The Cromford Report – Daily Observations November 2016

    November 30 – On November 21 we suggested that the active listing count was likely to peak on Sunday November 20 and we can now confirm this to be the case. That peak was 21, 684 and we are already down to 21,105 (excluding UCB listings). We are currently losing supply at the rate of roughly 300 listings a week and would expect a downward trend throughout the remaining weeks of the year. This means that although we saw a rise in the flow of new listings in 2016, the increased sales rate was able to cope with the extra supply. We are likely to start 2017 with a similar number of active listings as we had on Jan 1, 2016.

    November 29 – The S&P / Case-Shiller® Home Price Index® report was released today for the 3 month period ending in September 2016. The year over year changes were as follows:

    1. Seattle 11.0%
    2. Portland 10.9%
    3. Denver 8.7%
    4. Dallas 8.0%
    5. Tampa 7.5%
    6. Miami 6.7%
    7. Charlotte 6.2%
    8. Los Angeles 5.9%
    9. Detroit 5.8%
    10. San Francisco 5.7%
    11. Las Vegas 5.6%
    12. San Diego 5.3%
    13. Atlanta 5.3%
    14. Phoenix 5.3%
    15. Minneapolis 5.3%
    16. Boston 4.3%
    17. Chicago 4.3%
    18. Cleveland 2.9%
    19. Washington DC 2.7%
    20. New York 1.8%

    At 5.3% Phoenix remains just below the national average of 5.5% and thus completely unexceptional. The table is quite similar to last month, though Seattle has replace Portland at the top. Charlotte and Detroit are moving up while San Francisco and San Diego have moved down.

    The month over month changes look like this:

    1. Tampa 0.49%
    2. Miami 0.47%
    3. Las Vegas 0.46%
    4. Dallas 0.34%
    5. Charlotte 0.33%
    6. Denver 0.33%
    7. Los Angeles 0.29%
    8. Phoenix 0.26%
    9. Minneapolis 0.26%
    10. Washington DC 0.19%
    11. Atlanta 0.16%
    12. Boston 0.15%
    13. San Diego 0.11%
    14. New York 0.07%
    15. Portland 0.06%
    16. Chicago 0.01%
    17. Seattle 0.00%
    18. Detroit -0.11%
    19. Cleveland -0.36%
    20. San Francisco -0.42%

    After a brief exciting spell at number one last month, Phoenix is back to the boring 8th position.

    Comparing the month to month change with the same figure for 2015 we can see that Phoenix, Los Angeles, Atlanta, Chicago, Boston, Detroit, Minneapolis, Charlotte, Las Vegas, Washington, Tampa, New York and Cleveland are all showing stronger moves than last year.

    San Diego, San Francisco, Denver, Miami, Portland, Dallas & Seattle are showing less positive moves than in 2015 and it appears that many of these former high flyers may be slowing down.

    November 28 – Following yesterday’s observation, here are some of the areas where the comparison of days of inventory with last year is not so favorable for sellers:

    1. Youngtown – up 98% to 62 days from 31 last year
    2. New River – up 97% to 199 days from 101 last year
    3. Carefree – up 38% to 443 days from 321 last year
    4. West Phoenix – up 31% to 66 days from 50 last year
    5. Avondale – up 24% to 52 days from 42 last year
    6. Arizona City – up 20% to 165 days from 138 last year
    7. Surprise – up 15% to 86 days from 75 last year
    8. Sun City West – up 15% to 73 days from 64 last year
    9. Glendale – up 10% to 60 days from 54 last year
    10. Paradise Valley – up 5% to 336 from 319 last year

    In general the West Valley has cooled off while the Southeast Valley has warmed up.

    November 27 – Days of Inventory (available inventory divided by the annual sales rate) is one of our favorite measures and comparing November 27, 2016 to November 27, 2015 allows us to check which parts of the market have strengthened or weakened over the last year.

