The Cromford Report – Daily Observations March 2018

    March 30 – The Cromford® Market Index table for the single-family markets in the 17 largest cities is shown below:

    We still have slightly more cities (10) showing improvement for sellers than deterioration (7).

    A pattern emerges where cities with the cheapest homes have seen great improvement. These include Avondale (+21%), Buckeye (+8%) and Maricopa (+9%).

    Those with more expensive homes have done less well, including Paradise Valley (-10%), Scottsdale (-5%) and Cave Creek (-0%). Fountain Hills is an exception, rising 12% since last month.

    March 29 – OfferPad, the second largest iBuyer in Phoenix, purchased another 76 homes during February. This is an increase over February 2017 which saw 63 purchases, but not as dramatic a growth as for Opendoor, which was experiencing something of a lull during the first half of 2017. Here are a few things we can deduce from the recorded deeds and affidavits of value.

    1. Total expenditure was $16.3 million. ($11.9 million 2017)
    2. Average purchase price was $214,972. ($188,335 in 2017)
    3. 82% of purchases were single-family homes, while 18% were condos or townhomes. In February 2017 the split was 83% and 17%. OfferPad appears to neutral about whether a home is attached or not.
    4. 77% of purchases were in Maricopa County, while 23% were in Pinal. This means Pinal is relatively stronger for OfferPad than Pinal. February 2017 saw a 84% / 16% split which is neutral.
    5. Maximum price paid was $385,000. OfferPad avoids higher priced homes as a deliberate strategy. The maximum in February 2017 was $382,000.
    6. Average price paid was $115.56 per sq. ft. in February 2018. The average price paid per sq. ft. was $102.96 in February 2017. This is an 12% increase, and clearly OfferPad is staying focused on cheaper properties than Opendoor, despite the scarcity of sellers at the low end. This may be a reason their acquisition volume grew by a lower percentage.
    7. Average age of a home purchased was 2000, up from 1995 last year..

    We have to assume that the price stated is the gross purchase price and this has not been reduced by any of the seller-paid fees. If anyone knows any different, please let us know too.

    The Greater Phoenix market had 9,297 sales during February 2018, so OfferPad acquisitions represented 0.8% of the total market. Last year saw a 0.7% share.

    Like Opendoor, OfferPad files its Affidavits of Value with the intended use “to be used as a non-primary or secondary residence”. Most investors use the option “to be rented to someone other than a qualified family member”. This means an analysis of the data will count OfferPad purchases as second home purchases and not as investor purchases. We will all therefore under count investment activity and overcount second home activity. Once the home is resold it will be captured as a flip.

    Since OfferPad`s HQ is in Gilbert, these purchases count as in-state transactions.

    All of the recording for OfferPad is handled by First American Title.

    The bulk of these purchases state there is no lender involved. However First International Bank and Trust is occasionally mentioned.

    March 28 – Opendoor, the largest iBuyer in Phoenix, purchased another 245 homes during February. This is a huge increase over February 2017 which saw only 65 purchases. Here are a few things we can deduce from the recorded deeds and affidavits of value.

    1. Total expenditure was $60.2 million. ($13.3 million in Feb 2017)
    2. Average purchase price was $245,624. ($205,332 in Feb 2017)
    3. 91% of purchases were single-family homes, while 9% were condos or townhomes. In February 2017 the split was 97% and 3%. Opendoor has shown a bias towards single-family homes.
    4. 90% of purchases were in Maricopa County, while 10% were in Pinal. This means Maricopa is relatively stronger for Opendoor than Pinal. February 2017 saw a 75% / 25% split which favored Pinal County.
    5. Maximum price paid was $450,000. Opendoor avoids higher priced homes as a deliberate strategy. The maximum in February 2017 was $324,200.
    6. Average price paid was $131.02 per sq. ft. in February 2018. The average price paid per sq. ft. was $111.16 in February 2017. This is an 18% increase, so clearly Opendoor is having to move more upmarket in order to increase its volumes, thanks to the scarcity of sellers at the low end.
    7. Average age of a home purchased was 1997.

