Daily Observations from The Cromford Report
March 21 - The Cromford® Market Index table for the single-family markets in the 17 largest cities looks like this:
This shows much greater strength than a month ago with an average increase in the CMI of 5.5%, comparing favorably with the 3.8% increase we saw last week.
Only 5 cities saw a decline and 4 of those were of 1% or less. Only Scottsdale saw a noticeable decrease (-4%).
Cave Creek, Avondale, Glendale and Paradise Valley all advanced more than 10% with Mesa, Tempe, Goodyear and Queen Creek improving by at least 6%.
There is still no city among the 17 in a balanced market (below 110). The top 7 are strong seller's markets.
March 20 - While we cannot claim to know much about the US housing market outside Arizona, it is clear that Greater Phoenix has a far more buoyant housing market than implied in the prevailing news reports. We turn our attention today to pricing. The important prices are what homes actually sell for, not what they are listed at. There are thousands of price changes every week, some up as well as many down, but we don't really know what a home is worth until someone stumps up the money, usually with the help of a lender who has insisted on a professional appraisal. Sale prices are reality whereas asking prices sometimes have a dreamlike quality, especially at the upper end of the market.
Sales prices in March 2019 are looking very strong. Here are the current readings for average price per sq. ft. (our preferred measuring tool):
|Sector||March $/SF Now||March $/SF Last Year||Change||Remarks|
|Greater Phoenix - all types||$174.24||$161.40||+8.0%|
|Greater Phoenix - single-family||$174.63||$161.03||+8.4%|
|Greater Phoenix - condo / townhouse / patio home etc.||$182.35||$174.33||+4.6%|
|Greater Phoenix - mobile / manufactured||$96.02||$95.44||+0.6%||small sample size - volatile measure|
|Greater Phoenix - under $250,000||$135.88||$126.43||+7.5%|
|Greater Phoenix - $250,000 to $500,000||$158.36||$154.24||+2.7%|
|Greater Phoenix - $500,000 to $1 million||$212.26||$206.51||+2.8%|
|Greater Phoenix - over $1 million||$391.40||$338.54||+15.6%||small sample size - highly volatile measure|
|12 Month $/SF Now||12 Month $/SF Last Year||Change|
|Greater Phoenix - all types||$164.37||$153.33||+7.2%|
|Greater Phoenix - single-family||$164.06||$153.01||+7.2%|
|Greater Phoenix - condo / townhouse / patio home etc.||$176.60||$164.52||+7.3%|
|Greater Phoenix - mobile / manufactured||$98.19||$92.15||+6.6%|
|Greater Phoenix - under $250,000||$131.24||$121.67||+7.9%|
|Greater Phoenix - $250,000 to $500,000||$155.64||$149.56||+4.1%|
|Greater Phoenix - $500,000 to $1 million||$204.82||$201.29||+1.7%|
|Greater Phoenix - over $1 million||$340.28||$333.11||+2.2%|
Can you spot the weakness in today's market prices?
No, neither can I.
March 19 - Here is another observation comparing 2019 with previous years. The contract ratio is a reliable measure of how hot a market is, but it is subject to seasonal effects. If we compare March 19 for each of the last 14 years we eliminate any seasonal issues and should be able to make a very fair comparison.
For the whole of the ARMLS database, the contract ratio was as follows:
- 2019 - 62.1
- 2018 - 73.2
- 2017 - 62.7
- 2016 - 55.9
- 2015 - 53.7
- 2014 - 41.1
- 2013 - 92.9
- 2012 - 134.7
- 2011 - 63.2
- 2010 - 59.2
- 2009 - 25.8
- 2008 - 12.2
- 2007 - 16.4
- 2006 - 26.9
We can conclude that 2019 is far stronger than the market between 2006 and 2009 and also hotter than 2014 through 2016. Admittedly it is cooler than 2018, but it is very similar to 2017 and 2011. Sellers are not in as strong a position as they were in 2018 at this time, but they are better placed than in 8 out of the last 13 years. That makes 2019 better than average.
You could legitimately argue that 2011 through 2014 were affected by the presence of a large number of short sales. This tends to increase the contract ratio because these listings stay under contract for a long time awaiting lender approval.
So let us look at just the non-distressed listings for Greater Phoenix:
- 2019 - 64.1
- 2018 - 75.3
- 2017 - 62.5
- 2016 - 54.2
- 2015 - 50.2
- 2014 - 34.7
- 2013 - 57.4
- 2012 - 52.9
- 2011 - 25.3
- 2010 - 23.2
- 2009 - 9.7
This is a better table and tells us that March 2019 is the second hottest of the last 11 years and similar to March 2017. In March 2017 we were feeling pretty good having experienced 3 straight years of strong growth. The only fault of 2019 is that it does not compare so well with 2018. If we ignore 2018 then it is the hottest year in the last 10. Why would anyone think the Greater Phoenix market is in trouble? I guess because people focus too much on short term trends and fail to consider the longer term perspective. I am confident that Cromford Report subscribers are not among those people.
March 18 - In the market above $500,000 we saw Greater Phoenix active listings (including UCB and CCBS) rise during February to reach a total of 5,267, which is 5% higher than last year. Does this mean the luxury market is swinging in favor of buyers?
No. The annual sales rate has rise by almost 18% in the last 12 months, so relative to demand, supply has actually grown weaker. We had 202 days of luxury inventory across Greater Phoenix on March 1. The same reading in 2018 was 228.
The luxury market is balanced when the days of inventory reading lies between 246 and 303. It would take a massive shift in the balance to get from 202 days to 334 days, where a buyer's market starts to take over.
The weakest part of the luxury market is over $2 million. There we see 30 months of inventory, far above the 11 months we find for homes between $1 million and $2 million. This in turn is much higher than the 6 months that exists for homes between $500,000 and $1 million. It is the range between $1 million and $2 million that has shifted most in favor of sellers; quarterly sales are up 7% from a year ago while active listings without a contract are down 7%.
March 15 - The ranking table of annual average price per square foot has been published for March and it is striking how much the outlying areas have out-performed the inner parts of the valley.
Top locations for appreciation between March 2018 and March 2019 are:
- Tonopah - up 43.7%
- Arizona City - up 18.5%
- Coolidge - up 16.0%
- Youngtown - up 15.8%
- Wickenburg - up 15.6%
- Carefree - up 14.1%
- Casa Grande - up 11.8%
- El Mirage - up 11.3%
- Florence - up 11.2%
- Tolleson - up 11.0%
Of the top 6, only Youngtown could be considered part of the central area, and it is certainly one of the least expensive of those areas, even after an almost 16% rise in average $/SF.
In the top 10, 7 are locations on the outer edge of the valley. The remaining 3 are in the inner West Valley.
March 14 - The Cromford® Market Index values for the single-family markets in the 17 largest cities are shown below:
This shows that the recent strength in the market is intensifying with 12 out of the 17 cities showing improving conditions for sellers. No sign here of us getting close to a buyer's market (below 90).
Maricopa, Scottsdale and Peoria are the main holds outs for the pessimists.
The average change over the past month is 3.8%, up from 1.7% last week.
Avondale is not only on top of the table, it has the highest percentage improvement over the past month. Cave Creek, Paradise Valley, Glendale, Goodyear and Fountain Hills are all up 6% or more.
March 12 - The general perception out there seems to be that the housing market is in trouble. I am simply NOT seeing evidence of that in Phoenix. Yes, the market is cooler than last year, but the first half of last year was unusually strong and makes a difficult comparison. If we are to be fair to 2019 we should compare it with long term averages and not try to create alarming headlines to attract readers' eyeballs.
So let us look at a series of measurements over the next several days and see how 2019 is doing. First off is the listing success rate:
We are currently running at an 82.4% success rate. This means that in the last month 82.4% of listings that terminated were closed and 17.6% were either cancelled or expired. This is a very high success rate by long term standards. The average over the last 18 years is 64.1%. You will notice there was a big dip in January but this happens every year because a large number of listings expire on December 31.
On March 11, 2018 the success rate was higher - 83.8% - but not a lot higher. 2019's success rate is better than 2017 (80.9%), 2016 (76.4%), 2015 (73.0%), 2014 (70.1%), 2013 (79.2%), 2012 (79.0%), 2011 (65.2%), 2010 (63.2%), 2009 (47.2%), 2008 (32.7%), 2007 (44.0%), 2006 (57.5%). All of these were measured on March 11.
We have to go all the way back to the bubble year of 2005 (84.3%) to find another year with a higher success rate as of March 11.
If anyone thinks 2019 is bad, then I have to conclude they have no idea what bad looks like.
March 11 - With the unverified affidavits counted from Maricopa and Pinal counties we can give you a reasonable estimate of the iBuyer transaction counts in February and how they compare with last year. These are not the final numbers, based on verified data. Those will be published, in a couple of weeks or so, on the Tableau charts within the Cromford Public section of our site, but the numbers below should not be too far from the truth.
|Opendoor||OfferPad||Zillow||All iBuyers Combined|
|Homes Purchased in February 2019||246||70||133||450|
|Homes Purchased in February 2018||245||76||0||321|
|Annual Change in purchases||0%||-8%||N/A||+40%|
|Homes Sold in February 2019||228||76||77||381|
|Homes Sold in February 2018||226||131||0||357|
|Annual Change in Sales||+1%||-42%||N/A||+7%|
|Median Purchase Price in February 2019||$232,950||$220,443||$326,900||$250,079|
|Median Purchase Price in February 2018||$236,300||$207,250||N/A||$230,000|
|Median Sale Price in February 2019||$254,363||$250,608||$320,675||$267,547|
|Median Sale Price in February 2018||$233,500||$234,900||N/A||$234,000|
|Homes in Inventory at the End of February||1,129||411||406||1,946|
Although iBuyer purchases are up 40% overall from February 2018, all this growth is accounted for by the new entrant Zillow. There has been a slight decline in purchase volumes for the original 2 players.
On the sales side, growth is more modest at 7%, with OfferPad's February sales far below their total in February last year.
The median prices for both purchases and sales have increased for iBuyers as a whole, because Zillow is operating over a broader price range than the original 2 players. While Opendoor and OfferPad still concentrate most of their attentions on the low end of the market, Zillow frequently buys homes in the mid range. As a result they often take a bit longer to sell them.
Gross margins are highest for OfferPad, with Opendoor in the middle and Zillow operating on the smallest gross margins.
March 8 - As a follow up to the post on March 6, here are the areas which have seen the greatest increase in their annual sales rate over the past year:
|ZIP Code||2018 Sales Rate||2019 Sales Rate||Change|
|New River 85087||177||236||+33%|
|Rio Verde 85263||110||141||+28%|
|Black Canyon City 85324||24||29||+21%|
|Casa Grande 85193||11||13||+18%|
|Arizona City 85123||263||300||+14%|
This includes many of the most obscure and little-known parts of the valley. If your friend thinks they really know Phoenix real estate well, ask them to point out Stanfield and Arlington on the map.
March 7 - Below is a chart showing the Cromford Market Index for the single-family markets in the 17 largest cities by dollar volume:
The market is improving for sellers with 10 cities rising while 7 have been falling over the past month. The average change is +1.7%, a significant improvement from -1.1% last week.
Leading the way upward are Avondale, Paradise Valley, Glendale and Fountain Hills. Notably late to the party are Maricopa and Scottsdale.
The majority of cities are showing rises over the past week, with Scottsdale, Surprise, Peoria and Maricopa the only exceptions.
Among the cities outside the top 17 the following have shown rises in their CMI in the last week:
- Apache Junction
- Arizona City
- Casa Grande
- Gold Canyon
- Litchfield Park
- Sun City
The following declined over the past week:
- El Mirage
- Sun City West
- Sun Lakes
The overall picture shows rising demand from a fairly weak level and stable but chronically low supply which is starting to decline. Sales prices continue to rise, despite the large number of list price cuts.
March 6 - Thanks to the downshift in demand, the annual sales rate for single-family homes across Greater Phoenix is down 2.7% from 77,467 to 75,366 according to the ARMLS database.
Here are the ZIP codes with the greatest reduction in annual sales:
|ZIP Code||2018 Sales Rate||2019 Sales Rate||Change|
|Fort McDowell 85264||5||2||-60%|
|Gila Bend 85337||10||8||-20%|
|Sun City 85351||847||742||-12%|
|Gold Canyon 85118||510||454||-11%
March 4 - We have the preliminary numbers for Maricopa County recordings in February.
There were 8,015 sales in total, down 6% from last year. This is an improvement on January where sales were down 10% compared with 2018.
New home sales totalled 1,222 and were down only 1%. resales were down 7%.
The overall median sales price was $273,00, up from $260,490 in February 2018. The new home median was $340,308, barely changed from $338,906 last year because builders are focusing more attention on the entry market by building smaller homes. The re-sale median climbed from $249,900 to $260,000.
All the above include single-family and condo / townhouse properties.
March 1 - The market started the year far behind 2018 in terms of demand - the monthly sales rate was down 11% on January 1 from a year earlier while the count of listings under contract was down 17%. At the end of January these numbers had changed to down 17% and 14% respectively. At the end of February they had changed to down 8% and 12% respectively.
What can we conclude from this? First, we know the under contract count is a leading indicator for closed sales. The 17% gap at the start of January suggested that January closings would be weak and they were indeed, down 17%. The slight improvement in under contract counts to 14% down suggested a mild recovery in February. We actually saw an even stronger recovery to just 8% down. This is quite respectable when you consider that because pricing was up year over year, the dollar volume in February was $2,127 million, not far (2.6%) below 2018s $2,184 million.
At 12% down compared with last year, under contracts counts are recovering from 17% and 14% down at the beginning of the previous 2 months. We anticipate that March sales will reflect that recovery and it is possible that the sales gap could narrow further, even enough to close the dollar volume gap completely. This assumes that current trends continue, which is not certain, but reasonably likely.
February 28 - Here is the table showing the Cromford® Market Index for the single-family markets in the 17 largest cities:
Although the market is starting to recover, the average change in the CMI compared with a month ago is -1.1%. This is an improvement from last week's observation when we saw a change of -2.2% over the month.
7 cities are already showing improvement, with Fountain Hills and Glendale leading the charge. The remaining 10 cities are showing deterioration compared with January 28, with Maricopa, Peoria and Scottsdale down the most.
If we compare the CMI values with last week's table we see that 10 cities have higher CMIs than a week ago.
- Fountain Hills
- Paradise Valley
- Queen Creek
- Cave Creek
It is only in the last week that the CMI trend has changed, but the market is no longer deteriorating and is slowly moving in favor of sellers.
February 27 - Following the government shutdown, the Census Bureau is running about 4 weeks behind and has only just published the residential building permit numbers for the month of December. We can summarize them by stating that they were unusually strong for single-family and unusually weak for multi-family. You can see full details of the numbers broken down by county in the Cromford Public section of our web-site.
February 26 - The S&P/ Case-Shiller® Home Price Index® was published today covering the 3 months October through December 2018.
Here are the 20 focus cities ranked by their month to month change in home price index:
- Los Angeles +0.25%
- Las Vegas +0.17%
- New York +0.17%
- Miami +0.09%
- Atlanta +0.07%
- Phoenix +0.05%
- Dallas +0.03%
- Charlotte -0.04%
- Tampa -0.05%
- Denver -0.14%
- Washington -0.18%
- Portland -0.28%
- Cleveland -0.36%
- Detroit -0.39%
- Boston -0.47%
- Minneapolis -0.50%
- Seattle -0.63%
- San Diego -0.69%
- Chicago -0.70%
- San Francisco -1.43%
Although it only managed to eke out a tiny month to month rise, Phoenix was placed 6th out of 20 and compared favorably with the national average which was -0.14%
On a year over year basis, the HPI changes were:
- Las Vegas +11.4%
- Phoenix +8.0%
- Atlanta +5.9%
- Minneapolis +5.5%
- Denver +5.5%
- Detroit +5.3%
- Boston +5.3%
- Tampa +5.3%
- Charlotte +5.2%
- Miami +5.2%
- Seattle 5.1%
- Cleveland +4.6%
- Dallas +3.9%
- Portland +3.9%
- Los Angeles +3.7%
- San Francisco +3.6%
- New York +3.3%
- Chicago +3.0%
- Washington +2.7%
- San Diego +2.3%
In this table Las Vegas and Phoenix are a long way ahead of the rest of the pack. The national average is 4.7% and none of the 20 cities is negative year over year.
February 24 - 2019 is starting to look stronger now after a powerful third week of February. In January, we saw contract activity pick up for the second half and February seems to be doing the same, only more so. The count of listings under contract for all areas and types jumped from 9,886 to 10,600, a rise of 714 listings or 7.2% between Feb 16 and Feb 23. Surprisingly, this is a much stronger jump than in 2018 when the same week produced a rise from 11,451 to 11,896. This was only 3.9%.
The Cromford® Demand Index is firmly on the rise again having hit a low point of 86.0 on January 24 and rebounding to 89.2.
The Cromford® Supply Index is still rising but stands at 70.8, still far below the normal range of 90 to 110. However active listings without a contract are slightly lower than this time last week. If a top can be formed this early in the year, it will be a good omen. New listings are currently arriving more slowly than in 2018 and with all the new contract activity, it would not be surprising if active listing counts fell away from this point.
The simplest and clearest positive sign is that the Cromford® Market Index has turned around. It hit 125.7 last Tuesday but now stands at 126.1 with upward momentum building.
It seems that the market has finally decided it wants to warm up again, now that typical mortgage interest rates are back around 4.5% instead of close to 5%.
February 21 - Once again we show below the Cromford® Market Index numbers for the single-family markets in the 17 largest cities by dollar volume:
The picture is similar to last week with an average decline of 3.1%, a very slight improvement over -3.3% on February 14.
We have 5 cities improving for sellers and 12 deteriorating. The significant positive moves came from Glendale and Fountain Hills. The biggest deterioration came from Maricopa, Peoria, Chandler, Cave Creek, Scottsdale and Paradise Valley.
Will still have a seller's market in all 17 cities although the 5 cities at the bottom of the table are showing only a mild advantage for sellers in the 110 to 120 range.
Over most of the valley we are not seeing demand get any weaker, and a gentle recovery is underway. We are not seeing supply climb sharply either and it may peak fairly soon. The market is well behaved and losing steam slowly and gently. The overall market CMI looks poised to stabilize in the mid 120s, which is where the City of Phoenix currently lies (126.1).
At this stage, any landing looks likely to be soft and any recovery looks likely to be slow and gentle too. Of course things could change at any moment, but there seems to be insufficient downward momentum to take us into the balanced zone (90 to 110), never mind a buyer's market (under 90).
Not too much to worry about and not very much to get excited about either. Just a quieter market than 2018 and 2017 and similar in many ways to 2016.
February 20 - Comparing the annual sales rate across Greater Phoenix for all dwelling types by price range we find the following:
|Price Range||Annual Sales Rate Feb 18, 2019||Annual Sales Rate Feb 18, 2018||Change|
|up to $100K||2,039||2,968||down 31%|
|$100K to $125K||1,760||2,634||down 33%|
|$125K to $150K||3,307||4,674||down 29%|
|$150K to $175K||5,181||8,214||down 37%|
|$175K to $200K||8,737||11,181||down 22%|
|$200K to $225K||10,286||10,195||up 1%|
|$225K to $250K||10,451||9,564||up 9%|
|$250K to $275K||8,435||7,567||up 11%|
|$275K to $300K||7,164||6,545||up 9%|
|$300K to $350K||10,048||8,759||up 15%|
|$350K to $400K||7,023||6,064||up 16%|
|$400K to $500K||7,767||6,876||up 13%|
|$500K to $600K||3,654||3,047||up 20%|
|$600K to $800K||3,110||2,636||up 18%|
|$800K to $1M||1,281||1,112||up 15%|
|$1M to $1.5M||1,079||879||up 23%|
|$1.5M to $2M||392||341||up 15%|
|$2M to $3M||279||223||up 25%|
|over $3M||134||123||up 9%|
A collapse in sales volume below $200K is balanced by increases in sales above this point. Especially impressive is the unit sales growth between $500K and $3M. The overall effect is a 2% drop in unit sales.
Although the annual sales rate has declined 2%, the annual dollar volume has increased 7% from $28B to $30B. With an extra $2 billion spent on residential real estate compared with the prior 12 months, the market does not look too bad to me.
February 19 - The annual sales rate has been in decline since the summer of 2018 but not uniformly across all segments of the market. Let us look first at the single-family markets in the broad geographic areas:
|Segment||Peak Annual Sales||Peak Month||Current Annual Sales||Change|
|Phoenix & Central Valley||16,947||Apr 2018||16,544||down 2.4%|
|Northeast Valley||7,551||Aug 2018||7,195||down 4.7%|
|Southeast Valley||22,355||May 2018||21,462||down 4.0%|
|West Valley||23,296||Jul 2018||22,654||down 2.8%|
|Pinal County||8,626||Aug 2018||8,362||down 3.1%|
We can see that the greatest fall in annual sales has been in the Northeast Valley (down almost 5%) in the shortest time (peaking in August).
In contrast, Phoenix and the Central Valley is down the least (2.4%) and the slowest (peaking in April).
February 18 - The lower echelons of the luxury market have performed very well over the past few months, but the upper end has been much weaker.
- quarterly sales between $500K and $1M - up 3% from 1,402 to 1,444 (compared with the same 3 months a year ago)
- quarterly sales between $1M and $2M - up 3% from 284 to 292
- quarterly sales over $2M - down 14% from 83 to 71
Quarterly sales were also down year-over-year- for the rest of the market under $500K so the $500K to $2M sector has been the strongest price range, especially the $500K to $1M sector.
January 2019 saw a big jump in active listings for homes over $500K - up 19% and now 5% higher than the start of February 2018. Sales were weaker than January 2018, down 5%. Luxury sellers therefore have more competition from other sellers and fewer buyers.
