The Cromford Report – Daily Observations May 2017
May 31 – Attached homes have been gaining popularity and market share over detached homes in 2017. This is a fairly new trend but one which is becoming firmly established and appears to be quite significant. You can see this is the ARMLS numbers, but it is even more obvious in the public record data we store in the Cromford® Public site. (The reason is that new homes are included in the public records but only a small percentage of new homes hit the MLS).
First, let us take a look at the ARMLS data. The year-to-date sales for May 28 is compared with the same period in 2016
|Dwelling Type||Closed Listings YTD 2016||Closed Listings YTD 2017||Change|
|All Attached Homes||5,486||6,184||+12.7%|
|Single-Family Detached Homes||28,742||31,087||+8.2%|
Single-family detached homes still dominate the market, unlike most large conurbations in the USA. However attached homes, mainly townhomes and condominiums but also including a few duplex, triplex and four-plex units, are growing sales faster. Sales are up almost 13% compared with single family sales up by just over 8%. Mobile homes lag behind at under 4% growth.
The growing demand for attached homes is also reflected in pricing
|Dwelling Type||Average $/SF YTD 2016||Average $/SF YTD 2017||Change|
|All Attached Homes||$143.34||$159.07||+11.0%|
|Single-Family Detached Homes||$141.44||$148.99||+5.3%|
Not so long ago (2014), the average price per sq. ft. for attached homes was 2.3% lower than for attached homes. Now a significant gap has opened up. The gap first appeared in 2015 where we can see attached homes with a 1.4% pricing advantage for the same sq. ft. In 2016 this stayed roughly the same at 1.3%. But in 2017 so far, this gap has widened to 6.8% and is causing me to take more notice.
Some of this trend is due to the introduction of more luxury condos into the market, sometimes selling at very high $/SF, especially for the upper floors and most particularly for the top floor. However this would not be reflected in the numbers above if buyers were not responding enthusiastically. We see baby boomers in particular losing enthusiasm for large and remote detached homes and opting to move closer to the city centers and to properties with more shared facilities that they do not have to manage themselves.
Because the trend in favor of attached homes is reflected in both unit volumes and pricing, we are seeing an even stronger result when we look at dollar volumes:
|Dwelling Type||Dollar Volume YTD 2016||Dollar Volume YTD 2017||Change|
|All Attached Homes||$1,011M||$1,294M||+28.0%|
|Single-Family Detached Homes||$8,487M||$9,722M||+14.5%|
All segments are expanding, but attached homes are achieving almost twice the growth rate of detached homes in terms of dollars spent.
We should point out that single-family detached homes still represent an impressive 87.5% of the total dollar volume. However, this has declined from the 89.1% we saw in YTD 2014
May 30 – One of our favorite charts is the Annual Appreciation by Major City, based on annual average $/SF. You can find it here.
Avondale, Buckeye and Maricopa are at the top of the chart with appreciation rates around 9% to 10%.
We then see a big cluster between 6% and 7%, including Goodyear, Surprise, Queen Creek, Peoria, Mesa, and Glendale.
Phoenix is trending lower from a consistent 7.5% to around 5.8% and is one of the weaker performers in recent months. It is unusual that it is behaving differently from the cities in the cluster above.
Gilbert is very steady at 5.5% while Chandler is slightly weaker at 5%, where it matches Cave Creek which is on a rising trend.
Tempe used to be one the higher performers but has weakened in recent months. Appreciation has dropped from 8.4% last year to only 4.3% this week.
Scottsdale is steady at around 3%, a lower rate that all of the other big cities. This is because it is dominated by the luxury market which has seen much lower appreciation than the rest of the market. Despite this overall weak trend in luxury homes, Paradise Valley has improved significantly. Last year at this time it was showing negative appreciation, but has recovered to 5% as of this week. However it is one of the most volatile of the cities due to its relatively low annual sales count.
Fountain Hills is in last place with 0.7% having peaked at 4.4% last December.
May 29 – Another 828 multi-family units in Maricopa and Pinal Counties received building permits during April according to the Census Bureau. That brings the year-to-date total to 2,672, up from 1,730 last year. The rolling 12 month total has hit 10,587, a figure we have not seen since January 2008. Not much sign of any slowdown there, despite warnings from some quarters that lenders are losing interest in backing some of these projects.