    We have to assume that the price stated is the gross purchase price and this has not been reduced by any of the seller-paid fees. If anyone knows any different, please let us know too.

    The Greater Phoenix market had 9,297 sales during February 2018, so Opendoor acquisitions represented 2.6% of the total market. Last year saw a 0.8% share.

    Unlike most fix and flip operations, Opendoor files its Affidavits of Value with the intended use “to be used as a non-primary or secondary residence”. Most investors use the option “to be rented to someone other than a qualified family member”. This means an analysis of the data will count Opendoor purchases as second home purchases and not as investor purchases. We will all therefore under count investment activity and overcount second home activity. Once the home is resold it will be captured as a flip.

    Since Opendoor`s HQ is in San Francisco, this tends to overstate our counts of out-of-state purchases.

    Most of the recording for Opendoor is handled by Fidelity National Title with Chicago Title picking up most (but not quite all) of the remainder. Of course, both are part of the FNF corporation.

    The bulk of the lending on these purchases (51%) is from Deutsche Bank, though Goldman Sachs is also mentioned (9%). However 35% of affidavits state that the home was purchased with all cash. 5% were financed by what was stated to be a “private lender”.

    March 27 – The S&P / Case-Shiller Home Price Index is published today and covers sales that were recorded between November 2017 and January 2018.

    Here is how the 20 urban areas stack up for the month to month change in their index:

    1. San Diego 0.76%
    2. Seattle 0.73%
    3. Atlanta 0.68%
    4. Denver 0.66%
    5. Miami 0.61%
    6. Las Vegas 0.60%
    7. Los Angeles 0.57%
    8. Tampa 0.45%
    9. Portland 0.43%
    10. San Francisco 0.39%
    11. Charlotte 0.38%
    12. Phoenix 0.34%
    13. Dallas 0.24%
    14. Boston 0.21%
    15. Detroit 0.12%
    16. Minneapolis 0.09%
    17. New York 0.04%
    18. Cleveland 0.03%
    19. Chicago -0.04%
    20. Washington -0.44%

    Phoenix has slipped from 9th place last month to 12th this month, but beat the US national average which was only 0.05%

    Taking the year over year view we see the following:

    1. Seattle 12.9%
    2. Las Vegas 11.1%
    3. San Francisco 10.2%
    4. Denver 7.6%
    5. Los Angeles 7.6%
    6. Detroit 7.6%
    7. San Diego 7.4%
    8. Portland 7.1%
    9. Dallas 6.9%
    10. Tampa 6.7%
    11. Atlanta 6.5%
    12. Charlotte 6.0%
    13. Minneapolis 5.9%
    14. Phoenix 5.9%
    15. Boston 5.3%
    16. New York 5.2%
    17. Miami 4.0%
    18. Cleveland 3.5%
    19. Washington 2.4%
    20. Chicago 2.4%

    The national average was 6.2% and Phoenix fell slightly below that. For those who are concerned that Phoenix prices are rising too fast, consider that we remain below average for the country in absolute prices and in the rate of increase.

    March 26 – The multi-family permit count for February was 782, bringing the count for the past 12 months to 9,950 units. This highlights the continuing strength of multi-family construction. Unlike the single-family market, multi-family is fully recovered back to pre-crash levels.

    However the multi-family market is dominated by far fewer cities. Over the past 12 months the counts are as follows:

    1. Phoenix 4,472
    2. Tempe 1,608
    3. Chandler 1,602
    4. Mesa 706
    5. Scottsdale 630
    6. Peoria 456
    7. Goodyear 348
    8. Surprise 135
    9. Gilbert 115
    10. Unincorporated Pinal County 104
    11. Paradise Valley 43
    12. Fountain Hills 6
    13. Guadalupe 5
    14. Apache Junction 4

    In Phoenix, Tempe and Chandler, we now have more multi-family units being planned than single-family. This is particularly true for Tempe which has almost exited single-family new construction.

    March 23 – At 1,593, single-family permits in Maricopa & Pinal counties were down slightly in February from January, but up 8.7% from February 2017. The new home market continues to expand, but it is revealing to look back at the permit counts from 20 years ago. February 1998 saw 2,557, which was unexceptional at the time.

