A lot has changed in the Phoenix real estate market since last October. We broke down the important statistics to explain what they mean to you as a buyer, seller, or homeowner.
What's changed since last year in the Phoenix real estate with October now in the books?
To start, we saw a 3.8% decrease in the number of new homes coming on the market. Active inventory, though, increased 2.9% in that same period. This month, 7,104 homes sold versus 6,328 last year, good for a 12.2% increase. Our month's supply of inventory dropped to 3.37 compared to the 3.67 months we had at this time last year. That's an 8.2% decrease in inventory.
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Homes are selling a great pace and interest rates are still near historic lows.
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The good news for the market is that homes are selling at a better pace than they were last year, interest rates are still very low, (3.47% on a 30-year fixed), people are buying now to lock in low rates. Rumor has it rates will increase after the election.
We're starting to see two different markets, though: you see homes that are selling (and doing so fairly quickly) and homes that are sitting on the market with price reductions. We're seeing that throughout the Valley, and it's usually the sign of a transitioning market. This could mean a transition from a seller's market to more of a balanced market or buyer's market. It varies depending on the neighborhood or price point.
If you want to get a better idea about your specific area or an area you're interested in, give me a call or send me an email. I'd love to answer any questions you have.
Today, we’re talking about what happened in the Phoenix real estate market during the first quarter this year. Specifically, we’ll compare data from March 2015 to March 2016.
Interestingly enough, there wasn’t a huge difference in listings. Last year, we had 10,627 enter the market. This year, we saw 11,318 new listings at a 6.5% increase. In 2016, there were 25,496 active listings around this time. Comparatively, this number increased to 26,275 by 3% this year.
The amount of homes sold is up by 8%. A total of 8,514 sold this year compared to 7,871 last year. That’s an admirable jump.
Inventory has remained flat. Last year, we experienced around 3.24 months of inventory compared to 3.09 this year. This isn’t a significant difference.
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The amount of homes sold is up by 8%.
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Another thing is that while we didn’t have many Canadian buyers coming in, we had quite a few Canadian sellers listing their homes on the MLS. They likely took advantage of the exchange rate, but this activity didn’t impact the market overall.
Additionally, election years are excellent for the real estate market. That means this year is absolutely an opportune time to buy or sell a home. However, you’ll have to wait until my next video for more information about that!
If you’re thinking about buying or selling a home in the surrounding area, give me a call or send me an email!
Cromford Report:
The market conditions remain very diverse with different price ranges in dramatically different situations. We will start with the overall numbers and then break them down to try to make more sense of what is going on.
Here are the basic ARMLS numbers for April 1, 2016 relative to April 1, 2015 for all areas & types:
Active Listings (excluding UCB): 22,493 versus 22,303 last year - up 0.9% - but down 0.4% from 22,587 last month
Active Listings (including UCB): 27,398 versus 26,436 last year - up 3.6% - and up 0.9% compared with 27,146 last month
Pending Listings: 7,522 versus 7,853 last year - down 4.2% - but up 4.3% from 7,214 last month
Under Contract Listings (including Pending & UCB): 12,427 versus 11,986 last year - up 3.7% - and up 5.6% from 11,773 last month
Monthly Sales: 8,548 versus 7,893 last year - up 8.3% - and up 46.6% from 5,829 last month
Monthly Average Sales Price per Sq. Ft.: $138.96 versus $131.99 last year - up 5.3% - and down 1.7% from $141.09 last month
Monthly Median Sales Price: $215,000 versus $200,000 last year - up 7.5% - and up 1.4% from $212,000 last month
Closed sales were very strong in the final week of March, which had the side-effect of dropping the under contract count sharply from the week before. However sales, pending listings and under contract counts are all up from both last month and last year. This represents a firming of demand, which has brought the Cromford® Demand Index to a level we have not seen since June 2013, almost 3 years ago. This demand increase mainly affects the price range from $175,000 up to $600,000.
Dollar volume in March was $2.291 billion. This is up 13% from last year (8% from higher volume and 5% from higher prices). The dollar volume for the first quarter was also up 13% compared with 2015.
The supply of active listings is now higher than 12 months earlier for the first time since December 2014. However the Cromford® Supply Index has stopped rising and reached a plateau of 81.3, telling us we have a continued shortage of homes for sale compared with a normal market. This is deceptive for much of the market because almost all of the missing homes for sale are at the affordable end of the market below $175,000, where they are missing in huge numbers. The absence of the normal low end supply is not just in homes for sale. Affordable homes for rent are also extremely scarce. Entry level buyers and potential tenants are facing strong rises in price with no sign of relief.