The year-to-date multi-family permit counts look like this:
- Phoenix – 1,075
- Glendale – 471
- Chandler – 404
- Peoria – 357
- Mesa – 160
- Surprise – 135
- Unincorporated Pinal County – 38
- Paradise Valley – 12
- Scottsdale – 10
- Tempe – 6
- Apache Junction – 4
May 28 – The Census Bureau reports that 1,838 single-family building permits were issued in Maricopa and Pinal Counties during April, up 9.1% from 1,684 last year.
This brings the year to date total to 6,626 which is up only 8.3% from 6,120 last year. This is very modest by the standards of all the years from 1996 to 2007. The quietest of those years (1997) gave us 10,153 permits during the first four months and in 2017 we are down 35% from 20 years ago.
Based on current trends, we are not going to see new home building make any significant dent in the supply problem. With their cautious hats on, the developers probably like things that way. It keeps prices up and avoids any risk of overbuilding.
The current 12 month rolling average is 18,893, up 5.5% from 17,913 last year.
For those with a subscription to Cromford® Public, we provide the following Tableau charts for the period 1996 onwards:
- monthly permit counts
- quarterly permit counts
- annual counts
- year-to-date permits counts
- rolling 12 month counts
Filters are provided for county and place name, as well as date ranges.
The top permit producing places year-to-date in Arizona are:
- Mesa – 872
- Phoenix – 793
- Buckeye – 694
- Unincorporated Pinal County – 623
- Peoria – 611
- Gilbert – 567
- Queen Creek – 446
- Goodyear – 412
- Maricopa – 399
- Unincorporated Pima County – 248
Glendale is particularly slow at 54 (less than Kingman and Prescott) and Avondale only slightly better at 74 (less than San Luis and Sahuarita). It is no wonder that supply is such a long term problem in these two cities.
May 25 – The Cromford® Market Index table for the single-family markets in the largest 17 cities is failing to provide sellers with encouragement this week:
Here we find 6 cities have improved over the past month while 11 have deteriorated. In addition, 4 of the improving cities were up by 1% or less, leaving only Peoria (6%) and Fountain Hills (12%).
To balance this, the deteriorating cities were mostly down by small percentages of 3% or less, with only Tempe (down 23%) showing a large change.
The market remains strongly favorable to sellers, with all cities having a CMI over 100 and all but 2 over 110. However there is no denying that the slight changes that are visible tend to be more favorable to buyers than sellers.
With only 3 cities making major moves over the last month, here are the headlines:
- Tempe has seen a significant increase in available active listings (211 to 247 in the past month)
- Fountain Hills has seen a drop in supply coupled with increased demand
- Supply has tightened in Peoria
May 23 – When their listing gets an accepted offer, a large number of agents use Active – Under Contract Accepting Backup Offers (UCB) instead of the traditional Pending status these days. Today we have 8,048 listings in pending status and 5,177 in UCB (or CCBS) status.
One of the side effects of this is much higher days on market counts than we used to see. When a listing goes pending it stops accumulating days on market, but when it is in UCB status it is still on the market and continues to accumulate days on market. Today we see that pending listings have an average of 59 days on market while UCB (and CCBS) listings have an average of 80.
This increase in days on market is then reflected in the statistics for closed listings. Today we have an average of 71 cumulative days on market for listings closed in the last month. If it were back before the days of Zillow, this reading would be under 60.
This is another reason why do not recommend average days on market as an accurate way of measuring the state of the market.
May 22 – Subscriber Ben Graham suggested a number of areas for research, one of which was the relationship between single-level and multi-level homes with respect to pricing. He has a hunch that single-level single-family homes are about 20% more expensive than 2-level single-family homes on a $/SF basis. Based on all sales within Greater Phoenix on ARMLS, where the field “Floors” has an entry, then Ben is not far off the mark.
We find that single-level homes are 18% more expensive on a price per sq. ft. basis than 2-level homes. Mind you, they are 16% cheaper based on average price and 29% smaller based on average living space.
Homes with more than 2 levels are uncommon, but they are actually more expensive – 11% more expensive than single-level homes on a price per sq. ft. basis and 59% larger based on average living space.