    Year to date numbers for 2018 show dramatic changes from 2017:

    Place 2018 YTD 2017 YTD Change
    Phoenix 611 373 +64%
    Buckeye 355 301 +18%
    Unincorporated Pinal County 336 255 +32%
    Maricopa 225 172 +31%
    Peoria 222 259 -14%
    Gilbert 214 187 +14%
    Goodyear 213 176 +21%
    Unincorporated Maricopa County 204 69 +196%
    Surprise 194 85 +128%
    Queen Creek 149 226 -34%
    Scottsdale 109 100 +9%
    Chandler 67 40 +68%
    Mesa 65 376 -83%

    Mesa has dropped from first place to 13th and with Chandler at low levels in both years and Queen Creek going backwards, this does not bode well for the availability of new homes in the Southeast Valley. New home buyers in that area will find more if they head further out to either Maricopa or San Tan Valley.

    San Tan Valley provides the bulk of permits classified under Unincorporated Pinal County. With the effort to incorporate San Tan Valley now stalled and the town of Queen Creek annexing more parts of Pinal County that San Tan Valley “claims”, the geographic borders of this part of the valley are going to get even more confusing than they already are.

    Phoenix is now growing faster than it has for 10 years, measured by new home permits, while the ambitious city of Buckeye is now number 2 in the valley for year-to-date permits and one of the 10 fastest growing cities in the USA.

    March 22 – Here again is the table of Cromford® Market Index values for the single-family markets in the largest 17 cities:

    Avondale is back at the top again, thanks to two favorable trends for sellers – lower inventory and higher demand. Glendale and Goodyear are also higher, but by relatively small amounts. However Surprise and Peoria are lower, especially the former which saw the opposite trends to Avondale with lower demand and increased supply.

    The Southeast Valley saw little change over the month while the Northeast Valley deteriorated, except for Fountain Hills.

    Maricopa and Buckeye both improved significantly, the least expensive cities in the list and both relatively well-supplied with active listings. Buckeye is seeing its highest CMI since 2013.

    Phoenix, representing about 25% of the market, continued to improve and also hit its highest CMI since 2013. Because of its size, it is hard for the market to deteriorate when Phoenix is improving steadily. Although the balance is nearly even with 9 cities improving and 8 deteriorating, the strong performance of Phoenix keeps the overall market direction positive for sellers.

    March 20 – The primary characteristic of the current housing market in Greater Phoenix is a lack of inventory. Part of the problem is that, despite having 5.5% more agents, we are getting 2.5% fewer new listings than last year.

    Measuring year-to-date as of March 18:

    • Greater Phoenix has seen 2.8% fewer new listings than last year
    • Out of Area new listings have grown by almost 8% (not much use to people looking for a home in Greater Phoenix)

    The dwelling type that is worst affected is Single Family Detached – these are down 3.4%. Condos and townhomes are down only 1.1% and mobile and manufactured homes are up 7.4%.

    Here are the cities that have seen the biggest drop in new listings:

    1. Laveen – down 17.3%
    2. Fountain Hills – down 15.8%
    3. Sun City West – down 11.0%
    4. Avondale – down 10.1%
    5. Gilbert – down 7.4%
    6. Gold Canyon – down 6.3%
    7. Mesa – down 6.1%
    8. Tempe – down 4.8%
    9. Sun City – down 4.7%
    10. Casa Grande – down 4.7%

    Buyers might want to know where new listings have grown since last year, giving them more opportunities:

    1. Paradise Valley – up 12.4%
    2. Florence – up 11.6%
    3. Cave Creek – up 10.2%
    4. Queen Creek – up 4.8%
    5. Anthem – up 2.0%

    That is the complete (short) list.

    So to get to see more new listings than in 2017, buyers will have to either plan to spend more than $1 million in PV, or head up to the northern hills in Cave Creek or Anthem or the far southeast in Queen Creek and Florence.

    Everywhere else there has been a drop in new listings since year. The biggest 2 cities for listings are Phoenix and Scottsdale, where new listings are down 2.5% and 2.6% respectively, close to the average for the area as a whole.

