The Cromford Report – Daily Observations February 2016
February 28 – You can often tell how strong a year will be for the housing market in Greater Phoenix by looking at the date when the number of active listings hits a first half of the year peak. The earlier the better. Although we started the year with only 20,073 active listings (excluding UCB & CCBS) across all areas & types, they have jumped to 23,031 today, a rise of 15%. Last year we started at 22,604 and rose to 23,775 as of February 28, an increase of only 5%, having hit the peak on February 8. We are clearly seeing a much stronger supply trend thatn in early 2015.
The good news for sellers is that at least we seem to have hit the peak before March starts. Hitting the peak in week 8 is a neutral reading for Greater Phoenix as a whole. Last year we hit it in week 6, a positive reading. In 2014 we hit it in week 11, a negative reading. However the reading will be different if you examine smaller segments of the market.
The following cities appear to have already peaked for single family active listings, this being a positive indicator:
- El Mirage – Feb 6
- Laveen – Feb 8
- Tolleson – Feb 8
- Arizona City – Feb 10
- Phoenix – Feb 13
- Casa Grande – Feb 13
- Cave Creek – Feb 13
- Mesa – Feb 14
- Avondale – Feb 14
- Surprise – Feb 15
- Gilbert – Feb 20
- Glendale – Feb 20
- Buckeye – Feb 20
- Anthem – Feb 20
- Gold Canyon – Feb 20
- Maricopa – Feb 21
- Sun Lakes – Feb 21
On the other hand, the following are still appearing to make new highs:
- Paradise Valley
- Queen Creek
- Sun City
- Apache Junction
- Sun City West
- Litchfield Park
- Fountain Hills
The active listing count in Scottsdale is still heading upwards, but not in all ZIP codes. Within Scottsdale, the increasing trend is strongest for 85255, 85259, 85262 and 85266.
February 27 – Housing demand is fundamentally driven by population growth. If the population declines then fewer homes are needed. Some homes are destroyed by fire or demolished every year so even a static population needs a few new homes to be constructed. But if a population starts to fall significantly through disease, outward migration or infertility, then the housing market supporting that population will quickly go into severe decline. This affects new homes first but re-sale values are also subject to major declines. In Central Arizona we have had very little experience of this. Our housing market has enjoyed very positive population growth for almost its entire existence. The only exception was 2008-2010 when the dual effects of the bursting of the housing bubble and SB1070 combined to bring drive significant migration of workers away from the state and brought population growth almost to a standstill. It has now recovered to a level that corresponds to a moderately healthy rate of about 70,000 to 90,000 additional people per year.
It is instructive to look at what happens to an economy with population in decline. Japan is an excellent example. More than a decade ago, Japan embarked on a path of sustained and inexorable population decline. Japan’s birth rate has long been well below the 2.1 per female require to sustain a static population. It currently stands at 1.4 and falling. Inward migration to Japan is negligible. Nearly a third of Japan’s population is older than 65. Excellent health care and nutrition means life expectancy in Japan is one of the highest in the world. By 2050 it is projected that 40% of the population will be over 65. Current government projections forecast that by 2050 the population will have declined from its peak of about 128 million to 107 million. That is a 16% decline and it is reasonable to assume that demand for homes will decline by a similar amount. The increasing trend for people to live alone will not be enough to mitigate this. By 2100 the population would have fallen 34% to 83 million, roughly the same as in 1950.
At the moment condominium prices in highly populated areas like Osaka and Tokyo are still rising as the population concentrates into urban areas. However, even in Tokyo abandoned homesare becoming a problem. Already some 8 million residences are abandoned across the country and half of these are generating no rent and of zero resale value. Often after the resident dies, the property is inherited by someone with no need for the home. They are unable to sell at any price due to a lack of interested buyers. They are unwilling to pay for demolition. So the home quickly descends into an overgrown eyesore for its neighbors. With plenty of rainfall and the typical use of inexpensive construction materials, plants take over the building quite quickly.
So far the population decline in Japan between 2010 and 2015 amounts to only 1 million. Imagine the consequences when it has dropped by 45 million – that is more than the entire population of Ukraine or Spain, or the population of California and Arizona combined.
Fertility rates are declining over the entire developed world and most of the developing world too. Only in the severely under-developed parts of the world is the birthrate being sustained at a high level, and this is often to compensate for a horrific mortality rate and a low life expectancy. Some of the countries with the worst outlooks for self-generated population growth are looking to immigration as a potential solution to their economic woes. Many of these countries are in Eastern Europe. However immigration often brings cultural conflict into an otherwise homogenous population and sometimes sparks political outrage as a result.
