How’s The Market?

Are you trying to understand how the real estate market is doing in your area but don’t know where to begin?

If you are like most people then you are probably hearing mixed information reported from a variety of media outlets, real estate institutions and companies, and various other economic think tanks. This unfortunately creates confusion and causes most people interested in real estate (as a buyer, seller, or investor) to make inaccurate judgments and conclusions about the market.

Think about it, with all this mixed information on whether we are in a good, bad, or flat market, who’s information is the “correct” answer? Also, who is the information you are reading in reference to? A great market for a buyer may be a bad one for a seller while a bad market for a seller may be a great one for a investor/buyer.

The point is, depending on what kind of real estate consumer you are (buyer, seller, investor) then the information you take in needs to be interpreted in light of your objectives. At any given time the market is always “Good”, “Bad”, “Flat”, or “Great”…but that depends on what you are looking to specifically do with real estate.

We can provide you with the proper information to accurately answer “How’s the market?” for you, based entirely on what you are looking to do with real estate.

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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.

Price Range Active June 2015 Active June 2016 Active June 2017 2 Year Change Current Days of Inventory
$500K-$600K 1,130 1,374 1,261 +12% 176
$600K-$800K 1,215 1,419 1,441 +19% 239
$800K-$1M 688 800 783 +14% 295
$1M-$1.5M 680 751 738 +9% 358
$1.5M-$2M 381 436 460 +21% 600
$2M-$3M 377 369 391 +4% 728
Over $3M 272 302 289 +6% 879
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:

Desert Hills
New River
Rio Verde

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.

Carefree – 376 days of inventory, -5.3% appreciation in annual $/SF, -2.9% annual increase in annual median, contract ratio 16.1 – expensive and over-supplied with falling sales rate and unusually low listing success rate (46%). One of the most difficult places to be a seller, hence prices are falling
Coolidge – 55 days of inventory, 8.2% appreciation in annual $/SF, 9.0% annual increase in annual median, contract ratio 107.4 – very affordable and appreciating quickly – only 1.2 months of supply – underrated as investment opportunity
Eloy – 139 days of inventory, 7.0% appreciation in annual $/SF, 42.9% annual increase in annual median, contract ratio 36.1 – a relatively cool market, rapidly moving upmarket due to the growth of Robson Ranch
Florence – 93 days of inventory, 10.5% appreciation in annual $/SF, 10.9% annual increase in annual median, contract ratio 73.2 – a hot, affordable and expanding market with rapid appreciation
Rio Verde – 295 days of inventory, 8.8% appreciation in annual $/SF, 1.3% annual increase in annual median, contract ratio 18.7 – excess supply and little growth in sales means stable pricing
Tonopah – 105 days in inventory, -4.0% appreciation in annual $/SF, 4.3% annual increase in annual median, contract ratio 25.0 – a cool rural market, with volatile numbers due to low sales rate (45 a year)
Wickenburg – 275 days of inventory, 7.7% appreciation in annual $/SF, 3.1% annual increase in annual median, contract ratio 19.5 – a very cool and stable rural market, lower success rate than average (60%)
Wittmann – 157 days of inventory, -0.3% appreciation in annual $/SF, 9.8% annual increase in annual median, contract ratio 35.7 – a relatively cool and stable market
Youngtown – 21 days of inventory, 12.5% appreciation in annual $/SF, -1.1% annual increase in annual median, contract ratio 260.0 – only 0.4 months of supply, tiny area with extremely low supply and low prices

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%
Northeast Valley 225 213 191 -15.1% $235.44 $249.03 +5.8%
Southeast Valley 92 73 73 -20.7% $137.98 $144.98 +5.1%
West Valley 81 80 74 -8.6% $114.96 $123.56 +7.5%
Pinal County 119 88 82 -31.1% $95.67 $102.04 +6.7%

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:

the listing agent wants to create a comp for future use by appraisers or other agents
the listing agent wants to claim credit for the successful transaction in regional or national statistic tables collected by the National Association of REALTORS® or others
the listing agent wants to give the selling agent credit for the sale

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:

listings spend less time in escrow because deals are getting completed more quickly in a busy market
lenders are able to get loans approved more quickly because underwriting standards are loosening
more listings are closed as soon as they are created, never hitting the market

There are at least 2 ways we can spot the last of these.

closed listings on the database that are completely missing from our daily log of active, UCB. TOM, CCBS or pending status listings
listings with 0 cumulative days on market or 0 agent days on market

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:

Seattle 2.57%
Charlotte 1.48%
Minneapolis 1.41%
Boston 1.36%
Detroit 1.31%
Denver 1.29%
Dallas 1.23%
Chicago 1.15%
San Francisco 1.05%
San Diego 1.02%
Portland 1.02%
Los Angeles 0.96%
Atlanta 0.92%
Washington DC 0.80%
Las Vegas 0.78%
New York 0.76%
Phoenix 0.59%
Miami 0.26%
Cleveland -0.13%
Tampa -1.01%

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:

Seattle 12.3%
Portland 9.2%
Dallas 8.6%
Denver 8.4%
Boston 7.7%
Detroit 7.0%
Minneapolis 6.8%
Charlotte 6.7%
San Diego 6.5%
Las Vegas 6.4%
Miami 6.0%
Phoenix 5.6%
Atlanta 5.5%
Los Angeles 5.4%
San Francisco 5.1%
Tampa 5.1%
Chicago 5.1%
Cleveland 4.4%
Washington DC 4.2%
New York 4.1%

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%
Mobile Homes 841 871 +3.6%

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%
Mobile Homes $78.97 $$87.35 +10.6%

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%
Mobile Homes $84M $100M +18.5%

All segments are expanding, but attached homes are achieving almost twice the growth rate of detached homes in terms of dollars spent.

We should point out that single-family detached homes still represent an impressive 87.5% of the total dollar volume. However, this has declined from the 89.1% we saw in YTD 2014

May 30 – One of our favorite charts is the Annual Appreciation by Major City, based on annual average $/SF. You can find it here.

Avondale, Buckeye and Maricopa are at the top of the chart with appreciation rates around 9% to 10%.

We then see a big cluster between 6% and 7%, including Goodyear, Surprise, Queen Creek, Peoria, Mesa, and Glendale.

Phoenix is trending lower from a consistent 7.5% to around 5.8% and is one of the weaker performers in recent months. It is unusual that it is behaving differently from the cities in the cluster above.

Gilbert is very steady at 5.5% while Chandler is slightly weaker at 5%, where it matches Cave Creek which is on a rising trend.

Tempe used to be one the higher performers but has weakened in recent months. Appreciation has dropped from 8.4% last year to only 4.3% this week.

Scottsdale is steady at around 3%, a lower rate that all of the other big cities. This is because it is dominated by the luxury market which has seen much lower appreciation than the rest of the market. Despite this overall weak trend in luxury homes, Paradise Valley has improved significantly. Last year at this time it was showing negative appreciation, but has recovered to 5% as of this week. However it is one of the most volatile of the cities due to its relatively low annual sales count.

Fountain Hills is in last place with 0.7% having peaked at 4.4% last December.

May 29 – Another 828 multi-family units in Maricopa and Pinal Counties received building permits during April according to the Census Bureau. That brings the year-to-date total to 2,672, up from 1,730 last year. The rolling 12 month total has hit 10,587, a figure we have not seen since January 2008. Not much sign of any slowdown there, despite warnings from some quarters that lenders are losing interest in backing some of these projects.

The year-to-date multi-family permit counts look like this:

Phoenix – 1,075
Glendale – 471
Chandler – 404
Peoria – 357
Mesa – 160
Surprise – 135
Unincorporated Pinal County – 38
Paradise Valley – 12
Scottsdale – 10
Tempe – 6
Apache Junction – 4

May 28 – The Census Bureau reports that 1,838 single-family building permits were issued in Maricopa and Pinal Counties during April, up 9.1% from 1,684 last year.

This brings the year to date total to 6,626 which is up only 8.3% from 6,120 last year. This is very modest by the standards of all the years from 1996 to 2007. The quietest of those years (1997) gave us 10,153 permits during the first four months and in 2017 we are down 35% from 20 years ago.

Based on current trends, we are not going to see new home building make any significant dent in the supply problem. With their cautious hats on, the developers probably like things that way. It keeps prices up and avoids any risk of overbuilding.

The current 12 month rolling average is 18,893, up 5.5% from 17,913 last year.

For those with a subscription to Cromford® Public, we provide the following Tableau charts for the period 1996 onwards:

monthly permit counts
quarterly permit counts
annual counts
year-to-date permits counts
rolling 12 month counts

Filters are provided for county and place name, as well as date ranges.

The top permit producing places year-to-date in Arizona are:

Mesa – 872
Phoenix – 793
Buckeye – 694
Unincorporated Pinal County – 623
Peoria – 611
Gilbert – 567
Queen Creek – 446
Goodyear – 412
Maricopa – 399
Unincorporated Pima County – 248

Glendale is particularly slow at 54 (less than Kingman and Prescott) and Avondale only slightly better at 74 (less than San Luis and Sahuarita). It is no wonder that supply is such a long term problem in these two cities.

May 25 – The Cromford® Market Index table for the single-family markets in the largest 17 cities is failing to provide sellers with encouragement this week:

Here we find 6 cities have improved over the past month while 11 have deteriorated. In addition, 4 of the improving cities were up by 1% or less, leaving only Peoria (6%) and Fountain Hills (12%).

To balance this, the deteriorating cities were mostly down by small percentages of 3% or less, with only Tempe (down 23%) showing a large change.

The market remains strongly favorable to sellers, with all cities having a CMI over 100 and all but 2 over 110. However there is no denying that the slight changes that are visible tend to be more favorable to buyers than sellers.

With only 3 cities making major moves over the last month, here are the headlines:

Tempe has seen a significant increase in available active listings (211 to 247 in the past month)
Fountain Hills has seen a drop in supply coupled with increased demand
Supply has tightened in Peoria

May 23 – When their listing gets an accepted offer, a large number of agents use Active – Under Contract Accepting Backup Offers (UCB) instead of the traditional Pending status these days. Today we have 8,048 listings in pending status and 5,177 in UCB (or CCBS) status.

One of the side effects of this is much higher days on market counts than we used to see. When a listing goes pending it stops accumulating days on market, but when it is in UCB status it is still on the market and continues to accumulate days on market. Today we see that pending listings have an average of 59 days on market while UCB (and CCBS) listings have an average of 80.

This increase in days on market is then reflected in the statistics for closed listings. Today we have an average of 71 cumulative days on market for listings closed in the last month. If it were back before the days of Zillow, this reading would be under 60.

This is another reason why do not recommend average days on market as an accurate way of measuring the state of the market.

May 22 – Subscriber Ben Graham suggested a number of areas for research, one of which was the relationship between single-level and multi-level homes with respect to pricing. He has a hunch that single-level single-family homes are about 20% more expensive than 2-level single-family homes on a $/SF basis. Based on all sales within Greater Phoenix on ARMLS, where the field “Floors” has an entry, then Ben is not far off the mark.

We find that single-level homes are 18% more expensive on a price per sq. ft. basis than 2-level homes. Mind you, they are 16% cheaper based on average price and 29% smaller based on average living space.

Homes with more than 2 levels are uncommon, but they are actually more expensive – 11% more expensive than single-level homes on a price per sq. ft. basis and 59% larger based on average living space.

May 21 – Here is a table showing the annual change in annual average price per sq. ft. for single family homes for various cities. The cities are ranked by the most recent annual rate of change.
City Annual Change in Annual Average $/SF May 2015 Annual Change in Annual Average $/SF May 2016 Annual Change in Annual Average $/SF May 2017 Current Trend in Appreciation Rate
Arizona City 6.9% 8.2% 17.2% strengthening
El Mirage 7.3% 10.1% 13.9% flat
Avondale 5.8% 8.4% 10.0% strengthening
Laveen 6.0% 8.6% 9.6% weakening
Maricopa 5.5% 6.9% 9.5% weakening
Tolleson 10.9% 5.8% 9.2% weakening
Buckeye 5.5% 8.3% 8.8% weakening
Apache Junction 10.4% 6.4% 8.1% strengthening
Sun City 4.7% 10.9% 7.9% weakening
Sun City West 4.5% 6.6% 7.9% weakening
Casa Grande 8.3% 1.1% 7.8% weakening
Goodyear 5.6% 4.5% 7.5% strengthening
Mesa 4.2% 6.2% 7.0% strengthening
Surprise 4.9% 5.9% 6.9% flat
Queen Creek 5.7% 6.8% 6.7% flat
Peoria 3.5% 5.6% 6.4% strengthening
Glendale 5.8% 9.1% 6.1% weakening
Phoenix 6.8% 7.8% 5.9% weakening
Gilbert 2.3% 4.7% 5.5% flat
Litchfield Park 6.5% 4.8% 5.3% weakening
Paradise Valley 3.6% -1.5% 5.2% strengthening
Chandler 2.8% 5.6% 5.0% weakening
Cave Creek 3.5% 1.5% 4.7% flat
Tempe 4.7% 8.2% 4.2% weakening
Gold Canyon 12.8% -4.1% 3.6% strengthening
Sun Lakes 4.2% 3.1% 3.6% flat
Scottsdale 3.6% 1.2% 2.9% strengthening
Anthem 1.8% 5.5% 2.3% strengthening
Fountain Hills 2.3% 2.0% 0.4% 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 %
1 Eloy $160,000 $208,000 30.0%
2 Arizona City $94,000 $110,000 17.0%
3 Apache Junction $162,000 $183,000 13.0%
4 El Mirage $148,000 $165,900 12.1%
5 Buckeye $175,000 $194,990 11.4%
6 Laveen $185,000 $205,000 10.8%
7 Tolleson $172,000 $190,500 10.8%
8 Coolidge $108,400 $119,900 10.6%
9 Sun City West $205,000 $225,000 9.8%
10 Sun City $160,000 $175,000 9.4%
11 Glendale $202,000 $220,000 8.9%
12 Avondale $185,000 $201,000 8.7%
13 Florence $145,250 $157,450 8.4%
14 Mesa $217,000 $235,000 8.3%
15 Peoria $248,500 $269,000 8.3%
16 Maricopa $160,000 $173,000 8.1%
17 Waddell $254,500 $275,000 8.1%
18 Chandler $270,388 $290,000 7.3%
19 Queen Creek $194,000 $208,000 7.2%
20 Wittmann $258,640 $277,000 7.1%
21 Litchfield Park $270,400 $289,500 7.1%
22 Gilbert $270,000 $289,000 7.0%
23 Phoenix $219,900 $234,000 6.4%
24 Surprise $208,000 $221,000 6.3%
25 Casa Grande $154,900 $164,500 6.2%
26 Tempe $258,950 $275,000 6.2%
27 Cave Creek $410,000 $432,776 5.6%
28 Sun Lakes $252,250 $266,000 5.5%
29 Tonopah $163,950 $172500 5.2%
30 Gold Canyon $250,000 $263,000 5.2%
31 Fountain Hills $422,500 $439,950 4.1%
32 Scottsdale $485,000 $505,000 4.1%
33 Goodyear $242,000 $250,000 3.3%
34 Anthem $289,000 $289,500 0.2%
35 New River $325,000 $324,000 -0.3%
36 Carefree $750,000 $743,584 -0.9%
37 Paradise Valley $1,425,000 $1,400,000 -1.7%
38 Rio Verde $435,000 $426,750 -1.9%
39 Wickenburg $245,000 $240,250 -1.9%
40 Youngtown $150,000 $143,750 -4.2%

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
2 Brian Bair OfferPad 595 541 54 0.272% $144M
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
20 Bobby Lieb HomeSmart 110 89 21 0.106% $56M

Between them, OpenDoor and OfferPad represented 0.853% of the market volume over the past 12 months.

Note that several of these names represent teams with all the business being channelled through one lead name. Unfortunately I am unable to compile other team members together if they record transactions under different individuals, because ARMLS does not record team membership in their database.

May 12 – Today there are 38,274 names on the ARMLS roster which is up 6.9% from this time last year when we saw 35,806. Some of these names are affiliates, MLS staff members, office staff, appraisers, etc., so if we only count Agents, Brokers and Salespeople, the total count last year was 33,191 and we now have 35,358, an increase of 6.5%. The number of appraisers is up almost 11% to 477.

The annual sales rate through ARMLS has increased from 85,464 to 93,301 during the same 12 months. This is a rise of 9.2%. This means the average agent is handling 5.28 transaction sides (assuming each sales involves 2 agents, which is not true but will do for our purposes). This is an increase of 2.5% in transaction sides per agent. The average sales price over the past 12 months is $283,284, so the average agent is processing $1,495,034 in transaction volume. Assuming a typical commission of 3%, that amounts to $44,851 per average agent in commission. This is an increase of 8.5% over the same measurement in May 2016.

Of course many of the names listed were not mentioned in any transactions at all. 24,357 unique names appeared in ARMLS transactions in the last 12 months as either the listing agent, selling agent or both. This does not necessarily mean the remaining 11,001 names were completely inactive. Many teams process all their business through the team leader and the other team members names never appear on transactions.

The overall dollar volume has increased 15.6% over the last year. Of the 15.6% increase, our estimate is that 8.5% has flowed to agents as additional revenue per agent and the rest is accounted for by the increase in the agent population.

May 11 – Here is our regular look at the Cromford® Market Index for the single-family markets in the 17 largest cities by dollar volume:

Improving cities outnumber deteriorating cities (for sellers) by 10 to 7.

The big movers over the past month are Tempe (down 14% due to a large increase in supply), Fountain Hills (up 11%), Paradise Valley (up 7%) and Avondale (down 6%).

The remaining 13 cities have moved up or down a relatively modest 4% or less.

The Southeast Valley (with the notable exception of Tempe) is still improving for sellers with Mesa and Gilbert leading the charge and Queen Creek & Chandler following up.

The West Valley is showing weakness, with flagship Avondale in danger of being overtaken by Chandler. Glendale, Goodyear and Buckeye all deteriorated and Peoria and Surprise were the only locations that managed small improvements.

The Northeast Valley is seeing some improvement after a long period of relative weakness, though it is dominated by Scottsdale which is still drifting slightly lower.

May 9 – Although we remain in a market very favorable to most sellers, the Cromford® Demand Index has started to move out of its very tight range between 105 and 107 by heading downwards. At 104.5 it has dropped to the lowest level since January 31. What is causing this (very slightly) negative indication? The answer lies in the number of listings under contract which is starting to look a little weak relative to last year (and the year before for that matter). There is nothing to be too concerned about here yet, but we designed the index to be very sensitive so that any changes or new trends would be observable quickly. The most recent high value was 106.3 on April 18, so we have not seen a big move yet. I would suggest that we keep an eye on this indicator, just in case something more significant develops.

May 8 – By far the most numerous foreign buyers in Central Arizona are Canadians. Between September 2009 and May 2013 we could rely on them to buy at least 200 homes every month, sometimes more than 500. Things started to drop off in June 2014 and reached a very low point in September 2016 with only 18 homes purchased. However activity has been picking up since then. Canadians are nowhere near as active as they once were, but year to date we have seen 208 purchases which is up 28% from 162 in the same period of 2016.

Meanwhile sales by Canadians average about 150 per month. So sales outnumber purchases by about 3 to 1 meaning there is still an exodus going on, just not at the very high ratio of 7 to 1 that we saw in March last year.

