The Cromford Report – Daily Observations August 2016

    August 31 – Average days on market is a very popular statistic but one which we rarely use in the Cromford Report. It has a number of problems:

    • Are we talking days on market only for closed listings? We should be
    • Average days on market for active listings tends to go down as supply rises – contrary to what most people expect. We recommend that you ignore this statistic as it is a very unreliable indicator.
    • Average days on market is not a leading indicator. It is much like pricing in that it confirms what we already know. When the market is good it will be low, but when the market gets weaker it will be quite some time before the average days on market starts to grow. When the market is weak but improving, average days on market will be slow to show the improvement
    • Some agents go to great lengths to artificially reset a listing’s days on market to zero, thus invalidating the accuracy of the data
    • The increased use of UCB status means average days on market has been increasing artificially over the last few years

    Overall we do not recommend that you pay much attention average days on market. It would not be in our top 20 of data points to watch.

    However for those who still like it, here are the current average days on market for closed sales of single family homes in the major and secondary cities:

    1. El Mirage 26
    2. Avondale 42
    3. Arizona City 42
    4. Laveen 45
    5. Tolleson 50
    6. Tempe 51
    7. Glendale 53
    8. Gilbert 55
    9. Mesa 64
    10. Phoenix 64
    11. Surprise 66
    12. Buckeye 67
    13. Apache Junction 68
    14. Chandler 71
    15. Queen Creek 72
    16. Sun City 72
    17. Peoria 75
    18. Goodyear 77
    19. Sun City West 77
    20. Maricopa 81
    21. Anthem 84
    22. Litchfield Park 76
    23. Casa Grande 88
    24. Cave Creek 96
    25. Sun Lakes 119
    26. Scottsdale 124
    27. Fountain Hills 142
    28. Gold Canyon 152
    29. Paradise Valley 204

    Pretty much what you would expect.

    August 30 – Another S&P/Case-Shiller® Home Price Index® report has been released this morning. This one covers sales in the 3 month period April through June 2016. Based on the annual change in the HPI here is the ranking table for the 20 cities covered by the report:

    1. Portland 12.6%
    2. Seattle 11.0%
    3. Denver 9.2%
    4. Dallas 8.9%
    5. Tampa 7.9%
    6. Miami 6.9%
    7. San Francisco 6.4%
    8. San Diego 6.4%
    9. Atlanta 5.8%
    10. Las Vegas 5.7%
    11. Los Angeles 5.3%
    12. Detroit 5.1%
    13. Phoenix 5.1%
    14. Minneapolis 5.1%
    15. Charlotte 5.1%
    16. Boston 4.7%
    17. Chicago 3.3%
    18. Cleveland 2.5%
    19. Washington DC 2.0%
    20. New York 2.0%

    Most of these percentages are just a tad lower than last month. The exceptions are Portland, Seattle, Miami,Tampa, Charlotte and Las Vegas. Phoenix is at the national average of 5.1%, completely unexceptional

    Examining the extent of the bounce from the bottom, here is how the index has changed since August 2011, 5 years ago:

    1. San Francisco 69.0%
    2. Phoenix 60.0%
    3. Las Vegas 58.9%
    4. Miami 52.4%
    5. Portland 50.9%
    6. Seattle 47.8%
    7. Los Angeles 47.7%
    8. Denver 46.9%
    9. Detroit 46.6%
    10. San Diego 45.7%
    11. Tampa 41.5%
    12. Dallas 41.1%
    13. Minneapolis 32.3%
    14. Atlanta 29.4%
    15. Charlotte 24.4%
    16. Boston 22.4%
    17. Washington DC 16.6%
    18. Chicago 14.1%
    19. Cleveland 9.9%
    20. New York 7.6%

    The West Coast and Mountain West has out-performed the rest of the USA though Florida has had a strong recovery too.

    Note that oft-ridiculed Detroit has been a strong performer since August 2011, coming out ahead of San Diego and Dallas.

    August 29 – The summer dip in prices seems to reaching an early end this year with the average $/SF for pending listings across all areas & types up to $146.93 today. That is the highest number we have seen since April 3, 2008 and it augers well for average sales $/SF pricing in September and October.

    August 28 – There were only 318 multi-family units given building permits in July, a big drop from 793 a year ago. These multi-family numbers can be very volatile, and we just saw 2,131 in June, so it is a bit early to call it a slowing down. In fact we have seen 5,181 year to date which is higher than the 4,219 year to date last year at this point.

