The Cromford Report – The Daily Observations October 2017

    October 31 – The S&P / Case-Shiller® Home Price Index® is reported today and cover sales between June and August 2017. The chart is available here.

    The changes since last month`s report are as follows:

    1. Las Vegas 0.99%
    2. New York 0.85%
    3. San Diego 0.85%
    4. Phoenix – 0.77%
    5. Charlotte 0.74%
    6. Cleveland 0.66%
    7. Detroit 0.61%
    8. Chicago 0.38%
    9. Boston 0.35%
    10. Tampa 0.35%
    11. Los Angeles 0.34%
    12. Denver 0.32%
    13. Dallas 0.29%
    14. Minneapolis 0.28%
    15. Atlanta 0.24%
    16. Seattle 0.18%
    17. Miami 0.15%
    18. Portland 0.14%
    19. Washington 0.13%
    20. San Francisco -0.11%

    These numbers look very different from last month with the former high-flyers of Seattle, Portland, Denver and San Francisco in the bottom half of the table.

    Phoenix has moved up from 14 to 4 in this table. The national average was 0.54% and the majority of the big cities did worse than the national average. Only the top 7 cities above did better.

    When we look at the 12 month change in the Index we see the following:

    1. Seattle 13.2%
    2. Las Vegas 8.6%
    3. San Diego 7.8%
    4. Denver 7.2%
    5. Portland 7.2%
    6. Detroit 7.2%
    7. Dallas 7.1%
    8. Boston 6.9%
    9. Tampa 6.8%
    10. Charlotte 6.8%
    11. San Francisco 6.1%
    12. Los Angeles 6.1%
    13. Phoenix 5.8%
    14. Minneapolis 5.6%
    15. Atlanta 5.4%
    16. Miami 4.9%
    17. Cleveland 4.4%
    18. New York 4.4%
    19. Chicago 3.7%
    20. Washington 3.4%

    The national average is 6.1% and Phoenix is a little below that. Unless this month’s index is an anomaly, the fact that the short term movement for Phoenix is more impressive than the long term movement is a positive signal for us.

    October 30 – Multi-family building permits remain buoyant with a total of 911 units across Maricopa and Pinal counties in September. The total for the 12 month period ending September 2017 is 9,071. The year to date counts by city look like this:

    1. Phoenix – 2,707
    2. Mesa – 716
    3. Chandler – 670
    4. Tempe – 636
    5. Glendale – 471
    6. Peoria – 456
    7. Goodyear – 336
    8. Scottsdale – 314
    9. Surprise – 135
    10. Unincorporated Pinal County – 70
    11. Paradise Valley – 23
    12. Fountain Hills – 6
    13. Guadalupe – 5
    14. Apache Junction – 4

    We note that multi-family counts exceed single-family counts in Phoenix, Tempe, Glendale and Chandler. We also see the first permits in Guadalupe for many years.

    October 27 – The Census Bureau has published single family permit data for September 2017. Across Maricopa and Pinal counties we see 1,625 permits, the lowest monthly total since February. However it is up 11% from 1,467 in September 2016. As a result, the 12 month total has risen to 20,023 the first time we have seen over 20,000 permits since February 2008.

    Looking at the year to date counts, the ranking by city or place is as follows:

    1. Phoenix – 2,120
    2. Mesa – 1,930
    3. Buckeye – 1,642
    4. Unincorporated Pinal County – 1,599
    5. Peoria – 1,452
    6. Gilbert – 1,260
    7. Queen Creek – 889
    8. Maricopa – 842
    9. Goodyear – 836
    10. Unincorporated Maricopa County – 628
    11. Surprise – 575
    12. Scottsdale – 546
    13. Chandler – 408
    14. Avondale – 198
    15. Florence – 156
    16. Wickenburg – 128
    17. Glendale – 127
    18. Casa Grande – 93
    19. Eloy – 88
    20. Litchfield Park – 63
    21. Fountain Hills – 57
    22. Tempe – 41
    23. Apache Junction – 35
    24. Carefree – 24
    25. Cave Creek – 23
    26. Guadalupe – 9
    27. El Mirage – 8
    28. Tolleson – 4
    29. Coolidge – 2

    The top 2 are not a surprise, but look how Buckeye is outbuilding Chandler, Scottsdale and Surprise combined.

