December 2006 transactions.
The median sales price is up 8.4% from $211,320 in March 2015 to $229,000 in March 2016. The median sales price for new homes actually fell by 2% from $321,085 to $315,229, as there are now larger numbers of less expensive new homes below $300,000 entering the new home mix. Median sales prices are close to useless for measuring new homes. You have to use average price per sq ft to compensate adequately for the changes in the mix.
The median sales price for resale homes rose from $200,000 in March 2015 to $217,00 in March 2016, an annual rise of 8.5%.
Note that transactions without affidavits are excluded from all the above numbers. This includes HUD sales, trustee sales, and REO sales processed by the out of state title companies Quality Escrow and Servicelink. Both of these title companies continue to completely misunderstand Arizona law regarding exemptions from affidavits. If the county assessors ever notice, the title companies could be in legal trouble for claiming false exemptions for their lender clients.
April 4 - The housing crash is starting to feel like a long time ago now, and when we look at the percentage of distressed sales among March 2016 closed transactions we see confirmation of this.
There were only 3 cities with distressed transactions over 10%, and these were all in Pinal County: Arizona City, Coolidge and Florence. Apache Junction was just behind at 10%, which is mostly in Pinal County. The highest percentages in Maricopa County can be found in Glendale and Anthem, both at 9%.
The lowest percentages of distressed sales were in Sun City West and Fountain Hills, both down to 2% of sales.
April 3 - There were 1,538 new homes added to the ARMLS listings during the first quarter of 2016, 26% more than in the first quarter of 2015. 185 of the added listings were for dwelling types other than single-family, these being up only slightly from 175 in the first quarter of 2015.
This is still not a patch on the numbers we used to see between 2002 and 2008. The peak first quarter listing count for new homes was 3,446 in 2006 when homes started to become more difficult to move and inventory was piling up. However new home listings are up in volume by a much higher percentage than new re-sale listings, which are up 7% compared to last year). This still doesn't change the fact that 3 out of 4 new homes do not get placed into the ARMLS database prior to closing.
Generally, the hotter the market, the fewer homes get listed, but different developers have different policies too. Meritage, Taylor Morrison and DR Horton are the sources of the most listings since 2012. This does not necessarily mean they sold the most new homes, since we are counting listings not sales.
April 2 - Yesterday we investigated the supply by price range. Today we look at the demand for single family homes, by examining the number of listings under contract:
|Price Range||Under Contract (including UCB & CCBS) April 1, 2016||Year Ago||% Change||Comment||Contract Ratio April 1, 2016||Contract Ratio March 1, 2016||Contract Ratio April 1, 2015|
|Under $100K||155||360||-57%||large decline||85.6||96.6||116.9|
|Over $3M||16||29||-45%||large decline||4.9||6.0||9.7|
From $225,000 to $600,000 we have far more listings under contract that at this time last year. We also see very strong growth for the sector from $800,000 to $1 million.
From $175,000 to $225,000 and from $1.5 million to $2 million we have moderate increases in listings under contract of between 10% and 15%. For the sector from $1.5 to $2 million this goes a little way to mitigating the increase in supply.
The shortage of supply means the market under $175,000 is much smaller than last year, though the contract ratios are much higher between $125,000 and $175,000 showing there is no lack of buyer interest. Below $125,000 there is not much for sale and buyer interest is lower than last year too.
There are significant problems for sellers between $1 million and $1.5 million as well as for those over $2 million. This is because the number of listings under contract is down from last year at the same time that supply is much higher. The contract ratios have slipped compared with April 2015 and this signifies a large shift of negotiation power away from sellers and towards buyers. We should not be surprised to see weaker pricing trends in these price ranges as a result.
April 1 - When we examine the number of active single family listings by price range, we can clearly see the long term shortage of affordable homes, the adequate supply in the mid-range and the glut of luxury homes for sale.
|Price Range||Active (excluding UCB & CCBS) April 1, 2016||Year Ago||% Change||Comment||Days of Inventory|
|$125K-$150K||441||793||-44%||lowest level since 2005||40|
|$400K-$500K||1,903||1,601||+19%||highest active count since Mar 2009||191|
|$500K-$600K||1,229||1,036||+19%||highest active count since Apr 2009||253|
|$600K-$800K||1,337||1,065||+26%||highest active count since Jun 2009||293|
|$800K-$1M||760||683||+11%||highest active count since Aug 2009||384|
|$1M-$1.5M||808||677||+19%||highest active count since Nov 2009||480|
|$1.5M-$2M||465||408||+14%||highest active count since Mar 2010||684|
|$2M-$3M||407||382||+7%||highest active count since Mar 2010||798|
|Over $3M||327||300||+9%||highest active count since Dec 2009||1,219|
From $400,000 upwards we have more active listings than we have seen in the last 6 years, so buyers have plenty of choice and therefore negotiating power.
Below $200,000 we have a chronic shortage of homes available for purchase, and there is precious little to rent too. Here sellers have most of the negotiating power.
The median sales price for single family homes is at $230,000.
March 31 - Today we take another look at the single family markets in the largest 17 cities and examine how the Cromford® Market Index has changed over the past month:
Overall, the market continues the recent improving trend for sellers with 11 out 17 cities seeing an increase in their CMI. Many of them are up 5% or more, including Maricopa, Surprise, Avondale, Goodyear, Buckeye, Peoria, Mesa, and Chandler.
Fountain Hills, Paradise Valley and Tempe are the main weakening spots for sellers, though Tempe is still in the seller's market zone over 100. Paradise Valley and Fountain Hills are firmly in buyer's market territory now.
Once again, Maricopa is the faster improving market and managed to rise from 17th to 16th place.
March 30 - Just in case you think analyzing the ARMLS listings is pretty straightforward I am going to start an occasional series about the weird data you sometimes find among the listings. These are often hard to spot, but they make a terrible mess of your averages if you don't detect and correct them before you do your calculations.
So here is the first of our weird listings containing unusual data errors:
Listing number 4086563 for 19708 N CONCORD DR, Surprise, AZ 85374 claims to have 2 bedrooms and 1075 bathrooms. Although these numbers are confirmed by Monsoon we are more than a little skeptical. This seems like rather an excessive amount of plumbing to fit inside 1894 sq. ft, and we believe the listing agent probably meant to enter 1.75 bathrooms. However his typo survives to this day. The remarks talk about 2 beds and 2 baths and we are willing to bet he rounded the actual 1.75 up to 2 when it came to entering the remarks.
All this seems to have confused Zillow, so that it is reporting 0 bedrooms and 2.5 bathrooms. Redfin has the same faulty information as Zillow, while RPR ups the ante and reports 0 bedrooms and 3 bathrooms. Homesnap has the same bad data as RPR and so does eppraisal.com.
My respect goes to any real estate site that has the correct bedroom and bathroom data for this home. I have not found one yet.
One that might be more exciting to agents who represent buyers - listing number 5376886 - appears to be offering 3602639116% of the sale price as buyer's broker compensation. Unfortunately it is already closed. Not many agents use their telephone number to generate the commission percentage. When it comes to MLS data, you have to expect the unexpected. Imagine if you were trying to compute the average percentage commission based on the MLS data without scanning for this sort of data entry error first.
March 29 - The S&P / Case-Shiller® Home Price Index® report has been published for January. This covers sales that closed between November 2015 and January 2016. Ranking the 20 cities reported by their month to month price changes we see the following:
- Los Angeles 0.53%
- San Diego 0.42%
- Portland 0.42%
- Miami 0.38%
- Las Vegas 0.28%
- Tampa 0.24%
- Denver 0.22%
- Seattle 0.19%
- Detroit 0.11%
- Dallas 0.11%
- Cleveland 0.08%
- Atlanta 0.00%
- Charlotte -0.05%
- Washington -0.10%
- Phoenix -0.20%
- New York -0.27%
- Chicago -0.38%
- Boston -0.39%
- Minneapolis -0.50%
- San Francisco -0.69%
At 15th place, Phoenix has dropped dramatically from last month when it was 3rd. We are a little puzzled why this would happen as we are not seeing the same price trend that Case-Shiller is reporting. Our average price per sq. ft. for Oct 2015 to Dec 2015 was $136.13 for all areas & types while the same number for Nov 2015 to Jan 2016 was $137.70. This is a month to month increase of 1.2% which would put us top of of the table above.
If we restrict our analysis to Greater Phoenix, the increase is still 1.2% using ARMLS closed sales.
Looking at all the recorded sales across Pinal and Maricopa County we get an average price per sq ft of $134.24 for the fourth quarter of 2015 moving to $135.58 for November through January 2016, an increase of 1.0%
So the latest Case-Shiller number for Phoenix looks a little suspect.
The annual change table is as follows:
- Portland 11.8%
- Seattle 10.7%
- San Francisco 10.5%
- Denver 10.2%
- Dallas 9.2%
- Tampa 7.4%
- Detroit 7.1%
- San Diego 6.9%
- Miami 6.8%
- Los Angeles 7.0%
- Phoenix 6.1%
- Las Vegas 6.0%
- Atlanta 5.7%
- Charlotte 4.9%
- Minneapolis 4.5%
- Boston 3.6%
- Cleveland 2.9%
- New York 2.8%
- Washington 2.2%
- Chicago 2.1%
The national increase was 5.4%, so Phoenix remains modestly ahead of that and still in the middle of the pack. Washington has been going backwards since July, Chicago and Boston have been going backwards since August, New York since September.
Chicago appears to be the weakest of the major markets covered by Case-Shiller while the Pacific Northwest (Portland & Seattle) are the strongest.
March 28 - The National Association of REALTORS® has reported the highest number of pending listings for the USA in 7 months for the end of February. We presume that this does not include what we locally know as UCB or CCBS listings.
The ARMLS pending listings stand today at 8,313 for all areas & types. This is the highest since May 28 (10 month ago), but if we include the UCB and CCBS listings we get a count of 13,547 under contract. This is the highest number recorded since June 28, 2013, which is 33 months ago. Just in the last month UCB & CCBS listings have grown by 15% and pending listings have grown by 12% . Last year at this time we saw UCB & CCSB listings grow by 12% (less than 2016). However pending listings grew by a very strong 22% during the same period last year. Overall under contract listings grew by 19% between Feb 28 and Mar 28 last year and by 13% this year. So our high under contract count at the moment is largely due to us starting at a higher number rather than an exceptional growth rate.
March 27 - The number of active listings is starting to decline now, rather late in the season but with some serious downward momentum building as new listings drop in number and buying activity hits its stride. We have 22,796 excluding UCB & CCBS across all areas & types, down from 23,054 last week and 23,148 the week before that. We have a huge number of UCB & CCBS listings - 5,190 in all. In fact 39% of all under-contract listings are now UCB or CCBS.
Price changes are also in decline with 2,526 in the last week, the lowest total since February 1. We hit a peak of 2,941 on March 8
March 26 - The total number of listings under contract for all areas & types is 13,250, which is higher than at any time last year. The peak usually occurs between March and May, so we are likely to see 2016 establish a higher point before it slows down. We did see higher totals between 2009 and 2013 but these numbers were inflated by the large number of short sales that stayed in escrow for a long time awaiting lender approval.
The ZIP codes with the largest percentage increase in under contract listings compared with a year ago are:
- Gila Bend 85337 (4 versus 1)
- Phoenix 85003 (43 versus 19)
- Morristown 85342 ( 6 versus 3)
- Guadalupe 85283 (2 versus 1)
- Arlington 85322 (2 versus 1)
- Coolidge 85128 (34 versus 18)
- Chandler 85248 (80 versus 49)
- Casa Grande 85122 (40 versus 26)
- Phoenix 85012 (23 versus 15)
- Glendale 85305 (26 versus 17)
We see a couple of central Phoenix areas & a handful of remote ZIP codes in that list
March 25 - In many of the cities we are seeing a change to a more positive situation for sellers. Demand is increasing while the flood of new listings that dominated the market for the first 10 weeks of 2016 has started to ease. We can see this in the Cromford® Market Index for the single family markets in the 17 largest cities:
In marked contrast to a month ago, we see 12 of the 17 cities with higher CMI readings and only 5 showing a deteriorating situation for sellers. Once again the West Valley is in good shape, with no exceptions:
- Peoria - up 7%
- Avondale - up 6%
- Surprise - up 5%
- Buckeye - up 5%
- Goodyear - up 3%
- Glendale - up 2%
Even when we extend our analysis to the smaller cities we see positive trends in the West Valley:
- El Mirage +35%
- Sun City +14%
- Sun City West +4%
- Tolleson +3%
There are a couple of areas having trouble however:
- Litchfield Park -12%
- Laveen -1%
Phoenix and the Southeast Valley are also doing fairly well with the obvious exception of Tempe which has deteriorated by 16% in the last month and Queen Creek which is showing signs of weakness..
The worst trends for sellers are concentrated in the Northeast Valley:
- Fountain Hills -12%
- Paradise Valley -11%
- Scottsdale -3%
However Cave Creek has held steady over the last month.
Although it is still in 17th place, Maricopa is the most improved city in the top 17 list, up 13%.
March 24 - Today we are taking a look at the three largest 55+ age restricted areas in the valley: Sun City, Sun City West and Sun Lakes. Now there are many other locations containing age restricted communities, but these three are the easiest to study since they are almost exclusively for the active adults among us. Here is how they compare now and last year at this time, for single family homes (along with Chandler for comparison with the normal market):
All 3 areas have more inventory for sale than last year, while Sun City and Sun City West have also seen a significant increase in new listings compared to last year. The annual sales rate has declined slightly in Sun City but increased in Sun City West and surged by 16% in Sun Lakes compared to a year ago. However there is some weakness in Sun Lakes when looking at the under contract counts and the contract ratio. The under contact counts for Sun City and Sun City West look strong and their contract ratios are higher than last year.
Average days on market is lower than last year for Sun City and much lower for Sun City West but higher for Sun Lakes.
Like the rest of the market, appreciation has been stronger for the lower priced areas, in this case Sun City at 9% handily beat Sun City West's 6% while Sun Lakes was way behind at only 2%.
Overall I would say that sellers are currently having a harder time in Sun Lakes than they are in the other two areas. The increase in inventory will make life somewhat easier for buyers in all these areas than last year, but they are facing significantly higher pricing in the two Northwest Valley locations.