    Almost all the units in July were generated by Chandler, although Phoenix, Tempe and Gilbert are the leaders for year-to-date totals.

    August 27 – July was a lighter month for single family permits with 1,382 across Maricopa & Pinal counties. This is down from July 2015 when we saw 1,623.

    The year to date total at the end of July is 11,106, well above last year’s 9.852 at the same point. The deceleration in July was partly caused by the low number of working days in July so we will probably see a recovery in August.

    August 26 – Ranking the major & secondary cities by their annual percentage change in annual median sales price (single family only) we find the following:

    1. Arizona City – up 17.3% to $100,000
    2. Apache Junction – up 13.3% to $169,900
    3. Tolleson – up 12.4% to $179,900
    4. Sun City – up 12.2% to $165,000
    5. Glendale – up 11.9% to $210,000
    6. Avondale – up 11.8% to 190,000
    7. Sun City West – up 11.7% to $210,000
    8. Surprise – up 11.4% to $215,000
    9. Buckeye – up 11.3% to $182.500
    10. El Mirage – up 10.9% to $152,000
    11. Laveen – up 10.8% to $195,000
    12. Anthem – up 10.4% to $289,900
    13. Phoenix – up 9.7% to $224,900
    14. Maricopa – up 9.3% to $165,000
    15. Mesa – up 9.0% to $223,000
    16. Queen Creek – up 8.8% to $199,900
    17. Tempe – up 7.9% to $263,250
    18. Litchfield Park – up 7.8% to $275,000
    19. Goodyear – up 7.0% to $245,995
    20. Casa Grande – up 6.7% to $159,000
    21. Cave Creek – up 6.3% to $425,000
    22. Peoria – up 5.7% to $255,000
    23. Scottsdale – up 4.8% to $492.500
    24. Gilbert – up 4.6% to $275,000
    25. Chandler – up 4.6% to $277,250
    26. Fountain Hills – up 3.3% to $428,500
    27. Gold Canyon – up 2.4% to $255,950
    28. Sun Lakes – up 1.4% to $255,400
    29. Paradise Valley – up 0.9% to $1,437,500

    August 25 – The Cromford® Market Indexes for the single family markets in the largest 17 cities confirm we are still in a favorable situation for sellers:

    Only 4 of the 17 cities showed any deterioration and the major decline was in Avondale, which could stand some cooling down after what seems like an eternity at the top of our table.

    Perhaps the biggest surprise is the strengthening of Paradise Valley which is no longer at the bottom of the table thanks to an expected big decline in supply and an unexpected improvement in demand.

    Tempe is probably another surprise, now at the bottom of our table thanks to its supply index rising to its highest level since 2014.

    Overall this is a positive picture for sellers with 15 cities in a seller’s market and 2 in the balanced zone between 90 and 110.

    August 24 – The demographic situation in the 15 Arizona counties is as follows:

    County Median Age July 2010 Median Age July 2015 5 Year Change in Population Under 5 5 Year Change in Population of 65 and Over
    Apache 32.5 34.2 -9.2% +19.7%
    Cochise 39.6 40.8 -5.1% +14.6%
    Coconino 30.9 30.9 -8.0% +32.1%
    Gila 47.9 49.7 -2.7% +17.4%
    Graham 31.7 32.6 -7.3% +12.4%
    Greenlee 34.9 33.6 +4.6% +10.7%
    La Paz 54.0 55.4 -9.6% +11.7%
    Maricopa 34.7 36.1 -3.0% +27.0%
    Mohave 47.8 50.4 -15.7% +20.6%
    Navajo 34.7 36.5 -10.9% +24.2%
    Pima 37.7 38.4 -4.7% +21.8%
    Pinal 35.4 38.7 -21.1% +46.9%
    Santa Cruz 35.6 37.1 -11.8% +22.2%
    Yavapai 49.4 52.6 -12.2% +26.0%
    Yuma 33.7 34.6 +0.9% +19.3%

    The 21% decline in under 5s in Pinal County is very ominous for the elementary schools in that county, representing a 6,297 reduction from 29,882 in 2010 to 23,585 in 2015. At the same time the growth in retirees is phenomenal, with 47% more people at 65 plus and 60% more at 85 plus. Pinal county has shown a huge swing from young to old with a 3.3 year increase in the median age over just 5 years. This is due to a combination of growing 55+ active adult communities attracting people from far afield and a low fertility rate for the existing population.

    Retirees are already dominant in Gila, Yavapai and especially La Paz counties.