May 21 – Here is a table showing the annual change in annual average price per sq. ft. for single family homes for various cities. The cities are ranked by the most recent annual rate of change.
|City||Annual Change in Annual Average $/SF May 2015||Annual Change in Annual Average $/SF May 2016||Annual Change in Annual Average $/SF May 2017||Current Trend in Appreciation Rate|
|Sun City West||4.5%||6.6%||7.9%||weakening|
It is interesting to note that some cities look quite different using this measure than the one based on median sales prices that we documented on May 19. If in doubt, we recommend the $/SF measure over the median measure.
May 20 – It may seem that the annual average price per sq. ft. is a dull measure and certainly I rarely get any questions about it. However its advantage is that it is an extremely stable and non-volatile measure, especially across a large geographic area. Although price is always a trailing rather than a leading indicator, the difference between the annual average $/SF today and last year is an excellent guide to how strong the market has been in the very recent past. This is our favorite way to measure appreciation.
Keeping things simple, let’s look at the annual average $/SF for all areas & types, measured on a weekly basis in the chart here.
The gap between 2013 and 2014 closed during the latter part of 2014 indicating a significant weakening in the market. In 2015 the annual gap continued to close until May but started to widen from October onwards. The gap has been gently widening since then which indicates we are in a market that is gradually getting stronger. The current gap is 5.54%. Last year it was 5.31% and the year before 4.65%. However in May 2014 it was 16.23%. As long as the gap continues to widen, even just by a little bit, the market is displaying strength. If it starts to narrow, then it is reasonable to experience some concern about a slowdown. Of course, we will be looking out for that on your behalf and reporting it in our observations.
You can use this tool for smaller market segments, but it starts to lose its usefulness if you get down to very small areas with low sales volumes. The sample size is key to success with most statistics. Tomorrow we will look at the annual average $/SF for the larger cities, looking for relative strength and weakness in the recent past.
May 19 – Despite generally strong pricing the monthly median sales price for single-family homes in Phoenix is currently lower at $235,000 in mid May then it was at $240,000 at the end of May last year. You can see this in the weekly chart here. This illustrates that even for a large city like Phoenix, the monthly median sales price can be volatile and give strange results. For a more reliable view of the pricing trends, the annual median is a better guide. It can still be measured weekly, as it is here. We then see a consistent picture of increasing prices with the most recent being $234,000, up from $219,900 last year.
Here is a table raking the cities by the change in their annual median sales price for single-family homes over the past 12 months:
|Rank||City||Annual Median Sales Price May 2016||Annual Median Sales Price May 2017||Change %|
|9||Sun City West||$205,000||$225,000||9.8%|
We have 6 cities that went backwards over the past year based on their annual median sales price. Most surprising is Youngtown which is surrounded by cities that appreciated strongly.
May 18 – Taking another look at the Cromford® Market Index for the single-family markets in the largest cities by dollar volume, we find the following changes over the past month:
We clearly remain in a seller’s market overall, with 15 of the cities over 110, but only 9 cities show improvement from a seller’s perspective over the past month, with the remaining 8 deteriorating.
By far the greatest deterioration has been in Tempe which has seen a large increase in active listings. The remaining 7 deteriorating cities saw changes of 4% or less.
By far the greatest improvement has been seen in Fountain Hills, which has seen declining supply and improving demand. Other improving cities saw changes of 4% or less.
Overall the picture remains unusually stable.
May 14 – For the first time this year, new listings have opened up a lead over last year. It is not a big lead, but we have seen 47,805 additions versus 47,485 last year. This is only 0.67%, but the gap is slightly larger at 0.9% if we look at new listings in the second quarter.
This increase is clearly not large enough to cope with the higher demand this year, so the gap between supply and demand is greater than last year.
The year to date sales chart is quite impressive for 2017. It looks similar to 2010 and not too far behind 2005 and 2011, so ranks third of the last 16 years.
The chart above is a simplified version covering all areas & types. If you would like to apply some filters to this data, I recommend the Tableau long term sales chart. This has a tab at the top which allows you to switch to a sales year-to-date daily view.
May 13 – Recently within the Daily Observations we compiled tables of the top 20 listing agents, top 20 selling agents and top 20 dual agents in the year 2016 by dollar volume.