We have seen 516 completed sales by Canadians so far this year. If you would like to know which properties they own, we have updated our detailed list of real estate owned by people with Canadian home addresses here.

May 7 – Today we are extending yesterday’s analysis to determine which segments are closest to regaining their peak pricing before the housing crash.
Segment of the Market (ARMLS closed listings) Peak Date Peak Quarterly Average $/SF Current Quarterly Average $/SF Increase Required to Match Peak Increase in Last 12 Months
Phoenix (condos/townhouses) Aug 31, 2006 $186.70 $157.53 18.5% 15.9%
Scottsdale (condos/townhouses) Oct 24, 2007 $257.60 $209.80 22.8% 5.3%
Chandler / Gilbert / Mesa (condos/townhouses) May 23,2006 $161.65 $134.60 20.1% 10.5%
Avondale / Glendale / Peoria (condos/townhouses) Feb 15, 2007 $148.90 $106.46 39.9% 3.9%
Tempe (condos/townhouses) Jul 10, 2008 $209.06 $155.50 34.5% 9.7%
Paradise Valley 85253 (single-family-detached) Oct 4, 2006 $507.12 $353.47 43.5% 5.9%
Scottsdale 85251 (all types) Oct 11, 2007 $282.25 $241.13 17.1% 12.1%
Phoenix 85018 (all types) Apr 12, 2007 $305.27 $270.62 12.8% -2.4%
Scottsdale 85255 (all types) Feb 15, 2007 $334.44 $275.23 21.5% 4.7%
Scottsdale 86262 (all types) Jul 5, 2007 $391.91 $270.04 45.1% -2.4%
Carefree 85377 (all types) Oct 29, 2007 $356.99 $211.65 68.7% -8.9%
Cave Creek 85331 (all types) Mar 3, 2006 $258.73 $185.32 39.6% 4.4%
Phoenix 85016 (all types) Aug 31, 2006 $317.61 $233.41 36.1% 13.8%
West Phoenix (all types) May 27, 2007 $145.14 $109.44 32.6% 10.1%
South Phoenix (all types) Jun 29, 2006 $155.64 $112.91 37.9% 10.7%
Ahwatukee (all types) May 25, 2006 $208.67 $160.64 29.9% 3.3%
Northwest Phoenix (all types) Aug 21, 2006 $162.09 $133.07 21.8% 10.7%
Northeast Phoenix (all types) Apr 29, 2006 $198.32 $166.10 19.4% 7.7%
Central Phoenix (all types) Sep 14, 2007 $224.27 $194.03 15.6% 6.8%
Far North Phoenix / Anthem / New River (all types) May 28, 2006 $200.03 $144.68 38.3% 4.3%

Scottsdale 85251 is clearly a front-runner in this table and is still appreciating fast. Phoenix 85018 has also got closer to its peak than any other segment in the above list. However its quarterly average $/SF has actually declined in the last 12 months.

Phoenix condos and townhouses are a strong segment with very rapid appreciation in the past 12 months. Central Phoenix (all types) is also getting close to its peak, needing another 15.6% and achieving 6.8% in the past year.

The far Northeast Valley is having the hardest time regaining its peak, with Carefree 85377 and Scottsdale 85262 a long way below and going backwards in the past year.

May 6 – Yesterday we mentioned that in general, prices in Greater Phoenix still have a long way to go before they return to the peaks before the housing crash. We thought we would look into this in more detail and examine how each segment of the market is doing relative to the pricing at the peak of the market. Of course there is a lot of complexity in doing this because:

different segments peaked at different times. For example, 85143 hit its highest monthly average $/SF as early as October 2005, while 85253 hit its peak in November 2007, more than 2 years later.
when we look at small segments, the price volatility is often very high and we do not want to use a high spike as an unrealistic measuring point, or accept a sudden spike now as proof of a return to a new high.
median and average sales prices can be poor measurement tools if the median and average size of home has changed a lot since the peak. We need to compare apples with apples.

As an example of the last point, the peak median sales price in Maricopa County for new homes prior to the crash was $311,928 in July 2006, and that was surpassed as long ago as December 2013. But the median new home in December 2013 was 13% larger than the median home being sold in July 2006, because developers were no longer focusing on entry level homes. New homes regained their peak price consistently for the last 14 months if we were to misguidedly pay attention only to the monthly median sales price. But they have not regained the peak at all if we use the average price per square foot. The latter is a much more reliable measuring tool for this purpose. In March 2017, the average price per square foot for a new home in Maricopa County was $161.30, while in May 2016 it peaked at $184.22. New homes in Maricopa County still have 14% price appreciation to achieve before they regain the level of May 2006.

We can avoid volatility problems by taking a longer term average, such as an annual average. This avoids us paying attention to sudden spikes and troughs. However it also means recent increases are watered down by being mixed in with prices from the the last 12 months.

A reasonable compromise is to use quarterly averages, so this is what we have done in our analysis below. Today we will look at some pretty broad segments:
Segment of the Market (ARMLS closed listings) Peak Date Peak Quarterly Average $/SF Current Quarterly Average $/SF Increase Required to Match Peak Increase in Last 12 Months
All Areas & Types (whole ARMLS database) Jun 30, 2006 $189.30 $149.32 26.8% 6.3%
Greater Phoenix (all types) Jun 30, 2006 $189.22 $149.32 26.7% 6.3%
Maricopa County (all types) Jun 30,2006 $193.07 $154.69 24.8% 6.6%
Maricopa County (single-family detached) May 15, 2006 $194.76 $154.54 26.0% 5.8%
Maricopa County (condo/townhouse) Jul 6, 2006 $190.99 $161.84 18.0% 11.8%
Maricopa County (mobile homes) Jun 29,2006 $105.38 $90.30 16.7% 9.8%
Pinal County (all types) Feb 6, 2006 $142.85 $101.41 39.9% 6.5%
Phoenix (all types) May 27,2007 $182.02 $152.69 19.2% 6.0%
Northeast Valley (all types) May 15, 2006 $295.40 $238.73 23.7% 6.1%
Southeast Valley (all types) Jul 7, 2006 $176.47 $143.22 23.2% 6.1%
West Valley (all types) Jun 10, 2006 $158.36 $121.10 30.8% 7.7%
Greater Phoenix (all types) – Less than 1,500 sq ft Jul 1, 2006 $173.74 $142.77 21.7% 9.6%
Greater Phoenix (all types) – 1,500 to 2,000 sq ft May 2, 2006 $169.67 $140.28 21.0% 6.9%
Greater Phoenix (all types) – 2,000 to 3,000 sq ft Apr 3, 2006 $187.33 $142.57 31.4% 5.8%
Greater Phoenix (all types) – 3,000 to 4,000 sq ft Jun 13, 2006 $223.46 $151.05 47.9% 3.6%
Greater Phoenix (all types) – 4,000 to 5,000 sq ft Feb 19, 2006 $269.49 $182.40 47.8% 0.6%
Greater Phoenix (all types) – Over 5,000 sq ft Feb 10, 2008 $414.23 $289.15 43.3% 3.7%

It is very noteworthy that before the crash, condos & townhouses used to be cheaper than single-family homes on a $/SF basis, but that at present they are more expensive and are appreciating faster. As a result they have far less to go to get back to their peak level. Mobile homes have always been much more affordable than the other types, but they have recovered closer to their peak. They only have 16.7% to go and are currently appreciating faster than single family homes but not as quickly as condo/townhouse properties.

We also note that homes over 3,000 have a huge way to go (almost 50%) before reattaining their peak. They are also increasing in price the slowest , especially slow for homes between 4,000 and 5,000 sq. ft.

In 2017, it appears, from an appreciation point of view, to be an advantage for a home to be closer to the center of the valley, smaller than 2,000 sq. ft., affordable and either attached or mobile. Large, expensive single-family homes on the outskirts are appreciating the slowest. of all property types and have the furthest to go to reattain the heights before the housing crash.

May 5 – We have added a new Tableau chart that plots dollar volume by quarter. From this chart we can see that the first quarter of 2017 was almost as high as the first quarter of 2005 and 2006 as far as dollars closed through ARMLS. This does not mean the overall housing market is back to the same dollar volume, because far more homes were sold outside of the MLS in 2005 and 2006. We wait to see if the second quarter of 2017 can set a new all time record.

Prices are not back to the peak 2006 levels and I am somewhat surprised to see claims elsewhere that this is not too far away for Greater Phoenix. We still have a long way to go for most parts of the valley, especially if we are measuring the monthly average price per square foot. The current average $/SF for all areas & types is $151.29. This would have to increase by 26% to get back to the May 2006 peak of $190.61.

Those measuring monthly median sales prices do not have so far to go, but we are currently at $234,900 while the peak was $267,000 (attained on June 16, 2006). We need 14% appreciation to get back to the prior peak median sales price.

May 4 – We are taking another look at the Cromford® Market Index for the single-family markets in the 17 largest cities (by dollar volume):

Here we see a strong seller’s market overall, but only a small improvement for sellers over the past month. There are 9 cities showing better conditions for sellers and 8 showing some deterioration. With the big cities of Phoenix, Mesa and Chandler all showing improvements, the overall change is still in favor of sellers.

The Southeast Valley continues to outperform the other areas of the valley (except much of Pinal County, which does not feature very strongly in this table due to most of its cities being relatively small). Mesa has overtaken Glendale since last week, while Gilbert has overtaken Tempe.

The West Valley is a weaker picture than usual with only Surprise showing any positive move over the last month and Buckeye slipping into last place.

The Northeast is looking more positive with Paradise Valley and Fountain Hills improving by 9% and 6% respectively and Cave Creek up 4%. However, the largest city in the Northeast, Scottsdale, is still languishing close to the bottom of the table with a fairly balanced market.

We have experienced a seller’s market for a long time now and there is little in the above table to cheer buyers.

May 3 – We are clearly experiencing a hot market, but the questions are: how hot, and is it overheating?

One of our favorite measures of the current state of the market is the Contract Ratio. This compares the number of homes under contract with the number available for sale. We saw extremely high contract ratio numbers between 2011 and 2013, but that was a very different market from today because distressed sales were such a high percentage of the total. If we remove short sales, pre-foreclosures, bank owned homes, GSE owned homes and HUD homes from our analysis, we get a more realistic picture. The Tableau chart “Contact Ratio” allows us to do this and the resultant chart looks like this:

May 2 – As I recorded the number of single-family active listings (excluding UCB & CCBS) by city for the start of May I was struck that some cities are experiencing unusually low numbers, although others are within normal ranges. Here are a few of the stand-outs:

Casa Grande – 197 is the lowest count since October 2012
Apache Junction – 96 is the lowest count since September 2012
Tolleson – 52 is the lowest count since May 2013
Arizona City – 45 is the lowest count since June 2012
Coolidge – 29 is the lowest count since July 2012
Florence – 123 is the second lowest count since September 2012

Note that 5 out of these 6 are in Pinal County. Supply is much lower in Pinal County than Maricopa County, relative to normal.

The counts by price range reveal some interesting numbers too

Under $100,000 – 77 listings – there were 9,497 in January 2011
Between $100,000 and $125,000 – 70 listings – there were 3,713 in January 2009
Between $125,000 and $150,000 – 155 listings – there were 3,790 in August 2008
Between $150,000 and $175,000 – 441 listings – there were 3,534 in August 2008

In all there are only 1,559 active listings under $200,000. There were 23,795 closed listings in 2016, so we have a current inventory of only 24 days for single-family homes under $200,000.

May 1 – The boom in apartment building continues accorded to the latest report by the Census Bureau. There were another 823 permits issued across Maricopa and Pinal counties during March. This makes the rolling annual count 10,010 which is the highest level since January 2008. Contributions in March were from:

Phoenix – 483 units
Chandler – 285 units
Mesa – 25 units
Scottsdale – 10 units
Paradise Valley – 8 units
Unincorporated Pinal County – 6 units
Tempe – 6 units

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
10 Bobby Lieb HomeSmart 13 $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
15 Robert Joffe Launch 5 $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
17 Robert Joffe Launch 16 $19M
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:

Mesa -249
Phoenix – 230
Gilbert – 207
Peoria – 207
Buckeye – 182
Unincorporated Pinal County – 150
Maricopa – 135
Goodyear – 126
Queen Creek – 110
Scottsdale 108

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:

Scottsdale Waterfront Residences
Plaza Lofts at Kierland Commons
Two Biltmore Estates
Enclave at Borgata
Esplanade Place

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:

Seattle 1.91%
San Francisco 1.17%
Dallas 1.07%
San Diego 0.98%
Portland 0.76%
Charlotte 0.48%
Boston 0.40%
Atlanta 0.39%
Los Angeles 0.39%
Las Vegas 0.39%
Denver 0.38%
Phoenix 0.38%
Detroit 0.28%
Washington DC 0.22%
Chicago 0.20%
Minneapolis 0.13%
Miami 0.04%
New York -0.03%
Cleveland -0.30%
Tampa -0.52%

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:

Seattle 12.2%
Portland 9.7%
Dallas 8.8% (up 1 place)
Denver 8.5% (down 1 place)
Boston 7.6% (up 1 place)
Tampa 6.9% (down 1 place)
Miami 6.7%
San Diego 6.5% (up 6 places)
San Francisco 6.4% (down 1 place)
Las Vegas 6.3% (down 1 place)
Chicago 6.2% (up 2 places)
Detroit 6.2% (down 2 places)
Charlotte 6.1% (down 2 places)
Minneapolis 5.9% (up 1 place)
Atlanta 5.6% (down 2 places)
Phoenix 5.3% (up 1 place)
Los Angeles 5.1% (down 1 place)
Cleveland 4.5% (up 1 place)
Washington DC 4.1% (down 1 place)
New York 3.2%

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:

Portland 31.4%
Seattle 31.3%
Denver 31.0%
San Francisco 28.0%
Dallas 27.7%
Miami 23.5%
Tampa 23.0%
Las Vegas 19.1%
Los Angeles 18.6%
Atlanta 18.6%
San Diego 18.4%
Detroit 16.6%
Boston 16.2%
Charlotte 15.7%
Phoenix 14.8%
Minneapolis 12.2%
Chicago 11.4%
Cleveland 8.7%
New York 7.7%
Washington DC 6.5%

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.

Carefree 85377 – 51.4%
Rio Verde 85263 – 51.9%
Paradise Valley 85253 – 52.2%
Scottsdale 85262 – 53.1%
Wickenburg 85390 – 55.4%
Scottsdale 85266 – 56.5%
Morristown 85342 – 56.6%
Casa Grande 85194 – 59.8%
Congress 85332 – 60.8%
Phoenix 85003 – 60.8%
Gold Canyon 85118 – 60.9%
Phoenix 85054 – 61.2%
Scottsdale 85255 – 61.3%
Tonopah 85354 63.2%
Scottsdale 85259 – 63.8%
Fountain Hills 85268 – 64.3%
Superior 85173 – 64.3%
Eloy 85131 – 66.6%
Apache Junction 85119 – 65.7%
Phoenix 85012 – 65.9%

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.

Phoenix 85027 – 85.1%
El Mirage 85335 – 84.8%
Sun City 85351 – 84.7%
Sun City West – 84.2%
Chandler 85224 – 84.2%
Peoria 85345 – 84.2%
Chandler 85225 – 83.6%
Mesa 85204 – 83.5%
Mesa 85201 – 83.4%
Peoria 85382 – 82.6%
Tempe 85282 – 82.5%
Sun City 85373 – 82.5%
Mesa 85202 – 82.2%
Tempe 85283 – 82.1%
Avondale 85392 – 82.0%
Chandler 85226 – 81.6%
Gilbert 85233 – 81.6%
Mesa 85210 – 81.5%
Glendale 85302 – 81.5%
Peoria 85381 – 81.3%

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)

Chandler 85286 – 94.1%
Phoenix 85013 – 66.7%
Scottsdale 85254 – 54.3%
Phoenix 85014 – 50.0%
Scottsdale 85250 – 50.0%
Gilbert 85296 – 50.0%
Scottsdale 85258 – 48.7%
Scottsdale 85255 – 47.7%
Phoenix 85028 – 47.6%
Paradise Valley 85253 – 47.2%
Phoenix 85018 – 47.1%
Tempe 85284 – 47.1%
Gilbert 85298 – 46.9%
Scottsdale 85259 – 46.5%
Scottsdale 85262 – 45.9%
Scottsdale 85260 – 45.6%
Scottsdale 85251 – 44.7%
Phoenix 85021 – 42.9%
Phoenix 85048 – 42.9%
Glendale 85310 – 41.9%

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;

Tempe – up 10%
Queen Creek – up 7%
Chandler – up 6%
Mesa – up 5%
Gilbert – up 3%

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):

Youngtown 1.0
El Mirage 1.2
Tolleson 1.4
Avondale 1.7
Tempe 1.8
Chandler 1.9
Glendale 1.9
Surprise 1.9
Coolidge 2.0
Sun Lakes 2.0
Mesa 2.1
Gilbert 2.1
Maricopa 2.1
Arizona City 2.1
Sun City 2.2
Florence 2.3
Apache Junction 2.3
Casa Grande 2.3
Sun City West 2.3
Tonopah 2.3
Queen Creek 2.4
Laveen 2.4
Waddell 2.4
Phoenix 2.5
New River 2.5
Peoria 2.7
Goodyear 2.7
Buckeye 2.7
Wittmann 2.7
Anthem 2.9
Eloy 3.1
Gold Canyon 3.7
Litchfield Park 4.3
Cave Creek 4.5
Scottsdale 5.5
Rio Verde 6.1
Fountain Hills 6.2
Paradise Valley 10.4
Wickenburg 14.7
Carefree 16.0

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:

under $100K – 49.9 days
$100K – $200K – 33.4 days
$200K – $300K – 54.6 days
$300K – $400K – 86.9 days
$400K – $500K – 128. 2 days
$500K – $1M – 218.6 days
$1M – $2M – 437.7 days
over $2M – 882.4 days

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:

Days of Inventory stood at 28 (currently 85)
Months of supply was 0.9 (currently 2.8)
Annual appreciation rate was 27.9% (currently 6.8%)
Dollar volume was up 43.9% annually (currently up 14.6%)
Listing success rate was 84.3% (currently 81.9%)
Cromford® Supply Index was 41.4 (now 72.6)
Cromford® Demand Index was 129.5 (now 106.1)
Cromford® Market Index was 312.7 (now 146.1)
Average percent of list for closed listings was 99.16% (currently 97.69%)
New homes sales were 42,724 a year just in Maricopa County (currently 13,958)

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
Mesa 2248 2185 +3%
Gilbert 1587 1767 -10%
Chandler 1402 1583 -11%
Ahwatukee (Phoenix) 531 567 -6%
Tempe 462 462 0%
Queen Creek 369 377 -2%
Sun Lakes 195 229 -15%
Apache Junction 3 12 -75%

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
Mesa 1670 1426 +17%
Gilbert 1126 1107 +2%
Chandler 1011 934 +8%
Ahwatukee (Phoenix) 335 304 +10%
Tempe 362 297 +22%
Queen Creek 230 251 -8%
Sun Lakes 139 128 +9%
Apache Junction 8 9 -11%

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:

Mesa +8.4%
Sun Lakes +6.8%
Tempe +6.2%
Queen Creek +6.2%
Gilbert +6.1%
Chandler +4.8%
Ahwatukee (Phoenix) +4.0%

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
Pinal County 1587 2166 -27%
Southeast Valley 3277 4179 -22%
Northeast Valley 3558 3912 -9%
West Valley 3860 3904 -1%
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.