    A third of the counties lost population overall, which is a negative sign for their housing markets. These are:

    1. Cochise -4.1%
    2. Santa Cruz -2.0%
    3. La Paz -1.4%
    4. Gila -0.7%
    5. Apache -0.1%

    Tiny Greenlee was the fastest growing county at 14.3% and was the only county with a healthy growth in under 18s. Maricopa was the second fastest growing county at 8.9%, with Pinal third at 7.2%.

    It should be noted that Greenlee may not have done so well between 2015 and 2016 due to the fall in copper prices. The Morenci mine is by far the largest employer in the county.

    Graham county is the youngest with a median age of 32.6, though even here the number of children under 5 has declined by 7.3%.

    August 23 – The Census Bureau provides population estimates by age group and county for every July 1, although we do not yet have any numbers for 2016.

    In Maricopa County, the number of children under 5 dropped 3% between 2010 and 2015 reflecting the lower birth rates we have been experiencing over the past several years. Although we experienced almost 9% overall growth in population between 2010 and 2015 in Maricopa County, this growth was heavily skewed towards the adult population, especially those of retirement age. Ages under 18 only grew by 2%, while those of working age (18-64) grew by 8% and those of retirement age (65+) grew by an astonishing 27%. The median age in Maricopa County increased from 34.7 to 36.1, a 4% increase in just 5 years. The trend appears to be widespread and accelerating.

    This shift towards an aging population is not a small, insignificant change. It is a dramatic change compared with Arizona’s experience prior to 2007. A lot of this change is probably caused by the unusually low immigration rates we have seen since 2007. In the distant past immigrant parents have tended to have larger families than native born parents and so contributed disproportionately to growing Arizona’s economy. Retirees contribute relatively little to growing the local economy as they are usually not fertile and not working.

    I would conclude that the last thing we need for our economy right now is another disincentive to have children. Cue the Zika virus, something of greater economic significance than the Ebola virus that caused many people to freak out last year. We tend to respond far more urgently to something patently horrific and sudden, even if it has no significant real impact on our lives. Our response to something important and dangerous but increasing only gradually gave rise to the “boiling frog” theory. In fact, frogs have proven to be cleverer than we thought. However so far we humans seem to have largely ignored the potential deceleration in our economy that low fertility rates are likely to create.

    August 22 – The fraction of the United States population age 60 or over will increase by 21 percent between 2010 and 2020, according to an academic study published in 2014 by the Rand Corporation. Between 2010 and 2050 the fraction will grow by 39%. Coupled with the historically large reduction in fertility rates that is currently underway, we are witnessing huge changes in the demography of the nation. These demographic changes are likely to have detrimental effects on the economy and sectors of the housing market may be significantly affected going forward.

    We already see explosive growth in Arizona population counts for people over 60 while the population under 18 is barely growing (and under 5 is in decline). This is unexpected given that we have a relatively large number of women of child bearing age. It is generally accepted that people tend to consume more than they earn during their later years, but consume less than they earn while they are in their working years. It is very possible that the shift towards an older population is the primary cause of the relatively slow growth in GDP in the USA. It follows that similar effects are likely to be at work in other developed countries. We have not experienced an era like this before, so there is little experience to draw on just yet. However, I believe the rapidly changing demographics are likely to become the most significant factor driving housing demand over the next ten to fifteen years.

    August 21 – The price action for most areas of the valley look nothing like Arcadia. As a contrast to yesterday’s post here is the annual average price per sq. ft. for all types of homes in the Biltmore district:

    This is more typical of other high priced areas. Prices recovered from 2012 through the middle of 2015 but have been going sideways since. There is a long way to go before prices regain the levels of 2008. Note however that the high point for Biltmore was significantly higher than for Arcadia, so that target is far more difficult to achieve.

    August 20 – We commented a few days ago how ZIP codes 85251 and 85018 are doing rather better than most towards regaining the price level of the peak during the bubble. If we focus exclusively on Arcadia, which straddles both these ZIP codes, then the situation is even more positive. Mind you, we are talking here of the real Arcadia, not the much larger region that some sellers like to call Arcadia these days. No homes south of the canal for us.

    Here is the annual average $/SF chart for Arcadia single family homes:

    Not only has Arcadia comfortably exceeded the annual average peak of $335 that it hit in February 2008 (much later than most parts of the valley), it has stormed through to $377, thanks to strong sales of homes over $2 million.

    We used to see a few single family homes selling for less than $500,000 in Arcadia, but there were none at all in the last 3 months. This is the first time we have seen that happen.

