The Cromford Report – Daily Observations January 2016
January 31 – The growth in active listings (excluding UCB & CCBS) between January 1 and January 31 was 12% this year. The cities with much higher growth than this were:
- Sun City West (32%)
- Buckeye (25%)
- Wittmann (24%)
- Maricopa (23%)
- El Mirage (21%)
- Sun City (19%)
- Cave Creek (18%)
- Avondale (18%)
- Apache Junction (17%)
- Tolleson (17%)
We note that a lot of these are on the west side where supply was mostly tight last year. Buyers are getting a little more to choose from here.
The weakest growth in active listings was in:
- Youngtown (-60%)
- Laveen (-5%)
- Waddell (-3%)
- Litchfield Park (-2%)
- Wickenburg (2%)
- Queen Creek (3%)
- Fountain Hills (3%)
- Anthem (3%)
- Sun Lakes (4%)
- Gilbert (6%)
January 30 – The rate of arrival of new listings has been quite strong during January. As usual, the peak days are Thursday and Friday meaning that the 2-day totals we measure on Saturday morning are very high. Counting all listings of of residential types and in all areas including those outside Greater Phoenix, we see the following 2-day totals for the last 4 Saturdays:
- Jan 9 = 897
- Jan 16 = 1,124
- Jan 23 = 1,088
- Jan 30 = 1,104
These 2-days totals are usually below 1,000 for most Saturdays in every year and we can always tell we are seeing a surge in supply when they break the 1,000 mark. Surges are common in January and October and sometimes seen during the spring months.
In 2015 the January Saturday numbers looked like this:
- Jan 10 = 931
- Jan 17 = 1,012
- Jan 24 = 998
- Jan 31 = 928
The difference between this year and last year was -4%, +11%, +9% and +19% for each of the four Saturdays. The latter is quite striking and caused me to write this observation today.
The total added from Jan 1 to Jan 31 was 10,170 last year and this year we saw 10,504, an increase of 3.3%. Our total so far this year is almost the same as in January 2014 and 10% higher than in January 2013.
January 29 – The Cromford® Market Index for the single family markets in the largest 17 cities moved over the past month as follows:
Not a bad looking chart for sellers, though it should be pointed out that most of the good news is packed into Phoenix, Chandler, Tempe and Gilbert. Only the top 8 can be considered seller’s markets with another 8 in a balance between buyers and sellers.
The West Valley has not moved much in either direction with Peoria showing the most deterioration and Surprise the biggest improvement.
Paradise Valley has recovered a little ground but remains under the 100 mark, while Scottsdale is going backwards again, along with Fountain Hills and Cave Creek.
The unhappiest sellers can be found in Maricopa which is now far adrift at the bottom of table just as Avondale is way out in front at the top.
January 28 – The census permit counts are a bit late this month but we finally have them for the month of December and therefore the whole of 2015.
There were 1,433 single-family permits issued across Maricopa and Pinal counties, a strong number for December, bringing the 2015 annual total to 16,768. This is up 43% from 2014 and far higher than almost anyone expected at the start of last year. Nevertheless it is still a long way below the numbers throughout the period 1996-2007, when the minimum annual total was 25,352 (2007) and the maximum 55,858 (2004).
Ranking the various permit issuing authorities by the number of permits issued in 2015 we get:
- Phoenix 2,237 (up 40%)
- Gilbert 1,819 (up 27%)
- Mesa 1,708 (up 72%)
- Peoria 1,589 (up 59%)
- Unincorporated Pinal County 1,384 (up 31%)
- Goodyear 1,186 (up 50%)
- Chandler 1,157 (up 77%)
- Buckeye 1,104 (up 47%)
- Queen Creek 987 (up 42%)
- Scottsdale 869 (up 35%)
- Unincorporated Maricopa County 826 (up 26%)
- Surprise 537 (up 68%)
- Maricopa 334 (down 4%)
- Florence 177 (up 21%)
- Casa Grande 129 (up 2%)
- Avondale 123 (up 193%)
- Glendale 109 (up 418%)
- Eloy 79 (down 6%)
- Tempe 75 (up 34%)
- Wickenburg 75 (up 241%)
- Paradise Valley 65 (up 30%)
- Litchfield Park 50 (up 14%)
- Fountain Hills 46 (up 5%)
- Apache Junction 32 (down 16%)
- Cave Creek 28 (up 155%)
- Carefree 27 (down 13%)
- Tolleson 7 (up 40%)
- Coolidge 6 (up 50%)
- El Mirage 3 (down 96%)
For the counties as a whole, Pinal was up only 19% while Maricopa increased by 47%. The remaining 13 counties of Arizona were up by only 13%
January 27 – After a relatively weak 2015, the following remote locations are now having a stronger start to 2016. Listings under contract counts are growing much faster than in the equivalent period a year ago.
|City||Under Contract Growth Jan 2015||Under Contract Growth Jan 2016||Change||Rank|
It is unusual to see a trend like this where the fastest growth in listings under contract in January is concentrated in the smaller outer areas of the valley. The majority of the valley is growing listings under contract at a slower rate than in January 2015, though we started the year with a higher number of listings already under contract.
The weakest comparisons with last year are in New River, Sun City West, Youngtown, Avondale, Glendale, Gold Canyon and Cave Creek.