Compared with 2015 all three of the active adult markets are overall a little weaker relative to the normal market as represented by Chandler.
March 23 - According to the Zumper National Rent Report, rents in Phoenix have increased an average of 13.0% for 1 bedroom apartments to hit $780 a month. Two bedroom apartments are at an average of $980, 11.4% higher than a year ago.
In Mesa, 1 bedroom apartments are averaging $710 a month, up 6.0% while 2 bedroom apartments are at $890, up by 11.3%.
If these rent increases are causing concerns, I have 2 suggestions:
- Move to Tucson where 1 bedroom apartments are only $530 a month, down 1.9% from last year and 2 bedroom apartments are $730 a month, unchanged from a year ago.
- Console yourself that you are not in San Francisco where a 1 bedroom apartment rents for $3,590 a month and a 2 bedroom apartment rents for $4,870 a month.
Note that these rents are based on advertised asking prices not actual lease agreements.
March 22 - One subscriber has asked me to comment on how the midrange from $250,0000 to $500,000 is stratified. To do this I will use the recorded deeds from Maricopa & Pinal because the high number of new homes does not get reflected in the ARMLS statistics. The following table is for single family and condo/townhouse properties in Maricopa & Pinal.
|Price Range||YTD Sales Feb 2016||YTD Sales Feb 2015||Sales Growth YoY||% New Homes||Active (excl. UCB) Mar 1, 2016||Active (excl. UCB) Mar 1, 2015||Active Change YoY||6 mth avg $/SF||YoY Appreciation in 6 mth avg $/SF||ARMLS Annual Sales Rate||ARMLS Days of Inventory|
|$250,000 to $275,000||1,000||742||+35%||19%||1,085||1,037||+5%||$130.20||2.5%||5,289||75|
|$275,000 to $300,000||829||671||+24%||23%||1,214||1,238||-2%||$135.06||5.2%||4,612||96|
|$300,000 to $350,000||1,100||888||+25%||26%||1,915||1,766||+8%||$139.18||2.0%||6,107||115|
|$350,000 to $400,000||706||628||+12%||26%||1,541||1,594||-3%||$144.97||0.6%||4,208||134|
|$400,000 to $500,000||788||653||+21%||24%||2,064||1,820||+13%||$161.18||2.7%||4,491||168|
We can see the following:
- new homes have a very strong market share in the price range $300,000 to $400,000
- the largest growth in active listings is for the highest range $400,000 to $500,000 with 5.5 months of active inventory
- unit sales growth is good across the mid range, with the weakest price range being $350,000 to $400,000 and strongest $250,000 to $275,000
- the weakest appreciation is for $350,000 to $400,000 and the strongest for $275,000 to $300,000
March 21 - New home sales are off to a good start in 2016. The year to date count for closed sales of new single family homes during the first two months was 1,619 across Maricopa & Pinal counties, up 32% from last year.
The same cannot be said of attached homes, which were down 7% to 111 units. There seem to be far fewer attached homes available for closing, but many more are under development so this rate should increase by 2017.
The top locations for new homes sales so far this year are:
- Mesa 220
- Peoria 198
- Gilbert 180
- Phoenix 168
- Queen Creek 126
- Buckeye 126
- Chandler 114
- Goodyear 106
- San Tan Valley 102
- Scottsdale 56
If we rank the cities by dollars spent on new homes the picture changes a little:
- Mesa $71M
- Gilbert $67M
- Peoria $67M
- Phoenix $66M
- Scottsdale $49M
- Chandler $47M
- Queen Creek $44M
- Goodyear $35M
- Buckeye $31M
- San Tan Valley $28M
The top 10 home builders so far in 2016 based on closed revenue are:
- Taylor Morrison $43M
- Pulte $42M
- K Hovnanian $35M
- Lennar $31M
- Meritage $26M
- Shea $25M
- CalAtlantic $25M
- Fulton $24M
- D R Horton $22M
- Ashton Woods $22M
March 20 - The Cromford® Market Index hit a short term low on March 8 at 125.6 and has since gently risen to 126.7 telling us that the market has improved slightly for sellers in the last 2 weeks. The Cromford® Supply Index is still rising - it went from 80.2 to 81.1 during the same period - but we at last detect some serious signs of improving demand. The Cromford® Demand Index has risen from 100.8 to 102.8, its most significant move in 10 months.
Contributing to the increased demand we see:
- The monthly closed sales rate up from 6,034 to 6,866 in 12 days
- The number of pending listings up from 7,729 to 8,044
- The number of UCB & CCBS listings up from 4,778 to 5,008
These bode well for the rest of the spring buying season.
The number of normal UCB & CCBS listings has hit an all time record today at 4.376. We expect higher records to come. To illustrate the distorting effect of internet marketing sites on the UCB counts we note that this number was 2,282 two years ago, 814 four years ago and just 435 six years ago. By our calculations at least 65% of the UCB listings today would have been classified as Pending based on the customary habits of agents in 2010, prior to the impact of Zillow etc.
March 19 - There were 1,001 multi-family unit permits issued across Maricopa and Pinal counties in January. This is a surprisingly high number and exceeds every month in 2015. However these monthly numbers can be very volatile. The annual rate is 7,840 which is roughly the annual rate we saw throughout the 2004 to 2008 period.
Almost all of these January 2016 permits were issued in the City of Phoenix. A tiny handful were issued in Chandler, Unincorporated Pinal County and Scottsdale. So it was a very lop-sided month which gives us little idea what 2016 will turn out like.
March 18 - Something awful appears to have happened to the Census Bureau's online permit database. It has been "down for maintenance" for three weeks now and not expected to return for another two weeks. I was able to get a text file from the bureau containing January's permit counts for Arizona and this paints a happy picture for home builders. There were 1,234 single family permits issued in January 2016 across Maricopa and Pinal counties. This is up 42% from January 2015 and emphasizes how much buyers are favoring new homes over re-sales in the last several months. The top locations for permits in January were:
- Phoenix 201
- Mesa 119
- Buckeye 111
- Gilbert 107
- Peoria 103
- Unincorporated Pinal County 91
- Chandler 81
- Maricopa 78
- Goodyear 65
- Scottsdale 65
Compared to last month, Chandler and Peoria have fallen out of favor while Mesa, Buckeye and Maricopa are more popular.
The 12 month rolling average for single family permits has risen to 1,428 per month, equivalent to 17,136 per year. Last year's total was 16,768 and our current forecast for 2016 is 22,100.
March 17 - Last week on March 10 we suggested that we would see some improvement in the overall picture now that the flood of new listings is starting to ease off and demand is picking up with the spring season in full swing. This is reflected in the Cromford® Market Index for the single family market in the 17 largest cities:
We now see 8 cities improving for sellers (twice as many as last week) and 9 deteriorating. The most significant deterioration is in Tempe, Paradise Valley and Fountain Hills. The bottom 4 cities in the table are in the buyer's market zone while the top 8 are in the seller's market zone. If we examine the change over the past week the picture becomes even more positive:
Here we see only 6 cities showing deteriorating conditions for sellers.
In general the entry-level and mid range homes up to $500,000 are selling well, but the market over $500,000 remains over-supplied, especially between $1 million and $2 million.
March 16 - The first distinct signs of early trouble are starting to appear in the Black Knight Financial Services Mortgage Monitor report for January 2016. For the first time in several years, a couple of states are showing an increase in delinquency rates year over year. It is pretty obvious that this is due to the problems of the oil and gas industry. Ranking the states by the change in the percentage of first loans that are non-current we see:
- Wyoming +2.2%
- North Dakota +2.1%
- West Virginia -0.2%
- Oklahoma -0.4%
- South Dakota -2.4%
- Louisiana -2.8%
- Texas -3.0%
- Montana -5.1%
- Alabama -5.8%
- Virginia -5.8%
- Delaware -6.4%
- New Mexico -6.5%
- Kansas -6.7%
- Arizona -6.8%
- Alaska -7.2%
- Mississippi -7.4%
- California -7.5%
- Georgia -7.7%
- Indiana -8.4%
- Iowa -8.8%
- Kentucky -8.8%
- South Carolina -9.0%
- North Carolina 9.1%
- Montana -9.2%
- Utah -9.4%
- Pennsylvania -9.5%
- Arkansas -9.7%
- Tennessee -9.7%
- Washington DC -10.1%
- Maryland -10.4%
- Ohio -10.6%
- Nebraska -11.4%
- Michigan -11.8%
- Minnesota -11.9%
- Colorado -12.0%
- Wisconsin -12.2%
- Maine -12.4%
- Idaho -12.6%
- Connecticut -13.4%
- Vermont -13.7%
- Hawaii -14.1%
- New York -14.5%
- New Jersey -15.0%
- Illinois -15.5%
- Rhode Island -15.9%
- Massachusetts -15.9%
- New Hampshire -18.0%
- Washington -18.4%
- Oregon -18.8%
- Nevada -19.1%
- Florida -23.4%
The top seven states in this list are all highly dependent on the oil and gas industry. Meanwhile Florida and Nevada, formerly the poster children of the housing crisis, are showing the fastest improvement in delinquency rates.
The picture in Arizona is slightly mixed. While our non-current percentage is down to 4.2% from 4.5% a year ago, this month's reading is higher than all of the readings since last March. We now rank 42rd out of 51 so this is 1 rank worse than last month with Oregon taking our place.
By the time we see the March report, I would expect to see the top 7 states in the table above record higher delinquency rates year over year, along with New Mexico, Alabama and Kansas. California, Arkansas, Arizona, Indiana and Nebraska are also strong possibilities for a year over year increase as March 2015 through September 2015 is going to be a more difficult comparison due to the low delinquency readings we saw last year.
March 15 - We saw that the market sectors with the heaviest over-supply right now are priced between $1 million and $2 million, but not all locations are alike. Confining our calculations to this price range we have examined certain geographic areas to see where the effects of excessive supply are mild or extreme:
|Location||Current Days of Inventory||Running Average Since 2011||% of Running Average||Ranked Market Strength for Sellers|
|Gold Canyon 85118||1338||745||180%||23|
Inside the 101 loop, Scottsdale locations are in good shape (with the notable exception of 85258. However, outside the 101 loop we see an unusually large inventory of homes for sale in the $1 million to $2 million range. The situation is particularly hard for sellers in 85258, 85266, 85255, 85262 and Fountain Hills. Paradise Valley has too much inventory but most areas of Phoenix have less inventory than normal, with 85018 the only exception.
Elsewhere, Gold Canyon, Mesa and Peoria are massively over-supplied with inventory but Queen Creek, Buckeye, Gilbert and Glendale are below their normal levels.
March 14 - There are many possible reasons why someone might decide to list a luxury home for sale:
- downsizing to a smaller home after the kids have all moved out
- US currency strength (e.g. versus the Canadian dollar) making cashing out attractive for foreign owners
- illness making it hard to manage a large home
- death leaving a home to beneficiaries who have no need for it
- need for liquid funds due to financial problems elsewhere (this particularly applies to oil & gas executives at the moment)
Whatever the reasons, there are strong signs that the current owners of luxury homes are much more interested in selling than usual. This is creating an excessive number of active listings in many areas. Our favorite way to measure supply is to compare the number of active listings (excluding UCB and CCBS) with the annual sales rate, expressing the result as the number of days of inventory. As of March 12, the overall days of inventory in Maricopa County is 96, not a large number by any means, though slightly higher than the running average since January 2011 (85). However when we look at the number of days of inventory by price range we find the following (using the Tableau chart Days of Inventory):
|Price Range||Current Days of Inventory||Running Average Since 2011||% of Running Average||Supply versus Demand||Ranked Market Strength for Sellers|
|Under $100K||65.5||55.4||118%||excess supply||14|
|$100K - $125K||47.0||50.7||93%||under supplied||8|
|$125K - $150K||38.2||55.7||69%||extreme shortage of supply||2|
|$150K - $175K||43.3||64.5||67%||extreme shortage of supply||1|
|$175K - $200K||61.7||76.1||81%||severe shortage of supply||3|
|$200K - $225K||68.8||80.3||86%||shortage of supply||4|
|$225K - $250K||75.8||87.5||87%||shortage of supply||5|
|$250K - $275K||83.5||93.5||89%||shortage of supply||7|
|$275K - $300K||92.9||104.1||89%||shortage of supply||6|
|$300K - $350K||115.3||118.3||97%||slightly under supplied||10|
|$350K - $400K||129.2||133.5||97%||slightly under supplied||9|
|$400K - $500K||169.4||155.3||109%||over supplied||12|
|$500K - $600K||239.0||188.8||127%||severely over supplied||17|
|$600K - $800K||266.8||223.6||119%||excess supply||15|
|$800K - $1M||370.6||302.6||122%||excess supply||16|
|$1M - $1.5M||449.4||337.3||133%||extremely over supplied||18|
|$1.5M - $2M||632.2||467.8||135%||extremely over supplied||19|
|$2M - $3M||776.8||665.6||117%||excess supply||13|
Between $100,000 and $400,000 sellers are enjoying a lack of competition from other sellers, especially if their home is priced between $125,000 and $200,000. For these price ranges we can expect appreciation to remain strong relative to inflation.
Seller's problems start at $400,000 and stop at $3 million. Despite the huge number of 1116 days of supply over $3 million this is quite normal for this sector of the market and is actually lower than the last four years at this point in the season. It is always hard work selling any home over $3 million because there are so many for any one buyer to choose from. 2016 is no worse than normal.
It is the sectors ranked from 12 through 19 that are giving sellers more problems than normal and the biggest problems at the moment are for homes priced between $1.5 million and $2 million.
Those sectors ranked 15 through 19 are the ones most likely to depreciate over the coming 12 months.
Tomorrow we will add geographic location into the mix to see where the problems are most severe.
March 13 - We have been reporting that the luxury market has been becoming more difficult for sell
March 13 - We have been reporting that the luxury market has been becoming more difficult for sellers since mid-2015. Initially the weakness was concentrated in the price ranges over $2 million. This was easy to explain because of the long established correlation between high-end homes and the weak performance of the stock market during the last 8 months. Recently the excessive inventory has become more obvious in the ranges from $500,000 to $2 million.