    Here are some areas showing the biggest improvements from a seller’s perspective:

    1. Chandler – down 28% to 57 days from 79 last year
    2. Ahwatukee – down 25% to 69 days from 92 last year
    3. Fountain Hills – down 25% to 152 days from 202 last year
    4. Sun Lakes – down 22% to 83 days from 105 last year
    5. Maricopa – down 22% to 77 days from 99 last year
    6. Queen Creek – down 20% to 74 days from 93 last year
    7. Gilbert – down 18% to 56 days from 68 last year
    8. Mesa – down 17% to 65 days from 78 last year
    9. Goodyear – down 17% to 75 days from 90 last year
    10. Anthem – down 11% to 79 days from 89 last year

    All the above are for all property types and exclude UCB listings.

    November 26 – Looking at the sales recorded by the counties, I am struck by the acceleration in the price of new homes over the past 3 months. We cannot see that from ARMLS data because so few new home sales are processed through the MLS. If we look across the whole of Maricopa and Pinal counties, the monthly average in October reached $158.12 per square foot for new homes, up from $146.69 in October 2015. This is a 7.8% increase over 12 months. The prior 12 months only generated an increase of 2.8% and the year before than just 3.0%.

    You might be thinking that new homes are getting larger, but you would be wrong. On average new homes are 0.8% smaller than a year ago and 1.9% smaller than 2 years ago.

    No, they are responding to increased demand by achieving higher prices. In October 2015, new homes only enjoyed a 6.8% premium in average price per square foot over normal resales. In October 2016 that advantage has jumped to 11.2%.

    November 25 – The Cromford® Market Index for the single-family markets in the largest 17 cities continues to show a mixed picture:

    We have roughly half (8) of the cities showing an improving situation for sellers. The main examples are Avondale, Chandler, Tempe & Gilbert. The Southeast Valley has had an unusual pattern of declining active listing counts during the months of October and November.

    Among the cities that have been deteriorating for sellers (9 in number), the main examples are Cave Creek, Surprise, Scottsdale, Paradise Valley, Queen Creek, Mesa and Glendale.

    From Thanksgiving onward, we usually get a decline in supply. If the ranking table starts to improve for sellers as a result, this would be normal. If it fails to improve between Thanksgiving and the New Year, then this would be a troubling sign.

    November 24 – If the single family permits were unspectacular, the multi-family permits in October were downright feeble. At 251 they were down 42% from October 2015. These monthly numbers are very volatile – we had 1,562 in September 2016. The rolling annual average still stands at a very respectable 8,555, so there is no need to get alarmed yet.

    Surprisingly the main contribution in October was 132 units from Goodyear. The usual contenders were very quiet otherwise.

    November 23 – We counted 1,401 single family permits across Maricopa and Pinal counties during October 2016. This is up only 1% from October 2015 and this a much lower growth rate than we had been seeing earlier in the year. Year to date after 10 months we have reached 15,611 which is up just under 10% from 2015.

    Given the strong growth in new home sales, the slower growth in permits is a little surprising. Maybe home builders are being extra cautious in this cycle.

    The top locations for YTD 2016 are:

    1. Phoenix 2099
    2. Mesa 1811
    3. Gilbert 1400
    4. Peoria 1368
    5. Unincorporated Pinal County 1256
    6. Buckeye 1234
    7. Chandler 1081
    8. Queen Creek 950 (the Town of Queen Creek only)
    9. Unincorporated Maricopa County 889
    10. Goodyear 837

    Scottsdale is some way behind at 613.

    November 22 – The Phoenix Business Journal recently ran a story about investor owned houses in Maricopa County, as it has the largest number of these in the USA. Maricopa is one of the largest counties in the USA, so it is not surprising. By the way, the data source, ATTOM, is the new name for RealtyTrac. It is good that their name no long implies that they are skilled at tracking realty, since they were the primary source of the false shadow inventory mythology.