Sun City West, Youngtown, Avondale and Glendale have all been very hot but appear to be cooling down a bit based on this analysis. Gold Canyon and Cave Creek were cool to start with and are cooling further.
January 26 – The S&P / Case-Shiller® Home Price® Index report is out for November 2015, which covers sales closed between September and November 2015.
You can see all 20 cities in our chart here.
The 20 metro areas are ranked as follows for their percentage price appreciation over the prior 12 months:
- Portland 11.1%
- San Francisco 11.0%
- Denver 10.9%
- Seattle 9.7%
- Dallas 9.4%
- Miami 8.1%
- Detroit 6.3%
- Los Angeles 6.2%
- San Diego 6.0%
- Tampa 6.0%
- Phoenix 5.9%
- Atlanta 5.7%
- Charlotte 5.3%
- Las Vegas 5.2%
- Minneapolis 4.3%
- Boston 4.7%
- New York 3.7%
- Cleveland 2.2%
- Washington 2.1%
- Chicago 2.0%
Phoenix is in the middle of pack and slightly ahead of the national average with was 5.3%.
The west coast, Dallas, Denver and Florida were the strongest areas over the last year. The North and Northeast were the weakest.
The change over the previous month was quite small in many cases:
- Miami 0.8%
- Tampa 0.5%
- Seattle 0.5%
- Los Angles 0.3%
- Phoenix 0.3%
- Charlotte 0.3%
- Portland 0.3%
- San Francisco 0.3%
- San Diego 0.3%
- Dallas 0.2%
- Denver 0.1%
- Detroit 0.1%
- Washington 0.1%
- Minneapolis 0.1%
- Cleveland 0.0%
- Las Vegas -0.1%
- New York -0.3%
- Atlanta -0.3%
- Boston -0.5%
- Chicago -0.7%
Phoenix is among the top 5 here so we seem to have a bit of relative momentum going on thanks to the low supply at the bottom end of the market. Some of the hottest markets over the past year seem to have lost steam over the last month. Florida is an exception to this trend.
January 25 – Hot and cold. Here is a summary of the frenzied, very hot, hot, warm, tepid and cold parts of the market right now, based on contract ratios:
Cold / Tepid:
- high end luxury – may warm up once we get into the February-June buying season, though stock market is not helping
- far flung outskirts of the valley – new developers adding to supply but demand is often weaker as we move further out
- Pinal county except for Apache Junction & Arizona City
- mid range areas $250,000 to $500,000 – good demand with plenty of supply
- most of Maricopa County, especially the Southeast Valley, Central & Southern Phoenix, West Side
- most easily accessible and affordable areas with average price under $250,000 – low supply
- inner Southwest Valley and much of the inner Northwest valley
- West Mesa, Central Chandler & Gilbert
January 24 – The rise in listings under contract in 2016 has been under-whelming so far. Comparing the last seven years for normal listings across Greater Phoenix we see the following growth since Jan 1 and Jan 24:
- 2016 = 21.2%
- 2015 = 29.9%
- 2014 = 33.6%
- 2013 = 34.9%
- 2012 = 36.1%
- 2011 = 27.4%
- 2010 = 20.3%
- 2009 = 18.0%
Surprisingly 2016 is the weakest start to the year since 2010.
2010 and 2009 did see strong growth in listings under contract, but this was confined to the lender owned listings that dominated the supply at the time, not normal listings which were badly neglected.
January 23 – We are now setting a new record for the millennium so far – the lowest rate of new foreclosures notices in January since we started keeping records in 2001. Today we have seen 456 for the month to date, at a rate of 35 per working day. The closest rivals are last year (2015) and 2006. In 2006 January finished with 750 notices and 2015 had 827. We are on track to hit between 650 and 675 for the month.
2009 was the busiest January for foreclosure notices with a total of 8,635, an average of 432 per working day, roughly 12 times the rate we see today.
January 22 – For the overall market the Cromford® Supply Index has settled down around 73,which is 27% below normal, having fallen from a peak of 76 in mid December. The Cromford® Demand Index has barely moved in the last four months, currently 1% below normal around 99.
After the strong December we were tentatively hoping for stronger demand figures in January, but it seems that was hoping in vain. Pending listings are up 16% from the start of year. Last year we saw a 22% increase in the same period and were not particularly impressed with that, so January this year is really quite weak for listings going pending. We can turn to the UCBs (including the CCBS listings) and see that they have increased by 20% so far this year. Last year it was 24%.
Maybe buyers have been unsettled by the abysmal performance of the stock market. Maybe not. Either way these are not statistics that suggest buyers are getting 2016 off to a strong start.
The closed listing numbers are a bit better; so far we are about 12% ahead of last year, but that reflects contracts signed in 2015, so this is not what we are really looking for.
In February 2015 we saw an unexpectedly strong surge in contract signings after the end of January, and maybe we will see a similar phenomenon in 2016. We will report here as soon as we see something (or not).