To illustrate the huge differences between the entry level price sector, the mid-range and the high-end, let us do some simple comparisons. El Mirage, a city with a population of about 33,000 has 9,429 single family homes within its ZIP code according to the Maricopa County Assessor. Litchfield Park has a much smaller population of only 5,300, but its ZIP code extends far beyond the city boundaries and includes 9,678 homes, of which 8,884 are single family. They are roughly the same size market but the average Litchfield Park home is priced much higher than the average El Mirage home. To represent the higher end of the market we selected Fountain Hills 85268 which has 8,413 single family homes, but also has 4,571 condos & townhomes (which we excluded from our comparison).
Single Family Homes at April 1, 2016
El Mirage 85335
Litchfield Park 85340
Fountain Hills 85268
Number of single family homes in ZIP Code
9.429
8,884
8,413
Active Listings (excluding UCB & CCBS)
32
177
327
Percentage of Homes for Sale
0.3%
2.0%
3.9%
Pending Listings
56
55
32
UCB & CCBS Listings
20
44
26
Average List price of Active Listings
$173,881
$468,331
$878,111
Median Sales Price Annual Sales
$145,000
$250,000
$422,000
Annual Sales
641
571
501
Turnover Rate
6.8%
6.4%
6.0%
Average Cumulative Days on Market (Annual Sales)
41
78
130
Average % of Final List Price Achieved at Closing
99.0%
97.9%
96.1%
Days of Inventory (excluding UCB & CCBS)
18
113
238
Annual Change in Annual Average $/SF
10%
2%
-1%
Contract Ratio
238
56
18
The number of sales in each of the 3 ZIP codes is similar and roughly in line with the number of homes that exist, a 6% to 7% annual turnover (much lower than in the early 2000s).
Supply is very scarce in El Mirage, adequate in Litchfield Park and excessive in Fountain Hills where 1 home in 25 is listed for sale and has no contract. Consequently, prices in El Mirage are moving up at about 10 times the rate of inflation which those in Litchfield Park are just a tad above inflation. Prices in Fountain Hills have been declining. Notice that it is the supply that is driving pricing in all 3 cases, not the demand.
So the low-end of the market has too little supply while the high end has too much. The mid-range is in the happiest "Goldilocks" state, with neither too little nor too much. Mid-range prices are stable and volumes are growing. Since the mid-range is by far the most important sector for the construction industry this is excellent news for most builders.
Despite the excessive supply, the high-end luxury market had a good first quarter from a volume perspective, with 79 closed sales for ARMLS listings priced over $2 million. This compares well with 68 in the first quarter of 2015 and we have to go all the way back to 2008 to find a first quarter with higher sales volume. The abundance of supply means there is plenty of choice for high-end luxury buyers and they are finding homes they like. For sellers it means they will need plenty of patience because of all the competition from other sellers. It also means they may have to settle for a lower contract price than they anticipated, especially if they are accustomed to looking up their home on Zillow.
Call me at (480) 596-2900 for a FREE home buying or selling consultation
June was a particularly powerful month for closed sales, but leaves us starting July with a weaker backlog.
8,721 closed listings is what we see right now, but this number will change over the next week or two as corrections are posted. Helped by its 22 working days, June 2015 had the highest number of closed listings since May 2013.
Overall demand remains normal with little signs of change. However, overall supply continues to dwindle. The most interesting thing to watch is for which price ranges supply is increasing and which are reducing. For single-family active listings (excluding UCB) within Greater Phoenix:
Under $100,000 - down to 251 from 277 last month
$100,000 to $199,999 - up to 2,672 from 2,605 last month
$200,000 to $299,999 - down to 3,412 from 3,542 last month
$300,000 to $499,999 - down to 4,315 from 4,408 last month
$500,000 to $999,999 - down to 2,525 from 2,705 last month
$1,000,000 and over - down to 1,346 from 1,622 last month
In contrast to previous months, the price range between $100,000 and $199,999 got a little relief while the luxury market lost the most supply in percentage terms. The latter was partly due to a larger number of expired and cancelled listings.