New listings during Q1 – 2905 in 2016 and 2653 in 2017
Closed Sales during Q1 – 1643 in 2016 and 1916 in 2017

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%
Maricopa 609 646 -6%
Casa Grande 305 370 -18%
Florence 198 209 -5%
Apache Junction 194 240 -19%
Gold Canyon 202 202 0%
Arizona City 91 90 +1%
Coolidge 77 68 +13%
Eloy 27 55 -51%
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%
Maricopa 411 340 +21%
Casa Grande 242 204 +19%
Florence 160 128 +25%
Apache Junction 164 138 +19%
Gold Canyon 145 109 +33%
Arizona City 70 67 +5%
Coolidge 51 39 +31%
Eloy 30 16 +88%
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:

Arizona City +15.9%
Coolidge +10.2%
Florence +9.7%
Maricopa +9.7%
Casa Grande +8.4%
San Tan Valley +7.3%
Apache Junction +6.8%
Eloy +5.5%.
Gold Canyon +0.2%

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:

Phoenix 85012 – up 26.5% to $222.87
Phoenix 85051 – up 19.0% to $106.40
Casa Grande 85194 – up 18.8% to $117.90
Phoenix 85040 – up 18.7% to $101.88
Phoenix 85009 – up 18.2% to $105.29
Phoenix 85016 – up 16.5% to $231.50
Arizona City 85123 – up 16.1% to $80.24
Phoenix 85035 – up 16.0% to $104.58
Wickenburg 85390 – up 15.8% to $152.69
Mesa 85201 – up 15.1% to $126.69
Glendale 85307 – up 15.1% to $113.39
Mesa 85213 – up 14.6% to $138.77
Surprise 85387 – up 14.6% to $150.95
Avondale 85323 – up 13.7% to $105.13
Peoria 85345 – up 13.6% to $120.04
Glendale 85306 – up 13.5% to $128.80
Mesa 85202 – up 13.5% to $134.10
Phoenix 85028 – up 13.1% to $190.71
Florence 85132 – up 12.3% to $89.35
El Mirage 85335 – up 11.5% to $106.42

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:

Carefree 85377 – down 9.7% to $217.25
Scottsdale 85262 – down 7.9% to $252.85
New River 85087 – down 4.1% to $134.78
Tonopah 85354 – down 3.6% to $77.11
Phoenix 85004 – down 2.6% to $278.54
Waddell 85355 – down 0.5% to $110.44
Scottsdale 85259 – down 0.2% to $223.69
Phoenix 85042 – up 0.1% to $119.81
Phoenix 85085 – up 0.2% to $139.82
Scottsdale 85258 – up 0.6% to $222.94

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:

Wittmann 85361 – up 199%
Eloy 85131 – up 104%
Youngtown 85363 – up 93%
Surprise 85378 – up 88%
Phoenix 85031 – up 84%
Phoenix 85012 – up 76%
Glendale 85302 – up 74%
New River 85087 – up 71%
Glendale 85307 – up 66%
Avondale 85392 – up 65%
Phoenix 85085 – up 60%
Mesa 85201 – up 58%
Peoria 85383 – up 55%
Avondale 85323 – up 54%
Mesa 85202 – up 53%
Phoenix 85040 – up 52%
Waddell 85355 – up 52%
Mesa 85215 – up 51%
Phoenix 85028 – up 47%
Phoenix 85033 – up 47%

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:

Mesa 85203 – down 19%
Chandler 85226 – down 9%
Phoenix 85053 – down 7%
Phoenix 85013 – down 6%
Phoenix 85042 – down 5%
Fountain Hills 85268 – down 4%
Cave Creek 85331 – down 4%
Queen Creek 85142 – down 2%
Phoenix 85004 – down 2%
Phoenix 85029 – flat

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:

Scottsdale 85257 – up 36%
Scottsdale 85251 – up 33%
Scottsdale 85260 – up 29%
Rio Verde 85263 – up 29%
Carefree 85377 – up 28%
Scottsdale 85258 – up 27%
Scottsdale 85259 – up 25%
Phoenix 85016 – up 24%
Phoenix 85054 – up 20%
Scottsdale 85255 – up 20%
Scottsdale 85262 – up 13%
Scottsdale 85250 – up 11%
Paradise Valley – up 11%
Scottsdale 85266 – up 6%
Scottsdale 85254 – up 6%
Phoenix 85018 – up 5%
Fountain Hills 85268 – down 4%
Cave Creek 85331 – down 4%

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
3 Janine Long Meritage 299 $93M
4 Brian Bair Liberty Properties & Associates 387 $93M
5 Dawn Faraci Lennar 202 $70M
6 Taylor Mize Pulte 202 $64M
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
14 Bobby Lieb HomeSmart 90 $48M
15 Carol Royse Keller Williams Realty East Valley 161 $48M
16 Robert Joffe Launch 28 $47M
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 %
January $181,506,902 $260,001,623 43.2%
February $213,455,852 $306,953,305 43.8%
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 %
January $1,597,337,667 $1,983,318,918 24.1%
February $1,829,948,260 $2,114,979,912 15.6%
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:

San Diego 0.80%
Las Vegas 0.62%
Seattle 0.59%
Denver 0.48%
Boston 0.40%
Charlotte 0.39%
Los Angeles 0.38%
Washington DC 0.30%
New York 0.29%
Miami 0.26%
Dallas 0.25%
Chicago 0.17%
Portland 0.13%
Phoenix 0.01%
Tampa -0.01%
Atlanta -0.24%
Detroit -0.40%
San Francisco -0.41%
Cleveland -0.48%
Minneapolis -0.59%

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:

Seattle 11.3%
Portland 9.7%
Denver 9.2%
Dallas 8.2%
Tampa 8.1%
Boston 7.0%
Miami 6.7%
San Francisco 6.3%
Las Vegas 6.2%
Detroit 6.2%
Charlotte 6.0%
Atlanta 5.9%
Chicago 5.8%
San Diego 5.7%
Minneapolis 5.4%
Los Angeles 5.3%
Phoenix 5.1%
Washington DC 3.9%
Cleveland 3.9%
New York 3.2%

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:

Portland 31.4%
Seattle 31.3%
Denver 30.5%
Dallas 27.7%
San Francisco 26.8%
Miami 23.3%
Tampa 22.7%
Las Vegas 19.1%
San Diego 18.6%
Los Angeles 18.6%
Atlanta 17.5%
Detroit 16.6%
Boston 16.2%
Charlotte 15.7%
Phoenix 14.2%
Minneapolis 12.2%
Chicago 10.3%
Cleveland 8.7%
New York 7.7%
Washington DC 6.8%

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
1 Phoenix 27,879 25,939 7.5%
2 Mesa 12,293 10,731 14.6%
3 Scottsdale 9,543 8,910 7.1%
4 Gilbert 7,759 7,113 9.1%
5 Chandler 7,047 5,859 20.3%
6 Peoria 5,798 4,896 18.4%
7 Glendale 5,502 5,112 7.6%
8 Surprise 4,414 4,141 6.6%
9 San Tan Valley 4,043 3,434 17.7%
10 Buckeye 3,339 2,763 20.8%
11 Goodyear 3,131 2,707 15.7%
12 Tempe 2,753 2,589 6.3%
13 Sun City 2,649 2,373 11.6%
14 Maricopa 2,139 1,960 9.1%
15 Queen Creek 1,966 1,652 19.0%
16 Avondale 1,922 1,660 15.8%
17 Sun City West 1,655 1,513 9.4%
18 Laveen 1,333 1,126 18.4%
19 Casa Grande 1,292 1,101 17.3%
20 Cave Creek 1,021 936 9.1%
21 Fountain Hills 917 914 0.3%
22 Litchfield Park 911 814 11.9%
23 Apache Junction 883 799 10.5%
24 Tolleson 872 875 -0.3%
25 Florence 851 743 14.5%
26 El Mirage 746 740 0.8%
27 Sun Lakes 659 612 7.7%
28 Anthem 548 526 4.2%
29 Gold Canyon 535 449 19.2%
30 Paradise Valley 501 538 -6.9%
31 Tucson (in Pinal) 468 449 4.2%
32 Waddell 329 299 10.0%
33 Arizona City 285 281 1.4%
34 Coolidge 284 228 24.6%
35 Eloy 235 199 18.1%
36 New River 221 249 -11.2%
37 Rio Verde 208 135 54.1%
38 Wickenburg 199 166 19.9%
39 Oracle 187 127 47.2%
40 Youngtown 170 147 15.6%

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.

Carefree 85377 – 547 days
Scottsdale 85262 – 541 days
Paradise Valley – 443 days
Rio Verde 85263 – 408 days
Wickenburg 85390 – 378 days
Scottsdale 85266 – 315 days
Scottsdale 85255 – 279 days
Gold Canyon 85118 – 264 days
Phoenix 85004 – 259 days
Morristown 85342 – 253 days

Here is the current state of play with respect to the 3 month moving average $/SF in these locations:

Carefree 85377 – $213.70 versus $247.99 – down 13.8%
Scottsdale 85262 – $254.60 versus $268.62 – down 5.2%
Paradise Valley – $385.06 versus $342.05 – up 12.6%
Rio Verde 85263 – $166.16 versus $167.72 – down 0.9%
Wickenburg 85390 – $154.21 versus $132.70 – up 16.2%
Scottsdale 85266 – $236.85 versus $217.00 – up 9.1%
Scottsdale 85255 – $275.07 versus $288.49 – down 4.7%
Gold Canyon 85118 – $154.60 versus $163.40 – down 5.4%
Phoenix 85004 – $275.05 versus $267.30 – up 2.9%
Morristown 85342 – $99.72 versus $100.10 – down 0.4%

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).

El Mirage 85335 – 24 days
Mesa 85210 – 28 days
Chandler 85224 – 32 days
Mesa 85202 – 32 days
Youngtown 85363 – 33 days
Chandler 85225 – 34 days
Phoenix 85027 – 36 days
Glendale 85302 – 37 days
Tempe 85282 – 39 days
Mesa 85201 – 40 days

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

El Mirage 85335 – $106.77 versus $94.69 – up 12.8%
Mesa 85210 – $124.52 versus $119.77 – up 4.0%
Chandler 85224 – $149.57 versus $144.40 – up 3.6%
Mesa 85202 – $132.61 versus $119.57 – up 10.9%
Youngtown 85363 – $96.81 versus $89.71 – up 7.9%
Chandler 85225 – $144.51 versus $120.25 – up 20.2%
Phoenix 85027 – $137.90 versus $125.04 – up 10.3%
Glendale 85302 – $110.78 versus $99.96 – up 10.8%
Tempe 85282 – $145.85 versus $137.11 – up 6.4%
Mesa 85201 – $127.21 versus $105.83 – up 20.2%

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 All 96 78 -19%
Greater Phoenix Single-family 93 77 -18%
Greater Phoenix Condo/Townhouse 98 74 -25%
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
Maricopa County All 92 77 -17%
Pinal County All 131 85 -35%
Yavapai County All 368 298 -19%

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.

Southeast Valley – 81%
West Valley – 80%
Central and North Valley – 77%
Pinal County – 75%
Northeast Valley – 65%

Ignoring the tiniest locations, the most significant cities with very high success rates are:

El Mirage – 91%
Sun City – 88%
Youngtown – 86%
Avondale – 85%
Sun City West 84%

The cities with the lowest success rates are:

Carefree – 46%
Paradise Valley – 47%
Rio Verde – 52%
Wickenburg – 54%
New River – 59%

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:

$100K to $150K – 87% (86% last year)
$150K to $200K – 86% (87% last year)
$200K to $300K – 84% (82% last year)
$50K to $100K – 80% (82% last year)
$300K to $500K – 73% (74% last year)
Under $50K – 68% (79% last year)
$500K to $1M – 63% (61% last year)
$1M to $2M – 53% (48% last year)
Over $2M – 32% (47% last year)

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:

Mississippi – 11.3% of loans non-current
Louisiana – 9.8% of loans non-current
Alabama – 7.9% of loans non-current
West Virginia – 7.7% of loans non-current

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
1 Avondale 98.85% 98.75% +0.10
2 Queen Creek 98.61% 98.30% +0.31
3 Buckeye 98.43% 98.08% +0.35
4 Glendale 98.39% 98.23% +0.16
5 Gilbert 98.33% 98.13% +0.20
6 Maricopa 98.25% 97.71% +0.54
7 Mesa 98.16% 97.79% +0.37
8 Surprise 98.14% 98.03% +0.11
9 Goodyear 98.14% 97.71% +0.43
10 Chandler 98.00% 97.86% +0.14
11 Peoria 98.00% 97.92% +0.08
12 Tempe 97.79% 97.36% +0.43
13 Phoenix 97.60% 97.45% +0.15
14 Cave Creek 96.73% 96.54% +0.19
15 Scottsdale 95.98% 95.26% +0.72
16 Fountain Hills 95.66% 95.45% +0.21
17 Paradise Valley 93.80% 91.92% +1.88

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
West Valley $172.13 $165.02 -4.1%
Phoenix $231.84 $230.62 -0.5%
Northeast Valley $355.87 $352.71 -0.9%
Southeast Valley $163.90 $173.57 +5.9%

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:

Mesa 85213 – up 26% from $131.68 to $165.85
Gilbert 85298 – up 19% from $150.29 to $178.37
Mesa 85207 – up 11% from $168.59 to $187.86
Tempe 85284 – up 6% from $182.27 to $193.26
Gilbert 85234 – up 6% from $161.58 to $171.78

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:

El Mirage 85335 – 234 (up 16%)
Mesa 85202 – 188 (up 45%)
Mesa 85210 – 181 (up 70%)
Glendale 85302 – 169 (up 56%)
Phoenix 85027 – 160 (up 15%)
Glendale 85306 – 153 (up 33%)
Mesa 85201 – 145 (up 34%)
Peoria 85345 – 143 (up 23%)
Phoenix 85024 – 135 (up 149%)
Chandler 85225 – 135 (up 4%)

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:

Scottsdale 85266 – 14
Scottsdale 85262 – 16
Phoenix 85004 – 16
Carefree 85377 – 16
Wickenburg 85390 – 18
Paradise Valley – 18
Rio Verde 85263 – 20
Scottsdale 85255 – 23
Fountain Hills 85268 – 24
Gold Canyon 85118 – 29
Phoenix 85045 – 33
Scottsdale 85259 – 33
Apache Junction 85119 – 35
Phoenix 85016 – 36
Cave Creek 85331 – 36

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:

Phoenix & North Valley has a lot of spots that are cooler than last year:
85003 – down 28% from 57 to 41
85004 – down 11% from 18 to 16
85006 – down 36% from 92 to 58
85009 – down 31% from 68 to 47
85012 – down 17% from 56 to 47
85014 – down 15% from 68 to 58
85016 – down 5% from 38 to 36
85017 – down 7% from 105 to 98
85021 – down 15% from 58 to 49
85029 – down 5% from 118 to 112
85033 – down 34% from 132 to 87
85035 – down 36% from 117 to 75
85037 – down 25% from 136 to 103
85040 – down 12% from 111 to 98
85042 – down 33% from 88 to 59
85043 – down 30% from 184 to 129
85045 – down 29% from 46 to 33
85048 – down 3% from 52 to 51
85050 – down 17% from 54 to 45
85051 – down 13% from 99 to 86
85053 – down 4% from 120 to 116
85086 – down 5% from 53 to 50
Pinal County has just a few cooler spots, just:
85128 – down 8% from 56 to 51
85142 – down 6% from 71 to 66
85173 – down 28% from 23 to 17
Southeast Valley has very few cooler spots, the vast majority being considerably hotter than in 2016
85203 – down 4% from 95 to 91
85226 – down 4% from 118 to 114
85234 – down 1% from 86 to 85
85296 – down 5% from 119 to 113
Northeast Valley is mostly warmer than last year with a couple of exceptions
85266 – down 16% from 17 to 14
85268 – down 11% from 27 to 24
West Valley – has a few more cooling areas, but the majority are hotter than last year
85304 – down 47% from 163 to 86
85310 – down 11% from 61 to 54
85323 – down 2% from 117 to 115
85339 – down 15% from 89 to 76
85353 – down 17% from 120 to 100
85363 – down 50% from 300 to 150
85373 – down 20% from 71 to 57
85379 – down 1% from 99.4 to 98.8
85381 – down 18% from 75 to 66.1

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

Fountain Hills

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:

Casa Grande
Litchfield Park
Sun City

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:

Surprise up 11%, overtaking Peoria
Avondale up 10% extending its lead at the top of the table
Fountain Hills down 12%, now in a balanced market

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:

Tampa 1.13%
Miami 0.33%
Seattle 0.59%
Boston 0.56%
Chicago 0.55%
Washington 0.52%
Cleveland 0.36%
New York 0.35%
Portland 0.30%
Las Vegas 0.26%
Los Angeles 0.25%
San Diego 0.22%
Dallas 0.20%
Phoenix 0.18%
Atlanta 0.16%
San Francisco 0.14%
Denver 0.11%
Charlotte 0.08%
Minneapolis -0.10%
Detroit -0.19%

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:

Seattle 10.8%
Portland 10.0%
Denver 8.9%
Tampa 8.4%
Dallas 8.1%
Miami 6.8%
Boston 6.3%
Atlanta 6.3%
Detroit 6.2%
Las Vegas 5.8%
Minneapolis 5.7%
San Francisco 5.7%
Charlotte 5.6%
San Diego 5.4%
Los Angeles 5.4%
Phoenix 4.9%
Chicago 4.9%
Cleveland 4.4%
Washington 4.2%
New York 3.1%

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:

Phoenix 85009 – up 73%
Phoenix 85004 – up 45%
Scottsdale 85250 – up 32%
Phoenix 85035 – up 32%
Fountain Hills – up 30%
Phoenix 85007 – up 27%
Mesa 85212 – up 25%
Scottsdale 85266 – up 23%
Wittmann 85361 – up 22%
Phoenix 85045 – up 21%
Sun City West 85375 – up 21%
Phoenix 85048 – up 21%
Rio Verde 85263 – up 20%
Phoenix 85053 – up 20%
Gilbert 85297 – up 19%
Tempe 85284 – up 19%
Phoenix 85006 – up 19%
Phoenix 85003 – up 18%
Phoenix 85050 – up 18%
Phoenix 85018 – up 18%

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:

Youngtown 85363 – down 48%
Phoenix 85031 – down 30%
Glendale 85306 – down 29%
Casa Grande 85122 – down 29%
Surprise 85378 – down 27%
Phoenix 85017 – down 25%
Glendale 85302 – down 24%
Glendale 85307 – down 24%
Superior 85173 – down 24%
Glendale 85304 – down 22%
Gilbert 85296 – down 21%
Waddell 85355 – down 21%
Phoenix 85040 – down 20%
El Mirage 85335 – down 19%
Glendale 85303 – down 18%
Surprise 95379 – down 16%
Apache Junction – down 16%
Tempe 85283 – down 15%
Maricopa 85138 – down 14%
Phoenix 85034 – down 14%

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
Under $100K 68 65 -3%
$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%
Over $3M 1178 1342 +14%

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:

Total population of Arizona grew by 113,506 (up from 99,282 in for July 2014 – July 2015)
There were estimated to be 87,204 births (down from 87,385)
There were estimated to be 56,564 deaths (up from 53, 233)
Natural increase (births minus deaths) was 30,640 (down from 34,152)
Net domestic migration was 61,544 (up from 45,934)
Net international migration was 14,861 (down from 17,344)

The Census Bureau also provides the cumulate total for the period April 2010 to July 2016 (6 years and 3 months)

Total population of Arizona grew by 538,770
There were estimated to be 539,307 births
There were estimated to be 320,404 deaths
Natural increase (births minus deaths) was 218,903
Net domestic migration was 223,380
Net international migration was 81,853

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:

New York
West Virginia
and Puerto Rico (not a state but treated like one by the Census Bureau) – this had by far the fastest decline at 1.8%

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:

Utah 2.03%
Nevada 1.95%
Idaho 1.83%
Florida 1.82%
Washington 1.78%
Oregon 1.71%
Colorado 1.68%
Arizona 1.66%
Washington DC 1.61%
Texas 1.58%

Over the longer term since April 2010, the top ten look like this:

Washington DC 13.2%
North Dakota 12.7%
Texas 10.8%
Utah 10.4%
Colorado 10.2%
Florida 9.6%
Nevada 8.9%
Arizona 8.4%
Washington 8.4%
Idaho 7.4%

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:

Scottsdale 85251 – $405.60 (up 9%)
Scottsdale 85255 – $373.14 (up 4%)
Phoenix 85018 – $367.93 (up 5%)
Scottsdale 85250 – $338.27 (up 13%)
Carefree 85377 – $313.84 (up 11%)
Scottsdale 85254 – $266.34 (up 10%)
Fountain Hills 85268 – $265.41 (up 4%)

But we also see declines here:

Paradise Valley 85253 – $361.97 (down 3%)
Scottsdale 85262 – $351.73 (down 1%)
Phoenix 85016 – $300.99 (down 10%)
Cave Creek 85331 – $293.55 (down 1%)
Scottsdale 85266 – $271.02 (down 12%)

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.