    August 19 – The Cromford® Market Index ceases to work quite so well with small market segments, so for smaller cities we turn to other measurements to determine how those segments are faring. Days of inventory and the contract ratio are two of our favorite indicators. Here is how the smaller cities are doing as measure by those statistics:

    City Contract Ratio Now Contract Ratio Last Year Days of Inventory Now Days of Inventory Last Year Implications Current Situation
    Sun City 67 81 54 49 Cooler than last year Seller’s market
    El Mirage 219 207 41 42 Similar to last year Seller’s market
    Casa Grande 42 43 137 108 Cooler than last year Balanced market
    Apache Junction 51 59 100 91 Cooler than last year Seller’s market
    Anthem 56 49 107 104 Mixed signals Seller’s market
    Laveen 92 86 86 88 Slightly hotter than last year Seller’s market
    Sun City West 77 77 54 55 Almost identical to last year Seller’s market
    Litchfield Park 44 47 112 113 Similar to last year Balanced market
    Tolleson 127 83 62 78 Hotter than last year Seller’s market
    Arizona City 32 49 112 85 Cooler than last year Balanced market
    Sun Lakes 49 64 71 73 Cooler than last year Seller’s market
    Gold Canyon 21 25 131 139 Cooler than last year Balanced market
    Florence 46 38 135 133 Slightly hotter than last year Balanced market
    Coolidge 45 29 146 158 Hotter than last year Balanced market
    New River 22 61 198 100 Much cooler than last year Buyer’s market
    Carefree 13 22 348 301 Cooler than last year Buyer’s market
    Rio Verde 27 19 236 174 Mixed signals Balanced market
    Wickenburg 20 9 335 306 Mixed signals Balanced market
    Waddell 65 51 131 110 Mixed signals Balanced market

    August 18 – The single family market in the top 17 cities continues on its healthy trend, as evidenced by the Cromford® Market Index for today and last month at this time:

    We see 13 out of 17 cities showing improved negotiation power for sellers and only 4 showing improved negotiation power for buyers.

    Among the latter are Avondale, Glendale and Tempe where inventory has increased substantially over the last month.

    The top improving city is Paradise Valley, now well over the 100 mark having languished in the buyer’s market zone until very recently.

    August 17 – Rent rises seems to be easing up a little, with the current annual increase “only” 4.6%. We have become used to seeing 6% to 10% rises over the last 2 years, so maybe the rental market is coming off the boil just a bit.

    The lowest number of rental listings ever seen on ARMLS (2,117) occurred on March 14. We have recovered to 3,132 as of yesterday, so prospective tenants have 48% more choice than they had in March. There is always a seasonal swing like this, however, so I am not quite ready to pronounce this as a significant change just yet. In 2015, we went from 2,962 on March 14 to 3,352 on August 17, which is a rise of only 13%. I would say we have some evidence that the most extreme shortages of rental homes are now in the past, based on admittedly limited ARMLS data.

    I have heard several credible rumors that institutional owners may be planning to lighten their portfolios over the coming 2 years. If so, this would be sweet relief for the purchase market. We could certainly do with (say) 10,000 additional affordable homes coming back onto the market. However if those 10,000 homes are currently occupied by tenants, we still have a problem of where those tenants are going to live.

    August 16 – During July, a total of 31 Maricopa County homes were purchased by Canadians. That is the lowest sales total in 10 years and represents only a.035% share of the market. With the current strength in the dollar, few foreigners are venturing into the Phoenix market to buy. During the same month of July, 167 homes were sold by Canadians, so we now see sales outnumber purchases by over 5 to 1.

    The net change of -136 Canadian owners contrasts strongly with the last several years:

    • July 2016 -136
    • July 2015 -108
    • July 2014 +12
    • July 2013 +78
    • July 2012 +223
    • July 2011 +307
    • July 2010 +310

    August 15 – Buckeye has been making news by claiming it has issued more single family permits than in any year in history. This is true – it has issued 706 so far this year, comfortably exceeding the total for the whole of 2015 (509). However, prior to 2009, the majority of permits counted in the area now occupied by the City of Buckeye, were classified by the Census Bureau as belonging to unincorporated Maricopa County. Back in the bubble years, Buckeye was not issuing many permits, the county was doing it instead.

    In 2006, unincorporated Maricopa County areas including large parts of what is now part of Buckeye issued a total of 3,167 permits. Buckeye issued only 14 permits in 2006. This year so far the county has issued only 499, far less than in 2006 and far less than Buckeye in 2016.