February 15 - Despite the cooling in the market, and almost certainly one of the causes of this cooling, appreciation rates continue to run well above inflation. Here are the latest appreciation rates for the single-family markets in the 17 largest cities. These percentages are based on the annual average price per sq. ft. The numbers in parentheses show what the rates were 12 months ago.
- Maricopa 10.2% (7.9%)
- Queen Creek (including San Tan Valley area) 9.7% (8.3%)
- Mesa 8.5% (7.0%)
- Avondale 8.5% (9.4%)
- Tempe 8.2% (5.0%)
- Phoenix 8.2% (5.4%)
- Buckeye 8.2% (7.3%)
- Glendale 8.1% (7.0%)
- Gilbert 8.0% (5.4%)
- Surprise 7.4% (7.9%)
- Paradise Valley 7.0% (1.3%)
- Chandler 7.0% (5.0%)
- Cave Creek 6.6% (4.2%)
- Peoria 6.3% (7.0%)
- Goodyear 6.2% (6.1%)
- Scottsdale 5.7% (4.1%)
- Fountain Hills 3.6% (4.5%)
February 14 - Below is our usual table showing the Cromford® Market Index for the single-family markets in the 17 largest cities:
Here we see 13 cities that have deteriorated for sellers over the past month and 4 that have improved.
Fountain Hills and Glendale have the largest gains, while the largest falls took place in Paradise Valley, Maricopa, Peoria, Chandler and Cave Creek. Phoenix, Scottsdale and Queen Creek fared poorly too.
The message is that the market is significantly cooler but all 17 cities are still above the balanced zone between 90 and 110, with even Paradise Valley still in a seller's market, if only just.
The average change over the last month is -3.3%, a deterioration from -2.8% last week.
Those looking for good news for sellers do have something to cheer. The Cromford® Demand Index has reversed course and started to increase. For the overall market it has already risen from 86.0 on Jan 29 to 87.9 on Feb 14. This is the first rise in the CDI since March 2018.
Cities with rising CDI include the following:
- Apache Junction
- Arizona City
- Cave Creek
- Fountain Hills
- Gold Canyon
- Paradise Valley
- Queen Creek
Those with a CDI that continues to fall include:
- El Mirage
- Sun City West
- Sun Lakes
Overall, demand has stopped declining and is tentatively beginning to recover. Supply continues to rise, although this is normal for the season. The signals are mixed and we still need to watch vigilantly to see which direction the market decides to go.
February 12 - The crucial question of the moment is how demand is building during the early stages of the spring selling season. Here is the daily chart of listings under contract:
The same chart one year ago looked like this:
The first thing we notice is that the overall shape is quite similar. The second is that in 2018 we had just topped the 11,000 listing mark, whereas in 2019 we have not yet breached 10,000. We should also note that in 2018 we were starting from a higher base - 7,583 - some 1,282 - 20% more than the 6,301 we measured on January 1, 2019.
We can also see that in 2019 we have yet to beat the August number whereas in 2018 we had comfortably exceeded it.
The good news is that the recent growth in 2019 is looking healthy - up 55% from the Jan 1 start. In 2018 we saw a 49% growth in listings under contract at this stage. In absolute terms we are still a little behind 2018 with a year-to-date increase of 3,497 versus 3,671. However this is only a 5% shortfall, much lower than the 20% shortfall we started with.
We conclude that 2019's spring season is likely to be somewhat lower in sales counts than 2018 but not as much lower as once feared. The slump in listings under contract that we saw in December has largely been negated.
The gradual recovery in demand is reflected in the Cromford® Demand Index which has risen to 87.5 after hitting its short term low of 86.0 on January 25. This still well below normal (100) but we are now moving higher instead of lower.
February 11 - One of the reasons we like annual averages is that the large sample size tends to deliver very consistent messages. A good example is the annual average price per square foot for all areas & types. The daily chart looks like this:
Notice how the slope of the chart is very consistent for long periods of time.
We can see that the steep upward slope of August through November has been replaced by a gentle upward slope. Long term average prices are still rising but at a significantly reduced pace. This is because there is now much less of a disparity between supply and demand. Even so, demand still exceeds supply, so the direction of the chart remains upward. If supply were to exceed demand, then the chart would eventually start to slope downwards.
However, remember that sales prices are a trailing indicator, so there is a long time lag between the market balance changing and sales prices following suit.
February 8 - After 7 full days it is time to check how February is looking for both sellers and buyers.
New listings are arriving at a similar rate to the last 2 years. Including those still in delayed status, they are a little higher than 2018 (up 2.1%) but a little lower than 2017 (down 4.2%) for the same week. However if we look over the last 4 weeks, we are up 2.7% from 2018 and 3.4% from 2017. These are not big increases, but they do give potential buyers a little more choice. They also give sellers a little more competition. If we only count new listings that have been activated, then the first week of February saw 2,383 new listings across Greater Phoenix, compared with 2,546 in 2018 and 2,693, so we are seeing a slight decline there. The decline is almost entirely in listings priced below $250,000, which are down from 1,095 in Feb 2018 to 888. Between £250K and $500K we see an increase from 1,040 to 1,088 and above $500K a tiny decline from 411 to 407.
Across Greater Phoenix, active listings without a contract have climbed from 17,964 on Feb 1 to 18,282 on Feb 8, a rise of 318 or 1.8%. During the same period last year we saw active listings without a contract rise grow from 16,132 to 16,245, a rise of 113 or 0.7%. Available supply is therefore growing faster than last year, but not at a rate that should cause concern.
Under Contract Listings:
Across Greater Phoenix , listings under contract climbed from 8,438 on Feb 1 to 9,292 on Feb 8, a rise of 854 or 10.1%. During the same period last year we saw listings under contract grow from 9,817 to 10,757, a rise of 940 or 9.6%.
This reading has given us mixed signals so far this year, with weak numbers during the first 2 weeks of January, stronger growth during the latter part of January and moderate numbers in early February. Over the last 5 weeks listings under contract have grown 48%, adding 3,013 listings, while last year they grew 41% adding 3,146. We can conclude that the gap is slowly closing but we have a long way to go to catch up with 2018. The reading on Feb 8 was still 14% behind Feb 2018, but this is better than Jan 4 when we were down by 18%.
Sellers are lowering their asking prices more now than at any time in the past 3 years with a total of $38M in price cuts during the last week. This corresponds to some improvement in demand which is reflected in the rising Cromford® Demand Index numbers.
February 7 - Once again we share the Cromford® Market Index numbers for the single-family markets in the 17 largest cities:
Only 4 cities show improvement while 13 show deterioration in the market from a seller's perspective. There are only 2 cities that have improved strongly for sellers over the past month - Fountain Hills and Glendale. Paradise Valley, Cave Creek, Goodyear and Chandler saw the most deterioration.
During the last 2 weeks of January we saw a significant improvement in the rate of homes going under contract. The first week of February was nothing special in this respect and certainly not stronger than last year, so has to be seen as mildly disappointing after the encouraging signs in late January. In addition, new listings arrived in stronger numbers during early February than they did last year, so although supply remains low overall, the gap between supply and demand narrowed for most segments of the market.
None of the 17 largest cities has entered the balanced zone between 90 and 110, but some of the smaller cities have. We see Casa Grande at 108.9, Sun City West at 105, Litchfield Park at 101.6, Gold Canyon at 99.4 and Sun City at 91.2.
In summary, demand was a little weaker than we expected and supply a little stronger. The market does not seem to have decided which way it wants to go.
February 6 - We now have preliminary numbers for iBuyer activity during January across Maricopa and Pinal counties:
|Number of Homes Purchased||247||66||112|
|Number of Homes Sold||186||60||37|
|Average Price of Homes Purchased||$250,721||$232,114||$324,589|
|Average Price of Homes Sold||$253,091||$258,192||$323,164|
|Median Price of Homes Purchased||$243,000||$220,520||$313,000|
|Median Price of Homes Sold||$248,500||$247,950||$306,000|
|Total Value of Homes Purchased||$61.9M||$15.3M||$36.4M|
|Purchase Units Annual Growth||18%||-1%||N/A|
|Sold Units Annual Growth||18%||-42%||N/A|
|Inventory at end of month||1,111||417||350|
|Annual Inventory Change||33%||18%||N/A|
Overall iBuyer purchases were up 16% over January 2018, while iBuyer sales increased by 37%.
Unsold iBuyer inventory grew by 58% over the last 12 months to a total of 1,878 homes. This includes homes not yet ready for re-sale as well as those being marketed. Clearly inventory has grown faster than transaction volume.
The January numbers are not final yet because we have to check the data carefully (for duplicates, filed in wrong county, wrong parcel, wrong date, etc.) before it is published in the Tableau charts within the Cromford® Public section of our site.
The range of gross margins achieved can be seen in the Tableau Fix and Flip charts within the Cromford Public section. The charts include filters for each iBuyer. The margins for January are not yet available, but for December 2018 the median gross margins we calculate for homes that closed were:4.1% for Opendoor, 5.8% for OfferPad and 2.5% for Zillow. Zillow tends to buy more expensive homes and the median gross margins were $9,950 for Opendoor, $13,873 for OfferPad and $5,800 for Zillow. In December iBuyer transactions represented 7% of purchases and 4.5% of sales.
Median hold times for homes that closed in December 2018 were 102 days for Opendoor, 78 days for OfferPad and 70 days for Zillow. However Zillow has sold relatively few (only a third) of the homes it has purchased so the 70 days is likely to grow over the next few months.
iBuyers have achieved significant penetration of the Greater Phoenix market since Opendoor started operation in August 2014. However they face a number interesting challenges as their business matures:
- gross margins are lower and getting smaller as competition increases
- hold times are lengthening, incurring additional costs
- a large amount of capital is tied up in inventory (1,878 homes at an average of $250,000 = $464,500,000)
No doubt iBuyers are or will be pursuing additional ancillary revenue generated by their transactions, such as mortgage generation, title insurance, etc. This will help to deliver more margin out of a single home purchase and sale.
February 5 - We have preliminary numbers from Maricopa County for recordings during January 2019.
Total recorded sales for single-family and condo/townhouse properties was 6,898, down almost 10% from 7,647 in January 2018. This is a larger drop in recorded sales than we experienced in December (7.4%).
In December 2018 new home closings held up much better than re-sales, but this effect disappeared in January. New home closings numbered 944, down 9.7% from January 2018. Re-sales were down almost the same percentage at 5,954.
The overall median sales price was $270,000, up 7% from January 2018. The re-sale median was up 8% to $258,900 while the new home median was up 5% to $342,618.
February 1 - Below is the table of Cromford® Market Index numbers for the single-family markets in the 17 largest cities by dollar volume:
This gives us a mixed picture with 7 cities improving for sellers over the past month and 10 cities showing deterioration. The average change in CMI for the 17 cities is -1.4%. Last week we reported +0.7% and suggested it looked a little ominous. We expect a little more negative movement over the next 2 weeks for 2 reasons.
- Slow contract activity during the first 2 weeks of January led to a larger rise in active listings than last year
- Low contract numbers in November and January led to a very slow closing rate during January
However, we are more optimistic for sellers than we were in mid January. The second half of January saw contract activity pick up nicely and this has 2 expected results which could show up in the CMI by mid February:
- Active listing counts should stop rising and may start to fall back slowly in a normal seasonal pattern
- Closed listing counts should start to rise as the additional contract signings in January come through escrow
It is not clear if the boost in contract activity will continue into February but a combination of lower interest rates and higher FHA loan limits tends to support that outcome. We have also heard new home builder report increased buyer traffic in recent weeks.
Several cities have seen significant upticks in their Cromford® Demand Index over the past 2 weeks, including:
- Apache Junction
- Casa Grande
- Cave Creek
- Fountain Hills
- Gold Canyon
Notably absent from this list are Phoenix, Chandler, Mesa and Gilbert. Also relatively weak are Sun City, Sun City West and Sun Lakes, all 55+ locations.
All 17 of the largest cities remain in the seller's market zone over 110 though Paradise Valley and Goodyear look like they may drop into the balanced zone between 90 and 110.
January 31 - Following up yesterday's post, here are the changes in the number of listings under contract over the past 2 weeks, compared with the same 2 weeks in January 2018:
|Market Segment||Rise in Listings Under Contract 2019||Rise in Listings Under Contract 2018||Change|
|Greater Phoenix all types||1,787||1,591||+12%|
|Phoenix - single-family||287||287||+0%|
|Mesa - single-family||140||148||-5%|
|Scottsdale - single-family||156||66||+136%|
|Chandler - single-family||70||50||+40%|
|Glendale - single-family||59||62||-5%|
|Gilbert - single-family||79||72||-10%|
|Surprise - single-family||87||57||+53%|
|Peoria - single-family||71||43||+65%|
|Queen Creek - single-family||66||79||-16%|
|Avondale - single-family||18||36||-50%|
|Tempe - single-family||32||24||+33%|
|Goodyear - single-family||62||46||+35%|
|Maricopa - single-family||28||18||+47%|
|Buckeye - single-family||38||54||-70%|
|Cave Creek - single-family||19||8||+138%|
|Fountain Hills - single-family||7||5||+40%|
|Paradise Valley - single family||5||6||-17%|
The biggest positive change is in the price ranges from $500K to $1M. Here there has been a 101% increase comparing the 2 week growth in listings under contract between 2018 and 2019. This is reflected in the very good numbers in the table above for Scottsdale and Cave Creek, which have a lot of homes inside that price range.
There is also a 20% improvement in the range from $200K to $500K and a 12% improvement in listings over $1M. The bad news is that listings under contract under $200K are off by 32%. This remains a bigger market by unit count than than the market between $500K and $1M, but it is hindered by a lack of supply.
January 30 - It looks like closings will be pretty dismal in January 2019. January is always a very slow month for closed listings and after low contract activity in November and December it would be surprising if January's count was anything other than bad. After 4 complete weeks of January we are at 4,166 for Greater Phoenix (all dwelling types), which is down from 4,847 at the same point in 2018. That's a 14% drop.
However, things are looking more positive when we look at contracting activity in January, especially over the last 2 weeks.
For all areas & types across the ARMLS database, we have grown from 7,253 to 9,077 listings under contract, a rise of 25%. In the same 2 weeks last year we saw an increase from 8,765 to 10,389, a rise of under 19%. We are still far behind, but catching up at a surprisingly speedy rate.
What is even more impressive is that the absolute number of listings under contract grew by 1,824 compared with 1,624 last year, a 12% improvement.
I am not ready to pop any champagne corks, but this is strong evidence of a surge in buyer interest over the past 2 weeks. The market started the year very cool compared to 2018, but is now heating up much faster than last year. This is great news for sellers and suggests that buyers should act fast before the real buying season gets underway and they have to deal with more competition from other buyers
It seems likely (but not certain) that the Cromford® Market Index will continue to decline for a short while yet due to the low closing rate, but as active counts top out and contracts and closings start to climb, I would cautiously expect the index to reverse direction and start increasing again before too long. A buyer's market looks increasingly unlikely to happen in 2019.
January 29 - The last Tuesday of every month is the date for release of the S&P/Case-Shiller® Home Price Index® data.
This month the sales period covered is September through November 2018 and here are the month to month percentage changes for the 20 focus cities:
- New York +0.43%
- Tampa +0.38%
- Phoenix +0.32%
- Miami +0.32%
- Atlanta +0.28%
- Dallas +0.20%
- Charlotte +0.16%
- Boston +0.08%
- Las Vegas -0.01%
- Washington -0.02%
- Minneapolis -0.16%
- Los Angeles -0.30%
- Denver -0.32%
- Detroit -0.35%
- Portland -0.48%
- San Diego -0.63%
- Cleveland -0.66%
- Chicago -0.69%
- San Francisco -0.71%
- Seattle -0.73%
More than half of the cities had a negative move between October and November although the national average was still positive at +0.05%. Phoenix slipped from 1st to 3rd place being overtaken by New York and Tampa.
For the year over year change we get:
- Las Vegas +12.0%
- Phoenix +8.1%
- Seattle +6.3%
- Atlanta +6.2%
- Denver +6.2%
- Minneapolis +5.8%
- Detroit +5.7%
- Tampa +5.7%
- San Francisco +5.6%
- Boston +5.6%
- Charlotte +5.5%
- Miami +5.0%
- Cleveland +4.6%
- Los Angeles +4.4%
- Portland +4.4%
- Dallas +4.0%
- New York +3.5%
- San Diego +3.3%
- Chicago +3.1%
- Washington +2.7%
The national average was 5.2%. Phoenix remains well ahead of that number though far behind Las Vegas.
No city is showing negative appreciation on a year over year basis.
January 26 - For those in search of good news for sellers, pickings have been thin for the last few weeks, but we have something this morning.
Greater Phoenix listings under contract increased substantially between January 19 and January 26, from 7,194 to 8,175, an increase of 13.6%. Last year we saw an increase of only 10.2% to 9,597. We are still some way behind last year in under contract listing counts, but we have started to catch up rather than fall further behind.
One week does not make a trend, but this is something for the optimists among us to hang their hat on.
The breakdown by price range is also interesting:
- listings under $250K were up 13.5%
- listings between $250K and $500K were up 13.8%
- listings between $500K and $1M were up 15.3%
- listings over $1M were up 8.%
- there was no growth in listings over $2M
There is a developing theme - the relative strength of the market in homes priced between $500K and $1M, with $800K to $1M the top performing range within that group.
January 25 - Since the critical factor at the moment is contracting activity, it makes sense to study the contract ratio for the market as a whole as well as various segments. The contract ratio tells us what proportion of the unresolved listings on ARMLS are under contract, compared with those without any contract. Under contract means they are pending, UCB or CCBS status. Resolved means they are closed, expired or cancelled. Delayed or temporarily off market listings are ignored.
The contract ratio is a seasonal measurement so we need to compare January 25, 2019 with other January 25 numbers from prior years.
|Market Segment||Contract Ratio 2019||Contract Ratio 2018||Contract Ratio 2017||Contract Ratio 2016|
|All areas & types||43.7||56.2||49.3||42.1|
|Greater Phoenix - Single-Family Detached||45.0||59.6||51.2||44.4|
|Greater Phoenix - Townhouse||54.1||66.9||63.0||51.2|
|Greater Phoenix - Apartment Style||40.6||56.2||48.8||39.2|
|Greater Phoenix - Gemini / Twin||50.5||60.2||64.7||53.1|
|Greater Phoenix - Patio Home||48.4||49.1||47.8||44.9|
|Greater Phoenix - Mobile Home||48.1||37.3||34.7||27.3|
|Queen Creek SFD||54.4||76.9||64.1||51.8|
The overall market is cooler than 2017 and 2018 but slightly hotter than 2016.
We note that mobile homes are following a different pattern and are much hotter in 2019 than they were in any of the last 3 years. In fact they have been on an entirely positive trend from 2016-2019.
We also see that Phoenix now has a significantly cooler market than in 2016, unlike the majority of cities. In contrast Scottsdale has cooled only a little compared with 2018 and is hotter than 2016 and 2017.
January 24 - It is time to look at the Cromford® Market Index values for the 17 largest cities:
At first glance this looks reasonably positive with 9 cities improving for sellers over the past month and 8 cities deteriorating. However it is not as good as last week and the average change is only +0.7% whereas last we saw +2.0%. This is a little ominous.
Paradise Valley is clearly in trouble, down 12% from a month ago, probably thanks to the terrible performance of the stock market in Q4 2018. It has dropped from 8th to 15th in just 3 weeks.
Goodyear looks like it is headed for the balanced market zone (90 to 110).
What is most concerning is the comparison with last week's numbers. 13 of the 17 cities have declined since January 17 and only 4 have improved (Buckeye, Fountain Hills, Glendale and Tempe).
It is still early in the year and we cannot reach firm conclusions, but there is little evidence so far of a fast take off for the re-sale market in 2019. Optimists will need to pin their hopes on February.
January 23 - Contracts accepted in ARMLS across Greater Phoenix during the first 3 weeks of 2019 totalled 5,259. During the same period last year the total was 5,980. The decline of 12% is significant and worse than we saw in the first 3 weeks of December (8%). Our conclusion is that demand remains weak and has shown little to no signs of recovery so far.
Almost all of the decline in contracts accepted took place in homes priced under $250,000. These were down 23% from 2,943 to 2,275. Homes between $250,000 and $500,000 declined by only 3% from 2,456 to 2,384 while homes over $500,000 increased by 3% from 581 to 600.
January 22 - After 3 complete weeks of January it is fair to compare the first 21 days of 2019 with the first 21 days of 2018.
Closed listings dropped from 3,638 to 3,121, a decline of 14%. The fall was slightly steeper for condos/townhouses (16%) and even steeper for mobile homes (22%).
As expected, due to lack of inventory, closings dropped the most for homes under $250K, falling by 24%. The mid-range from $250K to $500K was down only 4% while the lower reaches of the luxury sector, from $500K to $1M saw a 3% gain in 2019. The upper end of the luxury market was not so fortunate, dropping 20% compared to 2018.
January 21 - The Cromford Market Index stayed fairly level through most of December and the first half of January but has started to drift a bit lower. Here is the short term chart:
Although the index is still above 130, it is losing a bit of altitude because:
- active listing counts are rising
- new listings have started to arrive slightly faster than they did in January 2018
- active listings are going under contract a little slower than usual
- closing rates are still a little slower than usual for what is usually a very slow month
- pending, UCB and CCBS listings are growing from a very low level, but not at a particularly impressive rate
Most agents, sellers and developers were probably hoping for a better reaction to 30-year fixed interest rates moving back down to about 4.65% from the 4.85% level. From the evidence so far, demand has not emerged from the doldrums that started last September.
The changes are not enormous but the market is slowly moving in favor of buyers. It still has a long way to go before we can truly describe it as a buyer's market. What happens immediately after the Super Bowl will be crucial, because in a strong year, this is when we see contract activity pick up dramatically.
In the past, government shutdowns have coincided with a marked loss of demand, but they have tended to be brief affairs.
