East Valley Real Estate News
News from the Cromford Report
June 15 - It is time for our weekly look at the Cromford® Market Index for the single-family markets in the 17 largest cities (by dollar volume)
We have 11 cities showing improving conditions for sellers and 6 deteriorating. Last week we predicted that there would be more green dots and fewer red one, and we are relieved to be proven correct.
Weaker conditions are concentrated in the Southeast Valley - Chandler down 8%, Gilbert down 5% and especially Tempe - down 17%. Mesa and Queen Creek are the lone holdouts and are still improving.
Paradise Valley had a good spring but is fading now that the triple digit temperatures are taking hold. It is the only one of the 17 cities not in the seller's market zone over 110.
Among the big improvers are Fountain Hills, Cave Creek, Buckeye and Glendale, with Scottsdale and Avondale not far behind.
The West Valley has regained its mojo with all its cities showing improvement and its star player Avondale now breaking through 200 again.
Phoenix itself is almost unchanged compared with last month.
June 14 - The single-family luxury home market is starting to split into 2 segments - under $1.5 million which is looking much stronger than last year - and over $1.5 million which continues to be plagued by abundant supply and lower growth in demand.
|Active June 2015||Active June 2016||Active June 2017||2 Year Change||Current Days of Inventory|
|All the above||4,743||5,451||5,363||+13%||274|
Overall, we have 13% more supply than 2 years ago, so there is still plenty of choice for buyers. However, the annual sales rate for homes over $500,000 has increased from 5,264 to 7,132, a rise of 35%. So here we can see that the growth in demand is faster than the growth in supply and after a weak period since peaking in mid-summer 2015, prices in most luxury areas are on the rise again, particularly for homes under $1.5 million. It is above $1.5 million where the market starts to change for the worse.We can see that inventory is over 600 days from homes priced above $1.5 million, and here annual sales have risen from 547 to 596, an increase of only 9%, while supply is up by from 1,030 to 1,140, a rise of 11%. Now we see a problem. When supply increases at a faster rate than demand, sellers are at a disadvantage. Pricing will have a hard time making substantial upward progress until this condition changes.
June 13 - On the thirteenth of each month we publish the small city snapshots for the following:
Two of these barely fit our small city category these days. Florence has grown in size to justify being promoted to one of our secondary cities, while Desert Hills is really now just a suburb of Phoenix and is slowly disappearing into oblivion from a statistical point of view.
Being small these don't get a lot of attention, so I though we should review the more interesting things happening to some of the single-family markets in these small cities.
June 12 - Today I would like to make a broad comparison of the different regions within the Greater Phoenix area and compare how they have changed over the last year and since last month. The two key measures I am going to use are days of inventory and quarterly average price per sq. ft. We will focus on the single-family market since the condo/townhouse market is very small in a couple of these broader areas.
|Region||Days of Inventory June 2016||Days of Inventory May 2017||Days of Inventory June 2017||Annual Change||Quarterly Average $/SF May 2016||Quarterly Average $/SF May 2017||Annual Change|
|Phoenix & North Valley||93||87||83||-10.7%||$147.21||$153.95||+4.6%|
Note that Pinal County has shown the largest decline in days of inventory and hence the biggest swing in favor of sellers. The West Valley has seen the smallest swing, but it is still in favor of sellers and it was already a strong seller's market in June 2016.
The Southeast Valley has seen the second biggest swing in favor of sellers, but note that it is the only area that did not improve for sellers between May 2017 and June 2017.
Days of inventory is a leading indicator of the market whereas quarterly average $/SF is very much a trailing indicator.
The Northeast Valley has improved its pricing noticeably over the last 2 months, but we caution that the "third quarter effect", where pricing weakens between June and September, is more pronounced for the luxury market than for other price ranges.
June 10 - We seem to have reached the minimum level of new foreclosures in Maricopa County. For the past 11 months, the 90-day average for the number of new Notices of Trustee Sale has been at 20 per day (about 29 per working day). This is the lowest level since 2000 but there is currently no sign of it going any lower. I guess we could call this the "background level" of new foreclosure notices that will be filed even at the best of times. You can see this flat-lining in the chart here.
We not not reached a minimum in terms of completed foreclosures (Trustee Deeds). The current 90 day average across Maricopa County is 6 per day, down from 9 per day this time last year and still on a downward trend. We still have a long way to go to reach the minimum of 1 per day that we saw in 2006. This is because at the peak of the bubble, investors would ensure that any home that entered the foreclosure process would get plenty of purchase offers before it actually went to trustee sale. In those days negative equity was yet to be discovered as "a thing".
June 9 - Let us take another look at the Cromford® Market Index for the single-family markets in the 17 largest cities by dollar volume:
Here we see a slight majority of cities improving for sellers, with strong gains for Fountain Hills, Buckeye, Peoria, Glendale and Scottsdale.
8 out of the 17 show deteriorating conditions, though there are no cities with CMI below 100. Tempe remains on a weakening trend, while Paradise Valley and Chandler are faltering.
Geographically speaking, all of the East Valley cities lost some ground over the past month, while the Northeast Valley is looking better than it has for some time (except for Paradise Valley). The West Valley is regaining more of its mojo especially in the big cities of Glendale and Peoria.
The overall picture is still heavily biased in favor of sellers due to the weak supply situation and over the next 3 months that supply is going to get tighter still. With lenders' underwriting standards continuing to get looser, it is our bet that the supply will drop a little faster than demand, which always fades during the third quarter. Nothing is certain in this world, but we expect to see a few more green dots and fewer red ones in the weeks ahead.
June 8 - The Cromford® Market Index seems to be gaining at bit of its mojo back, having risen from 146.5 to 147.2 in the last 7 days. This is because the supply is now falling at a faster pace and we would expect it to continue to fall until the end of August. The Demand Index, meanwhile, has stopped its mild decline from the 106 level and is holding steady at 103 or thereabouts.
The consequent outlook is a mild improvement for sellers over the next month thanks to fewer competing sellers. Buyers are expected to thin out over the next few months also, but to a lesser extent.
So overall, the picture remains positive with no storm clouds on the horizon just yet. Appreciation will no doubt be interrupted by the third quarter effect, however, almost certainly resuming in the fourth quarter.
June 7 - Not every listing closed through ARMLS has actually been marketed on ARMLS. We are seeing more and more listings that are added retrospectively, after the deed has recorded. This may be done for various reasons, such as:
As this trend grows, the connection between listings under contract (i.e. pending, UCB or CCBS) and listings closed starts to break down. We get sales counts growing without a corresponding growth in listings under contract because these listings added after the fact appear to have never been in escrow. Many of you will have noticed that closed listings are up significantly from last year (11% year to date), but listings under contract are slightly lower (down 4% as of today).
I think there are multiple effects at play here:
There are at least 2 ways we can spot the last of these.
The first category above is up 91% from last year. The second category is up 30%. The second category is about 7 times more common than the first in 2017.
There used to be a strong relationship between the under contract count and the monthly sales count the following month. The growing weakness in that relationship makes market trends a little more tricky to spot. At the national level we are seeing statements that demand is weakening because the pending listing counts are below expectations. We think this may be misguided. The way the market works now is generating more pocket listings and therefore artificially tamping down the pending listing count. Of course the pending listing count is already much lower than normal because so many listings under contract are being placed in UCB rather than pending status. Our estimate is that 67% of the UCB listings are not really available for sale, but would have been in pending status if not for the existence of Zillow.
We need to adjust our expectations of the under contract count and reset the relationship between that count and the expected sales count the following month.
June 6 - The preliminary numbers for Maricopa County recorded deeds are now available for May. Total sales volume was 11,274, the highest total since June 2006 and up 14% over May 2016. This includes single-family, condos and townhomes.
The overall monthly median sales price hit $250,000 for the first time since November 2007. The median for new homes was $325,324 which is unspectacular but up 1.3% from May 2016. The median sales price for new homes is being held back by higher volumes of entry level homes. Prices for similar homes are increasing far more than 1.3%. The median sales price for re-sales was $239.000, up from $225,000 last year.
New home unit volume increased by 26% from last year whereas re-sales volumes were up by 12%.
June 5 - We have now added a new Tableau chart that shows the seasonal nature of new listings in Greater Phoenix. You can find it here.
The biggest month for new listings is January (the slowest month for closed sales). The slowest month for new listings is December.
For homes over $1 million, October is also a very busy month few new listings. July is very quiet, almost as slow as December.
June 4 - We have added a new Tableau chart that shows the seasonal nature of sales in Greater Phoenix. You can find it here.
It includes filters for Dwelling Type, Transaction Type, Price Range, County, City and ZIP Code. You can also adjust the years that are included (the default is 2001 through 2016. Be warned that if you include the current year it will distort the picture since not all months will be included.
May is the overall peak month for closed sales with 9.827%. However June is close behind and May and April quickly follow. By far the weakest month is January with only 6.174% of closed sales.
When we look exclusively at condo / townhouse sales, April is the peak month and May drops into second place. For mobile homes, March is the favorite month with April in second place.
For homes over $1 million, June is the biggest month and the drop between June and July is huge. This helps explain why we see average price per sq. ft. fall every year during the third quarter. September is the weakest month for sales of homes over $1 million.
June 3 - The S&P/Case-Shiller® Home Price Index® report for March came out on Tuesday and showed the following monthly changes for the 20 cities they focus on:
Food for thought for those who think Phoenix is appreciating too fast. Not only did we place only 17th out of 20, we were well below the national average of 0.81%.
The monthly drop in Tampa is unusual. I suggest we keep an eye on that one.
The more important 1 year change table looks like this:
Here we see Phoenix firmly in the middle of the pack and just below the national average of 5.7%.
I see no sign of the collapse in the San Francisco market that some have been forecasting. Seattle, Portland, Dallas and Denver remain the front runners, as they have for quite some time.
June 2 - Below is the regular weekly table where we show how the Cromford® Market Index has changed for the single-family markets in the 17 largest cities by dollar volume.
We remain in a seller's market overall with 8 cities showing improvement for sellers and 9 showing deterioration.
The last five months have seen the smallest overall change in the Cromford® Market Index since we started measuring it. However there are a few bigger moves in the specific cities.
The largest percentage change is in Tempe which has seen a sudden increase in active listings over the past 6 weeks. Although it is still a seller's market in Tempe, it has slipped from 4th place in this table down to 11th since April 20. It is not yet clear why this increase in supply has happened since most parts of the valley have seen a decline in active listings. Active listings (excluding UCB and CCBS) are up significantly in all four Tempe ZIP codes (85281, 85282, 85282 and 85284). In particular, 85281 has the highest number of active single-family listings at the start of a month since April 2014. In the neighboring areas of Ahwatukee in Phoenix 85044 and 85048 we also see a rising supply trend. This is particularly surprising since there is little new single-family construction going on in these areas.