    Most of the activity in Unincorporated Pinal County is in the San Tan Valley area. When combined with the nearby incorporated towns of Queen Creek and Florence we have a total of 2,644.

    October 26 – Our regular table showing the Cromford® Market Index for the single-family markets in the largest 17 cities is shown below:

    The usual increase in supply that we see during the first part of the fourth quarter is bring down many of the indexes and we have 12 cities deteriorating for sellers. However 5 cities are bucking that trend, with Paradise Valley and Buckeye drawing attention.

    Avondale has conceded its place at the top once more with Chandler taking first place for the first time and former top-spot holder Mesa close behind. The Southeast Valley is doing particularly well in the CMI stakes at the moment. This not due to demand which is actually close to normal, but due to supply which is not only very low but has deteriorated much faster than the rest of the Phoenix area over the last 12 months. In contrast supply has been pouring in for Fountain Hills where the CMI has dropped 16% in the last month. Surprise and Peoria are other cities that dropped 5% or more in the last month.

    October 25 – According to the Freddie Mac survey, interest rates dropped in September. The average rate on a 30 year fixed home loan was 3.81%, the lowest since November 2016. Fluctuations in mortgage rates have been pretty small over the past 12 months. The only excitement comes from comparing actual rates with the wild forecast produced by most economists in the last quarter of 2016. We note that economist’s forecasts for mortgage interest rates have been wildly wrong (too high) for several years in a row now. I like to quote the Canadian-born American economist (also diplomat, editor and public official) John Kenneth Galbraith, who is responsible for some of the best comments on many subjects:

    • The only function of economic forecasting is to make astrology look respectable
    • Economics is extremely useful as a form of employment for economists
    • Under capitalism, man exploits man; under communism it’s just the opposite
    • In the choice between changing one’s mind and proving there’s no need to do so, most people get busy on the proof

    October 24 – We are seeing the usual increase in active listing counts that occurs during October and November, but this is disguising a slightly weak flow of new listings. For the first 3 weeks of October we have seen 1% fewer listings added than in October 2016. Looking at the change in active supply compared with this time last year we are seeing the opposite of what we need. More listings at the top end, fewer in the mid range and dramatically fewer at the bottom end.

    Price Range Active Listings % Change
    Under $200K 3,082 -27%
    $200K-$250K 2,582 -5%
    $250K-$300K 2,182 -3%
    $300K-$500K 5,045 -5%
    $500K-$800K 2,3828 -2%
    $800K-$1M 690 -1%
    $1M-$2M 1,059 +6%
    Over $2M 613 +8%

     

    October 23 – The final price band we are looking at for active listing counts is $1,500,000 and up:

    Here we see an unrelenting upward trend will higher highs and higher lows. Despite a significant increase in sales volumes, life is difficult for someone selling a home over $1.5M because there are simply too many for buyers to chose from. One slightly good piece of news for sellers to observe is that the increase between 2016 and 2017 is less than the increase between 2015 and 2016. Apart from that, sellers must keep their fingers crossed that the high point next spring fails to exceed the high point of spring 2017.

    October 20 – Another look at the active listing count but this time those homes listed between $500,000 and $1,500,000:

    Here we see a strong seasonal pattern with a peak in May and a trough in September. We also see an general upward trend in the number of listings between 2013 and 2016. However 2017 has seen a turnaround with a smaller peak in May and a lower trough in September. Supply is tightening in this price range and given the large percentage increase in closed sales, the balance of power has swung in favor of sellers.

    October 19 – Our weekly look at the Cromford® Market Index for the single-family market in the largest 17 cities suggests that the market is weakening a little:

    We have slightly more cities (9) deteriorating than improving (8). However most of the deteriorations are of very small magnitude except for Fountain Hills and Cave Creek.

    Paradise Valley has moved higher up the table than we have seen it for a long time and showed the biggest improvement over the last month. Buckeye came next, followed by Avondale and Tempe.

    October 18 – Another active listings chart extract but this time for homes between $200,000 and $500,000:

    Here we see that supply was a huge problem in mid 2013 but grew rapidly during 2014. Since then it has been surprisingly stable. However the sales rate has increased substantially over the past 2 years. A flat supply feels more and more inadequate in the face of a much larger sales volume. However at least the supply has not fallen back as sales increased.

    We see that supply usually increases quickly during the first quarter and also during the fourth quarter with the annual low point usually occurring in September.