January 18 - There are a number a false myths circulating in the housing industry at the moment. Many are obviously untrue when you examine the history of the market, but are often stated as if they were natural laws.
- when interest rates rise, home prices fall - this is hardly ever true, but I hear it claimed quite often
- when sales volumes fall, home prices fall - this is hardly ever true, but certainly happened in the great crash of 2005-2009, so is fresh in our memory
Home prices fall when supply exceeds demand by a substantial margin. If supply is lower than demand then it is extremely unlikely that home prices will fall. We can find no examples in history of prices falling when demand exceeds supply.
Rising interest rates decrease demand, but they can also decrease supply if many home owners have an existing mortgage with a low rate. If supply is abundant and interest rates rise, then it is likely that home prices will fall. However it is surprisingly uncommon to find this situation in the last 70 years. This is because interest rate have tended to fall far more often than they have risen, and because supply has tended to be low far more often than it has been abundant. At the moment, interest rates are on an upward trend (although this trend has halted recently) but supply is a very long way from being abundant, Supply remains very low by historic standards, though it is slowly increasing.
Sales volumes fall when demand falls, but this tells us nothing about supply. Supply sometimes rises when sales volume falls (as in 2005-2009). If it rises enough to exceed demand then prices will fall until the balance is restored between supply and demand. Eventually lower prices will stimulate demand (as it did between 2009 and 2013). However it is often the case that demand falls without falling enough to match supply, and in this case prices continue to rise. This has been a common situation in the last 70 years and is also the situation right now.
If demand falls so much that it matches supply, then prices stabilize. We have not reached that point, but it did occur in 2014 for a short period. Demand then bounced back and has exceeded supply ever since.
If demand falls so much that it drops below supply, then price will tend to move lower. This is a relatively uncommon occurrence, but happened between 1989 and 1991, between 2006 and 2009 and for a short period between 2010 and 2011. The 1989 and 2010 declines were very mild, but the 2006-2009 decline was a true bubble bursting. This is something that tends to happen only once or twice a century, after almost everyone who remembers it has passed on. Bubbles require a suspension of disbelief that is impossible for someone who has already experienced one. In 2005 the most popular false myth was that house prices never go down.
January 17 - The single-family markets in the 17 largest cities generate the following Cromford® Market Index information:
This does not look quite as encouraging as last week with 5 of the 17 cities showing deterioration for sellers and 12 showing improvement.
The big positive moves are in the West Valley (Avondale and Peoria) while the big negative move is in the Northeast Valley (Cave Creek).
Paradise Valley has seen conditions deteriorate quickly, having looked strong as recently as early January.
The average move over the past month was +2.0%, but this is down from +2.6% last week.
Another reference point is the high number of cities (20 out of 29) where the CMI went down over the past week:
- Apache Junction
- Arizona City
- Cave Creek
- Gold Canyon
- Litchfield Park
- Paradise Valley
- Queen Creek
- Sun City
- Sun City West
- Sun Lakes
Gold Canyon is the only city which has dropped below 100.
Over the past week, we have seen the demand index rise in the following:
- Casa Grande
- El Mirage
- Fountain Hills
This is rather a short list (8 out of 29 cities). Although almost all areas remain a seller's market thanks to the chronic low supply, demand is staying stubbornly weak in the majority of locations. Where we go from here is not exactly clear.
January 16 - After 2 full weeks it is fair to compare closed sales counts with the same 2 weeks last year.
Across Greater Phoenix for all dwelling types we have seen 1,980 closings, down 14% from 2018.
By price range the changes are:
- Under $250K - down 25.2% from 1,186 to 887
- Between $250K and $500K - down 3.9% from 893 to 858
- Between $500K and $1M - up 7.9% from 178 to 192
- Over $1M - down 18.9% from 53 to 43
The range between $500K and $1M has been relatively strong.
The range over $3M was particularly weak with closings dropping from 7 to 3.
January 15 - New listing counts are a little lower than last year with 4,383 added and activated in the first 2 weeks. The same period in 2018 gave us a count of 4,627, so we are looking at a drop of 5.3%. However, the use of the relatively new "Delayed" status means more listings are being added without being activated. If we examine the total number of residential listings created (whether activated or not) we find 4,684 in 2019 and 4,657 in 2018, a small increase of 0.6%.
Active listing counts are rising faster than last year because although there are a lower number of new listings activated, fewer listings are going into Pending or UCB status.
During the first 2 weeks of 2018 we saw active listing counts (excluding UCB and CCBS) climb from 16,697 to 17,667, a rise of 5.8%.
In 2019 we saw an increase from 17,339 to 18,581, a rise of 7.2%.
Unless demand starts to increase, which is certainly possible given that interest rates have eased, we expect to see active listing counts peak later in the spring than they did in 2018.
January 14 - Well 2019 is off to a rather flat start so far with most numbers well below those of January 2018.
The monthly sales rate is at 6,102 which is down 10% from the 6,816 we saw last year. Most of those sales occurred in December since the year to date count is only 1,835, down 20% from the same point last year.
Listings under contract are at 7,115, up 12.9% from 6,301 at the start of the year. The equivalent numbers in 2018 were 8,356, up 10.8% from 7,543. Although the fact that the counts are down substantially, the growth rate is a little higher, a positive signal.
Mortgage rates have dipped recently so we may see more demand arrive soon. In most years we don't really get buyers returning in large numbers until the Super Bowl is over.
In 2019 so far, new listings have been arriving at a similar rate to 2018. With the lower demand they are turning into listings with contracts more slowly, so active listing counts are rising faster than last year. However, active listing counts remain low by historic standards and unless they rise very much higher we have little chance of significant downward pressure on closed prices. List prices are more fragile as sellers adjust to the slower demand. Average price per sq. ft. for most segments remains strong, particularly when we look at pending listings.
The listing success rate stands at 74.3%, still well above the long term average, but down from 76.8% at this time last year.
Although the market is cooler and smaller than last year, it is not in any significant trouble. The CMI is drifting slightly lower, something that happens in January for most years.
January 10 - The regular Cromford Market Index table for the single-family markets in the largest 17 cities is below:
14 out of 17 cities have seen conditions change in favor of sellers over the past month and only 3 have moved the other way. Only one (Cave Creek) has moved in favor of buyers in a big way (CMI down 11%)
The West Valley is stronger with Avondale up 16% and Peoria up 13%.
Demand remains weak, but the important thing to remember is that supply is even weaker, so the balance still favors sellers, even though volumes are on a downward trend.
Prices remain on a clear upward trend.
January 9 - A few agents have contacted us to suggest that their revenue and side counts are too low in the Agent Performance Table for 2018. So far, every case has shown the table to be correct because the agents were including transactions in their totals that are intentionally not included in the table.
The most common reasons why a transaction is not included in the table are:
- it was a land transaction not a residential sale
- it was a new home sale that did not get a listing on ARMLS
- it was outside of the ARMLS territory (out of area)
- the agent was a co-listing agent or co-selling agent, not the listing agent or selling agent
We are very willing to correct any errors in the table if you find any, but please make sure you have excluded the inappropriate transactions from your comparison.
January 8 - We have just got a chance to study the affidavits that were filed in Maricopa County during December and they paint a much rosier picture of the housing market than we get from examining the ARMLS data. Why is this?
- new home sales are holding up far better than re-sales
- new home prices are gaining strength which is not reflected in MLS data since most new home sales are not in the MLS database
December's new home sales (single-family and condo / townhouse) totalled 1,544 which is up 10% from December 2017, while re-sales totalled 6,624, down 11% from a year earlier.
The median sales price of a new home in December was $349,990, up 6.6% from a year earlier
The median sales price of a re-sale home in December was $256,000, up 5.6% from December 2017.
This data suggests buyers are increasingly being attracted to new homes rather than the limited choice available for re-sale. They took 19% of the market in December 2018 while only managing 16% in December 2017.
January 7 - I have started to see a few writers claim that Phoenix is becoming a buyer's market. I think this is a huge stretch. It is possible that we have forgotten what a buyer's market really feels like. We have seen a noticeable downturn in demand but that alone does not constitute a buyer's market.
In a buyer's market, supply is higher than demand and currently we still have very low supply and little sign of a significant increase on the horizon. The weaker demand is still more than enough to match the current level of supply. Consequently sales prices still upwards momentum, although this has eased a little since last spring.
I also hear talk of lower prices, but this talk is not referring to closed sales prices. It refers to the fact that many sellers are adjusting their expectations and bringing list prices more in line with market conditions. This is not resulting in closed prices going lower than last year, as we would expect in a true buyer's market. In fact the average price per sq. ft. for listings under contract continues to hit new highs.
We have become used to a hot, growing market that strongly favors sellers and now that it is cooler, contracting in volume and moderately favoring sellers, we have a tendency to over-react and make more of the change than it really deserves. We have to stay calm and realistic and be guided by the numbers. These numbers look like a cooling off, not a downturn. We experienced a similar, though more severe, cooling off in 2013-2014, but the last significant downturn took place between late 2005 and 2009 and was followed by a 2 stage recovery from 2009 through 2013. There was also a mini-downturn in 2010-2011 which interrupted the recovery but had little lasting significance in hindsight.
There has been no decrease in loan approval rates and buyers have little to stop them apart from their own desires and perceptions. Many appear to think the current state of the market will mean lower prices for them if they wait to buy later. In this, they are very likely mistaken, but it will take time for them to realize this. Population growth in Central Arizona is still increasing faster than the number of homes. Despite a less friendly tax code since 2017, owning a home still makes better financial sense than renting unless you expect to own the home for less than 3 years. None of the conditions for closed prices to fall are currently in effect.
It seems more likely that demand will come back up, rather than more supply will appear out of nowhere. It is certainly possible that new facts come into play (e.g. interest rates) which could change the picture, but most measurements that impact the housing market are in normal to good ranges. Affordability has dropped below the ideal range but compared with neighboring California, we are amazingly affordable. 2019 is very unlike the situation in 2005, when almost every number was highly unusual and flashing danger signals, even though most of the population chose to ignore them.
As in most things, the numbers are more reliable that emotions. We will continue to report the natural numbers without adding any artificial ingredients.
January 5 - We have updated the Agent Production Table for 2018 to include all data in ARMLS as of January 4. You can find it here.
Based on dollar volume (not sides) the top 25 agents during 2018 were as follows:
|Rank||Name||2018 Dollars||2017 Dollars|
This table excludes:
- agents working for home builders
- agents working for iBuyers
If you wish to include these, the Tableau chart has filters that allow this. There may be some home builder agents that are not yet identified as such. If you spot any, please let me know.
Dan Noma handles Zillow iBuyer transactions but also acts as a non-iBuyer agent. However the volume of Zillow transactions is now so large that we have decided to include him as an iBuyer rather than a regular agent.
If you feel any of these numbers are incorrect, please let me know. Many of the top agents in this list lead large teams. In most cases all team members funnel their transactions through the team leader's MLS ID. For team that do not do this, ARMLS does not provide team member information, so I can only include other team members if you let me know exactly who was on your team during which time period. I can then aggregate the transactions under the team leader, if you so desire. Otherwise the transactions will appear under the individual team members because that is what appears on the MLS listing data.
January 3 - Below is the regular table showing the Cromford® Market Index for the single-family markets in the 17 largest cities.
Despite the lower demand we have been experiencing the market index has improved in the majority of cities over the past month. Only 5 of the 17 are showing deterioration for sellers and only 1 of these is experiencing strong deterioration (Cave Creek).
Avondale, Paradise Valley, Peoria and Tempe are showing the largest monthly improvements, mainly thanks to lower inventory.
The average monthly change in the CMI is +2.6%, an improvement from +1.9% last week.
January 2 - We started 2019 with remarkably few listings in escrow. Across all areas & types in the ARMLS database we counted 17,339 active listings, 2,561 UCB or CCBS and 3,740 pending. This gives us a contract ratio of 36.34. Now January 1 is always a low point for listings under contract (pending + UCB + CCBS), but at 6,301, 2019 is down 17% from 7,583 last year and the lowest we have seen since since 2008 when we had an unbelievably weak 3,632 during the collapse of the bubble.
There is no doubt at all that this number will grow over the next few months, bit the real question is by how much. Sellers would like to see more buyers back in the game. Buyers seems suspicious that something bad is happening to the market, but the only bad thing is the fact that so many of them are holding back. If they stopped holding back, we would be back in a hot market once more. It is an unusual situation with both supply and demand far below normal. The big question is whether they are holding back by choice (fear) or because they cannot do anything at current prices (lack of affordability). Fear can be easily overcome, given time, but prices are not likely to move lower in the current circumstances. We would need a glut of homes to hit the market and there is no sign of that coming from anywhere. Employment remains strong and typical homeowners have plenty of equity. There are very few weak hands among the sellers, even though some investors may choose to take profits at this point..
If we look at the single-family sector by price range, we find the following change in the contract ratios:
|Price Range||Contract Ratio Jan 2018||Contract Ratio Jan 2019||Change|
|$150K to $175K||88.3||68.1||-23%|
|$175K to $200K||91.1||63.5||-30%|
|$200K to $225K||75.5||55.6||-26%|
|$225K to $250K||67.4||52.2||-23%|
|$250K to $275K||62.6||45.5||-27%|
|$275K to $300K||60.9||45.5||-25%|
|$300K to $350K||52.8||39.4||-25%|
|$350K to $400K||40.3||35.8||-11%|
|$400K to $500K||37.1||32.0||-14%|
|$500K to $600K||34.1||25.2||-26%|
|$600K to $800K||28.6||25.5||-11%|
|$800K to $1M||21.6||17.6||-19%|
|$1M to $1.5M||14.1||14.8||+5%|
|$1.5M to $2M||12.0||9.4||-22%|
|$2M to $3M||7.4||12.9||+74%|
Two price ranges are stronger than last year - $1M to $5M and $2M to $3M
The biggest percentage fall is for homes over $3M, which is not surprising given the antics of the stock market over the past 3 months. The price range up to $350K have all fallen by 23% to 30% which is a significant cooling off across a broad range of prices. The cooling effect is much less noticeable between $350K and $1M although for some reason $500K to $600K has dropped 26%.
December 29 - Most of the market indicators are looking pretty healthy at the moment:
- the Cromford® Market Index is now looking stable and for all areas & types stands comfortably over 130
- the days of inventory count at 78 is just a tad higher than it was at this time last year (77)
- average days on market are low (66), lower than last year (69) and have risen only moderately in the past few months
- active listing counts are low by historic standards and now stand just above last year
- listing success rate stands at 870.8% (very high), slightly down from this time last year
The primary measure that is looking rather poor is the under contract count, as can be seen in the image taken from the weekly chart below:
At 6,458, listings under contract are down 20% from 8,043 last year and at the lowest point since 2008. 2007 was also much lower the the current total,
We shall be watching closely to see what sort of ramp up we get during the first 3 months of 2019.
December 28 - We normally publish the building permit data at this point but the Census Bureau is closed due to the government shutdown so unfortunately we will not have any more permit data until the shutdown is over.
December 27 - The Cromford® Market Index numbers for the single-family markets in the 17 largest cities:
Things continue to get better for sellers, a trend which started back on November 30, although you would not think so based on some of the gloomy commentaries in the media.
The average change in the CMI values is +1.9% which compares favorably with +0.3% last week.
We see 12 cities showing improvements for sellers and only 5 showing deterioration over the past month. All 17 cities are seller's markets (over 110).
Paradise Valley and Avondale are leading the recovery, up 12% and 11% respectively. This shows it is not confined to a specific price range, as Paradise Valley is our most expensive city while Avondale is among the least expensive.
Cave Creek has the least favorable market index trend of the 17 (down 9%). This is because demand has been declining while supply remains flat. Among the cities that experienced a decline during the past month, Fountain Hills, Queen Creek, Surprise and Glendale have shown a rise over the past week. This is another positive signal as we enter the new year.
The table above is a far more positive picture for sellers than we were expecting to see based on the situation in mid November. Although demand is certainly weaker than last year, supply remains far below normal and insufficient to meet even the subdued demand. Consequently sellers remain firmly in control of the market and prices will continue to rise while this situation continues.
December 26 - The S&P/Case-Shiller® Home Price Index® numbers have been released for the latest sales period (August through October) and the 20 focus cities fared as follows on a month to month basis:
- Phoenix +0.70%
- New York +0.41%
- Las Vegas +0.33%
- Charlotte +0.30%
- Tampa +0.27%
- Atlanta +0.16%
- Miami +0.14%
- Boston +0.13%
- Los Angeles +0.11%
- Washington +0.02%
- Dallas +0.01%
- Detroit -0.02%
- San Diego -0.12%
- Minneapolis -0.13%
- Denver -0.28%
- Chicago -0.35%
- Cleveland -0.52%
- Portland -0.55%
- San Francisco -0.71%
- Seattle -1.05%
Once again Phoenix is at the top of the table having opened up a gap ahead of number 2 New York.
We see almost half of the focus cities with negative changes, but this is partly due to seasonality and the national average was +0.10%. Phoenix was seven times the national average and is over-performing again. As a result, it even made a mention in the Case-Shiller press release. Seattle took another large hit for a single month while San Francisco and Portland are slowing after very strong gains over the past 4 years.
For the year over year numbers we see:
- Las Vegas +12.8%
- San Francisco +7.9%
- Phoenix +7.7%
- Seattle +7.3%
- Denver +6.9%
- Tampa +6.4%
- Detroit +6.0%
- Atlanta +6.0%
- Minneapolis +5.9%
- Los Angeles +5.5%
- Boston +5.4%
- Charlotte +5.0%
- Portland +4.9%
- Cleveland +4.8%
- Miami +4.8%
- Dallas +3.9%
- San Diego +3.8%
- Chicago +3.3%
- New York +3.1%
- Washington +2.9%
The national average was +5.5% so Phoenix was well ahead of that, and it moved up to 3rd place from 5th place last month. None of the focus cities is showing a negative move year over year.
December 24 - After 3 full weeks of December we can once again make some comparisons with the same period in 2017. For December 1 to December 21
- we have seen 4,590 new listings added, 6.0% fewer than the 4,881 we saw in 2017
- there have been 4,668 closed listings, 5.1% fewer than the 4,919 we saw in 2017
- we have seen 4,735 accepted offers, 8.4% fewer than the 5172 we saw in 2017
The situation with new listings is almost the same as last week, down 6% showing that sellers have little enthusiasm for today's market
Closed listings are down 5% although they were slightly above 2017 last week, so we immediately see that the third week has had a sharp drop in closing activity. Indeed, we had 16% fewer closings during the third week of December. After the first 2 weeks were roughly level, this drop is quite a major change. However it was impossible for closings to stay high indefinitely while accepted contracts continued to fall.
Accepted contracts fell further during the third week leaving us down 8.4% after 3 weeks compared with down 7% after 2 weeks. The third week of December was down 11% compared with the same week in 2017.
We hesitate to read too much into a single week of data, but it is clear that demand is not recovering. In fact it is weakening further as buyers step up their strike action. December 15 to 21 was the worst week of 2018 so far for year over year comparisons of demand. We still see low levels of supply, but demand is now so weak that active listing counts are not falling away quickly as they usually do during the second half of December. They are just drifting slightly lower.
It looks like December will probably be a low volume month in all respects: low demand, even lower supply and a low number of closings.
December 22 - We are still seeing fewer accepted contracts than in December 2017. This means active listings stay active longer so average days on market increases. It also means the count of listings under contract is much lower than last year. How much lower? Let us take a look at various segments:
|Market Segment||Under Contract Dec 21, 2017||Under Contract Dec 21, 2018||Change|
|All Areas & Types||8,558||7,229||down 15.5%|
|Greater Phoenix, All Types||8,365||7,072||down 15.5%|
|Greater Phoenix - Single-Family Detached||6,846||5,801||down 15.3%|
|Greater Phoenix - Condo / Townhouse||1,317||1,090||down 17.2%|
|Greater Phoenix - Mobile / Manufactured||202||181||down 10.4%|
|Greater Phoenix - Under $250K||4,078||2,922||down 28.3%|
|Greater Phoenix - $250K to $350K||2,087||1,972||down 5.5%|
|Greater Phoenix - $350K to $500K||1,191||1,200||up 0.8%|
|Greater Phoenix - $500K to $1M||774||761||down 1.7%|
|Greater Phoenix - Over $1M||235||217||down 7.7%|
|Northeast Valley||1,079||867||down 19.6%|
|Central & North Valley||1,870||1,532||down 18.1%|
|Southeast Valley||2,326||1,891||down 18.7%|
|Pinal County||842||755||down 10.3%|
|Paradise Valley||61||65||up 6.6%|
|Scottsdale 85254||98||57||down 41.8%|
|Peoria 85383||121||163||up 34.7%|
|Queen Creek 85142||167||177||up 6.0%|
|Sun City 85351||130||100||down 23.1%|
Although the decline in listings under contract is quite noticeable, it is not at all consistent. The most significant decline is for homes below $250K. In this price segment there is a dearth of attractive homes to tempt buyers. It also seems that buyers with less than $250,000 to spend are very discouraged by higher interest rates.
There are plenty of examples of ZIP codes with higher listings under contract than last year. Among them are 85172, 85307, 85355, 85194, 85281, 85324, 85305, 85140, 85387 and 85383, all with increases of over 30%. I am struggling to find a common thread that binds those.
There are even more examples of ZIP codes with a huge fall in listings under contract, including 85040, 85332, 85131, 85233, 85284, 85043, 85087, 85377, 85303, 85044, 85304, 85210, 85254, 85045, 85018, 85048, 85119, 85248, 85249, 85379, 85262, 85206, 85390, all having more than a 33% reduction. Again there is no obvious pattern, though the area of Ahwatukee, South Tempe and South Chandler is prominently represented.
This looks to me like a buyer's strike, but one without a lot of conviction. Sellers would probably be best advised to wait it out until more buyers arrive in late January and early February. Unless sellers have a strong need to sell quickly there is no obvious reason for drastic action. The laws of supply and demand are still working in sellers' favor and a little patience will probably prove wise.