    March 19 – A new record high was set for residential sales through ARMLS at the end of February. 20450 N 108th Pl., Scottsdale 85255 closed for $17,500,000. The previous record was $15,650,000, set as recently as last December.

    This property was originally listed at $24,500,000 in 2011 when newly constructed and the listing was cancelled in 2017 after 2011 days, having had its price cut to $19,950,000 in 2016. It was then relisted at $17,995,000 in June 2017. Cumulative days on market was 2,261 (6.2 years).

    It boasts 5 kitchens, 2 elevators and 8 garages and was constructed by custom home builder Linthicum.

    Congratulations to the listing agents Mike Domer & Delania Munro and the selling agent Frank Aazami.

    DC Ranch Community must be delighted to receive the $87,500 community transfer fee.

    The buyers (from Regina Saskatchewan in Canada) got a discount of 29% off the original list price. Not bad for a new home. Also not bad for a second home. I wonder what their primary residence is like.

    March 18 – Are conditions improving for buyers? No. They are improving for sellers though. The overall listing success rate has just reached 84.1%. This is the highest reading since July 2005.

    In the last 20 years there have only been 4 months with a higher listing success rate – between March 11, 2005 and July 10, 2005. Those were also months where almost half the closed transactions did not even hit the MLS.

    Ten years ago in January 2008, the listing success rate reached an all-time low of 20.4%. Remember how bad that felt when 4 out 5 listings expired or were cancelled?

    Sellers should enjoy the current conditions. They will not last forever.

    March 16 – The CMI table we showed yesterday ranks the top 17 cities by the current balance between buyers and sellers. This is a leading market indicator. A good trailing indicator is the annual appreciation rate based on the annual average sales price per square foot. Here is how the same 17 cities stack up:

    1. Avondale 9.3% (9.0% this time last year)
    2. Queen Creek 8.3% (7.3%)
    3. Maricopa 8.3% (10.1%)
    4. Surprise 7.8% (6.4%)
    5. Buckeye 7.7% (9.8%)
    6. Glendale 6.9% (6.7%)
    7. Mesa 6.8% (6.9%)
    8. Peoria 6.8% (5.9%)
    9. Phoenix 5.7% (6.9%)
    10. Goodyear 5.8% (6.8%)
    11. Gilbert 5.5% (5.4%)
    12. Tempe 5.1% (5.8%)
    13. Chandler 5.0% (6.1%)
    14. Cave Creek 5.0% (4.9%)
    15. Scottsdale 4.5% (1.8%)
    16. Paradise Valley 3.3% (1.1%)
    17. Fountain Hills 3.2% (2.8%)

    March 15 – Taking another look at the Cromford® Market Index for the single-family markets in the 17 largest cities and how they have changed over the last month:

    We have 9 cities showing improvement for sellers and 8 showing deterioration. All 17 are in a seller’s market but some much more than others. The slight change in favor of sellers is reflected in the overall CMI for all areas & types which has edged up from 157.9 to 160.3 over the past 4 weeks. This is the highest reading since August 2013.

    For those thinking back to 2005, we reached a peak of 312.9 on April 4, 2005, so we are still a long way below that. Back in 2004 it took only 11 months to go from 160 to 313, fueled by almost unlimited availability of finance and buyers’ irrational expectations. At the moment we don’t see the same easy finance or buyer enthusiasm, but the market is very hot and the current cryptocurrency craze proves the human race still is very skilled in self-deception.

    Over the last month, the stand-out performer has been Avondale where demand has strengthened at the same time as supply has dwindled. Other winners include Maricopa, Buckeye and Goodyear, while Phoenix continues its long improving trajectory.

    Paradise Valley, Surprise and Cave Creek are all weaker than last month though Cave Creek has managed to stay above the 110 level which represents the top of a balanced market.

    The Southeast Valley is treading water with only small changes over the past month. Its cities still dominate the top half of the table.

    March 14 – The single-family luxury market (over $500,000) has improved quite a lot since this time last year. Supply is not the problem that it is under $500,000, but the sales rate has risen significantly across all the luxury segments.