These trends are not unique to Greater Phoenix. In fact a recent report by CoreLogic comments on similar developments across the whole country. However the situation in Greater Phoenix displays some differences from the picture painted by CoreLogic. CoreLogic shows strong correlation between the S&P 500 Index and the percentage of home sales over $1 million. Their chart is shown below:
A similar chart for Maricopa County only (but starting in 1999) looks like this:
Here we can see that million dollar home sales in Maricopa County peaked much higher at 3.2% of sales in March 2007. This was partly because the luxury market kept booming while the rest of the market slowed dramatically in the second half of 2006. There has also been a slightly weaker recovery in the percentage of million dollar home sales than Core Logic reports for the whole country. We peaked recently at 1.9% (April 2015) while CoreLogic is reporting 2.2% as a peak for May 2015.
You can see a sudden drop in demand for high end homes during the second half of 2015, especially in August through October. However you can also see a good recovery since then despite the stock market correction during January and February.
We would agree that there is some correlation between high end demand and the stock market. However we do not think the problems that affect the high end market right now are because of a lack of demand. In fact sales over $1 million in Maricopa County were up 11% in January and 7% in February compared with a year earlier. Transaction counts are strong, which is good news for REALTORS®.
The current problems for sellers are caused by excessive supply. Too many luxury home owners are interested in selling their homes at the same time in 2016. It is the number of sellers that is abnormal not the number of buyers. We will look further at this issue tomorrow.
March 12 - Rental listings at ARMLS are in danger of being declared an endangered species. Yesterday we had a total of just 2,140 active listings (excluding vacation rentals). The all time low was a couple of weeks ago on Feb 28, when there were just 2,090. Back in 2008 there were almost 10,000. The current count is 27% below last year and 45% less than 2014.
The average lease price for an active listing is now up to $2,087 per month, 11% higher than last year.
The current inventory represents just 26 days of supply and the average days on market is 28. Last year at this time the average days on market was 37.
The average leased price per sq. ft. is currently 79.1c, while last year it was 71.7c. That represents an annual increase of over 10%.
It is a very good time to be a landlord and a terrible time to be a tenant.
March 11 - Yesterday we looked at the 17 largest cities. Today we turn our attention to the 12 remaining secondary cities. The following are seeing single family markets that favor sellers;
|Rank||City||Cromford® Market Index||Contract Ratio||Days of Inventory||Appreciation in Annual $/SF|
The following are balanced (CMI between 90 and 110):
|Rank||City||Cromford® Market Index||Contract Ratio||Days of Inventory||Appreciation in Annual $/SF|
The following have markets that favor buyers:
|Rank||City||Cromford® Market Index||Contract Ratio||Days of Inventory||Appreciation in Annual $/SF|
|7||Sun City West||89.3||67.0||119||5.3%|
Once again the market in El Mirage is extremely short of supply with the consequence that appreciation is running into double figures.
The active adult market, represented by Sun City, Sun City West and Sun Lakes, is seeing more supply and weaker demand than last year.
March 10 - When we look at the change in the Cromford® Market Index over the last month for the single family markets in the largest 17 cities we still see unfavorable trends for sellers:
There are far more(13) cities that have deteriorated since February 10 than have improved (4). However the table is more positive than last week.
The worst changes over the past month from a seller's perspective are:
- Paradise valley (down 15%)
- Tempe (down 14%)
- Chandler (down 8%)
These 3 cities have suffered from an excessive rise in active listings giving buyers more choice and so weakening sellers' negotiating power. However Tempe and Chandler remain in the seller's market zone with a CMI over 110 whereas Paradise Valley is well below 90 signifying a buyer's market. In this it joins Buckeye and Maricopa, although the situation in Maricopa has started to improve in the last 6 weeks.
Fountain Hills and Scottsdale are also weakening for sellers, but cities that have predominantly mid-range homes, such as Mesa, Peoria and Gilbert are showing positive movements for sellers.
We forecast that next week we see some more improvement in the overall picture now that the flood of new listings is starting to ease off and demand is picking up with the spring season in full swing.
March 9 - A couple of weeks ago, Bank of America announced that it was rolling out a new home loan product that would allow borrowers to put down as little as 3%. In some ways this product competes with FHA loans with their minimum down payment of 3.5%. However FHA loans require mortgage insurance and the new Bank of America product does not. Bank of America's relationship with the Federal Housing Agency (FHA) is clouded by the $800 million it paid to settle claims that it made errors in FHA-backed loan documents. "It" is rather a loose term in this case because the vast majority of those loans were made by Countrywide Financial prior to its acquisition by Bank of America in 2008. This purchase prevented a collapse of Countrywide Financial and was seen as a rescue at the time. Whether Bank of America would have completed the acquisition with hindsight is debatable.
Mortgages created under the new program will be sold to the non-profit Self-Help Ventures Fund, which in turn will sell them on to Freddie Mac. The non-profit will remain on the hook for most of the losses should the borrower default at some point in the future.
Importantly, the 3% down payment may be funded by another second loan, a grant or cash on hand. Another innovation is that credit history may be established by non-traditional forms of credit such as day-care expenses, health club memberships and rents.
There are some important restrictions in this program. First the borrower must occupy the home and it must be their primary residence. The borrower must also have a credit score of at least 660 and earn no more than the median for the area. In the "Phoenix-Mesa-Glendale" metro area the Census Bureau reports a median income of $53,365 per year for 2014, the most recent number available. The 2015 median income will not be released by the Census Bureau until September 2016. The median income used by Bank of America will not be the Census Bureau's number in any case, but rather the HUD median income, which is defined for each county. In both Maricopa and Pinal the 2015 median income is currently defined as $64,000.
In addition the debt to income ratio must be no more than 43% (to make it a Qualified Mortgage for Freddie Mac). So if the maximum income is $64,000 per year, the maximum monthly debt repayment for all loans payable by the borrower will be $2,293. If we assume $500 a month for a car loan, student loan, etc. that leaves $1,793 for the maximum monthly mortgage payment under this scheme. First time home owners will also be required to attend a home buyer education program. The maximum loan size is $417,000 but that is much higher than the FHA loan limit of $271,050.
The most significant restriction is the cap that Bank of America is placing on loan production.
For now, Bank of America is reported (by Dow Jones Business News quoting the bank as its source) to be capping loan production under this scheme at $500 million annually. This is a very small number for the whole country and represents less than 3,000 loans annually if the average loan size is a modest $170,000. To put it in context, it is far less than the $1.36 billion advanced in FHA loans by Bank of America last year. Most of the large banks have been exiting the FHA loan business and Bank of America was only the 22nd largest FHA loan originator during 4Q 2015. Bank of America originated $69 billion in first mortgages and home equity loans in 2015, so the new scheme will probably represent far less than 1% of its annual loan production. If Greater Phoenix gets its fair share of the country's allocation we may see some 30 to 50 of these new type of loans during 2016.
We can conclude that this scheme is likely to have only a tiny impact on the market if the cap remains in place. No doubt Bank of America will be watching to decide whether to remove or adjust the cap, while other lenders consider their options.
March 8 - Across Greater Phoenix year-to-date, sales are up 5% compared with this time last year. However they are up only a modest 4% for single family detached homes. They are up a more impressive 10% for attached homes and up a strong 14% for mobile and manufactured homes.
Although single family sales were up 4% year to date, for homes priced below $200,000 sales during February dropped by 16% compared with February 2015. Between $200,000 and $300,000 sales were up 9% and above $300,000 they were up a very healthy 17%.
March 7 - After 66 days of the year we have seen 23,071 new listings added to ARMLS within Greater Phoenix (all dwelling types). This represents 102 days of supply at the annual sales rate of 82,672. With 102 as the average we can spot the areas with relatively high or low numbers of new listings.
The unusually low supply areas are:
- Glendale 85307 (44 days)
- Glendale 85304 (65 days)
- Phoenix 85053 (65 days)
- Youngtown 85363 (65 days)
- Avondale 85392 (67 days)
- Phoenix 85043 (67 days)
- Mesa 85204 (70 days)
- Phoenix 85027 (71 days)
- Phoenix 85019 (71 days)
- El Mirage 85335 (72 days)
Here we see the usual suspects, mostly on the west side, where supply has been hard to find for a long time. The next 10 are also mostly on the west side with a couple of ZIP codes from West Mesa and Chandler 85226 thrown in.
The unusually high numbers of new listings are here:
- Fort McDowell (549 days)
- Aguila 85320 (320 days)
- Arlington 85322 (275 days)
- Casa Grande 85194 (263 days)
- Scottsdale 85262 (211 days)
- Rio Verde 85263 (210 days)
- Scottsdale 85266 (197 days)
- Phoenix 85003 (196 days)
- Phoenix 85054 (185 days)
- Carefree 85377 (173 days)
- Paradise Valley 85253 (172 days)
- Gold Canyon 85118 (171 days)
- Morristown 85342 (170 days)
- Scottsdale 85258 (164 days)
- Congress 85332 (158 days)
- Scottsdale 85255 (155 days)
- Florence 85132 (147 days
- Scottsdale 85259 (145 days)
- Mesa 85215 (142 days)
- Wickenburg 85390 (140 days)
Many sellers in the above 20 areas are struggling to compete with the large numbers of new listings relative to the usual sales rate. We expect to see a growing number of price reductions in these areas as listings fight for buyer's attention.
March 6 - We counted 845 new homes (single family & condo) that closed escrow within Maricopa County during February. This is an increase of 37% over February 2015 and the highest number for any February since 2008. The median sales price was $313,925 for new homes during February. There has not been any significant movement in medians for new homes since December 2013, when it was $319,898. It has bounced up and down randomly between $301,427 and $323,306.
New homes have gained market share over re-sales in the last year, moving from 10% in February 2015 to 12% in February 2016. However the mix for new homes is biased heavily towards single family rather than condos. There is still a lot of construction going on for attached homes, but the vast majority of these are intended for rent rather than purchase.
March 5 - I frequently get asked what percentage of home sales go through the MLS. As usual, the answer is more complex than you might expect. This is because you need to decide what counts as a home sale. For example in 2015 in Maricopa and Pinal Counties there were the following deeds that I would normally ignore when counting home sales:
- 6,330 parcels in bulk sales
- 863 deeds in lieu of foreclosure
- 9,890 corrective deeds (fixing mistakes in earlier deeds)
- 147 duplicated recordings
- 1 gift
- 309 multi-parcel sales
- 12,376 non-residential sales (e.g. commercial or multi-family)
- 86,857 related party sales (not arms length)
- 1 treasurer's deed
- 295 sheriff's deed
- 2,646 reversions to beneficiary through failed trustee auction
- 19,902 land parcel sales
- 99 sales to relocation services
We the come down to the deeds I would count as true sales of one sort or another, that did not involve the MLS:
- 190 bank owned sales outside MLS
- 26 GSE owned sales outside MLS
- 1,779 investor flips outside MLS
- 9,060 new homes outside MLS
- 12,451 normal resales outside MLS
- 268 pre-foreclosures outside MLS
- 2,338 trustee sales
There were also 79,739 deeds recorded that could be linked directly to an MLS listing
This means that MLS sales represented approximately 75% of the total sales in 2015.
March 4 - After a slight lull last week, new listings are arriving at full speed again. We have seen the arrival of 8.5% more than last year, 3.3% more than 2014 and 13.2% more than in 2013 as of March 4.
This is good news for buyers, but unfortunately the mix of new listings does not match the mix of demand. Across Greater Phoenix we see 63% of homes sales go for less than $250,000, but only 52% of new listings are priced below $250,000. The price range between $250,000 and $500,000 represents 30% of sales and it has received 34% of the new listings. This is not dramatically out of balance. Sales of $500,000 and more represent less than 8% of transactions but 14% of new listings have been at this price point. This is a problem.
The most seriously over-supplied sectors are from $500,000 upwards:
|Price Range||Number of Closed Sales YTD||Number of New Listings YTD||New Listings versus Closings||Increase in New Listings Compared with 2015||Increase in YTD Sales Compared with 2015||Increase in Active Listing Count since Jan 1|
The range between $2M and $3M is less affected than the others, but the remaining price ranges over $500,000 have seen a surge in new listings and active listing counts.
There is good news for sellers in the YTD sales counts compared with 2015, especially for the ranges $500K-$600K, $1M-$1.5M and Over $2M. The most challenging price ranges are currently $600K-$800K and $1.5M-$2M. In the case of $600K-$800K the surge in supply is the largest percentage of all and has overwhelmed the improving demand. In the case of $1.5M to $2M we see a lot of new listings and no sales growth.
The range over $3M is doing surprisingly well for closed sales, up 67% from this time last year after a quiet period during the second half of 2015. However the increase in sales is not enough to stop the supply from growing significantly. Given that there were 85 sales through ARMLS of homes over $3M during the whole of last year, 115 new listings is a 16 month supply added in just over 2 months. It is going to take a long time to absorb those new listings unless there is a large increase in demand during the next 4 months.
March 3 - The Cromford® Market Index has been dropping since January 17, but the decline is slowing and it only fell from 126.9 to 126.1 over the past week. Although the Supply Index is still moving up, the Demand index has started to increase at last and at 100.5 (just a fraction above normal) it at its highest level since September 20.
When we look at the single family markets in each of the 17 largest cities the trend is still mostly negative over the past month:
We see 3 improving cities, 2 more than last week. We also see 3 cities with only a fractional negative change over the last month.
The picture looks brighter when we look at changes in the past week. The CMI has increased for the following cities in the last 7 days:
- Maricopa - the only city to improve dramatically, but still bottom of the league
- Mesa - up 2.6 from last week
- Peoria - up 2.3 from last week
- Cave Creek - up 1.1 from last week
- Gilbert - up 1.0 from last week
- Buckeye - up 1.0 from last week
- Avondale - up 0.8 from last week
- Phoenix - up 0.4 from last week
- Surprise - up 0.1 from last week
The remaining cities have deteriorated further for sellers over the past 7 days:
- Tempe - down 7.6
- Paradise Valley - down 4.2
- Chandler - down 2.7
- Fountain Hills - down 2.2
- Scottsdale - down 1.9
- Goodyear - down 1.3
- Queen Creek - down 0.7
- Glendale - down 0.5
It is encouraging that more cities improved (9) in the last week than deteriorated (8). However the situation for sellers in the upper levels of the market remains quite poor and this is reflected in the presence of Paradise Valley, Fountain Hills and Scottsdale in the deteriorating list. In fact Paradise Valley has dropped into a buyer's market territory (under 90) over the past week.