Dollar volume for homes below $150,000 has collapsed from 6.0% market share to just 3.3%
Dollar volume for homes from $150,000 to $250,000 has remained constant at roughly 28% market share
Dollar volume for homes between $250,000 and $400,000 has grown from 28.7% to 31.1%
Dollar volume for homes between $400,000 and $1,000,000 has also grown from 24.9% to 26.3%
Dollar volume for homes over $1 million has dropped from 12.1% to 10.8% market share

The above does not quite explain all the complexity. We also note that:

From $175,000 to $300,000 we are seeing growth in market share.
From $300,000 to $350,000 market share is stable at just over 9%
Market share grows again for $350,000 up to $1.5 million
Market share falls for $1.5 million and upwards.

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:

Gold Canyon – up 85% from 33 to 61
Wittmann – up 85% from 13 to 24
New River – up 82% from 17 to 31
Waddell – up 69% from 16 to 27
Carefree – up 55% from 11 to 17
Tonopah – up 54% from 13 to 20
Eloy – up 42% from 12 to 17
Sun City West – up 41% from 107 to 151
Youngtown – up 39% from 13 to 18
Avondale – up 36% from 107 to 146

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:

Fountain Hills – down 31% from 113 to 78
Rio Verde – down 29% from 21 to 15
Tolleson – down 26% from 70 to 52
Paradise Valley – down 16% from 55 to 46
Laveen – down 6% from 115 to 108
Gilbert – down 5% from 529 to 500
Chandler – down 5% from 497 to 474
Coolidge – down 5% from 22 to 21
Anthem – down 1% from 67 to 66
Florence – flat at 74 both years

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 %
Under $100K 593 402 -32%
$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%
Over $3M 18 13 -28%

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:

Fountain Hills – down 15%
Maricopa – down 12%
Goodyear – down 5%
Phoenix – down 5%

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:

Coolidge 41.0%
Wittmann 32.5%
Florence 23.1%
Wickenburg 21.5%
Gold Canyon 18.5%
Laveen 16.3%
Buckeye 13.6%
Chandler 13.2%
Casa Grande 13.0%
Maricopa 12.8%
Queen Creek 11.5%
Mesa 9.6%
Apache Junction 9.4%
Sun City 9.1%
Goodyear 8.8%
Gilbert 8.4%
Cave Creek 8.0%
Sun City West 7.9%
Tonopah 7.9%
Sun Lakes 7.4%
Waddell 7.2%
Tempe 6.6%
Eloy 6.6%
Peoria 6.3%
Youngtown 5.2%
Scottsdale 5.0%
Surprise 4.5%
Rio Verde 4.5%
Phoenix 4.3%
Anthem 4.2%
Avondale 2.5%
Tolleson 2.5%
Litchfield Park 2.4%
Glendale 1.8%
Fountain Hills -0.6%
Arizona City -3.0%
El Mirage -4.2%
Paradise Valley -9.5%
Carefree -10.0%
New River -17.8%

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:

Total recordings for single family homes & condos were up 21% over January 2016
The median sales price was up 5.4% since last year from $223,000 to $235,000
New home closings were up 47.5% from 602 to 888
The median sales price for new homes was up 9.4% from $302,498 to $330,874
Re-sales closings were up 17.7%
The median sales price for re-sales increased 5.2% from $212,000 to $223,000
The median sales price for re-sales was at its lowest mark since April 2016

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

Fountain Hills continues its descent from the heights of the fall of 2016 and is now in the balanced zone
Maricopa is not doing as nicely for sellers as it was in the fourth quarter of 2016, but remains a seller’s market
Surprise is bouncing back after a weak fourth quarter
Glendale is challenging Chandler for the number 2 spot

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:

Tampa 0.79%
Denver 0.56%
Miami 0.49%
Boston 0.44%
New York 0.40%
San Diego 0.34%
Phoenix 0.32%
Las Vegas 0.31%
Charlotte 0.27%
Seattle 0.24%
Washington 0.21%
Dallas 0.17%
Portland 0.16%
Los Angeles 0.15%
Minneapolis 0.11%
Atlanta 0.02%
Cleveland 0.00%
Detroit -0.05%
San Francisco -0.06%
Chicago -0.82%

Phoenix comfortably beat the national average of 0.24%.

For the year over year changes the table looks like this:

Seattle 10.4%
Portland 10.1%
Denver 8.7%
Tampa 8.1%
Dallas 8.1%
Detroit 6.6%
Miami 6.1%
Atlanta 6.1%
Las Vegas 6.0%
Charlotte 5.9%
San Diego 5.8%
Los Angeles 5.5%
Minneapolis 5.5%
Boston 5.5%
San Francisco 5.3%
Phoenix 5.2%
Chicago 4.0%
Cleveland 3.8%
Washington 3.7%
New York 2.4%

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:

  1. Gila Bend – 0.0
  2. Aguila – 0.0
  3. Stanfield – 0.0
  4. Fort McDowell – 0.0
  5. Carefree 85377 – 10.0
  6. Scottsdale 85266 – 10.1
  7. Wickenburg 85390 – 12.0
  8. Scottsdale 85262 – 12.8
  9. Paradise Valley – 13.0
  10. Congress – 16.7
  11. Morristown 85342 – 18.8
  12. Casa Grande 85194 – 19.1
  13. Rio Verde 85263 – 19.2
  14. Black Canyon City – 20.0
  15. Fountain Hills – 20.1
  16. Scottsdale 85255 -22.3
  17. Superior 85173 – 23.1
  18. Gold Canyon 85118 – 24.2
  19. Phoenix 85004 – 25.0
  20. Scottsdale 85259 – 25.2
  21. Phoenix 85013 – 26.5
  22. Cave Creek 85331 – 28.0
  23. Phoenix 85003 – 28.6
  24. Eloy 85131 – 28.9

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:

  1. Mesa 85202 – 148.5
  2. Mesa 85210 – 147.6
  3. Peoria 85345 – 137.5
  4. El Mirage – 136.8
  5. Glendale 85304 – 129.7
  6. Glendale 85302 – 122.0
  7. Youngtown 85363 – 117.6
  8. Surprise 85378 – 117.2
  9. Chandler 85225 – 115.2
  10. Phoenix 85040 – 113.3
  11. Mesa 85201 – 109.1
  12. Phoenix 85031 – 107.3
  13. Phoenix 85027 – 106.4
  14. Phoenix 85053 – 104.7
  15. Phoenix 85037 – 104.5
  16. Gilbert 85296 – 103.7
  17. Phoenix 85032 – 103.2
  18. Chandler 85224 – 101.9
  19. Mesa 85204 – 101.8
  20. Chandler 85226 – 94.5
  21. Tempe 85283 – 93.8
  22. Mesa 85208 – 90.6
  23. Phoenix 85006 – 90.2
  24. Gilbert 85233 – 84.9
  25. Phoenix 85041 – 84.9
  26. Chandler 85286 – 82.7
  27. Gilbert 85234 – 82.6
  28. Glendale 85306 – 82.2
  29. Apache Junction 85120 – 81.6
  30. Avondale 85392 – 80.8

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:

  1. Phoenix 4,493
  2. Tempe 1,486
  3. Chandler 1,143
  • Gilbert 938
  1. Mesa 711
  2. Scottsdale 400
  3. Pinal County 162
  4. Goodyear 134
  5. Surprise 100
  6. Paradise Valley 46

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
130 Youngtown 85363 900 118 -87%
129 Phoenix 85017 113 43 -61%
128 Glendale 85303 90 48 -47%
127 Scottsdale 85266 18 10 -45%
126 Phoenix 85043 118 67 -43%
125 Glendale 85307 125 71 -43%
124 Phoenix 85013 45 26 -41%
123 Phoenix 85027 179 106 -40%
122 Phoenix 85035 66 40 -39%
121 Phoenix 85033 83 52 -37%
120 Mesa 85203 110 73 -33%
119 Phoenix 85042 87 58 -33%
118 Phoenix 85009 77 53 -31%
117 Surprise 85378 167 117 -30%
116 Phoenix 85014 81 57 -29%
115 Phoenix 85050 75 54 -28%
114 Chandler 85226 131 95 -28%
113 Phoenix 85034 100 75 -25%
112 Phoenix 85004 33 25 -25%
111 Mesa 85201 144 109 -24%

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
1 Avondale 85395 24 47 +96%
2 Chandler 85286 44 83 +87%
3 Phoenix 85021 30 56 +86%
4 Mesa 85215 31 57 +81%
5 Phoenix 85031 59 107 +80%
6 Glendale 85305 44 79 +79%
7 Phoenix 85048 28 50 +75%
8 Peoria 85345 81 138 +70%
9 Maricopa 85138 33 54 +65%
10 Casa Grande 85122 33 54 +63%
11 Tempe 85283 57 94 +63%
12 Glendale 85302 75 122 +63%
13 Phoenix 85008 43 70 +62%
14 Sun City 85373 43 69 +60%
15 Phoenix 85044 49 77 +59%
16 Chandler 85225 74 115 +56%
17 Phoenix 85085 32 50 +54%
18 Scottsdale 85260 31 47 +51%
19 Maricopa 85139 45 67 +49%
20 Mesa 85202 100 148 +48%

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.

January 26 – The Cromford® Market Index for the single-family markets in the 17 largest cities now looks like this:

Overall we still see a very positive picture for most sellers with only 5 out of the 17 deteriorating over the last month.

Top among the improving cities for sellers was Cave Creek, followed by Queen Creek, Tempe, Glendale & Peoria.

Paradise Valley and Fountains Hills were weaker again, joined by Buckeye, Maricopa and Chandler. However the last 2 of these are taking a breather after strong improving trends over the past few months.

January 20 – Daily observations will be delayed and less frequent while Mike is travelling throughout the UK until January 31. Normal service will resume as soon as possible.

January 19 – Let us take another look at the Cromford® Market Index for the 17 largest cities and their single-family markets:

This is another pretty sight for sellers and not very promising for buyers. 13 cities out of 17 improved their seller’s negotiating power over the last month, several by quite large amounts.

The big positive swings were:

  1. Cave Creek +19%
  2. Tempe +11%
  3. Queen Creek +10%
  4. Glendale +7%
  5. Mesa +7%
  6. Gilbert +6%
  7. Phoenix +6%

Chandler has cooled off a bit in the last 2 weeks so allowing the next few cities a chance to catch up.

The balance continues to lie in buyer’s favor in Paradise Valley, though while it stays above 90, I would still describe it as a balanced market.

Cave Creek has overtaken Fountain Hills, replacing it as the most seller-friendly part o the Northeast Valley.

January 18 – In contrast to yesterday’s post, here are the locations that were below average in terms of annual sales growth:

Most areas saw at least some growth, but sellers in Carefree appear to have a few demand problems to worry about (not so Carefree after all, then).

New River also stands apart from the crowd with a substantial fall in annual sales.

January 17 – Here is a table of the areas where the home sales in 2016 exceeded 2015 by more than the average for the Greater Phoenix area as a whole:

This is based on sales recorded in Maricopa and Pinal Counties.

January 16 – We all seem to be talking about interest rates as if they have moved substantially higher, but the latest report from Freddie Mac shows that so far in 2017 they have only moved lower.

  • Jan 12, 2017
    • 30 year Fixed 4.12%
    • 15 Year Fixed 3.37%
    • 5 Year ARM 3.23%
  • Jan 5, 2017
    • 30 Year Fixed 4.20%
    • 15 Year Fixed 3.44%
    • 5 Year ARM 3.33%
  • Dec 29, 2017
    • 30 Year Fixed 4.32%
    • 15 Year Fixed 3.55%
    • 5 Year ARM 3.30%

At the beginning of 2016 they were:

  • Jan 7, 2016
    • 30 Year Fixed 3.97%
    • 15 Year Fixed 3.26%
    • 5 Year ARM 3.09%

So the latest rates are up year over year by only 0.15% for 30 year fixed rate loans, 0.11% for 15 year fixed and 0.14% for 5 year ARMs. Admittedly rates were lower during much of 2016 with a sharp tick upwards in November, but we can hardly expect major market movements from these tiny year over year changes. Once again, I must point out that no-one has proven to be very good at interest rate forecasts. We seem to have pundits surprised more often than we have the pundits’ views confirmed.

In any case the loan application approval rate is far more important factor in determining demand than the interest rate, and that approval rate continues to have a favorable trendline.

January 15 – Today we will try to rank the major, secondary and small cities by the movement in days of inventory between mid-January 2015 and now. This is for single-family homes only.

  1. Coolidge – down 44%
  2. Wickenburg – down 33%
  3. Maricopa – down 30%
  4. Litchfield Park – down 27%
  5. Queen Creek – down 25%
  6. Sun Lakes – down 25%
  7. Chandler – down 24%
  8. Gilbert – down 24%
  9. Fountain Hills – down 21%
  10. Florence – down 19%
  11. Laveen – down 19%
  12. Casa Grande – up 18%
  13. Gold Canyon – down 16%
  14. Wittmann – down 16%
  15. Mesa – down 15%
  16. Goodyear – down 14%
  17. Anthem – down 14%
  18. Cave Creek – down 12%
  19. Tolleson – down 12%
  20. Peoria – down 10%
  21. Tonopah – down 10%
  22. Rio Verde – down 9%
  23. Tempe – down 7%
  24. Phoenix – down 4%
  25. Sun City West – down 4%
  26. Scottsdale – down 2%
  27. Sun City – down 1%
  28. Arizona City – up 1%
  29. Apache Junction – up 2%
  30. Buckeye – up 5%
  31. Paradise Valley – up 5%
  32. El Mirage – up 7%
  33. Glendale – up 8%
  34. Waddell – up 12%
  35. Eloy – up 16%
  36. Surprise – up 17%
  37. Avondale – up 18%
  38. Carefree – up 28%
  39. New River – up 121%
  40. Youngtown – up 146%

Those cities with a high percentage decrease have the largest shift towards favorable conditions for sellers.

Once again, we are seeing the most favorable trends for the Southeast Valley and many parts of Pinal County. However Litchfield Park, Wickenburg, Fountain Hills, Laveen, Wittmann, Goodyear, Anthem and Cave Creek are looking good by this analysis too.

Several cities at the bottom of the list had extremely favorable conditions for sellers this time last year but have cooled off a bit over the last 12 month. These include Youngtown, Avondale, Surprise, Glendale. and El Mirage.

Those who have written off Coolidge for the past 10 years might want to take a second look.

January 14 – Now that the weekly charts have 2 measurement points for the year, it makes sense to check how 2017 is doing compared with previous years 2001 through 2016.

  • for the monthly sales rate, 2017 is running in 4th place out of 17, beaten by the bubble year of 2005 and the REO-dominated years of 2011 and 2012. There is a notable increase in sales volume over 2013 through 2016
  • the monthly average price per sq. ft. is standing at $145.36 , placing 2017 in 4th place after 2006, 2007 and 2008.
  • listings under contract are looking strong compared with 2014 through 2016, but weaker than 2010 through 2013 when they were affected by large number of short sales hanging around forever awaiting approval
  • the dollar volume chart looks much stronger than every other year except 2006
  • for days of inventory, 2017 ranks fourth with 2005, 2012 and 2013 showing even tighter supply versus demand

January 13 – It is time to pay some attention to some of those small cities that rarely get a mention. A few of them are showing interesting developments:

Showing strongly positive trends are:

  1. Coolidge – every single indicator in the Coolidge snapshot is showing green in the year over year column. Annual average $/SF is up almost 13% and we have only 2.2 months of supply.
  2. Florence – the annual sales rate has increased from 461 to 578 over the past year and the annual average $/SF has risen a solid 9%. Supply is reasonable at 4.1 months, but down from 7 last year at this time.

Looking like sellers are having a rough time in:

  1. Wickenburg – annual average $/SF is down nearly 5% over the past year even though annual sales volume rose from 133 to 155. Wickenburg’s snapshot is dominated by red indicators.

January 12 – Let us take our second look in 2017 at the Cromford® Market Indexes for the single-family markets in the 17 largest cities:

For 13 of the 17 cities we see a green circle indicating an improving situation for sellers. Since they are already in a seller’s market this is clearly bad news for buyers, who are losing more of what little negotiation power they had.

In line with everything we have seen for the past 3 months, there is nothing but good news for the Southeast Valley and Pinal.

  1. Tempe – up 13%
  2. Queen Creek – up 9%
  3. Gilbert – up 8%
  4. Mesa – up 6%
  5. Chandler – up 6%
  6. Maricopa – up 2%

Supply is looking tighter across all 6 of these cities.

The Northeast Valley is looking a bit more like rough sailing for sellers, with the notable exception of Cave Creek. It appears that Paradise Valley is in danger of slipping below 90 which would represent a buyer’s market. Fountain Hills has deteriorated fast from its former high flying position at number 2 as recently as November, One bright spot is that Scottsdale managed a small 1% improvement and looks like it is safe from slipping into the balanced zone below 110, at least for now.

In the West Valley it is favorable news for Avondale, Glendale, Goodyear and Peoria, but not so good for Buckeye and Surprise.

Overall this table indicates a very good start for the year from a seller’s perspective, and for the majority of agents who are seeing a high level of activity for the time of year.

January 11 – We have been noting relative strength in the Southeast Valley for a few months now, and this trend is underscored by a detailed examination of the high end market over $500,000. Comparing average price per square foot for the fourth quarter of 2016 with the fourth quarter of 2015, we see the following impressive price advances:

  1. Mesa 85213 – up 34% to $168.45
  2. Scottsdale 85251 – up 18% to $362.27
  3. Tempe 85284 – up 15% to $196.85
  4. Sun Lakes 85248 – up 13% to $193.02
  5. Queen Creek 85142 – up 12% to $159.15
  6. Mesa 85207 – up 11% to $176.55
  7. Cave Creek 85331 – up 11% to $207.62

For the Southeast Valley to have 5 entries in the top 7 is very unusual. Although the luxury sales volume is very modest in the Southeast Valley compared with the Northeast Valley, the buying public appeared to be giving more respect to some of the lesser known luxury locations, such as Mesa’s Citrus Area (85213), Las Sendas (85207), South Tempe and Queen Creek.