    October 17 – Below is an image taken from the weekly active listings chart:

    A price range filter has been selected to eliminate all listings over $200,000. UCB and CCBS listings are excluded from the counts.

    Here we can see the huge reduction in supply that has occurred over the past 4 years. The seasonal pattern clearly shows up, but each year is much lower than the year before. It is starting to look as though there will not be much of a market below $200,000 before too long.

    October 16 – As a follow up to our observation about appreciation rates on October 13, we are taking a look at the trends for the cities.

    Cities showing a declining trend in appreciation rate:

    • Arizona City peaked at 17.9% in May but has retreated to 12.0% now.
    • Avondale peaked at 10.7% in July but has retreated to 9.2% now
    • Buckeye peaked at 9.9% in February but has retreated to 7.4% now
    • Fountain Hills was at 3.3% in January but has fallen to 0.7% now
    • Laveen has dropped from 10.4% in January to 7.4% now
    • Maricopa has declined steadily all year from 11.6% in January to 6.4% now
    • Phoenix has dropped from 7.4% in January to 5.2% now
    • Sun City West has dropped from 9.2% in January to 6.0% now
    • Tempe has dropped from 6.2% in January to 4.8% now
    • Tolleson has dropped from 11.2% in January to 7.3% now

    Cities on an improving appreciation trend:

    • Anthem, relatively slow, has started to catch up, increasing from 1.6% in January to 3.9% now
    • Apache Junction has increased from 5.7% in January to 8.9% now
    • Casa Grande has increased from 6.1% in January to 9.7% now
    • Gold Canyon was at -0.7% in January and has increased dramatically to 7.1% now
    • Litchfield Park was at a low of 5.5% in May and has improved to 8.8% now
    • Mesa was at 5.8% in January and has advanced to 7.3% now
    • Paradise Valley has improved from -1.4% in January to 4.6% now
    • Peoria has increased from 5.2% in January to 7.1% now
    • Queen Creek has increased steadily from 7.0% in January to 8.2% now
    • Scottsdale has seen modest improvement from 2.7% in January to 3.6% now
    • Sun Lakes has increased from 3.7% to 5.9% now
    • Surprise has increased slowly but steadily from 6.7% in January to 7.7% now

    Cities with little change in appreciation rates:

    • Cave Creek was at 4.6% in January and is at 5.2% now
    • Chandler was at 6.2% in January and is at 5.6% now
    • El Mirage was at 13.8% in January and is at 12.8% now
    • Gilbert was at 5.3% in January and is at 5.6% now
    • Glendale was at 6.9% in January and is at 7.0% now
    • Goodyear was at 6.3% in January and is at 6.9% now
    • Sun City was at 10.1% in January and is at 9.7% now

    This is a pretty mixed picture with fortunes changing in many different directions. All the appreciation rates are now positive (two were negative in January) which is a good sign. However the slowdown in our largest city of Phoenix (about 25% of the total market) means the overall trend is very slightly lower at the moment.

    October 13 – Changes in the annual appreciation rate (measured using the annual average $/SF) give us a good indication of whether the market has been heating up or cooling down. This is using closed sales prices so it is a trailing indicator rather than a leading indicator. By using the annual average we get a fairly non-volatile reading. The trends tend to stay in place for quite some time. By looking at the weekly chart for annual appreciation we can detect when those trends change direction. Here is what we have seen so far:

    1. Appreciation was below 2% and weakening in early 2002, but the trend turned around in the second quarter and reached 4% by the end of the year.
    2. The appreciation continued to increase slowly during 2003 reaching 5.6% by the end of the year.
    3. Appreciation started to go crazy as the market heated up during 2004 thanks to the widespread availability of easy credit. It exceeded 12% in December 2004.
    4. The bubble was in full expansion mode during 2005 with appreciation exceeding 36% at the end of 2005.
    5. Appreciation peaked at 37.2% in March 2006 and then collapsed down to 11% by the end of the year, as the bubble burst.
    6. The bubble continued to deflate reaching -5% in December 2007.
    7. The foreclosure wave took depreciation to new depths reaching -28% in December 2008.
    8. The appreciation rate hit a historic low in the summer of 2009 at -36.5% but then started rising again.
    9. During 2010, the appreciation rate climbed by to slightly positive at 0.6% but this trend ran out of steam during the fourth quarter of 2010.
    10. 2011 saw appreciation slide back down to -9% by 3Q but signs of new life emerged at the end of the year.
    11. In 2012 appreciation charged from -9% all the way up to 20%
    12. Appreciation peaked at 25% during the spring of 2013 and started to drift slowly down again.
    13. 2014 saw appreciation drop from over 20% to less than 9%.
    14. In 2015 the downward trend stopped in September at 4.1% and started rising slowly again, reaching 4.4% by the end of the year.
    15. During 2016 the appreciation rate improved to 5.4% by the end of the year, though all of that improvement occurred during the first 3 months of the year.
    16. In 2017 appreciation hit a maximum of 6.5% in September and has drifted slightly lower since then, currently at 6.3%