    Due to the huge annexations made by Buckeye we are not really comparing apples with apples here.

    August 14 – In the recent couple of years the market trends have been determined far more by price range rather than the traditional location (location, location). This is contrary to normal market behavior. We are not used to our fastest appreciating markets being those with the worst performing schools and the highest rates of crime. However a few numbers will easily prove my point: The figures below are for all property types within Greater Phoenix.

    Price Range Annual Avg $/SF July 2014 Annual Avg $/SF July 2015 Annual Avg $/SF July 2016 2 year change 1 year change
    Up to $200,000 $88.46 $93.17 $101.00 14.2% 8.4%
    $200,000 to $300,000 $119.61 $121.86 $126.47 5.7% 3.8%
    $300,000 to $400,000 $136.91 $138.80 $141.68 3.5% 2.1%
    $400,000 to $500,000 $154.37 $155.99 $158.00 2.4% 1.3%
    $500,000 to $600,000 $173.41 $175.94 $176.03 1.5% 0.1%
    $600,000 to $800,000 $197.54 $200.60 $201.08 1.8% 0.2%
    $800,000 to $1M $221.07 $224.08 $227.15 2.8% 1.4%
    $1M to $1.5M $267.66 $265.92 $265.59 -0.8% -0.1%
    $1.5M to $2M $305.50 $323.04 $324.61 6.3% 0.5%
    $2M to $3M $367.57 $383.68 $384.89 4.7% 0.3%
    Over $3M $505.34 $509.28 $513.29 1.6% 0.8%

    I highlighted in red the price ranges which went backwards in dollars adjusted for inflation (which was 1.01% this year and 0.12% 12 months ago).

    I am not sure why the $800,000 to $1M range should be doing better than those either side of it. It is faring as well as the $400,000 to $500,000 range. The rest of the ranges from $500,000 upwards have not performed so well over the past 24 months. The range between $1M and $1.5M shows the weakest trend here.

    In terms of unit sales through ARMLS, the price ranges at or below $500,000 comprise 93% of the total market while those above $500,000 comprise only 7%. So it is fair to say that the market as a whole is keeping housing assets appreciating well ahead of inflation. This becomes even more true as you head down market.

    The picture changes when we look at supply rather than demand. Among the active listings on ARMLS within Greater Phoenix today, listings over $500,000 comprise 24%, and those of $500,000 or less only 76%.

    August 13 – The ranking of 41 local cities by annual average price per square foot has been updated and published today. In this table we see 3 cities that have depreciated over the past 12 months:

    1. Gold Canyon – down 4.7%
    2. Paradise Valley – down 4.6%
    3. Rio Verde – down 1.6%

    After this group we see cities with positive appreciation but well below the average for Greater Phoenix as a whole:

    1. Wickenburg – up 0.2%
    2. Scottsdale – up 0.9%
    3. Eloy – up 1.9%
    4. Desert Hills – up 2.6%
    5. Fountain Hills – up 2.6%
    6. Cave Creek – up 3.2%
    7. Sun Lakes – up 3.4%
    8. Anthem – up 3.5%
    9. Casa Grande – up 3.6%

    Following these under performers we find a lot of cities in the average to moderately above average range of 4.5% to 9%:

    1. Coolidge – up 4.6%
    2. Waddell – up 5.0%
    3. Carefree – up 5.1%
    4. Gilbert – up 5.3%
    5. Litchfield Park – up 5.4%
    6. Chandler – up 5.5%
    7. Goodyear – up 5.5%
    8. Florence – up 5.6%
    9. Mesa – up 6.6%
    10. Surprise – up 6.6%
    11. Peoria – up 6.8%
    12. Queen Creek – up 6.8%
    13. Tempe – up 7.1%
    14. Apache Junction – up 7.5%
    15. Sun City West – up 7.6%
    16. Phoenix – up 7.8%
    17. Glendale – 7.9%
    18. New River – up 8.1%
    19. Avondale – up 8.8%

    Lastly we have a group that have comfortably over performed in appreciation over the past 12 months:

    1. Laveen – up 10.2%
    2. Buckeye – up 10.2%
    3. El Mirage – up 10.5%
    4. Sun City – up 10.6%
    5. Maricopa – up 10.8%
    6. Tolleson – up 12.5%
    7. Tonopah – up 13.9%
    8. Arizona City – up 14.0%
    9. Wittmann – up 16.8%
    10. Youngtown – up 18.7%

    All except 2 of the top performers are in the West Valley (some far outside the central areas such as Wittmann & Tonopah). The 2 exceptions are both in Pinal County.