    Over the last 3 months we have seen 25% more closings than during the same period last year. Sales are up most between $1 million and $2 million with an increase of 37%. The supply of active listings (excluding UCB & CCBS) is up 2% in this range but it is down 4% for all homes over $500,000. The higher sales rate means the supply feels much lower even though it is only down slightly. This is good for pricing which has increased just over 5% (in $/SF) compared with a year ago.

    Average days on market are down 13% and days of inventory (a key measurement) is down 18% from 282 to 231.

    The listing success rate is higher too, with only Carefree and Fountain Hills below 50%. Unusually high success rates are to be seen in parts of the Southeast Valley (85048, 85248, 85249).

    March 13 – We still see occasional claims that pricing is back to the levels during the bubble years but we refute these claims. We still have quite a long way to go in most segments of the market, with just a handful of special exceptions.

    First of all, people make the mistake of using median sales prices. This is NOT a fair way to compare 2018 with 2006. In 2006 the median single-family house size across Greater Phoenix was far smaller (1,741 sq. ft.) than the median house size in 2018 (1,886 sq. ft.). That is a difference of 8%, so the median sales price in 2018 would need to exceed that in 2006 by at least 8% before we could realistically claim pricing had recovered to 2006 levels.

    It is also not fair to use monthly average price per sq. ft. because this is a volatile measure and if one month pops up the next may drop back down again. We can call a recovery only when prices are consistently higher than they used to be.

    We need to use a long term measure and one that incorporates the change in home sizes. For this reason we like the annual average price per square foot. With this measure in mind we can examine the pricing by ZIP code for single-family-homes. Such a chart can be found here.

    The following ZIP codes have an annual average price per square foot for single-family homes that exceeds the maximum achieved in 2005-2009.

    1. Phoenix 85006 – $195.45 versus the peak of $192.44 in July 2007
    2. Eloy 85131 – $114.80 versus the peak of $111.08 in December 2007
    3. Scottsdale 85251 – $271.92 versus the peak of $252.02 in September 2007
    4. Scottsdale 85257 – $202.07 versus the peak of $193.68 in November 2006.

    The following are within 5% of recovery:

    1. Phoenix 85008 – $168.93 versus the peak of $177.47 in April 2007
    2. Phoenix 85013 – $197.84 versus the peak of $207.02 in April 2007
    3. Phoenix 85014 – $203.29 versus the peak of $212.21 in December 2007
    4. Scottsdale 85250 – $240.93 versus the peak of $251.14 in February 2007
    5. Tempe 85281 – $184.28 versus the peak of $193.90 in January 2007

    The following are within 10% of recovery:

    1. Phoenix 85003 – $253.68 versus the peak of $273.60 in February 2008
    2. Phoenix 85015 – $147.76 versus the peak of $160.91 in April 2007
    3. Phoenix 85018 – $294.17 versus the peak of $315.83 in April 2007
    4. Mesa 85202 – $146.49 versus the peak of $159.38 in October 2006
    5. Mesa 85204 – $141.33 versus the peak of $155.00 in November 2006
    6. Chandler 85224 – $158.38 versus the peak of $175.41 in September 2006
    7. Tempe 85282 – $157.25 versus the peak of $166.70 in August 2006
    8. Chandler 85286 – $154.05 versus the peak of $168.13 in September 2007 (note that this ZIP code did not exist in 2006)

    All the other ZIP codes are adrift of their peak levels by more than 10%. Looking at a few of the largest in terms of the number of existing homes, we see