January 21 – We turn again to the Cromford® Market Index for the single family market in the largest 17 cities. The chart below shows how it has changed over the past month:
Here we see a better than average picture for sellers with 11 out of 17 cities improving. The trend favoring the southeast valley continues very strongly, particularly for Chandler – up from 115.9 to 140.8 since December 21. Gilbert and Tempe are also in double digits for their percentage improvement and Mesa and Queen Creek are doing fine with 5% and 4% improvements respectively. Goodyear and Buckeye are improving for sellers but both remain in the balanced zone.
The northeast valley is generally weaker with Fountain Hills and Cave Creek both dropping below 100. Paradise Valley is creeping upwards again after its drop under the neutral 100 mark. Scottsdale is balanced with a slight cooling trend.
The central valley is strong with Phoenix up 9%. Anthem doesn’t make the top 17 but is also a seller’s market and still improving for sellers.
For the west valley it is a mixed picture. Avondale remains far out in front due to chronic low supply. Glendale is still very much a sellers market but is on a gently cooling trend. Surprise has stopped its downward trend but shows only a very slight improvement. Peoria is now a balanced market and this is due to a strong in flow of supply. Active listings in Peoria are up 7%, the largest percentage of any of the major cities.
Pinal County is very mixed. Apache Junction has been improving for sellers since October when it was already a seller’s market. Arizona City is also looking strong. However we see a lot of weakness in Casa Grande, Maricopa (down 10% in the above chart), Florence, Coolidge and Gold Canyon. Overall Pinal is currently much weaker than Maricopa County.
The active adult areas of Sun City and Sun City West are back in the balanced zone between 90 and 110, though still above the neutral mark of 100. Sun Lakes however is a buyer’s market with strong inventory of active listings and is currently the weakest part of the southeast valley.
January 20 – A question arises after yesterday’s observation: can we already see signs of trouble in the housing markets identified to be at risk due to the collapse of energy prices. Texas is a non-disclosure state so it is hard for individuals to do research on home sales and prices. However Texas A&M has a large Real Estate Center which is supported by the state, part funded by the license fees paid by real estate agents in Texas. They have access to the necessary sales data and publish monthly information on their web site.
Here is what we see for Houston in November:
This does not look good. Sales are down 11% and average prices down 4%. Supply is up 28% and the only ray of sunshine is the median sales price number. Remember that oil prices have dropped another 35% since last November.
What about Midland TX, much smaller and much more dependent on the oil industry
Now this looks really bad except for the active listings number. I have a hard time believing the university reported 522 because realtor.com is showing 1,156 homes for sale right now. If the realtor.com number is correct then we are looking at almost a year of inventory. Home construction in Midland is grinding to a halt and the number of people employed in oil and gas related jobs has already plummeted by 20% in the last 12 months. The regional oil rig count is down 63% and yet production remains stubbornly high. In fact oil production in 2016 is projected to exceed 2014.
If I were an investor in Midland I would definitely have wanted to sell my real estate property last year. In Houston I would want to do it now while I still can.
January 19 – Since last summer we have been expressing serious concern about the potentially damaging effects of the collapse in commodity prices. These include almost all metals, basic foodstuffs like rice, soy and wheat, animal produce and of course, energy products like oil, natural gas and coal. Low prices sound like good news and they are for the upstream consumers of those raw materials. Almost everyone appreciates lower gasoline prices, for example. However if you are employed in a business that produces raw materials then a sustained drop in prices can quickly lead to layoffs and unemployment. The jobs affected are often concentrated in particular geographic regions. Those companies that supply plant and machinery for producers of commodities are also exposed to cuts in demand that eventually lead to big job losses. We have all heard that the employment situation is improving overall, which is fine as long as your job is not associated with commodities. Miners, oil and gas workers and farmers are suffering badly and it looks like it is going to get a lot worse before it gets better.
Particularly exposed to the drop in oil and natural gas prices are North Dakota and Houston. Having both experienced booming housing markets in very recent years, the slow down is likely to be very painful. Take a quick look at these recent news items:
Houston is headquarters for 25 of the Fortune 500 companies. 22 of those 25 are in energy-related businesses. Houston sailed through the Housing Crisis with hardly a problem. It is not looking good there right now. It faces a future with trepidation a little bit like Phoenix did in early 2007.
We can be relieved that we are no longer very reliant of raw material industries in Arizona, but the economic distress of large scale job losses, loan defaults and company bankruptcies elsewhere can still send negative waves over our housing market from over the state border. Unless there is a quick recovery in commodity prices, which looks increasingly unlikely, we could be facing some serious headwinds over the next few years. I do not expect these to show up immediately in our local housing data, but it makes sense to take a greater interest in what is happening in prominent housing markets that depend on jobs related to commodities, especial oil, natural gas and coal. The most exposed areas are probably:
- Texas, especially Houston, Austin, Dallas, San Antonio and Midland
- Wyoming, especially Casper
- West Virginia
- New Mexico
We will be taking more than just a passing interest in how these markets react to the huge drop in commodity prices over the last 2 years.
January 18 – The annual snapshot has been updated, and this year every indicator is green apart from the 2 measures of appreciation. The strong comparison with the situation last January is emphasized by this table.
The appreciation measured by median sales price is very close, but this is rather misleading as it is helped by the scarcity of low priced homes. These days the median sales price is biased to the upside just as it was biased to the downside during the years when REOs were very plentiful (2008 through 2011).