Here are the basic ARMLS numbers for July 1, 2015 relative to July 1, 2014 for all areas & types:
Active Listings (excluding UCB): 19,548 versus 24,440 last year - down 20.0% - and down 3.9% from 20,351 last month
Active Listings (including UCB): 23,228 versus 27,695 last year - down 15.9% - and down 5.3% compared with 24,595 last month
Pending Listings: 7,007 versus 6,426 last year - up 9.0% - but down 10.4% from 7,819 last month
Under Contract Listings (including Pending & UCB): 10,747 versus 9,681 last year - up 11.0% - but down 10.9% from 12,063 last month
Monthly Sales: 8,721 versus 7,228 last year - up 20.7% - and up 5.6% from 8,261 last month
Monthly Average Sales Price per Sq. Ft.: $135.79 versus $129.67 last year - up 4.7% - but down 0.3% from $136.16 last month
Monthly Median Sales Price: $214,990 versus $198,000 last year - up 8.5% - and up 0.9% from $213,000 last month
Pricing did not change much over the last month, with a slight increase in the monthly median and a slight decrease in the price per square foot. However, pricing is substantially higher than it was 6 months ago, especially when considered against the very weak inflation numbers,.
The busy spring is now well and truly over and we are entering the summer doldrums. Contract signings and closings will slow and we are likely to see directionless trends until we get to the end of September. -The Cromford Report
Call me at (480) 596-2900 for a FREE home buying or selling consultation
Many people in the area have asked me why the 2015 real estate market is so hot. Today, I thought I would venture an answer.
There are a few reasons we're seeing an active market. First, most people who lost their homes in a short sale or foreclosure were unable to get back into the market until this year, so a lot of those people are reentering the market now. Second, interest rates are rumored to rise this summer or fall; since most people understand higher rates equal higher monthly payments, many are jumping off the fence in order to lock in low interest rates.
Another reason people are entering the market is property values are cheap. When property values begin to rise, many enter the market to grab properties at a fair price before the market begins to stagnate. Since many people buy properties for tax reasons, grabbing cheaply valued properties while they're available is a common strategy. Since inventory is lower than last year, we're starting to see values rise and people enter the market as a result.
If you want to know what conditions are like in your area, or if you want to take advantage of these favorable market conditions, give me a call or shoot me a quick email. I would love to discuss your particular situation with you and figure out if we can make a beneficial real estate transaction in the current marketplace.
There are many great homes for sale in the Greater Phoenix Metropolitan area.Click here to perform a full home search, or if you're thinking of selling your home, click here for a FREE Home Price Evaluation so you know what buyers will pay for your home in today's market. You may also call me at (480) 596-2900 for a FREE home buying or selling consultation to answer any of your real estate questions.
It's a new year and many people are asking what they can expect to see
the real estate market do in 2015. When are interest rates going to
rise? Is it going to be another solid year? Today, we'll draw on what
the experts have said and try to set some expectations for this year.
Most experts are expecting real estate prices to go up between 3% and 5% over
the course of the year. That doesn't sound like a lot, and that's
because it isn't - it's on par with the national historic average. When
we see prices appreciate at a rate of 10% to 20%, it's an extremely hot
market. Right now, we have a stable, normal market, which is great news.
Will interest rates go up in 2015? Ninety percent of experts believe rates will go up,
as the Fed is planning to increase interest rates in June. Many people
think they can wait to make a move until then, but that's not the case. Interest rates may change before June -
it's dependent on what investors do with bonds. If they're buying and
selling bonds quickly, interest rates could fluctuate a lot.
What you want to do is lock in a low interest rate NOW -
after all, a low rate means a lower monthly payment for you. It's a
great time to buy a home, or upgrade a home, and grab a fantastic
interest rate while they're still available.
If you have
any questions about interest rates, the market, or the value of your
home, don't hesitate to give us a call or shoot us an email.
Thanks for tuning in, and we look forward to speaking with you soon!
There are many great homes for sale in the Greater Phoenix Metropolitan area.Click here to perform a full home search, or if you're thinking of selling your home, click here for a FREE Home Price Evaluation so you know what buyers will pay for your home in today's market. You may also call me at (480) 596-2900 for a FREE home buying or selling consultation to answer any of your real estate questions.
Today, we're going to take a quick look at what the real estate market looked like in November. Here are the numbers:
New homes: 7,597 came on the market
Homes on the Market: 27,486 active listings
Homes sold: 5,005 were bought
Inventory: 5.5 months supply
Most
of these numbers are down just slightly from last year, but not enough
to be concerned. If you look at the supply and demand from this year,
it's identical to what it was in 2001, which was a healthy, balanced market. What does all this mean?