    Generally speaking the least expensive areas have been appreciating fastest while the most expensive areas have appreciated the least. There are a few exceptions to this rule but the effect is very widespread,

    August 12 – The Black Knight Financial Services Mortgage Monitor Report for June has been published and there is not much good news inside for people who love foreclosures. For Arizona they report 0.4% of homes in some stage of foreclosure and 3.0% of loans more than 30 days late. The total of 3.4% is far below the long term average of around 5%.

    The average for the nation as a whole is 5.4%. There are still a few black spots.

    1. Mississippi – 10.1% of loans are late but only another 1.1% of loans are in the foreclosure process. What is wrong with MS? – they just don’t seem to take action on delinquency like other states. Either way, only 88.8% of first home loans are in a healthy current state.
    2. Louisiana – 7.9% of loans are late but only another 1.3% are in the foreclosure process. Similar to Mississippi, but not quite as extreme.
    3. New Jersey – 4.8% of loans are late and another 3.9% are in the foreclosure process. New Jersey has by far the highest percentage of its homes in foreclosure.

    North Dakota is the only state that got worse over the last 12 months, no doubt due to the depression in the oil and gas business. However it still has the lowest delinquency rate in the nation. Its nearest rival is Colorado.

    August 11 – More very interesting changes can be seen in the table of Cromford® Market Index values for the single family markets in the largest 17 cities:

    Overall we still see a very positive picture with 11 cities improving conditions for sellers and only 6 deteriorating.

    Our top position city, Avondale, is still very much a seller’s market, but now declining as the higher pricing starts to bring listings under contract counts down from their extremely high levels.

    The market in Tempe is surprisingly poor for sellers relative to the surrounding areas. Tempe has almost 44% more active listings (excluding UCB) than it had this time last year while under contract listings are down by 6%. It had the second largest percentage decline in its CMI over the last month.

    Scottsdale is making good progress with a big fall in active listings over the last month and slightly more listings under contract than at this time last year.

    Paradise Valley is also improving for sellers with lower inventory and rather more contracting activity then usual for this time of year. It is back into the balanced zone and out of the buyer’s market it has been in for a few months.

    August 10 – Now for Pinal County. Here are the percentages below the peak $/SF attained for single family homes:

    1. Eloy 85131 -10%
    2. Apache Junction 85120 -27%
    3. Gold Canyon 85118 -29%
    4. Queen Creek -29%
    5. Apache Junction 85119 -30%
    6. San Tan Valley 85140 -30%
    7. Casa Grande 85194 -31%
    8. San Tan Valley 85143 -37%
    9. Florence 85132 -37%
    10. Casa Grande 85122 -37%
    11. Arizona City 85123 -40%
    12. Maricopa 85138 -43%
    13. Coolidge 85128 -44%
    14. Maricopa 85139 -45%

    In general Pinal County has further to go to recover the price heights attained during the housing bubble. One exception is Eloy, but this is largely due to current Active Adult sales within Robson Ranch. These are priced much higher than the average homes in Eloy and the community was not in operation during the bubble years.

    August 9 – For the Southeast Valley, the percentage below the peak in $/SF pricing for single family homes is as follows:

    1. Tempe 85282 -15%
    2. Chandler 85286 -15%
    3. Tempe 85281 -16%
    4. Tempe 85283 -16%
    5. Chandler 85224 -18%
    6. Mesa 85210 -18%
    7. Mesa 85202 -18%
    8. Chandler 85226 -19%
    9. Tempe 85284 -20%
    10. Chandler 85225 -21%
    11. Mesa 85204 -21%
    12. Mesa 85203 -21%
    13. Mesa 85205 -21%
    14. Mesa 85206 -22%
    15. Gilbert 85233 -22%
    16. Phoenix 85044 -22%
    17. Gilbert 85234 -23%
    18. Gilbert 85297 -23%
    19. Chandler 85249 -23%
    20. Sun Lakes 85248 -24%
    21. Mesa 85209 -24%
    22. Mesa 85208 -24%
    23. Phoenix 85048 -25%
    24. Mesa 85212 -25%
    25. Mesa 85207 -25%
    26. Gilbert 85296 -25%
    27. Mesa 85201 -26%
    28. Mesa 85213 -27%
    29. Gilbert 85295 -27%
    30. Gilbert 85298 -27%
    31. Mesa 85215 -29%
    32. Phoenix 85045 -32%

    Generally we can see that Tempe has recovered closest to its peak while Ahwatukee has the furthest to go, especially as we travel west..

