The Cromford Report – Daily Observations May 2016
May 31 – The latest S&P/Case-Shiller® Home Price Index® numbers came out this morning, covering sales that closed between January and March 2016. The national number showed a larger month to month change of 0.72% but a slightly lower year over year change of 5.15%. More gains were made in the last month than in the prior 7 months. Clearly the latest batch includes enough spring sales (from March) to restart the appreciation race. This will probably continue over the next 2 months
Over the past year the 20 metro areas reported by Case-Shiller rank as follows:
- Portland 12.3%
- Seattle 10.9%
- Denver 10.0%
- San Francisco 8.5%
- Dallas 8.5%
- Tampa 7.6%
- Atlanta 6.5%
- Los Angeles 6.5%
- Miami 6.3%
- Detroit 6.2%
- San Diego 6.2%
- Las Vegas 6.1%
- Phoenix 5.6%
- Charlotte 4.3%
- Minneapolis 3.9%
- Boston 4.3%
- Cleveland 2.8%
- New York 2.7%
- Chicago 1.9%
- Washington DC 1.5%
The west coast continues to appreciate the fastest, with Denver also very strong. Phoenix is below the middle of this pack of 20, but again beat the overall average for the USA.
When we look at the month to month change we see:
- Seattle 2.39%
- San Francisco 2.27%
- Denver 1.60%
- Portland 1.50%
- Dallas 1.41%
- Tampa 1.08%
- Atlanta 1.07%
- Miami 1.05%
- San Diego 1.04%
- Boston 1.02%
- Chicago 1.01%
- Charlotte 0.89%
- Washington DC 0.80%
- Minneapolis 0.77%
- Los Angeles 0.72%
- Las Vegas 0.69%
- Detroit 0.67%
- Phoenix 0.28%
- Cleveland 0.06%
- New York 0.01%
Phoenix was close to the bottom of this table. Those who predicted a dramatic slowing in appreciation for the San Francisco market last year appear to have been mistaken. I am looking at you, Zillow.
May 30 – Looking specifically at condo / townhouse new homes we see the following changes between the first 4 months of 2015 and the same period in 2016:
- Phoenix – up from 90 to 103 units closed
- Scottsdale – up from 39 to 78
- Mesa – down from 56 to 54
- Chandler – up from 5 to 12
- San Tan Valley – up from 0 to 9
- Goodyear – down from 14 to 6
- Cave Creek – down from 9 to 4
- Tempe – up from 0 to 4
- Fountain Hills – down from 8 to 3
- Buckeye – down from 6 to 3
- Maricopa – flat at 1
Gilbert (4), Litchfield Park (2), Surprise (2) and Apache Junction (1) made the list in 2015 but there have been no condo or townhouse closings so far this year.
May 29 – Because new home sales are the fastest growing segment of the market, we will take a closer look at figures from the first 4 months of the year and compare them with January through April 2015.
Using only those cities with at least 50 new homes closed in both periods we see the following growth:
- Chandler – up 134% from 130 to 304 units closed
- Laveen – up 74% from 62 to 108
- Mesa – up 61% from 322 to 517
- Peoria – up 53% from 345 to 527
- Buckeye – up 49% from 217 to 324
- Florence – up 46% from 59 to 86
- Queen Creek (Maricopa County only) – up 44% from 197 to 283
- Goodyear – up 44% from 190 to 273
- Scottsdale – up 43% from 111 to 159
- San Tan Valley (including parts of Queen Creek in Pinal County) – up 39% from 181 to 252
- Maricopa – up 32% from 77 to 102
- Phoenix – up 29% from 357 to 459
- Surprise – up 28% from 101 to 129
- Gilbert – up 8% from 392 to 424
- Cave Creek – unchanged at 56 in both years
Almost making this list is Tolleson up 74% from 30 to 58.
May 28 – A new record has been set this past week – the lowest number of foreclosure notices we have ever seen in Maricopa County for a 30-day average. Just 29 per working day between April 27 and May 26. The previous low was 30 and set in April 2006.
May 27 – Below is the ranking table of the Cromford® Market Index for the single family markets in the largest 17 cities.