    The second and third quarters of 2017 gave us a fairly strong positive direction but so far the fourth quarter has seen a change of trend to a slight downward drift. Since this is a trailing indicator it suggests the market has cooled a little since the spring. By examining the appreciation chart by city we can see where the cooling trend has occurred, and where it has not.

    We should emphasize that when the rate of appreciation falls, prices are still rising, they are just not rising with quite so much speed. Only when the rate of appreciation goes negative are prices actually falling compared with the previous year. At the current 6.3% we are a long way above that point.

    October 12 – The Cromford® Market Index for the single-family markets in the 17 largest cities by dollar volume is shown in the table below:

    Although we are very much in a seller`s market the changes over the last month are mixed. We have 9 cities showing improvement for sellers and 8 showing deterioration.

    Buckeye is one of the improving areas and is now comfortably over 110 in the seller`s market zone. Gilbert is catching up with Mesa and Chandler while Avondale has consolidated its place at the top of the table. Paradise Valley continues to improve.

    The cities doing significantly less well are Fountain Hills and Cave Creek. The others losing ground are only down 4% or less.

    October 11 – Let us take a look at how the single-family luxury market fared during the third quarter. We will count homes that were listed for $500,000 or more and closings through ARMLS only. Our comparison period will be the third quarter of 2016.

    Supply:

    Looking at active listings excluding those in AWC or CCBS status as of October 1, the total number declined by 4% from 4,096 to 3,946. The decline was 6% in the price range from $500,000 to $1 million, from 2,667 to 2,508. The price range from $1 million to $2 million increased slightly from 916 to 920 while the price range over $2 million increased 1% from 513 to 518.

    Demand:

    Third quarter closings were up a very strong 22% from 1,500 to 1,835. The increase was greatest over $2 million where closings rose 33% from 48 to 64. The range between $1 million and $2 million was next with an increase of 24% from 211 to 262. Between $500,000 and $1 million closings increased 22% from 1,241 to 1,509.

    Supply versus Demand:

    • The price range from $500,000 to $1 million went from 6.5 to 5.0 months of inventory based on the quarterly sales rate
    • The price range from $1 million to $2 million went from 13.0 to 10.5 months of inventory
    • The price range over $2 million went from 32.1 to 24.3 months of inventory

    Pricing:

    • Despite a significant improvement in the inventory position, the price range between $500,000 and $1 million only managed a 0.7% increase in average $/SF from $192.47 to $193.89
    • The price range from $1 million to $2 million fared worse, with the average $/SF dropping 1.2% from $280.84 to $277.39
    • The price range over $2 million saw a 14.3% decline in average $/SF from $455.43 to $390.34

    The overall pricing for single-family homes over $500,000 declined 0.6% from $224.12 to $222.67

    In summary, it was a great quarter for sales volume, but for pricing it was not good at all. Having said that, some ZIP codes did much better than others.

    Average $/SF was at least 10% higher in 85018, 85020, 85234, 85250, 85254, 85298, 85377 and 85383 when compared with 3Q 2016. However several of these are ZIP codes with only a small number of luxury sales. The large ZIP codes did not do well, with 85255 down 4% and 85262 down 6%.

    October 10 – We now have the preliminary September recording data for Maricopa County and can report the following data.

    • The overall monthly median sales price was $251,000, unchanged from August but up 3.3% from September 2016.
    • The new home median sales price was $331,188, up 3.1% from September 2016
    • The re-sale median sales price was $239,900, up 4.3% from September 2016
    • The total sales count was 8,933, up 1.5% from September 2016 (which benefited from an extra working day)
    • The new home sales count was 1,388, up 9.4% from September 2016
    • The re-sale home sales count was 7,545, up 0.2% from September 2016

    New homes continue to out-perform re-sales in volume, but not in pricing.