Fountain Hills is the biggest percentage riser, benefiting from both a fall in supply and rising demand.
Most other cities are little changed with the next largest moves by Peoria (up 5%) and Chandler (down 5%).
In the Northwest, Paradise Valley has faded a bit after a good spring season while Scottsdale is showing some improvement with good sales volumes and a fall in supply.
The Southeast Valley has lost steam with the CMI for Queen Creek, Gilbert, Chandler and Tempe all down. Mesa is the only large city in the area showing a small advance.
Outside the large cities, we have to mention Arizona City which is currently showing a CMI of 279.7. Supply has crashed in Arizona City with only 30 single-family homes available without a contract. This is the lowest we have ever recorded. There were 91 as recently as December and the previous record low in 2005 was 32. The annual sales rate is now 247, its highest level since 2014. The annual average $/SF is currently rising by 17.2% a year and the monthly median sales price has reached $130,000, very low by most standards, but up more than 29% from $100,500 a year ago. Its peak monthly median sales price during the bubble years was $169,000 in April 2006.
June 1 - Opendoor and OfferPad are the two most prominent iBuyers of homes in the USA and both of them started operation in Phoenix. They have now been joined by Knock in Atlanta. Opendoor now operates in Dallas and in Las Vegas too (though to a very limited extent in the latter). They first started buying homes in Phoenix in August 2014 and I think now is a good to time to study their home buying and home selling in more detail. We are doing this primarily using recorded deeds rather than ARMLS data, since many of their purchases take place outside of the MLS. However the vast majority of their sales occur through the MLS.
First here is a chart showing the unit volume of purchases across Maricopa and Pinal Counties:
This chart will be updated monthly and will be available in the Cromford® Public section of our site along with several other charts related to iBuyers.
We note that Opendoor's strongest buying does not correspond with the peaks in the Phoenix market (March through May), but during the weaker months of June through November. This is probably a clever strategy since competition from other buyers is weaker. We also note that buying so far in 2017 has grown a relatively slow 14% from last year, with the last 2 months of March and April 2017 coming in lower than the corresponding months of 2016. Clearly the buying operation appears to be slowing in Phoenix. However the selling operation remains in top gear, as we shall see in subsequent observations. This means Opendoor's inventory of homes for sale has dropped significantly over the past 6 months. At the end of November they had 606 more home purchased than sold but at the end of April there were only 259 in stock, of which some 200 or so were listed on ARMLS while the rest were presumably in the process of getting ready for listing. This slower purchasing rate may also be because management were focused on expanding in Dallas which has grown very fast. Opendoor started selling homes in Dallas in September 2016 and reached a similar number of sales to Phoenix by February 2017, just 5 months later.
Another factor is that Opendoor homes have a median selling price which is around $210,000, lower than the market as a whole. As a business policy, they purchase and sell very few homes over $350,000. This means their supply is limited by the shortage of available homes at a suitable price and they may be finding it harder to grow their revenue in Phoenix as easily as they can grow by moving to other territories. Concentrating on lower end homes reduces business risk and lowers time on market, so it certainly makes good sense, especially for a start-up company.
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:
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:
Filters are provided for county and place name, as well as date ranges.
The top permit producing places year-to-date in Arizona are:
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:
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.
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 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:
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:
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:
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
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:
April 30 - Following on from the analysis of the top 20 listing agents and top 20 selling agents, it might be interesting to look at the top 20 agents who represented both sides of transactions in 2016. These are:
|Rank||Dual Agent Name||Office||Closed Listings||Dollar Revenue for Listings Closed in 2016|
|1||Tracy Norton||LGI Homes||224||$42M|
|2||Mize Taylor||Pulte Homes||79||$24M|
|3||Scott Grigg||Realty Executives||7||$21M|
|4||Joel Huston||KB Homes||79||$20M|
|5||Mike Domer||Re/Max Excalibur||2||$11M|
|6||Catherine Renshaw||CalAtlantic Homes||29||$10M|
|7||Barbara Miller||Russ Lyon Sotheby's International Realty||5||$8M|
|8||Chad Fuller||K Hovnanian Homes||21||$8M|
|9||Clayton Denk||David Weekley Homes||15||$8M|
|11||Walt Danley||Walt Danley Group||6||$8M|
|12||Mackey Martin||Realty Executives||1||$7M|
|13||Carl Mulac||AV Homes||24||$7M|
|14||Rusty Davis||Russ Lyon Sotheby's International Realty||2||$7M|
|16||Deborah Beardsley||Silverleaf Realty||2||$6M|
|17||Jason Mitchell||My Home Group||8||$6M|
|18||Michaelann Haffner||Re/Max Infinity||16||$6M|
|19||Craig Tucker||Maracay Homes||16||$6M|
|20||Allan Macdonald||Russ Lyon Sotheby's International Realty||3||$6M|
It is perhaps surprising that so many new home buyers allow the developer's agent to represent them. This is not necessarily an accurate reflection of the new home business overall, since the majority of new homes are sold without being listed on the MLS at all.
There were 6,182 transactions representing $1,766 million where one agent represented both parties. This represents about 7% of all transactions.
Tracy Norton, Mize Taylor, Walt Danley and Robert Joffe are the only names that appear in all 3 tables.
April 29 - Last month we provided a table of the top 20 listing agents. Now we will look at the other side of the transactions and list the top 20 selling agents with the largest dollar volume in 2016. The analysis is restricted to residential homes within the Greater Phoenix area, so it excludes out of area listings, but includes all property types.
|Rank||Selling Agent Name||Office||Closed Listings||Dollar Revenue for Listings Closed in 2016|
|1||Jason Mitchell||My Home Group||151||$47M|
|2||Tracy Norton||LGI Homes||224||$42M|
|3||Brett Tanner||Keller William Realty Phoenix||165||$35M|
|4||Walt Danley||Walt Danley Group||15||$33M|
|5||Carin Nguyen||Keller Williams Realty Phoenix||141||$33M|
|6||Jeffery Hixson||OpenDoor Homes||155||$31M|
|7||Scott Grigg||Realty Executives||18||$30M|
|8||Kenny Klaus||Keller Williams Integrity First||120||$29M|
|9||John Gluch||Re/Max Platinum Living||80||$29M|
|10||Jared Parker||Stunning Homes Realty||151||$25M|
|11||Taylor Mize||Pulte Homes||79||$24M|
|12||James Wexler||Realty Executives||30||$24M|
|13||Mike Domer||Re/Max Excalibur||10||$21M|
|14||Joel Huston||KB Homes||79||$20M|
|15||Shannon Cunningham||Keller Williams Realty Professional Partners||88||$20M|
|16||JoAnn Callaway||Those Callaways||54||$20M|
|18||Sarah Parker||Stunning Homes Realty||112||$19M|
|19||Susan Pellegrini||Russ Lyon Sotheby's International Realty||25||$19M|
|20||Alan Kittelman||Show Appeal Realty||97||$19M|
There were also 1,085 sales worth $354M that had "nonmls" as the selling agent, meaning no ARMLS member represented the buyer. This amounted to 1.5% of all dollar revenue.
Jason Mitchell's market share is 0.19%
Walt Danley, Tracy Norton, Taylor Mize, Kenny Klaus, JoAnn Callaway, Robert Joffe and Brett Tanner appeared in both top 20 lists.
A total of 20,028 agents represented buyers in 2016 for at least one transaction, out of a total population of 37,122 ARMLS members at the end of 2016.
It is commonly suggested that 80% of the business is conducted by 20% of the agents. It actually took the top 8,069 selling agents to represent 80% of the buyers. This is 40% of the agents who represented anybody. However there were 37,122 ARMLS members in total, so 8,069 represents 22% of all the possible agents.
April 28 - For March 2017 the Census is reporting 1,985 single-family new home permits across Maricopa and Pinal counties for March. We have seen 4,788 for the first quarter, which is 7.9% more than the 4,436 we saw in the first quarter of last year.
This brings the 12 month rolling average up to 18,739. Last year at this point it was 17,871. That is only a 4.9% increase, much less than most people seem to be forecasting for the 2017 increase over 2016. The consensus forecast appears to be for 20% growth. The biggest quarter is usually the second, so maybe we shall see more aggressive numbers over the next few months.
The biggest contributors with new home permits in March 2017 were:
April 27 - It is time again for our weekly look at the Cromford® Market Index for the single-family markets in the 17 largest cities (by dollar volume):
The changes over the last month still favor sellers, but only moderately. There are 10 cities showing improving conditions for sellers and 7 showing deterioration.
Most of the deterioration is in the West Valley, with Avondale down 10%, Goodyear down 5%, Peoria down 3%, Glendale down 2% and Buckeye down 2%. Only Surprise managed an improvement.
The Southeast Valley continues to do better than average with Queen Creek up 7%, Gilbert up 6%, Mesa up 4%, Chandler up 2% and Tempe up 1%.
Fountain Hills has started to recover and may manage to claw its way off the bottom rung by overtaking Buckeye and/or Scottsdale which both saw mild deterioration.
Paradise Valley continues to do much better than it did in the first quarter while Avondale is coming down from the heights, perhaps to give some other city a chance of going top for the first time in over a year.
April 26 - Using the deeds recorded during the first quarter in Maricopa and Pinal Counties, let us take a quick look at the luxury market, which is here defined as homes that sold for $1 million and more. The underlying data comes from the Cromford Public section of the Cromford Report, since it is based on public records rather than ARMLS numbers.
|Measurement for Market at $1M plus||1Q 2015||1Q 2016||1Q 2017||YoY Change|
|Total Million Dollar Units Closed||347||343||398||up 16%|
|Single Family Units Closed||326||332||348||up 5%|
|Condo / Townhouse Units Closed||21||11||50||up 355%|
|New Units Closed||49||64||97||up 52%|
|Re-sale Units Closed||298||279||301||up 8%|
|Scottsdale Dollar Volume||$285M||$275M||$316M||up 15%|
|Paradise Valley Dollar Volume||$132M||$151M||$171M||up 13%|
|Phoenix Dollar Volume||$77M||$97M||$95M||down 2%|
|Southeast Valley Dollar Volume||$40M||$31M||$32M||up 4%|
|Fountain Hills Dollar Volume||$13M||$16M||$13M||down 21%|
|Cave Creek & Carefree Dollar Volume||$7M||$13M||$19M||up 53%|
|West Valley Dollar Volume||$7M||$5M||$10M||up 122%|
|Average $/SF||$330||$344||$347||up 0.8%|
|Average $/SF - Single-Family||$325||$340||$331||down 3%|
|Average $/SF - Condo / Townhouse||$472||$516||$547||up 6%|
Overall, the first quarter of 2017 was a much busier quarter for million dollar homes than the same period in 2016. Fountain Hills and Phoenix were the only areas that declined. The West Valley, Cave Creek & Carefree saw the greatest percentage growth, but the largest luxury areas (Scottsdale, Paradise Valley) were both up by healthy percentages.