This is the first time we have ever seen the city of Phoenix doing worse than any other city during a monthly comparison period. It has not dropped much, from 134.2 to 131.4, and is still comfortably inside the “seller’s market” zone. However every other city either improved of just deteriorated by a very tiny amount.
The situations in Fountain Hills and Paradise Valley have improved greatly thanks to a drop in the number of active listings and an uptick in demand measurements.
Avondale is still way out in front thanks to its ridiculously poor supply. We have to go back to 2011 to find a Supply Index reading over 100 in Avondale.
Apart from the places already mentioned Mesa and Goodyear are seeing the strongest percentage improvement over last month.
So what is going on in Phoenix? Well supply is still rising, which is unusual for the time of year, not by a lot but in this respect Phoenix is out of step with most of the other cities in our region.
May 26 – Judging by the multi-family permits reported by the Census Bureau, we are well past the peak in the apartment development boom in Maricopa (& Pinal) Counties. There were just 83 units receiving permits in April, the lowest total since November 2013. The rolling 12 month average is down to 6,600, far below the peak of 8,900 reached in December 2014. The monthly numbers are very volatile so the low April count is not so significant. The rolling average is very significant however and is at its lowest level since February 2014.
The year to date count is 1,730, well down from 2,313 at this point last year, which in turn was well down from 3,963 in 2014.
May 25 – The Census Bureau has finally got its permit database back online so we are able to report the April single family permits for Maricopa and Pinal counties. The total during the month was 1,684, which is only 3% higher than for April 2015. The total year to date after 4 months is 6,120, which is 23% higher than last year, so April presents a much slower growth over last year than we saw during the first quarter. It is still the largest total for April since 2007.
The individual areas rank as follows:
- Phoenix – 241
- Mesa – 225
- Gilbert – 177
- Chandler -163
- Goodyear – 118
- Peoria -113
- Buckeye – 108
- Unincorporated Pinal County – 106
- Unincorporated Maricopa County – 102
- Queen Creek – 98
Compared with March, we see growth in Mesa, Goodyear and unincorporated Maricopa County. The other 7 areas declined a little.
May 24 – Good news from the National Association of REALTORS®. REALTORS are getting younger!
The median age of a REALTOR reduced from 57 in 2014 to 53 in 2015, the lowest since 52. This means a lot more young people are joining the real estate industry. Given that the median age of a person in the labor force is 42, we have some way to go before the significant age gap is eliminated. The median experience level also fell from 12 years to 10 years. With 20% of NAR members reporting 1 year or less of experience that is a lot of new blood since 2014.
In the 2014 report 40% of REALTORS were 60 or older. This has dropped to 31% in 2015.
Not so good news is that the median income of NAR members dropped from $45,800 in 2014 to $39,200 in 2015. There is a strong correlation between years of experience and income level.
We have been observing large increases in the number of ARMLS members over the past two months. Today we topped 36,000 entries in the agent database. As recently as March 24, we saw fewer than 35,000. That is an increase of 500 a month. All of the top 20 offices (by number of agents) except 1 saw increases in the number of agents. The highest increases were at:
- HomeSmart, Scottsdale (added 6.9% to go from 970 to 1,037 agents)
- Realty ONE Group, Goodyear (added 6.7% to go from 254 to 271 agents)
- Revelation Real Estate, Chandler (added 6.0% to go from 448 to 475 agents)
Among the smaller offices by agent count, Launch Real Estate, Scottsdale grew 21% from 88 to 107 agents. My Home Group, Tempe grew 12% from 200 to 223 agents and My Home Group, Scottsdale grew 29% from 149 to 192 agents. Show Appeal Realty, Scottsdale grew by 13% from 112 to 127 agents, as did Keller Williams Realty Professional Partners, Goodyear from 87 to 98 agents.
Many other offices grew significantly but the ones mentioned in the paragraph above seem to be recruiting at the fastest rate among those starting with at least 80 agents to begin with.
May 23 – New homes in Maricopa County have been selling even better than in Pinal County, with closed unit volume for the first 4 months of 2016 up an astonishing 41% from the same period last year. The number of closings was 3,787 versus 2,690. Average new home pricing stands at $366,693 across Maricopa County for April, down 5.6% from $388,317 in April 2015. However this is mostly due to a 4.9% fall in the average home size from 2,594 sq. ft. to 2,468 sq. ft.