December 21 - Here is a list of the cities where the CMI is higher than it was last week:
- Arizona City
- Casa Grande
- El Mirage
- Litchfield Park
- Paradise Valley
- Queen Creek
- Sun City West
- Sun Lakes
The exceptions are:
- Apache Junction
- Cave Creek
- Fountain Hills
- Gold Canyon
- Sun City
I think we can agree that the cities gaining advantage for sellers are more significant than the ones going the other way. These numbers are for single-family homes only.
In the overall market for all areas & types the CMI has not yet completed its downward cycle. It stands at 132.0 and was 132.3 last week. This is a very modest decline however and there is no sign of enough momentum to force it below 130.
Both the demand index and the supply index are falling, telling us that the market is getting less active. The monthly sales rate is down 9.9% while the number of listings under contract is down 14.9% from this time last year. Sales momentum has evaporated faster than prices have increased, which means dollar volume is moving lower. This is bad news for agents, lenders and title companies, but because supply remains weaker than demand, sellers should not be fooled into thinking that buyers now have an advantage.
Sales may take longer and time on market may increase, but we do not have the right conditions for prices to decline. Based on the CMI staying above 130 we anticipate upward pressure on pricing to continue. The only city with a CMI below 110 is Casa Grande at 101 and even here it rose from 100.5 last week.
December 20 - A Christmas present for sellers in the Cromford® Market Index table this week. The following is for the single-family markets in the 17 largest cities.
A much greener table than those we have published for the past 2 months, we have 11 cities showing improvements for sellers and only 6 still deteriorating. The recent downturn is now complete as the overall average change in the CMI in this table is +0.2% instead of the -1.5% we reported last week.
Paradise Valley and Maricopa are the strongest upward movers, while Glendale, Queen Creek and Surprise are the primary downward trending cities.
Remember that the CMI tells us about the balance between buyers and sellers. It does not tell us about the size of the market. Both supply and demand are weak at the moment so the market is contracting. That means fewer transactions and less business to go round. However those worried about falling prices can take some comfort. The numbers in the table above support significant upward pricing pressure. This means homes will probably get even more unaffordable and sales volumes are likely to fall further. Listings are receiving remarkably few acceptable offers in the middle of December, but we are also seeing very low numbers of new listings.
Normally when demand goes weak we see a build up of supply, but in this cycle, we are not seeing this effect..
December 17 - We now have 2 complete weeks of December data in hand so it is fair to compare with the same 2 weeks in past Decembers:
- we have seen 3,268 new listings across Greater Phoenix, 6% lower than the 3,478 we saw in 2017 and the second lowest total after 2014
- there have been 2,949 closed listings across Greater Phoenix, slightly above the 2,937 we saw in 2017
- there have been 3,340 accepted offers on listings across Greater Phoenix, down 7% from the 3,607 we saw in 2017
At 6% the drop in new listings is not as severe as for the first week of December which was down 11%. However it indicates we still see subdued flows of new supply in December, well below the average over the past 18 years.
Closings are running at a good pace, but new contracts are now down 7% having been down 4% after the first week. Buyer enthusiasm is low partly because of higher cost of ownership but also because there is a shortage of attractive inventory for them to choose from.
The combination of low contracts and normal closings means that the number of listings in escrow is unusually low and declining further. This means there is excess capacity at title companies and we will enter January with an extremely low number of homes under contract.
December 16 - Demand is lower today than it was this time last year, but the decline is modest compared with the downturns of 2006-8, 2010 and 2013-14.
One way of measuring demand downturns is to look at the contract ratio. This indicator has the advantage of being applicable to small sectors of the market but it is subject to seasonality. We can avoid the seasonality effects by comparing the same dates in different years. Let us take a look at December 2018 versus December 2017 to see how much the contract ratio has changed.
On December 15, 2018 the contract ratio for all areas & types across the ARMLS database stands at 40.9. This is a 19% decline from 50.8 on December 15, 2017 - a noticeable downturn but not a dramatic one.
On December 15, 2013 the contract ratio was 35.6 and had suffered a 54% decline since December 15, 2012 when it was 78.0. We can see that the downturn that started in mid-2013 created more than twice the annual decline that we are seeing in mid-December 2018. This was a dramatic fall, but it was not enough to stop prices from rising. It did cause them to rise at a much lower rate however.
On December 15, 2010 the contract ratio was 43.2 having been 52.2 a year earlier. This was a 17% decline and gives us a similar percentage decline to the one we experiencing today. In 2010 the fall in demand was due to the expiry of large government incentives to encourage home purchases. This occurred during a period when delinquency rates for home loans were very high and negative equity was widespread. New supply was pouring onto the market, much of it distressed in the form or short sales or lender owned homes. As a consequence the price rises experienced between 2009 and 2010 were given up again in 2011 to reach a second low point.
In 2018, home loan delinquencies are at an extremely low level and home equity is at a high level. Consequently the fall in demand is merely causing sales rates to drop and allowing buyers a little more negotiation power than a year ago. This is likely to lead to a slower appreciation rate but is very unlikely to lead to home values falling.
Before buyers get too excited about their improving circumstances, we should point out that this is because there are slightly fewer of them about. The supply is still very low by long term standards. In fact the total number of active listings on ARMLS as of December 15, 2018 is the lowest we have recorded for any December 15 since 2004, which was close to the height of the bubble. Indeed it is the second lowest total for December 15 since our records began.
December 15 - Today we are taking a deeper look into the annual sales rate and how it has changed over the past 12 months.
If we compare the annual period ending December 12 2018 with that ending December 12, 2017, we see a small increase of 0.3% over all areas and types. However single-family detached sales are down 0.2% while mobile home sales are up 7.6% and condo sales are up 2.0%. Condo sales includes the following ARMLS dwelling types:
- Apartment Style / Flat
- Loft Style
- Gemini / Twin Home
- Patio Home
Mobile home sales include:
- Mfg / Mobile Housing
- Modular / Pre-Fab
Sales in Greater Phoenix are up by 0.2% while out-of-area sales are up 3.5%.
Comparing the broad areas around Phoenix we find
- the central valley is up 1.0% (all types)
- the northeast is up 2.6%
- the southeast is down 1.4%
- the west is flat
- Pinal County is up 2.4%
This demonstrates the better performance of the higher end of the market (which dominates the northeast), relatively unconstrained by supply problems. Pinal County is growing faster than Maricopa County.
December 14 - Among the 12 cities that are too small to be included in the weekly survey, the following have seem their Cromford® Market Index rise over the last week:
- Arizona City
- El Mirage
- Litchfield Park
7 of the 12 cities are still showing some deterioration for sellers. The overall picture is of a market stabilizing after a mild downturn. This does not bear much similarity to what we read in the press of a major retreat or even slump in the housing market. But then if the headlines did not grab your attention you would not read the adverts alongside..
The reality in Greater Phoenix is that we have shifted from a strong seller's market with high volumes to a moderate seller's market with slightly lower volumes. In due course this is likely to adjust appreciation rates from the 8%-10% level to more like 6%-8%. If the CMI drops below 120 I would change our prediction to 4%-6% but at the moment there is little sign of a fall much below 130. At a CMI of 100 we would expect appreciation Of course things could change at any point but it would need a new factor coming into play.
The housing market has seen 3 factors put a slight dent in demand:
- Mortgage interest rates are at a much higher level than in 2017, though still far below long term averages
- The cost of home ownership has risen faster than rents
- The tax law changes since 2018 have removed many of the tax benefits of owner-occupied housing relative to renting
We definitely do not have anything approaching a crash or a slump, which would require a large increase in supply. Supply remains weak because many existing homeowners are more reluctant to move. Doing so would require them to give up their existing cheap loan and take out a new more expensive one. They are tending to stay put, which is good news for the likes of Home Depot and home remodelling and redecorating companies.
Other parts of the country are reporting weaker markets at the upper levels, but in Greater Phoenix, the luxury market is looking strong. Supply of higher end homes is down from last year and demand is holding up rather well. Of course the luxury market in Arizona is priced like the mid-range market in many parts of California. Population flows are favoring Arizona too, so it looks as though Phoenix will have one of the leading housing markets over the coming year, even though it is likely to be somewhat less active than 2018.
December 13 - The Cromford® Market Index for the single-family markets in the 17 largest cities is shown below:
With 10 cities showing deterioration for sellers over the last month and 7 showing improvement, this is better for sellers than last week and a huge improvement from mid November when every city was deteriorating. The average change in the CMI is only -1.5%, up from -3.6% last week.
Glendale was the last city to enter the downturn but it looks like being the last to leave too. Queen Creek's market is also weak while Avondale and Surprise make up the remaining big downward movers over the past month. When we look at changes over the past week we can see the following cities improved for sellers:
- Paradise Valley
This list is as long as last week at 10, but there has been some change in the members with Cave Creek and Mesa dropping out while Peoria and Gilbert have joined.
Though we still have a little deterioration overall, the movement is now very slight. The overall Cromford® Market Index for all areas & types has declined from 132.8 to 132.3 which means we are still very much in a seller's market and 2019 will start with sellers still dominant. The last time buyer's had a slight advantage (CMI below 100) was July 1, 2014. The last time they had a clear advantage (CMI below 90) was November 11, 2010.
December 12 - Closings in November were sharply down from a year earlier. Many people believe the primary reason for this is the steep increase in mortgage rates that took place between September and October. According to Freddie Mac, the average rate on a 30-year fixed loan rose from 4.63% to 4.83%. We had seen an even steeper rise between January and February from 4.03% to 4.33% which did not seem to have much effect on buyer enthusiasm here in Greater Phoenix. However this earlier increase was spread over many weeks whereas the rise between September and October took place during 1 week between October 4 and October 11. The sudden sharp increase seemed to take the wind out of the sails of many buyers. It makes sense, from a timing perspective, for this to negatively affect contracts in October and closings in November.
Rates peaked at 4.94% between November 8 and November 15 and have since been on a downward trajectory. The poor performance of the stock market has driven investors into treasury bonds, raising their prices and hence lowering yields. These yields have a major influence on mortgage rates and so we are now down to 4.75% for a 30-year fixed loan as of December 6. The trend is now downward until the stock market starts booming again and money comes back out of its safe havens.
It now looks as though closings are strengthening in December and this may be because buyers are anxious to lock down their lower rates before they start to rise again.
December 11 - Trying to determine how many buyers in Maricopa County come from California is slightly complicated. We need to exclude many banks and companies like Opendoor who are headquartered in CA.
If we look only at the people who buy as individuals or couples, then we see significant growth over the last year. The annual purchase rate for people with Californian addresses is up 23% to 4,391. It is also up 43% from 2 years ago.
A similar (and slightly more pronounced) situation exists in Pinal County, where purchases by Californian couples or individuals are up 30% from last year and up 47% from 2 years ago. The absolute numbers are smaller however with the annual rate at 655. This is in line with the relative sizes of the Maricopa and Pinal markets.
We conclude there is a lot of truth in the rumor than more people are moving sideways from California to Central Arizona. In doing so they can often get 2 to 3 times as much home for the same money or release equity while same-sizing. Their property taxes will also be significantly lower.
The favorite locations for 2018's Californian buyers to originate are as follows:
- San Diego
- San Jose
- Los Angeles
- San Francisco
- Huntingdon Beach
- Long Beach
- Mission Viejo
- Rancho Cucamonga
- Chula Vista
- Simi Valley
The potential inter-state movement here from California is vast and the current numbers represent only a trickle, given the total size of the Californian population.
December 10 - Now we have complete data for the first week of December we can compare the numbers for those 7 days with the same period last year. We want to know about new listings, contract activity and closed sales. Here are the numbers:
- new listings - there were 1,649 new listings added to ARMLS across Greater Phoenix, which is 11% lower than the 1,857 we saw in 2017
- accepted offers - there were 1,726 accepted offers within ARMLS across Greater Phoenix, which is 4% lower than the 1,807 we saw in 2017
- closed sales - there were 1,353 closed listings across Greater Phoenix, barely changed from 1,357 in 2017
The conclusion for this particular period is that new supply was unusually weak while demand was a bit stronger than anticipated and not much below this time last year.
This is more evidence that the market is stabilizing and no longer in much of a downtrend.
December 7 - Based on affidavits filed at the Maricopa County Recorder's office in November, home sales were 6% lower in November 2018 than November 2017. However, condo and townhouse sales were up 2% while single-family detached sales were down 7%. We also note that more of the condo / townhouse sales were for owner-occupation rather than rental - 18.7% were intended to be used as rental properties in November 2018 compared with 19.4% in 2017.
The same source shows us that new home sales increased 2% year over year while re-sales declined 7%.
December 6 - Below is the table showing the Cromford® Market Index for the single-family markets in the 17 largest cities:
Now we are really starting to see some significant improvement for sellers. Most obviously 5 of the 17 cities have seen a movement in favor of sellers over the past month. The moves are relatively small, with only Paradise Valley making a significant move of 6%. We also still have 12 cities that have deteriorated, but that is distinctly better than the 16 we had last week.
The downturn still has some distance to run, but it seems to be rapidly running out of steam.
Looking at the changes over the last week, we see the following cities have a higher CMI than last Thursday:
- Cave Creek
- Paradise Valley
So more than half of the cities have a higher CMI than 7 days ago. Gray clouds are all around, but that tiny silver lining we referred to on November 15 now looks very shiny and thick. We should be seeing some sunshine quite soon.
The average decline in CMI is 3.6%, down from 5.9% last week and 8.0% the week before.
The remaining problem areas are concentrated in Queen Creek, Glendale and Surprise.
All 17 cities are still over 110 and therefore seller's markets.
ecember 4 - Monthly sales totals have tended to look more robust in public records than they have in ARMLS data over the past few months. This is because volumes of new home sales and normal non-MLS sales have held up better than normal MLS sales. The strength of non-MLS sales is largely because iBuyer purchases are now some 4% to 5% of the market and about 90% of them do not involve an MLS listing until after they have been purchased by the iBuyer. It is also true that iBuyer transactions tend to create higher sales overall. What would have been a single sale prior to iBuyers entering the market becomes 2 sales - one from seller to the iBuyer and one from iBuyer to the eventual purchaser.
We now have preliminary counts for Maricopa County affidavits in November and after adjusting for the number of working days in each month we see the following year-over-year changes in sales volume for single-family homes, condos and townhomes:
- Nov 2018 - down 5.9%
- Oct 2018 - down 2.7%
- Sep 2018 - up 1.5%
- Aug 2018 - up 1.4%
- Jul 2018 - up 5.2%
- Jun 2018 - up 3.0%
- May 2018 - up 3.5%
- Apr 2018 - up 2.2%
- Mar 2018 - up 9.0%
- Feb 2018 - up 10.8%
- Jan 2018 - up 0.4%
The November % change is the most negative since September 2014 (down 6.8%). However the year-over-year sales declines that we saw in 2013 and 2014 were far more severe. The worst case was December 2013 when it dropped 15.5% from December 2012.
In summary, the November affidavit counts confirm a significant downturn in demand but also imply the downturn is not as severe as we experienced in 2013 and 2014.
The affidavit counts exclude transactions that are exempt from filing an affidavit. These include HUD sales and trustee sales. They also include some REO sales filed by a few out-of-state title companies who erroneously think REO sales are exempt. They are clearly wrong, but for some reason the Arizona authorities have not sought to correct the title company misinterpretation of Arizona statutes. Servicelink, Quality Escrow and NexTitle are the primary offenders.
December 3 - The daily Cromford® Market Index chart looks like this:
looks like this:
The rate of decline reached maximum during late October and subsided during November. We are now seeing a moderate rate of decline which looks as though it might not drop much below 130.
November 30 - The usual weekly table showing the Cromford® Market Index for the single-family markets in the 17 largest cities is shown below:
At first sight this looks pretty bad for sellers, with 16 out of 17 cities moving in favor of buyers over the past month. However there are in fact several pieces of good news for sellers buried in the details.
First of all the average decline is down to 5.9% from 8% last week.
Secondly, every city is still above 110 and therefore inside the seller's market zone.
Thirdly, we have several cities that saw their CMI rise over the past week. These are:
- Buckeye - up from 111.4 to 112.4
- Cave Creek - up from 142.0 to 142.6
- Chandler - up from 159.8 to 160..7
- Goodyear - up from 120.4 to 121.2
- Maricopa - up from 124.4 to 127.1
- Mesa - up from 156.4 to 157.0
- Paradise Valley - up from 121.8 to 122.5
- Peoria - up from 119.7 to 120.4
That is almost half of the 17 cities that have staged a turnaround, albeit by very small amounts. We can see that supply is dropping again and demand is stabilizing. The present downturn looks like it is shaping up to be both relatively minor compared to 2013 and relatively short-lived too.
Among the smaller cities outside the top 17, we are also seeing improvements for sellers over the last week in the following:
- Arizona City
- Casa Grande
- El Mirage
- Litchfield Park
- Sun City
At the moment I see only a small chance of the current trajectory taking us into a balanced market, and a buyer's market is not a likely outcome at all. This means that in the short term prices will continue to have upward momentum, although somewhat less than they had before September. Any buyers who think by opting out today they will be able to come back and find lower prices next year are very likely to be disappointed. It would take a massive change in the market for this to happen and there is absolutely no evidence of such a change in today's numbers.
November 29 - In the Cromford® Public section of this web-site we provide a chart which compares the annual average price per square foot over time for each transaction type. The current figures look like this:
- New homes $168.16
- Normal MLS sales $164.16
- Investor Flip sales $143.21
- Normal non-MLS sales $137.86
- Short sales $131.15
- Bank owned sales $124.41
- Pre-foreclosures $124.34
- GSE REO sales $115.54
- Trustee sales $111.21
- HUD sales $101.76
The annual change for these values are as follows:
- Pre-foreclosures 10.36%
- Trustee sales 10.21%
- Normal MLS sales 9.18%
- Bank owned sales 8.86%
- Normal non-MLS sales 8.72%
- Investor flip sales 8.70%
- Short sales 7.76%
- GSE REO sales 7.64%
- New home sales 6.32%
- HUD sales 4.42%
Although new homes are the most expensive transactions on a price per sq. ft. basis, the average $/SF is growing slowest apart from HUD sales (of which there are now very few). This is partly because many developers are aiming at lower price points where demand is strongest and competition from the supply of existing homes is very weak.
November 28 - It happens every year. As soon as Thanksgiving is over, the number of active listings starts to drop. For example, in the city of Phoenix, single-family listings without a contract are down from the peak of 3,263 reached on November 18 to 3,157 on November 27, a level we last saw on October 31. This is slightly higher than the 3,058 we measured on October 27 last year, but the drop in contract activity is being matched by a drop in new listing activity.
Both buyers and sellers are fewer in number than they were in November 2017. This increases competition among agents.
November 27 - The S&P/Case-Shiller® Home Price Index® numbers have been released for the latest sales period (July through September) and the 20 focus cities fared as follows on a month to month basis:
- Phoenix +0.75%
- Las Vegas +0.64%
- Tampa +0.58%
- Cleveland +0.29%
- New York +0.23%
- Atlanta +0.22%
- Charlotte +0.20%
- Miami +0.20%
- Detroit +0.11%
- San Francisco +0.02%
- Boston -0.01%
- Dallas -0.01%
- Chicago -0.06%
- Portland -0.06%
- Minneapolis -0.07%
- Denver -0.13%
- Los Angeles -0.16%
- Washington -0.23%
- San Diego -0.35%
- Seattle -1.34%
Suddenly Phoenix has jumped from the number 5 spot to top of the table
We see half of the focus cities with negative changes, but the national average was +0.08%. Phoenix was almost ten times the national average and is definitely an over-performer again. Seattle took another large hit for a single month while Las Vegas is no longer out in front in a league of its own.
For the year over year numbers we see:
- Las Vegas +13.5%
- San Francisco +9.9%
- Seattle +8.4%
- Denver +7.3%
- Phoenix +7.2%
- Tampa +6.7%
- Detroit +6.3%
- Minneapolis +6.0%
- Atlanta +5.7%
- Los Angeles +5.5%
- Cleveland +5.2%
- Portland +5.2%
- Charlotte +5.2%
- Boston +5.0%
- Miami +4.6%
- Dallas +4.3%
- San Diego +4.0%
- Chicago +3.0%
- Washington +2.9%
- New York +2.6%
The national average was +5.5% so Phoenix was well ahead of that, and it moved back to 5th place from 6th place last month. None of the focus cities is showing a negative move year over year.
November 26 - Comparing the annual non-distressed single-family sales in Greater Phoenix between November 1, 2017 and October 31, 2018 with the previous year we find that the annual sales rate increase was 2.0% and the annual average $/SF rose by 7.3%.
The top performing areas for appreciation were as follows:
- Florence & Coolidge (85128 & 851320 - up 15.6%
- Sky Harbor South (85040) - up 13.9%
- Far West Phoenix (85037) - up 12.1%
- I-10 and I-17 (85009, 85015, 85017, 85019, 85031, 85033, 85035) - up 11.8%
- Maricopa (85138 & 85139) - up 10.7%
- Southwest Phoenix (85043) - up 10.3%
- Tolleson (85353) - up 10.2%
- Sky Harbor North (85006, 85008, 85014, 85034) - up 10.1%
- El Mirage (85335) - up 10.0%
- South Buckeye (85326) - up 9.8%
The bottom performing areas for appreciation were as follows:
- Gold Canyon (85118) - up 3.1%
- South Tempe (85284) - up 3.5%
- North Goodyear (85395) - up 3.8%
- Downtown Phoenix (85003, 85004, 85007) - up 4.1%
- Northeast Phoenix (85050, 85054) - up 4.1%
- North Surprise (85387) - up 4.5%
- North Phoenix (85083, 85085, 85310) - up 5.0%
- North Scottsdale (85255, 85259, 85262, 85266) - up 5.1%
- South Scottsdale (85250, 85251, 85257) - up 5.3%
- Anthem (85086) - up 5.4%
November 24 - For the first time in many years, the monthly dollar volume today is lower than it was this time last year. This confirms the market slowdown and indicates that the drop in monthly sales volume is now having a greater impact than the annual rise in average sales price.