It is clear that the luxury condo/townhouse sector is where the majority of the growth occurred, jumping from 11 to 50 units, the highest we have seen in any quarter in history. Unit growth in the single family sector was a relatively modest 5%.
Prices rose only 0.8% based on average price per square foot, less than the annual rate of inflation. This confirms that despite the healthy increase in volume, there is little pricing power among sellers of luxury homes, thanks to the abundant inventory of active listings. In fact single family pricing fell by 3% over the last 12 months, but condo/townhouse pricing rose by 6% to an eye-watering $547 per sq. ft. It seems to be the attached jewel-boxes where pricing power still resides with the sellers, especially new home sellers given that the average price per sq. ft., for new condo/townhouse units reached $574 per sq. ft.. This is up 22% year over year, thanks to the very high end condo/townhouse developments that have opened since the early part of 2016. In fact there were 17 condo sales over $600 per sq. ft. with the highest at $762. The most expensive locations were:
Portland on the Park also sold in volume during 1Q 2017 but at slightly lower prices per sq. ft. than the 6 developments mentioned above.
The first quarter of 2015 was similar to 2016, but the second quarter of 2015 was very strong, so this will make a more challenging comparison for 2Q 2017 when we come to measure that.
April 25 - The S&P / Case-Shiller® Home Price Index® report released today contains data for the 3 month period December 2016 through February 2017. Phoenix added 0.38% since last month, and in contrast to last month this was higher than the national average. The month to month changes for the 20 cities that are reported by Case-Shiller were as follows:
We were in 14th place last month, so moved up 2 notches. The national average was 0.24%.
The West Coast and Texas are clearly seeing greater pricing momentum than the rest of the country. Florida is unusually slow.
The year over year changes are as follows:
Phoenix was below the national average of 5.8% but rose 1 place by overtaking Los Angeles in the table. San Diego and Chicago were the biggest upward movers in the table compared to last month.
Seattle, Portland, Denver, San Francisco and Dallas have been outperforming the rest of the country for a long time now. The three year change in index looks like this:
Although some people have suggested the Phoenix market may be overheating, Phoenix has appreciated less than the USA national average of 16.0% over the last 3 years.
April 24 - The Commerce Department announced duties of up to 24% on softwood lumber imported from Canada. The tariffs will range from 3% to 24% on the 5 major producers and 20% on all others. 28% of all softwood used in home building in the USA is imported from Canada. This had been expected and lumber prices were already up by 30% over last year. This will add to cost pressures on home builders who are already struggling with the increased costs of land and labor. They will have great motivation to increase list prices if the market allows them to. At the moment the disparity between supply and demand suggests they will have enough pricing power to respond, but this will of course be bad news for new home buyers in the second half of 2017 and in 2018.
April 23 - I think it is time we reviewed the rental listings for some signs of what is happening in the rental market. We exclude vacation rentals from all our statistics.
Right now we have 2,566 active listings, and we had 2,489 this time last year. Little change there really, with a 3.1% increase. At least it is going in the right direction for tenants, but we are still way down from the 6,561 we had back in 2013. Condo and townhouse supply is up 5.9% and single-family only 1.0%
Leases are being signed through ARMLS at a rate of 2,163 a month, down 6% from 2,299 last year. This means we have 1.2 months of supply, up from 1.1 months last year.
The average closed rent is 85.7 cents per sq. ft. per month, which is up 5.0% from 81.7 cents this time last year. The rate of increase is still strong but has subsided from the heights that we saw last year and in 2015.
Overall I would conclude that the rental market is still hot, but is on a slight cooling trend now.
April 22 - It is getting a little uncanny. The year to date count of new listings added to the ARMLS database is 40,194. On April 22, 2016 the count was 40,193. So we have just 1 extra listing.
Mind you, we have 6.4% more ARMLS members and 5.5% more broker's offices than we had 12 months ago. So that 1 extra listing is spread across 2,286 extra agents and 253 extra brokers.
April 21 - I expect many people have noticed that the sales rate in 2017 has increased significantly over 2016. As of yesterday, year-to-date sales were up 13% across the entire ARMLS database. I wonder how many people have noticed that listings under contract are NOT up by a similar percentage. In fact they are slightly DOWN. We had 13,608 yesterday and 13,930 last year on April 20. That is a decline of just over 2%.
The two trends seem at first be a disconnect. How do sales go up when listings under contract are down? The answer is probably in the speed of closing. Despite all the grumbling when the new TILA-RESPA procedures were introduced, we have seen a decline in the number of days it takes to close a loan now that people have got used to the new processes. According to the most recent Ellie Mae Origination Insight report, the average number of days to close a purchase loan was 43 in March 2017. Back in the late 2015 and early 2016 we were seeing an average of 50 to 51 days. That means loan closing times are down about 14%. In turn this means listings are spending less time under contract. So we see more closings without having to increase the listings under contract pool.
April 20 - We take another look at the Cromford® Market Index for the single-family markets in the 17 largest cities by dollar volume:
The biggest deterioration over the last month is in Avondale, but it remains at the top of the table. This deterioration is mainly due to increasing supply, but demand has faded a little too. It remains top because demand still outstrips supply by a very wide margin.
The largest improvement over the last month occurred in Paradise Valley. Here there has been a significant strengthening in demand and a slight reduction in supply. It is looking much better for sellers than last quarter.
Of the largest markets, Phoenix, Mesa and Chandler all improved nicely while Scottsdale faded slightly. Overall the market continues to gently improve for sellers from an already favorable position. So there is little here that spells relief for buyers. Indeed, we have no city with a CMI under 100 (unlike last week) and 14 out 17 cities are in the seller's market zone.
April 19 - Yesterday we looked at the best ZIP codes for listing success rates.
Now for the bad news. Here are the 20 ZIP codes where it has been hardest to succeed with a listing since January 1, 2013. ZIP codes with less than 100 closed listing since January 1, 2013 are ignored.
The overall average listing success rate is 75.1% since January 1, 2013. This is higher than the average since January 1, 2001, which is only 63%.
April 18 - We were wondering which areas were the easiest to sell homes. To find out we analyzed the listing success rate for every ZIP code within Greater Phoenix since January 1, 2013.
Here are the top 20 ZIP codes where agents have the greatest success with their listings. ZIP codes with less than 100 closed listings are ignored.
The West Valley, especially the northwestern areas are very dominant in this list. The inner Southeast Valley also makes a strong appearance.
If we confine our analysis to homes listed for more than $1 million, the most successful ZIP codes are shown below ( we have ignored ZIP codes with fewer than 5 sales over $1 million)
Only the 3 ZIP codes at the top have a better than even chance of a listing selling. Although its volume of million dollar homes is not high, Chandler 85286 is quite remarkable with 16 successful closings out of 17 listings. the magic ZIP code of 85254 goes some way towards justifying its name by appearing at number 3.
April 17 - If we compare the total dollar volume during the first quarter of 2017 with the same period in 2016, we can see an interesting pattern by price range:
Note that the price range under $100,000 has declined due to lack of supply. The same lack of supply is constraining volumes between $100K and $200K. However above $200K and all the way up to $3 million, dollar volume is up by healthy amounts from 18% to 34%.
Above $3 million, there is no lack of supply, but there seems to be a surprising shortage of demand. This has caused dollar volume to decline 23% in stark contrast to the rest of the market.
April 16 - Few people are paying attention to delinquency rates these days, but the latest report from Black Knight Financial Services makes for interesting reading. The data relates to the month of February 2017. Arizona has 3.1% of its first position home loans in some form of delinquency (from 30 days late upwards). It also has another 0.3% of its loans in the foreclosure process. The total percentage of loans that are non-current is 3.4%, which is a 9.2% lower than last year. We are still one of the better states in the nation for loan currency, placing 42nd out of 51 states (including DC). Oregon and Washington have improved faster than Arizona and overtaken us, but Alaska has deteriorated and fallen behind us, so we rose in the non-currency table by 1 place since last year when we were 43rd.
Alaska stands out as showing initial signs of trouble, with a 18% increase in delinquency over the past year. North Dakota has deteriorated by 8.7%, but it still remains the state with the least percentage of non-current home loans in the nation. South Dakota, Louisiana and Vermont all saw very small deteriorations but all other states are improved since February 2016.
Black Knight provides an interesting map for delinquency rates (these excluded loans already in foreclosure). These days the gulf coast states of Mississippi, Louisiana and Alabama, together with West Virginia have the worst delinquency problems.
We note there are some counties in Mississippi with delinquency rates as high as 23% (Tallahatchie) or even 25% (Noxubee and Perry).
Mississippi, Louisiana and Alabama now have delinquency rates that are between 1.75 and 2 times the national average.
Black Knight also provides an interesting map of average loan to values. California is way out in front in terms of home equity with only 47% loan to value. New York is next with 50% and Washington DC has 51%, while Colorado, Oregon and Washington are comfortable at 53%. West Virginia and Missouri have the highest loan to value at 68%. Arizona is in the middle ground with an average of 62% loan to value.
You can read the whole report here.
April 15 - After 2 complete weeks of the second quarter, we have seen almost exactly the same number of new listings added to the ARMLS database as we saw in 2016. The growth from last year is just 0.1%. This is unusual. In 2016 there was 10.6% growth over the previous year. However it continues the trend that we saw during the first quarter where the difference between 2016 and 2017 was just 0.6%.
Basically, the supply is running at an equivalent rate to last year. This is inadequate to match the number of buyers because closings are running much higher than last year. So far in 2017 we have seen 14% more closings year to date than in the equivalent period in 2016. Because we have 14% more closings from the same supply, the listing success rate has to increase. We are running at 81.8% right now, compared with 78.2% last year. This compensates for about one third of the increase in closings. The other two thirds is leading to a drop in the available inventory. Unfortunately the drop in inventory is not uniform and is affecting some price ranges and locations much more than others.
April 14 - This is the time of year when pricing tends to make its major move - the second quarter. Yesterday the average price per square foot for all areas & types reached $150 for the first time since March 2008. This is a rise of 2.5% in just one month. By the time we get to late June, it is likely that the current momentum will have waned and we anticipate a sideways move or even a moderate retreat during the third quarter, followed by another recovery in the fourth quarter. Greater Phoenix's seasonal pattern is well established, but given the supply shortages it is not surprising that annual appreciation is nearly 7% at the middle of April.