The busiest ZIP codes were:
- Peoria 85383 – 463 at an average of $139.68 per sq. ft.
- Gilbert 85298 – 302 at $141.46
- Queen Creek 85142 – 283 at $123.12 (Maricopa section only)
- Mesa 85212 – 257 at $132.08
- Buckeye 85396 – 181 at $134.73
- Goodyear 85338 – 164 at $120.16
- Chandler 85249 – 147 at $143.26
- Buckeye 85326 – 143 at $107.44
- Phoenix 85085 – 126 at $152.50
- Goodyear 85395 – 109 at $150.27
- Laveen 85339 – 108 at $109.66
- Chandler 85286 – 106 at $150.54
- Mesa 85209 – 77 at $141.24
- Mesa 85207 – 76 at $164.06
- Phoenix 85041 – 64 at $104.48
- Surprise 85379 – 60 at $109.40
- Tolleson 85353 – 58 at $106.68
- Cave Creek 85331 – 56 at $202.43
- Gilbert 85295 – 52 at $137.62
- Gilbert 85296 – 51 at $131.64
Among the expensive ZIP codes, the busiest for new home closings were Scottsdale 85255 with 47 at an average of $321.04 per sq. ft. and Scottsdale 85251 with 43 at $335.05 per sq. ft.
May 22 – The new home business has been picking up in Pinal County. During the first 4 months of 2016 there were 578 deeds for newly constructed homes filed by the Pinal County Recorder, up 24% from 466 during the same 4 months of 2015. In 2015 we saw a very slight decline over the same period in 2014.
The busiest ZIP codes were:
- San Tan Valley 85140 – 131 at an average of $126.31 per sq. ft.
- Maricopa 85138 – 102 at $94.80
- Florence 85132 – 86 at $100.27
- San Tan Valley 85143 – 73 at $105.64
- Queen Creek 85142 – 48 at $110.35 (Pinal section only)
- Oracle 85623 – 35 at $191.20
- Eloy 85131 – 32 at $151.07
- Tucson 85739 – 23 at $144.72
- Red Rock 85145 – 17 at $89.73
- Casa Grande 85122 – 9 at $93.07
- Casa Grande 85194 – 9 at $135.70
- Apache Junction 85119 – 8 at $147.45
- Apache Junction 85120 – 3 at $110.94 (Pinal section only)
- Gold Canyon 85118 – 2 at $257.13
The overall average price per sq. ft. was $118.29 so far this year. This is actually down slightly from last year when we saw $119.23. Last year the average home was 2,129 sq ft. This has dropped slightly to 2,111 sq. ft. As well as being mostly cheaper than in Maricopa County, new homes are considerably smaller on average in Pinal. Red Rock, Casa Grande and Maricopa offer the cheapest price per sq. ft.
The pricing for 85140, 85739, 85131 and 85623 is influenced to the upside by a strong showing by 55+ age restricted or age targeted communities. The homes in these areas tend to be much more expensive than similar homes outside of the 55+ subdivisions, because of all the additional community facilities provided by the developer.
May 21 – I recommend the appreciation chart for major cities based on the annual average sales price per square foot. It is a trailing indicator but gives us a very good impression of how prices have been behaving over the past 24 months. At the moment we see the following ranking for the largest 17 cities:
- Glendale +9.1%
- Avondale +8.4%
- Tempe +8.2%
- Buckeye +8.2%
- Phoenix +7.7%
- Maricopa +6.9%
- Queen Creek +6.9%
- Mesa +6.3%
- Surprise +5.9%
- Chandler +5.6%
- Peoria +5.5%
- Gilbert +4.6%
- Goodyear +4.5%
- Fountain Hills +2.1%
- Cave Creek +1.5%
- Scottsdale +1.2%
- Paradise Valley -1.4%
Fountain Hills and Cave Creek have both improved over the last few weeks but were weak before that. Paradise Valley peaked at +9.3% last August but has seen a worsening trend since then. Scottsdale has been very steady at 1% to 2%, but this hides higher appreciation in the south and negative appreciation in the north. Everywhere else is showing strong and steady gains in pricing, particularly the central areas and inner west valley.