Here is a list of the countries projected by the United Nations to lose the highest percentage of their population by 2100:
- Moldova 54% decline (currently 4 million)
- Bulgaria 52% decline (currently 7 million)
- Bosnia & Herzegovina 50% decline (currently 4 million)
- Romania 45% decline (currently 20 million)
- Ukraine 41% decline (currently 45 million)
- Serbia 40% decline (currently 9 million)
- Croatia 38% decline (currently 4 million)
- Latvia 35% decline (currently 2 million)
- Japan 34% decline (currently 127 million)
- Hungary 34% decline (currently 10 million)
- Lithuania 30% decline (currently 3 million)
Some of these countries are incredibly beautiful to visit for a vacation. However I don’t recommend buying a holiday cottage in counties facing this level of long term decline in housing demand.
February 26 – One indicator that the environment is changing is a significant rise or fall in the number of weekly price reductions. When sellers are gaining advantage, price reductions will become less common. In a balanced or stable market they will remain level and when sellers begin to lose their advantage reductions will increase. Right now the number of price reductions is on the increase. This is true of all price ranges but is most obvious for listings over $500,000. Last week for listings over $500,000 we had the highest number of price reductions (489) in any week since we started measuring in June 2014. By the way we are here excluding any price reductions of $100 or less. This price cut number has been on an upward trend since August (apart from the usual slowdown between Thanksgiving and New Year’s Day).
There are now several different indicators suggesting significant weakness developing in the market over $500,000 and sellers need to be realistic about their prospects during the key months of March through June if they want to be successful in selling their property. Competition among sellers is heating up quickly, which puts buyers in charge. Scottsdale in particular has more active listings than at any time since early 2011. If we focus exclusively on homes listed over $500,000, then the total number of Scottsdale active listings (excluding UCB) is 2,290, 13% more than at this time last year. That is simply too many for the current level of demand.
February 25 – It is time to examine the Cromford® Market Index for the single family market in the 17 largest cities.
This is the worst looking table for sellers that we have seen in a long time, with only one city (Queen Creek) showing an improvement, and that a very small one. The problem for sellers is that too many other sellers are joining them and competition among these sellers is therefore rising. Sellers tend to focus on tracking potential buyers, because those are the people they meet and they often forget to keep an eye on their competition down the street. However, buyers are checking out everything that is available in their chosen price range and location and they tend to know when their choices are growing wider. It is not always the case, but buyers are often more aware of market conditions than sellers.
Overall supply is still well below normal below $250,000 but there is now plenty of supply over this price and something of an excess in several of the luxury home areas over $500,000. Scottsdale, Cave Creek, Fountain Hills and Paradise Valley are all now below the balanced 100 mark and although they have not fallen below 90 into what we would classify as a true buyer’s market, some buyers will no doubt use any advantage they can get.
The good news is that the downward trend is likely to slow down over the next few weeks. Normally the flow of new listings starts to ease off in March and we do not expect this year to be any different. Indeed there has already been some improvement in the CMI over the last week in a few cities:
Other smaller cities showing some slight improvement for sellers include El Mirage, Gold Canyon and Sun City West.
Overall I would say the Northeast Valley remains relatively weak, while the West Valley is gaining some strength at the expense of the Southeast Valley, which started the year strongly. Phoenix is still looking fairly good for sellers and is one of the areas I expect to see turn round its cooling trend sometime in the next 4 weeks.
February 24 – The S&P / Case-Shiller® Home Price Index® report has been published for December. This covers sales throughout the fourth quarter of 2015. Ranking the 20 cities reported by their month to month price changes we see the following:
- Tampa 0.90%
- San Diego 0.67%
- Phoenix 0.51%
- Portland 0.38%
- Las Vegas 0.37%
- Los Angeles 0.36%
- Detroit 0.35%
- Charlotte 0.32%
- Seattle 0.32%
- Dallas 0.22%
- Atlanta 0.02%
- Denver -0.05%
- Cleveland -0.09%
- Washington -0.12%
- Boston -0.23%
- San Francisco -0.24%
- New York -0.27%
- Miami -0.30%
- Minneapolis -0.41%
- Chicago -0.41%
At third place, Phoenix is higher up this table that it has been for some time (we were in fifth place last month) and we are well above the national average of 0.09%. The relative momentum we commented on last month continues.