    Note that the median sales price for new homes and re-sales are not comparable since the average new home is much larger than the average re-sale home.

    October 9 – On October 6 we published a comprehensive analysis by ZIP code of the annual change in annual average price per sq. ft. for single family homes in the Greater Phoenix area.

    Today we are doing the same for condos & townhomes. There are far fewer ZIP codes that qualify based on our minimum 2,000 homes, but we need to apply this minimum to ensure the results are meaningful. Below this level the sample size is just too small to give us results we can truly rely on.

    Rank City ZIP Condos & Townhomes Appreciation Rate Current Annual Average $/SF
    1 Phoenix 85014 3,527 24.2% $159.08
    2 Phoenix 85008 2,528 23.3% $135.92
    3 Phoenix 85015 3,300 20.8% $90.39
    4 Mesa 85201 3,597 19.4% $122.20
    5 Phoenix 85016 5,743 17.8% $225.91
    6 Glendale 85301 3,182 14.6% $73.07
    7 Mesa 85206 2,751 13.3% $128.18
    8 Mesa 85210 3.170 13.2% $118.33
    9 Mesa 85202 4,171 13.1% $114.97
    10 Tempe 85282 3,298 13.0% $138.57
    11 Scottsdale 85257 2,764 12.6% $141.94
    13 Sun City 85351 8,135 12.5% $91.96
    14 Chandler 85225 3,221 12.4% $135.83
    15 Phoenix 85032 4,246 11.6% $131.63
    17 Scottsdale 85251 12,063 11.5% $227.26
    19 Phoenix 85018 3,869 10.2% $179.82
    20 Phoenix 85022 3,290 10.2% $125.93
    21 Phoenix 85020 5,740 9.3% $147.00
    22 Fountain Hills 85268 4,579 8.7% $172.50
    23 Phoenix 85013 2,026 8.0% $158.45
    24 Scottsdale 85254 2,632 7.7% $247.83
    25 Tempe 85283 2,807 7.6% $141.50
    26 Mesa 85209 3,125 7.2% $141.02
    27 Scottsdale 85260 6,634 7.1% $191.05
    28 Phoenix 85044 2,402 7.0% $149.90
    29 Tempe 85281 5,350 6.0% $183.20
    30 Scottsdale 85250 6,125 5.5% $186.66
    31 Sun City West 85375 2,780 5.1% $108.82
    32 Chandler 85224 2,539 4.3% $149.09
    33 Scottsdale 85258 7,532 3.2% $210.38
    34 Scottsdale 85255 3,805 -1.0% $215.40

    In general, condos and townhomes have appreciated faster than single-family homes over the past 12 months. Central areas of Phoenix and Mesa have seen the biggest rises. Least favorable was 85255 which saw a small decline. Pricing in 85301 remains far below average but is catching up.

    October 6 – At the ZIP Code level, the monthly average price per square foot is not terribly useful. Most ZIP codes are too small to have sales rates that give us enough samples to get a realistic price per sq. ft. over just one month. The average ZIP code in Maricopa County has 9,718 single family homes, condos or townhomes. There are a few ZIP codes that are much larger than average. Examples would be 85255 with 19,121, 85308 with 21,286, 85383 with 20,389, 85351 with 20,626, 85375 with 18,650, 85225 with 19,538 and 85032 with 20,399. Others are tiny, such as 85004 with only 1,288 homes and 85034 with only 851.

    The answer is to take averages over a longer time frame, such as a year. However with the tiny ZIP codes, even this yields too small a sample to be very useful. So ignoring ZIP codes with fewer than 2,000 single-family homes, here is the ranking of ZIP codes by the annual change in annual average $/SF for single-family homes:

    Rank City ZIP Single Family Homes Appreciation Rate Current Annual Average $/SF
    1 Phoenix 85009 8,208 18.9% $111.17
    2 Coolidge 85128 3,827 17.9% $70.76
    3 Wickenburg 85390 2,599 15.7% $148.29
    4 Phoenix 85040 6,245 13.8% $110.24
    5 Mesa 85201 6,552 13.3% $135.97
    6 Phoenix 85035 8,808 12.8% $108.34
    7 El Mirage 85335 9,439 12.8% $109.14
    8 Eloy 85131 2,690 12.3% $110.20
    9 Phoenix 85051 9.653 12.0% $113.86
    10 Phoenix 85041 15,428 12.0% $107.98
    11 Sun City 85351 12,491 11.6% $112.22
    12 Arizona City 85123 3,668 11.6% $80.57
    13 Phoenix 85031 5,816 11.5% $98.15
    14 Phoenix 85033 11,130 11.5% $107.48
    15 Florence 85132 6,339 10.9% $91.80
    16 Avondale 85323 10,139 10.6% $106.73
    17 Scottsdale 85250 3,382 10.5% $233.43
    18 Peoria 85345 14,734 10.3% $124.06
    19 Phoenix 85027 9,294 10.2% $143.57
    20 Buckeye 85326 16,945 10.0% $101.89
    21 Glendale 85301 7,165 9.9% $103.20
    22 Surprise 85387 5,029 9.8% $142.39
    23 Phoenix 85017 5,650 9.6% $103.97
    24 Mesa 85204 12,100 9.4% $136.55
    25 Casa Grande 85194 2,223 9.2% $123.24
    26 Phoenix 85006 5,090 9.1% $186.71
    27 Phoenix 85019 5,594 9.1% $104.72
    28 Phoenix 85043 7,764 9.1% $106.50
    29 Casa Grande 85122 13,044 9.0% $85.60
    30 Phoenix 85029 10,124 9.0% $123.98
    31 San Tan Valley 85143 13,701 9.0% $97.01
    32 Phoenix 85015 5,441 8.9% $145.03
    33 Phoenix 85037 12,226 8.8% $105.92
    34 Mesa 85213 8,393 8.8% $139.62
    35 San Tan Valley 85140 11,268 8.8% $110.30
    36 Phoenix 85053 7,809 8.7% $123.71
    37 Scottsdale 85257 7,239 8.7% $195.65
    38 Litchfield Park 85340 9.148 8.6% $126.68
    39 Surprise 85378 2,340 8.6% $121.47
    40 Glendale 85302 8,914 8.6% $116.71
    41 Apache Junction 85120 5,362 8.6% $123.72
    42 Apache Junction 85119 4,775 8.4% $134.96
    43 Chandler 85225 16,317 8.4% $149.17
    44 Surprise 85379 14,467 8.4% $109.85
    45 Goodyear 85338 16,631 8.3% $120.05
    46 Mesa 85215 5,084 8.2% $151.78
    47 Phoenix 85008 6,940 8.2% $159.85
    48 Maricopa 85139 4,643 8.0% $85.37
    49 Mesa 85212 10,852 8.0% $127.53
    50 Queen Creek 85142 19,969 8.0% $125.12
    51 Peoria 85381 7,207 7.9% $133.19
    52 Laveen 85339 12,399 7.9% $105.96
    53 Gilbert 85298 12,788 7.9% $153.37
    54 Avondale 85392 10.730 7.7% $113.85
    55 Mesa 85203 7,848 7.7% $132.59
    56 Tolleson 85353 9,723 7.5% $101.38
    57 Sun City 85373 7,089 7.5% $116.05
    58 Glendale 85310 7,043 7.4% $146.79
    59 Mesa 85208 8,324 7.3% $128.45
    60 Tempe 85281 5,557 7.3% $177.17
    61 Mesa 85209 11,109 7.1% $134.51
    62 Mesa 85202 6,943 7.1% $141.29
    63 Gold Canyon 85118 6,242 7.1% $157.81