May 20 – Although most luxury markets in Greater Phoenix, and across the USA are not being very helpful to sellers at the moment, there is one major exception. That would be Arcadia – the area south of Camelback and split between 85018 and 85251. We do not count locations south of the canal.
Sales of homes over $2 million were up 180% during the 3 month period February through April 2016, compared to a year earlier. That is a rise from 5 to 14 homes, with an average sales price per square foot up from $520.75 to $581.75 (up almost 12%). There were even two homes that closed for more than $1000 per sq. ft. and sold for $11.2 million and $7.2 million.
The overall average for Arcadia has reached $413.87 per sq. ft. which is significantly above the level of Paradise Valley, which fell to $336.11 during the same period. There were also 5 newly constructed homes that closed during the last 3 months, averaging $532.21 per sq. ft.
No wonder agents are using their imagination and attempting to extend the boundaries of Arcadia to the south and west.
May 19 – Taking another look at the single family markets in the 17 largest cities we see the following changes in the Cromford® Market Index over the past month:
Improving markets dominate with 14 of the 17, but Phoenix is one of the markets that has deteriorated slightly, and as it represents a quarter of the total market, we should watch this trend carefully.
Fountain Hills and Paradise Valley are starting to recover from their recent slump while Scottsdale is clawing its way back toward 100 again. The Southwest (Avondale. Goodyear and Buckeye) are still improving nicely for sellers.
May 18 – Our last analysis by area will look at the single family market in Pinal County, comparing pricing between Feb and Apr 2016 with one year earlier.
- Homes under $250,000 – average rise of 7.7% in $ per sq. ft.
- Homes between $250,000 and $500,000 – average rise of 4.2% in $ per sq. ft.
- Homes over $500,000 – average fall of 5.5% in $ per sq. ft.
The fastest appreciation is to be found in:
- Florence 85132 +17.1%
- Maricopa 85138 +11.8%
- Queen Creek 85142 +11.5%
- Maricopa 85139 +9.3%
- San Tan Valley 85140 +8.8%
- Apache Junction 85120 +8.7%
The weakest places for appreciation are:
- Gold Canyon 85118 -5.8%
- Coolidge 85128 +1.3%
- Apache Junction 85119 +1.4%
- Casa Grande 85122 +1.7%
May 17 – Turning our attention to the single family market in the Northeast Valley, we see lower appreciation rates between Feb – Apr 2015 and Feb – Apr 2016. This is because a much larger share of the northeastern market is dominated by luxury homes that are in plentiful supply.
- Homes under $500,000 – average rise of 5.8% in $ per sq. ft.
- Homes between $500,000 and $1,000,000 – average rise of 0.0% in $ per sq. ft.
- Homes over $1,000,000 – average fall of 2.2% in $ per sq. ft.
The fastest rising prices are to be found in:
- Scottsdale 85257 +13.0%
- Scottsdale 85254 +10.4%
- Carefree 85377 +7.8%
- Fountain Hills 85268 +7.4%
- Scottsdale 852517 +5.3%
The weakest places for appreciation are:
- Scottsdale 85266 -13.1%
- Rio Verde 85263 -4.2%
- Scottsdale 85260 -4.1%
- Paradise Valley 85253 -4.1%
- Scottsdale 85255 -1.3%
- Cave Creek 85331 -0.5%
- Scottsdale 85250 +0.2%
- Scottsdale 85259 +0.5%
- Scottsdale 85258 +1.8%
- Scottsdale 85262 +2.0%
May 16 – Today we are looking at Phoenix and the North Valley to see what happened to single family prices between Feb – Apr 2015 and Feb – Apr 2016.
- Homes under $250,000 – average rise of 10.6% in $ per sq. ft.
- Homes between $250,000 and $500,000 – average rise of 3.9% in $ per sq. ft.
- Homes over $500,000 – average rise of 1.6% in $ per sq. ft.
The small rise in pricing for homes over $500,000 is a better performance than the outer areas of the valley..