There are a few pieces of good news, per the Cromford Report:
Active
listing counts have started to fall (though not in all areas). We are
down 1% from a month ago and only 2.3% higher than in 2013.
Pending listings are UP from last month, as are listings under contract.
It is not time to celebrate, but it is time to start feeling a little hopeful that the worst is behind us.
According to the numbers, now is a pretty good time for real estate in the Phoenix area. When
you consider the fact that interest rates are still at historic lows,
at just over 4%, you can see we have ideal conditions for buying or
selling.
If you want to see the whole report, give us a call. We would love to send it over to you.
If
you have any questions about the real estate market or interest rates,
don't hesitate to give us a call or shoot us an email. We would love to
help you out!
There are many great homes for sale in the Greater Phoenix Metropolitan area. Click here to perform a full home search, or if you're thinking of selling your home, click here for a FREE Home Price Evaluation so you know what buyers will pay for your home in today's market. You may also call me at (480) 596-2900 for a FREE home buying or selling consultation to answer any of your real estate questions.
What Does our Inventory say About our Market? We're back with another market update for the Phoenix metro area. Today we are going to provide you with some statistics about the current state of our market and let you know what those statistics are telling us about the health of our market. In October, 9,914 homes came on the market, bringing us to a grand total of 27,002 active listings in Phoenix. After selling over 6,200 homes this month, we are left with about a 4.3 month supply of inventory. So much for less homes coming on the market in the 4th quarter of the year! A 4 month supply of inventory is pretty healthy. There are a lot of similarities between our current market and the markets of 2001 and 2002. This is good news because those markets were considered normal and healthy. If you are thinking of buying in the next year, pay attention to those interest rates. They have gone up slightly to just over 4%, and are expected to rise even more in the next year. Locking in these rates now, while they are low, could end up saving you thousands in the long run. If you have any questions, be sure to give us a call or send us an email. We hope to hear from you soon!
There are many great homes for sale in the Greater Phoenix Metropolitan area. Click here to perform a full home search, or if you're thinking of selling your home, click here for a FREE Home Price Evaluation so you know what buyers will pay for your home in today's market. You may also call me at (480) 596-2900 for a FREE home buying or selling consultation to answer any of your real estate questions.
Phoenix Real Estate Market Update October 2014 As you can see from the above video, we are not in Phoenix anymore. We are currently on location in Hollywood, Florida, networking with some of the top agents in the country. We are learning a lot of great things to help serve you and your listing better. In the South Florida market, homes are still flying off the shelf. There is a lot of international money coming in from foreign investors. The reason why we are telling you this, when obviously our market is on the other side of the country, is because this is evidence that people are still bringing their money here to this country. The market is not going through a major recession, even though you may hear different on the news. There are a ton of buyers still buying and market interest rates are still extremely low. This is one of the best times we have ever seen to buy a home in the past 15 years. If you have any questions about your specific market, don't hesitate to reach out to us. We would be glad to provide you with the information you are searching for.
There are many great homes for sale in the Greater Phoenix Metropolitan area. Click here to perform a full home search, or if you're thinking of selling your home, click here for a FREE Home Price Evaluation so you know what buyers will pay for your home in today's market. You may also call me at (480) 596-2900 for a FREE home buying or selling consultation to answer any of your real estate questions.
Phoenix Market Update for October 2014 Fall is here in Phoenix and we are excited to bring you yet another real estate market update. Things have been looking good so far this month. Here are the latest stats:
8,680 homes came on the market in the month of September, a slight uptick from the number we saw in August
The number of homes on the market saw a slight increase as well, and now sits at a solid 26,256.
The number of sold homes is down slightly, from 6,474 in August to 6,286 in September.
Inventory rose slightly, from 4.0 to 4.18%
If you look at supply and demand from this year, it is strikingly similar to the supply and demand of 2001 and 2002 which were great years for the market. 2014 is a really good year to buy a home. Interest rates are much, much lower than they have been in the past and it's a perfect time to lock these rates in because they are so low. If you have any questions about the market, or about real estate in general, feel free to reach out to us. You can give us a call or send us an email and we would be happy to help you out!