January 17 – The Cromford® Demand Index is losing upward momentum again, hitting its lowest point since December today. The market is well positioned but so far there has been no significant uptick in demand that would be required to push the index higher. Last year was similar. January was very lackluster, but everything changed as soon as we entered February. We don’t know if the same thing will happen this year.
The awful start to the year from the stock market does not help buyer confidence and developers’ stocks have been severely battered even as they hit long term highs in sales units. These days, Arizona is more a consumer of raw materials rather than a significant producer (cotton, copper, citrus and cattle), so the collapse in commodity prices is mostly good news for our local businesses. However, we are not immune to the possible economic consequences of a major global slowdown, even though almost none of the slowness started in the USA. We would expect the mid-west and gulf states to be affected to a greater degree, if there is a significant slowdown. They are more dependent on energy, mining and agriculture than we are.
January 16 – Where are the new listings piling in from? After 15 days we have roughly the same number of new listings added as we did last year (about 3% more to be precise), but some locations are seeing large increases or reductions compared with a year ago. Here are the most popular ZIP codes for new listings compared with the same period in January 2015:
- Phoenix 85015 – up 83% from 12 to 22 new listings
- Phoenix 85024 – up 71% from 17 to 29
- Peoria 85381 – up 58% from 12 to 19
- Mesa 85208 – up 52% from 29 to 44
- Glendale 85305 – up 50% from 6 to 9
- Glendale 85306 – up 50% from 10 to 15
- Peoria 85345 – up 45% from 31 to 45
- Tempe 85283 – up 39% from 23 to 32
- Rio Verde – up 36% from 14 to 19
- Glendale 85304 – up 33% from 15 to 20
We note the strong showing of Glendale and Peoria.
The top price ranges for new listings compared to last year are:
- $600K to $800K – up 39% from 152 to 211
- $500K to $600K – up 25% from 173 to 217
- $250K to $275K – up 18% from 254 to 299
- $400K to $500K – up 15% from 293 to 336
- $300K to $350K – up 11% from 370 to 410
At the other end of the spectrum the ZIP codes with the highest decline in new listings compared to last year are:
- Youngtown 85363 – down 80% from 5 to 1
- Phoenix 85009 – down 70% from 20 to 6
- Arizona City 85123 – down 65% from 23 to 8
- Phoenix 85053 – down 65% from 20 to 7
- Mesa 85213 – down 65% from 37 to 13
- Phoenix 85040 – down 61% from 18 to 7
- Phoenix 85028 – down 58% from 33 to 14
- Phoenix 85012 – down 56% from 9 to 4
- Phoenix 85035 – down 55% from 20 to 9
- Phoenix 85085 – down 54% from 41 to 19
Phoenix is the strongest player here.
The price ranges with the biggest loss in new listings year over year are:
- Under $100K – down 41% from 425 to 252
- $2M to $3M – down 35% from 40 to 26
- $125K to $150K – down 33% from 492 to 332
- $1M to $1.5M – down 25% from 117 to 88
- $100K to 4125K – down 22% from 253 to 197
Luxury home sellers will be pleased to see that we have not seen a large increase in new listings at elevated price points. Only $1.5M to $2M increased by 10% and all other ranges above $800K are down year over year. Entry level buyers will be disappointed that the supply situation below $175K is just going from bad to worse.
The middle of the market between $300K and $800K is where the increases are concentrated – there are at least 10% more new listings here than last year in each of the price ranges.
January 15 – The Southeast Valley and Phoenix continue to gain relative strength in the Cromford® Market Index stakes. Below is the table showing how the CMI has changed over the last month for the single family market in the 17 largest cities:
The outstanding performer in the last month is Chandler which has jumped from 9th to 3rd place thanks to weakening supply and a nice uptick in demand. It’s CMI was at 105.1 as recently as November 10, and it has moved from a balanced market to a seller’s market remarkably quickly. Tempe, Gilbert and Mesa are all showing positive changes in balance in favor of sellers, and Queen Creek has edged up into the neutral position around 100.
Phoenix remains at 5th position but its 9% improvement matches the positive development of the overall market in the last 4 weeks.
In the West Valley the picture is more mixed. Avondale has extended its lead at the top largely because supply is dreadful. Demand has actually fallen in Avondale but the supply index is only 36.6, not far above the record low of 28.9 that we saw in July 2013. We see only 47 days of inventory, and that is including the UCB and CCBS listings. Excluding them, the supply is only 38 days. Goodyear and Buckeye are also making progress, so the southwestern areas seem to be gaining on the northwestern areas. Surprise, Glendale and Peoria have all lost a little momentum for sellers over the last month. Surprise has fallen the most from 3rd to 8th place.
The Northeast continues to be less favorable to sellers. No area is in a seller’s market, but Scottsdale is best positioned with a balanced CMI of 107.3 which is up 2% from last month. Fountain Hills, Cave Creek and Paradise Valley have all lost ground over the past month. Of these three, Paradise Valley is showing the most promise despite its currently lowly position in the table. It has started a positive trend beginning on January 6.
Because it has few large cities, Pinal County does not feature strongly in the above list, with its only exclusive entrant Maricopa at the bottom of the table as a buyer’s market and declining the fastest. (Queen Creek is shared by Maricopa and Pinal counties). However Apache Junction is in great shape and would appear at number 2 in the above table. Arizona City is doing well too, but Gold Canyon, Casa Grande, Florence and Coolidge are still relatively difficult areas for sellers.