The fastest rising prices are to be found in a long list of ZIP codes, mostly in the center, west and south of Phoenix:
- Phoenix 85004 +55.0% (very volatile due to small sample and huge range of price values)
- Phoenix 85040 +27.1%
- Phoenix 85031 +25.1%
- Phoenix 85007 +20.0%
- Phoenix 85017 +18.9%
- Phoenix 85033 +18.5%
- Phoenix 85009 +18.0%
- Phoenix 85020 +16.5%
- Phoenix 85006 +16.4%
- Phoenix 85037 +15.9%
- Phoenix 85035 +15.3%
- Phoenix 85042 +15.2%
- Phoenix 85014 +15.0%
- Phoenix 85015 +14.8%
- Phoenix 85019 +14.8%
- Phoenix 85013 +14.7%
- Phoenix 85029 +14.3%
- Phoenix 85008 +14.1%
- Phoenix 85007 +13.9%
- Phoenix 85043 +12.7%
- Phoenix 85027 +12.1%
- Phoenix 85051 +11.7%
- Phoenix 85041 +11.1%
- Phoenix 85022 +10.0%
The weakest places for appreciation are:
- Phoenix 85016 -10.6%
- Phoenix 85021 -1.3%
- Phoenix 85028 -0.6%
- Phoenix 85054 +1.3%
May 15 – Turning our attention to the West Valley single family market, we see even more contrast between the low and high end of the market.
- Homes under $250,000 – average rise of 10.4% in $ per sq. ft. between Feb – Apr 2015 and Feb – Apr 2016
- Homes between $250,000 and $500,000 – average rise of 1.2% in $ per sq. ft.
- Homes over $500,000 – average fall of 5.0% in $ per sq. ft.
The fastest rising prices are to be found in:
- Glendale 85301 +22.5%
- Youngtown 85363 +18.8%
- Tolleson 85353 +15.7%
- Sun City 85351 +15.3%
- Glendale 85303 +14.1%
- Glendale 85302 +12.1%
- Buckeye 85326 +11.6%
- Peoria 85345 +11.3%
- Laveen 85339 +11.2%
The weakest places for appreciation are:
- Glendale 85310 -1.1%
- Peoria 85381 +0.9%
- Peoria 85383 +3.2%
- Surprise 85374 +3.8%
All other areas are over 5%
May 14 – Today we are taking a closer look at the pricing patterns in the Southeast Valley. Comparing price per sq. ft., during the last 3 months (Feb thru Apr) with the same months in 2015, we see the following for single family homes:
- Homes under $250,000 – average rise of 9.0% in $ per sq. ft.
- Homes between $250,000 and $500,000 – average rise of 3.1% in $ per sq. ft.
- Homes over $500,000 – average fall of 3.3% in $ per sq. ft.
Clearly this means we are seeing better pricing in the least expensive areas while prices decline in the more luxurious locations. This is confirmed by the an analysis by the fastest appreciating ZIP codes:
- Tempe 85281 +16.3%
- Mesa 85204 +15.2%
- Chandler 85224 +13.4%
- Mesa 85208 + 12.8%
- Tempe 85283 +12.1%
- Mesa 85201 +11.6%
- Mesa 85210 +11.5%
The weakest appreciation is in
- Mesa 85207 -2.3%
- Phoenix 85045 -1.7%
- Chandler 85286 +1.0%
- Phoenix 85048 +1.6%
- Mesa 85215 +1.6%
May 13 – During the first 4 months of this year we saw 32,177 sales recorded in Maricopa County with an Affidavit of Value. 99.3% of these sales were to people giving a USA address. Only 212 buyers (0.7%) gave a foreign address.
In 2015, the equivalent number was 29,019, so sales are up by almost 11%. However sales to people with foreign addresses are down by 45%. Canadians represent 77% of all foreign buyers in 2016, down from 93% in the first 4 months of 2015. Foreign buyers excluding Canadians have almost doubled from 25 to 48, but this is still a tiny number (0.15%) of the overall market.
Chinese buyers have grown from 6 to 10 units, but these units are very low priced – averaging just $127,260 per home. We can see no sign of the Chinese buyers of luxury properties that have been active in California and other coastal areas. The few Chinese buyers in Phoenix are mostly investing in rental condominiums.