April 13 - The table of Cromford® Report Index values for the single-family markets in the 17 largest cities (by dollar volume) is show below:
The Southeast Valley is certainly on a roll, with all its cities improving for sellers;
The West Valley is mixed with Surprise up 6% and Glendale improving 2%, but Avondale has weakened by 12% (something it can afford given its long term hold on the top of the table). In addition, Goodyear is down 7% and Peoria down 2%, so the West Valley is definitely falling behind the Southeast Valley from a seller's perspective..
Pinal County is also in great form, and Maricopa, its only representative in the top 17 (Queen Creek spans both Maricopa and Pinal), continues to rise up the table, gaining 3% over last month.
The Northeast Valley remains the weakest area, though Paradise Valley is making a fine recovery by advancing 10% and threatening to become a seller's market if it can breach 110 by maintaining its recent improvement in demand..
Phoenix has been pretty stable for many months but is now making a move in favor of sellers, up 5% since last month.
It is the mid-price ranges that are healthiest with high volumes and limited supply. The Southeast Valley is very much the province of the mid-price ranges from $250,000 to $600,000.
Volumes in the higher price ranges are much improved over last year but so far this has done little to help prices because of the excessive supply of active listings at price points over $1 million.
April 12 - Here are the cities ranked by single-family months of supply (based on their monthly sales rate):
In this case, "Supply" includes listings in UCB and CCBS status, so the "real" supply of homes without a contract is much less than the numbers above suggest.
Buyers who want a more relaxed time should head to the areas ranked 32 or lower. The top 10 are extremely tough places to be a buyer right now.
April 11 - As of April 8, days of inventory for Greater Phoenix (excluding UCB and CCBS listings) stood at 74.8, the lowest level since September 2013. However this one number fails to explain the huge disparity between the bottom and top ends of the market. Here are the days of inventory for various price ranges:
It is the $100K to $200K price range that is most stressed by the lack of supply, and within that range the $125K to $150K price range has only 28.3 days of inventory. This is the lowest level since 2005.
The range between $500K and $600K has dropped from 230.8 to168.8 days over the last 12 months, making this sector much more favorable to sellers.
Meanwhile the range over $3M has 1230.5 days of supply, up from 1129.8 this time last year, so sellers outnumber buyers to a huge extent at this rarified price point.
April 10 - In some parts of the valley, the market is so hot that a few people have been drawing parallels with 2005 and expressing fear of a bubble. While I agree that the Southeast Valley, Pinal County and parts of the Northwest Valley are much hotter than they have been for a while, the market is more akin to 2013 than 2005.
I think some people forget quite how ridiculous 2005 was. It was exactly 12 years ago that:
The Greater Phoenix market has a long way to go before conditions get bubbly, and we should remember how few skeptics there were in 2005 that the market could ever go down. Now there are skeptics everywhere, which is a very good reason that another bubble is unlikely to develop. The next housing bubble is likely once everyone who experienced the last one has retired or passed away.
April 9 - Today we will look in more detail at the Southeast Valley, where active listings have fallen by the largest amount within Maricopa County.
Here are the changes in new listings by city:
|City (within Maricopa County)||Q1 New Listings 2017||Q1 New Listings 2016||Change|
We will ignore Apache Junction for now, since the majority of this city lies within Pinal County.
Mesa is the only major city showing more new listings in 2017 than 2016. Sun Lakes, Chandler and Gilbert are down by double digit percentages, a significant lack of supply.
Here are the changes in closed sales during the first quarter:
|City||Q1 Sales 2017||Q1 Sales 2016||Change|
So although Mesa and Tempe saw no reduction in new listings, they have have been charging ahead in closed sales.
Overall it is a good time to be a seller in the Southeast Valley and the current annual appreciation rates look like this:
So despite being the only major city with more new listing than last year, its extremely strong growth in sales has helped Mesa to rank top in terms of appreciation.
April 8 - Looking at the active listing counts for single-family detached homes at the end of the first quarter, we see that some areas have seen much larger declines since the same time last year:
|Area||Active Listings (excluding UCB & CCBS) April 1, 2017||Active Listings (excluding UCB & CCBS) April 1, 2016||Change|
|Phoenix & North Valley||2902||2902||0%|
Pinal County has seen a huge fall in active listings of 27% and the Southeast Valley has also declined significantly by 22%. The Northeast valley has seen a more modest decline of 9% while the West Valley and Phoenix have seen very little change.
Since it has seen the biggest movement, let us look at Pinal County to see whether it was caused by a decline in new listings or a rise in sales.
So there has been a rise of 17% in sales activity as well as a 9% fall in the number of new listings. These have combined to give us a steep 27% fall in active listings.
The rise in sales activity is about twice as significant as the fall in new listings, but both work to make life easier for sellers.
Has this been uniform across Pinal County?
First here are the changes in new single family listings
|City||Q1 New Listings 2017||Q1 New Listings 2016||Change|
|San Tan Valley||930||996||-7%|
|All Other Locations||20||29||-31%|
The steepest fall off in new listings is seen in Eloy, Apache Junction and Casa Grande, as well as the smaller locations. The other locations saw a drop that was below average for Pinal County.
Now let us look at the change in sales activity:
|City||Q1 Sales 2017||Q1 Sales 2016||Change|
|San Tan Valley||632||584||+8%|
|All Other Locations||11||18||-39%|
The rise in sales activity is much higher in Eloy, Gold Canyon, Coolidge and Florence with Maricopa, Casa Grande and Apache Junction above average. San Tan Valley and Arizona City have seen relatively modest increases in sales, while the smaller locations have declined.
It is not surprising therefore that Pinal County has seen some of the strongest appreciation over the past year:
April 7 - We have the preliminary transaction data for March derived by the Information Market from the office of the Maricopa County Recorder. The numbers are just as impressive as the ARMLS numbers we released on April 2.
There were 10,818 closed sales for single-family homes, condos and townhomes, the largest number since June 2006. This is up 12% from March 2016, very similar to the percentage increase in closed listings.
The advantage that new homes have enjoyed over re-sales has fallen back to more normal levels- new homes grew by 15%, while re-sales by 12%, year over year. Because new home builders are increasingly addressing the lower mid-price ranges, the median price for new homes was $320,437, down from $336,000 last month, and only 2% higher than $315,229, which we saw in March 2016.
The re-sale median was up 6% from $217,000 to $230,000 over the past 12 months.
Almost the whole market seems to be participating in the improving trend in sales volumes. We note that the listing success rate for Scottsdale has improved from an overall 66% in 2016 to 73% during the first quarter of 2017. In a higher priced ZP code like 85255, we are currently measuring a success rate of 67%, up from only 59% in 2016.
April 6 - Time once again to take a look at the Cromford® Market Index for the single-family markets in the largest 17 cities:
This is generally a positive picture for sellers with 11 out of 17 cities showing sellers gaining bargaining power over the last month. Leading among these are Tempe, Paradise Valley, Surprise and Chandler. Paradise Valley has improved enough to jump from last place to 14th in just 2 weeks.
There are 6 cities where things have deteriorated for sellers, with Avondale and Goodyear the primary movers. Despite this, Avondale remains at the top of the table. Occupying 4 of the 5 bottom places, Northeastern cities are offering buyers the strongest bargaining power. However only Fountain Hills has dropped below the balanced 100 mark.
April 5 - Here are the significant ZIP codes with the highest rise in average sale price per square foot between Q1 of 2016 and Q1 of 2017. All dwelling types are included:
We see entrants from the central valley, the west, the southeast and Pinal County in this list.
The bottom ranked ZIP codes for price appreciation between Q1 2016 and Q1 2017 are:
April 4 - Let us try and get a picture of the sales growth that occurred in Q1 of 2017 by comparing it with Q1 of 2016.
For all property types within Greater Phoenix, we saw an overall 13.6% growth in closed listings from 13,214 in 2016 to 15,008 in 2017. Looking at dollar volumes, these grew by 21.3% from $3.6 billion to $4.4 billion.
The significant ZIP codes with the most growth in dollar volume were:
This list is dominated by the West Valley, particularly the Northwest Valley.
The following significant ZIP codes failed to participate in the overall trend in dollar volumes:
By "significant" we mean ZIP codes with at least 20 sales a year or an annual dollar volume of over $10 million.
For the Northeast Valley, we see growth in dollar volume as follows:
Here we see the dominance of South and Old Town Scottsdale.
There are several ZIP codes that grew dollar volume but failed to grow average price per square foot. Carefree 85377, Scottsdale 85262 and Scottsdale 85259 all fall into that category. We will look at the Q1 price movements by ZIP code tomorrow.
April 3 - We should recognize March 2017 as one of the strongest months for closed listings, with 9,272 over all areas & types. This is the highest monthly total since May 2013 and the highest total for March since 2005, making it the second most successful March ever.
To be fair, March did contain 23 working days, the highest number we ever see in a month, so we should have expected a big number. But March 2016 also had 23 working days and only managed 8,363 closed listings.
You can see the big spike in context in the long term sales chart here.
Because it also benefits from the 6% appreciation since last year, the dollar volume chart is even more impressive. You can find it here.
In this chart, dollar volume is at its highest monthly level since 2005.
April 2 - Multi-family permits are still running at a high rate - 9,270 per year for the 12 months ending on February 28.
In 2017 year-to-date, Glendale is leading the pack for permits with 471 units. The usual leader, Phoenix, has only contributed 244, with Surprise and Chandler supply the bulk of the remainder.
April 1 - For new listings 2017 has lagged slightly behind 2016 all the way through the first quarter, but just pushed in front on the last day of March, winning by a nose. We counted 32,291 new listings added to ARMLS during the first quarter of 2017 which is 0.6% ahead of 2016 with 32,199.
Both totals are well above 2015 which only saw 30,505 new listings added.
With closed sales running well ahead of 2016, this rate of new listings is insufficient to move the market balance in favor of buyers and sellers still have a strong advantage across the vast majority of the market.