On the other hand, the Ahwatukee area of 85048 is a little out of favor, with the average $/SF slipping 6% to $181.13 between Q4 2015 and Q4 2016.

We also note that Old Town Scottsdale (85251) is far outperforming the rest of Scottsdale.

January 10 – In the latest issue of the Black Knight Financial Services Mortgage Monitor, some surprising facts are revealed:

  • 39 million Americans with home loans now owe less than 80% of their home’s value
  • There is a total of $4.6 trillion in untapped home equity (below 80% of home value)
  • The amount of untapped home equity is the highest since 2006
  • At current rates of growth we are within 6 months of the previous high point in 2006

As interest rates rise we should expect lenders to start becoming aggressive in the marketing of HELOC products to allow home owners to tap into this untapped equity.

January 9 – In the Southeast Valley, the differences in appreciation rates between price ranges started to disappear during the fourth quarter of 2016. Looking at the single-family market during October to December 2016, we see the following numbers compared with the same period in 2015:

Below $250,000 From $250,000 to $500,000 Over $500,000 All Price Ranges
Change in Active Listing Counts (excluding UCB & CCBS) -26% -13% +7% -13%
Change in Quarterly Sales -2% +35% +48% +18%
Change in Average Price per Square Foot +8% +5% +6% +7%


We have been seeing drops in inventory for the low end for a very long time and active counts were again down by 26% at the end of December. This shortage of supply has made it hard to keep sales volume growing and indeed quarterly sales slipped by 2%. In the mid-range, supply was down slightly but sales volume grew by 35% so there was still upward pressure on pricing. At the high end over $500,000 we saw increased supply, but sales volume jumped by 48% so here too we saw much stronger appreciation than we were experiencing 12 months ago.

Overall we saw a very healthy increase of 7% across the entire market. However we now see all price ranges participating, not just the low end. In fact the high end slightly out-performed the mid-range.

The top ZIP codes for appreciation in average $/SF between 4Q 2015 and 4Q 2016 were:

  1. Mesa 85201 +16.9%
  2. Mesa 85204 +13.4%
  3. Mesa 85213 +11.6%
  4. Mesa 85210 +10.4%
  5. Chandler 85249 +9.5%
  6. Gilbert 85233 +9.0%
  7. Gilbert 85298 +8.6%
  8. Queen Creek 85142 +8.3%
  9. Sun Lakes 85248 +7.8%
  10. Mesa 85208 +7.7%

The weakest appreciation was seen in:

  1. Phoenix 85044 -0.4%
  2. Mesa 85202 +1.3%
  3. Mesa 85205 +1.9%
  4. Gilbert 85297 +2.0%
  5. Phoenix 85045 +2.3%
  6. Phoenix 85048 +2.8%
  7. Mesa 85206 +3.1%
  8. Gilbert 85296 +3.4%
  9. Tempe 85283 +3.5%
  10. Tempe 85281 +3.6%

January 8 – A whole week has gone by in the new year, so we can start looking at the new listings to see what the most recent supply looks like. There are actually two different ways to count new listings. The first is based on when the listings first become visible after an MLS number is assigned (first download date) and the second is when the listing is created (list date). Downloading all the listings every day means that we can see new listings as they become visible. Using the value given for list date gives us somewhat different numbers since listings are often created some time in advance of being made active and therefore visible. A single listing may be created on December 28, for example, but not become visible until January 5.

2,317 listings have become newly visible in 2017 so far which is 13.3% higher than last year and 19.1% higher than 2015. Clearly we are seeing more sellers than in the last 2 years.

Based on the list date, we see 2,191 new listings across Greater Phoenix date in 2017, which is up 4.7% from 2,092 last year and up 8.6% from 2,017 in 2015. These are still quite modest numbers by historic standards. The 2015 number is the lowest we have ever seen and the 2017 is the fourth lowest for the years 2001 through 2017.

Nevertheless, buyers will be pleased to have a few more listings to choose from. Sellers need not be too concerned about the extra supply since the annual sales rate is up about 7.5%, so we really need about 10% more listings just to stay where we are. We need more new listings than we get sales because some 20% to 25% of all listings get cancelled or expire.

January 7 – My favorite charts for monitoring the market, and making sure it does not surprise me, are the weekly charts that are updated every Saturday. Of special interest to me are:

We can see that the active listings are starting off 2017 at almost the same point as they did in 2016. You could be forgiven for thinking this means that inventory is roughly the same. However there are 2 points to make here:

  1. the active listing count is the same but the annual sales rate is much higher (90,336 versus 84,066), so the same number of listings will sell out faster
  2. the active listings are not in the same locations as last year; we have more in the West Valley and fewer in the Southeast Valley, for example.

We can see that the days of inventory chart starts off the year at a lower point than last year (94 instead of 100) because the annual sales rate was significantly higher in 2016 than it was in 2015. This also influences the Cromford® Market Index which starts the year noticeably higher than it did in 2016.

We also see the the number of listings under contract is a little higher than it was at the start of 2016 (8,049 versus 7,734), suggesting that demand is a little higher too.

You might think that the monthly sales chart would be more useful than the annual sales chart. However the monthly sales counts are influenced by seasonality and the number of working days in each month. This causes the monthly sales numbers to give us a lot of noise in the signal. The annual sales rate numbers are almost all signal and barely any noise. This is the way analysts like their data. My advice is to watch the annual sales rate closely.

January 6 – The initial numbers are in for Maricopa County recordings in December. The first thing that struck me about them was the new home sales total. At 1,535 this was the highest monthly total since 2007. Who says December is a quiet month?

The median sales price for new homes was $324,227, up 4.8% from 309,299 in December 2015. However it was only 3.7% above the monthly median for December 2014 and 1.4% above the median sales price in December 2013. New homes have not seen a lot of movement if we are looking only at the median sales price. However the average new home has got smaller over the past few years so the average price per square foot shows a more positive picture, and we shall come back to review this on another day.

The resale median sales price came in at $225,000 yet again. Although we have bounced around a bit, we ended the year with the same median sales price as in May.

Because new homes are gaining considerable market share from re-sales, the overall median made good progress over the past 12 months, rising 5.9% from $230,000 to $243,500. New homes took 17.7% of the unit sales, up from 15.6% in December last year and the highest percentage since October 2008.

Given the strong increase in closed sales, you would think new home builders would be celebrating. However they are struggling to make good margins even with the higher volume because land prices have risen faster than home prices and labor costs are escalating due to the chronic shortage of construction labor. With the proposed massive increase in government infrastructure construction (not to mention the border wall), we could find the construction labor shortage becomes even more extreme over the next few years.

January 5 – The first Cromford® Market Index comparison of 2017 is a positive one for most sellers. Here is the table showing how the single-family markets in the largest 17 cities have fared over the past month:

Things are great for the top 9 cities in the table. They are not only in the top 9, but they are improving too. The Southeast Valley is really making life easy for sellers and hard for buyers with Tempe up 16%, Gilbert up 9%, Chandler up 8% and Mesa up 4% and squeezing into the top 4 by overtaking Glendale. The West Valley is mixed with Avondale still way out on top and improving by another 11%. Glendale, Peoria and Goodyear made small improvements, but Surprise continued to look relatively weak and Buckeye slipped another 6%.

The Northeast Valley is the under-performing area with Paradise Valley slipping below 100 and in last place. Fountain Hills continues to deteriorate fast while Scottsdale sees only slight deterioration. The most positive move in the Northeast was in Cave Creek which improved by a strong 12%.

Maricopa continues its progress up the chart slowly but steadily, while the most important city of all, Phoenix showed a strong positive move, up 6%.

Given the less attractive interest rates buyers are facing, this is a reassuring picture for sellers. We must remember that higher interest rates do not just discourage buyers. They discourage sellers too, since in many cases they would be paying off low interest loans and taking out higher interest loans, not something to be done lightly. We therefore expect both supply and demand to be affected negatively by higher rates. It is the balance between supply and demand that is crucial. It is the cities with CMI values over 130 that are in the strongest shape for price increases over the next several months..

January 4 – At this time of year a crucial thing to watch is the number of new listings being added to the ARMLS database. We have to be careful since it is unfair to compare any period of less than 7 days. This is due to the weekly cycle, where far more listings are added on Thursday and Friday than on other days of the week. Over the past 7 days (Dec 29 to Jan 4) we have seen 1,447 new listings, which is a middle-of-the-road number compared to prior years. The equivalent in 2016 was 1,266 and in 2015 we saw 1,306. But in 2014 there were 1,528, in 2013 1,549 and in 2012 1,534. So we are seeing more listings over the past week than in 2015 and 2016 but less than 2012 through 2014.

An even more reliable indicator is the 28 day count of new listings. This is currently at 5,628, whereas last year we saw 5,118 and in 2015 we had 5,054. So we are up 10% from 2015 and 11% from 2016. In 2014 we had 5,495, in 2014 we saw 5,886 and in 2013 we had the most at 6,489.

If we continue with this current pace then we should have enough new listings to cope with the increased sales rate, which is up by about 7% from last year. In 2016 we saw strong flow of new listings during the first 2 months of the year and by the beginning of March we were up 8% over 2014. However the pace dropped during March and we ended 2016 with only 5% more new listings than 2015. This was inadequate to match the 7% increase in sales rate, meaning that the market favored sellers by a greater amount at the end of 2016 than at the start of the year.

We generally need more new new listings than we have closed sales since about 20% to 35% of listings get cancelled or expired instead of closing. In stronger markets the percentage closing increases but rarely exceeds 80% for extended periods.

January 3 – How does December 2016 compare to all the other Decembers we have measured over the years?

  • Monthly Sales Count = 7,191 – 5th highest (after 2010, 2004, 2011 and 2009)
  • Annual Sales Count = 90,027 – 3rd highest (after 2005 and 2004)
  • Average Sales Price = $282,067 – 4th highest (after 2006, 2005 and 2007)
  • Median Sales Price = $225,000 – 4th highest (after 2006, 2005 and 2007)
  • Monthly Average Price per Square Foot = $144.79 – 4th highest (after 2005, 2006 and 2007)
  • Annual Average Price per Square Foot = $141.43 – 4th highest (after 2006, 2007 and 2005)
  • Dollar Volume = $2.028B – 2nd highest (after 2005)

So, thanks to the 5th strongest sales count and the 4th strongest pricing, we just had the second best December for dollar volume in the last 16 years.

January 2 – Yesterday we looked at the overall supply and demand numbers. Today we will look at specific price ranges to see how the supply situation differs. Here we are looking at the total number of active listings (including UCB and CCBS) for single family homes.

Once again the big percentage annual declines in supply are in the lower price ranges:

  • Under $25K – down 25%
  • $25K to $50K – down 25%
  • $50K to $75K – down 38%
  • $75K to $100K – down 45%
  • $100K to $125K – down 42%
  • $125K to $150K – down 40%
  • $150K to $175K – down 21%

Below $125K the annual sales rate has dropped by a larger percentage than the drop in active listings. This sector has become so small that it is no longer of any great significance to us. It is only 1% of the market by value. Back in 2010 45% of all unit sales were under $125K. The extent of the change between 2010 and 2017 is remarkable.

If we look only at homes priced over $175,000, supply is up 3%, even though overall supply is down 2%. There is a complex pattern for the increases. The largest percentage increases are for the following:

  • $600K to $800K – up 15%
  • $175K to 4200K – up 10%
  • $1.5M to $2M – up 10%
  • $200K to $225K – up 7%
  • Over $3 M – up 7%
  • $400K to $500K – up 6%
  • $500K to $600K – up 4%

The following ranges are barely changed:

  • $225K to $250K – up 2%
  • $800K to $1M – up 2%
  • $250K to $275K – up 1%
  • $1M to $1.5M – no change
  • $275K to $300K – down 1%

Supply has also declined for these:

  • $300K to $350K – down 3%
  • $350K to $400K – down 4%
  • $2M to $3M – down 4%

With the background of an overall 7% increase in the annual sales rate, there are no price ranges that are looking dramatically over supplied. The least favorable range is $600K to $800K where the annual sales rate is up only 9% while the supply is up 15%.

For sellers, the situation is most favorable for the price ranges $250K through $350K. Here we see little change in the total supply compared with the beginning of last year, but the annual sales rate has gone up more than 24%. In that context, the same supply level as last year starts to look rather meag

January 1 – The year 2017 has started with 19,397 active listings (excluding UCB and CCBS) for all areas and types. This is down 3.4% from 20,073 on January 1, 2016. There was a sudden drop of 2.8% of all listings between December 31 and January 1, an effect which occurs in all years due to a large number of expirations at the end of the year. The effect was slightly smaller than last year when 3.5% of all listings disappeared.

So supply is starting a little weaker than it was last year, at a time when the annual sales rate is up by just over 7%. It is hard to see prices stabilizing in this environment unless demand drops. We started the year with 4,885 pending listings, barely changed from 4,865 in 2016. However we have 2,916 listings in UCB status, compared with 2,810 in January 2016. That is almost a 4% advantage to 2016.

Weaker supply and stronger demand suggest appreciation rates may be a little faster in 2017 than 2016. However the segments affected may very well be different from last year.

December 31 – Foreclosures are the first thing to be finalized for the year, especially easy when the last day falls on a weekend. During 2016 there were a total of 8,017 Notices of Trustee Sale issued in Maricopa County. This is down 14% from the 9,310 we had in 2015. It is a good time to remember that we had 10,712 notices in the month of March 2009 alone and 103,342 for the year of 2009. This puts the 8,017 for this year into perspective.

2016 saw the lowest number of Notices of Trustee Sales in any year since 2001, when we started counting.

Trustee Deeds numbered 3,412 for Maricopa County in 2016, down 20% from 4,275 in 2015. Unlike Notices, the Trustee Deed count is nowhere near the lowest we have seen. The lowest year for Trustee Deeds was 1,072. In those days, Notices of Trustee Sale resulted in multiple approaches by investors trying to buy the homes prior to the auction, because the homes generally had plenty of equity. For some of the investors that turned out to be pretty bad timing, buying at the top of the market.

We still have a significant number of homes with negative equity and when these get a Notice of Foreclosure Sale, it is unlikely that any investor is going to be interested until the trustee sale takes place and the existing lien is wiped away.

Having said this, our Trustee Deed count in 2016 is the lowest for any year since 2001, except for the bubble years of 2005 and 2006.

December 30 – We can use the Days of Inventory (active listing count divided by the annual sales rate) to tell us which cities are in a better or worse situation for sellers than they were last year. In the table below we excluded UCB and CCBS listings from the active counts, but we included all property types.

Rank City Days of Inventory Dec 2015 Days of Inventory Dec 2016 Change
1 Wittmann 149 94 -37%
2 Coolidge 133 87 -35%
3 Wickenburg 425 294 -31%
4 Chandler 68 49 -28%
5 Maricopa 98 71 -28%
6 Fountain Hills 203 146 -28%
7 San Tan Valley 83 61 -27%
8 Sun Lakes 117 85 -27%
9 Laveen 74 57 -23%
10 Litchfield Park 105 81 -23%
11 Gilbert 62 49 -21%
12 Mesa 75 59 -21%
13 Queen Creek 101 80 -21%
14 Goodyear 87 69 -21%
15 Anthem 89 71 -20%
16 Casa Grande 140 119 -15%
17 Florence 151 135 -11%
18 Peoria 78 70 -10%
19 Cave Creek 154 139 -10%
20 Gold Canyon 256 233 -9%
21 Rio Verde 337 310 -8%
22 Apache Junction 121 113 -7%
23 Phoenix 73 68 -7%
24 Tolleson 45 42 -7%
25 Eloy 171 159 -7%
26 Scottsdale 149 142 -5%
27 Tempe 57 56 -2%
28 Sun City 58 58 0%
29 Paradise Valley 323 326 +1%
30 Waddell 97 101 +4%
31 Sun City West 67 72 +7%
32 Buckeye 84 90 +7%
33 Glendale 52 656 +8%
34 Arizona City 128 140 +9%
35 Surprise 75 85 +13%
36 Avondale 37 43 +16%
37 El Mirage 24 31 +29%
38 Carefree 314 442 +41%
39 New River 98 174 +78%
40 Youngtown 16 66 +313%


We used the name San Tan Valley to refer to the places within ZIP Codes 85140, 85142 and 85143 which lie within Pinal County. For Queen Creek we restricted our analysis to Maricopa County locations.

Some of the areas of the West Valley suffered extreme shortages of supply in 2015 that have now started to abate. Examples include Youngtown, El Mirage, Avondale, Surprise, Glendale, Buckeye, Sun City West and Waddell.

The unusual shortages we currently see are in Chandler and Gilbert, where 49 days is a very low reading for the time of year. Mesa and Tempe are not far behind.

Pinal County is improving sharply for sellers (particularly in Coolidge, Maricopa and San Tan Valley)

Wickenburg and Wittmann are not exactly hurting for supply, but the days of inventory has dropped significantly in both locations since this time last year.

Among the more expensive locations, Carefree is the one with the most difficulty for sellers compared to last year, while Fountain Hills is the most improved.

December 29 – The last Cromford® Market Index table of 2016 paints a pretty picture for the majority of the market, with 11 out of 17 cities improving their balance in the seller’s favor.

The top 8 cities have all seen an improving situation for sellers over the last month thanks to a significant fall in active listings. The Southeast Valley is a great spot for sellers with Chandler, Gilbert, Mesa and Tempe taking 4 of the top 6 spots and on an improving trend, especially for Tempe.

The West Valley is more mixed with Avondale and Glendale taking the remaining 2 spots in the top 6, but Buckeye and Surprise sitting near the bottom of the table.

The Northeast valley fares the worst, with Fountain Hills crashing back to 9th place having been among the leaders a few weeks back. Paradise Valley has also weakened over the last month and remains in last place.

However we still have none of the 17 largest cities below 100, the neutral point.

December 28 – There are just over 20,000 active listings on ARMLS, excluding UCB & CCBS. There were just under 21,000 on the same day last year. There are another 3,281 listings in UCB or CCBS status, up from 3,096 last year, reflecting the popularity of UCB status which continues to be used widely instead of Pending, even when backup offers are unwelcome.

Including UCB & CCBS, we have 95 days of inventory based on the annual sales rate. This is the lowest number of days of inventory since September 2013, and 10 fewer than last year at this time.

All in all, we will be starting 2017 with a pretty dismal inventory from a buyer’s perspective. Even though supply is plentiful in parts of the luxury market, the overall level of supply is inadequate to meet the current level of buyers’ demand.

We can therefore feel confident that prices are going to rise yet again in the next few months. This is a three month outlook. After that the forecast will depend on the levels of supply and demand that we see during the first quarter of 2017.