    64 Glendale 85306 6,625 7.0% $132.27
    65 Surprise 85388 9,173 6.9% $107.70
    66 Mesa 85206 9,245 6.9% $132.82
    67 Peoria 85383 19,973 6.8% $144.87
    68 Mesa 85210 5,739 6.7% $135.75
    69 Tempe 85282 10,209 6.6% $153.45
    70 Scottsdale 85254 14,623 6.6% $202.84
    71 Phoenix 85007 3,011 6.6% $186.08
    72 Glendale 85303 7,895 6.6% $114.37
    73 Maricopa 85138 13,991 6.4% $89.16
    74 Waddell 85355 3,719 6.3% $115.21
    75 Phoenix 85028 7,165 6.2% $186.19
    76 Chandler / Sun Lakes 85248 13,608 6.2% $158.84
    77 Glendale 85308 20,170 6.2% $143.35
    78 Scottsdale 85251 5,574 6.1% $268.13
    79 Scottsdale 85266 5,711 6.0% $235.50
    80 Sun City West 85375 15,870 5.9% $131.65
    81 Gilbert 85234 14,569 5.9% $145.37
    82 Gilbert 85233 11,342 5.8% $146.81
    83 Phoenix 85023 7,976 5.8% $141.72
    84 Phoenix 85021 6,522 5.8% $173.86
    85 Phoenix 85032 16,153 5.8% $161.21
    86 Phoenix 85083 6,342 5.7% $138.78
    87 Phoenix 85024 7,124 5.7% $156.53
    88 Chandler 85226 11,108 5.6% $162.68
    89 Phoenix 85018 9,303 5.6% $289.95
    90 Surprise 85374 16,627 5.5% $134.55
    91 Glendale 85304 8,368 5.4% $122.31
    92 Gilbert 85296 14,257 5.3% $141.03
    93 Scottsdale 85260 9,118 5.2% $214.18
    94 Phoenix 85022 10,371 5.1% $153.27
    95 Mesa 85205 11,598 5.1% $136.25
    96 Chandler 85249 15,940 5.1% $147.06
    97 Chandler 85224 11,505 4.9% $153.62
    98 Scottsdale 85259 7,522 4.8% $225.40
    99 Cave Creek 85331 11,715 4.8% $186.90
    100 Anthem / Phoenix 85086 14,279 4.8% $145.72
    101 Phoenix 85016 6,858 4.8% $219.65
    102 Mesa 85207 14,399 4.8% $159.31
    103 Phoenix 85020 7,269 4.7% $185.68
    104 Glendale 85305 2,984 4.7% $118.52
    105 Phoenix 85042 10,513 4.7% $127.59
    106 Gilbert 85295 12,829 4.5% $135.48
    107 Paradise Valley 85253 6,668 4.3% $353.90
    108 Phoenix 85045 2,771 4.2% $149.32
    109 Phoenix 85014 4,105 4.2% $194.48
    110 Chandler 85286 12,352 4.1% $151.16
    111 Peoria 85382 12,874 4.0% $136.17
    112 Phoenix 85050 8,812 4.0% $178.57
    113 Goodyear 85395 11,204 3.9% $135.94
    114 Scottsdale 85258 6,395 3.9% $239.34
    115 Tempe 85283 9,312 3.5% $153.70
    116 Buckeye 85396 8,547 3.5% $121.86
    117 Phoenix 85013 4,221 3.0% $191.97
    118 Tempe 85284 6,009 2.9% $173.43
    119 Gilbert 85297 9,881 2.8% $138.21
    120 Phoenix 85085 6,417 2.2% $142.01
    121 Phoenix 85048 10,509 2.1% $159.32
    122 Phoenix 85044 10,796 1.2% $162.14
    123 Fountain Hills 85268 8,446 1.2% $201.21
    124 New River 85087 2,867 0.8% $139.12
    125 Scottsdale 85255 15,316 -0.1% $281.13
    126 Scottsdale 85262 6,964 -2.1% $264.33