    My estimate for investor owned homes is slightly lower than ATTOM’s – 242,000 is my best guess, of which 69,000 are estimated to be owned by out of state landlords. Second homes are counted separately. Currently rental vacancy rates are very low, but if forced deportations are to come, as promised by the new administration, I believe the housing market is right to be nervous. It all depends on the speed and scale of the deportations. I have no idea what the new administration really intends to do about undocumented residents, and the administration may not know either at this stage. In the worst case there could be a rush to the exits by landlords that could be potentially devastating to prices. It would also reduce the need for new construction and consequently land prices. On the positive side it would release construction workers to work on infrastructure projects. Except that there are estimated to be 800,000 construction workers who are undocumented.

    I have been pointing out the (unintended?) consequences of a reduced population on the housing market for some time and I am very concerned. If it happens it will show up in the rental market first. Both multi-family and sfr/condo vacancy rates will rise.

    November 21 – Last year active listings (excluding UCBs) hit their 4Q peak on Sunday November 22 at 21,890 and then headed downwards to reach 20,073 on January 1, 2016.

    This year Thanksgiving is 2 days earlier than last year and we can reasonably expect Sunday November 22 to be our peak at 21,684. This is slightly below last year, but not so much that it matters. It comes after we have seen a 4% increase in new listings, balanced by a 6% increase in sales.

    Nothing spectacular there, just healthy.

    I wonder whether we will drop below 20,000 active listings on Jan 1, 2017.

    November 20 – The monthly sales rate as of November 20 is a staggering 26% higher than it was this time last year. However we must remember that last year we were suffering the effects of the TRID changes in closing processes for sales involving lenders. Sales were weak during October and November 2015 as a result, while listing under contract piled up. The effect disappeared quickly during the first quarter of 2016 when everyone got used to the new processes. However for the fourth quarter of 2016 we are beating the fourth quarter of last year by a comfortable margin.

    November 19 – We often point out that “days of inventory” is one of the most powerful and predictive measures in the housing market. By using the annual sales rate we get rid of seasonal sales trends and the lower the number gets the stronger the market is for sellers.

    Let us compare the days on inventory for the entire market (all areas & types on ARMLS) for this week in November for every year back to 2002 and rank the years by how favorable they were to sellers.

    1. 2004 – 45.2
    2. 2005 – 83.7
    3. 2012 – 95.3
    4. 2011 – 98.6
    5. 2016 – 104.6
    6. 2003 – 106.9
    7. 2015 – 111.3
    8. 2013 – 114.8
    9. 2014 – 134.4
    10. 2002 – 142.8
    11. 2009 – 164.8
    12. 2010 – 186.9
    13. 2006 – 227.3
    14. 2008 – 361.6
    15. 2007 – 373.8

    So we are in the 5th strongest year for sellers. 2004 and 2005 were very bubbly and 2011 and 2012 were during the coiled spring bounce back. This is best normal year for sellers of the last 15 years.

    November 18 – Here is the regular table of Cromford® Market Index numbers for the single family markets in the top 17 cities:

    We still have more cities (10) that are deteriorating for sellers than improving (7)

    The chief offenders in the deterioration are:

    • Surprise
    • Cave Creek
    • Scottsdale
    • Paradise Valley
    • Queen Creek
    • Glendale

    We see weakness mostly in the Northeast and West Valley due primarily to growing supply trends.

    The cities that are looking best for sellers are:

    • Chandler
    • Avondale
    • Tempe

    Chandler and Tempe have declining supply trends, whereas Avondale has had unusually low supply for longer than we can remember (my memory is not so good these days). I guess that means it is no longer unusual. Whatever the reason, it is still very tough to be a buyer in Avondale. El Mirage is even worse, though it does not make are top 17 list.