The last time this crossover occurred was in December 2013. On that occasion dollar volume remained lower than the prior year for 9 months but re-crossed in September 2014 and has remained above the prior year from then until today.
If history is any guide, the dollar volume is likely to remain lower for the rest of 2018 and part of 2019. However it is unlikely to remain lower for the whole of 2019. In fact we can gauge the severity of the current downturn by how long it takes to cross back over the prior year's dollar volume. We are unable to make any specific prediction for this date, but we can see that the current downturn has so far proven to be less dramatic than the one that occurred in 2013.
November 23 - Looking at the third week of November and comparing with the same period in 2017 we see the following:
- New listings total 1,764, down 13.0% from 2017 and the lowest number we have ever recorded since 2000 for the third week of November.
- Closed listings total 1,832, down 12.3% from 2017
- Accepted offers total 1,875, down 9.5% from 2017
The figures above are for all dwelling types across Greater Phoenix.
Clearly the market is far less active than it was this time last year, but it is not just buyers who are down. The steepest fall was in the number of new listings, showing that sellers are also losing enthusiasm. If this trend continues we will probably find we have too much capacity in the support functions for residential real estate transactions. It appears that many potential move-up buyers are deciding to stick with the mortgage they already have. This reduces the number of sellers as well as the number of buyers but it is good news for the businesses that support home improvement.
The changes are not uniform across all price ranges:
- Closed listings were down 25.7% for homes under $250,000
- Closed listings were down 4.6% for homes between $250,000 and $300,000
- Closed listings were up 17.9% for homes between $300,000 and $400,000
- Closed listings were down 7.6% for homes between $400,000 and $800,000
- Closed listings were up 14.5% for homes between $800,000 and $1.5 million
- Closed listings were down 14.3% for homes over $1.5 million
November 22 - Once again we take a look at the Cromford Market Index numbers for the single-family markets in the largest 17 cities:
The market is starting to show signs of pulling out of its dive. The above table looks pretty negative for sellers but it has a few more positive elements than last week.
First we have 1 city - Paradise Valley - that showed a small improvement from last month. Second, we have an average change of -8.1%, better than the -9.2% we saw last week.
We still have every city in the seller's market zone above 110. In fact Buckeye, the closest we have to a balanced market, moved up from 110.8 last week. Fountain Hills is also higher than last week
Avondale, Queen Creek, Chandler, Tempe & Scottsdale are down by 10% or more since last month, but we still see no signs of any of these 17 cities breaching the 110 mark. Until they do, the long-term average sales price per sq. ft. is very unlikely to fall below current levels. In fact we would not expect this to become a real possibility until CMI values have dipped well below 100.
November 21 - To read the news you would that the housing market was having a really hard time. A phrase like "the worst slowdown in years" (Bloomberg) sound ominous, but we need to remember that the housing market had been growing at an accelerating pace between 2015 and 2018 and a slowdown is inevitable at some point when prices rise for many years.
Talking specifically about Greater Phoenix
- We are having a slowdown
- It has been expected for at least a year
- It is quite a modest slowdown, the least dramatic in the last 20 years
- It is still the worst slowdown in years, because it is the only slowdown since 2013/2014.
- The 2013/2014 slowdown was much more severe that the current slowdown
- Sales prices did not decline during the 2013/2014 slowdown, they merely stabilized for a while before resuming an upward trajectory
- So far there is no sign that sales prices will decline due to the current slowdown
- There are more cuts in list prices than we have seen for a good while, but these are not likely to lead to cuts in the average sales price per sq. ft. which is based on closed contract prices
- There is no sign yet of sales prices even moderating, although that would be likely if the drop in demand continues for a long period
- It would take a large increase in supply to start putting downward pressure on pricing, and the supply of new listings is currently getting weaker, not stronger.
To give you some idea of how benign the current slowdown is let us have a look at the average price per sq. ft. for listings under contract:
This is for all types of dwellings within Greater Phoenix.
The chart is a leading indicator of future sales pricing and shows a strong rise in prices for homes in escrow over the past 2 months.
If buyers are going on strike, waiting for prices to come down or interest rates to drop (or both), then they are likely to be disappointed. It is more likely that prices will rise (and who knows what interest rates will do?).
November 16 - During the second full week of November we made the following observations compared with the same period in 2017:
- New listings: 2,039 in 2018 versus 2,095 in 2017, a decline of 3.3%
- new listings under $250K fell 19% from 1,001 to 809
- new listings between $250K and $500K rose 16% from 794 to 924
- new listings over $500K rose 2% from 300 to 306
- Closed listings: 1,272 in 2018 versus 1,392 in 2017,a decline of 8.6%
- closed listings under $250K fell 20% from 720 to 574
- closed listings between $250K and $500K rose 4.4 % from 542 to 566
- closed listings over $500K rose 1.5% from 130 to 132
- Accepted offers: 1,828 in 2018 versus 2,083 in 2017, a decline of 12%
- accepted offers on listings under $250K fell 24% from 1,080 to 821
- accepted offer on listings between $250K and $500K rose 4% from 802 to 831
- accepted offers on listings over $500K fell 12% from 201 to 176
All the above numbers are for all property types across Greater Phoenix.
The conclusions we can make are as follows:
- The market is contracting with new listings, closed listings and accepted offers all down from last year
- Accepted offers showed the largest decline, showing that weaker demand is the primary change compared to last year.
- Although sales and offers have fallen in the segment below £250K, so has the supply of new listings. All have declined by a similar amount, around 20%. The market remains favorable for sellers, though much smaller than last year.
- New supply between $250K and $500K is arriving 4 times as fast as listings are going under offer or closing, leading to an increase in choice for buyers and weakening sellers' negotiation power.
- The market over $500K, which remained stronger than 2017 during October is starting to show signs of demand weakness with the 12% drop in accepted offers. New listings and closings were in balance.
November 15 - Looking at the Cromford® Market Index table for the single-family markets in the 17 largest cities we see another big downward change over the past month:
Now we have 100% of the cities showing a decline as even Glendale has surrendered. Glendale does have the lowest monthly fall at -3%. The average change is -9.2%, just 0.1% higher than last week, the tiniest of silver linings.
There are more silver linings if we look very closely.
The first positive is that every city is still over 110 and so is officially classified as a seller's market despite the big decline in buyer interest. Buckeye has stabilized in the last week and only fell 0.1 over the last 7 days. Other cities that have stabilized over the last week are Peoria and Goodyear, while Paradise Valley has managed a very slight increase over the past 2 weeks. So we would then have all 5 cities at the bottom of the table refusing to drop further. Those higher up the table are still rushing to join them in the 110 to 130 zone. It looks like Tempe, Maricopa & Fountain Hills are preparing to join the stabilized group soon, now they have dropped below 130.
Top of the table Avondale declined by the largest percentage (-16%).
The overall impression is that cities are unlikely to fall much below 110 on the current trends. This is much cooler than the market in the first half of 2018, but it certainly is not a market crash, just a return to a healthy more-balanced situation. Many potential buyers are taking a break, but it would not be surprising if they came back again once they have got used to the current interest rate environment. They are probably hoping that closed sales prices will fall, which is unlikely given the continued shortage of homes for sale. It is likely that asking prices will have to get more attractive however, which will cause sales price increases to moderate.
We clearly have a rapidly cooling market but there is absolutely no sign of serious cause for alarm in the data we are studying. Sellers will need a little more patience and flexibility on their terms and asking prices. Buyers may feel less outnumbered by other competing buyers and as a result can do their house-hunting in a less frenetic and stressful way.
Both of these seem like good news to me.
November 14 - The Home Opportunity Index (HOI) is published by the National Association of Home Builders in conjunction with Wells Fargo Bank. It calculates the percentage of homes listed for sale that could be afforded by a family earning the median income.
The chart below shows the HOI for the USA in green and for Phoenix in blue.
In the third quarter of 2018 homes were the least affordable they had been since 2008 and the HOI is no longer inside the normal range of 60-75. This helps to explain why we are seeing a weakening trend in demand.
We also see that Phoenix no longer has a significant affordability advantage over the USA as a whole, something we have had for most of the past 30 years. Houses in Phoenix are cheaper than average, but incomes are also lower than average.
November 13 - Today we make another comparison between 2013 and 2018, this time looking at listings under contract.
We can see that 2013 had much higher numbers of listings under contract, but this was primarily caused by the large number of short sales in escrow.
We can also see that although 2018 has seen a sharp fall-off in listings under contract between April and November, the decline in 2013 was steeper. Again, this shows that the cooling of the market in 2018 is not as severe as in 2013.
We note that the cooling of the market in 2013 did not cause prices to stop rising. We can deduce that the cooling in 2018 is unlikely to stop prices from rising. However it may stop them from rising quite so fast.
November 12 - Although we have entered a market down-cycle, it is much less severe than the last down-cycle which commenced in 3Q 2014. To illustrate this let us take a look at a series of charts that compare 2018 with 2013.
Here we can see that active listings have risen in 2018 from the end of July, but they have not yet exceeded the level of early April. The count for November 10 (week 45) was 22,112 (all areas and types). Our current down-cycle features a relatively small build-up of inventory.
In 2013, active listings started rising in late May and surged between July and November by roughly 7,000 listings. The count for week 45 was 26,900. This illustrates how much more severe the market slowdown was in 2013 compared with 2018. We also have far fewer active listings in 2018 than we did in late 2013.
November 9 - We like to study weeks much better than months. Weeks are more consistent in length and therefore comparing (say) week 45 of 2018 with week 45 of earlier years usually gives us an accurate understanding of how the current market compares with the past. Even if there was a holiday during a week, reducing its working-day count from 5 to 4 or even 3, the corresponding week almost always has the same working-day count. Months have the annoying habit of being inconsistent in length. Even a month like November which always has 30 days, has a variable number of working days, between 17 and 20, so comparing November 2018 with earlier Novembers is fraught with problems. Most analysts ignore this problem and compare months anyway, sometimes leading to spurious conclusions.
Anyway, we would now like to look at the week at the start of November, one which has just completed. Comparing with the same week last year we find:
- new listings are down from 2,353 to 2,178, a drop of 7%
- closed listings are down from 1,245 to 1,133, a drop of 9%
- accepted offers are down from to 2,281 to 1,904, a drop of 17%
The market is clearly less busy than last year at this time. New supply is coming onto the market more slowly while existing listings are closing at an even slower rate. The biggest decline is in contract signings. This latter change is the one with the most significance and implies that higher interest rates and higher prices are finally cooling the market down, as economic theory tells us they should.
Buyers are much less active than they were last year, so despite the fact that we have more demand than supply, sellers will not be in as strong a position as they were this time last year. A corollary is that the remaining buyers are going to enjoy better negotiating power and are more likely to win concessions from sellers. This is reflected in the charts which show seller paid closing costs and price changes.
Everything is orderly and the market is operating as we would expect. This is not unusual greed or fear at work (as we would see in a bubble), just the normal operation of a cyclical market. The only slightly surprising thing is how long it took for the higher interest rates and higher prices to have an impact. In 2017 we were expecting to see this effect become clearly observable by mid-2018, but the signs were only very small at this point. Now the effects are very clear and this makes for a different market sentiment.
November 8 - Once again we are showing the table of Cromford® Market Index values for the single-family markets in the 17 largest cities:
If you thought last week's average 8.4% decline was impressive, then you will be even more impressed with the 9.3% fall we have this week.
Glendale managed a very small increase but the other 16 cities saw declines, most of them over 10%.
The common story is that listings are going under contract slower than usual which makes active listings start to build up. We are NOT seeing an increase in the number of new listings arriving.
Despite the declines, all the cities (even Buckeye) are still in the seller's market zone over 110. Remember that 100 represents normality. We expect Buckeye will drop below 110 by next week, but the overall market is still much stronger than it was for all of 2014, all of 2015 and most of 2016. We are approaching a more balanced market at some speed, but given the continued weak supply, we are very unlikely to overshoot. We would need a large increase in supply to create a buyer's market. It is not at all obvious where this extra supply would come from. The situation is very different from 2005 when tens of thousands of empty homes had been purchased by speculators with ill-advised and reckless loans. Anyone who thinks the current situation is a bubble bursting is very much mistaken. It is merely the normal process of an over-heated market cooling down, something we expect to see several times a decade. True bubbles in housing tend to occur once or twice a century.
November 6 - There was a significant decline in the number of MLS listings going under contract in October. The total of accepted offers was 8,133 which was down 2% from September (a much shorter month with 17% fewer working days) and it was down 8% from October 2017.
However the decline was not universal across all price ranges. Almost all the decline occurred in the price range up to $225,000. This saw just 2,630 accepted contracts, down 28% from 3,651. Between $225,000 and $350,000 accepted contracts rose 5% to 3,226 while between $350,000 and $800,000 they grew 10% to 2,003. Between $800,000 and $2 million there was a slight decline of 1% to 240 while over $2 million we saw a 31% increase to 34.
Seeing the huge drop-off in contracts under $225,000 we expect to see a strong upward trend in average price per sq. ft. over the coming months, since the mix of homes closing will be skewed towards the higher end.
November 5 - Looking at the affidavit counts for October in Maricopa County, we see 9,042 for single-family and condo residences, up 1.7% from October 2017. New homes sales were up 5.9% while re-sales were up only 1.0%. These sales counts do show some modest annual growth, unlike the ARMLS closings which were down year-over-year. The reason the public recordings show more growth are:
- 90% of new home sales do not get recorded in the ARMLS database and these are still showing a healthier trend than re-sales.
- 90% of iBuyer purchases do not get recorded in the ARMLS database and these are well up from 2017 levels.
- October's fall in MLS sales was more severe in Pinal County (-8%) than in Maricopa County (-1%)
November 2 - This is the first month since September 2016 where months of supply (3.1) is higher than 12 months earlier. This transpired for two reasons. First, the monthly sales rate for October was unusually weak compared with the previous 24 months, especially considering it had 23 working days. Second, the active listing count rose sharply during October due to the low rate at which listings went under contract.
Although it is valid to conclude that the market is cooling, 3.1 months is still lower than average and the market is merely heading towards normality. We would consider 4 to 5 months normal for a balanced market in early November. For example November 2014's reading was 4.7 months and the market was reasonably balanced between buyers and sellers at that point.
November 1 - The cooling of the market is accelerating according to the weekly table of Cromford® Market Index values for the single-family markets in the 17 largest cities:
Here we have 16 cities deteriorating for sellers and only 1 (Glendale) improving over the past month.
All 17 cities remain in the seller's market and so those hoping for prices to fall have nothing to celebrate yet. We would need CMI values to fall below 90 for that to occur and even the lowest ranked (Buckeye) is above the balanced zone of 90 to 110.
The average change over the past month is -8.4%, the largest decline we have seen since 2013. This means we are experiencing a profound change in market conditions. The decline is not as rapid or severe as 2013, but sellers need to note that their bargaining power is on the wane. Buyers are less numerous and have lowered enthusiasm.
It is unusual to see many cities with double digit percentage declines with Paradise Valley, Buckeye, Gilbert, Mesa, Avondale, Goodyear, Chandler and Maricopa all holding that dubious honor. Among the secondary cities, Casa Grande is the weakest with a CMI of 110.8, just outside of the balanced zone.
At some point we expect this plummeting behavior to slow and bottom out. We are not seeing this yet, but it is quite likely that we see some slowing of the trend during November. Watch this section of the web sites for the earliest news of this.
October 31 - The Greater Phoenix area is relatively unaffected by international buyers, with the single exception of Canadians. Unlike Californio or Washington State, we get little attention from the Chinese. The good news is that we are therefore seeing little to no effect from the significant downturn in Chinese buying of American real estate. This downturn is probably a consequence of the imposition of tariff barriers to trade. Chinese holders of significant commercial real estate assets have been selling many of them in 2018 to release liquid funds to repatriate. Most of these assets are on the east and west coasts.
The bad news is that Arizona is no longer attracting much Canadian interest either. The annual purchase rate across Maricopa and Pinal counties is standing at an unimpressive 768 homes for the 12 months starting October 2017. At least this is up from the low point of 564 attained in December 2016, but it is a far cry from the 4,351 we saw in February 2012.
Canadians are selling almost twice as many homes as they are buying. 1,524 is the current annual sales rate, though this has declined from a peak of 2,824 in August 2016.
So the vast majority of the housing demand across Phoenix is now coming from domestic sources. The table below shows how much annual housing demand comes from each state or territory:
- Arizona 92,012
- California 4,380
- Washington 1,867
- Illinois 1,250
- Colorado 1,245
- Minnesota 777
- Oregon 658
- Texas 654
- Wisconsin 505
- Utah 387
- Michigan 377
- Nevada 373
- New York 355
- Florida 318
- Iowa 302
- Ohio 291
- North Dakota 262
- Pennsylvania 252
- New Mexico 252
- Idaho 232
- Nebraska 230
- Missouri 224
- Montana 221
- Indiana 189
- Virginia 188
- New Jersey 162
- South Dakota 161
- Kansas 151
- Alaska 147
- Georgia 138
- North Carolina 131
- Massachusetts 126
- Wyoming 114
- Hawaii 107
- Maryland 106
- Tennessee 92
- Oklahoma 87
- South Carolina 79
- Connecticut 78
- Arkansas 39
- Kentucky 38
- Alabama 38
- Louisiana 33
- New Hampshire 31
- Maine 25
- Delaware 23
- Armed Forces in Europe (AE)
- Rhode Island 19
- Mississippi 18
- Vermont 17
- West Virginia 16
- Armed Forces in the Pacific (AP)
- Washington DC 11
- Guam 8
- Puerto Rico 5
The numbers indicate the annual sales rate for homes intended as first or second residences (not investment properties) and exclude purchases by the out-of-state iBuyers (Opendoor and Zillow).
Alberta and British Columbia used to rank quite high in this table, but AB is now equivalent to North Dakota and BC to Kansas.
October 30 - The S&P/ Case-Shiller® Home Price Index® numbers have been released for the latest sales period (June through August) are the 20 focus cities fared as follows on a month to month basis:
- Las Vegas +1.15%
- Tampa +0.54%
- Detroit +0.52%
- Cleveland +0.52%
- Phoenix +0.40%
- Minneapolis +0.32%
- Atlanta +0.30%
- Charlotte +0.22%
- Chicago +0.20%
- Miami +0.13%
- Los Angeles +0.13%
- Boston +0.06%
- Denver -0.02%
- Washington -0.03%
- New York -0.03%
- Dallas -0.04%
- Portland -0.10%
- San Francisco -0.29%
- San Diego -0.46%
- Seattle -1.58%
We are starting to see a larger number of cities with negative changes - 8 this month, although the national average was +0.22%. Phoenix was almost double the national average and is starting to look like an over-performer again, although it slipped from 3rd to 5th place in the table above since last month. Seattle took an unusually large hit for a single month while Las Vegas is out in front in a league of its own.
For the year over year numbers we see:
- Las Vegas +13.9%
- San Francisco +10.6%
- Seattle +9.6%
- Denver +7.7%
- Tampa +7.0%
- Phoenix +7.0%
- Los Angeles +6.2%
- Minneapolis +6.0%
- Detroit +6.0%
- Atlanta +5.8%
- Cleveland +5.6%
- Boston +5.5%
- Portland +5.4%
- Charlotte +5.2%
- Miami +5.0%
- San Diego +4.8%
- Dallas +4.7%
- Chicago +2.9%
- New York - 2.8%
- Washington +2.8%
The national average was +5.8% so Phoenix was well ahead of that, though it slipped from 5th place last month to 6th place today.
October 29 - The Cromford® Market Index for all areas and types is really diving at the moment as can be seen in the chart below:
This is partly because of more supply, but then we get more supply at this point every year. It almost always peaks around Thanksgiving and then plunges again during December. Supply is not what we need to worry about at this stage.
The primary reason for the plummeting CMI is the weakness of demand. Closed listings had been running well ahead of 2017 for most of the year but started to falter a couple of months ago. Monthly closings were 1.2% ahead of 2017 as recently as October 2. Today they are 7.3% below 2017. Pending listings are 13.5% below 2017 levels and UCB listings are down 9%.
We can argue about what is causing the drop in demand, but we can no longer argue about its existence.
October 26 - Below is a table showing the Cromford® Market Index for the single-family markets in the 17 largest cities:
Although all cities are still in the seller's market zone over 110, this is the most negative picture we have seen for a very long time.
16 of the 17 cities have deteriorated for sellers over the past month and only 1 (Glendale) has improved. Paradise Valley and Buckeye have fallen the most, representing both the top and bottom end of the price spectrum. The Southeast Valley mid-range strongholds of Chandler, Gilbert and Mesa are all down 7 to 9% while the Northeast Valley's Scottsdale and Fountain Hills are down 8%. The big West valley cities including Peoria and Surprise are holding up reasonably well in comparison. Phoenix continues to drift lower as it has for many months now.
The market is cooling fast with weakened demand being the primary culprit. Supply remains low and still inadequate to meet demand, so sales prices continue to rise. However the fall in seller negotiation power is leading to a flattening trend in asking prices across many price ranges.
We anticipate falling sales volumes, which is bad news for agents, brokers and title companies, though the downwards trend is not as steep as we saw in 2013 and 2014. Lenders will probably also see lower volumes though the rising interest rates create opportunities to increase spreads.
The rest of the USA has been reporting weaker demand for several months now. It seems that Greater Phoenix is joining the rest of the country. However we must emphasize that the current figures represent a return to normality rather than a dire situation. Loan delinquency is very low and most home owners have substantial equity, so there are almost none of the dangerous conditions that prevailed in 2006 and 2007.