Price growth between the November and December reports was very moderate, with almost half the cities showing a slight fall. Strangely, the media reported that “prices accelerated in December”, illustrating that most reporters still don’t understand how to correctly interpret even the most basic of statistics. These comments were prompted by the year over year percentage change. In fact price growth across the US has been slowing for four consecutive months now and the acceleration the media is referring to happened back in the March through July period in 2015. There is absolutely NO sign of recent acceleration, so the headlines are 100% incorrect. This misinterpretation of the numbers is illustrated by this article from the Los Angeles Times, but similar stories appear in the Wall Street Journal and elsewhere. It is no wonder that the public is confused.
The year over year numbers look like this:
- Portland 11.4%
- San Francisco 10.3%
- Denver 10.2%
- Seattle 10.0%
- Dallas 9.6%
- San Diego 7.2%
- Miami 7.1%
- Detroit 7.1%
- Tampa 6.9%
- Phoenix 6.3%
- Los Angeles 6.2%
- Las Vegas 5.8%
- Atlanta 5.5%
- Charlotte 5.5%
- Minneapolis 4.7%
- Boston 4.5%
- New York 3.3%
- Cleveland 2.8%
- Chicago 2.4%
- Washington 1.7%
The national increase was 5.4%, so Phoenix was modestly ahead of that and right in the middle of the pack. Washington and Cleveland have been going backwards since July, Chicago and Boston have been going backwards since August, New York and Atlanta since September.
Houston TX is not one of the 20 cities that Case-Shiller reports on, but the market over $250,000 is relatively weak there due to the troubles of the oil and gas industry. Dallas TX remains strong. The markets in North Dakota, Wyoming, West Virginia, Louisiana and Oklahoma are showing signs of stress due to rising loss of jobs and failing companies in the energy sector.
February 23 – Do you remember how almost everyone assumed that if the Federal Reserve raised their target interest rate in December (which they did) then mortgage rates would probably rise too? Well Freddie Mac now tells us that their survey shows that the average interest rate for a 30 year fixed loan dropped from 3.96% in December to 3.87% in January.
Investors have been flooding into the bond market as a safety play, scared by the losses in the equity markets. This has caused the 10 year T-bill to drop to its lowest yield since 2012. Mortgage rates tend to follow the 10 year Treasury yield rather than the Fed Funds rate.
This means mortgages are actually slightly cheaper than they were last quarter. You would think that demand might be up as a result, right? Well we are seeing increases in the ARMLS under contract counts, with UCB listings up 59% from Jan 1 and Pending listings up 50%. However these are not as favorable as last year’s equivalent increases which were 66% and 58% respectively.
In addition, closed sales though ARMLS are not very impressive in 2016 so far. On the positive side, we are up 6.1% in monthly unit volume from this time last year, but we were up 9.3% last month and the rolling 7-day sales rate has been falling for the past 2 weeks. This is unusually weak for the middle of February. We would normally see closed sales rates increasing sharply by this point in the year. I think it is fair to say that demand is holding steady, but there is no sign of any positive response to the lower interest rates.
February 22 – 2015’s new residential construction (by dollars recorded in sales price) was shared among the cities as follows:
Note that we are using the Postal City rather than the Municipality to segment the market.
Gilbert remained out in front but towards the end of 2015, Peoria, Mesa and Phoenix were catching up fast. It seems unlikely that Gilbert will still be number one in 2016, but it may still be among the top 3. Scottsdale was 5th because the average price in Scottsdale was a very high $886,370. If we were to rank by unit sales then Scottsdale came in 11th after Surprise but ahead of Maricopa.
For new home buyers the cheapest locations are almost all in Pinal County, with Arizona City, Red Rock, Casa Grande, Maricopa, Apache Junction and Florence all providing very affordable new homes. In Maricopa County the least expensive new homes were in El Mirage and Tolleson, with Sun City and Laveen close behind.
February 21 – Newly constructed single family home sales (i.e. recorded deeds) during 2015 totaled 11,330 for Maricopa and Pinal counties combined. There were another 913 new home sales classified as condo or townhouse properties. Both annual totals were the highest we have seen since 2008. The percentage increase over 2014 was 20% for condos & townhouses and 16% for single family homes.
However, these increases are far smaller than the increase in single family permits reported by the US Census Bureau which grew 43% from 11,741 to 16,768 between 2014 and 2015. Presumably developers are expecting sales to increase further in 2016. They may be correct for new homes, but currently this sales growth is not being reflected in re-sale volumes. The annual sales rate for ARMLS transactions is stuck between 84,000 and 85,000 closed listings per year with little sign of any growth over the past month.