There are many great homes for sale in Greater Phoenix Metropolitan. Click here to perform a full home search, or if you're thinking of selling your home, click here for a FREE Home Price Evaluation so you know what buyers will pay for your home in today's market. You may also call me at (480) 596-2900 for a FREE home buying or selling consultation to answer any of your real estate questions.
Phoenix Real Estate Market Update for Fall 2014 Today we are going to go over another market update for Phoenix. Fall is approaching, and with that, some changes are coming to the market we'd like you to be aware of. Here are some statistics to keep an eye on as we move forward:
8,209 homes came on the market for sale in August
6,447 homes were sold in August
We currently have 26,340 active listings as well as a 4 month supply of inventory
For now, the market appears to be pretty level. We are entering the fall months, so we are going to start seeing some action from 2nd homeowners who are selling one of their properties or looking to buy a new one. We usually see increased activity in the fall, so if you are thinking of selling your home, you may want to consider making the jump now. It's September, so you aren't going to get caught up with all of the listings that will go up in the market in October and November. If you're a buyer, there's going to be a lot more availability in the next 30 days than there has been. If you have any questions, or maybe would like to suggest a topic for our next video, please give us a call. We'd love to help you out!
There are many great homes for sale in Greater Phoenix Metropolitan. Click here to perform a full home search, or if you're thinking of selling your home, click here for a FREE Home Price Evaluation so you know what buyers will pay for your home in today's market. You may also call me at (480) 596-2900 for a FREE home buying or selling consultation to answer any of your real estate questions.
Phoenix Real Estate Market Update for September 2014
Cromford Report - Market Snapshot
(Click to Enlarge)
Welcome back to our blog. Today we are going to give you a quick update on what's going on in Phoenix real estate. We have some statistics we'd like to share, as well as some advice for you on how to take the most advantage of current market conditions. Here's what's going on in Phoenix:
8,607 homes came on the market for sale
There were 26,997 homes for sale
6,849 homes were actually sold
We have about 4 months of supply of inventory, a very healthy number
Listings are up 45.2% from this time last year
Pending sales are down 21.6% from last year
Monthly sales are down 15.7% from this time last year
So, what can we expect going forward? Inventory is going to increase between August and November as the temperature begins to cool down and less people are looking for homes.
The current arrival rate of new listings is at a 14-year low. That makes this a great time to put your home on the market and get it sold. Additionally, interest rates are below 4.5% so it's a great time to lock in your rate if you are looking to buy so you can save some money.
Cromford Report - Market Index
(Click to Enlarge)
Current trends put the appreciation rate at around 3-7% over the next few months, before dropping to 0- -2% by the end of the year. If you have any questions about the status of the Phoenix real estate market, please feel free to give us a call or send us an email. We would be glad to help you out with any questions you might have.
There are many great homes for sale in Greater Phoenix Metropolitan. Click here to perform a full home search, or if you're thinking of selling your home, click here for a FREE Home Price Evaluation so you know what buyers will pay for your home in today's market. You may also call me at (480) 596-2900 for a FREE home buying or selling consultation to answer any of your real estate questions.
Why Now is a Great Time to Think About Selling Your Home Thank you all so much for the overwhelming response to our last video about our brand-new website. It sounds like a lot of you have been exploring all of its new features and we are very happy about that. If you haven't checked it out yet, you should. There are a lot of things on there we think you will really like. A question we get asked all the time is "When should I sell my home and buy another property?" Actually, right now is a great time to make a change for a few different reasons. 1. Interest rates Interest rates are at historically low rates, below 5%. This is really where you want to lock in your rate if you are going to be financing. If you are waiting for your property's value to rise before you sell, realize you will pay more for the home you are going to buy and if the market is doing well and interest rates are higher, you're going to be paying a lot more in the long run 2. Inventory We have a four month supply of inventory right now, which is relatively low. This is a normal market and a great market to sell in. If you wait to sell at a later time, you might be trying to sell in a buyer's market where it will be much harder to get your price. 3. Reasonable prices Right now we have reasonable prices and great payment options that make sense. This is a perfect time to make a trade either up or down. If you have any questions, please feel free to give us a call. We look forward to hearing from you. Make it a great day!
There are many great homes for sale in Greater Phoenix Metropolitan. Click here to perform a full home search, or if you're thinking of selling your home,click here for a FREE Home Price Evaluation so you know what buyers will pay for your home in today's market. You may also call me at (480) 596-2900 for a FREE home buying or selling consultation to answer any of your real estate questions.