March 1 - Although there are not very many trustee sale auctions in Maricopa or Pinal counties these days, it is still possible to pick up the occasional bargain property through foreclosure.
During February, 57% of the 292 properties auctioned went to a third party bidder rather than reverting to the beneficiary (lender). This is a very strong percentage. We have not exceeded 58% since April 2006 almost ten years ago. Last year in February 2015 only 42% of the 323 trustee sales went to third parties.
February 29 - The overall supply of active listings (excluding UCB & CCBS) across Greater Phoenix is still slightly below last year, about 3% below in fact. This should be good news for sellers. However the change is not spread evenly over all price ranges.
Below $175,000 we have lost a third of our supply with the worst affected price range being $125,000 to $150,000, down 40%. This leaves the balance of power firmly in the hands of sellers.
Between $175,000 and $200,000 we are down 9%, not a good situation for buyers in this very popular price range.
Between $200,000 and $400,000 we have 4% more supply than last year, not a very significant change, and far less than the increase in sales volume.
Between $400,000 and $2,000,000 is where most of the increase has occurred. This range is up 18% , an increase of over 1,000 listings. The biggest increase is for $500,000 to $600,000 which is up 24%.
Over $2 million there is only a negligible change - up less than 1%.
So if we have a supply problem for sellers, it is somewhere in the price ranges between $400,000 and $2 million.
Of course an increase in supply is not much of an issue if demand increases at the same time. We can check this by looking at the days of inventory for each price range, comparing last year with this year.
- $400,000 to $500,000 - down from 180 to 168 days of inventory - demand has increased even more than supply since last year
- $500,000 to $600,000 - up from 228 to 232 days of inventory- not too significant a change
- $600,000 to $800,000 - up from 264 to 269 days of inventory - again not too significant a change
- $800,000 to $1 million - up from 361 to 362 days of inventory - static
- $1 million to $1.5 million - up from 392 to 437 days of inventory - 11% increase and at the highest level in 5 years
- $1.5 million to $2 million - up from 583 to 641 days of inventory - a 10% increase and at the highest level in 5 years
Now we see the sellers' problem more clearly. The price range from $1 million to $2 million has seen supply grow 11% since last year without a corresponding increase in demand. The additional competition is applying some downward pressure on pricing. The effect is not dramatic but to get back to neutral we will need more buyers or fewer sellers.
February 28 - You can often tell how strong a year will be for the housing market in Greater Phoenix by looking at the date when the number of active listings hits a first half of the year peak. The earlier the better. Although we started the year with only 20,073 active listings (excluding UCB & CCBS) across all areas & types, they have jumped to 23,031 today, a rise of 15%. Last year we started at 22,604 and rose to 23,775 as of February 28, an increase of only 5%, having hit the peak on February 8. We are clearly seeing a much stronger supply trend thatn in early 2015.
The good news for sellers is that at least we seem to have hit the peak before March starts. Hitting the peak in week 8 is a neutral reading for Greater Phoenix as a whole. Last year we hit it in week 6, a positive reading. In 2014 we hit it in week 11, a negative reading. However the reading will be different if you examine smaller segments of the market.
The following cities appear to have already peaked for single family active listings, this being a positive indicator:
- El Mirage - Feb 6
- Laveen - Feb 8
- Tolleson - Feb 8
- Arizona City - Feb 10
- Phoenix - Feb 13
- Casa Grande - Feb 13
- Cave Creek - Feb 13
- Mesa - Feb 14
- Avondale - Feb 14
- Surprise - Feb 15
- Gilbert - Feb 20
- Glendale - Feb 20
- Buckeye - Feb 20
- Anthem - Feb 20
- Gold Canyon - Feb 20
- Maricopa - Feb 21
- Sun Lakes - Feb 21
On the other hand, the following are still appearing to make new highs:
- Paradise Valley
- Queen Creek
- Sun City
- Apache Junction
- Sun City West
- Litchfield Park
- Fountain Hills
The active listing count in Scottsdale is still heading upwards, but not in all ZIP codes. Within Scottsdale, the increasing trend is strongest for 85255, 85259, 85262 and 85266.
February 27 - Housing demand is fundamentally driven by population growth. If the population declines then fewer homes are needed. Some homes are destroyed by fire or demolished every year so even a static population needs a few new homes to be constructed. But if a population starts to fall significantly through disease, outward migration or infertility, then the housing market supporting that population will quickly go into severe decline. This affects new homes first but re-sale values are also subject to major declines. In Central Arizona we have had very little experience of this. Our housing market has enjoyed very positive population growth for almost its entire existence. The only exception was 2008-2010 when the dual effects of the bursting of the housing bubble and SB1070 combined to bring drive significant migration of workers away from the state and brought population growth almost to a standstill. It has now recovered to a level that corresponds to a moderately healthy rate of about 70,000 to 90,000 additional people per year.
It is instructive to look at what happens to an economy with population in decline. Japan is an excellent example. More than a decade ago, Japan embarked on a path of sustained and inexorable population decline. Japan's birth rate has long been well below the 2.1 per female require to sustain a static population. It currently stands at 1.4 and falling. Inward migration to Japan is negligible. Nearly a third of Japan's population is older than 65. Excellent health care and nutrition means life expectancy in Japan is one of the highest in the world. By 2050 it is projected that 40% of the population will be over 65. Current government projections forecast that by 2050 the population will have declined from its peak of about 128 million to 107 million. That is a 16% decline and it is reasonable to assume that demand for homes will decline by a similar amount. The increasing trend for people to live alone will not be enough to mitigate this. By 2100 the population would have fallen 34% to 83 million, roughly the same as in 1950.
At the moment condominium prices in highly populated areas like Osaka and Tokyo are still rising as the population concentrates into urban areas. However, even in Tokyo abandoned homesare becoming a problem. Already some 8 million residences are abandoned across the country and half of these are generating no rent and of zero resale value. Often after the resident dies, the property is inherited by someone with no need for the home. They are unable to sell at any price due to a lack of interested buyers. They are unwilling to pay for demolition. So the home quickly descends into an overgrown eyesore for its neighbors. With plenty of rainfall and the typical use of inexpensive construction materials, plants take over the building quite quickly.
So far the population decline in Japan between 2010 and 2015 amounts to only 1 million. Imagine the consequences when it has dropped by 45 million - that is more than the entire population of Ukraine or Spain, or the population of California and Arizona combined.
Fertility rates are declining over the entire developed world and most of the developing world too. Only in the severely under-developed parts of the world is the birthrate being sustained at a high level, and this is often to compensate for a horrific mortality rate and a low life expectancy. Some of the countries with the worst outlooks for self-generated population growth are looking to immigration as a potential solution to their economic woes. Many of these countries are in Eastern Europe. However immigration often brings cultural conflict into an otherwise homogenous population and sometimes sparks political outrage as a result.
Here is a list of the countries projected by the United Nations to lose the highest percentage of their population by 2100:
- Moldova 54% decline (currently 4 million)
- Bulgaria 52% decline (currently 7 million)
- Bosnia & Herzegovina 50% decline (currently 4 million)
- Romania 45% decline (currently 20 million)
- Ukraine 41% decline (currently 45 million)
- Serbia 40% decline (currently 9 million)
- Croatia 38% decline (currently 4 million)
- Latvia 35% decline (currently 2 million)
- Japan 34% decline (currently 127 million)
- Hungary 34% decline (currently 10 million)
- Lithuania 30% decline (currently 3 million)
Some of these countries are incredibly beautiful to visit for a vacation. However I don't recommend buying a holiday cottage in counties facing this level of long term decline in housing demand.
February 26 - One indicator that the environment is changing is a significant rise or fall in the number of weekly price reductions. When sellers are gaining advantage, price reductions will become less common. In a balanced or stable market they will remain level and when sellers begin to lose their advantage reductions will increase. Right now the number of price reductions is on the increase. This is true of all price ranges but is most obvious for listings over $500,000. Last week for listings over $500,000 we had the highest number of price reductions (489) in any week since we started measuring in June 2014. By the way we are here excluding any price reductions of $100 or less. This price cut number has been on an upward trend since August (apart from the usual slowdown between Thanksgiving and New Year's Day).
There are now several different indicators suggesting significant weakness developing in the market over $500,000 and sellers need to be realistic about their prospects during the key months of March through June if they want to be successful in selling their property. Competition among sellers is heating up quickly, which puts buyers in charge. Scottsdale in particular has more active listings than at any time since early 2011. If we focus exclusively on homes listed over $500,000, then the total number of Scottsdale active listings (excluding UCB) is 2,290, 13% more than at this time last year. That is simply too many for the current level of demand.
February 25 - It is time to examine the Cromford® Market Index for the single family market in the 17 largest cities.
This is the worst looking table for sellers that we have seen in a long time, with only one city (Queen Creek) showing an improvement, and that a very small one. The problem for sellers is that too many other sellers are joining them and competition among these sellers is therefore rising. Sellers tend to focus on tracking potential buyers, because those are the people they meet and they often forget to keep an eye on their competition down the street. However, buyers are checking out everything that is available in their chosen price range and location and they tend to know when their choices are growing wider. It is not always the case, but buyers are often more aware of market conditions than sellers.
Overall supply is still well below normal below $250,000 but there is now plenty of supply over this price and something of an excess in several of the luxury home areas over $500,000. Scottsdale, Cave Creek, Fountain Hills and Paradise Valley are all now below the balanced 100 mark and although they have not fallen below 90 into what we would classify as a true buyer's market, some buyers will no doubt use any advantage they can get.
The good news is that the downward trend is likely to slow down over the next few weeks. Normally the flow of new listings starts to ease off in March and we do not expect this year to be any different. Indeed there has already been some improvement in the CMI over the last week in a few cities:
Other smaller cities showing some slight improvement for sellers include El Mirage, Gold Canyon and Sun City West.
Overall I would say the Northeast Valley remains relatively weak, while the West Valley is gaining some strength at the expense of the Southeast Valley, which started the year strongly. Phoenix is still looking fairly good for sellers and is one of the areas I expect to see turn round its cooling trend sometime in the next 4 weeks.
February 24 - The S&P / Case-Shiller® Home Price Index® report has been published for December. This covers sales throughout the fourth quarter of 2015. Ranking the 20 cities reported by their month to month price changes we see the following:
- Tampa 0.90%
- San Diego 0.67%
- Phoenix 0.51%
- Portland 0.38%
- Las Vegas 0.37%
- Los Angeles 0.36%
- Detroit 0.35%
- Charlotte 0.32%
- Seattle 0.32%
- Dallas 0.22%
- Atlanta 0.02%
- Denver -0.05%
- Cleveland -0.09%
- Washington -0.12%
- Boston -0.23%
- San Francisco -0.24%
- New York -0.27%
- Miami -0.30%
- Minneapolis -0.41%
- Chicago -0.41%
At third place, Phoenix is higher up this table that it has been for some time (we were in fifth place last month) and we are well above the national average of 0.09%. The relative momentum we commented on last month continues.
Price growth between the November and December reports was very moderate, with almost half the cities showing a slight fall. Strangely, the media reported that "prices accelerated in December", illustrating that most reporters still don't understand how to correctly interpret even the most basic of statistics. These comments were prompted by the year over year percentage change. In fact price growth across the US has been slowing for four consecutive months now and the acceleration the media is referring to happened back in the March through July period in 2015. There is absolutely NO sign of recent acceleration, so the headlines are 100% incorrect. This misinterpretation of the numbers is illustrated by this article from the Los Angeles Times, but similar stories appear in the Wall Street Journal and elsewhere. It is no wonder that the public is confused.
The year over year numbers look like this:
- Portland 11.4%
- San Francisco 10.3%
- Denver 10.2%
- Seattle 10.0%
- Dallas 9.6%
- San Diego 7.2%
- Miami 7.1%
- Detroit 7.1%
- Tampa 6.9%
- Phoenix 6.3%
- Los Angeles 6.2%
- Las Vegas 5.8%
- Atlanta 5.5%
- Charlotte 5.5%
- Minneapolis 4.7%
- Boston 4.5%
- New York 3.3%
- Cleveland 2.8%
- Chicago 2.4%
- Washington 1.7%
The national increase was 5.4%, so Phoenix was modestly ahead of that and right in the middle of the pack. Washington and Cleveland have been going backwards since July, Chicago and Boston have been going backwards since August, New York and Atlanta since September.
Houston TX is not one of the 20 cities that Case-Shiller reports on, but the market over $250,000 is relatively weak there due to the troubles of the oil and gas industry. Dallas TX remains strong. The markets in North Dakota, Wyoming, West Virginia, Louisiana and Oklahoma are showing signs of stress due to rising loss of jobs and failing companies in the energy sector.
February 23 - Do you remember how almost everyone assumed that if the Federal Reserve raised their target interest rate in December (which they did) then mortgage rates would probably rise too? Well Freddie Mac now tells us that their survey shows that the average interest rate for a 30 year fixed loan dropped from 3.96% in December to 3.87% in January.
Investors have been flooding into the bond market as a safety play, scared by the losses in the equity markets. This has caused the 10 year T-bill to drop to its lowest yield since 2012. Mortgage rates tend to follow the 10 year Treasury yield rather than the Fed Funds rate.
This means mortgages are actually slightly cheaper than they were last quarter. You would think that demand might be up as a result, right? Well we are seeing increases in the ARMLS under contract counts, with UCB listings up 59% from Jan 1 and Pending listings up 50%. However these are not as favorable as last year's equivalent increases which were 66% and 58% respectively.
In addition, closed sales though ARMLS are not very impressive in 2016 so far. On the positive side, we are up 6.1% in monthly unit volume from this time last year, but we were up 9.3% last month and the rolling 7-day sales rate has been falling for the past 2 weeks. This is unusually weak for the middle of February. We would normally see closed sales rates increasing sharply by this point in the year. I think it is fair to say that demand is holding steady, but there is no sign of any positive response to the lower interest rates.