    November 17 – Looking at the other end of the spectrum, the following have been the weakest ZIP codes for $/SF appreciation over the last 2 years:

    1. Carefree 85377 – 7.1%
    2. Scottsdale 85266 – 3.6%
    3. Phoenix 85045 – 2.9%
    4. Scottsdale 85262 – 0.1%
    5. Scottsdale 85259 + 1.1%
    6. Paradise Valley 85253 + 1.6%
    7. Scottsdale 85258 + 1.8%
    8. Gold Canyon 85118 + 3.0%
    9. Fountain Hills 86269 + 3.1%
    10. Scottsdale 85260 + 3.4%
    11. Phoenix 85003 + 3.5%
    12. Phoenix 85054 + 3.6%
    13. Scottsdale 85255 + 3.9%
    14. Phoenix 85048 + 4.2%
    15. Cave Creek 85331 + 4.6%
    16. Wickenburg 95390 + 4.7%
    17. Phoenix 85016 + 4.7%
    18. Scottsdale 85250 + 4.8%
    19. Phoenix 85083 + 4.9%

    All the rest are above 5% over 2 years.

    Eight out of the top ten are in the Northeast Valley, and twelve out of the top twenty.

    November 16 – Which ZIP codes have seen the strongest appreciation over the past 2 years? We can answer that using the Tableau 12-month moving average price per square foot chart, comparing the figure for November 2014 with November 2016.

    The high flyers are as follows:

    1. Tonopah 85354 + 58.8%
    2. Phoenix 85009 + 48.3%
    3. Phoenix 85031 + 45.1%
    4. Phoenix 85019 + 44.1%
    5. Black Canyon City 85324 + 43.7%
    6. Phoenix 85017 + 42.4%
    7. Phoenix 85006 + 39.8%
    8. Phoenix 85035 + 37.1%
    9. Phoenix 85008 + 35.2%
    10. Phoenix 85033 + 33.7%
    11. Phoenix 85040 + 33.6%
    12. Glendale 85301 + 32.7%
    13. Youngtown 85363 + 30.1%

    Everywhere else is below 30%.

    The inner West Valley accounts for 8 of these high flyers with East Phoenix taking 2 slots, South Phoenix 1 spot and 2 far-flung rural areas.

    I am willing to bet no-one guessed Tonopah for number 1. But it started at only $49.48 so there was still a coiled-spring effect as it bounced back to $78.58 per sq. ft.

    By far the most expensive of the high flyers is Phoenix 85006 which jumped from $123.93 to $173.28 to rank number 7 overall.

    Among the luxury ZIP codes, 85251 came top with a 16.9% gain over 2 years from $194.49 to $227.40, while 85018 came second with 14.0% over 2 years, from $230.82 to $263.09.

    85251 ranks 47th overall while 85018 ranks 67th overall.

    All these numbers include all types of properties, not just single family.

    November 15 – For anyone who wants to see a positive signal in demand, take a look at the daily chart for annual sales:

    Ignore the short term zigs and zags and focus on the distinct change in the slope from mid October onwards. This is because 2016 has been stronger than 2015 for sales closed since mid October.

    November 14 – In the Northeast Valley, the overall market is more subdued than the rest of the Phoenix area, because there are relatively few homes under $250,000. For single family homes, supply compared to a year ago is as follows:

    • Under $500,000 – down 6%
    • Between $500,000 and $1,000,000 – up 5%
    • Over $1,000,000 – up 4%

    Quarterly sales numbers are looking very good because the comparative period from August through October 2015 was weak.

    • Under $500,000 – up 11%
    • Between $500,000 and $1,000,000 – up 5%
    • Over $1,000,000 – up 37%

    Appreciation is running at 4.3% for the sector under $500,000, but -0.2% for $500,000 to $1 million. The sector over $1 million is showing 6.0% appreciation rate thanks to a particularly strong performance by home sales over $2 million.