December 27 – The last Tuesday of the month means it is time for the S&P/Case-Shiller® Home Price Index® report. The latest one refers to the prices for sales between August and October 2016. The table of 20 cities based on the month to month change is as follows:

  1. Tampa +0.93%
  2. San Francisco +0.58%
  3. Miami +0.49%
  4. Dallas +0.42%
  5. Atlanta +0.41%
  6. Phoenix +0.39%
  7. Cleveland +0.36%
  8. Washington DC +0.22%
  9. Seattle +0.18%
  10. Charlotte +0.17%
  11. San Diego +0.15%
  12. Boston +0.06%
  13. Minneapolis +0.06%
  14. Denver +0.00%
  15. Los Angeles -0.01%
  16. Las Vegas -0.08%
  17. Portland -0.08%
  18. Detroit -0.17%
  19. New York -0.20%
  20. Chicago -1.06%

Placed at number 6 out of 20, Phoenix is well above the national average of +0.22%.

Measured over 12 months the changes are as follows:

  1. Seattle +10.66%
  2. Portland +10.27%
  3. Denver +8.29%
  4. Dallas +8.11%
  5. Tampa +7.81%
  6. Miami +6.46%
  7. Detroit +6.38%
  8. Charlotte +6.02%
  9. San Diego +5.90%
  10. Atlanta +5.98%
  11. Los Angeles +5.74%
  12. Las Vegas +5.72%
  13. Minneapolis +5.50%
  14. San Francisco +5.47%
  15. Phoenix +5.16%
  16. Boston +4.51%
  17. Cleveland +3.95%
  18. Chicago +3.95%
  19. Washington DC +3.41%
  20. New York +1.70%

On a year over year basis, Phoenix is slightly below the national average of 5.61%

December 26 – As we expected, the huge advantage that 2016 was showing over 2015 in sales rate during November has disappeared in December. On November 25, the monthly sales rate was running over 28% higher than the year before. However most of this was due to the effect of TRID delaying sales in the fourth quarter of 2015. By the second half of December the TRID effect had dissipated. We now see only an 8.6% advantage for 2016 over 2015 in the monthly sales rate as of December 26. This 8.6% is the underlying increase in sales which we think is mostly due to the higher approval rate on loan applications rather than an increase in the number of people making those same loan applications.

December 25 – Those like me, who thought the peak in multi-family construction might be behind us, should probably have another think after the November report about permits from the Census Bureau.

There were 1,144 multi-family units permitted during November, compared with only 409 in November 2015. Although the monthly fluctuations are quite extreme, the 12 month rolling annual count is relatively stable and is now reading 9,290, which is the highest figure we have seen since 2007. The previous peak in late 2014 looked safe as of the spring of this year, but recent counts have been surprisingly strong.

Major contributions this November were from:

  1. Phoenix – 498
  2. Mesa – 333
  3. Chandler – 209
  4. Surprise – 100

December 24 – November was a strong month for single family permits in Maricopa and Pinal counties. We counted 1,355 which is up 23% from 1,099 in November 2015. The year-to-date count is 16,966 which is up only 11% from the year to date total in 2015. Since closings on single family new homes have reached 34% higher than last year at this time, the number of permits is not keeping up the pace.

As we have mentioned several times, the overall shortage of supply has been getting more extreme in Chandler, Gilbert and Tempe. These locations feature only weakly in the new permits. Gilbert was top city for many years but has now slumped to 7th place in November with only 99 permits. Chandler comes in 9th with 70. With few vacant land locations, Tempe is way behind with only 10 permits.

The top permit locations in November were:

  1. Phoenix – 194
  2. Buckeye -152
  3. Mesa -130
  4. Peoria – 120
  5. Unincorporated Pinal County – 105
  6. Goodyear 100

Looks like there will be plenty of supply in Buckeye, Peoria and the North Valley in 2017. However I am growing concerned that buyers will have a very hard time in the Southeast Valley given the unusually weak supply trends of the past 3 months. Only Mesa seems to be keeping up with demand.

December 23 – There are not many days left in this year, and it looks like we will have seen just under 5% more listings created and added to the ARMLS database in 2016 compared with 2015. This additional supply might have swamped the market and been a severe problem for sellers. However we have instead seen an increase in the annual sales rate of just under 7%. So instead, the supply has failed to keep up with the ability of buyers to takes the homes off seller’s hands. This is largely because buyers are, on average, better qualified in 2016 than 2015, with stronger credit scores and greater ability to find the necessary down payments. As a result the Cromford® Market Index is ending the year above 143 having ended 2015 in the low 130’s.

Of course not everywhere is seeing stronger conditions for sellers than this time last year. We can rank the cities by how much the CMI has changed over the past year:

  1. Maricopa +56.2%
  2. Gold Canyon +52.5%
  3. Casa Grande +40.3%
  4. Chandler +39.7%
  5. Goodyear +35.5%
  6. Fountain Hills +33.6%
  7. Gilbert +28.2%
  8. Sun Lakes +20.0%
  9. Queen Creek +19.2%
  10. Laveen +17.5%
  11. Mesa +17.2%
  12. Apache Junction +13.8%
  13. Buckeye +12.0%
  14. Peoria +11.9%
  15. Phoenix +11.6%
  16. Paradise Valley +10.0%
  17. Avondale +9.1%
  18. Tempe +8.7%
  19. Scottsdale +7.2%
  20. Cave Creek +3.2%
  21. El Mirage +2.8%
  22. Anthem +0.3%
  23. Litchfield Park -2.4%
  24. Tolleson -2.7%
  25. Sun City -3.0%
  26. Glendale -4.2%
  27. Arizona City -4.5%
  28. Surprise -12.8%
  29. Sun City West -15.2%

22 out of 29 cities are in the positive zone. The Northwest Valley (Sun City, Sun City West, Surprise, Glendale) and inner Southwest Valley (Tolleson, Litchfield Park) are the most obvious areas that have deteriorated for sellers. Pinal County has seen strong improvement except in Arizona City. The Southeast Valley looks very much stronger than at the end of 2015.

Remember that changes in the CMI indicate future pricing trends not current ones, since it is very much a leading rather than a trailing indicator.

December 22 – When we look at the Cromford® Market Index for the single family markets in the largest 17 cities, we still see a mixed trend.

All 17 are still above 100, but the bottom 3 are in the balanced zone between 90 and 100. We have 9 cities deteriorating and 8 improving, but Phoenix itself has risen 2% over the last month and this gives a positive boost for the overall market since Phoenix typically accounts for 25% of sales.

The Southeast Valley continues to be the most improved spot for sellers, with Chandler, Gilbert, Tempe & Queen Creek all making strong progress. Mesa slipped 1% but remains in a relatively strong 5th place. The Northeast Valley has improved for buyers with all cities showing falls in their CMI, Cave Creek, Paradise Valley and Fountain Hills showing the heaviest declines. With the exception of Avondale and Buckeye, the West Valley cities also weakened slightly for sellers.

December 21 – The average price per square foot for pending listings has exceeded $150 for the past 5 days, a big jump from $147.11 as recently as December 6.

The last time this number was over $150 was on March 27, 2008.

This means there is a reasonable chance that the average $/SF for closed sales ends the year on a high again.

December 20 – The Black Knight Financial Services Report for October shows an increasingly mixed picture for loan delinquency among the states. While the USA as a whole continues to improve and the non-current loan rate is near normal at 5.3%, a handful of states are seeing deterioration compared with a year ago.

  1. Alaska – up 19.3% to 3.0%
  2. North Dakota – up 4.3% to 2.2%
  3. Louisiana – up 2.6% to 10.2%
  4. Wyoming – up 1.9% to 4.2%

These are no doubt affected by the continuing difficulties in the energy sector.

Arizona has improved by 12.3% to a non-current rate of 3.5%, well below the long term average.

The states with the largest improvement year over year are:

  1. Washington – down 23.7% to 3.3%
  2. Nevada – down 23.6% to 4.7%
  3. Oregon – down 22.4% to 3.2%
  4. Colorado – down 19.9% to 2.4%

We note that 3 of these 4 states contain major cities that are among the top performers in the Case-Shiller Home Price Index table (Seattle, Denver and Portland). Las Vegas is not in the list of 20 cities monitored closely by Case-Shiller.

December 19 – We know from the Ellie Mae report that loan approvals are increasing as a percentage of applications. The question that arises is whether lenders are lowering their standards, or borrowers are improving their credit ratings.

The average FICO score for a closed loan was 730 in October 2016, with a 78% loan to value and front-end debt-to-income ratio of 24% and back end debt to income ratio of 37%. A year earlier the FICO score was 722, LTV was 80, and 25 and 39 were the DTI ratios. So the closed loans actually averaged a higher standard than a year ago.

So the answer is pretty clear. Lenders are not lowering their standards. Instead, borrowers are improving their credit ratings and are also putting slightly more into down payments. This improvement happened between 2014 and 2016, and has been particularly strong over the last 12 months.

December 18 – We still measure the number of pending foreclosures each day, even though most people pay little attention to foreclosures these days. Our measurements show why most people are uninterested. There are fewer pending foreclosures now than in any December since we started measuring in 2001. There will never be zero foreclosures, but 2,387 for the whole of Maricopa County is extremely low compared with the maximum reading we have seen. That was 51,022 at the end of 2009. Today’s reading is not the lowest ever, since in April 2006 we had only 2,255. This was the calm before the storm. By the end of 2006 the number has risen ominously to 4,089. You would have found it hard at that point to find anyone who would believe it would rise to over 50,000.

December 17 – With little prospect for a cut in interest rates and the likelihood of further rises, many home buyers could be kicking themselves for not buying in 2016 while they had the chance. As recently as October it was possible to get a 30 year fixed loan at 3.42% according to Freddie Mac’s interest rate survey. Today we are looking at 4.18%.

For a $200,000 loan that translates to a payment of principal & interest of $976 per month. In October that same loan would have cost just $889 a month. This is a rise of almost 10% in a matter of weeks. The purchases prices at price points below $300,000 are still moving north at a brisk pace, so a home purchase in 2017 is likely to be a lot more expensive than it would have been n 2016.

If interest rates continue to climb, as many are forecasting, it is not impossible we could see 5% reached before the end of 2017. That would make the principal & interest payment for a $200,000 loan rise to $1,270. This is a 43% increase from the payment corresponding to a 3.42% rate, and this could potentially be happening in a little over a year.

Millennials are likely to be squealing if this were to happen, and they probably will not take kindly to being reminded by baby boomers that 8% is the long term average rate for a 30-year fixed loan. The monthly payment at 8% is $1,664. Mind you, it was last at 8% in August 2000, so it is easy to forget what it was like.

Economists have been predicting interest rate rises for the last 4 years and each year they have been wrong. It appears that 2017 may possibly be the year in which the forecasts finally come true, but no-one knows that for sure, even Janet Yellen.

Anyone who thinks rising interest rates cause home prices to fall will discover that is a false premise and has never been borne out by historical example. Home prices depend on supply versus demand. Higher interest rates are likely to cause lenders to be more interested in approving loans and a higher approval rate leads to increased demand. The shortage of construction labor is going to put a lid on additional supply, so unless there is an external change (e.g. a massive population shift) non-luxury home prices in Greater Phoenix are likely to continue rising in 2017, especially for the low end and lower mid-ranges up to $300,000.

December 16 – We are taking another look at the Cromford® Market Index for the 17 largest cities and their single family markets:

The green arrows have the advantage, outnumbering the red ones by 9 to 8. The overall market favors sellers by a wide margin, as all indexes are over 100.

Avondale remains way out in front and has opened up its lead by moving 8% higher over the last month. It’s demand index is 98.2, little changed, but its supply index has fallen back down to 48.2. We have not seen adequate supply in Avondale since early in 2011.

Cave Creek and Paradise Valley have weakened over the last month. In Cave Creek, supply has increased while demand has dropped sharply. It is now a balanced market having been a seller’s market as recently as late November. Paradise Valley’s supply is close to normal but its demand has weakened in recent weeks. Scottsdale is seeing a similar trend but not quite so pronounced.

Tempe has seen the largest improvement for sellers, with Gilbert doing quite well also. In fact both Gilbert and Chandler are strongly favorable for sellers at the moment with very weak supply in many areas.

Glendale, Mesa and Fountain Hills are seeing a cooling trend but remain well inside the seller’s market zone.

December 15 – We do not yet have an Ellie Mae Origination Insight Report that reflects the much higher interest rate environment since early November, but their last 4 reports about mortgages for July through October are still interesting reading.

The most obvious trend is that the closing rate has increased. We have always maintained that it is the loan closing rate that drives the demand in the housing market, not the interest rate. The interest rate determines what you can afford. The closing rate determines whether you get a loan at all. When anyone can get a loan, the market gets bubbly. When hardly anyone can get a loan, the market goes squishy and is dominated by cash buyers.

For conventional purchase loans, the closing rate has increased from 70.8% in October 2015 to 77.2% in October 2016. The closing rate has been over 70% since July 2015. In October 2013 the closing rate was only 67.1% and in October 2014 it was 67.9%. I think we can conclude there is an obvious trend here. Conventional purchase loans are getting approved at a rate that is 9% higher than last year. Have you noticed that annual sales are up by about 7% from last year on ARMLS? They are up almost 10% in the public records because new homes have been doing so well. The new home annual sales rate is up almost 30%. A lot of the extra loan approvals are for loans on new homes.

We did not need any more buyers or loan applications to achieve a 9% growth in sales. The higher approval rate turns 9% of latent demand into real actionable demand, by approving buyers who would otherwise have been declined their loans.

What about the other types of loans, I hear you ask. Well conventional loans represent 68% of all loans, so the others are not so important. But FHA loans (with 20% market share) are getting approvals at 72.9%, up from 66.5% last year. So we can see the same story there; in fact the closing rate is up 9.6%. For VA loans, representing 9% of the market, they are getting closed at 76.6%, up from 72.9% last year. Not quite such a big increase, at 5.1%, but VA loans have had a noticeable advantage in higher closing rates until now.

We observe that the Cromford® Demand Index has increased from 99.0 at the end of October 2015 to 107.9 at the end of October 2016. Although the CDI does not use the loan closing rate as an input, we believe there is a direct link between the increased loan closing rate and the increased demand reflected in the CDI numbers.

December 14 – From yesterday’s chart we can easily see that sellers are gaining an advantage in the Southeast Valley thanks to a combination of falling supply and increasing demand. This is far in excess of the trends in other regions of Greater Phoenix. Now let us look at which parts of the Southeast Valley are benefitting most from this trend. A quick way to do this is to examine the Days of Inventory for each area. A large percentage fall from this time last year is an indicator of a trend that is strongly favorable to sellers. So we see:

  1. Chandler 85286 – down 46% to 49 days
  2. Phoenix 85048 – down 40% to 60 days
  3. Chandler 85249 – down 39% to 67 days
  4. Mesa 85206 – down 36% to 59 days
  5. Chandler 85225 – down 33% to 36 days
  6. Gilbert 85233 – down 30% to 42 days
  7. Gilbert 85296 – down 29% to 48 days
  8. Mesa 85209 – down 28% to 61 days
  9. Mesa 85215 – down 28% to 85 days
  10. Chandler 85224 – down 26% to 34 days
  11. Gilbert 85295 – down 26% to 43 days
  12. Mesa 85212 – down 22% to 64 days
  13. Mesa 85213 – down 22% to 67 days
  14. Mesa 85203 – down 20% to 45 days
  15. Sun Lakes 85248 (including Chandler 85248) – down 20% to 91 days
  16. Gilbert 85298 – down 20% to 79 days
  17. Mesa 85207 – down 19% to 113 days
  18. Mesa 85208 – down 17% to 66 days
  19. Mesa 85210 – down 16% to 39 days
  20. Tempe 85281 – down 16% to 68 days
  21. Phoenix 85045 – down 16% to 99 days
  22. Mesa 85201 – down 14% to 39 days
  23. Queen Creek 85142 (Maricopa County only) – down 14% to 90 days
  24. Mesa 85205 – down 12% to 65 days
  25. Tempe 85282 – down 11% to 43 days
  26. Gilbert 85234 – down 10% to 54 days
  27. Tempe 85283 (including Guadalupe) – down 10% to 59 days
  28. Phoenix 85044 – down 5% to 60 days
  29. Mesa 85202 – down 2% to 40 days
  30. Gilbert 85297 – down 2% to 49 days
  31. Tempe 85284 – down 1% to 88 days
  32. Chandler 85226 – flat at 42 days
  33. Mesa 85204 – up 3% to 38 days

The top 16 ZIP codes in this table have seen a 20% or more drop in days of inventory since this time last year, and because days of inventory is a slow moving indicator, this is a significant positive sign for sellers. Only one ZIP code has added inventory, Mesa 85204. This was formerly an extremely hot ZIP code behaving more like the inner West Valley than the Southeast. Like the West Valley, the lowest price areas have cooled slightly over the last year. However, we cannot regard 38 days as very excessive inventory. It’s just not quite as low as 37 days.

December 13 – I am looking at how the Southeast Valley and Pinal County are improving for sellers compared with the rest of the market. From the chart below you can see that the overall market saw a slight decline in active listings between December 1, 2015 and December 1, 2016. The quarterly sales rate for September through November was 16% stronger in 2016 than 2015.  The Southeast Valley had the strongest increase in sales rate at 20%, while Phoenix & the North Valley had the weakest at 10%. The big difference for the Southeast Valley is the dramatic 12% fall in active listings since 12 months ago. In contrast the West Valley has seen a strong increase of 7%.

From a seller’s perspective,  the Southeast Valley is significantly out-performing the overall market, as is Pinal County, though to a lesser degree. The West Valley has weakened because of increased inventory while the Northeast Valley, Phoenix and the North Valley  are slightly under-performing the sales growth seen in the overall market.”

December 12 – Interest rates have moved higher quickly over the last month, with the most recent Freddie Mac report showing 4.13% for a 30-year fixed. This is 18 basis points higher than this time last year and 20% higher than the 3.44 reading we saw in July and August. Sudden interest rate rises like this tend to increase the sales rate as borrowers try to lock in their existing loan commitments. The sales rate then tends to fall back as the market adjusts to the higher cost of ownership for buyers who were unable to lock in lower rates. We can see that the sales rate was very high for the time of year over the last four weeks, and this is a typical reaction. Listings under contract readings are currently rather weak given the sales rate, again typical of a period just after a significant rise in interest rates.

How fast the under contract count rises in 1Q 2017 will very key. This will determine if the positive effect of less stringent loan qualification rules is balancing out the negative impact of higher borrowing costs.

December 11 – The Cromford® Demand Index has fallen slightly over the past month from 108.5 to 107.2. This may seem odd to people who have noticed that the monthly sales rate is up by about 21% from this time last year. The reason is that we use a combination of monthly sales rate plus pending listing counts plus UCB counts (adjusted for invalid UCB usage by agents) to compute the demand index. By that measure demand is somewhat weaker than the sales rate would suggest.

The CDI was only 99.0 on December 11, 2015, so demand is definitely up from last year. However we had 9,480 listings under contract then and we have 9,566 now. This is only a 1% increase, much less impressive than the increase in closed sales. Until we get to the end of December we will have to suffer the distortions caused by the introduction of TRID during the fourth quarter of 2015.

December 10 – New FHA loan limits were announced for 2017, but the changes are not going to make a big difference for Arizona. The 2017 limit is going up from $271,050 to $275,665 in all Arizona counties except Maricopa and Pinal, where it has been increased a little more, from $271,050 to $279,450, and Coconino, where it is unchanged at $362,250.