October 25 - The Census Bureau has released the single-family housing permit counts for September and they are a little lower than we have been used to seeing. A total of 1,511 permits for Maricopa and Pinal counties is down 7% from 1,625 in September 2017. This means the 12 month rolling average is slightly down from 22,388 last month to 22,274 this month.
The third quarter total is still up over last year, increasing from 5,423 to 5,912.
It appears that an additional degree of caution has overtaken the home builders, though supply still remains far below demand.
October 24 - Time to check on how sales have been doing for the first 3 weeks of October:
|Segment||Closed Listings 2018||Closed Listings 2017||Change|
|All areas & types||4,372||4,639||down 6%|
|Greater Phoenix - all types||4,214||4,504||down 6%|
|Greater Phoenix - Single-Family Detached||3,479||3,711||down 6%|
|Greater Phoenix - Condo/Townhouse||641||691||down 7%|
|Greater Phoenix - Mobile Homes||94||102||down 8%|
|Greater Phoenix - Below $200K||884||1,413||down 37%|
|Greater Phoenix - Between $200K and $300K||1,694||1,611||up 5%|
|Greater Phoenix - Between $300K and $400K||805||749||up 7%|
|Greater Phoenix - Between $400K and $1M||732||667||up 10%|
|Greater Phoenix - $1M and over||99||64||up 55%|
Overall, the unit counts are down everywhere and for all dwelling types. However the steepest drop is at the bottom end, mainly because of lack of supply. The mid range is up over last year but the increase is far less than during the first half of 2018.
For the luxury market over $1M sales have seen a very healthy increase.
These changes in the sales mix (in favor of the top end) will make the average sales price, median sales price and average $/SF all look very strong, and much stronger than the underlying change in home values. Remember this when interpreting the price charts during the fourth quarter.
October 23 - What we are witnessing in the Greater Phoenix housing market right now is nothing like a crash or a bubble deflating. However there are many clear signs that the market is softening after 3 years of growing strength. So far we have not seen enough to make any dent in the upward progress of average sales price per sq. ft. In fact this measure looks very strong in October as the market from $500K up to $3M is holding on to more momentum than the mid-range from $250K up to $500K. We should not expect to see negative changes in sales price $/SF any time soon because it is very much a trailing indicator. There are many other places to look for a change in the market and we will cover one of them today - the listing success rate.
Since exceeding 85% in mid-April the listing success rate has been gently moving lower and on October 22 we measure it below 78%.
This is still well above the long-term average but is the lowest we have seen for a long time. This means 22 out of 100 listings are failing to find a buyer instead of 15 out of 100 six months ago. Inverting the measure, the listing failure rate has increased by about 50% from below 15% to more than 22%. It sounds worse when we put it that way, but whatever way you look at it, sellers are not feeling as secure and confident as they did just a few months ago.
October 22 - In an effort to understand more clearly how the market has changed since last year we segmented the Greater Phoenix market by price range and compared the contract ratios:
|Price Range||Contract Ratio Today||Contract Ratio Last Year||Change|
|Under $100K||51.0||46.8||up 9%|
|$100K to £125K||87.4||90.6||down 4%|
|$125K to $150K||83.9||91.8||down 9%|
|$150K to $175K||92.1||95.9||down 4%|
|$175K to $200K||93.2||85.5||up 9%|
|$200K to $225K||78.6||81.2||down 3%|
|$225K to $250K||68.8||73.0||down 6%|
|$250K to $275K||57.0||67.5||down 16%|
|$275K to $300K||52.1||62.6||down 17%|
|$300K to $350K||47.7||53.8||down 11%|
|$350K to $400K||42.7||45.1||down 5%|
|$400K to $500K||39.0||38.3||up 2%|
|$500K to $600K||35.5||32.0||up 11%|
|$600K to $800K||30.3||26.8||up 13%|
|$800K to $1M||23.0||20.5||up 12%|
|$1M to $1.5M||19.7||18.8||up 5%|
|$1.5M to $2M||13.3||11.4||up 16%|
|$2M to $3M||15.0||10.8||up 39%|
|Over $3M||4.9||7.0||down 30%|
The weakest trend is for homes priced between $250K and $350K (and also for homes over $3M, though this segment has very few sales and is therefore very volatile). Between $250K and $350K we are seeing more available supply and fewer homes going under contract. It is this lower mid-range sector which is exhibiting the most significant weakening. As this is a very high volume part of the market it affects the overall market numbers. It is also a very popular price range for new homes, which for the most part are excluded from our numbers since 90% of them are not listed on the MLS.
The strongest trend is for homes priced between $500K and $3M. Here supply has fallen 5% compared with last year while 7% more homes are going under contract. However it is not as much improved as it was during the first half of 2018.
October 20 - The Cromford® Market Index for all areas and types stands at 149.1 today. This is significant because it is lower than at the same point in both 2016 and 2017. As recently as one month ago it stood above both these years at 158.2.
The market appears to be hitting an air-pocket with falling demand and rising supply. There are a number of possible causes and probably a combination of them is driving this change in market direction:
- mortgage interest rates have now risen enough to dampen buyer enthusiasm
- mortgage interest rates have now risen enough to cause sellers to defer move-ups or downsizing
- we are starting to see the end of the wave of boomerang buyers
- home prices have risen enough to seriously affect affordability
- interest from foreign buyers is at an extreme low (which means mostly Canada in Arizona)
- recent tax changes have removed incentives for home ownership over rental
- home purchase has become more expensive relative to home rental
Black Knight Financial Services estimates that the monthly mortgage payment required to buy the average home in the USA has increased 16% since January. Wages are up an average of 3% and rents are up an average of 8% across Greater Phoenix in the last year. Official government measures of inflation might be relatively low, but inflation in the cost of shelter is very high. Eventually demand is susceptible to costs rising beyond a tipping point. While rents are rising fast they are rising less fast than mortgage payments.
The CMI is a leading indicator. The most widely followed trailing indicator is sales price. This is still rising and is likely to continue to do so for several months at least.
October 18 - The market is in a cooling trend as evidenced by the Cromford® Market Index for the single-family markets in the 17 largest cities:
Here we see 13 of the cities deteriorating for sellers and of the the cities improving, only 1 (Glendale) improved by a significant percentage over the past month.
Among the declining cities, Paradise Valley, Buckeye are down by double digits. Scottsdale, Fountain Hills, Mesa and Chandler are all down 7% to 8%.
We are not getting a flood of new listings (quite the opposite in fact), but active listing counts are rising because contract activity is weakening. The Cromford Demand Index and Contract Ratio measures tell us that buyers have lost enthusiasm. However under $200,000 we still see multiple offers in most situations thanks to to the continued lack of listings within that price range.
October 17 - The contract ratio is an excellent guide to how hot or cold a market is, and we are seeing the following readings compared to October 17 last year:
|Market Segment||Contract Ratio 2017||Contract Ratio 2018||Change|
|All Areas & Types||53.0||50.0||down 6%|
|Greater Phoenix - Single-Family Detached||55.9||51.7||down 8%|
|Greater Phoenix - Townhouse||70.1||66.5||down 5%|
|Greater Phoenix - Apartment Style||48.9||45.0||down 8%|
|Greater Phoenix - Twin / Duplex||68.2||89.6||up 31%|
|Greater Phoenix - Patio Home||53.3||58.1||up 9%|
|Greater Phoenix - Mobile Home||34.1||41.5||up 22%|
|Single-Family - Phoenix||59.3||52.0||down 12%|
|Single-Family - Mesa||79.4||66.5||down 16%|
|Single-Family - Scottsdale||30.1||28.7||down 5%|
|Single-Family - Chandler||78.2||68.6||down 12%|
|Single-Family - Glendale||64.8||67.7||up 4%|
|Single-Family - Gilbert||75.9||73.8||down 3%|
|Single-Family - Surprise||61.0||59.8||down 2%|
|Single-Family - Peoria||53.7||49.2||down 8%|
|Single-Family - Queen Creek (including San Tan Valley)||73.6||61.4||down 17%|
|Single-Family - Avondale||73.0||68.8||down 6%|
|Single-Family - Tempe||51.0||49.6||down 3%|
|Single-Family - Goodyear||46.9||45.2||down 4%|
|Single-Family - Maricopa||65.5||57.4||down 12%|
|Single-Family - Buckeye||62.4||59.6||down 5%|
|Single-Family - Cave Creek||35.5||34.0||down 4%|
|Single-Family - Fountain Hills||25.2||23.2||down 8%|
|Single-Family - Paradise Valley||20.4||14.7||down 28%|
|Single-Family - Casa Grande||66.5||41.6||down 37%|
|Single-Family - Sun City||62.5||69.0||up 10%|
|Single-Family - El Mirage||162.5||98.1||down 40%|
|Single-Family - Apache Junction||61.3||63.3||up 3%|
|Single-Family - Anthem||58.8||37.6||down 36%|
|Single-Family - Laveen||75.4||93.2||up 24%|
|Single-Family - Sun City West||78.8||79.6||up 1%|
|Single-Family - Litchfield Park||42.9||38.7||down 10%|
|Single-Family - Tolleson||72.7||86.8||up 19%|
|Single-Family - Arizona City||35.8||72.5||up 103%|
|Single-Family - Sun Lakes||64.0||62.9||down 2%|
|Single-Family - Gold Canyon||29.0||28.5||down 2%|
|Single-Family - Florence||55.3||71.0||up 28%|
The majority of segments are cooler than last year, with dramatic declines in Anthem, El Mirage, Casa Grande and Paradise Valley. This is a situation that has developed over just the last 6 weeks.
However mobile homes are hotter than last year, as are patio homes and twin/duplex homes and a handful of cities - Florence, Glendale, Arizona City, Sun City, Sun City West, Tolleson, Laveen and Apache Junction.
October 15 - The second week of October has continued the new trends started in the first week, an important signal for the market. New listings are well below last year but active listing counts have grown relatively fast. This means listings are going under contract more slowly. Closed listings are less numerous than last year too.
These all add up to a smaller market with lower activity, but not necessarily lower pricing. Demand is weaening but supply is also weak and needs to grow a lot if it is to match even a weaker demand level.
The Cromford® Market Index is still over 150 so we have a strong seller's market. However it is falling very fast with supply increasing and demand falling. If this trend continues for a couple of months we could be well on the way back to a balanced market. Change is in the air, but it is still too soon to be certain how this will develop. It is clear that this is an important time to be watching the market carefully.
Here are a few key numbers from the first 2 weeks of October:
|Measure for first 2 weeks of October||2017||2018||Change|
|New Listings - Greater Phoenix||4,916||4,226||down 14%|
|Active Listings Change - Greater Phoenix||827||871||up 5%|
|Closed Listings||2,845||2,646||down 7%|
|Pending Listings at end of period||5,786||4,973||down 14%|
|UCB & CCBS Listings at end of period||3,773||3,559||down 6%|
All of these changes are negative for sellers, as evidenced by the short term Cromford® Market Index chart.
October 11 - The Cromford® Market Index table for the single-family markets in the 17 largest cities is shown below:
We see 7 cities showing an improvement for sellers and 10 deteriorating. This does not sound too bad until we calculate that the average change is -2.8%, considerably worse than last week's -1.9%.
Buckeye, Fountain Hills and Paradise Valley have seen the largest declines while Tempe was the only city to see a double digit percentage improvement.
Despite the shortage of new listings, active listings are growing because fewer homes are going under contract. Over the last month there has been a decline in the enthusiasm of both buyers and sellers.
October 10 - We are examining the first week of October in more detail to study how new listing counts dropped unexpectedly. We counted 2,017 new listings in Greater Phoenix during the first full week which is down dramatically from the same week in 2017. The overall decline is 23% year over year and this is the lowest number of new listings we have ever seen for the first week of October. The previous record low was 2,343 in 2014.
- Homes priced up to $250K dropped from 1,147 to 764, a decline of 33%
- Homes priced between $250K and $500K dropped from 1,003 to 929, a decline of 7%
- Homes priced over $500K dropped from 454 to 324, a decline of 29%
So the mid-range had the smallest decline while the top and bottom saw large falls in new listing counts.
If we chop more finely, we do see a handful price ranges with a growth in new listings:
- Up to $25K increased from 5 to 6
- $25K to $50K increased from 7 to 8
- $250K to $300K increased from 319 to 351
- $800K to $1M increased from 43 to 45
- Over $3M increased from 16 to 22
Segmenting by dwelling type we see:
- Single-family listings fell by 20%
- Condo listings fell by 33%
- Mobile home listings fell by 29%
Mortgage rates tend to increase when the economy is strong. According to realtor.com the average 30 year fixed loan in Arizona is now at 5.01%, up from 4.83% just 7 days ago. People usually worry about higher rates discouraging buyers and while that is a reasonable concern, I am also of the opinion that higher rates discourage sellers, because in most cases they are going to move somewhere else and pay a higher rate too. If they have the option to stay put, they may choose to do so when rates are increasing.
For whatever reason, sellers are surprisingly rare this month. Even if we change the measurement week to Oct 3 to Oct 9, the picture does not change - new listings down 25% from 2,520 in 2017 to 1,885 in 2018. This latter total is once again the lowest we have ever recorded for those dates.
We live in interesting times.
October 9 - Filing the latest version of the long term interest chart on Cromford Public, it struck me that mortgage rates have been climbing very slowly but somewhat relentlessly. Freddie Mac reported an average of 4.63% during September for the 30 year fixed. This is the highest we have seen since May 2011, more than 7 years ago. Of course in 2011 this seemed like a very low rate because we had experienced rates over 6% almost continuously between 1970 and 2008, with occasional short periods in the mid 5s.
Now we have a lot of homeowners with loans bearing rates of 3.5% to 4.25% taken out over the past 7 years. To move to a new home, they will need to pay off that cheap loan and take out another at closer to 5%. This effect is likely to be a drag on the supply of re-sale homes for a long time to come. It is likely to be good news for remodelling companies as many home owners decide to preserve their cheap financing by staying in place and spending their upgrade money on improving and modernizing their existing home instead.
October 8 - After the first full week of October it is striking that the month is off to an unusually slow start.
New listings are 14% lower than they were during the same period in 2017. It is a very long time since we saw a drop-off like that..
Closed sales are also down, with 1,338 closed during the first week of October 2018, down over 10% from the 1,494 we had in 2017. The annual sales rate has taken a step lower as a result.
It is not exactly clear what is causing this, but both supply and demand are weaker than expected. One week does not make a trend, but this is so different from what we have seen so far this year that I feel I should point it out. If the rest of the month continues in this vein then it would represent a significant change of sentiment.
We will watch carefully and report whether the second week is similar to the first or gives us a snap-back to normal.
October 5 - Until September we had seen extremely strong sales numbers for the Northeast Valley's luxury single-family homes (over $500,000). Here are the comparisons with the year before:
The wheels seem to have come off the cart last month. Could we have seen this coming. Yes!
The under contract count on September 1 was down 2% from the year before, suggesting that year over year growth would stall. Now September 2018 had only 19 working days and thus a 5% disadvantage compared with September 2017. Adding that 5% to the 2% drop in under contract listings we get -7%, exactly the drop in sales during September. It does not always work this cleanly. What do we expect for October? Well the under contract count is almost identical to 2017 as of October 1, so we would anticipate roughly the same unit sales, adjusted for the number of working days. October 2018 has 23 working days compared with October 2017's 22, so this will add 5% to our estimate. We should therefore expect a resumption of sales growth this month, but only 5%, unimpressive in the context of the last 10 months.
The lack of sales is concentrated at the bottom end between $500,000 and $600,000, where unit counts fell 32% from a year earlier. This is probably connected to the shortage of supply since active listing counts are down 21% in this price range.
October 4 - The table below shows the Cromford® Market Index for the single-family markets in the 17 largest cities
We have 6 cities showing an improvement for sellers, 2 more than last week, with Glendale and Goodyear joining the other 4. However 11 cities showed deterioration for sellers and the average monthly change was 1.9%, slightly higher than the 1.8% we recorded last week. The trend remains down with rising supply and falling demand.
Tempe was the standout city for improving selling conditions while Fountain Hills, Paradise Valley and Buckeye showed significant weakness.
October 3 - Although Zillow has ramped up its purchases as an iBuyer, it has sold relatively few homes so far. The total number of homes purchased by the end of September was 157 while the total number of sales was 33, leaving 124 in inventory.
When we compare with Opendoor's start-up in 2015 and 2015, we see a similar pattern. By July 2015 they had 132 homes in inventory, having purchased 169 and sold 37. The main difference was that it took Opendoor 12 months to reach this stage and Zillow has taken less than half this time. The first mover has to prove the concept and break rocks. Followers benefit from that ground-breaking.
OfferPad has a somewhat different trajectory. They have tended to keep a lower inventory and sell their homes more quickly. By the time they had purchased 154 homes (in July 2016, they had sold 64 and only had 90 left in inventory.
Lifetime statistics as of the end of September are:
October 2 - Based on affidavit filings, the 3 main iBuyers operating in Greater Phoenix purchased 358 homes across Maricopa and Pinal counties in September. This is down from 446 purchases in August, but up from 278 in September last year.
Opendoor only purchased 188, making it their quietest month for purchases since September last year when they bought 161.
OfferPad purchased 105, in line with recent months but down from 117 in September 2017.
Zillow purchased 65, their largest total since starting in May. They seem to be stealing some market share from the other 2, possibly because they are buying at slightly higher prices. Certainly they are making less gross margin when they sell. The median gross margin for Zillow was 5% in July but only 3% in August. We have not yet been able to calculate the September number. Their 3% gross margin is immediately eaten up by commission paid to the buyer's broker, so they are living off the seller fees, to which we do not have access. This iBuyer business clearly involves a large amount of capital tied up and seriously low margins. Some may question why Zillow wishes to engage in the market, but it does seem to be growing in popularity with sellers. iBuyer transactions now represent roughly 1 in 20 home sales (excluding new homes and foreclosures).
Gross margins for Opendoor were around 6% in August and for OfferPad around 8%. Both of these are down from 8% and 11% respectively in August 2017. The additional competition seems to be causing gross margins to tighten.
September was a low activity month with only 19 working days thanks to a weekend at both ends. All the sales counts will be lower than normal for this reason.
October 1 - Nate Randleman used our Tableau chart showing average $/SF over the long term to calculate how prices had appreciated over the past 18 years. For Maricopa County the average was $97.63 in September 2000 and it was $166.51 in September 2018. The difference between these 2 numbers represents a long term average appreciation rate of only 3%.
Nate believes most clients (and probably many agents) would expect the number to be much higher since we have experienced very positive appreciation since 2011. They sometimes forget how much we went backwards between 2000 and 2011. We have spent much of the time since 2011 recovering from the crash of 2007-2008.
Overall, a long term appreciation rate of 3% is far from excessive and supports the theory that we are not significantly over-valued at today's prices.
What Nate did not know is that this Long Term Appreciation rate appears in all of our snapshots, so he could have saved himself some calculating. Here are the numbers extracted from a few of our snapshots (there are well over a hundred on the site). It may be that many of these will surprise you.
|Market Segment||Sub-set||Long Term Appreciation (Jan 2001 - Sep 2018)|
|All Area & Types in ARMLS||2.9%|
|Sun City West||3.1%|
September 28 - The Cromford® Market Index for the single-family markets in the 17 largest cities is shown in the table below:
Sellers may be dismayed to see 13 of the 17 cities showing the balance of power shifting away from them. However they can console themselves with the fact the the average shift is only -1.8% which is down from the -2.2% we saw last week. This is partly because 2 of the 4 improving cities (Tempe and Cave Creek) improved by large percentages.
Among the decliners, Buckeye (-10%) and Fountain Hills (-18%) are the most prominent, but Surprise(-7%) and Mesa (-7%) declined significantly too.
Scottsdale has changed course after a strong run in the last 3 months.
September 27 - The Census Bureau has just released the single-family building permit counts for August. The total for Maricopa and Pinal counties was 2,263, up 16% from 1,954 in August 2017. The count for the 12 months Sep 2017 to Aug 31 is 22.388 which is up 12.7% from 19,865 last year. Maricopa and Pinal account for 74% of Arizona's single-family permits.
Year-to-date in 2018 we have 16,154 permits which is up 13.6% from 2017.
The increases all exceed the increase in the overall sales rate, which implies:
- The market share for new homes should increase over the next year
- Supply should gradually improve if developers build as quickly as the permits indicate
For the past 12 months the breakdown by city is as follows:
- Phoenix 15.7%
- Unincorporated Pinal County 11.0%
- Buckeye 10.1%
- Mesa 7.9%
- Gilbert 6.8%
- Maricopa 6.1%
- Peoria 6.1%
- Unincorporated Maricopa County 6.0%
- Goodyear 5.9%
- Surprise 5.8%
- Queen Creek 5.2%
- Scottsdale 3.0%
- Chandler 2.4%
- Avondale 1.2%
- Florence 1.1%
- Glendale 0.9%
- Tempe 0.7%
- Wickenburg 0.7%
- Casa Grande 0.7%
- Eloy 0.6%
- Fountain Hills 0.4%
- Paradise Valley 0.4%
- Apache Junction 0.4%
- Litchfield Park 0.3%
- Cave Creek 0.2%
- Carefree 0.1%
- Coolidge 0.1%
- everywhere else 0.1%
September 26 - The S&P / Case-Shiller® Home Price Index® report was published yesterday covering sales during May, June and July 2018. The month to month change in indexes were as follows:
- Las Vegas +1.39%
- Cleveland +1.35%
- Phoenix +0.74%
- San Francisco +0.64%
- Tampa +0.61%
- Atlanta +0.54%
- Portland +0.47%
- Miami +0.44%
- Detroit +0.41%
- Minneapolis +0.39%
- Chicago +0.33%
- Denver +0.33%
- Dallas +.18%
- Washington +0.16%
- Charlotte +0.15%
- Los Angeles +0.13%
- Boston +0.14%
- New York +0.09%
- San Diego +0.01%
- Seattle -0.01%
Moving up from 7th to 3rd place, Phoenix is retaining more price momentum compared with the rest of the country, although it is not alone - Las Vegas and Cleveland are doing even better. The national average was +0.45%
It is quite a while since we saw a negative change in Seattle, albeit a very tiny one.