February 22 - 2015's new residential construction (by dollars recorded in sales price) was shared among the cities as follows:
Note that we are using the Postal City rather than the Municipality to segment the market.
Gilbert remained out in front but towards the end of 2015, Peoria, Mesa and Phoenix were catching up fast. It seems unlikely that Gilbert will still be number one in 2016, but it may still be among the top 3. Scottsdale was 5th because the average price in Scottsdale was a very high $886,370. If we were to rank by unit sales then Scottsdale came in 11th after Surprise but ahead of Maricopa.
For new home buyers the cheapest locations are almost all in Pinal County, with Arizona City, Red Rock, Casa Grande, Maricopa, Apache Junction and Florence all providing very affordable new homes. In Maricopa County the least expensive new homes were in El Mirage and Tolleson, with Sun City and Laveen close behind.
February 21 - Newly constructed single family home sales (i.e. recorded deeds) during 2015 totaled 11,330 for Maricopa and Pinal counties combined. There were another 913 new home sales classified as condo or townhouse properties. Both annual totals were the highest we have seen since 2008. The percentage increase over 2014 was 20% for condos & townhouses and 16% for single family homes.
However, these increases are far smaller than the increase in single family permits reported by the US Census Bureau which grew 43% from 11,741 to 16,768 between 2014 and 2015. Presumably developers are expecting sales to increase further in 2016. They may be correct for new homes, but currently this sales growth is not being reflected in re-sale volumes. The annual sales rate for ARMLS transactions is stuck between 84,000 and 85,000 closed listings per year with little sign of any growth over the past month.
The developers' optimism implies a significant gain in market share for new homes over re-sales.
February 20 - At the opposite end to yesterday's post, here are the ZIP codes with the lowest rate of arrival of new listings relative to last year at this point:
- Gila Bend 85337 (-50%)
- Casa Grande 85193 (-50%)
- Morristown 85342 (-47%)
- Phoenix 85034 (-40%)
- Phoenix 85050 (-34%)
- New River 85087 (-32%)
- Phoenix 85019 (-30%)
- Phoenix 85053 (-28%)
- Tonopah 85354 (-26%)
- Superior 85173 (-25%)
- Youngtown 85363 (-24%)
- Glendale 85307 (-24%)
- Glendale 85304 (-23%)
- Phoenix 85028 (-22%)
- Avondale 85392 (-22%)
- Phoenix 85016 (-21%)
- Arizona City 85123 (-19%)
- Phoenix 85008 (-18%)
- Scottsdale 85250 (-17%)
- Mesa 85213 (-17%)
February 19 - New listings are arriving in 2016 at a faster pace than in the last 3 years. After 7 full weeks we have added 7% more than 2015, 2% more than 2014 and 12% more than 2013. This trend is reducing the advantage that sellers have in negations with buyers. It is also not spread evenly by geography and price range.
The largest increases in new listings compared with last year can be found in the following ZIP codes:
- Arlington 85322 (150%)
- Phoenix 85053 (51%)
- Coolidge 85128 (50%)
- Aguila 85320 (50%)
- Buckeye 85326 (41%)
- Phoenix 85006 (39%)
- Mesa 85215 (39%)
- Phoenix 85015 (38%)
- Surprise 85379 (37%)
- Florence 85132 (36%)
- Phoenix 85024 (35%)
- Phoenix 85040 (33%)
- Peoria 85381 (33%)
- Phoenix 85033 (33%)
- Maricopa 85139 (32%)
- Phoenix 85083 (31%)
- Scottsdale 85258 (31%)
- Tolleson 85353 (28%)
- Mesa 85208 (26%)
- Maricopa 85138 (25%)
February 18 - The single family market in 15 of the largest 17 cities is getting more unfavorable for sellers. Here is the comparison of the Cromford® Market Index for today versus January 18:
The 2 cities that did not show an unfavorable trend improved just a tiny fraction, so this is a pretty negative picture for sellers. Having said this, there are still 8 cities that are in a seller's market with 7 in the balanced zone and 2 in a buyer's market. The last month has dropped Avondale's CMI by 19%, though it remains in first place. Buckeye and Maricopa both dropped 12%.
The overall CMI for the market stands at 128.5 and although this is still a seller's market it is the lowest value since April 26, 2015.
Among the smaller cities that are not in the top 17, we see very negative trends for sellers in Apache Junction, Anthem, Sun City, Sun City West and Sun Lakes.
In almost all the cities where conditions for sellers are deteriorating, the problem is not a lack of demand, it is strong growth in supply. Apache Junction supply is up 29% in just one month. Anthem is up 24%, Buckeye is up 19%, Sun City is up 18%, Scottsdale is 16%, Goodyear is up 15%. This is a lot of competition for sellers to cope with and it is resulting in a significant increase in the number of price cuts we are recording. If conditions continue like this we are likely to see a reduction in appreciation rates for the affected areas.
The main exception to this situation is Avondale, where conditions are deteriorating for sellers because of a slackening in demand. Supply remains scarce in this city.
February 17 - If we compare the average price per sq. ft. for single family homes over the 3 months November through January with the same period 12 months earlier, we can find certain parts of the City of Phoenix with extraordinarily high appreciation rates compared with the rest of the city. Most of these are in the center, west or south of the city. The top examples are:
- 85009 +33%
- 85008 +26%
- 85031 +26%
- 85012 +24%
- 85033 +22%
- 85019 +21%
- 85017 +21%
- 85007 +21%
- 85043 +17%
- 85037 +17%
- 85040 +16%
- 85035 +15%
Many of these ZIP codes contain large numbers of rental homes that are currently off the market. This level of appreciation may tempt some owners to cash in on their investments and sell them. However the vast majority are occupied and on lease, so they are most likely to be sold in bulk to new landlords rather than come onto the normal MLS market.
February 16 - Among the 22,744 active listings (including UCB and CCBS) in Maricopa County, there are currently 659 that have a Canadian address for their tax bill. This represents almost 3% of homes for sale, even though Canadian owned homes represent only 1.5% of the total single family and condo homes that exist in the county. We can conclude that Canadians are twice as likely to be listing their home for sale as non-Canadians.
This time last year there were only 267 Canadian owned properties listed for sale out of 23,167. This represented 1.2% of homes for sale. So last year Canadians were less likely to be selling their homes in Maricopa County than non-Canadians.
To see one of the reasons why the situation has changed so dramatically see the chart below:
Average $/SF for Foreign Currencies
February 15 - Looking at the same data as yesterday, but segmenting by city we see the following cities with the strongest growth in under contract counts over the last month:
- Waddell up 83%
- Sun City West up 71%
- Coolidge up 70%
- Sun City up 68%
- Gold Canyon up 65%
- Apache Junction up 46%
- Queen Creek up 43%
- El Mirage up 42%
- Peoria up 40%
- Wittmann up 38%
The top ten are exclusively in the West Valley and Pinal County (OK, parts of Queen Creek and Apache Junction are in Maricopa County too)..
The bottom ten for the growth in under contract listings are:
- Youngtown down 29%
- Arizona City down 7%
- Eloy flat
- Casa Grande up 10%
- Fountain Hills up 10%
- Paradise Valley up 14%
- Tolleson up 14%
- Buckeye up 15%
- Tonopah up 15%
- Tempe up 15%
February 14 - We are seeing a normal healthy increase in the number of listings going under contract. This happens every year at this time and the overall trend is neither exceptionally strong nor weak. However we can examine segments of the market to see if there is a difference between certain price ranges.
The change in the number of under contract listings looks like this:
|Price Range||Under Contract 1/14/16||Under Contract 2/14/16||Change||Equivalent Change in 2015|
|Up to $100K||545||603||11%||10%|
|$100K to $125K||431||486||13%||23%|
|$125K to $150K||816||977||20%||28%|
|$150K to $175K||984||1331||35%||39%|
|$175K to $200K||959||1262||32%||39%|
|$200K to $225K||666||944||42%||41%|
|$225K to $250K||735||911||24%||51%|
|$250K to $275K||517||711||38%||37%|
|$275K to $300K||502||651||30%||31%|
|$300K to $350K||652||828||27%||48%|
|$350K to 4400K||418||550||32%||35%|
|$400K to $500K||515||681||32%||25%|
|$500K to $600K||244||338||39%||29%|
|$600K to $800K||233||275||18%||26%|
|$800K to $1M||124||147||19%||17%|
|$1M to $1.5M||91||104||14%||42%|
|$1.5M to $2M||40||53||33%||8%|
|$2M to $3M||31||37||9%||0%|
Most ranges are increasing at a similar or slower rate than last year at this time. The major exceptions are:
- $400K to $600K
- $1.5M to $3M
The overall increase in under contract listings is 28% this year versus 32% last year, so not quite as strong but still respectable.
On January 14 we had 11% more listings under contract than on January 14, 2015 and this has fallen to an 8% advantage by February 14. Still higher than last year but the gap is closing.
February 13 - In the city appreciation ranking table, published today we can see clearly the weakness in pricing at the higher end of the market. All of the cities with an average price per sq. ft. of over $150 have made very little positive movement in pricing over the past 12 months:
- Paradise Valley 0.4%
- Carefree -5.1%
- Scottsdale 1.7%
- Fountain Hills -1.2%
- Cave Creek -0.0%
- Rio Verde 1.9%
- Desert Hills 1.5%
- Gold Canyon 0.8%
Yet we have some big movements among the cheaper locations:
- Tonopah 25.0%
- Eloy 17.4%
- Wittmann 15.8%
- Youngtown 12.4%
- Wickenburg 11.0%
- El Mirage 9.5%
- Waddell 9.3%
- Glendale 8.6%
February 12 - Comparing the Cromford® Market Index for the single family markets in the largest 17 cities we see the following changes over the past month:
This is a less encouraging picture for sellers with 11 cities deteriorating and 6 improving from a seller's perspective. Only Tempe and Paradise Valley improved by more than 1% over the last month while Queen Creek and Fountain Hills are the only cities that improved over the last week (and both by only a tiny amount).
Four cities saw their CMI decline by double digit percentages: Avondale, Peoria, Buckeye and Maricopa.
Avondale has been in the number one spot for many months, but over the last month we have seen supply increase and demand fall sharply in Avondale. Even so, demand (66% of normal) is still more than enough to overwhelm the supply (38% of normal) at the moment. Peoria has also seen weaker demand and stronger supply, enough to drop into the middle of the balanced zone at a fraction over 100. Buckeye has also seen a big jump in supply. Coupled with a slight fall in demand this enough to drop it below the 90 mark so we now have 2 cities in the "buyer's market" zone. Maricopa has been in that zone since December 3. An increase in demand in Maricopa has been swamped by a larger increase in supply.
The Southeast Valley and Phoenix are showing the strongest trends so far in 2016. Although the market remains healthy and favorable to sellers, it is not seeing the strong seasonal improvement that we witnessed at this time last year. We have 8 of the 17 cities in the seller's market zone over 110 (including 5 of the 6 largest markets), but we also have 7 cities in the balanced zone between 90 and 110 and 2 cities in the buyer's market zone under 90.
February 11 - The Cromford® Market Index for all areas & types is still moving lower despite a very slight improvement in the Demand Index. This is because the Supply Index. though well below normal, is headed up quite fast, driven by a strong flow of new listings.
The active listing count has increased in all the major cities, as is normal for the time of year, but the largest percentage monthly increases are in:
- Goodyear 17%
- Scottsdale 17%
- Tempe 15%
- Surprise 15%
- Avondale 12%
- Chandler 12%
These increase give buyers a lot more choice. Scottsdale now has more active listings (including UCB) that at any time since 2011.
Queen Creek stands out by having the smallest increase of less than 2%, unusually low for the time of year.
Among the secondary cities the fastest growing active listing counts are in:
- Apache Junction 28%
- Sun City 20%
- Buckeye 18%
- Sun Lakes 16%
- Anthem 16%
- Cave Creek 15%
- Sun City West 14%
- Maricopa 12%
- Paradise Valley 10%
- Tolleson 10%
The inventory in the 55+ active adult areas is growing significantly faster than usual. Sun Lakes has the highest number of active listings (including UCB) since early 2011. Cave Creek beats this by having the largest number of active listings since 2010.
Conspicuously slow growth in active listings can be seen in:
- Litchfield Park -1%
- Laveen 0%
- Casa Grande 2%
February 10 - In the Northeast Valley, appreciation looks like this:
Here we clearly see the trend is strongly in favor of South and Central Scottsdale. Fountain Hills, Cave Creek & Carefree are seeing a little depreciation while the rest of the Northeast Valley is under-performing the average for the valley as a whole (between 4% and 6%). On a map it looks like this:
February 9 - Yesterday we looked at appreciation for the overall Greater Phoenix market. Today we will focus on the Southeast Valley to see where appreciation is strongest and weakest. Here is a color-coded ZIP code map that uses red to show where appreciation is stronger than average and blue to indicate below-average appreciation. ZIP codes with average appreciation are in gray.
Here we see very strong appreciation in the areas close to the 101 / 202 interchange in North Tempe and Northwest Mesa. We also see above average apprecation close to the Superstition Freeway (60) in Mesa, Tempe, Apache Junction and the Northeastern area of San Tan Valley. We also see above average appreciation either side of the 101 as it heads south towards the San Tan secion of the 202. South of the San Tan 202 loop things start to cool off with Queen Creek, South Gilbert, Sun Lakes and South Chandler seeing lower than average appreciation. North Mesa is relatively cool while Gold Canyon and Ahwatukee are weak, particularly the 85045 ZIP code.
Here is the data in the form of a ranking table:
February 8 - We often refer to appreciation in the Cromford® Report. By appreciation we mean the percentage change in pricing over the last twelve months. However there are dozens of ways to measure the change in pricing and some work better than others. For a start we could use:
- average sales price
- median sales price
- average sales price per sq. ft.
- median sales price per sq. ft.
We prefer the average price per sq. ft. measure, but we then have to choose the period over which we will measure the $/SF. If we are talking about the whole of Greater Phoenix then we can pretty safely use a monthly period. However when we examine smaller areas, the lower sample size increases the volatility and we need to choose a longer time frame. Generally speaking, an annual average $/SF is stable enough to give us a realistic appreciation rate. The disadvantage is that it will not give much weight to recent price trends since these will be swamped by the other transactions that occurred over the twelve month period.