The developers’ optimism implies a significant gain in market share for new homes over re-sales.
February 20 – At the opposite end to yesterday’s post, here are the ZIP codes with the lowest rate of arrival of new listings relative to last year at this point:
- Gila Bend 85337 (-50%)
- Casa Grande 85193 (-50%)
- Morristown 85342 (-47%)
- Phoenix 85034 (-40%)
- Phoenix 85050 (-34%)
- New River 85087 (-32%)
- Phoenix 85019 (-30%)
- Phoenix 85053 (-28%)
- Tonopah 85354 (-26%)
- Superior 85173 (-25%)
- Youngtown 85363 (-24%)
- Glendale 85307 (-24%)
- Glendale 85304 (-23%)
- Phoenix 85028 (-22%)
- Avondale 85392 (-22%)
- Phoenix 85016 (-21%)
- Arizona City 85123 (-19%)
- Phoenix 85008 (-18%)
- Scottsdale 85250 (-17%)
- Mesa 85213 (-17%)
February 19 – New listings are arriving in 2016 at a faster pace than in the last 3 years. After 7 full weeks we have added 7% more than 2015, 2% more than 2014 and 12% more than 2013. This trend is reducing the advantage that sellers have in negations with buyers. It is also not spread evenly by geography and price range.
The largest increases in new listings compared with last year can be found in the following ZIP codes:
- Arlington 85322 (150%)
- Phoenix 85053 (51%)
- Coolidge 85128 (50%)
- Aguila 85320 (50%)
- Buckeye 85326 (41%)
- Phoenix 85006 (39%)
- Mesa 85215 (39%)
- Phoenix 85015 (38%)
- Surprise 85379 (37%)
- Florence 85132 (36%)
- Phoenix 85024 (35%)
- Phoenix 85040 (33%)
- Peoria 85381 (33%)
- Phoenix 85033 (33%)
- Maricopa 85139 (32%)
- Phoenix 85083 (31%)
- Scottsdale 85258 (31%)
- Tolleson 85353 (28%)
- Mesa 85208 (26%)
- Maricopa 85138 (25%)
February 18 – The single family market in 15 of the largest 17 cities is getting more unfavorable for sellers. Here is the comparison of the Cromford® Market Index for today versus January 18:
The 2 cities that did not show an unfavorable trend improved just a tiny fraction, so this is a pretty negative picture for sellers. Having said this, there are still 8 cities that are in a seller’s market with 7 in the balanced zone and 2 in a buyer’s market. The last month has dropped Avondale’s CMI by 19%, though it remains in first place. Buckeye and Maricopa both dropped 12%.
The overall CMI for the market stands at 128.5 and although this is still a seller’s market it is the lowest value since April 26, 2015.
Among the smaller cities that are not in the top 17, we see very negative trends for sellers in Apache Junction, Anthem, Sun City, Sun City West and Sun Lakes.
In almost all the cities where conditions for sellers are deteriorating, the problem is not a lack of demand, it is strong growth in supply. Apache Junction supply is up 29% in just one month. Anthem is up 24%, Buckeye is up 19%, Sun City is up 18%, Scottsdale is 16%, Goodyear is up 15%. This is a lot of competition for sellers to cope with and it is resulting in a significant increase in the number of price cuts we are recording. If conditions continue like this we are likely to see a reduction in appreciation rates for the affected areas.
The main exception to this situation is Avondale, where conditions are deteriorating for sellers because of a slackening in demand. Supply remains scarce in this city.
February 17 – If we compare the average price per sq. ft. for single family homes over the 3 months November through January with the same period 12 months earlier, we can find certain parts of the City of Phoenix with extraordinarily high appreciation rates compared with the rest of the city. Most of these are in the center, west or south of the city. The top examples are:
- 85009 +33%
- 85008 +26%
- 85031 +26%
- 85012 +24%
- 85033 +22%
- 85019 +21%
- 85017 +21%
- 85007 +21%
- 85043 +17%
- 85037 +17%
- 85040 +16%
- 85035 +15%
Many of these ZIP codes contain large numbers of rental homes that are currently off the market. This level of appreciation may tempt some owners to cash in on their investments and sell them. However the vast majority are occupied and on lease, so they are most likely to be sold in bulk to new landlords rather than come onto the normal MLS market.