The $8,400 increase for Maricopa and Pinal is just over 3%. This is far less than the annual increase in average price per sq. ft. that we have seen for homes under $300,000, which is 8.2% based on public record data. This means slightly fewer buyers are likely to qualify for FHA loans in 2017 than in 2016 and the change is therefore a mildly negative factor for demand. Obviously it would have been worse if the limit had not been increased at all. However the cheaper homes that FHA loans are designed for have appreciated far more than more expensive homes. The FHA loan limit would have been increased to about $293,000 if it were tied to average price per sq, ft. for homes at or below $300,000.

Arizona is slightly disadvantaged in the HUD calculations because we have so few counties and Maricopa and Pinal Counties provide 66% of the state’s housing. HUD uses median sales price for a county and MSA as their primary guide in calculating the FHA loan limit.

December 9 – Let us have another look at how the Cromford® Market Index is doing for the single family markets in the 17 largest cities.

15 out 17 cities are in a seller’s market with just 2 in the balanced zone between 90 and 110. So the comments below are relative to an overall positive situation for sellers. The trend however is mixed rather than positive.

We see a very balanced picture, and not quite as healthy as I would have expected if you had asked me for an outlook two months ago. We have one city, and the most important one, Phoenix, standing absolutely still, and then eight cities improving for sellers and eight cities deteriorating. Cave Creek, Paradise Valley, Mesa, Surprise and Scottsdale have been going backwards and look distinctly weaker than last month. Avondale is back to its winning ways and remains way out in front. Tempe has had an excellent month while Gilbert and Buckeye have seen a decent improvement. Maricopa and Chandler also continue to develop quite nicely and steadily for sellers.

Among the next batch of 12 intermediate sized cities, the picture is more negative as we see the following very short list of cities showing improvement for sellers over the last 4 weeks:

  • El Mirage – up 14% from 220.0 to 250.6 – the most seller friendly part of Central Arizona

The list of intermediate cities with deterioration is much longer:

  • Arizona City – down 16%
  • Litchfield Park – down 16%
  • Sun Lakes – down 15%
  • Anthem – down 10%
  • Sun City West – down 10%
  • Sun City – down 7%
  • Gold Canyon – down 6%
  • Tolleson – down 5%
  • Casa Grande – down 4%
  • Apache Junction – down 1%
  • Laveen – down 1%

In 2015 we had a very strong December after two weak months in October and November. So my expectations after 2 stronger months in October in November was that the CMI trend would look better than this.

I wait with interest to see if December can get a little more impressive than it is was during the first week. It is still early days, so we could still see a surge into the finishing line on December 31.

December 8 – Although I cannot pretend that the ARMLS rental database is a true reflection of the entire rental market, it is giving us some signs of a mild slowdown in the rental market from the intensity of the last few years. The total number of active listings was 3,269 on December 6, which is only slightly higher than the 3,191 on December 2015. However the monthly closed lease rate is down from 2,307 to 1,977. This means we have 1.7 months of supply instead of 1.4 months last year.

The average monthly lease price per square foot was 78 cents on December 6, 2015, and this has moved up to 82.8 cents, a rise of just over 6%. However we hit a peak of 85.6 cents on July 1, 2016 and the trend has been downwards since then.

The average asking price is $1,918 per month, up from $1,818 last year, but down from a peak of $2,105 on May 30, 2016.

Average days on market for closed leases is up to 34 having been as low as 25 in June and just above the 33 days in early December last year.

Overall I would say it looks slightly easier to find a rental now than it has been all year. However we are a long way from the days of 2008 and 2009 when there were almost 10,000 rentals listed on ARMLS to choose from. The real test will come in late February of 2017 which is when we usually see the low point in supply for the

December 7 – So now we are looking for the locations where the Contract Ratio has improved the most for sellers. These places have seen a decline in active listings or an increase in listings under contract or both, sufficient to show an increase of 30% or more in the Contract Ratio since this time last year:

  1. Phoenix 85003 – up 242.2% from 27.3 to 93.3
  2. Wickenburg 85390 – up 158.5% from 7.7 to 20.0
  3. Phoenix 85045 – up 146.8% from 22.7 to 56.1
  4. Tempe 85281 – up 106.3% from 50.0 to 103.1
  5. Coolidge 85128 – up 83.9% from 31.4 to 57.7
  6. Peoria 85381 – up 76.5% from 43.7 to 77.0
  7. Scottsdale 85250 – up 72.8% from 26.9 to 46.5
  8. Maricopa 85138 – up 63.0% from 38.1 to 62.0
  9. Phoenix 85054 – up 62.0% from 55.6 to 90.0
  10. Phoenix 85048 – up 57.3% form 30.7 to 48.3
  11. Phoenix 85028 – up 51.9% from 46.7 to 71.0
  12. Phoenix 85015 – up 50.8% from 41.0 to 61.8
  13. Mesa 85206 – up 49.8% from 36.8 to 55.1
  14. Tonopah 85354 – up 47.1% from 20.0 to 29.4
  15. Phoenix 85023 – up 44.0% from 66.7 to 96.0
  16. Gold Canyon 85118 – up 43.9% from 12.3 to 17.6
  17. Chandler 85286 – up 40.7% from 47.0 to 66.1
  18. Scottsdale 85258 – up 40.4% from 20.0 to 28.1
  19. Phoenix 85014 – up 39.2% from 26.8 to 37.3
  20. Phoenix 85085 – up 38.5% from 40.4 to 56.0
  21. Gilbert 95297 – up 37.7% from 58.4 to 80.4
  22. Mesa 85213 – up 37.0% from 44.9 to 61.4
  23. Glendale 85308 – up 31.6% from 51.5 to 67.8
  24. San Tan Valley 85143 – up 30.1% from 50.0 to 65.0
  25. Florence 85132 – up 30.0% from 33.9 to 44.1

Many of these areas are those that were suffering last year and have recovered quite a bit of momentum. Phoenix 85045 is a prime example, badly affected by the construction of the 202 freeway extension. Wickenburg too, has recovered somewhat from a very low 7.7 last year. Other examples include Coolidge and Gold canyon, both of which have come through some hard times are showing signs of recovery.

We see very few areas in the West valley, which for the past 4 years has been the hottest part of town. Most of the locations are in the Central or Southeast Valley with several from Pinal County too.

December 6 – Overall the market is warmer than it was at this time last year, with the Contract Ratio measuring 46.01 today and 43.19 on December 6, 2015. This is an advantage of 6.8%, which is down from an advantage of 11.4% three months ago. So although the market is showing improvement over last year by this measure (one of our favorites), it has lost some of that advantage over the recent past. We shall try to find out where this advantage has been lost. Examining those ZIP codes where the contract ratio has substantially declined from last year, we find the following:

  1. Glendale 85307 – down 82.3% from 250.0 to 44.4
  2. Glendale 85306 – down 57.3% from 200.0 to 85.4
  3. Phoenix 85017 – down 54.3% from 114.3 to 52.2
  4. Mesa 85210 – down 51.9% from 120.8 to 58.1
  5. Phoenix 85008 – down 51.4% from 102.8 to 50.0
  6. Youngtown 85363 – down 47.9% from 122.2 to 63.6
  7. Phoenix 85022 – down 47.9% from 75.0 to 39.1
  8. Phoenix 85035 – down 47.2% from 87.8 to 46.4
  9. Rio Verde 85263 – down 46.5% from 18.5 to 9.9
  10. Phoenix 85009 – down 46.3% from 71.4 to 38.3
  11. Mesa 85202 – down 45.7% from 111.4 to 60.5
  12. Surprise 85388 – down 44.4% from 79.4 to 44.1
  13. Phoenix 85043 – down 43.1% from 129.2 to 73.4
  14. New River 85087 – down 42.6% from 36.5 to 21.0
  15. Glendale 85301 – down 39.8% from 67.4 to 40.6
  16. Glendale 85305 -down 39.6% from 58.8 to 35.6
  17. Apache Junction 85219 – down 38.5% from 44.2 to 27.2
  18. Glendale 85310 – down 38.2% from 63.6 to 39.3
  19. Phoenix 85029 – down 36.1% from 79.2 to 50.6
  20. Phoenix 85033 – down 34.9% from 90.0 to 58.6
  21. Tempe 85282 – down 31.9% from 86.2 to 58.7
  22. Phoenix 85083 – down 31.7% from 57.6 to 39.4
  23. Surprise 85379 – down 30.1% from 71.5 to 50.0
  24. Phoenix 85037 – down 29.8% from 136.1 to 95.5
  25. Wittmann 85261 – down 29.8% from 45.0 to 31.6
  26. Scottsdale 85262 – down 28.4% from 12.6 to 9.0
  27. Phoenix 85019 – down 26.2% from 72.7 to 53.7
  28. Phoenix 85042 – down 24.7% from 86.4 to 65.0
  29. Glendale 85303 – down 24.6% from 85.7 to 64.6
  30. Surprise 85374 – down 24.4% from 52.9 to 40.0
  31. Tolleson 85353 – down 24.0% from 96.2 to 73.0
  32. Surprise 85378 – down 22.9% from 125.0 to 96.4
  33. Avondale 85392 – down 21.6% from 103.3 to 81.1
  34. Queen Creek 85142 – down 20.7% from 55.1 to 43.7
  35. Tempe 85284 – down 20.3% from 37.5 to 29.9

All the above are at least 20% weaker than December 2015 as measured by their contract ratio.

Much of the formerly high-flying Northwest Valley is seeing a significant negative change from this time last year, with higher inventories and lower demand. This is particularly true of Surprise and Glendale plus many western areas of Phoenix. As a result we would expect lower rates of appreciation in the Northwest and inner West Valley in 2017. These areas have large numbers of rental homes and it is possible that landlords will lighten their portfolios in 2017 and 2018.

The contract ratio of 9.0 for Scottsdale 85262 is the lowest we have seen since 2009 and confirms a remarkable lack of buying interest for the very large number of homes for sale in this ZIP code. Rio Verde is also much weaker than last year although it typically has very low contract ratio readings at all times.

The contract ratio of 46.4 for Phoenix 83035 is the lowest we have seen since 2011. The Maryvale area is looking much softer than a year ago with 85035 showing the highest number of active listings since early 2014 and the lowest number of pending listings since 2008.

To balance these weaker areas there are many that are stronger and we will examine these in depth tomorrow.

December 5 – Which type of home has appreciated most over the past 2 years? There are 8 types defined by ARMLS

  • Single family detached
  • Townhouse
  • Apartment Style / Flat
  • Gemini / Twin
  • Patio Home
  • Manufactured / Mobile
  • Loft Style
  • Modular Prefab

Unfortunately two different agents can often disagree about what type a specific house is, so the use of these terms is inconsistent. Putting that aside for a moment, it is clear that certain types have appreciated faster than others over the past 24 months. We eliminated 2 types from consideration because they are relatively rare and the data is too sparse to be statistically reliable. These are loft style and modular / prefab.

For the other types we see the following:

Dwelling Type Annual Average $/SF Dec 1, 2014 Annual Average $/SF Dec 1, 2015 Annual Average $/SF Dec 1, 2016 2 Year Change %
Single Family Detached $127.45 $132.99 $141.22 10.8%
Townhouse $119.04 $128.21 $139.68 17.4%
Apartment Style / Flat $136.47 $143.84 $150.40 10.2%
Gemini / Twin $83.95 $92.81 $104.05 23.9%
Patio Home $150.71 $157.80 $162.30 7.7%
Manufactured / Mobile $66.39 $70.19 $79.10 19.1%


Generally, the pattern reflects what has been happening to price ranges. So the most expensive house type as far as price per sq, ft,. is concerned, Patio Homes, had the lowest appreciation rate.

However the least expensive home type, Manufactured / Mobile, did not have the highest appreciation rate, only the second highest. The honor for highest appreciation rate goes to Gemini / Twin Homes with an astounding 23.9% gain over 24 months.

December 4 – Thanks to the several factors, but especially the slowdown in closings that occurred in October and November 2015 after the introduction of new TRID procedures, the annual sales rate has ticked up sharply for most parts of the market. We can compare cities and see how much benefit they are seeing in their annual sales rate (single family sales only):

  1. Wittmann – from 73 to 104 – up 42.5%
  2. Coolidge – from 164 to 207 – up 26.2%
  3. Florence – from 458 to 560 – up 22.3%
  4. Laveen – from 825 to 985 – up 19.4%
  5. Chandler – from 3,959 to 4,614 – up 16.5%
  6. Buckeye – from 1,805 to 2,067 – up 14.5%
  7. Rio Verde – from 85 to 97 – up 14.1%
  8. Casa Grande – from 853 to 945 – up 10.8%
  9. Maricopa – from 1,501 to 1,661 – up 10.7%
  10. Apache Junction – from 584 to 639 – up 9.4%
  11. Gilbert – from 4,970 to 5,397 – up 8.6%
  12. Mesa – from 6,194 to 6,723 – up 8.5%
  13. Peoria – from 3,035 to 3,226 – up 6.3%
  14. Queen Creek – from 3,035 to 3,226 – up 6.5%
  15. Tempe – from 1,357 to 1,439 – up 6.0%
  16. Goodyear – from 1,820 to 1,928 – up 5.9%
  17. Wickenburg – from 136 to 144 – up 5.9%
  18. Eloy – from 88 to 93 – up 5.7%
  19. Phoenix – from 15,381 to 16,240 – up 5.6%
  20. Sun Lakes – from 514 to 542 – up 5.4%
  21. Surprise – from 3,173 to 3,328 – up 4.9%
  22. Anthem – from 609 to 638 – up 4.8%
  23. Waddell – from 244 to 255 – up 4.5%
  24. Sun City West – from 1,097 to 1,144 – up 4.3%
  25. Cave Creek – from 699 to 728 – up 4.1%
  26. Gold Canyon – from 392 to 406 – up 3.6%
  27. Sun City – from 1,193 to 1,227 – up 2.8%
  28. Tolleson – from 605 to 621 – up 2.6%
  29. Arizona City – from 219 to 224 – up 2.3%
  30. Scottsdale – from 4,789 to 4,892 – up 2.2%
  31. Glendale – from 3,652 to 3,721 – up 1.9%
  32. Avondale – from 1,348 to 1,371 – up 1.7%
  33. Fountain Hills – from 494 to 502 – up 1.6%
  34. Litchfield Park – from 593 to 600 – up 1.2%
  35. Youngtown – from 114 to 112 – down 1.8%
  36. El Mirage – from 641 to 597 – down 6.9%
  37. Tonopah – from 41 to 38 – down 7.3%
  38. Paradise Valley – from 370 to 339 – down 8.4%
  39. Carefree – from 105 to 83 – down 21.0%
  40. New River – from 199 to 151 – down 24.1%

Annual sales rates are non-volatile things so a big movement is very important.

Changes in the smaller cities are less significant but it takes a massive swing to move a city like Chandler up 16.5%. That indicates a very strong market, with Buckeye and Maricopa not too far behind.

December 3 – Days of inventory for all areas & types has dropped sharply in the last week thanks to a lot of active listings disappearing at the end of November. We currently have a reading of just over 100, down from 109 this time last year and 131 in 2014.

It is interesting to see how days of inventory has changed for each price range over the last year:

Price Range Days of Inventory Dec 2015 Days of Inventory Dec 2016 % Change
Under $100K 46 59 +31%
$100K-$125K 42 53 +26%
$125K-$150K 42 40 -5%
$150K-$175K 61 51 -16%
$175K-$200K 71 66 -7%
$200K-$225K 75 70 -7%
$225K-$250K 86 71 -17%
$250K-$275K 95 78 -18%
$275K-$300K 102 82 -20%
$300K-$350K 120 95 -21%
$350K-$400K 138 116 -16%
$400K-$500K 187 143 -13%
$500K-$600K 209 179 -14%
$600K-$800K 236 244 +3%
$800K-$1M 332 310 -7%
$1M-$1.5M 382 376 -2%
$1.5M-$2M 512 497 -3%
$2M-$3M 776 651 -16%
Over $3M 1,012 1,149 +13%


We note the increases in inventory under $125K, between $600K and $800K and over $3 Million.

Looking best from a seller’s perspective are the lower inventory level between $150K and $600K and between $2 Million and $3 Million.

December 2 – The Cromford® Market Index for the single family markets in the largest 17 cities has moved as follows over the past month:

The cities with deteriorating markets for sellers outnumber those with improving markets by 11 to 6. However in 3 cases (Goodyear, Phoenix, Peoria) the deterioration is extremely small, so a tiny change could swing the balance in other direction by 8 to 9.

The expensive areas of Cave Creek, Paradise Valley and Scottsdale are providing most of the negative momentum, although Fountain Hills is still high in the table, thanks to its superior supply situation.

The top improvers are Tempe, Avondale, Chandler and Gilbert.

Chandler is suffering from weak inventory trends in 85224, 85249 85286 and especially 85225, which is improving the negotiation power for sellers. Similar things are afoot for sellers in Gilbert 85233, 85234 and 85295.

December 1 – The closed sales numbers for November 2016 are looking huge compared with November 2015:

  1. Chandler up 67%
  2. Goodyear up 51%
  3. Avondale up 47%
  4. Peoria up 47%
  5. Queen Creek up 47%
  6. Gilbert up 38%
  7. Tempe up 31%
  8. Phoenix up 30%
  9. Scottsdale up 28%
  10. Mesa up 25%
  11. Glendale up 24%
  12. Surprise up 23%

These are single family sales numbers for the 12 largest cities.

This is deceptive however.

In November 2015 the title companies were struggling with the new closing procedures introduced by TRID and closed sales were unusually low. Listings under contract were piling up. At the time we estimated that 500 listings failed to close and slipped from November into December.

Also November 2016 had one more working day (19) than November 2015 (18). This means we should expect 5.6% more sales if the market were in the same state of play.

These factors mean the volume increase is overstated by about 16%. The true increase in sales rate is about 16% overall.

Still not too shabby.

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

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

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

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

The month over month changes look like this:

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

The top locations for YTD 2016 are:

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

Scottsdale is some way behind at 613.

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

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

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

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

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

Nothing spectacular there, just healthy.

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

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

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

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

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

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

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

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

The chief offenders in the deterioration are:

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

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

The cities that are looking best for sellers are:

  • Chandler
  • Avondale
  • Tempe

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

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

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

All the rest are above 5% over 2 years.

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

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

The high flyers are as follows:

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

Everywhere else is below 30%.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Overall sales are up 7% from a year ago.

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

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

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

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

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

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

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

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

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

Other areas have seen supply go down, for example:

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

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

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

Notable declines are to be found in:

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

Notable increases include:

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

These are still positive however.

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

October 31 – September saw a lull in Notices of Trustee Sale but October went back to normal with 644 across Maricopa County. There were 726 in October 2015, so we are still on a slow downward trend despite the odd bump from month to month. Year to date we are down 27% compared with last year at 6,792 after 10 complete months.

Completed trustee deeds dropped slightly in October compared with September, down to just 239 across Maricopa County. Year to date we have 2,913 which is down 43% compared to last year at this time. Last month’s total is down 96% from the peak in March 2010.

October 30 – Last year at this time we entered a 6 week period with a notable decline in the monthly sale rate, enough to take us 5% below the equivalent monthly sales rate for November 2014. In contrast this year, we are seeing an uptick in the monthly sales rate. As of today we are 14% ahead of October 30, 2015. That is the highest annual percentage growth in sales since August 2015.

October 29 – If the single family permits for September were a little underwhelming, the multi-family permits made up for it, with a total of 1,562 across Maricopa and Pinal. The is the fifth highest monthly total we have recorded in the last ten years. Big contributions came from:

  1. Phoenix 498
  2. Chandler 429
  3. Scottsdale 373
  4. Mesa 170
  5. Tempe 82

Unusually the permits included a a four-plex in Paradise Valley, with a construction cost over $2 million.