    November 13 – In the Central Valley (Phoenix, including Anthem & New River) we see a picture than is different from both the Southeast Valley and West Valley. For single family supply compared to a year earlier we see:

    • Under $250,000 – down 3%
    • Between $250,000 and $500,000 – down 1%
    • Over $500,000 – up 22%

    Clearly the growth in supply is all above $500,000. Overall supply grew by 3%.

    Quarterly sales are flat under $250,000 but growing above this mark:

    • Under $250,000 – down 1%
    • Between $250,000 and $500,000 – up 23%
    • Over $500,000 – up 12%

    Overall sales are up 7% from a year ago.

    With the ongoing lack of supply below $250,000, appreciation is quite strong at 10% for this price range. The adequate supply between $250,000 and $500,000 has produced an average appreciation rate of 4%. The excessive supply over $500,00 has meant that prices have declined by 2% over the past 12 months.

    November 12 – In contrast to the Southeast Valley, where single-family supply had declined in all price ranges, the West Valley has supply increasing across the board:

    • under $250,000 – up 6% compared to last year
    • $250,000 to $500,000 – up 13% compared to last year
    • over $500,000 – up 2% compared to last year

    However quarterly sales are up nicely in the upper 2 ranges:

    • under $250,000 – up 1% compared to last year
    • $250,000 to $500,000 – up 34% compared to last year
    • over $500,000 – up 14% compared to last year

    The action below $250,000 is a new development. We have not seen supply grow like this for a long time and even though 6% is not large growth, it suggests there is a changing situation in the West Valley. It is especially surprising that we do not see sales increasing by at least as much.

    The supply increase is patchy however. We see a large increases in:

    • Glendale 85301 – up 52%
    • Glendale 85302 – up 39%
    • Glendale 85306 – up 40%
    • Peoria 85345 – up 39%
    • Surprise 85378 – up 146%
    • Surprise 85379 – up 55%
    • Surprise 85387 – up 44%

    Glendale, Peoria and Surprise are all seeing declines in their Cromford® Market Index, especially Surprise.

    Other areas have seen supply go down, for example:

    • Glendale 85304 – down 10%
    • Laveen 85339 – down 14%
    • Litchfield Park 85340 – down 14%
    • Tonopah 85354 – down 22%
    • Avondale 85395 – down 12%

    November 11 – The Cromford® Market Indexes for the single family markets in the largest 17 cities are in the table below:

    Still giving a slightly negative readout, we see 7 cities improving and 10 deteriorating.

    Notable declines are to be found in:

    1. Surprise -17%
    2. Paradise Valley -10%
    3. Cave Creek -9%
    4. Scottsdale -8%
    5. Fountain Hills -6%
    6. Queen Creek -6%
    7. Glendale -5%

    Notable increases include:

    1. Chandler +6%
    2. Avondale +5%

    This is probably the most negative table we have seen since the first quarter, caused by increasing inventory particularly in the more expensive locations as well as Surprise. However there are still no cities below 100 and seller’s remain in charge of the market.

    Chandler stands out as the most improved market with inventory falling and increased demand. Goodyear and Maricopa also continue to look strong.

    November 10 – The Southeast Valley is looking like a very strong market these days. We have fewer active single family listings in ALL price ranges and sales volume in the last 3 months is up 13% from a year ago. Segmenting by price range we see:

    • Below $200K – supply down 25%, sales down 7%, pricing up 7%
    • $200K-$500K – supply down 8%, sales up 33%, pricing up 4%
    • Over $500K – supply down 2%, sales up 38%, pricing up 2%

    Almost all the key data trends are favorable and there is no longer any ZIP code showing negative appreciation, even 85045 is up 2.1%.

    The strongest areas for appreciation are currently Mesa 85201 (+14.0%), Mesa 85204 (+12.6%) and Gilbert 85297 (+10.4%).

    November 9 – Yesterday’s observation was about rental homes in all areas & types. If we look separately at single family homes and condos / apartments there are some further deductions we can make.