January 14 – A question that comes up regularly is “what is the most expensive house that has ever sold in Greater Phoenix?”
This is harder to answer than it sounds. The sale of very expensive new custom homes is often recorded differently from most new homes. The home buyer tends to acquire the vacant lot before the home is built. We know the price paid for the lot because an affidavit of value is recorded along with the deed. But this also means there is no recording for the home itself and no price becomes available to the public – it is a private contract between the developer and the home owner. Only when the home becomes an arms-length re-sale do we get a good look at a price.
We can easily see the highest price paid for a closed listing through ARMLS. The answer is $12,500,000 – for 6902 E Grapevine Close in Cave Creek in 2000. This ranch property claims over 10,000 sq ft of living space on 225 acres. Since a lot of the value is in the land, which includes 8 different parcels, it is hard to determine what the home itself sold for, but it is probably less than $10,000,000.
There have been a few sales of higher amounts outside of the MLS. The same home in Cave Creek changed hands for $15,500,000 in 2014. The highest price seen recorded for a single family home is $14,000,000 for 8040 N Mohave Rd in Paradise Valley during 2008. It is probably worth much less than that today, because luxury home prices were still peaking in 2008.
The highest assessed value for a home in Maricopa County is for the home of Robert Sarver, owner of the Phoenix Suns. It is currently assessed at $16,735,800. Assessed value is usually supposed to be roughly 75% to 80% of market value, so we can assume that the assessor thinks the home is worth at least $21 million. The address is 5710 N Yucca Rd, Paradise Valley and according to the assessor it has 28,229 sq ft of living area built in 2009, a 2,200 sq ft pool and 5 acres of land. It has never appeared in the MLS files and never changed hands with an affidavit of value. It was vacant land in 2005 and the lot sold for $6,200,000 cash at that time.
There are currently 8 active listings that aspire to set a new record for the highest sales price ever seen in Greater Phoenix through the MLS. The highest asking price is currently $32,000,000. This is not the highest we have ever seen. Indeed there have been 85 listings with their original list price over $32,000,000. However almost all of those are typing mistakes by the listing agents.
January 13 – When we compare the number of single family active listings (excluding UCB & CCBS) with a year ago, segmented by price range, we get the following chart:
Here we see clearly that luxury home buyers have quite a bit more choice than last year. In fact from $400,000 upwards there are more homes for sale. Yet the overall supply is down because supply below $275,000 is so weak. Last year there was already a shortage of affordable homes, so the situation has worsened for buyers, which is obviously good news for sellers.
Sellers of homes over $400,000 need to be aware that news of short supply does not apply to them. They have more competition from other sellers than they had a year ago.
January 12 – December was a great month for the housing market with particularly strong closings for new homes. Overall sales were up almost 15% from the previous December, while new home closings jumped 45% year on year. So I was rather expecting January to follow through with some positive signs. January is much better than January 2015, but not so much as to generate a lot of excitement.
For the first 12 days, we have closed sales up 8% while pending listings are up by 11%, compared to a year ago. The contract ratio has reached 40.1 as opposed to the 31.2 we saw on Jan 12, 2015. The current contract ratio is as good as we saw on Feb 9, 2015. These are all good positive signs, but if anything they are slightly disappointing after such a strong December. It is possible that December’s numbers were boosted by lenders and title companies doing some catching up with closing delayed by TRIS, so the comparison is probably not entirely fair.
It really looks like we may have to wait until February before we know whether 2016 is going to move well above 2015’s activity levels.
January 11 – The Black Knight Financial Services Mortgage Monitor report is now out for November 2015. The 31,000 first time foreclosure starts in the USA for the month is the lowest in over 10 years, in fact 18% lower than the previous lowest month since the report started monitoring in 2005.
Although every state in the nation is showing lower delinquency rates than in November 2014, the trend since March 2015 has been less positive. Arizona’s total non-current loans are up to 4.1% from 3.9% in March. Even so this is a pretty low percentage by historic standards and only 8 states have lower percentages of non-current loans.
Growing the most in non-current loans since March are:
- Texas – up by 12% from 6.0% non-current to 6.7%
- Oklahoma – up by 11% from from 7.0% to 7.8%
- New Mexico – up by 11% from 6.4% to 7.1%
- Wyoming – up by 10% from 3.0% to 4.3%
- Kansas – up by 9% from 5.6% to 6.1%
These are all states with a heavy exposure to the collapse in commodity pricing. The recent trend is possibly the result of significant redundancies in the support industries to resource exploration and extraction (wells, fracking and mining). Economic hardship usually takes some considerable time to show up in non-current loan numbers. People tend to pay their mortgage if they can. I therefore find the last 6 months figures a little worrying for the mid western states and Texas. The annual changes won’t look bad until we get to the report that covers March (released in May) and there is usually a seasonal improvement between December and March. We will have to wait and see if that seasonal trend still holds sway in 2016.
Louisiana is also not looking great and has overtaken New Jersey as the second worst state for loan delinquency after long-term delinquency leader Mississippi.
Alaska, Oregon, Florida, New Jersey and Nevada continue to improve the most quickly.