February 16 – Among the 22,744 active listings (including UCB and CCBS) in Maricopa County, there are currently 659 that have a Canadian address for their tax bill. This represents almost 3% of homes for sale, even though Canadian owned homes represent only 1.5% of the total single family and condo homes that exist in the county. We can conclude that Canadians are twice as likely to be listing their home for sale as non-Canadians.
This time last year there were only 267 Canadian owned properties listed for sale out of 23,167. This represented 1.2% of homes for sale. So last year Canadians were less likely to be selling their homes in Maricopa County than non-Canadians.
To see one of the reasons why the situation has changed so dramatically see the chart below:
February 15 – Looking at the same data as yesterday, but segmenting by city we see the following cities with the strongest growth in under contract counts over the last month:
- Waddell up 83%
- Sun City West up 71%
- Coolidge up 70%
- Sun City up 68%
- Gold Canyon up 65%
- Apache Junction up 46%
- Queen Creek up 43%
- El Mirage up 42%
- Peoria up 40%
- Wittmann up 38%
The top ten are exclusively in the West Valley and Pinal County (OK, parts of Queen Creek and Apache Junction are in Maricopa County too)..
The bottom ten for the growth in under contract listings are:
- Youngtown down 29%
- Arizona City down 7%
- Eloy flat
- Casa Grande up 10%
- Fountain Hills up 10%
- Paradise Valley up 14%
- Tolleson up 14%
- Buckeye up 15%
- Tonopah up 15%
- Tempe up 15%
February 14 – We are seeing a normal healthy increase in the number of listings going under contract. This happens every year at this time and the overall trend is neither exceptionally strong nor weak. However we can examine segments of the market to see if there is a difference between certain price ranges.
The change in the number of under contract listings looks like this:
|Price Range||Under Contract 1/14/16||Under Contract 2/14/16||Change||Equivalent Change in 2015|
|Up to $100K||545||603||11%||10%|
|$100K to $125K||431||486||13%||23%|
|$125K to $150K||816||977||20%||28%|
|$150K to $175K||984||1331||35%||39%|
|$175K to $200K||959||1262||32%||39%|
|$200K to $225K||666||944||42%||41%|
|$225K to $250K||735||911||24%||51%|
|$250K to $275K||517||711||38%||37%|
|$275K to $300K||502||651||30%||31%|
|$300K to $350K||652||828||27%||48%|
|$350K to 4400K||418||550||32%||35%|
|$400K to $500K||515||681||32%||25%|
|$500K to $600K||244||338||39%||29%|
|$600K to $800K||233||275||18%||26%|
|$800K to $1M||124||147||19%||17%|
|$1M to $1.5M||91||104||14%||42%|
|$1.5M to $2M||40||53||33%||8%|
|$2M to $3M||31||37||9%||0%|
Most ranges are increasing at a similar or slower rate than last year at this time. The major exceptions are:
- $400K to $600K
- $1.5M to $3M
The overall increase in under contract listings is 28% this year versus 32% last year, so not quite as strong but still respectable.
On January 14 we had 11% more listings under contract than on January 14, 2015 and this has fallen to an 8% advantage by February 14. Still higher than last year but the gap is closing.
February 13 – In the city appreciation ranking table, published today we can see clearly the weakness in pricing at the higher end of the market. All of the cities with an average price per sq. ft. of over $150 have made very little positive movement in pricing over the past 12 months:
- Paradise Valley 0.4%
- Carefree -5.1%
- Scottsdale 1.7%
- Fountain Hills -1.2%
- Cave Creek -0.0%
- Rio Verde 1.9%
- Desert Hills 1.5%
- Gold Canyon 0.8%
Yet we have some big movements among the cheaper locations:
- Tonopah 25.0%
- Eloy 17.4%
- Wittmann 15.8%
- Youngtown 12.4%
- Wickenburg 11.0%
- El Mirage 9.5%
- Waddell 9.3%
- Glendale 8.6%
February 12 – Comparing the Cromford® Market Index for the single family markets in the largest 17 cities we see the following changes over the past month:
This is a less encouraging picture for sellers with 11 cities deteriorating and 6 improving from a seller’s perspective. Only Tempe and Paradise Valley improved by more than 1% over the last month while Queen Creek and Fountain Hills are the only cities that improved over the last week (and both by only a tiny amount).
Four cities saw their CMI decline by double digit percentages: Avondale, Peoria, Buckeye and Maricopa.