    The current number of active single family rental listings on ARMLS is 2,158. This is actually down from 2,291 last year, but it is a lot higher than the 1,243 we saw on March 16, 2016. The single family rental inventory has increased from 37 to 45 days while the average price per sq. ft. has risen 6% from 74.5 cents to 79 cents. However the price peaked at 81.7 cents in July and has declined since then.

    The number of attached (condo, townhouse, apartment, etc.) rental listings on ARMLS is 1,188. This is up from 1,007 last year and the minimum of 816 on February 28, 2016. We now have 69 days of inventory when we only had 52 at this point last year. The condo rental market appears to be slowing down a bit as inventory rises while the average price per sq. ft. has risen 7% from $1.025 to $1.092 over the past 12 months.

    November 8 – It is a very long time since were able to say this. There are more rental listings on ARMLS than there were a year ago. 3,360 is not a huge number by historical standards, but it is bigger than 3,313, which is what we had on November 8, 2015. Supply of rentals through ARMLS is no longer on a downward trend.

    The lowest point reached was 2,117 on March 14. So we are up 56% in 7 months.

    The current monthly average lease price per sq ft for all areas & types is 84.4 cents. A year ago it was 78.7 cents. That is an annual increase of 7.2%. However all of that increase took place between November 8, 2015 and June 3, 2016. We have seen no upward trend in rental rates since May, with the number stuck in neutral between 84 cents and 86 cents.

    This would appear to be a change in market conditions that may cause landlords to consider a change of strategy. We should be on the lookout for signs of former rental homes coming onto the market for sale in larger numbers than we have seen for many years.

    November 7 – Several reports have suggested that single female buyers are becoming a larger part of the housing market. This is one of the few demographic subjects where we have good data. When we examine deeds and affidavits of value, we cannot tell the age, race, religion, sexual preferences or much else about the buyer and seller. However we can tell if the property is being purchased by an unmarried, divorced or married man, unmarried, divorced or married woman or a married or unmarried couple, of whatever combination of sexes. These facts are mentioned right there in the wording of the deed. These days it is no longer valid to assume that a married couple is of opposite sex, but statistically speaking the numbers of same sex couples making home purchases is still small.

    So can we see any trends in the numbers for Maricopa and Pinal counties? We decided to exclude distressed sales and focus only on normal sales, new homes and the flip part of a fix and flip.

    1. The percentage of sales to single women, or married women purchasing as their sole and separate property has indeed increased as follows:

    • 2011 – 22.5% of all purchases
    • 2012 – 22.6%
    • 2013 – 22.7%
    • 2014 – 23.5%
    • 2015 – 24.0%
    • 2016 – 24.8% (to the end of September)

    2. The percentage of sales to single men, or married men purchasing as their sole and separate property has also increased:

    • 2011 – 32.3%
    • 2012 – 33.7%
    • 2013 – 34.4%
    • 2014 – 34.2%
    • 2015 – 34.9%
    • 2016 – 34.9%

    The growth for single men seems to have stalled since 2013 however, which is when the growth in single women buyers started to grow. There is a slightly faster growth for single women over single men, but it is not dramatically different. I would conclude that the reports about increasing numbers of single female buyers are valid.

    3. The percentage of sales to couples has declined as follows:

    • 2011 – 45.2%
    • 2012 – 43.8%
    • 2013 – 43.0%
    • 2014 – 42.4%
    • 2015 – 41.1%
    • 2016 – 40.2%

    This is a clear trend. Sales to couples remain the largest sector, but it is in a steep declining trend. This corresponds to a decline in birth rates that we have already commented on.

    Another trend we observed is that couples with the wife mentioned first increased from 2.5% to 3.7% of purchases. Couples with the husband mentioned first dropped from 42.7% to 36.6%. Not quite sure what that tells us, but I am sure Cromford Report subscribers will have some interesting theories.