Greater Phoenix Market Update for Summer 2014
Cromford Report - Cromford Market Index (click to enlarge)
It's summertime in Phoenix and the real estate market, much like the weather, is heating up. We wanted to give you a quick market update so that you are informed of all the latest happenings in the Greater Phoenix real estate market. We have seen a massive increase in inventory over the past year. We currently have over 25,500 active listings in the Greater Phoenix area compared to about 15,500 listings at this time last year. So, what's causing this change?
For one, the inhibiting affects of massive student loan debt is stopping many younger people from getting into the market and purchasing their first home.
Another reason for this change is the after effects from the foreclosure wave of 2008-2012 that introduced sensitivities to people about risks associated with buying a property.
Also, a large number of former homeowners have yet to repair their credit from the last financial crash. This is keeping them out of the market as well.
Investors are not buying properties at the rates they were last year. This has pulled back demand for property and allowed the inventory to rise.
Cromford Report - Daily Market Snapshot (click to enlarge)
What this really means is that we are in a very healthy market. We are hovering around 4-5 months of inventory, with a 3-5% appreciation market. A healthy market is beneficial for all.
If you have any more questions about the market or anything at all, don't hesitate to give us a call. We would love to help you out!
For more information, read the entire Cromford Report by clicking here.
There are many great homes for sale in Greater Phoenix Metropolitan. Click here to perform a full home search, or if you're thinking of selling your home, click here for a FREE Home Price Evaluation so you know what buyers will pay for your home in today's market. You may also call me at (480) 596-2900 for a FREE home buying or selling consultation to answer any of your real estate questions.
Market Summary for the Beginning of May The market balance is still weighted towards buyers, but not quite as much as in March. Demand remains weak while supply is normal. April saw an improvement in sales volumes compared to March, but stronger closings at the end of April have left the pool of listings under contract at a relatively low ebb, especially for early May. Title companies are short of work to do in May and June and the whole market (especially mortgage lenders) could do with a lot more signed contracts. If we focus exclusively on ARMLS data, then the market appears much stronger than it really is. This is because ARMLS sales are currently capturing a much larger share of the overall market than usual. Normal sales through the MLS have been the strongest transaction type and the only type that has grown year over year. Last year we saw higher sales of new homes, most of which do not hit the ARMLS closings. Investor flips, wholesale deals, short sales, pre-foreclosures, REOs, HUD sales, deeds in lieu, sheriff sales, IRS auctions and trustee sales were all more numerous in 2013 and have all faded in importance this year. Private bulk deals between investors have also plummeted compared with the last few years and pocket listings and FSBOs are now few and far between. Even though total ARMLS sales are a much larger percentage of the total, they have declined 12% from a year ago. But if we look exclusively at Normal MLS sales in Greater Phoenix (ignoring the REOs, short sales, pre-foreclosures and HUD listings) then we can actually see some constructive growth. April normal sales were up 3.6% over April 2013 and the annual sales rate was up 20.8%. There is a reasonably healthy resale market there, hiding in plain sight inside the overall picture. Here are the basic ARMLS numbers for May 1, 2014 relative to May 1, 2013 for all areas & types:
Daily Market Snapshot - The Cromford Report (click to enlarge)
Active Listings (excluding UCB): 26,205 versus 15,482 last year - up 69.3% - but down 0.9% from 26,442 last month
Active Listings (including UCB): 29,647 versus 19,847 last year - up 49.1% - but down 1.1% compared with 29,907 last month
Pending Listings: 7,199 versus 10,888 last year - down 33.9% - and down 1.8% from 7,333 last month
Under Contract Listings (including Pending & UCB): 10,584 versus 15,253 last year - down 30.6% - and down 2.0% from 10,798 last month
Monthly Sales: 7,656 versus 8,704 last year - down 12.0% - but up 14.0% from 6,713 last month
Monthly Average Sales Price per Sq. Ft.: $129.99 versus $116.62 last year - up 11.5% - but down 0.3% from $130.33 last month
Monthly Median Sales Price: $190,000 versus $172,000 last year - up 10.5% - and up 0.5% from $189,000 last month
Cromford Market Index - The Cromford Report (click to enlarge)