Avondale has been in the number one spot for many months, but over the last month we have seen supply increase and demand fall sharply in Avondale. Even so, demand (66% of normal) is still more than enough to overwhelm the supply (38% of normal) at the moment. Peoria has also seen weaker demand and stronger supply, enough to drop into the middle of the balanced zone at a fraction over 100. Buckeye has also seen a big jump in supply. Coupled with a slight fall in demand this enough to drop it below the 90 mark so we now have 2 cities in the “buyer’s market” zone. Maricopa has been in that zone since December 3. An increase in demand in Maricopa has been swamped by a larger increase in supply.
The Southeast Valley and Phoenix are showing the strongest trends so far in 2016. Although the market remains healthy and favorable to sellers, it is not seeing the strong seasonal improvement that we witnessed at this time last year. We have 8 of the 17 cities in the seller’s market zone over 110 (including 5 of the 6 largest markets), but we also have 7 cities in the balanced zone between 90 and 110 and 2 cities in the buyer’s market zone under 90.
February 11 – The Cromford® Market Index for all areas & types is still moving lower despite a very slight improvement in the Demand Index. This is because the Supply Index. though well below normal, is headed up quite fast, driven by a strong flow of new listings.
The active listing count has increased in all the major cities, as is normal for the time of year, but the largest percentage monthly increases are in:
- Goodyear 17%
- Scottsdale 17%
- Tempe 15%
- Surprise 15%
- Avondale 12%
- Chandler 12%
These increase give buyers a lot more choice. Scottsdale now has more active listings (including UCB) that at any time since 2011.
Queen Creek stands out by having the smallest increase of less than 2%, unusually low for the time of year.
Among the secondary cities the fastest growing active listing counts are in:
- Apache Junction 28%
- Sun City 20%
- Buckeye 18%
- Sun Lakes 16%
- Anthem 16%
- Cave Creek 15%
- Sun City West 14%
- Maricopa 12%
- Paradise Valley 10%
- Tolleson 10%
The inventory in the 55+ active adult areas is growing significantly faster than usual. Sun Lakes has the highest number of active listings (including UCB) since early 2011. Cave Creek beats this by having the largest number of active listings since 2010.
Conspicuously slow growth in active listings can be seen in:
- Litchfield Park -1%
- Laveen 0%
- Casa Grande 2%
February 10 – In the Northeast Valley, appreciation looks like this:
Here we clearly see the trend is strongly in favor of South and Central Scottsdale. Fountain Hills, Cave Creek & Carefree are seeing a little depreciation while the rest of the Northeast Valley is under-performing the average for the valley as a whole (between 4% and 6%). On a map it looks like this:
February 9 – Yesterday we looked at appreciation for the overall Greater Phoenix market. Today we will focus on the Southeast Valley to see where appreciation is strongest and weakest. Here is a color-coded ZIP code map that uses red to show where appreciation is stronger than average and blue to indicate below-average appreciation. ZIP codes with average appreciation are in gray.
Here we see very strong appreciation in the areas close to the 101 / 202 interchange in North Tempe and Northwest Mesa. We also see above average apprecation close to the Superstition Freeway (60) in Mesa, Tempe, Apache Junction and the Northeastern area of San Tan Valley. We also see above average appreciation either side of the 101 as it heads south towards the San Tan secion of the 202. South of the San Tan 202 loop things start to cool off with Queen Creek, South Gilbert, Sun Lakes and South Chandler seeing lower than average appreciation. North Mesa is relatively cool while Gold Canyon and Ahwatukee are weak, particularly the 85045 ZIP code.
Here is the data in the form of a ranking table:
February 8 – We often refer to appreciation in the Cromford® Report. By appreciation we mean the percentage change in pricing over the last twelve months. However there are dozens of ways to measure the change in pricing and some work better than others. For a start we could use:
- average sales price
- median sales price
- average sales price per sq. ft.
- median sales price per sq. ft.
We prefer the average price per sq. ft. measure, but we then have to choose the period over which we will measure the $/SF. If we are talking about the whole of Greater Phoenix then we can pretty safely use a monthly period. However when we examine smaller areas, the lower sample size increases the volatility and we need to choose a longer time frame. Generally speaking, an annual average $/SF is stable enough to give us a realistic appreciation rate. The disadvantage is that it will not give much weight to recent price trends since these will be swamped by the other transactions that occurred over the twelve month period.