    November 6 – If we segment the market by property type, the fastest appreciation over the last 12 months has been experienced by mobile homes. The annual average price per sq. ft. for mobile homes is up 12% from November 2015. A year ago we saw 12% over November 2014 too. Over the past 5 years the average $/SF has more than doubled from $35.57 to $79.18. This far outpaces the appreciation of more traditional homes. Only 1,736 mobile home listings closed in the last year across Greater Phoenix, making this segment pretty small – just 2% of the total market.

    The slowest appreciation has been experienced by patio homes, which are up only 2.6% from a year ago, as measured by the annual average $/SF. The five year movement from $109.22 to $161.67 represents a gain of 48%. This is less than half the appreciation achieved by the mobile home segment. Patio homes represent 1.6% of the overall market.

    November 5 – The pricing charts are looking positive from a seller’s perspective these days. Not so much in the case of medians, but the average price and average price per sq. ft. charts have gained a new momentum in the last few weeks. Buyers may be dismayed, but sellers who need cheering up can take a look at the weekly $/SF for the overall market.

    November 4 – October was unusually strong for closed sales, but it was not equally strong across the geographic areas. We are showing 7,103 closed listings in ARMLS for October across all areas & types, From public records in Maricopa County we count 8,409 single family and condo/ townhouse sales. The latter is up 13% compared with October 2015 and is the highest number for any October since 2006. The Southeast Valley cities of Chandler, Gilbert and Mesa made a powerful contribution to the total, as did Goodyear, Buckeye and Sun City. Even Paradise Valley, Cave Creek & Tolleson grew by large percentages, though their unit numbers are relatively small. Phoenix, Scottsdale, Sun City West and Queen Creek, did not participate strongly in the trend.

    Looking at various cities and their sales transactions in the public records we see the following growths over 2015:

    City Oct 2015 Sales Oct 2016 Sales Change
    Goodyear 189 267 +41.3%
    Sun City 143 198 +38.5%
    Paradise Valley 30 38 +26.7%
    Chandler 485 606 +24.9%
    Gilbert 506 627 +23.9%
    Cave Creek 79 96 +21.5%
    Tolleson 76 92 +21.1%
    Buckeye 196 231 +17.9%
    Mesa 819 964 +17.7%
    Peoria 408 472 +15.7%
    Avondale 134 154 +14.9%
    Tempe 196 223 +13.8%
    Glendale 406 461 +13.5%
    Surprise 298 337 +13.1%
    Phoenix 2144 2241 +4.5%
    Scottsdale 698 729 +4.4%
    Sun City West 112 112 flat
    Queen Creek 160 145 -9.4%

    November 3 – Here is the usual weekly table showing the Cromford® Market Index for the single family markets in the 17 largest cities:

    We have 10 of the 17 showing a deterioration in negotiation power for sellers. These include the more expensive locations (Paradise Valley, Scottsdale, Fountain Hills and Cave Creek) with a uniform decline of 7% over the last month. This is due to a build up in inventory, which is often seen at this time of year. Buyers get more choice as well as more negotiation power when this happens.

    The large decline for Surprise is unexpected (a surprise?) but follows a 17% increase in active listings, far bigger than any other city in the list.

    Active listings actually declined in Gilbert, Chandler and Tempe, which helped their sellers. The Southeast Valley has seen smaller increases in inventory than normal for the time of year.

    Maricopa, Goodyear and Avondale continue to improve, while Glendale, Peoria and Queen Creek have faded a little.

    November 2 – Today we are taking a look at the Contract Ratio to see which segments of the single family market are hotter or cooler than last year. The following table compares the contract ratio on November 1 for 2015 and 2016. Higher numbers mean either more homes under contract or fewer home available, or both. This is good for sellers. Lower number mean the opposite.