A few foreign buyers have purchased luxury homes. By far the most expensive property going to a foreign-based buyer (a $6 million home in Arcadia) was bought by a company registered in Guadalajara, Mexico.
We also see lone buyers of luxury homes over $1 million from Switzerland and Spain. That is pretty much it. With the Canadians selling more homes than they are buying, our local market is almost completely dominated by domestic buyers.
May 12 – This week the Cromford® Market Index table for the single family markets in the 17 largest cities is looking better for sellers everywhere except Cave Creek:
I admit that the change in Phoenix is also negative for sellers, but a change of less than 2% is hardly statistically significant. The West Valley is still improving fastest with most of the big movers located west of I-17:
- Buckeye +17%
- Peoria +8%
- Avondale +7%
- Goodyear +7%
Sellers in Paradise Valley and Fountain Hills get some relief at last from the discouraging trends of the past several month, and Queen Creek continues its improving trend.
May 11 – We often get asked about the total number of single family homes and condo / townhouse properties in our area. Here are the total numbers of parcels with those “use types” reported by the Maricopa County assessor in each tax year. Note that the numbers established about 15 months prior to the corresponding calendar year.
|Tax Year||Active Single Family Parcels (Use Types 01, 86, 87)||Active Condo / Townhouse Parcels (Use Types 07, 85)|
The number of parcels is not quite the same as the number of properties, since some homes sit on multiple parcels and some parcels contain multiple homes.
You can see how little the inventory of homes has grown since tax year 2010 (measured October 2008), especially for condos & townhomes.
May 10 – The Black Knight Financial Service Mortgage Monitor report for March shows a dramatic fall in delinquency over the past 2 months. There is something of a seasonal pattern in these numbers and January to March is the time of year when the delinquency rate tumbles almost every year. However it is significant that the total delinquency rate for the USA is now at pre-housing crisis levels and the 30-day delinquency rate is the lowest in well over 15 years.
For Arizona we have 2.9% of first home loans delinquent and 0.5% in foreclosure, making 3.4% of loans non-current. The long term average is 5%. Arizona ranks 43 out 51 states (including DC) for non-current loans and 49 out of 51 for homes in foreclosure.
For those who like working foreclosures, Arizona is not a very productive location any more. The best spots would be:
- New Jersey 4.3%
- New York 3.7%
- Hawaii 3.5%
- Maine 2.7%
- Florida 2.6%
- New Mexico 2.4%
- Delaware 2.3%
- District of Columbia 2.2%
- Rhode Island 2.2%
- Connecticut 2.1%
May 9 – The detailed single family permit counts have finally been released for March by the US Census Bureau. The total for Maricopa and Pinal counties is confirmed as 1,797, which is the highest monthly total since August 2007. It is also an increase of 25% over March 2015.
For the first quarter of 2016 we can now show 4,436 single family permits in total, up 33% from 3,333 last year and the highest number since 2007, when there were 8,710. The top locations so far in 2016 are:
- Phoenix 656 – up 47% from 445 in Q1 2015
- Mesa 478 – up 76% from 271
- Gilbert 468 – down 1% from 475
- Peoria 374 – up 22% from 307
- Unincorporated Pinal County 358 – up 37% from 261
- Chandler 340 – up 73% from 196
- Buckeye 314 – up 64% from 191
- Queen Creek 239 up 24% from 192
- Scottsdale 212 – up 13% from 187
- Goodyear 200 – down 17% from 242
- Maricopa 200 – up 36% from 147
So Mesa and Chandler are the two cities with the fastest growth in new home construction while Goodyear and Gilbert are decelerating.
May 8 – Rental listings are getting scarcer, probably because it is so easy to fill a rental with a tenant without resorting to creating an ARMLS listing. So far in 2016 we have seen 12,039 new rental listings (we exclude vacation rentals). This is down 13% from the 13,844 we saw during the same period in 2015. In turn this was down 13% from the 15,937 in 2014, which was also down 17% from the 19,154 in 2013. Since 2013 new rental listings have declined by 37%.
May 7 – At the opposite end to yesterday’s observation, here are the ZIP codes with the least improvement in pricing over the past year.