    August 8 – Turning to the Northeast Valley, here is how far single family pricing is below the peak of 8-10 years ago:

    1. Scottsdale 85251 -2%
    2. Scottsdale 85257 -8%
    3. Scottsdale 85250 -15%
    4. Scottsdale 85255 -15%
    5. Scottsdale 85258 -20%
    6. Scottsdale 85254 -21%
    7. Scottsdale 85260 -24%
    8. Fountain Hills 85268 -26%
    9. Carefree 85377 -26%
    10. Cave Creek 85331 -27%
    11. Scottsdale 85259 -27%
    12. Scottsdale 85262 -28%
    13. Paradise Valley -29%
    14. Scottsdale 85266 -31%
    15. Rio Verde 85263 -36%

    South Scottsdale and Old Town Scottsdale are clearly the top performers in this group and beat any area from the West Valley or Central & North Valley that we examined over the last 2 days.

    August 7 – Extending yesterday’s exercise into the Central & North Valley, here are how far below the peak we are in the various ZIP codes (single family homes only):

    1. Phoenix 85018 -12%
    2. Phoenix 85013 -12%
    3. Phoenix 85014 -13%
    4. Phoenix 85006 -14%
    5. Phoenix 85015 -18%
    6. Phoenix 85003 -18%
    7. Phoenix 85021 -18%
    8. Phoenix 85008 -19%
    9. Phoenix 85020 -20%
    10. Phoenix 85007 -20%
    11. Phoenix 85028 -21%
    12. Phoenix 85032 -21%
    13. Phoenix 85054 -21%
    14. Phoenix 85024 -23%
    15. Phoenix 85050 -23%
    16. Phoenix 85027 -24%
    17. Phoenix 85012 -24%
    18. Phoenix 85022 -24%
    19. Phoenix 85023 -25%
    20. Phoenix 85016 -25%
    21. Phoenix 85053 -26%
    22. Phoenix 85085 -26%
    23. Phoenix 85029 -26%
    24. Phoenix 85042 -27%
    25. Phoenix 85083 -29%
    26. Anthem 85086 -29%
    27. Phoenix 85051 -30%
    28. Phoenix 85019 -32%
    29. New River 85087 -33%
    30. Phoenix 85031 -34%
    31. Phoenix 85017 -35%
    32. Phoenix 85033 -35%
    33. Phoenix 85041 -35%
    34. Phoenix 85043 -36%
    35. Phoenix 85004 -37%
    36. Phoenix 85037 -37%
    37. Phoenix 85040 -37%
    38. Phoenix 85035 -38%
    39. Phoenix 85009 -39%
    40. Phoenix 85034 -62%

    Phoenix 85018 is helped by the popularity of Arcadia.

    August 6 – As we prepare the ZIP code snapshots it is interesting to see which ZIP codes have moved closest to the peak prices during the housing bubble. Most are still a substantial way below those maximum prices. However the variation among the ZIP codes is quite noticeable..

    The percentage in the table below is comparing the current average $/SF for single family homes in the West Valley with the peak for that same ZIP code in the mid 2000’s:

    1. Sun City West -21%
    2. Surprise 85374 -25%
    3. Glendale 85308 -25%
    4. Glendale 85306 -25%
    5. Avondale 85392 -26%
    6. Glendale 85304 -26%
    7. Peoria 85382 -26%
    8. Sun City 85373 -26%
    9. Sun City 85351 -26%
    10. Peoria 85381 -27%
    11. Glendale 85310 -27%
    12. Glendale 85302 -27%
    13. Peoria 86383 -28%
    14. Surprise 85378 -29%
    15. Peoria 85351 -29%
    16. Surprise 85387 -31%
    17. Litchfield Park 85340 -31%
    18. Wittmann 85361 -31%
    19. Surprise 85388 – 32%
    20. Surprise 85379 -32%
    21. Glendale 85303 -32%
    22. Glendale 85301 -32%
    23. Tonopah 85354 -32%
    24. Glendale 85305 -33%
    25. Wickenburg 85390 -35%
    26. Goodyear 85338 -35%
    27. Youngtown 85363 -36%
    28. Tolleson 85353 -36%
    29. Laveen 85339 -36%
    30. Avondale 85323 -37%
    31. Glendale 85301 -37%
    32. Buckeye 85396 -38%
    33. El Mirage 85335 -38%
    34. Buckeye 85326 -41%
    35. Goodyear 85395 -45%
    36. Waddell 85355 -49%

    August 5 – July saw the lowest percentage of all-cash purchases since September 2008, during the George W Bush presidency. At 17.0%, all-cash deals last month were well down from 18.6% in June and 19.8% in July 2015. The peak for all-cash deals was February 2011 when we saw 41.9%. At last the market seems to trending back down towards a normal level of financed purchases, which I would class as 8% to 12%.