January 10 – December was a little stronger for luxury market pricing than the previous 3 months. In addition the pricing for homes under contract over $500,000 has moved to a new high in the early part of January which augers well for January sales pricing.
Sales volumes were a mixed bag. Fountain Hills had its best December since 2005 with 18 sales over $500,000. However Paradise Valley was slightly weak at only 24 and the Biltmore District was very weak at 4, which is 8 fewer than in December 2014. Scottsdale sales numbers were moderate and Arcadia saw 9 completed sales through ARMLS, the lowest monthly total since November 2014.
Apart from Fountain Hills, where sales were strong but pricing a little weak, the picture was of weak to moderate sales but some firming in pricing after the negative price trend that started in September.
January 9 – Prashant Gopal, a real estate journalist from Bloomberg News tells me he is hearing that the luxury market softened all over the country during the second half of 2015. This shows that what we experienced in Greater Phoenix is nothing unusual. Here are the numbers I shared with Prashant to illustrate the difference between the luxury market at $1 million and above compared with the market below $1 million. The change column compares 4Q 2014 with 4Q 2015:
|Greater Phoenix – all dwelling types||Price Range||Change|
|Active Listings||Under $1 million||down 6%|
|$1 million and over||up 9%|
|Closed Sales (ARMLS)||Under $1 mill on||up 4%|
|$1 million and over||down 10%|
|Average Price per Sq Ft||Under $1 mill on||up 6.5%|
|$1 million and over||down 0.9%|
In short the market under $1 million has improved on all 3 key measures while the market over $1 million has deteriorated on all 3 measures.
Sellers of homes valued at $1 million or more should be careful not to heed positive headlines about the overall market. Selling your home over $1 million has become more difficult in the last 12 months and prices have softened a little in all but a few areas.
January 8 – After a full week, it becomes possible to compare the rate at which new listings are arriving this year. We have 2,046 residential resale listings which is up 5% compared with 2015 but down 6% compared with 2014.
Nothing dramatic to report there. However new rental listings are down 15% compared with last year and down 31% compared with 2014.
January 7 – We are taking another look at the movement in the Cromford® Market Index for the single family markets in each of the 17 largest cities:
The biggest 4 markets – Phoenix, Mesa, Scottsdale, Chandler – all saw improvements in the market for sellers over the past month, with Chandler benefitting from a 15% fall in active listings. Tempe, Gilbert, Goodyear, Buckeye and Queen Creek all saw improvements too.
The West Valley, represented by Avondale, Glendale and Peoria, calmed down just a bit, and quite a lot in the case of Surprise.
Apart from Scottsdale, the rest of the Northeast is still going backwards, with Cave Creek, Fountain Hills and Paradise Valley all better for buyers than a month ago.
This leaves us with Maricopa which is now in buyer’s market territory at 80.1.
January 6 – The initial counts of deeds processed in December by the Maricopa County are in. December 2015 was a massive month for new home closings, at least by the standards of 2009-2015.
A total of 1,284 new homes were recorded (single family and condos), which is up 45% from December 2014. It is also the highest monthly total since October 2008. We would have seen even more closings last month if not for the construction labor shortages. These shortages are causing build times to extend and the larger the home the greater the delays. We are also seeing a few more builders offer products at the lower price points, and as a result the median sale price is down about 1% from December 2014. the labor shortage is causing construction costs to rise, so the developers’ margins are being squeezed. However I am sure they are delighted with the increase in volumes.
New homes contributed 16% to the overall closings, up from 12% in December 2014. Since new homes tend on average to be much larger than re-sales, this helped to push the overall median sales price for December to $230,000, the highest since February 2008.
January 5 – Preparing the monthly update to the ZIP code snapshots, it reminded me how much you can tell from just a one second glance at the colored indicators. Although the numbers are useful, the colored indicators may be overwhelmingly green as in this positive snapshot for Mesa 85202:
Clearly sellers are having the best of things in 85202, with appreciation between 8% and 11% depending on how you measure it.
But it is not so easy for sellers in Phoenix 85045:
The contrast between these locations is very striking. It appears that the imminent construction of the loop 202 freeway to the south and west of Ahwatukee may be having a negative short term effect on the market in 85045. Once the freeway is open, it is probable that market conditions will rebound because improved accessibility from the west and north will make the area more attractive to buyers. In the meantime the side-effects of construction appear to be having a modest negative impact on prices, with all the annual appreciation measures negative as of January 2016.
January 4 – Months of Supply, based on active listings divided by monthly sales, can often be a rather volatile measure which means comparing month to month sometimes gives us large changes. There was a large decline in active listings during December and the expiration of another batch at the end of the month has caused a big drop in the Months of Supply. This has been amplified by the stronger sales number in December as title companies and lenders caught up with the TRID delays that took place in November.
All this means we have some pretty low readings for months of supply in several areas. Don’t get too excited because there is absolutely no doubt that these readings will jump right back up at the end of January. In fact February 1, is when the months of supply readings peak in almost every year. This is because we get a lot of new active listings during January, yet January is usually the weakest month for closings.