Here are the appreciation rates for the top-appreciating ZIP codes, based on the annual average $/SF for closed single family homes measured at the end of January 2016 versus the end of January 2015:
|Rank||City||Zip||$/SF Jan 2015||$/SF Jan 2016||Appreciation Rate|
|9||Black Canyon City||85324||$88.10||$102.69||16.6%|
The vast majority of the fastest appreciating ZIP codes are on the west side of Central Avenue. The City of Phoenix is very diverse so we have 85017 appreciating by 22.1% while 85004 declined by 13.9% and 85045 declined by 3.5%.
The allure of central Scottsdale gives 85251 a much higher appreciation rate than most the rest of City of Scottsdale. 85250 is just behind 85251 at 11.7%. Appreciation in 85254, 85255, 85258, 85259, 85260, 85262 and 85266 was below 3%. South Scottsdale (85257 managed a healthy 7.7%.
February 7 - The number of listings going under contract has started to show some life again after a lackluster January. This is similar to what we saw in early 2015.
Across all areas & types we now have 10,183 under contract, up 11% in the last week and up 33% since the start of the year. In 2015 the equivalent growth percentages were 8% and 39% respectively. So this year we had a weaker January but a stronger first 7 days in February.
We estimate that 66% of the UCB and CCBS listings are really in Pending status, up from 61% this time last year, 55% in February 2014 and 35% in February 2013. The impact of Zillow and other other online sites increasingly motivates agents to keep listings visible to the world instead of placing them in Pending status.
This means that the pending listing count is understated by about 2,200 listings (36%) and the active listing count is overstated by the same amount, but a smaller percentage (9%).
February 6 - In contrast to residential listings, the number of new rental listings continues to plummet. 2,620 new rental listings were added to ARMLS over the past 28 days, some 15% fewer than a year ago, 22% fewer than in 2014 and 36% fewer than in 2013. It is not clear if this is because ARMLS is getting a lower percentage of the rental market, or the market is actually turning over less frequently. There are 2,535 active rental listings of all types and areas, down from 3.666 on February 6, 2015. This is another huge drop of 31%.
Judging by the ARMLS data, the rental market remains hot, with a supply of only 1.1 months. We had 1.3 months of supply 12 months ago.
The average rent for closed leases on ARMLS is 78.6 cents per sq. ft. per month, up from 72.8 cents a year ago. This is an annual rate of increase of 8%. The average rent for closed leases has increased to $1,395 from $1,291, also up 8%. Average days on market has dropped 4 days from 41 to 37.
It seems that it is still a wonderful time to be and landlord.
February 5 - January gave us 6,007 recorded deeds with Affidavits of Value for single family and condo properties in Maricopa County. That was a healthy 13% increase over January 2015. However this was no thanks to out of state buyers. Buyers with addresses outside Arizona purchased 8% fewer homes than a year ago. Homes bought by local buyers grew by almost 18%.
Canadians purchased only 40 properties, the lowest monthly number since 2007 and down 64% compared to January 2015. Meanwhile they sold 116 homes, 26% more than a year ago.
Most of the Canadian sellers in January 2016 were from Alberta (55) with British Columbia (20), Ontario (17), Manitoba (10) and Saskatchewan (10) behind them. There were only 4 sellers from the remaining provinces. Alberta was also top in home purchases (19), with Ontario (8) and British Columbia (7) making up most of the rest. Only 6 came from outside these 3 provinces.
February 4 - The Cromford® Market Index is still in positive territory but it has been trending lower since January 17 when it peaked at 136.5. It has eased to 132.8, mainly because the supply index has risen from 72.9 to 74.5 but partly because the demand index has weakened a little from 99.5 to 99.0. The trend in favor of buyers is not at all dramatic but it is fairly broad based and is affecting most cities. Here is how the single family markets in the top 17 cities have fared over the last month:
We now have more cities deteriorating for sellers than improving (9 to 8). This picture is also painting a much more positive picture than a comparison which uses only the last 2 weeks:
Here only 2 cities improved for sellers over the last two weeks - Paradise Valley and Tempe - and Tempe started to deteriorate over the last 7 days while Paradise Valley continued to improve though only slightly.
The West Valley has lost some of the steam it had last year, Avondale, Peoria & Buckeye in particular. The Southeast Valley and Phoenix are still doing fairly well but the former improving trend has faltered. There was little change over the last two weeks in Phoenix, Chandler, Mesa, Gilbert, Tempe or Queen Creek. but when we examine the daily numbers all these cities have indexes that are now declining.
Among the 39 major and secondary cities, only the following 6 saw improvement in the last 7 days - Arizona City, Casa Grande, Gold Canyon, Litchfield Park, Paradise Valley and Tolleson. Declines in the CMI were particularly severe in Sun City West and Sun City.
It is still early days but based on these signals I am adjusting down a notch my optimism for a strong spring selling season. To rekindle my optimism I would need to see in the next 2 weeks a lower rate of rise in the number of active listings and an increase in the number of listings going under contract.
February 3 - The rate of arrival of new listings has accelerated in the last few weeks and the 28 day total now stands at 6.2% higher than last year at this time. It has also overtaken the rates for 2014 and 2013.
Note that the List Date shown in the ARMLS system is not the same as the date it became a new listing. The List Date is the date the listing was first entered by the listing agent, but it may not be activated and become a new listing visible to anyone else until many days or even weeks later. There are therefore two ways of measuring new listings, based on when the listing was entered or when the listing became visible to the world. As an example MLS listing 5392962 was first entered on January 26 but did not become a live listing until February 3. The List Date is 1/26/16 but the history record shows it as a new listing on Feb 3. We do not get any information about listings that have been entered but not activated. We do see the List Date once the listing has been activated. Some listings are entered but are never activated. These are ignored completely by us. We download all the new listings every morning and compare the arrival rate of new MLS numbers with all previous days. The new listings that arrive this morning may have List Dates that are considerably earlier than this morning.
The Agent Days on Market (ADOM) count starts when the listing is entered. The Cumulative Days on Market (CDOM) starts when the listing becomes active. So although this may seem counter-intuitive, the Cumulative Days on Market can be less than the Agent Days on Market. When we refer to Days on Market in Cromford Report charts we are always referring to the Cumulative Days on Market. In the case of listing 5392962, it currently has 9 days as ADOM and 1 day as CDOM. The ADOM number is therefore quite misleading since this listing has only been on the market for 1 day.
The Tableau chart for new listings is based on the List Date field, so will not always reflect the same arrival patterns as we see each morning. It is based on the entry date for the listing not the activation date, but it will only include listings that have become active.
I have found in life that almost everything is more complicated than you expected it to be.
February 2 - After the extremely strong new home closing numbers in December, January was unable to keep up the pace. Closed new home sales collapsed by 53% to just 602 in Maricopa County. Before we panic, we must remember that this is still up 19% from January 2015 and is in fact the best January closing number since 2013. January is always a poor month for closed transactions on new homes
Several more builders have started offering homes that are smaller and more affordable, so the median sales price declined from $320,678 in January 2015 to $302,498, a drop of 6%. This is a sign of smaller homes not lower pricing.
February 1 - I have not seen this before. An entire town (population 6,331) has just 1 single family active listing. That town would be Youngtown. There are another 4 listings in UCB status and 5 pending, which means the contract ratio is an astonishing 900. There are almost 2,000 single family homes in Youngtown so for only 1 to be available for sale is very unusual.
There are far fewer single family homes in Wittmann, yet there are 43 of them for sale. This is a more typical situation. The contract ratio here is a relaxing (for buyers) 26.
anuary 31 - The growth in active listings (excluding UCB & CCBS) between January 1 and January 31 was 12% this year. The cities with much higher growth than this were:
- Sun City West (32%)
- Buckeye (25%)
- Wittmann (24%)
- Maricopa (23%)
- El Mirage (21%)
- Sun City (19%)
- Cave Creek (18%)
- Avondale (18%)
- Apache Junction (17%)
- Tolleson (17%)
We note that a lot of these are on the west side where supply was mostly tight last year. Buyers are getting a little more to choose from here.
The weakest growth in active listings was in:
- Youngtown (-60%)
- Laveen (-5%)
- Waddell (-3%)
- Litchfield Park (-2%)
- Wickenburg (2%)
- Queen Creek (3%)
- Fountain Hills (3%)
- Anthem (3%)
- Sun Lakes (4%)
- Gilbert (6%)
January 30 - The rate of arrival of new listings has been quite strong during January. As usual, the peak days are Thursday and Friday meaning that the 2-day totals we measure on Saturday morning are very high. Counting all listings of of residential types and in all areas including those outside Greater Phoenix, we see the following 2-day totals for the last 4 Saturdays:
- Jan 9 = 897
- Jan 16 = 1,124
- Jan 23 = 1,088
- Jan 30 = 1,104
These 2-days totals are usually below 1,000 for most Saturdays in every year and we can always tell we are seeing a surge in supply when they break the 1,000 mark. Surges are common in January and October and sometimes seen during the spring months.
In 2015 the January Saturday numbers looked like this:
- Jan 10 = 931
- Jan 17 = 1,012
- Jan 24 = 998
- Jan 31 = 928
The difference between this year and last year was -4%, +11%, +9% and +19% for each of the four Saturdays. The latter is quite striking and caused me to write this observation today.
The total added from Jan 1 to Jan 31 was 10,170 last year and this year we saw 10,504, an increase of 3.3%. Our total so far this year is almost the same as in January 2014 and 10% higher than in January 2013.
January 29 - The Cromford® Market Index for the single family markets in the largest 17 cities moved over the past month as follows:
Not a bad looking chart for sellers, though it should be pointed out that most of the good news is packed into Phoenix, Chandler, Tempe and Gilbert. Only the top 8 can be considered seller's markets with another 8 in a balance between buyers and sellers.
The West Valley has not moved much in either direction with Peoria showing the most deterioration and Surprise the biggest improvement.
Paradise Valley has recovered a little ground but remains under the 100 mark, while Scottsdale is going backwards again, along with Fountain Hills and Cave Creek.
The unhappiest sellers can be found in Maricopa which is now far adrift at the bottom of table just as Avondale is way out in front at the top.
January 28 - The census permit counts are a bit late this month but we finally have them for the month of December and therefore the whole of 2015.
There were 1,433 single-family permits issued across Maricopa and Pinal counties, a strong number for December, bringing the 2015 annual total to 16,768. This is up 43% from 2014 and far higher than almost anyone expected at the start of last year. Nevertheless it is still a long way below the numbers throughout the period 1996-2007, when the minimum annual total was 25,352 (2007) and the maximum 55,858 (2004).
Ranking the various permit issuing authorities by the number of permits issued in 2015 we get:
- Phoenix 2,237 (up 40%)
- Gilbert 1,819 (up 27%)
- Mesa 1,708 (up 72%)
- Peoria 1,589 (up 59%)
- Unincorporated Pinal County 1,384 (up 31%)
- Goodyear 1,186 (up 50%)
- Chandler 1,157 (up 77%)
- Buckeye 1,104 (up 47%)
- Queen Creek 987 (up 42%)
- Scottsdale 869 (up 35%)
- Unincorporated Maricopa County 826 (up 26%)
- Surprise 537 (up 68%)
- Maricopa 334 (down 4%)
- Florence 177 (up 21%)
- Casa Grande 129 (up 2%)
- Avondale 123 (up 193%)
- Glendale 109 (up 418%)
- Eloy 79 (down 6%)
- Tempe 75 (up 34%)
- Wickenburg 75 (up 241%)
- Paradise Valley 65 (up 30%)
- Litchfield Park 50 (up 14%)
- Fountain Hills 46 (up 5%)
- Apache Junction 32 (down 16%)
- Cave Creek 28 (up 155%)
- Carefree 27 (down 13%)
- Tolleson 7 (up 40%)
- Coolidge 6 (up 50%)
- El Mirage 3 (down 96%)
For the counties as a whole, Pinal was up only 19% while Maricopa increased by 47%. The remaining 13 counties of Arizona were up by only 13%
January 27 - After a relatively weak 2015, the following remote locations are now having a stronger start to 2016. Listings under contract counts are growing much faster than in the equivalent period a year ago.
|City||Under Contract Growth Jan 2015||Under Contract Growth Jan 2016||Change||Rank|
It is unusual to see a trend like this where the fastest growth in listings under contract in January is concentrated in the smaller outer areas of the valley. The majority of the valley is growing listings under contract at a slower rate than in January 2015, though we started the year with a higher number of listings already under contract.
The weakest comparisons with last year are in New River, Sun City West, Youngtown, Avondale, Glendale, Gold Canyon and Cave Creek.
Sun City West, Youngtown, Avondale and Glendale have all been very hot but appear to be cooling down a bit based on this analysis. Gold Canyon and Cave Creek were cool to start with and are cooling further.
January 26 - The S&P / Case-Shiller® Home Price® Index report is out for November 2015, which covers sales closed between September and November 2015.
The 20 metro areas are ranked as follows for their percentage price appreciation over the prior 12 months:
- Portland 11.1%
- San Francisco 11.0%
- Denver 10.9%
- Seattle 9.7%
- Dallas 9.4%
- Miami 8.1%
- Detroit 6.3%
- Los Angeles 6.2%
- San Diego 6.0%
- Tampa 6.0%
- Phoenix 5.9%
- Atlanta 5.7%
- Charlotte 5.3%
- Las Vegas 5.2%
- Minneapolis 4.3%
- Boston 4.7%
- New York 3.7%
- Cleveland 2.2%
- Washington 2.1%
- Chicago 2.0%
Phoenix is in the middle of pack and slightly ahead of the national average with was 5.3%.
The west coast, Dallas, Denver and Florida were the strongest areas over the last year. The North and Northeast were the weakest.
The change over the previous month was quite small in many cases:
- Miami 0.8%
- Tampa 0.5%
- Seattle 0.5%
- Los Angles 0.3%
- Phoenix 0.3%
- Charlotte 0.3%
- Portland 0.3%
- San Francisco 0.3%
- San Diego 0.3%
- Dallas 0.2%
- Denver 0.1%
- Detroit 0.1%
- Washington 0.1%
- Minneapolis 0.1%
- Cleveland 0.0%
- Las Vegas -0.1%
- New York -0.3%
- Atlanta -0.3%
- Boston -0.5%
- Chicago -0.7%
Phoenix is among the top 5 here so we seem to have a bit of relative momentum going on thanks to the low supply at the bottom end of the market. Some of the hottest markets over the past year seem to have lost steam over the last month. Florida is an exception to this trend.