    1. Phoenix 85032 – $165.37 versus the peak of $189.08 (12% below)
    2. Phoenix 85041 – $111.21 versus the peak of $146.24 (24% below)
    3. Mesa 85207 – $161.92 versus the peak of $201.16 (19% below)
    4. Chandler 85225 – $151.67 versus the peak of $171.16 (11% below)
    5. Gilbert 85234 – $147.71 versus the peak of $178.08 (17% below)
    6. Chandler 85249 – $148.14 versus the peak of $182.04 (19% below)
    7. Scottsdale 85255 – $281.60 versus the peak of $325.31 (13% below)
    8. Scottsdale 85262 – $269.89 versus the peak of $374.69 (28% below)
    9. Paradise Valley 85253 – $357.25 versus the peak of $479.21 (25% below)
    10. Scottsdale 85254 – $204.45 versus the peak of $237.63 (14% below)
    11. Glendale 85308 – $147.51 versus the peak of $178.63 (17% below)
    12. Buckeye 85326 – $105.00 versus the peak of $153.92 (32% below)
    13. Goodyear 85338 – $122.49 versus the peak of $167.59 (27% below)
    14. Peoria 85345 – $126.58 versus the peak of $156.04 (19% below)
    15. Surprise 85374 – $137.52 versus the peak of $168.66 (18% below)
    16. Sun City West 85375 – $134.07 versus the peak of $154.94 (13% below)
    17. Peoria 85383 – $147.54 versus the peak of $187.56 (21% below)

    The strongest recovery has been in Scottsdale 85251 where the average $/SF is now 8% higher than during the bubble.

    More generally, locations close to the intersection of the 101 and 202 in Tempe have recovered better than average, as well as several areas north and east of Central Phoenix.

    March 12 – A gap is starting to open up in 2018 new listings compared with 2017 and 2016.

    Today represents a whole number of weeks since the start of the year so we can do a fair comparison. We have seen 24,701 new residential listings across all areas & types. This is down 1.1% from the March 12 reading in 2017 and down 3.0% from 2016. So total supply is down, but the picture is even worse if we are looking purely at affordable homes, say those under $250,000 (which is almost 50% of the market, by units).

    Year to date we have seen only 10,103 new listings of all types across Greater Phoenix with an asking price below $250,000. Last year there were 12,018 and in 2016 there were 13,383. The best year for homes under $250,000 was 2010 when we had seen over 25,000 new listings by March 12.

    Is supply of affordable homes going to get better? I don’t think so.

    There are several factors working against generating more supply at the moment:

    1. Many homes are being taken out of the purchase and long-term-rental markets to feed the short-term-rental market, thanks to the success of Airbnb and similar offerings.
    2. Mobile home parks are being purchased for development into more expensive housing (e.g. Tempe Mobile Home Park (42 sites) recently sold to the Treehouse Group).
    3. Rising interest rates mean that existing loans start to look much more attractive than new loans, encouraging owners to stay where they are instead of moving.
    4. Prices are still rising at 7% or more, so today’s $240,000 house is likely to be next year’s $257,500 house, so no longer affordable by our definition.

    Despite an upward trend in permits, we are unlikely to see affordable supply growing in the short or medium term, unless we start to redefine our thoughts about what is affordable: $300,000, or maybe even $350,000.

    March 9 – The Contract Ratio is our favorite way of measuring the heat of a market, although it does not correct for seasonality. To overcome this defect we like to compare contract ratios for the same date each year. Below we look at how the cities compare with each other and with how they were 12 months ago:

    City Contract Ratio March 8, 2018 Contract Ratio March 8, 2017 Change
    Avondale 148.0 138.7 +6.7%
    El Mirage 135.6 260.0 -47.8%
    Gilbert 128.2 94.0 +36.4%
    Chandler 125.0 97.8 +27.8%
    Tolleson 116.7 103.9 +12.3%
    Sun City West 115.5 48.4 +138.6%
    Mesa 110.1 88.2 +24.8%
    Queen Creek 109.7 77.9 +40.8%
    Buckeye 103.8 71.0 +46.2%
    Glendale 102.1 102.7 -0.6%
    Apache Junction 94.9 76.9 +23.4%
    Laveen 92.4 77.8 +18.8%
    Surprise 88.7 93.6 -5.2%
    Sun Lakes 88.6 56.9 +55.7%
    Tempe 86.5 91.1 -5.0%
    Phoenix 84.8 73.7 +15.1%
    Sun City 83.4 66.0 +26.4%
    Florence 81.9 68.7 +19.2%
    Peoria 77.5 67.3 +15.2%
    Maricopa 72.6 99.2 -26.8%
    Anthem 67.6 64.2 +5.3%
    Arizona City 66.7 54.7 +21.9%
    Goodyear 65.0 58.8 +10.5%
    Casa Grande 63.0 67.2 -6.3%
    Litchfield Park 61.0 48.5 +25.8%
    Scottsdale 37.8 30.1 +25.6%
    Gold Canyon 34.8 32.2 +8.1%
    Cave Creek 34.5 36.6 -5.7%
    Fountain Hills 28.1 24.2 +15.2%
    Paradise Valley 19.5 17.1 +14.0%