Now we are compiling a list of the most active agents by total revenue (listing sides plus selling sides). We are also bringing it up to date by calculating over the most recent 12 months, rather than the year 2016.
|Rank||Dual Agent Name||Office||Closed Sides||Listing Agent||Selling Agent||Market Share||Dollar Revenue for Listings Closed (12 Months ending May 10, 2017)|
|1||Jacqueline Moore||OpenDoor Homes||1,383||1,355||28||0.581%||$307M|
|3||Beth Rider||Keller Williams Arizona Realty||481||433||48||0.268%||$142M|
|4||Taylor Mize||Pulte Homes||331||238||93||0.197%||$104M|
|5||Kenny Klaus||Keller Williams Integrity First||380||257||123||0.184%||$97M|
|6||Robert Joffe||Launch Real Estate||51||32||19||0.173%||$92M|
|7||Jason Mitchell||My Home Group Real Estate||196||50||146||0.171%||$90M|
|8||Tracy Norton||LGI Homes||457||261||196||0.165%||$87M|
|9||Walt Danley||Walt Danley Group||51||37||14||0.160%||$84M|
|10||Janine Long||Lockman & Long Real Estate||263||261||2||0.157%||$83M|
|11||JoAnn Callaway||Those Callaways||185||140||45||0.138%||$73M|
|12||Dawn Farad||Lennar Homes||197||197||0||0.133%||$70M|
|13||Brett Tanner||Keller Williams Realty Phoenix||305||157||148||0.130%||$69M|
|14||Russell Shaw||Realty ONE Group||276||210||66||0.126%||$67M|
|15||Carin Nguyen||Keller Williams Realty Phoenix||260||123||137||0.125%||$66M|
|16||Lisa Lucky||Russ Lyon Sotheby’s International Realty||74||51||23||0.124%||$66M|
|17||John Gluch||Re/MAX Platinum Living||174||87||87||0.111%||$59M|
|18||Andrew Bloom||Re/MAX Platinum Living||100||66||34||0.110%||$58M|
|19||Brandon Cleveland||Taylor Morrison Homes||137||137||0||0.108%||$57M|
Between them, OpenDoor and OfferPad represented 0.853% of the market volume over the past 12 months.
Note that several of these names represent teams with all the business being channelled through one lead name. Unfortunately I am unable to compile other team members together if they record transactions under different individuals, because ARMLS does not record team membership in their database.
May 12 – Today there are 38,274 names on the ARMLS roster which is up 6.9% from this time last year when we saw 35,806. Some of these names are affiliates, MLS staff members, office staff, appraisers, etc., so if we only count Agents, Brokers and Salespeople, the total count last year was 33,191 and we now have 35,358, an increase of 6.5%. The number of appraisers is up almost 11% to 477.
The annual sales rate through ARMLS has increased from 85,464 to 93,301 during the same 12 months. This is a rise of 9.2%. This means the average agent is handling 5.28 transaction sides (assuming each sales involves 2 agents, which is not true but will do for our purposes). This is an increase of 2.5% in transaction sides per agent. The average sales price over the past 12 months is $283,284, so the average agent is processing $1,495,034 in transaction volume. Assuming a typical commission of 3%, that amounts to $44,851 per average agent in commission. This is an increase of 8.5% over the same measurement in May 2016.
Of course many of the names listed were not mentioned in any transactions at all. 24,357 unique names appeared in ARMLS transactions in the last 12 months as either the listing agent, selling agent or both. This does not necessarily mean the remaining 11,001 names were completely inactive. Many teams process all their business through the team leader and the other team members names never appear on transactions.
The overall dollar volume has increased 15.6% over the last year. Of the 15.6% increase, our estimate is that 8.5% has flowed to agents as additional revenue per agent and the rest is accounted for by the increase in the agent population.
May 11 – Here is our regular look at the Cromford® Market Index for the single-family markets in the 17 largest cities by dollar volume:
Improving cities outnumber deteriorating cities (for sellers) by 10 to 7.
The big movers over the past month are Tempe (down 14% due to a large increase in supply), Fountain Hills (up 11%), Paradise Valley (up 7%) and Avondale (down 6%).