January 25 - Hot and cold. Here is a summary of the frenzied, very hot, hot, warm, tepid and cold parts of the market right now, based on contract ratios:
Cold / Tepid:
- high end luxury - may warm up once we get into the February-June buying season, though stock market is not helping
- far flung outskirts of the valley - new developers adding to supply but demand is often weaker as we move further out
- Pinal county except for Apache Junction & Arizona City
- mid range areas $250,000 to $500,000 - good demand with plenty of supply
- most of Maricopa County, especially the Southeast Valley, Central & Southern Phoenix, West Side
- most easily accessible and affordable areas with average price under $250,000 - low supply
- inner Southwest Valley and much of the inner Northwest valley
- West Mesa, Central Chandler & Gilbert
January 24 - The rise in listings under contract in 2016 has been under-whelming so far. Comparing the last seven years for normal listings across Greater Phoenix we see the following growth since Jan 1 and Jan 24:
- 2016 = 21.2%
- 2015 = 29.9%
- 2014 = 33.6%
- 2013 = 34.9%
- 2012 = 36.1%
- 2011 = 27.4%
- 2010 = 20.3%
- 2009 = 18.0%
Surprisingly 2016 is the weakest start to the year since 2010.
2010 and 2009 did see strong growth in listings under contract, but this was confined to the lender owned listings that dominated the supply at the time, not normal listings which were badly neglected.
January 23 - We are now setting a new record for the millennium so far - the lowest rate of new foreclosures notices in January since we started keeping records in 2001. Today we have seen 456 for the month to date, at a rate of 35 per working day. The closest rivals are last year (2015) and 2006. In 2006 January finished with 750 notices and 2015 had 827. We are on track to hit between 650 and 675 for the month.
2009 was the busiest January for foreclosure notices with a total of 8,635, an average of 432 per working day, roughly 12 times the rate we see today.
January 22 - For the overall market the Cromford® Supply Index has settled down around 73,which is 27% below normal, having fallen from a peak of 76 in mid December. The Cromford® Demand Index has barely moved in the last four months, currently 1% below normal around 99.
After the strong December we were tentatively hoping for stronger demand figures in January, but it seems that was hoping in vain. Pending listings are up 16% from the start of year. Last year we saw a 22% increase in the same period and were not particularly impressed with that, so January this year is really quite weak for listings going pending. We can turn to the UCBs (including the CCBS listings) and see that they have increased by 20% so far this year. Last year it was 24%.
Maybe buyers have been unsettled by the abysmal performance of the stock market. Maybe not. Either way these are not statistics that suggest buyers are getting 2016 off to a strong start.
The closed listing numbers are a bit better; so far we are about 12% ahead of last year, but that reflects contracts signed in 2015, so this is not what we are really looking for.
In February 2015 we saw an unexpectedly strong surge in contract signings after the end of January, and maybe we will see a similar phenomenon in 2016. We will report here as soon as we see something (or not).
January 21 - We turn again to the Cromford® Market Index for the single family market in the largest 17 cities. The chart below shows how it has changed over the past month:
Here we see a better than average picture for sellers with 11 out of 17 cities improving. The trend favoring the southeast valley continues very strongly, particularly for Chandler - up from 115.9 to 140.8 since December 21. Gilbert and Tempe are also in double digits for their percentage improvement and Mesa and Queen Creek are doing fine with 5% and 4% improvements respectively. Goodyear and Buckeye are improving for sellers but both remain in the balanced zone.
The northeast valley is generally weaker with Fountain Hills and Cave Creek both dropping below 100. Paradise Valley is creeping upwards again after its drop under the neutral 100 mark. Scottsdale is balanced with a slight cooling trend.
The central valley is strong with Phoenix up 9%. Anthem doesn't make the top 17 but is also a seller's market and still improving for sellers.
For the west valley it is a mixed picture. Avondale remains far out in front due to chronic low supply. Glendale is still very much a sellers market but is on a gently cooling trend. Surprise has stopped its downward trend but shows only a very slight improvement. Peoria is now a balanced market and this is due to a strong in flow of supply. Active listings in Peoria are up 7%, the largest percentage of any of the major cities.
Pinal County is very mixed. Apache Junction has been improving for sellers since October when it was already a seller's market. Arizona City is also looking strong. However we see a lot of weakness in Casa Grande, Maricopa (down 10% in the above chart), Florence, Coolidge and Gold Canyon. Overall Pinal is currently much weaker than Maricopa County.
The active adult areas of Sun City and Sun City West are back in the balanced zone between 90 and 110, though still above the neutral mark of 100. Sun Lakes however is a buyer's market with strong inventory of active listings and is currently the weakest part of the southeast valley.
January 20 - A question arises after yesterday's observation: can we already see signs of trouble in the housing markets identified to be at risk due to the collapse of energy prices. Texas is a non-disclosure state so it is hard for individuals to do research on home sales and prices. However Texas A&M has a large Real Estate Center which is supported by the state, part funded by the license fees paid by real estate agents in Texas. They have access to the necessary sales data and publish monthly information on their web site.
Here is what we see for Houston in November:
This does not look good. Sales are down 11% and average prices down 4%. Supply is up 28% and the only ray of sunshine is the median sales price number. Remember that oil prices have dropped another 35% since last November.
What about Midland TX, much smaller and much more dependent on the oil industry
Now this looks really bad except for the active listings number. I have a hard time believing the university reported 522 because realtor.com is showing 1,156 homes for sale right now. If the realtor.com number is correct then we are looking at almost a year of inventory. Home construction in Midland is grinding to a halt and the number of people employed in oil and gas related jobs has already plummeted by 20% in the last 12 months. The regional oil rig count is down 63% and yet production remains stubbornly high. In fact oil production in 2016 is projected to exceed 2014.
If I were an investor in Midland I would definitely have wanted to sell my real estate property last year. In Houston I would want to do it now while I still can.
January 19 - Since last summer we have been expressing serious concern about the potentially damaging effects of the collapse in commodity prices. These include almost all metals, basic foodstuffs like rice, soy and wheat, animal produce and of course, energy products like oil, natural gas and coal. Low prices sound like good news and they are for the upstream consumers of those raw materials. Almost everyone appreciates lower gasoline prices, for example. However if you are employed in a business that produces raw materials then a sustained drop in prices can quickly lead to layoffs and unemployment. The jobs affected are often concentrated in particular geographic regions. Those companies that supply plant and machinery for producers of commodities are also exposed to cuts in demand that eventually lead to big job losses. We have all heard that the employment situation is improving overall, which is fine as long as your job is not associated with commodities. Miners, oil and gas workers and farmers are suffering badly and it looks like it is going to get a lot worse before it gets better.
Particularly exposed to the drop in oil and natural gas prices are North Dakota and Houston. Having both experienced booming housing markets in very recent years, the slow down is likely to be very painful. Take a quick look at these recent news items:
Houston is headquarters for 25 of the Fortune 500 companies. 22 of those 25 are in energy-related businesses. Houston sailed through the Housing Crisis with hardly a problem. It is not looking good there right now. It faces a future with trepidation a little bit like Phoenix did in early 2007.
We can be relieved that we are no longer very reliant of raw material industries in Arizona, but the economic distress of large scale job losses, loan defaults and company bankruptcies elsewhere can still send negative waves over our housing market from over the state border. Unless there is a quick recovery in commodity prices, which looks increasingly unlikely, we could be facing some serious headwinds over the next few years. I do not expect these to show up immediately in our local housing data, but it makes sense to take a greater interest in what is happening in prominent housing markets that depend on jobs related to commodities, especial oil, natural gas and coal. The most exposed areas are probably:
- Texas, especially Houston, Austin, Dallas, San Antonio and Midland
- Wyoming, especially Casper
- West Virginia
- New Mexico
We will be taking more than just a passing interest in how these markets react to the huge drop in commodity prices over the last 2 years.
January 18 - The annual snapshot has been updated, and this year every indicator is green apart from the 2 measures of appreciation. The strong comparison with the situation last January is emphasized by this table.
The appreciation measured by median sales price is very close, but this is rather misleading as it is helped by the scarcity of low priced homes. These days the median sales price is biased to the upside just as it was biased to the downside during the years when REOs were very plentiful (2008 through 2011).
January 17 - The Cromford® Demand Index is losing upward momentum again, hitting its lowest point since December today. The market is well positioned but so far there has been no significant uptick in demand that would be required to push the index higher. Last year was similar. January was very lackluster, but everything changed as soon as we entered February. We don't know if the same thing will happen this year.
The awful start to the year from the stock market does not help buyer confidence and developers' stocks have been severely battered even as they hit long term highs in sales units. These days, Arizona is more a consumer of raw materials rather than a significant producer (cotton, copper, citrus and cattle), so the collapse in commodity prices is mostly good news for our local businesses. However, we are not immune to the possible economic consequences of a major global slowdown, even though almost none of the slowness started in the USA. We would expect the mid-west and gulf states to be affected to a greater degree, if there is a significant slowdown. They are more dependent on energy, mining and agriculture than we are.
January 16 - Where are the new listings piling in from? After 15 days we have roughly the same number of new listings added as we did last year (about 3% more to be precise), but some locations are seeing large increases or reductions compared with a year ago. Here are the most popular ZIP codes for new listings compared with the same period in January 2015:
- Phoenix 85015 - up 83% from 12 to 22 new listings
- Phoenix 85024 - up 71% from 17 to 29
- Peoria 85381 - up 58% from 12 to 19
- Mesa 85208 - up 52% from 29 to 44
- Glendale 85305 - up 50% from 6 to 9
- Glendale 85306 - up 50% from 10 to 15
- Peoria 85345 - up 45% from 31 to 45
- Tempe 85283 - up 39% from 23 to 32
- Rio Verde - up 36% from 14 to 19
- Glendale 85304 - up 33% from 15 to 20
We note the strong showing of Glendale and Peoria.
The top price ranges for new listings compared to last year are:
- $600K to $800K - up 39% from 152 to 211
- $500K to $600K - up 25% from 173 to 217
- $250K to $275K - up 18% from 254 to 299
- $400K to $500K - up 15% from 293 to 336
- $300K to $350K - up 11% from 370 to 410
At the other end of the spectrum the ZIP codes with the highest decline in new listings compared to last year are:
- Youngtown 85363 - down 80% from 5 to 1
- Phoenix 85009 - down 70% from 20 to 6
- Arizona City 85123 - down 65% from 23 to 8
- Phoenix 85053 - down 65% from 20 to 7
- Mesa 85213 - down 65% from 37 to 13
- Phoenix 85040 - down 61% from 18 to 7
- Phoenix 85028 - down 58% from 33 to 14
- Phoenix 85012 - down 56% from 9 to 4
- Phoenix 85035 - down 55% from 20 to 9
- Phoenix 85085 - down 54% from 41 to 19
Phoenix is the strongest player here.
The price ranges with the biggest loss in new listings year over year are:
- Under $100K - down 41% from 425 to 252
- $2M to $3M - down 35% from 40 to 26
- $125K to $150K - down 33% from 492 to 332
- $1M to $1.5M - down 25% from 117 to 88
- $100K to 4125K - down 22% from 253 to 197
Luxury home sellers will be pleased to see that we have not seen a large increase in new listings at elevated price points. Only $1.5M to $2M increased by 10% and all other ranges above $800K are down year over year. Entry level buyers will be disappointed that the supply situation below $175K is just going from bad to worse.
The middle of the market between $300K and $800K is where the increases are concentrated - there are at least 10% more new listings here than last year in each of the price ranges.
January 15 - The Southeast Valley and Phoenix continue to gain relative strength in the Cromford® Market Index stakes. Below is the table showing how the CMI has changed over the last month for the single family market in the 17 largest cities:
The outstanding performer in the last month is Chandler which has jumped from 9th to 3rd place thanks to weakening supply and a nice uptick in demand. It's CMI was at 105.1 as recently as November 10, and it has moved from a balanced market to a seller's market remarkably quickly. Tempe, Gilbert and Mesa are all showing positive changes in balance in favor of sellers, and Queen Creek has edged up into the neutral position around 100.
Phoenix remains at 5th position but its 9% improvement matches the positive development of the overall market in the last 4 weeks.
In the West Valley the picture is more mixed. Avondale has extended its lead at the top largely because supply is dreadful. Demand has actually fallen in Avondale but the supply index is only 36.6, not far above the record low of 28.9 that we saw in July 2013. We see only 47 days of inventory, and that is including the UCB and CCBS listings. Excluding them, the supply is only 38 days. Goodyear and Buckeye are also making progress, so the southwestern areas seem to be gaining on the northwestern areas. Surprise, Glendale and Peoria have all lost a little momentum for sellers over the last month. Surprise has fallen the most from 3rd to 8th place.
The Northeast continues to be less favorable to sellers. No area is in a seller's market, but Scottsdale is best positioned with a balanced CMI of 107.3 which is up 2% from last month. Fountain Hills, Cave Creek and Paradise Valley have all lost ground over the past month. Of these three, Paradise Valley is showing the most promise despite its currently lowly position in the table. It has started a positive trend beginning on January 6.
Because it has few large cities, Pinal County does not feature strongly in the above list, with its only exclusive entrant Maricopa at the bottom of the table as a buyer's market and declining the fastest. (Queen Creek is shared by Maricopa and Pinal counties). However Apache Junction is in great shape and would appear at number 2 in the above table. Arizona City is doing well too, but Gold Canyon, Casa Grande, Florence and Coolidge are still relatively difficult areas for sellers.
January 14 - A question that comes up regularly is "what is the most expensive house that has ever sold in Greater Phoenix?"
This is harder to answer than it sounds. The sale of very expensive new custom homes is often recorded differently from most new homes. The home buyer tends to acquire the vacant lot before the home is built. We know the price paid for the lot because an affidavit of value is recorded along with the deed. But this also means there is no recording for the home itself and no price becomes available to the public - it is a private contract between the developer and the home owner. Only when the home becomes an arms-length re-sale do we get a good look at a price.