Here are the appreciation rates for the top-appreciating ZIP codes, based on the annual average $/SF for closed single family homes measured at the end of January 2016 versus the end of January 2015:
|Rank||City||Zip||$/SF Jan 2015||$/SF Jan 2016||Appreciation Rate|
|9||Black Canyon City||85324||$88.10||$102.69||16.6%|
The vast majority of the fastest appreciating ZIP codes are on the west side of Central Avenue. The City of Phoenix is very diverse so we have 85017 appreciating by 22.1% while 85004 declined by 13.9% and 85045 declined by 3.5%.
The allure of central Scottsdale gives 85251 a much higher appreciation rate than most the rest of City of Scottsdale. 85250 is just behind 85251 at 11.7%. Appreciation in 85254, 85255, 85258, 85259, 85260, 85262 and 85266 was below 3%. South Scottsdale (85257 managed a healthy 7.7%.
February 7 – The number of listings going under contract has started to show some life again after a lackluster January. This is similar to what we saw in early 2015.
Across all areas & types we now have 10,183 under contract, up 11% in the last week and up 33% since the start of the year. In 2015 the equivalent growth percentages were 8% and 39% respectively. So this year we had a weaker January but a stronger first 7 days in February.
We estimate that 66% of the UCB and CCBS listings are really in Pending status, up from 61% this time last year, 55% in February 2014 and 35% in February 2013. The impact of Zillow and other other online sites increasingly motivates agents to keep listings visible to the world instead of placing them in Pending status.
This means that the pending listing count is understated by about 2,200 listings (36%) and the active listing count is overstated by the same amount, but a smaller percentage (9%).
February 6 – In contrast to residential listings, the number of new rental listings continues to plummet. 2,620 new rental listings were added to ARMLS over the past 28 days, some 15% fewer than a year ago, 22% fewer than in 2014 and 36% fewer than in 2013. It is not clear if this is because ARMLS is getting a lower percentage of the rental market, or the market is actually turning over less frequently. There are 2,535 active rental listings of all types and areas, down from 3.666 on February 6, 2015. This is another huge drop of 31%.
Judging by the ARMLS data, the rental market remains hot, with a supply of only 1.1 months. We had 1.3 months of supply 12 months ago.
The average rent for closed leases on ARMLS is 78.6 cents per sq. ft. per month, up from 72.8 cents a year ago. This is an annual rate of increase of 8%. The average rent for closed leases has increased to $1,395 from $1,291, also up 8%. Average days on market has dropped 4 days from 41 to 37.
It seems that it is still a wonderful time to be and landlord.
February 5 – January gave us 6,007 recorded deeds with Affidavits of Value for single family and condo properties in Maricopa County. That was a healthy 13% increase over January 2015. However this was no thanks to out of state buyers. Buyers with addresses outside Arizona purchased 8% fewer homes than a year ago. Homes bought by local buyers grew by almost 18%.
Canadians purchased only 40 properties, the lowest monthly number since 2007 and down 64% compared to January 2015. Meanwhile they sold 116 homes, 26% more than a year ago.
Most of the Canadian sellers in January 2016 were from Alberta (55) with British Columbia (20), Ontario (17), Manitoba (10) and Saskatchewan (10) behind them. There were only 4 sellers from the remaining provinces. Alberta was also top in home purchases (19), with Ontario (8) and British Columbia (7) making up most of the rest. Only 6 came from outside these 3 provinces.
February 4 – The Cromford® Market Index is still in positive territory but it has been trending lower since January 17 when it peaked at 136.5. It has eased to 132.8, mainly because the supply index has risen from 72.9 to 74.5 but partly because the demand index has weakened a little from 99.5 to 99.0. The trend in favor of buyers is not at all dramatic but it is fairly broad based and is affecting most cities. Here is how the single family markets in the top 17 cities have fared over the last month:
We now have more cities deteriorating for sellers than improving (9 to 8). This picture is also painting a much more positive picture than a comparison which uses only the last 2 weeks:
Here only 2 cities improved for sellers over the last two weeks – Paradise Valley and Tempe – and Tempe started to deteriorate over the last 7 days while Paradise Valley continued to improve though only slightly.
The West Valley has lost some of the steam it had last year, Avondale, Peoria & Buckeye in particular. The Southeast Valley and Phoenix are still doing fairly well but the former improving trend has faltered. There was little change over the last two weeks in Phoenix, Chandler, Mesa, Gilbert, Tempe or Queen Creek. but when we examine the daily numbers all these cities have indexes that are now declining.