The remaining 13 cities have moved up or down a relatively modest 4% or less.
The Southeast Valley (with the notable exception of Tempe) is still improving for sellers with Mesa and Gilbert leading the charge and Queen Creek & Chandler following up.
The West Valley is showing weakness, with flagship Avondale in danger of being overtaken by Chandler. Glendale, Goodyear and Buckeye all deteriorated and Peoria and Surprise were the only locations that managed small improvements.
The Northeast Valley is seeing some improvement after a long period of relative weakness, though it is dominated by Scottsdale which is still drifting slightly lower.
May 9 – Although we remain in a market very favorable to most sellers, the Cromford® Demand Index has started to move out of its very tight range between 105 and 107 by heading downwards. At 104.5 it has dropped to the lowest level since January 31. What is causing this (very slightly) negative indication? The answer lies in the number of listings under contract which is starting to look a little weak relative to last year (and the year before for that matter). There is nothing to be too concerned about here yet, but we designed the index to be very sensitive so that any changes or new trends would be observable quickly. The most recent high value was 106.3 on April 18, so we have not seen a big move yet. I would suggest that we keep an eye on this indicator, just in case something more significant develops.
May 8 – By far the most numerous foreign buyers in Central Arizona are Canadians. Between September 2009 and May 2013 we could rely on them to buy at least 200 homes every month, sometimes more than 500. Things started to drop off in June 2014 and reached a very low point in September 2016 with only 18 homes purchased. However activity has been picking up since then. Canadians are nowhere near as active as they once were, but year to date we have seen 208 purchases which is up 28% from 162 in the same period of 2016.
Meanwhile sales by Canadians average about 150 per month. So sales outnumber purchases by about 3 to 1 meaning there is still an exodus going on, just not at the very high ratio of 7 to 1 that we saw in March last year.
We have seen 516 completed sales by Canadians so far this year. If you would like to know which properties they own, we have updated our detailed list of real estate owned by people with Canadian home addresses here.
May 7 – Today we are extending yesterday’s analysis to determine which segments are closest to regaining their peak pricing before the housing crash.
|Segment of the Market (ARMLS closed listings)||Peak Date||Peak Quarterly Average $/SF||Current Quarterly Average $/SF||Increase Required to Match Peak||Increase in Last 12 Months|
|Phoenix (condos/townhouses)||Aug 31, 2006||$186.70||$157.53||18.5%||15.9%|
|Scottsdale (condos/townhouses)||Oct 24, 2007||$257.60||$209.80||22.8%||5.3%|
|Chandler / Gilbert / Mesa (condos/townhouses)||May 23,2006||$161.65||$134.60||20.1%||10.5%|
|Avondale / Glendale / Peoria (condos/townhouses)||Feb 15, 2007||$148.90||$106.46||39.9%||3.9%|
|Tempe (condos/townhouses)||Jul 10, 2008||$209.06||$155.50||34.5%||9.7%|
|Paradise Valley 85253 (single-family-detached)||Oct 4, 2006||$507.12||$353.47||43.5%||5.9%|
|Scottsdale 85251 (all types)||Oct 11, 2007||$282.25||$241.13||17.1%||12.1%|
|Phoenix 85018 (all types)||Apr 12, 2007||$305.27||$270.62||12.8%||-2.4%|
|Scottsdale 85255 (all types)||Feb 15, 2007||$334.44||$275.23||21.5%||4.7%|
|Scottsdale 86262 (all types)||Jul 5, 2007||$391.91||$270.04||45.1%||-2.4%|
|Carefree 85377 (all types)||Oct 29, 2007||$356.99||$211.65||68.7%||-8.9%|
|Cave Creek 85331 (all types)||Mar 3, 2006||$258.73||$185.32||39.6%||4.4%|
|Phoenix 85016 (all types)||Aug 31, 2006||$317.61||$233.41||36.1%||13.8%|
|West Phoenix (all types)||May 27, 2007||$145.14||$109.44||32.6%||10.1%|
|South Phoenix (all types)||Jun 29, 2006||$155.64||$112.91||37.9%||10.7%|
|Ahwatukee (all types)||May 25, 2006||$208.67||$160.64||29.9%||3.3%|
|Northwest Phoenix (all types)||Aug 21, 2006||$162.09||$133.07||21.8%||10.7%|
|Northeast Phoenix (all types)||Apr 29, 2006||$198.32||$166.10||19.4%||7.7%|
|Central Phoenix (all types)||Sep 14, 2007||$224.27||$194.03||15.6%||6.8%|
|Far North Phoenix / Anthem / New River (all types)||May 28, 2006||$200.03||$144.68||38.3%||4.3%|
Scottsdale 85251 is clearly a front-runner in this table and is still appreciating fast. Phoenix 85018 has also got closer to its peak than any other segment in the above list. However its quarterly average $/SF has actually declined in the last 12 months.