We can easily see the highest price paid for a closed listing through ARMLS. The answer is $12,500,000 - for 6902 E Grapevine Close in Cave Creek in 2000. This ranch property claims over 10,000 sq ft of living space on 225 acres. Since a lot of the value is in the land, which includes 8 different parcels, it is hard to determine what the home itself sold for, but it is probably less than $10,000,000.
There have been a few sales of higher amounts outside of the MLS. The same home in Cave Creek changed hands for $15,500,000 in 2014. The highest price seen recorded for a single family home is $14,000,000 for 8040 N Mohave Rd in Paradise Valley during 2008. It is probably worth much less than that today, because luxury home prices were still peaking in 2008.
The highest assessed value for a home in Maricopa County is for the home of Robert Sarver, owner of the Phoenix Suns. It is currently assessed at $16,735,800. Assessed value is usually supposed to be roughly 75% to 80% of market value, so we can assume that the assessor thinks the home is worth at least $21 million. The address is 5710 N Yucca Rd, Paradise Valley and according to the assessor it has 28,229 sq ft of living area built in 2009, a 2,200 sq ft pool and 5 acres of land. It has never appeared in the MLS files and never changed hands with an affidavit of value. It was vacant land in 2005 and the lot sold for $6,200,000 cash at that time.
There are currently 8 active listings that aspire to set a new record for the highest sales price ever seen in Greater Phoenix through the MLS. The highest asking price is currently $32,000,000. This is not the highest we have ever seen. Indeed there have been 85 listings with their original list price over $32,000,000. However almost all of those are typing mistakes by the listing agents.
January 13 - When we compare the number of single family active listings (excluding UCB & CCBS) with a year ago, segmented by price range, we get the following chart:
Here we see clearly that luxury home buyers have quite a bit more choice than last year. In fact from $400,000 upwards there are more homes for sale. Yet the overall supply is down because supply below $275,000 is so weak. Last year there was already a shortage of affordable homes, so the situation has worsened for buyers, which is obviously good news for sellers.
Sellers of homes over $400,000 need to be aware that news of short supply does not apply to them. They have more competition from other sellers than they had a year ago.
January 12 - December was a great month for the housing market with particularly strong closings for new homes. Overall sales were up almost 15% from the previous December, while new home closings jumped 45% year on year. So I was rather expecting January to follow through with some positive signs. January is much better than January 2015, but not so much as to generate a lot of excitement.
For the first 12 days, we have closed sales up 8% while pending listings are up by 11%, compared to a year ago. The contract ratio has reached 40.1 as opposed to the 31.2 we saw on Jan 12, 2015. The current contract ratio is as good as we saw on Feb 9, 2015. These are all good positive signs, but if anything they are slightly disappointing after such a strong December. It is possible that December's numbers were boosted by lenders and title companies doing some catching up with closing delayed by TRIS, so the comparison is probably not entirely fair.
It really looks like we may have to wait until February before we know whether 2016 is going to move well above 2015's activity levels.
January 11 - The Black Knight Financial Services Mortgage Monitor report is now out for November 2015. The 31,000 first time foreclosure starts in the USA for the month is the lowest in over 10 years, in fact 18% lower than the previous lowest month since the report started monitoring in 2005.
Although every state in the nation is showing lower delinquency rates than in November 2014, the trend since March 2015 has been less positive. Arizona's total non-current loans are up to 4.1% from 3.9% in March. Even so this is a pretty low percentage by historic standards and only 8 states have lower percentages of non-current loans.
Growing the most in non-current loans since March are:
- Texas - up by 12% from 6.0% non-current to 6.7%
- Oklahoma - up by 11% from from 7.0% to 7.8%
- New Mexico - up by 11% from 6.4% to 7.1%
- Wyoming - up by 10% from 3.0% to 4.3%
- Kansas - up by 9% from 5.6% to 6.1%
These are all states with a heavy exposure to the collapse in commodity pricing. The recent trend is possibly the result of significant redundancies in the support industries to resource exploration and extraction (wells, fracking and mining). Economic hardship usually takes some considerable time to show up in non-current loan numbers. People tend to pay their mortgage if they can. I therefore find the last 6 months figures a little worrying for the mid western states and Texas. The annual changes won't look bad until we get to the report that covers March (released in May) and there is usually a seasonal improvement between December and March. We will have to wait and see if that seasonal trend still holds sway in 2016.
Louisiana is also not looking great and has overtaken New Jersey as the second worst state for loan delinquency after long-term delinquency leader Mississippi.
Alaska, Oregon, Florida, New Jersey and Nevada continue to improve the most quickly.
January 10 - December was a little stronger for luxury market pricing than the previous 3 months. In addition the pricing for homes under contract over $500,000 has moved to a new high in the early part of January which augers well for January sales pricing.
Sales volumes were a mixed bag. Fountain Hills had its best December since 2005 with 18 sales over $500,000. However Paradise Valley was slightly weak at only 24 and the Biltmore District was very weak at 4, which is 8 fewer than in December 2014. Scottsdale sales numbers were moderate and Arcadia saw 9 completed sales through ARMLS, the lowest monthly total since November 2014.
Apart from Fountain Hills, where sales were strong but pricing a little weak, the picture was of weak to moderate sales but some firming in pricing after the negative price trend that started in September.
January 9 - Prashant Gopal, a real estate journalist from Bloomberg News tells me he is hearing that the luxury market softened all over the country during the second half of 2015. This shows that what we experienced in Greater Phoenix is nothing unusual. Here are the numbers I shared with Prashant to illustrate the difference between the luxury market at $1 million and above compared with the market below $1 million. The change column compares 4Q 2014 with 4Q 2015:
|Greater Phoenix - all dwelling types||Price Range||Change|
|Active Listings||Under $1 million||down 6%|
|$1 million and over||up 9%|
|Closed Sales (ARMLS)||Under $1 mill on||up 4%|
|$1 million and over||down 10%|
|Average Price per Sq Ft||Under $1 mill on||up 6.5%|
|$1 million and over||down 0.9%|
In short the market under $1 million has improved on all 3 key measures while the market over $1 million has deteriorated on all 3 measures.
Sellers of homes valued at $1 million or more should be careful not to heed positive headlines about the overall market. Selling your home over $1 million has become more difficult in the last 12 months and prices have softened a little in all but a few areas.
January 8 - After a full week, it becomes possible to compare the rate at which new listings are arriving this year. We have 2,046 residential resale listings which is up 5% compared with 2015 but down 6% compared with 2014.
Nothing dramatic to report there. However new rental listings are down 15% compared with last year and down 31% compared with 2014.
January 7 - We are taking another look at the movement in the Cromford® Market Index for the single family markets in each of the 17 largest cities:
The biggest 4 markets - Phoenix, Mesa, Scottsdale, Chandler - all saw improvements in the market for sellers over the past month, with Chandler benefitting from a 15% fall in active listings. Tempe, Gilbert, Goodyear, Buckeye and Queen Creek all saw improvements too.
The West Valley, represented by Avondale, Glendale and Peoria, calmed down just a bit, and quite a lot in the case of Surprise.
Apart from Scottsdale, the rest of the Northeast is still going backwards, with Cave Creek, Fountain Hills and Paradise Valley all better for buyers than a month ago.
This leaves us with Maricopa which is now in buyer's market territory at 80.1.
January 6 - The initial counts of deeds processed in December by the Maricopa County are in. December 2015 was a massive month for new home closings, at least by the standards of 2009-2015.
A total of 1,284 new homes were recorded (single family and condos), which is up 45% from December 2014. It is also the highest monthly total since October 2008. We would have seen even more closings last month if not for the construction labor shortages. These shortages are causing build times to extend and the larger the home the greater the delays. We are also seeing a few more builders offer products at the lower price points, and as a result the median sale price is down about 1% from December 2014. the labor shortage is causing construction costs to rise, so the developers' margins are being squeezed. However I am sure they are delighted with the increase in volumes.
New homes contributed 16% to the overall closings, up from 12% in December 2014. Since new homes tend on average to be much larger than re-sales, this helped to push the overall median sales price for December to $230,000, the highest since February 2008.
January 5 - Preparing the monthly update to the ZIP code snapshots, it reminded me how much you can tell from just a one second glance at the colored indicators. Although the numbers are useful, the colored indicators may be overwhelmingly green as in this positive snapshot for Mesa 85202:
Clearly sellers are having the best of things in 85202, with appreciation between 8% and 11% depending on how you measure it.
But it is not so easy for sellers in Phoenix 85045:
The contrast between these locations is very striking. It appears that the imminent construction of the loop 202 freeway to the south and west of Ahwatukee may be having a negative short term effect on the market in 85045. Once the freeway is open, it is probable that market conditions will rebound because improved accessibility from the west and north will make the area more attractive to buyers. In the meantime the side-effects of construction appear to be having a modest negative impact on prices, with all the annual appreciation measures negative as of January 2016.
January 4 - Months of Supply, based on active listings divided by monthly sales, can often be a rather volatile measure which means comparing month to month sometimes gives us large changes. There was a large decline in active listings during December and the expiration of another batch at the end of the month has caused a big drop in the Months of Supply. This has been amplified by the stronger sales number in December as title companies and lenders caught up with the TRID delays that took place in November.
All this means we have some pretty low readings for months of supply in several areas. Don't get too excited because there is absolutely no doubt that these readings will jump right back up at the end of January. In fact February 1, is when the months of supply readings peak in almost every year. This is because we get a lot of new active listings during January, yet January is usually the weakest month for closings.
What we can legitimately do is compare one area with another for the same date. Here are the cities with the lowest months of supply as of January 1:
- Avondale 1.5
- El Mirage 1.6
- Youngtown 1.8
- Tolleson 2.0
- Laveen 2.1
- Glendale 2.3
Every location here is in the West Valley.
The highest readings are in:
- Tonopah 22.0
- Wickenburg 16.5
- Paradise Valley 15.2
- Carefree 14.4
- Gold Canyon 12.9
January 3 - Only 6 sales of homes listed at $3 million or more were reported in December through ARMLS. Two were in Paradise Valley, 3 in Scottsdale 85255 and 1 was in Arcadia.
- New custom home in Silverleaf at DC Ranch by Dale Gardon Design and Salcito Custom Homes - sold for $7,500,000
- 2008 custom home in Silverleaf at DC Ranch by New Horizon - $7,000,000
- 2013 rebuild of 1976 custom home at the Sanctuary Resort on the slopes of Camelback Mountain - $4,660,000
- 2008 custom home by Bradley Builders in Turquoise Hills, in the north of Paradise Valley- $4,350,000
- 2010 custom home by Nance Construction in the Heart of Arcadia - $3,500,000
- New custom home by Skapa Properties in Silverleaf at DC Ranch - $3,400,000
None of these was on the market for more than 78 days, but we note there is nothing older than 2008 among these sales.
There were 8 sales in December 2014 listed at $3 million or more. The oldest then was built in 2002.
There were 7 in December 2013 but in those days people were still buying older homes - 3 were built in 1970, 1987 and 1999.
The super-luxury market is still a bit quiet, but brand new homes or those of very recent vintage are the most popular.
January 2 - Yesterday we analyzed the active listings segmented by price range. Today we will analyze them by city. Below we compare the number of single family active listings (excluding UCB and CCBS) yesterday with last month and last year. If both are lower this is a positive signal for sellers and if both are higher it is bad news for sellers.
|City||Active 1/1/16||Active 12/1/15||Active 1/1/15||Peak Since 2000||1 Month Change||12 Month Change||Comments on Short Term Change||Comments on Long Term Change|
|Anthem||139||147||132||646||-5%||+5%||slightly favorable for sellers||unfavorable for sellers|
|Apache Junction||122||138||165||523||-12%||-26%||very favorable for sellers||very favorable for sellers|
|Arizona City||76||82||91||332||-7%||-16%||favorable for sellers||very favorable for sellers|
|Avondale||128||155||188||1,116||-17%||-32%||extremely favorable for sellers||extremely favorable for sellers|
|Buckeye||390||437||488||1,279||-11%||-20%||very favorable for sellers||very favorable for sellers|
|Carefree||100||105||112||160||-5%||-11%||slightly favorable for sellers||favorable for sellers|
|Casa Grande||298||311||323||670||-4%||-8%||slightly favorable for sellers||favorable for sellers|
|Cave Creek||290||305||271||615||-5%||+7%||slightly favorable for sellers||unfavorable for sellers|
|Chandler||712||846||770||2,481||-16%||-8%||extremely favorable for sellers||favorable for sellers|
|Coolidge||52||51||63||239||+2%||-17%||unfavorable for sellers||very favorable for sellers|
|El Mirage||41||39||77||505||+5%||-47%||unfavorable for sellers||extremely favorable for sellers|
|Eloy||38||46||48||101||-17%||-21%||extremely favorable for sellers||very favorable for sellers|
|Florence||172||165||155||274||+4%||+11%||unfavorable for sellers||very unfavorable for sellers|
|Fountain Hills||277||292||284||575||-5%||-2%||slightly favorable for sellers||neutral|
|Gilbert||823||919||939||2,766||-10%||-12%||very favorable for sellers||very favorable for sellers|
|Glendale||498||527||604||2,567||-6%||-18%||favorable for sellers||very favorable for sellers|
|Gold Canyon||256||251||254||385||+2%||+1%||unfavorable for sellers||neutral|
|Goodyear||394||429||495||1,300||-8%||-20%||favorable for sellers||very favorable for sellers|
|Laveen||164||162||175||555||+1%||-6%||unfavorable for sellers||favorable for seller|
|Litchfield Park||165||178||162||534||-7%||+2%||favorable for sellers||neutral|
|Maricopa||379||378||485||1,092||0%||-22%||slightly unfavorable for sellers||very favorable for sellers|
|Mesa||1,209||1,293||1,316||3,657||-6%||-8%||favorable for sellers||favorable for sellers|
|New River||46||51||72||155||-10%||-36%||very favorable for sellers||extremely favorable for sellers|
|Peoria||640||668||768||2,073||-4%||-17%||slightly favorable for sellers||very favorable for sellers|