    These are meaningful numbers and tell us a number of stories.

    Generally the more glamorous and sought after ZIP codes are doing the least well for appreciation. The prime examples would be 85255 and 85262 which are the only 2 ZIP codes that show depreciation over the past year.

    The inverse is also generally true. It is hard to imagine 2 less glamorous ZIP codes than than 85009 and 85128 yet they are doing extremely well from an investment point of view.

    There are notable exceptions to this pattern. One expensive ZIP code has experienced strong appreciation over the past 12 months, and that is 85250. There also some cheaper locations that have seen relatively weak appreciation, including 85087, 85297, 85396 and 85395.

    Ahwatukee (85044, 85045, 85048) and Fountain Hills are obvious examples of areas that are appreciating slower than people might expect. In contrast, Wickenburg, Arizona City and Florence are appreciating much faster than people might have expected.

    For the data in chart form by ZIP code see here.

    October 5 – The Cromford Market Index table for the single-family markets in the 17 largest cities by dollar volume is shown below:

    Here we see 9 cities improving for sellers and 8 deteriorating. A little more balanced than we have seen for some time.

    The largest improvement by far is in Avondale which has consolidated its place at the top of the table one more.

    Other cities showing good improvements for sellers are Gilbert, Paradise valley, Maricopa and Buckeye.

    Fountain Hills, Cave Creek and Mesa are seeing the biggest pull backs.

    This is still very much a seller’s market with Buckeye now only hair’s breadth away from exceeding the 110 mark.

    October 4 – The overall supply has been very weak for a long time now, though the high-end remains well supplied with plenty of homes for sale. Some areas have changed quite a bit over the past year while other have remained stable. We can see the biggest changes by studying the Cromford® Supply Index for the individual cities. Ranking from lowest to highest supply we currently have:

    1. Arizona City – 39.5
    2. Tolleson – 42.6
    3. Avondale – 44.9
    4. El Mirage – 45.1
    5. Anthem – 47.3
    6. Sun City West – 48.8
    7. Apache Junction – 51.3
    8. Chandler – 53.6
    9. Sun Lakes – 54.4
    10. Mesa – 56.2
    11. Sun City – 57.0
    12. Glendale – 57.1
    13. Gilbert – 57.2
    14. Surprise – 58.6
    15. Phoenix – 65.5
    16. Gold Canyon – 65.5
    17. Laveen – 65.8
    18. Casa Grande – 67.4
    19. Queen Creek – 69.3
    20. Litchfield Park – 70.9
    21. Fountain Hills – 72.3
    22. Peoria – 73.9
    23. Maricopa – 74.2
    24. Goodyear – 75.1
    25. Scottsdale – 75.2
    26. Cave Creek 77.7
    27. Tempe – 80.9
    28. Paradise Valley – 84.3
    29. Buckeye – 104.0

    Remember that 100 represents normal and only one city (Buckeye) has a supply that is higher than normal (for Buckeye).

    The changes over the past year have been:

    1. Chandler – down 29%
    2. Sun Lakes – down 28%
    3. Casa Grande – down 26%
    4. Anthem – down 25%
    5. Arizona City – down 24%
    6. Gilbert – down 22%
    7. Apache Junction – down 17%
    8. Sun City West – down 17%
    9. Mesa – down 16%
    10. Cave Creek – down 14%
    11. Laveen – down 13%
    12. Queen Creek – down 12%
    13. Tempe – down 12%
    14. Tolleson – down 11%
    15. Litchfield Park – down 7%
    16. Surprise – down 7%
    17. Scottsdale – down 6%
    18. Avondale – down 5%
    19. Glendale – down 4%
    20. Paradise Valley – down 4%
    21. Gold Canyon – down 2%
    22. Peoria – down 2%
    23. Maricopa – down 2%
    24. Phoenix – unchanged
    25. Buckeye – up 1%
    26. Goodyear – up 6%
    27. Fountain Hills – up 7%
    28. Sun City – up 11%
    29. El Mirage – up 33%

    For buyers the supply situation has deteriorated the most in the Southeast Valley and Pinal County, while parts of the Southwest Valley (Goodyear and Buckeye) have eased, along with the Sun City and El Mirage area, although supply remains very tight compared with normal.

    October 2 – The percentage of trustee auctions being won by a third-party reached 68.9% in September. This is the highest level since the bubble era in October 2005.

    The remaining 31.1% of auctions failed to catch a bid and reverted to the beneficiary (i.e. lender). There were 60 of these. There were only 14 in October 2005 because in the bubble era, investors were even more active than now, picking off pre-foreclosures before they even got to the auction.

    October 1 – The multi-family permits issued in August for Maricopa and Pinal Counties amounted to 1,240, the highest total since September 2016. This robust total after several weak months brings the 12 month total up to 9,722, much higher than the Blue Chip Forecast for 2017 which was only 7,153 in the second quarter of this year. It seems that multi-family permits refuse to conform to expectations of a decline.

    The City of Phoenix is now way out in front in multi-family permits year-to-date:

    1. Phoenix – 2386
    2. Mesa – 716
    3. Chandler – 664
    4. Glendale – 471
    5. Tempe – 413
    6. Peoria – 408
    7. Goodyear – 336
    8. Surprise – 135
    9. Unincorporated Pinal County – 66
    10. Paradise Valley – 20
    11. Scottsdale – 13
    12. Fountain Hills – 6
    13. Apache Junction – 4

    Please note that the census definition of multi-family includes residential buildings from duplexes upwards.

     

    © 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.

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