- Gold Canyon 85118 -4%
- Phoenix 85045 -3%
- Casa Grande 85194 -3%
- Scottsdale 85266 -2%
- Scottsdale 85260 -1%
- Paradise Valley 85253 -1%
- Rio Verde 85263 -1%
- Cave Creek 85331 -1%
- Phoenix 85016 0%
- Scottsdale 85255 0%
- Phoenix 85054 +1%
- Fountain Hills 85268 +1%
- Scottsdale 85258 +1%
- Carefree 85377 +1%
- Scottsdale 85262 +2%
- Gilbert 85298 +2%
- Scottsdale 85259 +2%
- Phoenix 85048 +2%
- Phoenix 85028 +2%
- Sun Lakes 85248 +2%
With a few exceptions, this list is dominated by many of the most desirable locations in the valley, with the best schools and lowest crime rates. It seems counter-intuitive that the most sought after locations would have the weakest pricing trends. However, it is all about the supply. Across most of the USA we now have an excess of higher end homes going up for sale, too many for normal demand to keep up with. Prices are falling because sellers of luxury homes are competing with each other. Prices are rising at the lowest priced locations because buyers are competing with each other.
May 6 – We often get asked about which ZIP codes have appreciated the most, so here is a list of the top 20 gainers in annual average $/SF over the pat year. We have omitted the smallest ZIP codes which have an insufficient number of transactions to give us a good reading. Only single family homes are included in the calculations.
- Phoenix 85006 +22%
- Phoenix 85031 +22%
- Phoenix 85017 +21%
- Wittmann 85361 +20%
- Phoenix 85008 +19%
- Phoenix 85009 +18%
- Phoenix 85035 +18%
- Phoenix 85040 +18%
- Phoenix 85019 +17%
- Phoenix 85033 +17%
- Glendale 85301 +16%
- Youngtown 85363 +16%
- Glendale 85303 +15%
- Mesa 85210 +14%
- Tempe 85281 +13%
- Phoenix 85051 +13%
- Phoenix 85014 +13%
- Phoenix 85015 +13%
- Glendale 85302 +13%
- Sun City 85351 +12%
We note that the list is dominated by inexpensive locations in the center and inner west valley.
May 5 – It is time to take another look at the Cromford® Market Index for the single family markets in the 17 largest cities within Greater Phoenix:
This is another encouraging picture for most sellers. The West Valley continues to experience very low supply and Avondale, Glendale, Surprise, Peoria, Goodyear and Buckeye all improved over the last month. The Southwest (Buckeye, Goodyear and Avondale
le) was the area where conditions improved substantially for sellers.
We see a very slight softening in three large cities (Phoenix, Mesa, Chandler), while Cave Creek moves from the balanced zone into a buyer’s market.
Three of the weaker areas of late (Paradise Valley, Fountain Hills and Scottsdale) showed some slight improvement compared with April 5, but the first two of these remain very favorable for buyers.
May 4 – As appreciation rates have declined from the huge numbers (both negative and positive) during the disruptive period of 2003-2013, it has become more obvious that our usual method for calculating appreciation is less useful for smaller segments of the market. Our method has been to take the monthly average price per square foot and compare it with the same measurement one year earlier. This works quite well for the entire market but as you break the market into smaller segments, the volatility in their monthly average $/SF become excessive. Therefore we are changing our method to use the annual average $/SF instead of the monthly average to measure appreciation for all segments of the market. We will still use our original method for measuring the entire market (all areas & types).
Using the new method here is a ranking of the cities by appreciation rate, based on the 12 month change in their annual average $/SF for single family detached homes.