What we can legitimately do is compare one area with another for the same date. Here are the cities with the lowest months of supply as of January 1:
- Avondale 1.5
- El Mirage 1.6
- Youngtown 1.8
- Tolleson 2.0
- Laveen 2.1
- Glendale 2.3
Every location here is in the West Valley.
The highest readings are in:
- Tonopah 22.0
- Wickenburg 16.5
- Paradise Valley 15.2
- Carefree 14.4
- Gold Canyon 12.9
January 3 – Only 6 sales of homes listed at $3 million or more were reported in December through ARMLS. Two were in Paradise Valley, 3 in Scottsdale 85255 and 1 was in Arcadia.
- New custom home in Silverleaf at DC Ranch by Dale Gardon Design and Salcito Custom Homes – sold for $7,500,000
- 2008 custom home in Silverleaf at DC Ranch by New Horizon – $7,000,000
- 2013 rebuild of 1976 custom home at the Sanctuary Resort on the slopes of Camelback Mountain – $4,660,000
- 2008 custom home by Bradley Builders in Turquoise Hills, in the north of Paradise Valley- $4,350,000
- 2010 custom home by Nance Construction in the Heart of Arcadia – $3,500,000
- New custom home by Skapa Properties in Silverleaf at DC Ranch – $3,400,000
None of these was on the market for more than 78 days, but we note there is nothing older than 2008 among these sales.
There were 8 sales in December 2014 listed at $3 million or more. The oldest then was built in 2002.
There were 7 in December 2013 but in those days people were still buying older homes – 3 were built in 1970, 1987 and 1999.
The super-luxury market is still a bit quiet, but brand new homes or those of very recent vintage are the most popular.
January 2 – Yesterday we analyzed the active listings segmented by price range. Today we will analyze them by city. Below we compare the number of single family active listings (excluding UCB and CCBS) yesterday with last month and last year. If both are lower this is a positive signal for sellers and if both are higher it is bad news for sellers.
|City||Active 1/1/16||Active 12/1/15||Active 1/1/15||Peak Since 2000||1 Month Change||12 Month Change||Comments on Short Term Change||Comments on Long Term Change|
|Anthem||139||147||132||646||-5%||+5%||slightly favorable for sellers||unfavorable for sellers|
|Apache Junction||122||138||165||523||-12%||-26%||very favorable for sellers||very favorable for sellers|
|Arizona City||76||82||91||332||-7%||-16%||favorable for sellers||very favorable for sellers|
|Avondale||128||155||188||1,116||-17%||-32%||extremely favorable for sellers||extremely favorable for sellers|
|Buckeye||390||437||488||1,279||-11%||-20%||very favorable for sellers||very favorable for sellers|
|Carefree||100||105||112||160||-5%||-11%||slightly favorable for sellers||favorable for sellers|
|Casa Grande||298||311||323||670||-4%||-8%||slightly favorable for sellers||favorable for sellers|
|Cave Creek||290||305||271||615||-5%||+7%||slightly favorable for sellers||unfavorable for sellers|
|Chandler||712||846||770||2,481||-16%||-8%||extremely favorable for sellers||favorable for sellers|
|Coolidge||52||51||63||239||+2%||-17%||unfavorable for sellers||very favorable for sellers|
|El Mirage||41||39||77||505||+5%||-47%||unfavorable for sellers||extremely favorable for sellers|
|Eloy||38||46||48||101||-17%||-21%||extremely favorable for sellers||very favorable for sellers|
|Florence||172||165||155||274||+4%||+11%||unfavorable for sellers||very unfavorable for sellers|
|Fountain Hills||277||292||284||575||-5%||-2%||slightly favorable for sellers||neutral|
|Gilbert||823||919||939||2,766||-10%||-12%||very favorable for sellers||very favorable for sellers|
|Glendale||498||527||604||2,567||-6%||-18%||favorable for sellers||very favorable for sellers|
|Gold Canyon||256||251||254||385||+2%||+1%||unfavorable for sellers||neutral|
|Goodyear||394||429||495||1,300||-8%||-20%||favorable for sellers||very favorable for sellers|
|Laveen||164||162||175||555||+1%||-6%||unfavorable for sellers||favorable for seller|
|Litchfield Park||165||178||162||534||-7%||+2%||favorable for sellers||neutral|
|Maricopa||379||378||485||1,092||0%||-22%||slightly unfavorable for sellers||very favorable for sellers|
|Mesa||1,209||1,293||1,316||3,657||-6%||-8%||favorable for sellers||favorable for sellers|
|New River||46||51||72||155||-10%||-36%||very favorable for sellers||extremely favorable for sellers|
|Peoria||640||668||768||2,073||-4%||-17%||slightly favorable for sellers||very favorable for sellers|
|Phoenix||2,820||3,138||3,228||11,416||-10%||-13%||very favorable for sellers||very favorable for sellers|
|Queen Creek||763||829||868||2,354||-8%||-12%||favorable for sellers||very favorable for sellers|
|Rio Verde||82||80||90||147||+3%||-9%||unfavorable for sellers||favorable for sellers|
|Sun City||210||193||280||650||+9%||-25%||very unfavorable for sellers||very favorable for sellers|
|Sun City West||227||209||251||616||+9%||-10%||very unfavorable for sellers||favorable for sellers|
|Sun Lakes||184||166||179||338||+11%||+3%||very unfavorable for sellers||slightly unfavorable for sellers|
|Surprise||544||558||689||2,273||-3%||-21%||neutral||very favorable for sellers|
|Tempe||205||235||223||580||-13%||-8%||very favorable for sellers||favorable for sellers|
|Tolleson||76||78||122||503||-3%||-38%||neutral||extremely favorable for sellers|
|Tonopah||21||20||15||80||+5%||+40%||unfavorable for sellers||extremely unfavorable for sellers|
|Waddell||58||65||75||143||-11%||-23%||very favorable for sellers||very favorable for sellers|
|Wickenburg||159||168||140||226||-5%||+14%||slightly favorable for sellers||very unfavorable for sellers|
|Wittmann||36||40||40||194||-10%||-10%||very favorable for sellers||favorable for sellers|
|Youngtown||5||9||12||91||-44%||-58%||extremely favorable for sellers||extremely favorable for sellers|
Both long term and short term trends favor the West Valley. the short term trend is looking good for the inner Southeast Valley. The Northeast Valley is mostly neutral. There are some outliers among the smaller cities with Youngtown, Eloy, New River & Waddell looking good while Tonopah looks weak.