During March the Cromford® Supply Index was moving higher at almost the same rate that the Cromford® Demand Index was moving higher. Thus there was little discernible improvement for sellers. In April the Demand Index started to move a little faster and the Supply Index slowed down. That equates to a small but measurable improvement for sellers, and the trend is their friend at the moment. If we look at the total number of home sales recorded at the two counties, then volume is down a long way compared even with 1999 when the population of Maricopa and Pinal County was 28% less than it is now. The biggest loss is in new home sales. In 1999 we saw 38,063 single family permits for new construction. In the last 12 months we have seen just 12,480. So new home builds are down 67% from 1999 even though the population has grown 38%. Some agents who focus exclusively on normal MLS resales tend to wonder what the fuss is about. To them the housing market seems fine, even if it is a little quiet compared with the busy period of 2009-2013. They can see normal days on market, fair volumes and a reasonable amount of supply. However economists are almost universally gloomy about housing, lamenting the low home sales volumes, especially those for new homes which are a key driver of economic growth and job creation. Some people have suggested that new homes are too expensive relative to resales, based on comparing the median sales prices for new and resales. This is a fallacy, as we have pointed out several times. The new homes being sold in Maricopa County are about 25% larger than the average resale with better fixtures and fittings and a lower running cost. If simple adjustments are made on a price per square foot basis, rather than medians, then new homes are actually almost the same value as the average normal resale home in the same area. The main differences are that the resale will often have a swimming pool, landscaping and window treatments, whereas new homes usually leave those additional expenses to the new owner. The underlying key problem for housing demand is a lack of household formation. This has been dropping for a long time due to a number of factors including unemployment, falling birth rates, lower net migration and greater home sharing especially among millennials. If household creation were at the normal long term average we would quickly have a housing shortage here in Greater Phoenix. Household creation usually starts with stronger demand for rentals, as adult children move out from their parents' homes. This is typically followed in the second stage by stronger demand for homes to buy. We are certainly starting to see demand for rentals pick up, though of course relatively few of these go through the ARMLS database. Vacancies are unusually low and supply is tight. Activity in multi-family (both new construction and resales) is strong. The bulk transactions going through recording in the last few months include a number of conversions and renovations of condos and town home communities to rental units under a single landlord owner. The key issue for us is if and when overall demand for homes to buy will return to more normal levels for all property types. There are two main questions here:
How quickly will lenders lower their requirements for credit scores? The critical level is 600-700 which is very typical for first time home buyers. This has not been sufficient to qualify for a loan for some time, but lenders are starting to go there.
Will those who could qualify under these new guidelines actually apply for loans? Currently mortgage applications are at the lowest level since 2000 according to the Mortgage Bankers Association. Many people in the age group 20-35 are not even considering home purchase at this point in their lives. Will they start to take the option seriously, given how beneficial it could be to their long term wealth? Can they assemble the down payment somehow?
It would not take a huge change for demand to perk up. This could be: some more large lenders offering loans suitable for entry-level buyers with FICO scores of 620 and above; a greater degrees of forgiveness by loan underwriters for people who went through a foreclosure or short sale; 10% more millennials deciding to heck with renting, let's get our own place to live. There is plenty of pent-up demand which could emerge at any time. I am almost tempted to call it Shadow Demand (but I won't). But right now there is not much sign of it coming out and no-one knows for sure when it will. But it is a lot more significant and real than the so-called Shadow Inventory. If increased demand does start to appear, then we should immediately see increases in the pending listing counts relative to 2013. Currently these are some 34% lower than last year. Total under contract counts (which include UCB listings) should also show a better year on year change than the current 31% drop. These will be two of the earliest signs to watch and you can be sure we will make a big fuss if we see it happening. We should also see a pick up in the MBA's weekly mortgage application numbers, especially for purchase money loans rather than refinances. Until this happens sales prices look like they will stagnate. In particular reported appreciation rates are likely to drop quickly over the next 6 weeks. This is because prices went up more than 5% last year between May and mid June, not because prices are going to change very much in 2014. I don't see a strong chance of prices making a 5% advance this year in the same 6 week period. However, it will most likely be August or September before this low annual appreciation rate is reflected in the S&P/Case-Shiller® Home Price Index®.
What's changed since last year in the Phoenix real estate with October now in the books?
The good news for the market is that homes are selling at a better pace than they were last year, interest rates are still very low, (3.47% on a 30-year fixed), people are buying now to lock in low rates. Rumor has it rates will increase after the election.
If you want to get a better idea about your specific area or an area you're interested in, give me a call or send me an email. I'd love to answer any questions you have.