- Tonopah 27.0%
- Wittmann 19.7%
- Youngtown 16.3%
- Tolleson 10.8%
- Eloy 10.7%
- Sun City 10.5%
- El Mirage 9.8%
- Glendale 9.8%
- Avondale 8.7%
- Waddell 8.2%
- Laveen 8.1%
- Florence 7.8%
- Tempe 7.8%
- Buckeye 7.5%
- Arizona City 7.4%
- New River 7.4%
- Phoenix 7.3%
- Maricopa 7.2%
- Coolidge 7.1%
- Queen Creek 7.0%
- Mesa 6.6%
- Sun City West 6.4%
- Surprise 6.4%
- Apache Junction 6.3%
- Anthem 5.7%
- Chandler 5.5%
- Peoria 4.8%
- Gilbert 4.7%
- Desert Hills 4.7%
- Goodyear 4.4%
- Wickenburg 4.4%
- Litchfield Park 3.4%
- Sun Lakes 2.9%
- Casa Grande 1.6%
- Scottsdale 1.4%
- Carefree 1.3%
- Fountain Hills 0.5%
- Cave Creek -0.5%
- Rio Verde -0.5%
- Paradise Valley -0.7%
- Gold Canyon -3.9%
We note that 10 out of the top 11 cities are in the West Valley. The lone exception is Eloy, where prices are being helped a lot by new home sales in the Active Adult community Robson Ranch. Prices in Robson Ranch are much higher than the average home with a postal address in Eloy
6 out of the bottom 7 cities are in the Northeast Valley. In fact all of the northeastern cities are in the bottom 7. This underscores how badly the luxury market has been affected by excessive supply. If you were to remove all sales over $500,000 you would get a different picture of the Northeast Valley:
- Paradise Valley 26.1% (but only 3 sales a year were under $500,000)
- Carefree 8.5%
- Scottsdale 5.5%
- Fountain Hills 4.6%
- Cave Creek 1.0%
- Rio Verde 0.0%
We can disregard the Paradise Valley number since there is almost no market in PV under $500,000. The appreciation numbers for Carefree, Scottsdale and Fountain Hills are perfectly respectable for the market under $500,000. However Cave Creek & Rio Verde seem to be stuck in neutral even for the lower price ranges. Gold Canyon is also neutral at 0.3% if we exclude homes over $500,000, but as with Cave Creek & Rio Verde, neutral is better than the negative appreciation we see when we include all homes.
All the above numbers are based on ARMLS closings, not total recorded deeds.
May 3 – Ellie Mae has introduced what they call their “Millennial Tracker™” , which provides some statistics about mortgages closed by millennial borrowers (born 1980-1999). For the Phoenix metro area, they report that:
- millennials comprise 26% of all borrowers
- 45% of millennial borrowers were married
- average age was 29
- average loan amount was $195,966
- 85% of loans were for purchase and 15% for refinancing
- 52% of loans were conventional with 47% FHA and 1% VA
- average loan took 45 days to close
- average FICO score for successful borrower was 716
- average appraised value was $225,199
- average loan-to-value was 89%
In the Tucson metro area, only 22% of borrowers were millennials.
Across the country the percentage of borrowers who were millennials varied from lows of 10% (Sarasota FL and Myrtle Beach SC) to 45% (Laredo TX). The northeast and mid west has the highest percentage of millennial borrowers. Most of California has low percentages, probably because of extremely high prices. For example San Francisco is 16%, Los Angeles 16% and San Diego 17%.
All this data relates to the first quarter of 2016 and you can examine for yourself here.
May 2 – April was not a good month for the super-luxury market. Only 5 listings over $3 million closed escrow compared with 19 in April 2015. The average price per square foot was down 8% from last April and dollar volume was only $16 million, not impressive after 2015’s monster total of $81 million. The only bright spot in this rarified market is that we have 18 pending listings, one more than last year. That means we can justifiably hope for a stronger May and/or June. We certainly need a few strong months because at 5 sales per month we now have 65 months of supply enough to last until the fourth quarter of 2021.
May 1 – The Census Bureau still reports that their detailed database by county or place is “unavailable due to maintenance”. After two months I have to assume something very bad has happened to it and they are having trouble recovering from backup. In the meantime we have to make do with totals for the state and for the metropolitan areas. The Phoenix-Mesa-Scottsdale metro is showing 1,797 permits for single family homes for March. This is 25% higher than the 1,438 they reported for March 2015. So far this year we have seen 4,436 in the first 3 month which is up 33% from last year.
If the remaining 3 quarters kept up this differential we would see more than 22,000 permits for the whole year. However it remains to be seen if this pace will continue to hold.
© 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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