The year-over-year table looks like this:
- Las Vegas +13.7%
- Seattle +12.1%
- San Francisco +10.8%
- Denver +8.0%
- Phoenix +7.5%
- Tampa +6.8%
- Los Angeles +6.4%
- San Diego +6.2%
- Detroit +6.2%
- Boston +6.0%
- Minneapolis +6.0%
- Atlanta +5.8%
- Cleveland +5.7%
- Portland +5.6%
- Charlotte +5.6%
- Miami +5.0%
- Dallas +5.0%
- New York +3.4%
- Chicago +3.0%
- Washington +2.7%
Phoenix moves up to 5th place from 6th last month and is now well above the national average of 6.0%.
I have to admit it makes me nervous when Las Vegas is number one in both these tables.
September 25 - Consistent with the slight decline in the Cromford® Market Index we are seeing a slight decline in the listing success rate over the past 6 months. At the end of March the success rate for all areas & types was very high at 85%. Now it is merely high at 81%. This might seem like a very small drop but it does mean a 27% increase in the number of listings that failed to sell (from 15% to 19%). This is also consistent with the higher pace of price cuts that we have seen recently.
All in all, the market remains strong for sellers but not as strong as it has been and with a slow cooling trend.
September 24 - Long-time subscribers will have become familiar with the third-quarter slump in prices that happens every year in Greater Phoenix. It is not so much that home values go down; more that the sales mix moves away from more expensive properties and the price pressure from the second quarter eases away.
Despite the seller's market that prevails over the whole valley, the third quarter slump was in full force in 2018. However, it has now run its course and we can see the pressure building for another upward price trend in the fourth quarter. Take a look at the Tableau chart for Under Contract $/SF and you can see a sharp upward turn over the past few weeks. This happened at the same time in 2017 and was followed by 9 months of powerful upward movement. Unless there is a significant change in market conditions we are likely to see something similar over the next 9 months. Such a significant change would involve either a large increase in new listings or a major fall in the sales rate, neither of which are looking likely at the moment.
September 21 - One possible explanation for the low under contract counts we see these days is that lenders are taking less time to approve loan applications than they used to. This would shorten the time to close and result in fewer listings under contract for the same number of closed sales.
You would think that it would be fairly easy to check this hypothesis. It ought to be possible to measure close times by calculating the difference between the Contract Date and Close Date for each listing that closed on ARMLS. Unfortunately there are 85,044 closed listings where this calculation has a negative result, implying that the listing agent believes the purchase contract was signed AFTER the close of escrow. There are another 105,873 closed listings where the Close Date and Contract Date are exactly the same. This leads me conclude that the Contract Date data in ARMLS is of low quality and cannot be trusted. The Close Date is also of fairly poor quality, but we have the advantage of being able to cross check that date with the date the sale was recorded and therefore apply corrections to this field. At least that gets rid of the thousands of listings which are supposed to have closed on a Saturday, Sunday or public holiday (impossible since the county recorder does not work on those days).
Making the best of a bad job, we can examine the listings where the Close Date is at least 14 days later than the Contract Date. Closing times shorter than this are unlikely to have involved a third party lender. This test applies to 79% of the closed listings so it is a pretty decent sample. Using these records we find the following:
- average closing time in 2014 was 39.9 days
- average closing time in 2015 was 40.7 days
- average closing time in 2016 was 42.4 days
- average closing time in 2017 was 39.3 days
- average closing time in 2018 was 37.6 days
This gives us evidence of a 4.5% reduction is closing time between 2017 and 2018, following a more substantial reduction of 7.3% between 2016 and 2017.
Mind you, 2018's closing times are not exceptional. We were seeing closing times of 33 to 36 days throughout the years 2001 to 2008. It seems the easier it is to get a loan approved (as in 2004 to 2006) the quicker the close occurs. That make intuitive sense. The record low was 33.8 days in 2005. 2005 was really the year of the bubble bursting, even though people tend to focus on the collapse of Lehman Brothers in 2008, a long time after its collapse became inevitable.
We know that TRID (TILA-RESPA Integrated Disclosure) lengthened closing times in the fourth quarter of 2015 and then times started improving once everyone got used to the new procedures. Let us check the quarterly numbers:
- 2014 Q1 - 39.9
- 2014 Q2 - 40.0
- 2014 Q3 - 40.1
- 2014 Q4 - 39.4
- 2015 Q1 - 39.4
- 2015 Q2 - 40.8
- 2015 Q3 - 40.2
- 2015 Q4 - 42.7
- 2016 Q1 - 42.8
- 2016 Q2 - 42.6
- 2016 Q3 - 42.9
- 2016 Q4 - 41.3
- 2017 Q1 - 39.9
- 2017 Q2 - 39.9
- 2017 Q3 - 39.4
- 2017 Q4 - 37.8
- 2018 Q1 - 37.7
- 2018 Q2 - 37.9
- 2018 Q3 - 37.0
These numbers are at least consistent with the TRID story although I remain a little concerned about the quality of the data source even in the listings with reasonable sounding Contract Dates.
My conclusion is that there has been a reduction in close times over the past 2 years, but that we are now back to normal after the disruption due to TRID. The biggest drop took place in 4Q 2017. This goes some way towards explaining the reductions in listings under contract that we have reported, but it does not explain the drop completely. The under contract counts still look somewhat lower than we would expect. I believe we are seeing a slight weakening trend in demand at the low and mid-range, compensated by stronger demand at the high-end.
September 20 - The Cromford® Market Index table for the single-family markets in the 17 largest cities is shown below:
Here we see an average decline of 2.2% over the past month with 5 cities improving for sellers and 12 deteriorating.
Cave Creek and Tempe have shown the strongest improvement while Fountain Hills is in full scale retreat.
We cannot remember seeing Paradise Valley so high up this chart ever before. The luxury market has improved significantly over the past year with lower supply and much stronger sales numbers.
The recent weakness in the West Valley is reflected in this table with every city deteriorating for sellers
September 19 - The number of listings under contract is surprisingly low considering all the other readings on the market. We are some 9% below the count for this time last year and that was some 6% below 2016. The last time we saw a year-over-year increase for listings under contract was at the end of April.
While this situation persists it would be a mistake to think we are in a market with strong demand.
We are in a seller's market but that is not the same thing - the seller's current advantage is created by weak supply, not strong demand.
September 18 - It appears that Californians are back in force buying up Arizona homes, comprising 7.2% of all buyers in Maricopa County during August. However we need to remember that Opendoor counts as a Californian buyer and they represent about 33% of all sales to Californians at the moment. So we need to subtract their purchases before we can make a year over year comparison.
Having taken this extra step, we see that Californian buyers took a 5.1% market share during August, excluding Opendoor. In August 2017 the equivalent percentage was 4.2%. Thus there is a growing trend, but it is not quite as big as we might have assumed. California is almost always the largest source of out-of-state buyers and that is true more than ever in 2018.
Washington buyers have increased their share from 1.4% to 1.7% over the past year, but this includes Zillow, based in Washington. Subtracting their purchases brings us back to 1.6% which is still something, but again not quite as substantial as initial analysis suggests. Washington is in second place to California.
We don't have to make an allowance for OfferPad since they are based right here in Gilbert, Arizona.
Colorado is another strong state for our buyers but they have not increased their share (1.2%) since last year. Illinois has edged up from 0.9% to 1.0%.
All other US states increased from 7.2% to 7.7%. None of these individual states has as much impact as California, Washington, Colorado or Illinois, which are the biggest long term sources of out-of-state buyers.
Foreign buyers have become very scarce. Even Canadians who were buying as much as 6% in 2011 and rivalling California for impact on our market. Canadian buyers are down below 0.4% at the moment. This is not a new phenomenon. They were below 0.4% in August 2016 and August 2017 too.
September 17 - Reports from other parts of the country suggest the following trends:
- A significant reduction in demand from Chinese buyers.
- Continued strong demand for entry-level homes
- Declining demand for discretionary move-up and luxury homes
These trends do not appear to match what we are seeing in the Greater Phoenix area.
For one thing, we have never had much demand from Chinese buyers so even if their demand disappeared completely we would hardly notice. The Phoenix metropolitan area is the 12th largest in the USA, but it does not register in the conscious mind of the typical Chinese person. Before you think that is strange, let me ask you what you know about the 12th largest metropolitan area in China. The first question is what is it called? - Shenzhen being the correct answer. With a metro population of well over 23 million it is roughly 6 times the size of the Greater Phoenix area. I imagine few Arizona residents have ever thought much about it, never mind considered buying a home there. The same applies in reverse.
We are seeing much stronger growth in demand for luxury home this year than in 2017. Below we compare sales during the first 2 weeks of September:
- Total sales (all types) - 2,864 in 2018, 2,556 in 2017 - up 12%
- Under $250K - 1,310 in 2018, 1,357 in 2017 - down 3%
- $250K to $400K - 1,033 in 2018, 814 in 2017 - up 27%
- $400K to $800K - 427 in 2018, 317 in 2017 - up 34%
- $800K and up - 94 in 2018, 68 in 2017 - up 38%
No evidence there of declining demand for move-up and luxury homes. Entry level sales are down a little but that could be due to the limited availability of homes to buy at that price level.
I would therefore caution you not to assume that anything going on in the wider housing market applies to Greater Phoenix.
September 14 - We are still examining the changes that took place in the single-family market between August 1 and September 1, but this time we will segment the market by price rather than location.
The first thing that strikes us is that supply increased for homes at or under $400,000, but decreased for homes over $400,000. It is a very long time since we have said anything like that, so something different seems to be going on.
- active listings at or under $400,000 without a contract grew 9% from 6,610 to 7,187
- active listings over $400,000 without a contract fell 0.3% from 5,304 to 5,288
The big drop in supply was for homes between $1.5M and $2M which fell by 11%. This has been a heavily over-supplied sector in the recent past.
- monthly sale for homes at or under $400,000 fell 7% from 5,391 to 5,038
- monthly sales for homes over $400,000 grew 2% from 1,505 to 1,536
This analysis confirms our observations on September 12. The low to mid-range market is seeing rising supply and falling sales while the higher mid-range and luxury market is doing the opposite. This is the reason why the West Valley, with a large share of the most affordable homes, was the weakest areas during August.
About 78% of single-family sales in Greater Phoenix are priced at or below $400,000, so if this market loses steam, it will not be fully compensated by strength at the higher end.
One month does not make a trend, but we should keep our eyes on the low-to-mid-range market over the next few months.
September 13 - Below we show the Cromford® Market Index for the single-family markets in the 17 largest cities:
Here we a gradually deteriorating market from a seller's perspective. The average change of the last month is only -2.3%, but the decline is widespread with 12 of the 17 cities showing some deterioration and only 5 improving for sellers.
Cave Creek is the stand-out with a gain of 9% while Glendale and Fountain Hills saw the largest declines.
Despite this, every city is still a seller's market and well above the balanced zone of 90-110.
September 12 - We saw yesterday that the largest changes for the single-family market between August 1 and September 1 took place in the West Valley. Today we will look at the individual ZIP codes within the West Valley.
|Area||Active Listings (excl. UCB/CCBS) Aug||Active Listing (excl. UCB/CCBS) Sep||Change||Sales Jul||Sales Aug||Change||Months of Supply Aug||Months of Supply Sep||Change|
|Glendale 85301||46||46||none||34||29||down 15%||1.6||2.1||up 30%|
|Glendale 83302||52||48||down 8%||34||40||up 18%||2.0||1.8||down 9%|
|Glendale 85303||37||35||down 5%||43||32||down 26%||1.1||1.7||up 57%|
|Glendale 85304||46||59||up 28%||42||37||down 12%||1.5||1.9||up 32%|
|Glendale 85305||26||25||down 4%||16||14||down 12%||2.1||2.5||up 18%|
|Glendale 85306||34||42||up 24%||38||26||down 26%||1.1||1.7||up 55%|
|Glendale 85307||24||21||down 12%||8||5||down 37%||3.4||5.0||up 48%|
|Glendale 85308||180||168||down 7%||110||98||down 11%||2.1||2.3||up 6%|
|Glendale 85310||74||77||up 4%||46||37||down 20%||1.9||2.8||up 14%|
|Avondale 85323||60||61||up 2%||64||45||down 30%||1.3||2.0||up 58%|
|Buckeye 85326||192||197||up 3%||173||145||down 16%||1.5||1.8||up 17%|
|El Mirage 85335||44||44||none||63||37||down 41%||0.9||1.6||up 70%|
|Goodyear 85338||223||241||up 8%||109||116||up 6%||2.4||2.4||down 1%|
|Laveen 85339||97||122||up 26%||78||77||down 1%||1.6||2.0||up 12%|
|Litchfield Park 85340||124||137||up 11%||62||55||down 12%||2.4||2.9||up 19%|
|Peoria 85345||76||82||up 8%||67||72||up 8%||1.5||1.5||none|
|Sun City 85351||47||66||up 40%||69||59||down 15%||1.1||1.4||up 31%|
|Tolleson 85353||79||69||down 13%||70||64||down 9%||1.4||1.3||down 1%|
|Tonopah 85354||8||7||down 12%||5||1||down 80%||1.6||8.0||up 400%|
|Waddell 85355||62||63||up 2%||24||32||up 33%||3.3||2.4||down 28%|
|Wittmann 85361||25||29||up 16%||13||9||down 31%||2.6||3.8||up 44%|
|Youngtown 85363||6||10||up 67%||13||11||down 15%||0.7||1.6||up 136%|
|Sun City 85373||68||61||down 10%||45||36||down 20%||1.9||2.2||up 18%|
|Surprise 85374||85||94||up 11%||86||86||none||1.4||1.5||up 10%|
|Sun City West 85375||83||97||up 17%||91||83||down 9%||1.4||1.6||up 16%|
|Surprise 85378||20||39||up 95%||16||8||down 50%||1.6||5.6||up 246%|
|Surprise 85379||168||192||up 14%||124||106||down 15%||1.7||2.2||up 29%|
|Peoria 85381||59||56||down 5%||39||25||down 36%||1.8||3.2||up 76%|
|Peoria 85382||92||110||up 20%||55||69||up 26%||2.2||2.0||down 11%|
|Peoria 85383||418||440||up 5%||172||139||down 19%||2.7||3.6||up 30%|
|Surprise 85387||90||100||up 11%||30||28||down 7%||1.5||1.9||up 14%|
|Surprise 85388||103||120||up 17%||72||76||up 6%||1.8||1.9||up 6%|
|Avondale 85392||79||80||up 1%||67||55||down 18%||1.5||1.9||up 28%|
|Goodyear 85395||131||148||up 13%||61||53||down 13%||2.6||3.3||up 26%|
|Buckeye 85396||167||170||up 2%||76||81||up 7%||2.5||2.4||down 3%|
We see only 6 ZIP codes with lower months of supply than a month earlier. There is a general trend in favor of buyers when we see active listings up 7% in a month with 11% fewer sales despite the maximum number of working days (23). August is not expected to be a strong month, but the cooling is surprisingly strong in locations such as:
- Glendale 85303, 85306 and 85307
- Avondale 85323
- El Mirage 85355
- Tonopah 85354
- Wittmann 85361
- Youngtown 85363
- Surprise 85378
- Peoria 85381
We have become used to reporting strong markets at the low end and weaker ones at the top over the last 6 years. However there are distinct signs of a change going on. The top end is strengthening while the low to medium price ranges are cooling, albeit from a very strong situation. Supply is still weak (though improving) in the West Valley, so the market has a long way to go before it gets back to balance. However there are some signs of consolation for West Valley buyers in the above table.
If the entry-level market were very strong we would expect the West Valley to be the top performing area. Between August 1 and September 1, the opposite was the case.
September 11 - Here is how the major areas changed between August 1 and September 1
|Area||Active Listings (excl. UCB/CCBS) Aug||Active Listing (excl. UCB/CCBS) Sep||Change||Sales Jul||Sales Aug||Change||Months of Supply Aug||Months of Supply Sep||Change|
|Central Valley||2,810||2,892||up 2.9%||1,461||1,509||up 3.3%||2.4||2.3||down 1.0%|
|Northeast Valley||2,166||2,183||up 0.8%||632||612||down 3.2%||4.0||4.1||up 2.1%|
|Southeast Valley||2,578||2,696||up 4.6%||2,027||1,892||down 6.7%||1.7||1.9||up 9.6|
|West Valley||3,125||3,356||up 7.4%||2,119||1,888||down 10.9%||1.8||2.2||up 19.5|
The numbers are for single-family detached homes only.
We see that the deterioration in the market for sellers was concentrated in the West Valley - adding more listings without contracts than any of the other 3 are and showing a bigger drop in monthly sales rate too.
The Central Valley saw an increase in sales with a higher percentage than the increase in supply. It was therefore the area with the best trends for seller. The Northeast valley saw very little increase in supply, but there was a 3.2% drop in the sale rate. It was therefore the second best region from a seller's perspective.
The Southeast valley started and ended with the tightest supply, but it did see a 4.6% increase in active listings coupled to a 6.7% drop in sales. These trends went in the buyer's favor but not as much as in the West Valley.
September 10 - If you feel like the luxury market has improved a lot during the past year you are not mistaken. Excessive supply between 2015 and 2017 was a drag on the market keeping prices weak and inhibiting sellers during negotiations. The supply has been trending lower over the past year but the biggest change has been a surge in demand.
For the annual period that ended on August 31, we saw $8.4 billion spent on homes over $500,000 in Greater Phoenix. This is a huge 24.7% increase over the prior 12 months and almost entirely due to a 24.2% increase in the number of homes sold. The average price of these homes only rose by 0.4%.
The largest percentage increases in high-end dollar volume are to be seen in:
- Phoenix 85006 - up 384% (12 sales over $500K)
- Scottsdale 85257 - up 157% (40 sales)
- Rio Verde - up 163% (76 sales)
- Phoenix 85022 - up 142% (48 sales)
- Buckeye 85396 - up 132% (31 sales)
- Waddell 85355 - up 129% (22 sales)
- Surprise 85387 - up 121% (26 sales)
- Phoenix 85003 - up 105% (64 sales)
- Phoenix 85042 - up 95% (31 sales)
- Chandler 85224 - up 94% (23 sales)
- New River 85087 - up 91% (18 sales)
- Phoenix 85032 - up 85% (29 sales)
- San Tan Valley 85140 - up 85% (22 sales)
- Surprise 85379 - up 77% (14 sales)
- Phoenix 85008 - up 66% (13 sales)
- Mesa 85213 - up 65% (82 sales)
We excluded locations with fewer than 10 sales in the last 12 months from this table.
Few of these are generally regarded as top luxury home locations. The fact is that a rising price wave is pushing homes into the over-$500K bracket all over the place. We have more ZIP codes joining the over-half-million club, with homes selling for more than $500,000 in the following relatively inexpensive locations
- Phoenix 85009
- Casa Grande 85122
- Coolidge 85128
- Maricopa 85138
- Maricopa 85139
- Casa Grande 85194
- Mesa 85208
- Glendale 85301
- Glendale 85307
- Peoria 85382
- Avondale 85392
We also see strong rises in dollar volume in most of the traditional luxury areas:
- Fountain Hills 85268 - up 40%
- Scottsdale 85262 - up 24%
- Scottsdale 85255 - up 23%
- Paradise Valley - up 23%
- Phoenix 85018 - up 20%
There were a few exceptions, with Carefree 85377 down 1% and Scottsdale 85259 down 7%.
September 7 - Our regular examination of the Cromford® Market Index for the single-family markets in the 17 largest cities is shown below:
We see an average decline of 3% in the CMI, telling us that the market is not quite as favorable for sellers as it was a month ago. 6 cities have improved for sellers but 11 have deteriorated.
Glendale, Goodyear, Queen Creek, Maricopa, Mesa and Fountain Hills saw the largest declines while Cave Creek was the only city showing strong improvement.
Despite the general trend, every city is still a seller's market and it would take many months of this trend before buyers start to flex their negotiation power.
September 6 - We often get asked what percentage of the market has been captured by the iBuyers (Opendoor, OfferPad and Zillow). The answer is not too hard to calculate but it does depend on what you define as "the market". The simplest calculation is to take all sales of single-family or condo/townhouses within Maricopa and Pinal County. However this includes new home sales which are not part of the market where iBuyers operate. Trustee sales, bank owned sales, GSE REO sales and HUD sales should probably be excluded from the market too, even though it is possible for an iBuyer to acquire a home through these channels.
Here is a table showing market share over the past 24 months, using the 2 different definitions of "the market":
|Month||OfferPad Purchases||Opendoor Purchases||Zillow Purchases||Total iBuyer Purchases||% All Sales||% Sub market|
The August 2018 numbers are based on preliminary unverified data.
In rough terms, the iBuyers are now handling almost 1 in 20 of the available sellers in the Greater Phoenix market.
September 5 - Now let us take a look at average price per sq. ft. for new homes year-to-date:
- The New Home Company - $701
- Optima - $701
- Green Street - $296
- Statesman - $260
- Toll Brothers - $242
- Porchlight - $236
- Cachet - $232
- Highland - $232
- Robson - $208
- David Weekley - $205
- Shea - $200
- K Hovnanian - $194
- Blandford - $191
- VIP - $186
- Farnsworth - $184
- Taylor Morrison - $168
- Maracay - $168
- Mattamy - $161
- Towne - $157
- Bellago - $157
- Lennar - $156
- Woodside - $154
- Fulton - $152
- Richmond American - $148
- Pulte - $147
- William Ryan - $145
- Cresleigh - $145
- Ashton Woods - $139
- Elliott - $139
- Gehan - $138
- Meritage - $138
- William Lyon - $134
- KB - $132
- Beazer - $132
- Providence - $132
- Garrett Walker - $131
- Courtland - $130
- LGI - $124
- Pinnacle West - $121
- D R Horton - $120
It must be emphasized that land cost is an important part of the price of a new home. D R Horton achieves the lowest cost by focusing most of its development where land prices are lowest. Of the 1,332 closed sales year-to-date, 63% of them were in Buckeye, Maricopa or San Tan Valley.