    Price Range Average 2015 2016 % Change Interpretation
    Under $100K 159.0 84.1 56.2 -33.2% far below average and much cooler than last year
    $100K to $125K 141.1 112.6 94.5 -16.1% far below average and cooler than last year
    $125K to $150K 111.3 125.0 109.2 -12.6% slightly below average and cooler than last year
    $150K to $175K 94.2 92.5 103.3 11.7% above average and hotter than last year
    $175K to $200K 75.6 69.4 84.2 21.3% above average and hotter than last year
    $200K to $225K 61.0 66.3 70.1 5.7% above average and a little hotter than last year
    $225K to $250K 53.8 56.0 67.5 20.5% above average and hotter than last year
    $250K to $275K 52.3 53.3 63.1 18.4% above average and hotter than last year
    $275K to $300K 45.6 44.5 56.7 27.4% above average and hotter than last year
    $300K to $350K 40.5 37.9 47.5 25.3% above average and hotter than last year
    $350K to $400K 35.6 30.3 41.1 35.6% above average and hotter than last year
    $400K to $500K 30.3 29.1 33.0 13.4% above average and hotter than last year
    $500K to $600K 24.7 23.1 27.5 19.0% above average and hotter than last year
    $600K to $800K 21.0 20.1 21.8 8.5% about average and slightly warmer than last year
    $800K to $1M 16.0 13.8 18.4 33.3% above average and hotter than last year
    $1M to $1.5M 13.9 11.8 15.2 28.8% above average and hotter than last year
    $1.5M to $2M 11.7 8.8 11.2 27.3% still below average but not as cold as last year
    $2M to $3M 7.8 8.2 8.3 1.2% a little above average, similar to last year
    Over $3M 4.8 4.4 4.9 11.4% about average, but not as cool as last year

    Last year at this time, we were going through a distinct cooling period for a couple of months, so the comparison this year is favorable.

    The market is surprisingly cool under $150K. Supply is low but buyer interest seems to have weakened in the last year. Over $150K, the market is consistently hotter than last year at this time.

    The luxury market is in a better state than this time last year but remains relatively subdued between $1.5M and $2M.

    The biggest improvement for sellers in in the range $350K to $400K, which is good news for new home developers.

    November 1 – From time tome we like to check how Arizona is doing compared with the other states. For this purpose, the Core Logic Home Price Insights Report is a useful source.

    According to Core Logic’s report, which is based on data at the end of September, Arizona was one of the 5 states with the furthest to go to reach the height of pricing at the peak of the housing bubble.

    1. Nevada 31.4% below peak
    2. Florida 22.5% below peak
    3. Arizona 22.0% below peak
    4. Connecticut 19.1% below peak
    5. Maryland 18.7% below peak

    There are now 15 states (plus the District of Columbia) which are making new price highs, having exceeded the levels at the peak of the bubble:

    • Arkansas
    • Colorado
    • Iowa
    • Indiana
    • Kansas
    • Kentucky
    • Louisiana
    • North Carolina
    • Nebraska
    • New York
    • Oregon
    • Tennessee
    • Texas
    • Utah
    • Washington

    Core Logic provides 12 month forecasts for home price appreciation, though their track record for getting them correct is not brilliant. For what it’s worth, Arizona is among the highest group:

    1. California 9.0%
    2. Nevada 8.9%
    3. New Hampshire 7.1%
    4. Florida 7.0%
    5. Arizona 6.6%
    6. Michigan 6.3%
    7. Oregon 6.1%

    The lowest appreciation is forecast for the states most affected by the fall in energy prices:

    1. North Dakota 1.7%
    2. Wyoming 1.7%
    3. Texas 2.6%
    4. Montana 2.8%
    5. Oklahoma 3.1%
    6. Mississippi 3.1%
    7. Louisiana 3.4%

    These are still positive however.

    In the last 12 months two states have experienced negative home price appreciation: Alaska -0.3% and Connecticut -1.4%. Core Logic is forecasting that this will reverse over the net year, since they forecast 5.4% and 4.8% for these two states.


    © 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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