    With the contract ratio we are comparing how many homes are already in escrow with the number of homes still freely available. It therefore measures current demand versus current supply and the higher the number, the more it favors sellers over buyers.

    The vast majority of locations are hotter than last year, but there are notable exceptions – El Mirage, Glendale, Surprise, Tempe, Maricopa, Casa Grande and Cave Creek.

    The rise of Sun City West and Sun Lakes suggests that a lot of demand is coming from older people, many moving here from out of state.

    Buckeye and Queen Creek are also much hotter than last year at this time.

    March 8 – The single-family Cromford® Market Index chart for the 17 largest cities is looking like this:

    The West Valley continues to improve with Avondale up an astonishing 19% over the last month and Buckeye & Peoria up 7% and 6% respectively.

    The Southeast Valley is stable and very favorable to sellers, but Chandler at the top is giving up a little ground.

    The deteriorating cities include Cave Creek and Paradise Valley, with the former in danger of slipping into a balanced market.

    March 7 – Looking at the recordings in Maricopa during February we can see some significant changes in 2018 versus 2017.

    16.6% of buyers were investors. This is the highest percentage for 2 years and much higher than the 14.5% we observed in February 2017.

    Second homes are back in fashion. 17.9% of owner-occupied homes were second homes rather than primary residences. This is the highest percentage since March 2014, almost 4 years ago. In February 2017 the percentage was only 13.9%

    It seems that traditional primary residence buyers are fading a little, dropping from 75% in February 2017 to 70% of purchases in February 2018.

    March 4 – Prices are moving upwards faster than last year or 2016. The rate of appreciation, based on the annual average price per square foot across all areas & types within the ARMLS database, reached 7% on March 3, 2018. The last time we saw an overall number of 7% or more was in February 2015, when the appreciation rate was declining fast.

    Now it is has been on a clear upward trend since November 2017.

    Previous periods where appreciation has exceeded 7% were:

    • April 2004 to Feb 2007 (bubble rise and fall)
    • July 2012 to Feb 2015 (rebound after collapse)

    Overall appreciation rates over 7% are abnormal and we therefore need to monitor the market closely for signs of over-heating. You can monitor the overall appreciation rate using our weekly chart.

    March 3 – A little late with the Cromford® Market Index table for the largest 17 cities, but here it is. Only single-family homes are included.

    Clearly the Southeast Valley is out-performing the rest of the valley, holding the top 4 spots. However, both Chandler and Queen Creek saw slight declines and only Tempe retains much momentum.

    The West Valley has started to catch up with significant improvements for sellers in Avondale, Peoria, Buckeye and Peoria. At number 12, Buckeye is now in the highest position we have seen for a very long time.

    The Northeast Valley is bringing up the rear with all components weaker than they were a month ago. The situation in Cave Creek is the least favorable for sellers, although it remains in the seller`s market zone (over 110).

    The Central Valley (Phoenix) has been on a long slow improving trend and is looking very promising for sellers.

    March 2 – Multi-family permits were very strong in January, almost entirely thanks to a huge project in Tempe. We have 1,300 multi-family units year-to-date which is the second highest total in history. 2006 remains the record holder with 1,322.

    March 1 – January saw much stronger single-family permit counts than last year. The Census Bureau reports 1,613 units across Maricopa and Pinal County, up 21% and the highest January total since 2007.

    Big totals came in from:

    1. Phoenix – 326
    2. Buckeye – 161
    3. Unincorporated Pinal County – 124
    4. Gilbert – 121
    5. Peoria – 116
    6. Maricopa – 110
    7. Unincorporated Maricopa County – 106

     

    © 2018 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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