September 4 - Here are the median sales prices for new homes in Maricopa and Pinal counties, sold between January and July 2018.
|Developer||Median Sales Price|
|The New Home Company||$2,298,999|
|D R Horton||$220,000|
There are many other entities but volumes for these were too small to calculate a reasonable median sales price.
Once again we can see how D R Horton and LGI are very targeted at the entry level homes where there is such a shortage of re-sale supply.
September 3 - Following up our post of August 31, here the top 25 developers in Maricopa and Pinal counties by YTD sales revenue recorded by the end of July:
- Lennar - $405M
- Taylor Morrison - $337M
- D R Horton - $306M
- Pulte - $251M
- Meritage - $203M
- Shea - $193M
- Mattamy - $164M
- Toll Brothers - $148M
- Fulton - $133M
- KB - $129M
- Ashton Woods - $122M
- Optima - $117M
- Robson - $109M
- Richmond American - $109M
- K Hovnanian - $104M
- Maracay - $103M
- William Lyon - $83M
- Blandford - $77M
- Beazer - $68M
- Woodside - $63M
- Garrett Walker - $60M
- LGI - $48M
- David Weekley - $47M
- Courtland - $40M
- Gehan - $40M
We note that Toll Brothers moves up from 19 by units to 8th by revenue due to their exclusive focus on higher-end homes.
In contrast D R Horton and KB drop down compared the unit table due to heavy focus on entry-level housing.
August 31 - After 7 months of recordings between Jan 1 and July 31, here is the top 25 ranking by closed units for local developers:
- D R Horton - 1,332 closed homes
- Lennar - 1,137
- Taylor Morrison - 801
- Pulte - 715
- Meritage - 620
- KB - 469
- Shea - 420
- Mattamy - 397
- Fulton - 380
- Ashton Woods - 328
- Richmond American - 292
- William Lyon - 263
- K Hovnanian - 262
- Robson - 255
- Beazer - 237
- Garrett Walker - 228
- Maracay - 219
- LGI - 217
- Toll Brothers -170
- Woodside - 161
- Blandford - 159
- Courtland - 142
- Optima - 140
- Gehan - 114
- Pinnacle West - 96
The numbers are for Maricopa and Pinal counties only.
August 30 - Another look at the Cromford® Market Index table for the largest 17 cities (single-family only):
Here we see 11 cities deteriorating for sellers and 6 improving. The overall average is a decline of 2%. This week Cave Creek is the top advancing city with +7%. Glendale is going backwards fastest with -10%. Phoenix continues to drop slowly down the table.
Some of the smaller cities are looking more positive with some outstanding values for the CMI:
- Arizona City - 385.7
- El Mirage - 300.9
- Sun Lakes - 259.1
- Gold Canyon - 236.7
- Tolleson - 216.2
- Apache Junction - 204.2
If you want a high CMI these days its good to be in Pinal County or an inexpensive spot in the West Valley.
August 29 - The S&P / Case-Shiller® Home Price Index® number are now out for the sales during April through June. Comparing with last month, here is how the 20 featured metropolitan areas fared:
- Las Vegas +1.39%
- Detroit +1.04%
- Minneapolis +1.04%
- Cleveland +0.99%
- Boston +0.85%
- Chicago +0.77%
- Phoenix +0.74%
- Seattle 0.73%
- Portland +0.70%
- Miami +0.66%
- Atlanta +0.65%
- San Diego +0.60%
- Tampa +0.60%
- Denver +0.60%
- Charlotte +0.55%
- Washington +0.55%
- Los Angeles +0.53%
- San Francisco +0.47%
- Dallas +0.39%
- New York -0.07%
Phoenix slipped very slightly from 6th place last month to 7th this month and came in just below the national average of +0.77%.
On a year over year basis the ranking table looks like this:
- Las Vegas +13.0%
- Seattle +12.8%
- San Francisco +10.7%
- Denver +8.3%
- Los Angeles +7.4%
- Phoenix +7.2%
- Boston +7.1%
- San Diego +6.9%
- Tampa +6.9%
- Minneapolis +6.5%
- Detroit +6.4%
- Portland +5.8%
- Charlotte +5.7%
- Atlanta +5.7%
- Dallas +5.2%
- Miami +5.2%
- Cleveland +5.1%
- New York +3.8%
- Chicago +3.3%
- Washington +2.9%
Phoenix ranked 6th in this table, up from 7th last month and well above the national average of +6.2%.
August 28 - For the largest 17 cities you can see 2 years of comparative appreciation rates using the chart here.
We see that appreciation rates have tended to converge over the past 2 years, currently ranging from a low of 4.4% for Scottsdale to a high of 10.9% for Maricopa. Two years ago the range was much wider from a low of -4.8% for Paradise Valley to a high of 11.0% for Maricopa. Maricopa has not been on top for the whole period. Avondale was in the lead between April 2017 and May 2018.
The current ranking is:
- Maricopa 10.9%
- Avondale 8.2%
- Queen Creek 8.1%
- Mesa 8.0%
- Buckeye 7.9%
- Surprise 7.9%
- Glendale 7.7%
- Cave Creek 7.6%
- Phoenix 7.5%
- Paradise Valley 7.1%
- Gilbert 7.0%
- Chandler 6.8%
- Peoria 6.7%
- Tempe 6.5%
- Fountain Hills 5.5%
- Goodyear 4.7%
- Scottsdale 4.4%
All these numbers are for single-family detached homes only.
August 27 - The supply of active listings in 2018 (excluding those under contract) has followed a different trend depending on the dwelling type:
- single-family - has fallen from a peak 13,498 on January 21 to 12,392 on August 24, a drop of 8.2%
- condo / townhouse - has fallen from a peak of 2,561 on January 21 to 1,936 on August 24, a drop of 24.4%
- mobile / manufactured - has fallen from a peak of 684 on January 13 to 431 on August 24, a drop of 37.0%
So single-family homes have retained a much higher percentage of their supply than condos or mobile homes.
The supply has also behaved differently by county:
- Maricopa County - has fallen from a peak of 14,783 on January 20 to 13,254 on August 24, a drop of 10.3%
- Pinal County - has fallen from a peak of 1,917 on February 10 to 1,429 on August 24, a drop of 25.5%
So Pinal County has seen far more of its supply disappear than Maricopa County has.
These effects are all due to average price points.
- Pinal County is on average cheaper than Maricopa County
- condo / townhouse properties are on average cheaper than single family homes
- mobile / manufactured homes are on average cheaper than condo / townhouse properties
Although condo / townhouse properties are cheaper on average than single-family homes, this is purely because they are much smaller on average. The average price per sq. ft. for condo / townhouse properties is currently around $170, noticeably higher than the average price of single-family properties at around $160.
Whatever way you look at the market, inexpensive homes have become much harder to find over the last 7 months.
August 24 - The Cromford® Market Index for the single-family markets in the 17 largest cities:
Another table that suggests the market is slowly and slightly cooling down. The average change over the last month is -2% and we see 11 cities deteriorating for sellers with 6 improving. The general trend is an uptick in supply despite low numbers of new listings, coupled with continued weakness in homes going under contract compared with normal.
The Northeast Valley, represented by Paradise Valley (+9%), Scottsdale (+7%) and Cave Creek (+6%), is having the best of things, but Avondale, Buckeye and Chandler all managed a 3% gain.
The strongest declines are seen in Tempe (-10%), Glendale (-8%), Fountain Hills (-8%) and Gilbert (-7%).
Avondale has consolidated its position at the head of the table. Peoria and Tempe are a little way adrift at the bottom, but even these 2 cities remain in a seller's market over 110.
August 23 - The Census Bureau reported a total of 5,937 multi-family permits across Maricopa & Pinal counties for July 2018 year-to-date. This is the highest YTD number for July since 2007.
Phoenix and Tempe completely dominate the YTD numbers in 2018 with 2,118 and 2,021 respectively. Formerly very active, Scottsdale has faded into a distant third place with 505, while Chandler (387), Gilbert (205), Peoria (183) and Mesa (155) are the principal also-rans.
August 22 - The single-family permits for Maricopa & Pinal counties during July totalled 2,138 which is a 16% increase over July 2017. The annual run rate has increased to 22,079 which is the highest we have seen since February 2008. However it is still a lot lower than between 1997 and 2007 when it was consistently over 28,000 and usually over 33,000.
Many developers are trying harder to meet the demand for more affordable homes, which is probably why Unincorporated Pinal County is the number one source of permits this July with 300. The vast majority of these are located in the loosely defined area we know as San Tan Valley. The inexpensive areas of Buckeye and Maricopa also appear among the top 6 locations with 211 and 204 permits respectively. The top 6 are rounded out by Phoenix (250), Mesa (222) and Queen Creek (167).
Overall, the numbers suggest a mood of optimism among the developers, though moderated by caution based on their unhappy experience of 2007-2009.
August 21 - In the first 3 weeks of August we have seen fewer new listings appear than during the same 3 weeks last year. We currently count 6,147 which is 3.4% less than the 6,361 for last year. This gap seems to be widening because we saw a 1.4% drop after 2 weeks and a 0.3% increase after the first week.
The gap is visible for all dwelling types but is largest for mobile homes. We have seen only 111 versus 133 new mobile home listings which is a drop of over 16%.
The gap is also larger for Pinal County at 4.8% versus Maricopa County (3.2%).
August 20 - In most years the active listing count (excluding UCB and CCBS listings) hits a low point in August and then starts to rise until Thanksgiving. In 2018 we hit the low point slightly early in July and have already been drifting upwards for 4 weeks now. This might be considered a negative sign for sellers, but the change is so slight I would not want to make too big a deal out of it.
There are some areas that have seen a dramatic rise, often from abnormally low levels. Florence is probably the best example. At the end of June we had just 100 active listings without a contract, but since then the count has shot up 38%. The trend does not affect mobile homes, but single-family listings have jumped from 71 to 111, an increase of 56% in just 8 weeks. A similar but smaller event has occurred in Casa Grande and Coolidge. The only areas outside of Pinal County with a jump like this (albeit more moderate) are Litchfield Park and Surprise.
August 17 - We have examined the new listings for Greater Phoenix that arrived in the first 2 weeks of August. Overall we saw 4,079, down from 4,208 in the same period last year. The interesting stuff comes when we look at individual price ranges:
|Price Range||New Listings 2017||New Listing 2018||Change||Sales Rate||Change in Annual Sales Rate|
|Up to $150K||408||275||down 33%||8,697||down 20%|
|$150K to $200K||789||542||down 31%||17,257||down 13%|
|$200K to $250K||871||843||down 3%||20,496||up 6%|
|$250K to $300K||638||706||up 11%||15,044||up 10%|
|$300K to $400K||688||803||up 17%||16,376||up 12%|
|$400K to $500K||334||379||up 13%||7,639||up 14%|
|$500K to $1M||371||441||up 19%||7,711||up 14%|
|Over $1M||109||90||down 17%||1,882||up 19%|
We see that the market under $200K is contracting fast with both new listings and sales falling. However the new listing arrival rate is falling faster than the sales rate.
From £200K to $250K we have sales up and new listings down, a market improving for sellers. From $250K to $1M the supply is growing at a similar rate to sales, with a couple of ranges getting a larger increase in supply than sales ($300K to $400K and $500K to $1M).
Over $1M the situation is vastly improved for sellers because supply has fallen while sales rate up by the largest percentage of any price range.
August 16 - Once again we show the Cromford® Market Index table for the single-family markets in the 17 largest cities:
Only 5 cities improved for sellers over the past month, 3 of them in the Northeast Valley. Once again Paradise Valley and Scottsdale were the biggest gainers.
Avondale has regained its place at the head of the table despite losing 1%. The Southeast Valley has lost the dominance it held in the early part of the year, with Tempe (down 14%) and Gilbert (down 8%) the biggest decliners. Only Mesa remains above 200 although it went backwards by 2%. Chandler managed a 1% advance.
All 17 cities remain seller's markets, but 12 out of the 17 weakened for sellers.
August 15 - The total number of active listings (including those in UCB or CCBS status) is 19,736 today for all areas & types across the ARMLS database. This is just slightly above June 15, 2011 when we saw 19,696. We have to go all the way back to October 2005 to find another 15th date (19,715) with lower active listings.
Active listing counts have been on a declining trend since April 2014 when we hit a short term peak of 30, 506. We would consider somewhere between 30,000 and 35,000 to be sufficient for a balanced market. The all-time record high for a 15th date is 58,195 in November 2007.
Even if we are hearing about signs of a fall in demand, mainly at a national level and in regions outside Arizona, supply is so low at the moment, demand would have to drop a lot more for us to reach a balanced (and smaller) market.
August 14 - Inspired by a question from Tracy Royce, we have created a new Tableau chart in Cromford® Public which allows you to examine the intended use stated on the Affidavits of Value by buyers in Maricopa and Pinal counties.
For the second quarter of 2018, the following breakdown is observed for Greater Phoenix as a whole:
- Owner Occupier (Primary Residence) - 74.0%
- Investor - 10.9%
- Second Home - 10.7%
- iBuyer - 3.2%
- Unknown - 1.2% (mostly trustee sales)
Since iBuyers are acting as intermediaries and create one extra transactions than we would have seen without them, we concluded that the overall sales count is 3.2% higher than it would have been normally. Their share in 2Q 2017 was 1.7%, in 2Q 2016 was 1.3% and in 2Q 2015 was 0.2%.
We can see that iBuyers are not involved with home sales over $500,000 nor with the new home market. Excluding those sales from the total, they currently have a 4% market share, up from 2.1% a year ago.
If we focus on the 55+ communities (both legally restricted and targeted by marketing), then we see a very different picture:
- Owner Occupier - 64.0%
- Second Home - 28.0%
- Investor - 6.3%
- Unknown - 1.0%
- iBuyer - 0.7%
Since the iBuyer buying process is fairly passive, we conclude that the owners of 55+ properties are far less attracted to the iBuyer web sites than the average seller. We also see that investors show far less interest in 55+ homes than average. However 55+ properties are very popular as second homes.
Investors are far more active purchasing condos (16.6%) than single-family homes (9.8%)
iBuyers have tended to prefer the opposite with a 2.5% share in condo purchases and a 3.3% share in single-family purchases.
Top cities for the percentage of purchases by iBuyers in 2Q 2018 were:
- Waddell - 10.6%
- Tolleson - 9.5%
- Anthem - 9.1%
- Laveen - 8.0%
- San Tan Valley - 6.1%
- Glendale - 5.2%
- Avondale - 4.9%
- Surprise - 4.9%
- Arizona City - 4.8%
- Buckeye - 4.8%
August 13 - Sometimes it can be revealing to examine a market by breaking it into just a few large geographic areas. Below is a table of some key statistics for single-family homes comparing August 2018 with August 2017.
|Area||Annual Change in Annual Sales Rate||Annual Change in Active Listings (excluding UCB/CCBS)||Annual Change in Days of Inventory|
|Central & North Valley||+2.4%||-1.5%||-5.3%|
For sellers, every area has seen an improvement, but the Central & North Valley has seen by far the lowest percentage reduction in days of inventory. This is primarily due to a very small drop (-1.5%) in active listings compared to the rest of the valley.
The Northeast Valley and Pinal County have both seen a big improvement for sellers with an almost 20% drop in days of inventory. Both had a large 16% decline in active listings without a contract while they both saw strong increases in annual sales, with the Northeast the strongest of all.
The Southeast Valley saw a similar fall in active listings to Pinal County and the Northeast, but the annual sales rate has not managed any growth. It therefore lags behind the other two areas in positive movement for sellers.
The West Valley managed a similar increase in the annual sales rate to the Central Valley but saw a more significant drop in active listings.
Ranking the areas by improvement for seller's prospects we have:
- Pinal County
- Northeast Valley
- Southeast Valley
- West Valley
- Central & North Valley
It is surprising how different the areas are to one another and also how much the Northeast Valley has improved for sellers over the past 12 months.
August 10 - We have an unusually low number of listings under contract at the moment. Looking at the weekly chart for all areas & types we can see that in the last 10 years only 2008 and 2014 had lower counts at this point of the year. This is particularly unusual given that sales volume remains strong.
Certain cities have a significant shortfall of single-family contracts compared with last year:
- Fountain Hills - down 41%
- El Mirage - down 26%
- Avondale - down 24%
- Litchfield Park - down 21%
- Surprise - down 19%
- Sun City - down 18%
- Tempe - down 17%
- Glendale - down 16%
- Chandler - down 15%
- Casa Grande - down 15%
Fountain Hills had a large number of listings under contract in April, as many as 109, its highest count since 2012, but has slumped to just 41 as of this week.
Since the sales rates are holding up, you could argue that listings are closing more quickly or are being entered into ARMLS only after closing. This is certainly true of some listings, but since a drop in listings under contract is usually the first sign of a fall in demand, we are watching this situation closely. We suggest that you do too. As yet we are drawing no conclusions but we are wondering if the sales rate will follow suit over the next few months.
August 9 - The table below shows the Cromford® Market Index values for the single-family markets in the 17 largest cities by dollar sales volume.
We again see a big divergence between the Northeast Valley and the rest of the market.
The Northeast Valley continues to improve for sellers with a 26% increase in the CMI for Paradise Valley over the last month and a 10% rise for Scottsdale. Cave Creek has also gained a healthy 5% but Fountain Hills has started to fade after a very strong run over the past 3 months.
The rest of the market is looking a little bit tired. All cities are still seller's markets, but every city outside the Northeast (except Buckeye and Goodyear) showed at least a slight move in favor of buyers over the last month. Much of the change is due to weaker numbers of listings under contract. Tempe has also gained supply faster than normally expected for the season. Tempe, Gilbert and Avondale were the biggest losers. The change was modest for Mesa, Chandler, Surprise, Glendale, Phoenix and Queen Creek.
Supply remains very low, but has started to show early rises between $200,000 and $400,000.
It is unusual that Mesa should be top of the table while its close neighbor Tempe has hit the bottom. We are living in interesting times.
August 8 - Zillow has now purchased 62 homes and sold 10. All are in Maricopa County and none in Pinal.
The average purchase price of the 10 homes that have been sold was $309,700, which is just 0.4% below their average Zestimate of $311,036. The average sale price was $319,080, 2.3% higher than Zestimate. This means the average gross margin was 2.9%.
It took an average of 15 days to list the homes purchased, a further 23 days to get a contract and 20 days to close. These are lower numbers than the existing iBuyers (Opendoor and OfferPad), but remember we are only measuring the homes that sold, which by definition are the ones that sold quickly. There are plenty of homes that will take longer but are not closed yet.
Indeed, the first home purchased by Zillow is still active and has had no offers after 71 days and numerous Open House events. It has had 2 price reductions and is now on offer for $415,000 (having been purchased for $410,000). Zillow is offering an additional $2,500 commission to the buyer's broker on top of the 3% already offered.
There are now 10 listings in UCB status (the other iBuyers always use Pending status). There are 24 Active with no contracts and 18 not listed yet.
Zillow has announced a huge reduction in its targets for home sales in 2018. Forecast revenue is now down from $255 million to $40 million. They stated to investors that home closings are taking longer than anticipated.
August 7 - Between 2014 and 2016 we saw a strong upward trend in the supply of luxury homes, particularly in the Northeast Valley. That trend came to a halt in 2017 and we are now seeing a downward move. On August 1, 2018 we counted 2,365 single-family active listings (including UCB and CCBS) across the Northeast Valley and priced over $500,000. This is the lowest start-of-month count since September 2015 and is down 11% from a month ago and 8% lower than this time last year. The downward trend has gained momentum in the last 8 weeks.
Luxury buyers may have become used to having plenty of supply to choose from, and certainly supply is abundant compared with the market below $500,000. However supply is dropping faster than for several years and as a consequence sellers are gaining significant negotiation advantage. This is reflected in the rise in the Cromford® Market Index numbers for Scottsdale, Paradise Valley and Fountain Hills.
We normally see an increase in active listings from September through November but this is unlikely to change the narrative. Buyers of luxury homes have had their best times (the spring of 2016 was the peak) and their search is likely to become trickier over the next few months.
August 6 - The daily chart showing Average Annual Appreciation based on Monthly Average $/SF has been unusually stable for the last 6 months. The appreciation rate (by this measure) has stayed very close to 8% with only slight dips to 7% and occasional surges towards 10%.
If home prices are rising by 8% a year, then they are getting much less affordable. Average incomes are rising by something like a quarter of this rate. Rents are also rising at a steep rate (see charts below). The cost of shelter is rising as a percentage of income.
The effect is to make existing home owners feel more wealthy since their equity is growing fast. However, the incentive for people to move up and the enthusiasm of first-time buyers is in gradual decline. We have a low Cromford® Supply Index because remarkably few people wish to sell their house. We also have a declining Cromford® Demand Index because fewer people are trying to buy. At the moment demand remains much higher than supply across most sectors, so it feels like we have strong demand. Do not be fooled. The CSI stands at 59.1, the lowest level since 2015, but the CDI is at 96.5, the lowest level since March 2015. This is a key reason why we do not have bubble conditions (in which demand rises artificially due to speculation).
August 2 - The table showing the Cromford® Market Index values for the single-family markets in the largest 17 cities appears below.
There is a surprising amount of movement here. First we should point out that every one of the 17 cities is a seller's market. However only 7 of the 17 saw improvement for sellers over the past month and 10 saw deterioration.
Once again the biggest moves upward came from the Northeast with Paradise Valley up a staggering 32% and Scottsdale up 11%.
The biggest decliners were Tempe down 17% and Avondale down 12%.
Mesa remains on top for the second week, even though it took a 1% hit over the month.