Among the 39 major and secondary cities, only the following 6 saw improvement in the last 7 days – Arizona City, Casa Grande, Gold Canyon, Litchfield Park, Paradise Valley and Tolleson. Declines in the CMI were particularly severe in Sun City West and Sun City.
It is still early days but based on these signals I am adjusting down a notch my optimism for a strong spring selling season. To rekindle my optimism I would need to see in the next 2 weeks a lower rate of rise in the number of active listings and an increase in the number of listings going under contract.
February 3 – The rate of arrival of new listings has accelerated in the last few weeks and the 28 day total now stands at 6.2% higher than last year at this time. It has also overtaken the rates for 2014 and 2013.
Note that the List Date shown in the ARMLS system is not the same as the date it became a new listing. The List Date is the date the listing was first entered by the listing agent, but it may not be activated and become a new listing visible to anyone else until many days or even weeks later. There are therefore two ways of measuring new listings, based on when the listing was entered or when the listing became visible to the world. As an example MLS listing 5392962 was first entered on January 26 but did not become a live listing until February 3. The List Date is 1/26/16 but the history record shows it as a new listing on Feb 3. We do not get any information about listings that have been entered but not activated. We do see the List Date once the listing has been activated. Some listings are entered but are never activated. These are ignored completely by us. We download all the new listings every morning and compare the arrival rate of new MLS numbers with all previous days. The new listings that arrive this morning may have List Dates that are considerably earlier than this morning.
The Agent Days on Market (ADOM) count starts when the listing is entered. The Cumulative Days on Market (CDOM) starts when the listing becomes active. So although this may seem counter-intuitive, the Cumulative Days on Market can be less than the Agent Days on Market. When we refer to Days on Market in Cromford Report charts we are always referring to the Cumulative Days on Market. In the case of listing 5392962, it currently has 9 days as ADOM and 1 day as CDOM. The ADOM number is therefore quite misleading since this listing has only been on the market for 1 day.
The Tableau chart for new listings is based on the List Date field, so will not always reflect the same arrival patterns as we see each morning. It is based on the entry date for the listing not the activation date, but it will only include listings that have become active.
I have found in life that almost everything is more complicated than you expected it to be.
February 2 – After the extremely strong new home closing numbers in December, January was unable to keep up the pace. Closed new home sales collapsed by 53% to just 602 in Maricopa County. Before we panic, we must remember that this is still up 19% from January 2015 and is in fact the best January closing number since 2013. January is always a poor month for closed transactions on new homes
Several more builders have started offering homes that are smaller and more affordable, so the median sales price declined from $320,678 in January 2015 to $302,498, a drop of 6%. This is a sign of smaller homes not lower pricing.
February 1 – I have not seen this before. An entire town (population 6,331) has just 1 single family active listing. That town would be Youngtown. There are another 4 listings in UCB status and 5 pending, which means the contract ratio is an astonishing 900. There are almost 2,000 single family homes in Youngtown so for only 1 to be available for sale is very unusual.
There are far fewer single family homes in Wittmann, yet there are 43 of them for sale. This is a more typical situation. The contract ratio here is a relaxing (for buyers) 26.
© 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.
Ruth Sells was just a pleasure to work with and the best Realtor we have had the opportunity of meeting in many years of searching. – the Stumpfs (client of Ruth Sells)
Sheri Jackson is an amazing realtor! After meeting with her the first time, I knew that she had the passion and drive to help find the right home for me. The best part about the entire process was she made it so simple and easy for me to find a place I now call home. I would personally recommend her expertise to anyone looking for a home or rental in the future. – Ashley (client of Sheri Jackson)
This was my first time selling my house and I really didn’t know what might be in store for me. Chris, put my worries at easy and guided me through the whole process, it was very easy. Chris laid everything out for me and was very knowledgeable, whenever I had a question. I would recommend him to anyone. – Cameron K (client of Chris Nace)
This was my first time selling a house. I was worried about the whole process but then I was introduced to Chris. He took all the pressure off me with his expertise, knowledge of the industry, and his professionalism. Thank you Chris. – Brody M (client of Chris Nace)
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Thank you for helping me find my beautiful home. I knew it was hard work, but it was worth it. Thanks again for everything and for being such a good friend. – Kristin (client of Denise Pruitt)
I have worked with Cheryl several times (buying and selling) and I can confidently give her my highest recommendation. Cheryl is an intelligent, thorough and motivated agent who will work diligently to provide a pleasant and successful real estate transaction. – R Chang (client of Cheryl Menayas)