    August 4 – There are some very interesting developments in the Cromford® Market Index numbers for the 17 largest cities and their single family markets.

    Fountain Hills has jumped all the way to the number 2 slot having been as low as number 15 as recently as May. This is caused by a large drop in the number of homes for sale as sellers have taken many homes off the market for the summer. We probably should not get too excited because quite a few of these are likely to get relisted in time for the arrival of the snowbirds in the fall. However demand has picked up in Fountain Hills. This may be partly due to significant softening in prices. List prices have been on a downward trend for 8 months and sales prices during July were the lowest since January. Some people may be thinking that falling prices are a bad sign, but we must remember that lower prices stimulate demand and the number of homes under contract is looking encouraging.

    The situation has also improved for sellers in Scottsdale. Supply has dropped from almost 2,500 (excluding UCB) 3 months ago to well under 2,000 today. Demand has also softened a bit but sellers are now in a better position because of the less intense competition.

    Maricopa has reached its highest spot for a very long time. Months of supply is down to 2.3 and the appreciation rate is approaching 11%.

    Avondale has cooled a little – the supply has increased from just 37.5% of normal to 40% of normal. However it remains way out in front at the top of the table and appreciation in Avondale is running at 8.7% based on the annual average $/SF.

    Tempe is making a surprisingly weak showing, but a look at the active listings count shows us Tempe has almost 50% more listings than it had 12 months ago, while the sales rate has barely changed at all.

    Paradise Valley is rapidly clawing its way back towards the neutral zone between 90 and 110 and is the only city currently in a buyer’s market.

    Overall we have 10 cities showing improvement for sellers and 7 deteriorating. This is positive but the closest to neutral we have seen in many months.

    August 3 – If we look at the monthly average sales price per square foot for July we see a rather unimpressive number of $138.27 for all areas & types. Unimpressive because the figure for January was $139.24, so we have gone backwards by one dollar in six months. Those who who would like to see more signs of progress may turn to the median sales price which has moved up from $210,000 to $225,00 over the same 6 months.

    This illustrates how you can often see conflicting signals for the same market. The median is being forced higher by the shortage of inventory at the bottom end, resulting in lower sales volumes of cheaper homes. The average price per square foot is losing out because of weak sales at the higher end of the market. These expensive homes pull the average higher and they have been losing market share to the mid-range.

    August 2 – Preliminary reports from Maricopa County recording for July show similar trends to those we mentioned yesterday from the ARMLS closings. Recorded deeds in Maricopa County declined 3% from July 2015. The 10% drop in working days between July 2015 and July 2016 is the entire explanation for this anomaly. Expect the situation to reverse in August which has 23 working days in 2016 compared with only 21 in 2015.

    The overall median sales price came in at $235,000 which is up 6.8% from July 2015 but down 2.1% from June 2016.

    New home sales were up 16.5% from July last year but re-sales were down by 4.5%. The median sales price for new homes increased by 1.1% to $318,660 while than for re-sales rose by 6.7% since July 2015. New homes are gaining market share, but their prices have not increased very much.

    August 1 – The average price of homes sold during July has tumbled over 4% compared with June but this need not set off alarm bells. We expect high end homes to take a lower share of the market during the summer and we note that the average sq. ft. fell by 2% over the same period. Sales volume is down 13% too, and even down 3% compared with July 2015. This is explained by the fact that July 2015 contained 2 more working days than July 2016, a 10% difference in the amount of time that title companies were processing deeds.

    July’s numbers make it difficult to tell the signal from the noise. However experience tells us that July always looks bad compared with June every year, so we should keep calm and wait for the summer to be over before drawing any conclusions. In fact just about all the other signals says most of the market remains in generally good shape.

     

    © 2016 Cromford Associates LLC

    The data used to create the Cromford® Report is obtained from public records and obtained under license from the Arizona Regional Multiple Listing Service, Inc (ARMLS). Cromford Associates LLC and ARMLS expressly disclaim and make no representations or warranties of any kind, whether express, implied or statutory, as to the accuracy of the data used or the merchantability or fitness for any particular purpose.

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