March 31 - Here are the top 20 listing agents with the largest dollar volume in 2016. The analysis is restricted to residential homes within the Greater Phoenix area, so it excludes out of area listings, but includes all property types.
|Rank||Agent Name||Office||Closed Listings||Dollar Revenue for Listings Closed in 2016|
|1||Jacqueline Moore||OpenDoor Homes||991||$230M|
|2||Beth Rider||Keller Williams Arizona Realty||386||$111M|
|4||Brian Bair||Liberty Properties & Associates||387||$93M|
|7||Kenny Klaus||Keller Williams Integrity First||252||$62M|
|8||Walt Danley||Walt Danley Group||40||$61M|
|9||JoAnn Callaway||Those Callaways||141||$58M|
|10||Brandon Cleveland||Taylor Morrison||141||$55M|
|11||Tracy Norton||LGI Homes||294||$55M|
|12||Russell Shaw||Realty ONE Group||226||$53M|
|13||Deborah Beardsley||Silverleaf Realty||13||$49M|
|15||Carol Royse||Keller Williams Realty East Valley||161||$48M|
|17||Don Matheson||RE/MAX Fine Properties||60||$45M|
|18||James Samsing||Real Home Services & Solutions||230||$42M|
|19||Marlene Cerreta||Cerreta Real Estate||201||$42M|
|20||Brett Tanner||Keller Williams Realty Phoenix||169||$39M|
If there was any doubt that OpenDoor's business model is having an impact on the market then this table dispels that doubt quickly. In 2015 the dollar revenue for Jacqueline Moore of OpenDoor was just under $3 million.
We can also see that among the new home builders, Meritage Lennar, Pulte, Taylor Morrison & LGI are using the MLS to list quite a large number of the homes they sold.
March 30 - Let us take another of our regular looks at the Cromford® Market Index for the single-family markets in the 17 largest cities:
Gradual improvement for sellers is apparent with 13 out of 17 cities showing better conditions for sellers than last month. The only exceptions are Avondale, Goodyear, Gilbert & Scottsdale.
The highest percentage improvements are for Surprise, Maricopa, Tempe, Paradise Valley, Mesa and Glendale.
Paradise Valley has managed to lift itself off the bottom rung in the table, to be replaced by Fountain Hills.
March 29 - For the first 2 months of 2017, spending on attached homes (townhomes and condominiums) has been growing much faster than spending on single-family homes. Based on total dollar volume for recorded deeds in Maricopa and Pinal counties, we see the following:
|Period||Dollar Volume 2016||Dollar Volume 2017||Change %|
|Jan + Feb||$394,952,754||$566,954,928||43.6%|
This is far in excess of the growth in single-family homes, which was:
|Period||Dollar Volume 2016||Dollar Volume 2017||Change %|
|Jan + Feb||$3,428,285,927||$4,098,298,830||19.5%|
This is strong growth by any standards but the shift in favor of attached homes is significant, from 10.3% to 12.2% market share.
The growth of attached new home sales was even larger, up from $41,649,073 in Jan-Feb 2016 to $118,210,394 in Jan-Feb 2017, a growth rate of 183.8%. Market share within the new home sector doubled from 6.7% in Jan-Feb 2016 to 13.4% in Jan-Feb 2017.
March 28 - The S&P / Case-Shiller® Home Price Index® report released today contains data for the 3 month period November 2016 through January 2017. There is not much excitement for Phoenix since the latest index value was almost the same as last month. The month to month changes for the 20 cities that are reported by Case-Shiller were as follows:
We were in 14th place last month too, and well below the national average of 0.16%, which slipped from 0.21%.
Forbes magazine led with the headline "Home Prices Are on a Tear in 2017, Says S&P Case-Shiller" but this is a gross overstatement. If anything, home price increases are on a slower trend compared to last month.
The year over year changes are as follows:
Phoenix was below the national average of 5.9% and fell from 16th to 17th place in the table.
Seattle, Portland and Denver have been outperforming the rest of the country for a long time now. The three year change in index looks like this:
Over the last three years, Phoenix has appreciated less than the USA national average of 16.3%.
March 27 - Single family permits are not growing as fast as home sales. In February the 12 month count rose to 18,551 for Maricopa and Pinal Counties combined. This compares with 18,491 in January, a very modest 0.3% increase month to month. In February 2016, the 12 month count was 17,512, so the annual increase is currently running at 5.9%. Not only is the annual growth much slower than the rate of closings, the rate of growth is slowing down. Between January and February 2016 the month to month change in the 12 month count was 2.2%, which is nearly 7 times faster growth than we are seeing this year.
We are not seeing new homes planned at the rate necessary to meet the current increase in demand. This suggests that supply will continue to tighten, lead times will lengthen and prices will have to rise. Underlying causes are builders struggling to maintain profit margins in the face of stubbornly high land costs and scarce skilled labor which is growing ever more expensive. Government actions to drive immigrant labor out of the country will probably make the labor shortage more acute and new homes harder to find. However it will shrink re-sale and rental housing demand a little since that labor force will no longer need somewhere to live in Arizona.
March 26 - The overall listing success rate is hovering just under 82%, a small but significant increase over the 78% we were experiencing this time last year. The market is not dramatically different but we are seeing fewer cancellations and expirations. This means sellers are in a somewhat better position than in March 2016.
March 25 - In 2017 year to date we have seen 29,926 new listings added to the ARMLS system. This is remarkably similar to the 29,925 we saw in 2016 at this point.
2017 got off to a slightly slow start for new listings but has now caught up. This is hardly good enough however since closings are far more numerous in 2017. As of today we have seen 19,098 closed listings, which is up a hefty 17.3% from this time last year. Clearly if closings are up over 17% and new listings are flat, then supply is going to feel scarcer than last year in the majority of areas and price ranges.
March 23 - Looking once again at the Cromford® Market Indexes for the single family markets within the largest cities we see:
Here we see a positive picture for sellers with improvements in their negotiation power in 12 out of 17 cities. Surprise, Maricopa, Tempe, Glendale and Mesa lead the group advancing.
The only cities with significant deterioration were Scottsdale, Goodyear and, Avondale. However the latter remains far ahead at the top of the table. With Paradise Valley improving we now have no cities in the zone below 100.
March 21 - In Maricopa County there were 468 purchases by Canadians between March 2016 and February 2017. In the same period there were 2,006 sales, so sales outnumbered purchases by 4.3. Sales are up 11% while purchases are down 39% from the prior year.
March 20 - Although the active listing counts, both with and without UCB and CCBS listings) are still inching up, the strong rate of closings is driving the short term measures of supply ever lower. Long term measures are stable however.
For all areas & types we have 101 days of inventory, equalling the highs reached earlier this year on February 13 and March 13. The short term months of supply reading is down to 3.3 months having peaked at 4.0 months in January and February. Both measures are lower than last year when we saw 121 and 4.1 respectively.
March 19 - The arrival rate of new listings has increased over the last 2 weeks relative to last year. We have now seen almost as many added as we did year to date in 2016. As a result the total number of active listings is still growing, although very slowly. We should reach the peak for 2017 over the next few weeks. Both the Cromford® Supply Index and the Cromford® Demand Index are very stable indicating little change in the balance between buyers and sellers.
March 18 - The table below ranks the cities by their annual sales rate at the beginning of March. This is based on public recordings, not the ARMLS data.
|Rank||Postal City||Annual Sales Rate 2017||Annual Sales Rate 2016||Change|
|9||San Tan Valley||4,043||3,434||17.7%|
|17||Sun City West||1,655||1,513||9.4%|
|31||Tucson (in Pinal)||468||449||4.2%|
Note that Peoria has overtaken Glendale, which was in 4th place back in 2000, having been surpassed by Chandler and Gilbert many years ago.
New River and Paradise Valley saw significant declines in unit sales volume, going against the trend. Arizona City, Tolleson and Fountain Hills were also much weaker than average.
Among the larger cities, Chandler, Mesa , Queen Creek, Buckeye, Goodyear, San Tan Valley, Avondale and Peoria benefited from powerful growth with Gilbert and Surprise taking a bit of a pause compared to recent years.
March 17 - Comparing the Cromford Market Index for the single-family markets in the 17 largest cities (by dollar volume) with the index one month ago, we get the following:
There are 11 markets that are improving for sellers and only 6 deteriorating. Overall this is a positive move in four weeks.
Scottsdale, Goodyear and Gilbert are the main cities with a negative trend, and Scottsdale has moved from a seller's market into a balanced market.
Maricopa and Surprise show the largest positive trend over the past month, with Tempe not far behind them.
March 16 - The Cromford® Market Index for all areas and types has been extremely stable over the last few weeks, holding a tight range between 144.4 and 145.0. The supply index is unchanged at 72.9 since February 27 while the demand index has hovered between 105.3 and 105.5. At the moment this lack of direction means sellers remain in charge across much of the market. Although average sales price per square foot has changed little since January, we are seeing a rise in the pending average $/SF, which has just climbed over $151 for the first time since March 2008. This suggests we are likely to see the usual second quarter rise in average sales prices start to make its move very shortly.
March 15 - In contrast to yesterday, here are the ZIP codes with the highest inventory. Buyers can afford to be quite choosy in these locations while sellers will need a great deal of patience.
Here is the current state of play with respect to the 3 month moving average $/SF in these locations:
Paradise Valley was aided by one extremely expensive home sale in January 2017 ($12.75M), but 6 of the 9 other locations above saw decreases in the average price per sq. ft.
March 14 - Based on the current number of active listings (excluding UCB and CCBS listings) and the annual sales rate, here are the ZIP codes with the least supply in the Greater Phoenix area (all dwelling types included).
Last year this list was dominated by the West Valley, but in 2017 the Southeast Valley takes 6 of the top 10 slots. I would regard anything under 60 days as being very short of supply, so buyers are at a severe disadvantage in these locations.
What is happening to prices in these ZIP codes? Here are the 3-month moving average prices per sq. ft. compared to a year ago
March 13 - On February 24, we examined days of inventory by price range, comparing this year with last year. Today we are doing the same thing but segmenting by dwelling type rather than price range.
|Location||Dwelling Types||Days of Inventory March 2016||Days of Inventory March 2017||Change|
|Greater Phoenix||Mobile Home||182||145||-20%|
Here we see that the largest sector, single-family, representing about 80% of the market, has improved by 18% from a seller's perspective. However the smaller sectors have seen greater improvement. The inventory of condos & townhouses, in particular, is down 25% compared to a year ago and these attached homes have a greater imbalance between supply and demand. Mobile homes have improved for sellers by 20%, but still have substantially higher inventory at 145 days.
Let us also look at the figures by county.
|Location||Dwelling Types||Days of Inventory March 2016||Days of Inventory March 2017||Change|
The inventory in Pinal County has fallen much more dramatically than in Maricopa County, but still remains a little higher at the moment.
Yavapai County refers to the ARMLS territory only, namely Black Canyon City, Congress, Cordes Junction, Cordes Lakes, Crown King, Peeples Valley, Spring Valley and northern parts of Wickenburg and Morristown. Even though supply is plentiful here, it has fallen by the same percentage as Greater Phoenix as a whole.
March 12 - Extending our analysis of the listing success rate from yesterday, we are now going to compare the different geographic areas.