Phoenix condos and townhouses are a strong segment with very rapid appreciation in the past 12 months. Central Phoenix (all types) is also getting close to its peak, needing another 15.6% and achieving 6.8% in the past year.
The far Northeast Valley is having the hardest time regaining its peak, with Carefree 85377 and Scottsdale 85262 a long way below and going backwards in the past year.
May 6 – Yesterday we mentioned that in general, prices in Greater Phoenix still have a long way to go before they return to the peaks before the housing crash. We thought we would look into this in more detail and examine how each segment of the market is doing relative to the pricing at the peak of the market. Of course there is a lot of complexity in doing this because:
- different segments peaked at different times. For example, 85143 hit its highest monthly average $/SF as early as October 2005, while 85253 hit its peak in November 2007, more than 2 years later.
- when we look at small segments, the price volatility is often very high and we do not want to use a high spike as an unrealistic measuring point, or accept a sudden spike now as proof of a return to a new high.
- median and average sales prices can be poor measurement tools if the median and average size of home has changed a lot since the peak. We need to compare apples with apples.
As an example of the last point, the peak median sales price in Maricopa County for new homes prior to the crash was $311,928 in July 2006, and that was surpassed as long ago as December 2013. But the median new home in December 2013 was 13% larger than the median home being sold in July 2006, because developers were no longer focusing on entry level homes. New homes regained their peak price consistently for the last 14 months if we were to misguidedly pay attention only to the monthly median sales price. But they have not regained the peak at all if we use the average price per square foot. The latter is a much more reliable measuring tool for this purpose. In March 2017, the average price per square foot for a new home in Maricopa County was $161.30, while in May 2016 it peaked at $184.22. New homes in Maricopa County still have 14% price appreciation to achieve before they regain the level of May 2006.
We can avoid volatility problems by taking a longer term average, such as an annual average. This avoids us paying attention to sudden spikes and troughs. However it also means recent increases are watered down by being mixed in with prices from the the last 12 months.
A reasonable compromise is to use quarterly averages, so this is what we have done in our analysis below. Today we will look at some pretty broad segments:
|Segment of the Market (ARMLS closed listings)||Peak Date||Peak Quarterly Average $/SF||Current Quarterly Average $/SF||Increase Required to Match Peak||Increase in Last 12 Months|
|All Areas & Types (whole ARMLS database)||Jun 30, 2006||$189.30||$149.32||26.8%||6.3%|
|Greater Phoenix (all types)||Jun 30, 2006||$189.22||$149.32||26.7%||6.3%|
|Maricopa County (all types)||Jun 30,2006||$193.07||$154.69||24.8%||6.6%|
|Maricopa County (single-family detached)||May 15, 2006||$194.76||$154.54||26.0%||5.8%|
|Maricopa County (condo/townhouse)||Jul 6, 2006||$190.99||$161.84||18.0%||11.8%|
|Maricopa County (mobile homes)||Jun 29,2006||$105.38||$90.30||16.7%||9.8%|
|Pinal County (all types)||Feb 6, 2006||$142.85||$101.41||39.9%||6.5%|
|Phoenix (all types)||May 27,2007||$182.02||$152.69||19.2%||6.0%|
|Northeast Valley (all types)||May 15, 2006||$295.40||$238.73||23.7%||6.1%|
|Southeast Valley (all types)||Jul 7, 2006||$176.47||$143.22||23.2%||6.1%|
|West Valley (all types)||Jun 10, 2006||$158.36||$121.10||30.8%||7.7%|
|Greater Phoenix (all types) – Less than 1,500 sq ft||Jul 1, 2006||$173.74||$142.77||21.7%||9.6%|
|Greater Phoenix (all types) – 1,500 to 2,000 sq ft||May 2, 2006||$169.67||$140.28||21.0%||6.9%|
|Greater Phoenix (all types) – 2,000 to 3,000 sq ft||Apr 3, 2006||$187.33||$142.57||31.4%||5.8%|
|Greater Phoenix (all types) – 3,000 to 4,000 sq ft||Jun 13, 2006||$223.46||$151.05||47.9%||3.6%|
|Greater Phoenix (all types) – 4,000 to 5,000 sq ft||Feb 19, 2006||$269.49||$182.40||47.8%||0.6%|
|Greater Phoenix (all types) – Over 5,000 sq ft||Feb 10, 2008||$414.23||$289.15||43.3%||3.7%|
It is very noteworthy that before the crash, condos & townhouses used to be cheaper than single-family homes on a $/SF basis, but that at present they are more expensive and are appreciating faster. As a result they have far less to go to get back to their peak level. Mobile homes have always been much more affordable than the other types, but they have recovered closer to their peak. They only have 16.7% to go and are currently appreciating faster than single family homes but not as quickly as condo/townhouse properties.