January 1 – We always stress that understanding the housing market requires us to examine the balance between supply and demand. If I were forced to choose just one of these, I would choose supply. The level of supply tells us a great deal about the strength or weakness in the overall market and it also gives us insight into specific sectors. Below we compare the number of single family active listings (excluding UCB and CCBS) today with last month and last year. If both are lower this is a positive signal for sellers and if both are higher it is bad news for sellers. What is bad news for sellers is usually good news for buyers.
|Sector||Active 1/1/16||Active 12/1/15||Active 1/1/15||Peak Since 2000||1 Month Change||12 Month Change||Comments on Short Term Change||Comments on Long Term Change|
|SFR – Priced Under $100K||179||203||415||9,427||-12%||-57%||extremely favorable for sellers||extremely favorable for sellers|
|SFR – Priced $100K-$125K||227||226||522||3,713||0%||-57%||unfavorable for sellers||extremely favorable for sellers|
|SFR – Priced $125K-$150K||580||585||1,196||4,039||-1%||-52%||slightly unfavorable for sellers||extremely favorable for sellers|
|SFR – Priced $150K-$175K||947||993||1,336||3,534||-5%||-29%||favorable for sellers||very favorable for sellers|
|SFR – Priced $175K-$200K||1,123||1,213||1,409||3,929||-7%||-20%||favorable for sellers||very favorable for sellers|
|SFR – Priced $200K-$225K||917||961||1,038||4,252||-5%||-12%||favorable for sellers||favorable for sellers|
|SFR – Priced $225K-$250K||1,100||1,203||1,263||5,150||-9%||-13%||very favorable for sellers||favorable for sellers|
|SFR – Priced $250K-$275K||884||927||956||3,426||-5%||-8%||favorable for sellers||favorable for sellers|
|SFR – Priced $275K-$300K||984||1,046||957||3,651||-6%||+3%||favorable for sellers||slightly unfavorable for sellers|
|SFR – Priced $300K-$350K||1,460||1,587||1,480||4,351||-8%||-1%||favorable for sellers||neutral|
|SFR – Priced $350K-$400K||1,236||1,350||1,315||3,639||-8%||-6%||favorable for sellers||slightly favorable for sellers|
|SFR – Priced $400K-$500K||1,518||1,670||1,435||4,365||-9%||+6%||very favorable for sellers||slightly unfavorable for sellers|
|SFR – Priced $500K-$600K||947||1,018||855||2,757||-7%||+11%||favorable for sellers||unfavorable for sellers|
|SFR – Priced $600K-$800K||964||1,071||928||3,114||-10%||+4%||very favorable for sellers||slightly unfavorable for sellers|
|SFR – Priced $800K-$1M||644||675||533||1,440||-5%||+21%||favorable for sellers||very unfavorable for sellers|
|SFR – Priced $1M-$1.5M||620||645||599||1,473||-4%||+4%||slightly favorable for sellers||slightly unfavorable for sellers|
|SFR – Priced $1.5M-$2M||346||355||319||705||-3%||+8%||neutral||unfavorable for sellers|
|SFR – Priced $2M-$3M||365||368||336||708||-1%||+9%||slightly unfavorable for sellers||unfavorable for sellers|
|SFR – Priced Over $3M||272||268||258||642||+1%||+5%||unfavorable for sellers||slightly unfavorable for sellers|
It is normal for active listings to decline during December so those sectors that do not show a significant decrease get penalized.
Do not be fooled by the large overall drop in active listings over the last 12 months. That is mostly confined to the price ranges under $275K. However the median sales price for single family homes is currently around $225K so that drop in inventory applies to a large percentage of the market by unit volume.
© 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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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)
No small part of this deal working out was due to the intense negotiations and juggling of our real estate agent, Denise Pruitt with Arizona Best Real Estate. She acted in our best interest at every turn, taking the brunt of the unpleasantness and making it work out. WE WOULD NOT BE IN THIS HOUSE WITHOUT HER. I think she is owed a bedroom, at least. Maybe a portion of the pool. – Eric & Kathryn (clients of Denise Pruitt)
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