Ignoring the tiniest locations, the most significant cities with very high success rates are:
The cities with the lowest success rates are:
The Southeast Valley is currently very consistent with Gilbert, Mesa, Chandler and Tempe all at 81 to 82%. Cave Creek has the highest success rate in the Northeast, but Scottsdale varies from a high of 81% in 85257 to a low of 48% in 85262.
March 11 - If you work mainly with luxury homes you may not be aware of how easy it is for most sellers these days. Of course it is still possible to make mistakes like pricing a home way too high, but the Listing Success Rate chart tells no lies.
The current overall reading is 80.8% for all areas & types, and since this includes expensive homes, it is a pretty high number. The last time we saw an overall listing success rate that high was June 2013. In those days investors were snapping up every distressed property they could find, and they were disappearing fast. To achieve a listing success rate over 80% requires a very healthy market.
To see how it plays out by market sector, you can use the Listing Success Rate Tableau chart, and I recommend that you check it out, including the many different tabs showing different views of the data.
We are going to review a few facts gleaned from the listing success rate.
Listing success by price range:
It is getting harder to sell homes under $100K as well as homes over $2 million. From $100K up to $300K it is very easy - that is what a success rate over 82% means. $500K to $2 million is harder, but still easier than this time last year.
March 10 - In the most recent Black Knight Financial Services Mortgage Monitor Report. which focuses on January 2017, we can see that mortgage delinquencies fell again during 2016. For the country as a whole, 4.2% of first home loans had a payment late by more than 30 days and another 0.9% have entered the foreclosure process. One year earlier there were 5.1% of first home loans with a payment late by more than 30 days and an additional 1.3% were in foreclosure. This is an overall improvement of 18.6%, pretty impressive for one year.
Arizona behaved almost exactly like the country as a whole, with an improvement of 18.6%, leaving us with 3.1% of first home loans with a payment late by over 30 days and another 0.4% already in foreclosure. We used to have the lowest percentage in foreclosure, but now Colorado is down to 0.2%, while California, Minnesota and Michigan are at 0.3%.
New Jersey and New York have by far the highest percentage of homes in foreclosure, both with 2.8%. However they do not have the worst delinquency problems. That doubtful honor goes to the following southern states:
The bright side for these states is that at least the delinquency rate is improving year over year. That cannot be said for Alaska where delinquency has worsened by 6.9%. It is the only state with a negative change, though Wyoming and North Dakota managed less than a 6% improvement. All three states have been affected by the loss of jobs in the energy sector.
The biggest fall in delinquency over last year can be found in Washington state (down 26.5%), followed closely by Colorado (down 26.2%).
March 9 - The slight downward trend in the Cromford® Market Index is being replaced a very slight upward trend. The Cromford® Market Index for the single-family markets 17 largest cities is also starting to improve a little.
Here we have 9 out of 17 cities with an improving trend from a seller's perspective and 8 with a deteriorating trend. You cannot get closer to a slight upward trend than that, but I suspect next week will have more cities showing improving CMIs.
The strongest positive moves were by Surprise, Maricopa, Avondale and Buckeye, so the West Valley is doing great for sellers at the moment, and Maricopa is getting its mojo back.
There is a mixed picture in the Southeast Valley with Tempe and Mesa moving ahead but Chandler, Queen Creek and (especially) Gilbert moving backwards.
The Northeast Valley takes 4 of the 5 bottom spots with Fountain Hills and Scottsdale under performing. With the market over $1 million looking relatively weak, we can expect a slower pace of improvement in the northeast.
March 8 - The percentage of final list price achieved at closing is another useful indicator of how the market is doing. It is not much use for forecasting, since it is a trailing indicator, but it is good for confirming the current situation. If a segment is achieving a higher percentage than average we can conclude that times are good, and vice versa.
Lets look at the top 17 cities and their single family markets:
|Rank||City||Current % List (Year to Mar 2017)||Long Term Average % List (Since 2001)||Difference|
We note that all 17 cities are above their long term averages. Cities with higher prices tend to achieve lower percentages of list, though in this table Gilbert and Mesa are higher than that would suggest while Maricopa & Surprise are lower.
March 7 - When we look at the market for single family homes over $500,000 we see the following changes in the quarterly average price per sq. ft.
|Area||Average $/SF Dec 2015 - Feb 2017||Average $/SF Dec 2016 - Feb 2017||% Change|
The Southeast Valley sticks out like a sore thumb and has done for several months now. This is the only large area where homes over $500,000 have been selling for much higher average prices per sq. ft. than last year. There are certainly a few spots in the Northeast Valley and Phoenix that have done the same, such as Arcadia and Old Town Scottsdale, but when we consider the larger areas, these favorable trends are dragged down by the weak price trends in North Scottsdale, Paradise Valley, Fountain Hills, Carefree and the Biltmore District. The $/SF ratio between the northeast and the southeast has closed from 2.17:1 to 2.03 :1 over the past 12 months.
Again restricting our analysis to homes over $500,000 we can find some pretty steep rises in the quarterly average price per sq. ft. in the following southeastern ZIP codes:
All of these areas offer the buyer a good choice of large luxury style homes at relatively cheap prices, luxury homes for the budget conscious, if you like. Since this has become a visible phenomenon over the past 6 months, I wonder if there is a correlation between this favorable price trend and the creation of high-tech jobs in the Southeast Valley particularly along Rural Road. The jobs pay above-average salaries and for lower-end luxury home buyers who care about getting the maximum house for their money (and living close to a freeway so they can get to work easily), the Southeast Valley has been looking pretty inexpensive for the last several years. Of course that advantage could erode if prices continue to rise faster than the Phoenix area as a whole. As you can see in the table above, there is still a big price gap between the southeast and the northeast (and Phoenix), so the southeast still has a lot of room to run before its price advantage is gone.
March 6 - Here are the ZIP codes where the contract ratio (all dwelling types) is higher than in March 2016 and unusually high too:
In these ZIP codes the supply of active listing (excluding UCB and CCBS) is woefully small compared with the number of listings under contract (Pending, UCB or CCBS).
The opposite is true of the list below which comprises the 20 ZIP codes with the lowest contract ratios:
These are the locations where sellers will need the most patience.
March 5 - With overall supply down from last year, most areas are seeing higher contract ratios. The contract ratio is a direct measure of how hot or cold a particular market is. It is a seasonal measurement, so month to month comparisons are not always so useful, but a comparison from year to year is always telling. We are looking for the exceptions today, segments where the contract ratio has perversely gone down compared to a year ago. Here they are:
So we see that, perhaps unexpectedly, Phoenix has proportionally more areas that are cooler than a year ago.
The above analysis included all dwelling types in each area.March 4 - Sometimes it is insightful to consider how times have changed.
In February 2017 there were no distressed sales at all recorded through ARMLS in
Coolidge and Florence, in particular, used to be plagued by lender owned properties and short sales. In October 2009, 96% of sales in Coolidge were distressed, with 44 REOs, 6 short sales and just 2 normal sales. Florence's worst month was November 2008 with only 7% of sales normal. There were 22 REOs, 3 short sales and just 2 normal sales. Fountain Hills was never quite so badly affected. Its worst month was October 2010, when only 27% of sales were normal with 15 REOs, 9 short sales and 9 normal sales.
You can see the changes reflected in pricing.
In Coolidge, average price per square foot has risen from $35.38 in October 2009 to $66.70 in February 2017, a recovery of 89%.
In Florence, average price per square foot has risen from $46.12 in November 2008 to $90.50 in February 2017, a recovery of 96%
In Fountain Hills, average price per square foot has risen from $134.75 in October 2010 to $206.68, a recovery of 53%
You can see the latest percentages of distressed sales by city here. Casa Grande is the only one to exceed 10% and surprisingly, Paradise Valley is in second place at over 9%.
Just 12 months ago in February 2016, there were 6 cities with 10% or more of sales distressed:
None of the cities were completely free from distressed sales in February 2016, so the trend of falling distress levels is still continuing.
March 3 - We now have the preliminary Maricopa County closing numbers for February and they are looking pretty good. Total sales are up 12% over February 2016 (similar to the gain in ARMLS sales). However new build closings are up 26% year on year, whereas re-sales are up only 10%. Neither of these are too shabby, but new homes continue to build market share from 12.3% of unit sales in February 2016 to 13.9% in February 2017.
The new build median sales price is up 7% while the re-sale median is up 8%, with the overall median up 7%.
At $336,000 the new build median in February is the highest ever recorded in Maricopa County. This is NOT because new home pricing is really the highest ever, it is because the new home builders are selling very few small homes. On a price per square foot basis, new homes still have some way to go to match the pricing of 2006. The median sales price for new homes in June 2006 (the peak ) was only $266,523 because at that point there were huge numbers of entry-level new homes being sold to people who should never have qualified for a home loan.
The re-sale median was $225,900 which is still lower than June 2016 and September 2016, so no records there.
March 2 - The Cromford® Market Index for single-family market in the 17 largest cities is shown in the table below along with its value one month ago:
14 of the 17 cities are in the seller's market zone over 110, but only 6 out 17 showed an improvement in conditions for seller's over the last month. Many of the cities barely moved their index and the only major changes were:
March 1 - The National Association of Realtors (NAR) issued a statement yesterday referring to pending home sales weakening in January. This is based on their "Pending Home Sales Index" which takes the number of homes that go under contract and optionally adjusts the number for seasonality. If you examine their numbers in detail you will notice that the seasonal adjustment makes all the difference. For the west of the country NAR starts with an unadjusted 20.4% rise compared with last month and a 1.2% increase compared with last year. After applying the seasonal adjustment, these numbers become a 9.8% fall and a 0.4% decrease respectively.
This just has me scratching my head in wonder. I personally think NAR's seasonal adjustment may be distorting the real picture here, rather than adding clarity.
As far as our pending listings in ARMLS are concerned, we currently have 7,694 which is up from 7,410 on the same day in 2016, a rise of 3.8%. Since both measurements were taken on the same day we do not need to apply a seasonal adjustment of any sort.
This is a healthy increase, but not as strong as the rise in closed sales. We can probably make a better comparison by adding in the UCB listings, since about 65% of UCB listings are not really accepting backups, but are in a quasi-pending state.
When we do this we see a growth from 11,954 to 12,503, an increase of 4.6%.
There is no mechanism I can find that suggests that pending home sales are weakening. On the contrary, they are getting significantly stronger and have been doing so since the start of the year.
Maybe Phoenix is doing better for new contracts than the rest of the west?
Or maybe NAR's interpretation of their own data is not quite right?
Either way, there is absolutely no sign of any weakness in the pace of contract signings in Greater Phoenix thus far in 2017.