We also note that homes over 3,000 have a huge way to go (almost 50%) before reattaining their peak. They are also increasing in price the slowest , especially slow for homes between 4,000 and 5,000 sq. ft.
In 2017, it appears, from an appreciation point of view, to be an advantage for a home to be closer to the center of the valley, smaller than 2,000 sq. ft., affordable and either attached or mobile. Large, expensive single-family homes on the outskirts are appreciating the slowest. of all property types and have the furthest to go to reattain the heights before the housing crash.
May 5 – We have added a new Tableau chart that plots dollar volume by quarter. From this chart we can see that the first quarter of 2017 was almost as high as the first quarter of 2005 and 2006 as far as dollars closed through ARMLS. This does not mean the overall housing market is back to the same dollar volume, because far more homes were sold outside of the MLS in 2005 and 2006. We wait to see if the second quarter of 2017 can set a new all time record.
Prices are not back to the peak 2006 levels and I am somewhat surprised to see claims elsewhere that this is not too far away for Greater Phoenix. We still have a long way to go for most parts of the valley, especially if we are measuring the monthly average price per square foot. The current average $/SF for all areas & types is $151.29. This would have to increase by 26% to get back to the May 2006 peak of $190.61.
Those measuring monthly median sales prices do not have so far to go, but we are currently at $234,900 while the peak was $267,000 (attained on June 16, 2006). We need 14% appreciation to get back to the prior peak median sales price.
May 4 – We are taking another look at the Cromford® Market Index for the single-family markets in the 17 largest cities (by dollar volume):
Here we see a strong seller’s market overall, but only a small improvement for sellers over the past month. There are 9 cities showing better conditions for sellers and 8 showing some deterioration. With the big cities of Phoenix, Mesa and Chandler all showing improvements, the overall change is still in favor of sellers.
The Southeast Valley continues to outperform the other areas of the valley (except much of Pinal County, which does not feature very strongly in this table due to most of its cities being relatively small). Mesa has overtaken Glendale since last week, while Gilbert has overtaken Tempe.
The West Valley is a weaker picture than usual with only Surprise showing any positive move over the last month and Buckeye slipping into last place.
The Northeast is looking more positive with Paradise Valley and Fountain Hills improving by 9% and 6% respectively and Cave Creek up 4%. However, the largest city in the Northeast, Scottsdale, is still languishing close to the bottom of the table with a fairly balanced market.
We have experienced a seller’s market for a long time now and there is little in the above table to cheer buyers.
May 3 – We are clearly experiencing a hot market, but the questions are: how hot, and is it overheating?
One of our favorite measures of the current state of the market is the Contract Ratio. This compares the number of homes under contract with the number available for sale. We saw extremely high contract ratio numbers between 2011 and 2013, but that was a very different market from today because distressed sales were such a high percentage of the total. If we remove short sales, pre-foreclosures, bank owned homes, GSE owned homes and HUD homes from our analysis, we get a more realistic picture. The Tableau chart “Contact Ratio” allows us to do this and the resultant chart looks like this:
This is for all areas & dwelling types within Greater Phoenix and shows us that we have just hit a new high for normal sales, overtaking the previous high point of 67.1, but not by very much. The contract ratio is very seasonal and usually hits its highest level in May or June each year.