February 28 - The new S&P/Case-Shiller® Home Price Index® was published today and covers sales during the period October to December 2016. The ranking for month to month price movements was as follows:
Phoenix fell below the national average of 0.21% and slipped down the table from 7th to 14th place.
For the year over year changes the table looks like this:
Rising in this table are Miami, Boston, Minneapolis and San Francisco. Seattle, Portland and Denver continue to hold the top 3 spots. Phoenix stayed in 16th place but unlike last month, fell below the national average of a 5.3% annual increase. So although we are still in a strong seller's market, Phoenix is not appreciating quite as fast as the average for the USA as a whole. We are not making much of a splash these days unlike 2011-2013 during the "coiled spring rebound era".
February 27 - Yesterday we looked at the ZIP codes that had seen a decline in supply since the start of the year. Today we will do the opposite and look at the ZIP codes with the highest growth in supply since Jan 1:
Generally we are seeing the largest growth in supply in the more expensive parts of town. Geographically, Central Phoenix, Ahwatukee and the Northeast are getting plenty of new supply.
Interesting that 85035 is up while neighboring 85031 is down. The same applies to 85297 and 85296 and also 85284 and 5283.
The highest growth in Pinal County is for Maricopa 85139 (16%) and San Tan Valley 85140 (10%).
February 26 - The number of active listings (excluding UCB and CCBS) has increased by 5.3% since January 1. Last year the same period gave us an increase of 14.5%. We can conclude that buyers are going to have a harder time this spring than in 2016 due to less choice in many areas. We have more buyers competing for fewer properties. There are in fact many locations where we have fewer active listings than when we started the year. The biggest declines in supply are in:
The West Valley is heavily represented here, especially the northwest including Glendale, Surprise, El Mirage & Youngtown. Pinal County is also seeing lower supply in Casa Grande, Apache Junction, Maricopa & Superior.
February 25 - After almost catching up with 2016 two weeks ago, new residential listings added to the ARMLS data have started to fall behind last year again. As of this morning we have seen 19,301 additions since the start of the year and this is 1.6% lower than last year. However we must remember that the first quarter of last year was very strong for new listings, so the rate in 2017 is still pretty healthy. It is 5.5% higher than the 2015 year to date number and very similar to the 2014 year to date number.
The shortfall has mostly come in the last week with a 10% drop in the number of new listings compared to a year ago. The 4 week total is a less volatile measure and is currently 3.6% below the rate of 2016.
It would not normally be a big problem that active listings were running 3.6% below the prior year rate, but with sales currently running 17.4% higher than 2016 year to date, the shortfall in supply should be a concern for most buyers.
February 24 - Using days of of inventory as our guide we can see the following changes since last year:
|Price Range||Days of Inventory Feb 24, 2016||Days of Inventory Feb 24, 2017||Change|
|$100K - $125K||49||42||-15%|
|$125K - $150K||43||36||-15%|
|$125K - $175K||49||37||-25%|
|$175K - $200K||63||47||-25%|
|$200K - $225K||67||50||-26%|
|$225K - $250K||77||57||-26%|
|$250K - $275K||85||60||-29%|
|$275K - $300K||92||73||-22%|
|$300K - $350K||120||83||-31%|
|$350K - $400K||130||106||-18%|
|$400K - $500K||169||130||-23%|
|$500K - $600K||231||173||-25%|
|$600K - $800K||277||236||-15%|
|$800K - $1M||378||338||-11%|
|$1M - $1.5M||456||418||-8%|
|$1.5M - $2M||643||579||-10%|
|$2M - $3M||765||746||-2%|
Only one price range is weaker than last year - homes over $3 million. The greatest improvement (-31%) from a seller's perspective was for homes between $300K and $350K.
February 23 - It is time once again to take a look at the Cromford® Market Index for the single family markets in the 17 largest cities.
At first sight this is a little discouraging for sellers who are now used to a market favoring them so strongly.
Only 5 of the 17 cities are showing improving market conditions for sellers and 4 out of these 5 are in the West Valley.
Paradise Valley has improved by 4% but this is a consolation prize because it is still stuck firmly in last place. Plentiful supply and weak demand growth means it is still below the balanced 100 number.
Fountain Hills continues to trend lower and could easily join Paradise Valley below the 100 mark in the near future.
However, let us remember anything over 110 is in a seller's market and 14 of the cities qualify for that designation. The top 6 cities I would describe a heavily favoring sellers over buyers.
The market is still looking healthy overall and it could just be taking a breather before advancing once more during the critical spring season. Supply is low except for the high end but demand is a little patchy, so we are watching it closely.
February 22 - We are starting to get the first estimates from the US Census Bureau for population changes between July 2015 and July 2016. The only data released so far is statewide, but shows:
The Census Bureau also provides the cumulate total for the period April 2010 to July 2016 (6 years and 3 months)
Total population growth is increasing with the most recent 12 month period contributing 21% of the 6.25 year total. The main reason for this is inward domestic migration, especially for retirees. Florida and Arizona are becoming major destinations for those reaching the age of 65. This is confirmed by reports from the moving companies.
Natural growth is on a downtrend in Arizona. With a drop of 10% in a single year we are seeing the same effects as elsewhere in the developed world. Lower birth rates and increasing death rates are to be expected for the foreseeable future. At the moment the rise in the death rate is more significant than the drop in the birth rate. This is because our median age is rising fast as the retired population expands extremely quickly.
Net international migration is volatile, but is well below the 20,542 we saw in 2011. It is becoming less significant to the overall population growth.
The latest net domestic migration number is huge and is the primary driver of increased housing demand. 61,544 is up 34% from the prior year and up almost 9-fold from the figure in 2011.
The Arizona housing market is benefitting greatly from net domestic migration, but for every person who moves here from elsewhere in the USA, there is a corresponding negative effect to the housing demand in some other state.
States with declining populations between July 2015 and July 2016 include:
Over the longer term since April 2010, only Puerto Rico (-8.4%), West Virginia (-1.2%), Vermont (-0.2%) and Illinois (-0.2%) have seen declines, but the list of states with declining population is likely to grow over the next 20 years.
The top states for population growth between July 2015 and July 2016 are:
Over the longer term since April 2010, the top ten look like this:
The states with heavy dependence on energy production (North Dakota and Texas) have experienced decelerated growth.
Arizona has not changed places in the table, but Utah, Nevada, Idaho, Oregon, Florida and Washington have all seen rises in their ranking.
February 21 - Examining the single family market over $1 million, we see the annual average $/SF moving up between 2015 and 2016 for the following areas:
But we also see declines here:
Beware of reading too much into the percentage changes for 85377 and 85250, because these ZIP codes have very low sales volumes over $1 million (14 and 6 respectively in 2016). The pricing can be volatile due to the low number of samples.
Generally I would say areas very close to shops, restaurants and entertainment are attracting more buyers than usual.
February 20 - The average rent for homes leased through ARMLS last month was 84.9 cents per square foot. This is up 8% from February 20, 2016 when it was 78.6 cents. Obviously a lot of rentals are leased outside of ARMLS, but with 2,345 leases closed on ARMLS per month this represents a decent sample for analysis. The number of closed leases is down 8% from a year ago. The number of active listings (excluding vacation rentals) is currently 2542, up 11% from 2,290 a year ago. However this still only represents 1.1 months of supply. For prospective tenants, that is not a good number, but at least it is better than the 0.9 months that we experienced this time last year.
A more typical supply for our market is between 2 and 3 months, which is what we measured between 2010 and 2012. Supply of rental listings on ARMLS was still 2 months at the start of 2014 but declined that year and has been much lower since then.
Demand exceeds supply and continues to do so, though not quite to as great extent as in the first half of 2016.
You can see the resultant effect on lease rates here.
February 19 - Examining January's sales through ARMLS for single family homes within Greater Phoenix, we see some big swings in market share by price range over the last year. We are comparing dollar volume between January 2017 and January 2016.
The above does not quite explain all the complexity. We also note that:
Overall, the top and bottom end of the market are both losing market share while the mid range all the way from $175,000 to $1.5 million is growing market share.
The strongest growth in market share was for homes between $350,000 and $400,000 - these increased their share of the market by 22%
Among the luxury ranges the price sector from $1.5 million to $2 million lost the most market share - down by 24%.
February 18 - Yesterday we looked at the annual change in the number of listings under contract by price range. Today we will home in on the geographic areas that are seeing the highest and lowest percentage changes.
The top gainers over 2016 are:
Some excellent news there for Gold Canyon and Carefree, neither of which had a particularly good year in 2016.
At the other end of the scale we find:
February 17 - Listings under contract is another useful measure for determining demand. However you need to compare today's figure with that from previous February 17s, because the number varies a lot by season and during the month. Historical data counts are almost impossible to find unless you log all the ARMLS data every day as we do.
For all areas & types within the ARMLS database we can see that today's number of 11,615 is 3% higher than February 17, 2016 when it was 11,305. This tells us that overall demand is slightly higher than last year, but not dramatically so.
If we restrict our analysis to normal listings within Greater Phoenix, we see an increase from to 9,907 to 10,546. This is a more significant 6%. Excluding short sale and pre-foreclosures helps a lot because these listings tend to stay under contract for a long time awaiting approval from lenders. Over the last year, those under contract have dropped from 959 to 628, a fall of 35%.
We can use these numbers to see how demand has changed by price range:
|Price Range||Under Contract Feb 17, 2016||Under Contract Feb 17, 2017||Change %|
|$100K TO $125K||507||353||-30%|
|$125K to $150K||996||714||-28%|
|$150K to $175K||1,392||1,115||-20%|
|$175K to $200K||1,322||1,456||10%|
|$200K to $225K||976||1,096||12%|
|$225K to $250K||956||1,195||25%|
|$250K to $275K||736||792||8%|
|$275K to $300K||696||776||12%|
|$300K to $350K||870||927||7%|
|$350K to $400K||568||773||36%|
|$400K to $500K||683||850||24%|
|$500K to $600K||355||435||23%|
|$600K to $800K||288||370||28%|
|$800K to $1M||153||152||-1%|
|$1M to $1.5M||111||111||0%|
|$1.5M to $2M||49||47||-4%|
|$2M to 43M||36||38||6%|
We note that contracts under $175K are well down on last year, probably constrained by the lack of supply in these price ranges.
We also see that the healthiest growth in demand is between $350K and $800K. Above this mark demand drops off sharply and is down 2% overall. Under contract counts are 28% down for homes over $3 million. For homes over $5 million they are down 80% from 5 to 1.
February 16 - Let us have another look at the Cromford® Market Index for the single family markets in the 17 largest cities (by dollar volume):
11 out of 17 cities saw at least some deterioration in the market from a seller's perspective over the last month, though that is to be expected during a period when new listings tend to arrive in large numbers. The most significant changes were:
6 cities saw improvement in the market from a seller's perspective, most of these being in the West Valley, with Surprise and Glendale deserving special mention.