By selecting different filters on the contract ratio chart we can see which sectors of the market are the hottest.
- Condos & townhouses have just reached 71.7, far higher than the 52.9 we saw in May 2013
- Mobile homes are at 41.0, down slightly from last month but far above the years 2011-2016
- Single family homes are at 67.4, lower than 73.8 in May 2013 and lower than 2012.
So we can see that single family market is doing well but is not as strong as the attached home market.
Among the price ranges for normal sales, those setting new records for 2011-2017 are between $100K and $300K:
- $100K-$200K at 139.6, far higher than any previous month since 2010
- $200K-$300K at 95.3, reaching new heights too
- $300K-$400K at 61.4, not as hot as 2013
- $400K-$600K at 42.6, not as hot as 2013 or 2012
- $600K-$1M at 28.0, not as hot as 2013 or 2012
- $1M to $2M at 15.4, the coolest year since 2011
- Over $2M at 8.6, the coolest year since 2012
We can see clearly that the ranges above $1M are much cooler than the rest of the market and cooler than they were during the last 4 years.
Are we heading towards a bubble? Well the contract ratio in May 2005 was 174.34, so at 69.7 on May 1, 2017 we are nowhere near as overheated as were back in the bubble years. As long as we stay below 100, we are probably going to be safe from accusations of overheating.
May 2 – As I recorded the number of single-family active listings (excluding UCB & CCBS) by city for the start of May I was struck that some cities are experiencing unusually low numbers, although others are within normal ranges. Here are a few of the stand-outs:
- Casa Grande – 197 is the lowest count since October 2012
- Apache Junction – 96 is the lowest count since September 2012
- Tolleson – 52 is the lowest count since May 2013
- Arizona City – 45 is the lowest count since June 2012
- Coolidge – 29 is the lowest count since July 2012
- Florence – 123 is the second lowest count since September 2012
Note that 5 out of these 6 are in Pinal County. Supply is much lower in Pinal County than Maricopa County, relative to normal.
The counts by price range reveal some interesting numbers too
- Under $100,000 – 77 listings – there were 9,497 in January 2011
- Between $100,000 and $125,000 – 70 listings – there were 3,713 in January 2009
- Between $125,000 and $150,000 – 155 listings – there were 3,790 in August 2008
- Between $150,000 and $175,000 – 441 listings – there were 3,534 in August 2008
In all there are only 1,559 active listings under $200,000. There were 23,795 closed listings in 2016, so we have a current inventory of only 24 days for single-family homes under $200,000.
May 1 – The boom in apartment building continues accorded to the latest report by the Census Bureau. There were another 823 permits issued across Maricopa and Pinal counties during March. This makes the rolling annual count 10,010 which is the highest level since January 2008. Contributions in March were from:
- Phoenix – 483 units
- Chandler – 285 units
- Mesa – 25 units
- Scottsdale – 10 units
- Paradise Valley – 8 units
- Unincorporated Pinal County – 6 units
- Tempe – 6 units
© 2017 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.
Sheri helped us narrow down a list of homes she prepared for us, encouraged us not to just settle and within 48 hours we were signing papers to a home that suited all of our needs. Sheri was very knowledgeable and the made the house hunting experience A LOT OF FUN!! We would personally recommend Sheri to anyone looking to purchase a home in the future. – Bob & Sue H (clients of Sheri Jackson)
Ruth has done an excellent job of acqainting/educating us with the details of the AZ market. This has been our first experience purchasing an AZ property – and we’re very fortunate to have her assist us. Bless her for her patience with us throughout the process! – Roger (client of Ruth Sells)
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Thank you for helping me find my beautiful home. I knew it was hard work, but it was worth it. Thanks again for everything and for being such a good friend. – Kristin (client of Denise Pruitt)
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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Working with you was a great experience. Your knowledge, consulting and negotiating skills made the selling process go so smoothly. I will recommend you to my family, friends and anyone interested in selling or buying a home. – Judy B (client of Vicki Kaplan)
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