The Southeast Valley remains very strong, though there has not much change over the past month in any of the cities in this area.
Paradise Valley is still the weakest city from a seller's perspective, but it has shown some improvement over the past month.
February 15 - The most recent Ellie Mae Origination Insight Report covers loans closed in January 2017 and is the first to reflect the higher interest rate environment. You might expect refinances to drop in relation to purchase loans, but that is not what Ellie Mae is reporting. The re was little change between December and January with re-finances increasing from 46% to 47% of all closed loans.
Adjustable rate mortgages almost always gain popularity when rates increase and at 5.4% of all loans, this is the highest percentage since October 2015. The average 30 year loan interest rate was 4.31%, up from a low of 3.75% in September, but not much different from the 4.30% we saw in January 2016.
Overall there is not much sign of a significant change despite the increased interest rates.
February 14 - Probably the most under-used statistic that we really like is the annual sales rate. Most people look at it once per year, given that it is an annual measurement. However, we recalculate it every day and study it on a weekly basis to detect changes in the market.
The overall annual sales rate for all areas & types in the ARMLS database is 90,739 as of Feb 14, up 7.4% from 84,464 last year on the same date. This is a healthy increase over 12 months and shows that the market is expanding. The primary reason is that people have been improving their credit scores and are qualifying for home loans more readily as a result. This is a result of all the foreclosures and short sales that are now getting old enough to drop out of the credit score formula.
For Greater Phoenix only, the ARMLS annual sales rate has increased from 82,695 to 88,748, a rise of 7.3%, almost the same percentage as for all areas & types.
Lender owned sales (REOs) have however dropped from 3,071 to 1,981 per year, down 35%, while short sales and pre-foreclosures have fallen from 2,568 to 1,950 per year, a somewhat less dramatic decrease of 24%. To compensate for these falls, the normal transactions have increased from 77,056 to 84,817, a rise of 10%.
The rise in sales volume has not been consistent across all areas. Here are the cities ranked by annual sales increases in single family homes:
Many remote locations are showing remarkable growth in sales activity, particularly in the far northwest and far southeast.
Six of the 40 cities have markets that are contracting, particular noteworthy being Paradise Valley and Carefree, our 2 most expensive cities.
February 13 - A major statistical record was broken in January 2017 when MLS listing 5522429 changed to closed status. At $12,750,000 this is the most expensive residential sale ever recorded in the ARMLS database.
The property was 5901 E Edward Lane in the Tilyou Ranchito subdivision in Paradise Valley, built in 2007.
Congratulations to Robert Joffe of Launch Real Estate who represented the seller and Jay Pennypacker of Russ Lyon Sotheby's International Realty who represented the buyer. It was listed at $13,500,000 and you might be surprised to see for a home in this price range, that it was only on the market for 37 days. However it had been listed twice previously starting in May 2015 and at one time the price requested was $14,500,000, so the story is really a little more complicated.
The previous record of $12,500,000 had held since September 2000 and belonged to a property in Cave Creek with 225 acres.
At just over $900 per square foot, 5901 E Edward Lane does not top the table on a price per sq. ft. basis. In fact it ranks only 56th in Maricopa County by that measure.
February 12 - In Maricopa County we now have the fewest foreclosures pending that we have ever recorded (and we started in 2001). The county total stands at 2,248 and the lowest record previously was 2,253 in May 2006.
Not only do we have the lowest foreclosure activity, the trend is for it to get quieter still. We have seen pending foreclosures decline 26% in the last year and 4% in the first 6 weeks of 2017.
February 11 - We count how many new residential listings are added to the ARMLS database each day and as of this morning there has been 14,462 new additions year to date in 2017. This is almost exactly the same as on February 11, 2016 when we had counted 14,469. Both of these are 6% higher than in 2015 when we had seen only 13,668.
Unfortunately for buyers, the same number of new listings as last year will not be adequate, since the sales rate in 2017 is much higher than 2016. As of yesterday we had seen 16% more closed listings year to date than in 2016.
During the period Jan 1 to Feb 11, 2016, the number of active listings (excluding UCB and CCBS) grew from 20,073 to 22,455, a rise of 12%. This year the count grew from 19,397 to 20,424 a rise of only 5%.
Homes for sale are going to seem thinner on the ground than last year. Although this is bad for buyers, it is good for sellers and will provide fuel for home price inflation. The appraisal industry can only apply limited braking power when supply and demand are out of balance.
February 10 - Using the deeds recorded by Maricopa County in January 2017 we can deduce the following facts:
February 9 - After a strong start to the year, the market is hesitating to decide where it goes next. We can see this in the Cromford® Market Index table for the single-family markets in the largest 17 cities:
Here we see 9 cities with deteriorating conditions for sellers compared to January 9, primarily because supply has increased while demand has remained flat, However there are almost as many cities with improving conditions for sellers. There are only a handful of big swings over the last month
February 8 - The S&P/Case-Shiller® Home Price Index® that was published last week covers sales during the period September to November 2016. The ranking for month to month price movements was as follows:
Phoenix comfortably beat the national average of 0.24%.
For the year over year changes the table looks like this:
In this picture, Phoenix is in the bottom 25% of the pack, but close to the national average of 5.3%.
February 7 - The other side of the coin from yesterday's post - the table of ZIP codes with the lowest single-family Contract Ratios indicates where there is the most choice for buyers and sellers have the least bargaining power:
Here we see no appearance by any Southeast Valley ZIP codes and none in the West Valley until we reach as far as Morristown. There are a few cold spots in Central Phoenix and a lot of cold spots in the Northeast Valley, especially a long way north of the 202. Many tiny towns on the fringes of the valley are also seeing very low contract ratios. Pinal County has a smattering of cold spots too. Paradise Valley appears at number 9 in this table, but because there are no inexpensive single-family homes in the 85253 ZIP-code, we never see high contract ratios in PV, even in a booming market. The highest we have recorded was 32.3 in June 2012, and PV has not been higher than 20 since August 2015.
If you are a buyer looking for a bargain and fed up with competing against other buyers, you have your best chance of a successful offer in the 24 locations above.
February 6 - Let us take a look at the ZIP codes with the highest single-family Contract Ratios. These will generally be the most difficult spots for buyers to find what they want and the easiest for sellers to achieve a sale:
The North and Northeast are conspicuous by their absence and we have only one entry in the top 30 from Pinal County. However the inner West Valley and inner Southeast Valley are both well represented, along with South Phoenix.
February 5 - December 2016 was another strong month for multi-family building permits, with a total of 1,127 units across Maricopa & Pinal counties. This brings the 12-month total to 9,645, the highest since January 2008 and well above most forecasts.
The annual totals for cities with more 20 permits were:
It is not often we report multi-family permits for Paradise Valley.
February 4 - The US Census Bureau has withdrawn its building permit survey web pages as part of a "streamlining" exercise. Fortunately they are still making the underlying permit data available for download in data files and we are able to compile these files into several different interactive charts for our Cromford Public subscribers.
There were 1,421 single-family permits issued for Maricopa and Pinal counties in December 2016. For the first time since January 2015 we saw a negative year-over-year change, because December 2015 gave us 1,433 permits. The relatively meager total for December is surprising given that new home closings have been growing much faster than permits. Total new home sales grew from 10,661 to 14,080 between 2015 and 2016, an increase of 32%. However single-family permits grew from 16,768 to 18,387, an increase of only 10%.
Unless there is a substantial increase in permit rates, we should expect longer lead times for new homes, coupled with prices rising more swiftly.
We know that land prices are currently too high for many builders to achieve their planned gross margins, and labor costs are rising because of shortages of skilled workers throughout the construction trades. It should not be surprising that developers are unwilling to meet the growing demand for new homes if they are unable to generate the profits that their executives and shareholders expect. For us, this will probably mean more supply constraints which will be bad news for buyers and good news for sellers of existing homes, at least those in the price ranges primarily served by developers, namely $200,000 to $600,000.
Footnote: The census bureau uses a different definition of "single-family" from the rest of us. Generally, detached, semi-detached, duplex and townhomes are all counted as single-family by the census bureau. Condos are also included among single-family if they do not share utilities and have ground to ceiling walls separating the units. Multi-family permits, according to the census bureau, are those issued for apartment buildings and for condos that share utilities or do not have ground to ceiling walls separating the units.
February 3 - Today we take another look at the Cromford® Market Index for the single-family market in each of the 17 largest cities
The picture is still a positive one with 10 out of the 17 cities showing an improvement in the negotiating power for sellers over the last month. However there also 7 cities showing some deterioration in that negotiation power. The most significant of these negatives moves was in Fountain Hills which has fallen all the way from 2nd place to 15th over the past 3 months.
Most improved was Glendale which has moved up to third place. Surprise is also recovering from a weak patch and has overtaken Scottsdale. Maricopa has faded after a strong move during the fourth quarter of 2016, while Tempe and Queen Creek are still improving nicely.
Paradise Valley is still below 100, but has improved since last week so is looking less likely to become a buyer's market with a reading below 90 in the immediate future.
February 2 - Yesterday we looked at the most improved ZIP codes for sellers using the contract ratio. Today we will do the opposite - search for the weakest contract ratio trends by ZIP code:
For the single-family markets, here are some of the ZIP codes with negative trends for sellers:
|Rank||City||ZIP||Contract Ratio Feb 1, 2016||Contract Ratio Feb 1, 2017||Percentage Change|
Some formerly hot spots in the Southeast Valley have cooled down, like 85201, 85203 and 85226, but many of these weaker areas are in Phoenix, particularly West and Central Phoenix.
Scottsdale 85266 looks particularly weak with a contract ratio of 10, the lowest in the Northeast Valley and the lowest we have seen for 85266 since 2009.
February 1 - We are seeing interesting contrasts between areas. Some have seen a drop in active listings coupled with a rise in listings under contract. This clearly indicates improving conditions for sellers, and the drop in active listings is unusual for a January to February comparison. A statistic that captures these trends is the Contract Ratio, which compares the number of listings under contract with the number of active listings. By comparing the contract ratio on February 1, 2017 with its value on February 1, 2016, we can see which areas are seeing the strongest or weakest trends.
For the single-family markets, here are some of the most improved ZIP codes for sellers:
|Rank||City||ZIP||Contract Ratio Feb 1, 2016||Contract Ratio Feb 1, 2017||Percentage Change|
Some of these, such as 85202 and 85345 were already hot last year, so a strong improvement percentage suggests that buyers are going to have a hard time in these ZIP codes.