October 28 – The single family building permit count for September was 1,467 across Maricopa and Pinal counties. This is only a very slight increase on the 1,455 we saw in September last year and represents a bit of a cooling off. Having risen quickly from 975 in January 2015 to 1,489 in March 2016, the rolling 12 month average has stalled at about 1,510 per month and has barely changed for the last 7 months.

The year to date counts for the top 10 areas are:

  1. Phoenix 1,914
  2. Mesa 1,639
  3. Gilbert 1,276
  4. Peoria 1,250
  5. Unincorporated Pinal County 1,124
  6. Buckeye 1,111
  7. Chandler 998
  8. Queen Creek 850
  9. Unincorporated Maricopa County 814
  10. Goodyear 786

October 27 – This week we are really seeing the effect of incoming supply in the Cromford® Market Index for the single family markets in the 17 largest cities:

We have 12 out of 17 cities deteriorating for sellers, with significant rises in supply for Surprise, Paradise Valley, Fountain Hills and Scottsdale.

The Southeast Valley is getting off lightly with only very modest growth in supply, particularly in Chandler and Mesa.

Goodyear is looking stronger than it has for a very long time while Maricopa continues to improve despite the highest annual appreciation rate of the 17. A high appreciation rate eventually leads to suppression of demand.

And OMG, Avondale has started to go back up again, increasing the gap at the top of the table. I have to admit it is getting boring having the same city at number 1 for so long. However I am sure sellers in Avondale just love it.

October 26 – We have been pointing out the serious long term effects of demographic changes for some time and it appears we are not alone. The Federal Reserve Board has a Division of Research and Statistics and Monetary Affairs and they recently published a paper entitled Understanding the New Normal: The Role of Demographics.

The Washington Post published an article on the paper here. We are experiencing the after-effects of the post-war baby boom with a significant slowdown in the growth of the labor force.

The conclusion is that demographics are the primary cause of slow growth in the economy and that anemic GDP growth is likely to remain with us for a long time.

October 25 – The S&P / Case-Shiller® Home Price Index® report was released today for the 3 month period ending in August 2016. The year over year changes were as follows:

  1. Portland 11.7%
  2. Seattle 11.4%
  3. Denver 8.8%
  4. Dallas 8.1%
  5. Tampa 7.6%
  6. Miami 7.1%
  7. San Francisco 6.7%
  8. Los Angeles 5.8%
  9. San Diego 5.8%
  10. Charlotte 5.8%
  11. Detroit 5.7%
  12. Las Vegas 5.2%
  13. Atlanta 5.2%
  14. Phoenix 5.2%
  15. Minneapolis 5.2%
  16. Boston 4.1%
  17. Chicago 4.1%
  18. Cleveland 2.9%
  19. Washington DC 2.3%
  20. New York 1.7%

At 5.2% Phoenix is just below the national average of 5.3% and thus completely unexceptional. The top 3 remain the same as last month though they are slowing down a little.

The month over month changes look like this:

  1. Phoenix 0.59%
  2. New York 0.58%
  3. Tampa 0.55%
  4. Dallas 0.50%
  5. Seattle 0.50%
  6. Chicago 0.49%
  7. Minneapolis 0.46%
  8. Portland 0.45%
  9. Detroit 0.44%
  10. Miami 0.42%
  11. Charlotte 0.42%
  12. San Francisco 0.41%
  13. Los Angeles 0.37%
  14. Washington DC 0.36%
  15. Denver 0.33%
  16. Boston 0.31%
  17. Atlanta 0.23%
  18. San Diego 0.13%
  19. Las Vegas 0.12%
  20. Cleveland 0.06%

Now we see a reason to get excited. Phoenix is number 1 for home price appreciation month to month, up from 5th place last month.

October 24 – “The Presidential race already having an impact on the Phoenix-area housing market”. ???

Like Jim Belfiore, I am not seeing any evidence of this in the overall housing market. In fact the listings under contract chart confirms that there is more buyer contracting activity than at the same time last year. If there is any hesitation it is probably going to be in a few sectors of the luxury market, which is only a very small percentage of the total. Homes over $1 million represent less than 1.5% of unit sales. However they represent 8.5% of homes listed for sale. So there are far fewer buyers to go round and they are more likely to being distracted by politics.

I have never seen the housing market distracted by an election, and although I dearly wish this one would just stop already, I don’t believe it is having an appreciable effect now.

Of course policy decisions taken after an election could potentially have a major effect on the housing market.

October 23 – The statistics based on public records for Maricopa & Pinal counties are now complete for September and reveal the following:

  • Normal single family resales were up 5.8% compared with September 2015
  • New single family homes were up 29.7%
  • Distressed single family sales were down 23%
  • Total dollar volume increased by 15.4% for single family homes
  • Total dollar volume increased by 19.3% for condo / townhouses
  • Average price per sq. ft. for single family homes grew 6.7% to $140.29
  • Average price per sq. ft. for condo / townhouses grew 8.7% to $146.71

October 22 – The influx of new listings that we see every year from late September to Thanksgiving tends to put some downward pressure on the Cromford® Market Index, because supply inevitably grows. We just don’t have the sales rate to eat up all the new listings at this time of year. However we would not take this as a negative sign this year. The “springiness” in the weekly sales chart and pending listing chart both look more impressive this year than any since 2012 and the Listing Success Rate is much stronger than usual for the time of year.

There is nothing very remarkable or dramatic going on, but the small signs I see point to additional market strength rather than weakness.

October 21 – The Canadian dollar is currently worth about 75 cents US, down roughly 25% from 2012 and 2013 when it ranged between 95 cents and $1.03. This makes homes in Arizona much more expensive than they were a few years ago, if you are converting funds to or from Canadian currency. In the first 9 months of 2016 we have seen an exodus of Canadian-based homeowners with 1,736 selling up and only 333 purchasing within Maricopa County, a net loss of 1,403 homeowners.

In the same 9 months of 2015 we saw a net loss of 679 (1,323 sales and 644 purchases) and in 2014 we saw a gain of 250 (820 sales and 1,070 purchases).

The boom years of 2012, 2013 and 2014 gave us net gains of 3,327, 2,572 and 986 respectively, so the current exit rate is less than half the arrival rate of 2012.

I do not know if we have reached the peak Canadian exit rate, but we are currently losing about 7% of home-owning Canadians per year, something we have never seen before.

October 20 – Today we look once more at the Cromford® Market Index for the single family markets in the largest 17 cities within Greater Phoenix.

These numbers reflect the swing away from sellers that we usually see during October and November due to declining sales rates and increasing new listings. We see 11 cities deteriorating for sellers and 6 improving. The overall change is not huge however and the market remains in good health.

The Southeast Valley looks strongest with Mesa, Chandler and Tempe among the 6 improving areas. Gilbert and Queen Creek declined however. The Northeast Valley is affected most by the new supply with Scottsdale, Paradise Valley and Fountain Hills moving backwards. Cave Creek managed a small gain.

The West Valley is mixed with Glendale improving, but Surprise, Goodyear, Buckeye and Peoria all weakened for sellers with a stronger supply trend than we have seen for some time. Buckeye is the only city that is not a seller’s market among these 17.

October 19 – Looking at the broader regions within Greater Phoenix, we see inventory rising fastest in the Northeast and slowest in the Southeast. The change in days of inventory over the past month was as follows:

Region Days of Inventory 9/1/16 Days of Inventory 10/1/16
Southeast 82 84
Northeast 176 187
Phoenix 87 90
West 80 84


October 18 – The biggest difference between 2015 and 2016 has been the market share gains made by new homes over re-sales. Based on year to date sales at the end of August, overall dollar volume is up by 13.6% for single family and townhouse / condo properties across Maricopa and Pinal Counties. However new home dollar volume is up by 34.6% while re-sales are up by only 10.3%. In market share terms new homes have grown from a 13.6% share to 16.1%. New home developers have done more in 2016 to address the lower price ranges and unit counts are up 33% year to date.  Analyzing by city we see the following unit sales growth:

City New Homes YTD 2015 New Homes YTD 2016 % Change
Mesa 734 1,205 64%
Peoria 743 1,114 50%
Phoenix 803 976 22%
Gilbert 990 946 -4%
Chandler 370 765 107%
Buckeye 523 744 42%
Queen Creek 432 595 38%
San Tan Valley 414 571 38%
Goodyear 465 545 17%
Scottsdale 253 332 31%
Surprise 261 257 -2%
Laveen 147 233 59%
Maricopa 192 205 7%
Florence 139 203 46%
Cave Creek 114 129 13%
Tolleson 78 116 49%
Avondale 44 107 143%
Glendale 39 102 162%
Litchfield Park 100 77 -23%


October 17 – Tina Tamboer has been conducting research into the fix and flip market and has published her findings in a Powerpoint presentation that you can download from our web site:

2016-10 Fix and Flip Market.

October 11 through October 16 – Due to vacation, the only observations I have been making are of beautiful Lake Powell. Here is a picture my wife Andrea took of the sunset on October 12. Taken with a Samsung S7 Edge cell phone from the deck of our houseboat timeshare.

Perhaps it will encourage more people to move to Arizona?

Actually we were about 1 mile inside Utah when she took this shot, but let’s not split hairs.

October 10 – The Black Knight Financial Services Mortgage Monitor report for August has been released and shows the vast majority of states continue to experience lower delinquency rates than for August 2015. The only exception is North Dakota, with a 6.2 increase in non-current loans. Other fossil-fuel dependent states are seeing lower delinquencies but only small declines. These include Louisiana, West Virginia, Wyoming and Alaska.

As you might expect the greatest percentage drops in delinquency are found in states where the housing market is buoyant. These include Washington, Colorado, Oregon, Idaho, Nevada and Florida, all showing declines in delinquency of over 20%.

Arizona is in the middle with a decline of 11%. We are starting to rise up the delinquency table because states like Washington and Oregon are losing their delinquent loans faster than we are.

October 9 – Today we are examining pricing across the Central Valley, comparing 3Q 2016 with 3Q 2015 for all property types.

City ZIP Quarterly Average $/SF 3Q 2015 Quarterly Average $/SF 3Q 2016 % Change
Phoenix $136.77 $146.36 7.0%
85003 $237.47 $210.37 -12.9%
85004 $179.67 $196.87 8.7%
85006 $150.54 $178.39 15.6%
85007 $166.12 $164.05 -1.3%
85008 $126.35 $146.46 13.7%
85009 $80.05 $96.33 16.9%
85012 $182.06 $219.21 16.9%
85013 $161.82 $184.99 12.5%
85014 $148.82 $172.42 13.7%
85015 $111.57 $120.23 7.2%
85016 $193.76 $198.85 2.6%
85017 $79.72 $92.44 13.8%
85018 $256.01 $253.03 -1.2%
85019 $82.78 $97.02 14.7%
85020 $156.51 $158.23 1.1%
85021 $163.11 $158.18 -3.1%
85022 $134.73 $143.06 5.8%
85023 $123.12 $132.24 6.9%
85024 $140.21 $155.05 9.6%
85027 $117.89 $129.22 8.8%
85028 $172.09 $177.39 3.0%
85029 $104.15 $118.88 12.4%
85031 $74.25 $89.85 17.4%
85032 $134.11 $151.03 11.2%
85033 $83.90 $95.21 11.9%
85034 $114.80 $102.98 -11.5%
85035 $90.38 $99.77 9.4%
85037 $86.40 $99.54 13.2%
85040 $89.25 $99.13 10.0%
85041 $90.74 $99.82 9.1%
85042 $109.21 $122.46 10.8%
85043 $89.73 $100.13 10.4%
85050 $164.43 $172.83 4.9%
85051 $91.03 $98.86 7.9%
85053 $104.63 $113.43 7.8%
85054 $198.94 $194.68 -2.2%
85083 $129.43 $131.76 1.8%
85085 $135.65 $142.32 4.7%
85086 $135.04 $138.04 2.2%
New River 85087 $123.35 $137.86 10.5%

Dramatic variations in appreciation occur from a low of -11.5% in 85034 to a high of 17.4% in 85031.

It is noteworthy that 85018 made a much weaker showing in 3Q 2016 than in the previous 8 quarters. Generally speaking the south and west of Phoenix showed the strongest pricing trends, though some spots in the north (e.g. 85024, 85032) also did well.

October 8 – Today we are examining pricing across the Northeast Valley, comparing 3Q 2016 with 3Q 2015 for all property types.

City ZIP Quarterly Average $/SF 3Q 2015 Quarterly Average $/SF 3Q 2016 % Change
Carefree 85377 $250.29 $198.69 -20.6%
Cave Creek 85331 $171.19 $181.54 6.0%
Fountain Hills 85268 $183.25 $184.00 0.4%
Paradise Valley 85253 $318.85 $324.25 1.7%
Rio Verde 85263 $155.97 $187.66 20.3%
Scottsdale $212.30 $219.84 3.6%
85250 $191.72 $185.37 -3.4%
85251 $190.32 $221.87 14.2%
85254 $184.81 $191.18 3.3%
85255 $246.19 $264.80 7.0%
85257 $157.87 $173.67 9.1%
85258 $213.77 $217.84 1.9%
85259 $204.02 $210.06 2.9%
85260 $191.18 $196.50 2.7%
85262 $270.81 $259.47 -4.4%
85266 $224.91 $223.24 -0.7%

Far fewer ZIP codes exist in the Northeast Valley, but four of them showed negative appreciation when comparing 3Q sales in 2015 and 2016. Carefree had only 18 sales in 2016 compared with 34 in 2015 so the very weak pricing is based on a low sample. The same is true of Rio Verde but with the opposite effect. Sales grew from 17 to 29 and pricing showed an abnormal jump.

Yet again 85251 was an outstanding price performer in the Northeast Valley.

October 7 – Today we are examining pricing across the West Valley, comparing 3Q 2016 with 3Q 2015 for all property types.

City ZIP Quarterly Average $/SF 3Q 2015 Quarterly Average $/SF 3Q 2016 % Change
Avondale $95.97 $104.98 9.4%
85323 $88.23 $101.10 12.7%
85392 $101.49 $108.84 6.8%
Buckeye $95.94 $102.70 7.1%
85326 $85.16 $94.95 10.3%
85396 $114.07 $117.18 2.7%
El Mirage 85335 $88.69 $101.62 14.6%
Glendale $114.42 $122.19 6.8%
85301 $76.61 $87.56 12.5%
85302 $98.04 $108.61 9.7%
85303 $99.22 $113.34 12.5%
85304 $107.17 $121.94 12.1%
85305 $104.91 $116.86 10.2%
85306 $109.69 $125.18 12.4%
85307 $97.88 $108.20 9.5%
85308 $130.04 $136.62 4.8%
85310 $141.90 $137.17 -3.5%
Goodyear $111.42 $120.77 8.4%
85338 $105.57 $114.66 7.9%
85395 $120.77 $130.88 7.7%
Laveen 85339 $92.42 $100.11 8.3%
Litchfield Park 85340 $110.73 $116.58 5.3%
Peoria $122.34 $127.93 4.6%
85345 $102.76 $113.84 9.7%
85381 $119.03 $124.35 4.3%
85382 $123.08 $130.64 5.8%
85383 $130.48 $132.99 1.9%
Sun City $90.64 $98.60 8.8%
85351 $86.67 $92.62 6.4%
85373 $98.52 $107.51 8.4%
Sun City West 85375 $115.13 $123.90 7.1%
Surprise $105.55 $111.71 5.8%
85374 $120.21 $124.09 3.1%
85378 $98.97 $113.15 12.5%
85379 $96.51 $105.18 8.2%
85387 $129.19 $129.30 0.1%
85388 $94.51 $101.67 7.0%
Tolleson 85353 $87.49 $96.88 10.7%
Tonopah 85354 $69.85 $71.47 2.3%
Waddell 85355 $102.74 $104.53 1.7%
Wickenburg 85390 $124.66 $112.31 -9.9%
Wittmann 85361 $96.97 $113.47 17.0%
Youngtown 85363 $86.07 $96.74 12.4%

Once more we see very few ZIP codes declining (only 85310 and 85390) while 12 appreciated by more than 10%.

October 6 – It is time again to look at how the Cromford Market Index has fared for the single family market in the 17 largest cities.

Declining cities outnumber advancers by 10 to 7, but the picture is more balanced than that comparison suggests. 6 of the 10 declining cities fell by 2% or less leaving only Avondale, Surprise, Goodyear and Buckeye cooling by more than 2%. We note that these are all in the West Valley.

Strong advances can be seen in Cave Creek, Glendale, Chandler, Paradise Valley and Tempe. Overall we would say the market remains similar to a month ago with almost all areas and sectors in a seller’s market.

October 5 – Today we are examining pricing across Pinal County, comparing 3Q 2016 with 3Q 2015 for all property types.

City ZIP Quarterly Average $/SF 3Q 2015 Quarterly Average $/SF 3Q 2016 % Change
Apache Junction $106.92 $115.22 7.8%
85119 $112.04 $121.08 7.5%
85120 $102.67 $110.84 7.4%
Casa Grande $75.91 $81.53 7.4%
85122 $72.85 $78.41 7.1%
85194 $60.13 $71.66 16.1%
Coolidge 85128 $53.74 $57.89 7.7%
Eloy 85131 $93.77 $101.95 8.7%
Florence 85132 $77.96 $84.23 8.0%
Gold Canyon 85118 $145.09 $143.23 -1.3%
Maricopa $74.55 $84.09 12.8%
85138 $76.37 $85.43 10.6%
85139 $69.55 $79.45 12.5%
Queen Creek (including San Tan Valley) $98.64 $105.30 6.8%
85140 $95.17 $101.80 6.5%
85142 $110.04 $117.54 6.4%
85143 $85.21 $89.31 4.6%

By far the most expensive part of Pinal County, Gold Canyon 85118 was the only ZIP code in this area to show negative appreciation over the last 12 months.

October 4 – Today we are examining pricing across the Southeast Valley, comparing 3Q 2016 with 3Q 2015 for all property types.

City ZIP Quarterly Average $/SF 3Q 2015 Quarterly Average $/SF 3Q 2016 % Change
Ahwatukee $151.54 $156.29 3.0%
85044 $148.50 $159.18 6.7%
85045 $147.76 $147.12 -0.4%
85048 $155.33 $156.81 0.9%
Apache Junction $106.92 $115.22 7.8%
85119 $112.04 $121.08 7.5%
85120 $102.67 $110.84 7.4%
Chandler $138.55 $145.90 5.3%
85224 $137.04 $149.33 8.2%
85225 $129.94 $139.16 6.6%
85226 $142.62 $154.43 7.7%
85249 $135.50 $138.70 2.3%
85286 $143.04 $148.95 4.0%
Gilbert $131.01 $138.27 5.5%
85233 $133.60 $142.18 6.0%
85234 $133.80 $138.01 3.1%
85295 $127.82 $131.58 2.9%
85296 $129.95 $136.99 5.1%
85297 $126.51 $139.25 9.1%
85298 $135.64 $143.37 5.4%
Mesa $121.24 $128.02 5.6%
85201 $108.66 $119.67 9.2%
85202 $116.80 $127.31 8.3%
85203 $117.95 $125.67 6.1%
85204 $112.38 $129.52 13.2%
85205 $122.10 $129.50 5.7%
85206 $119.57 $120.37 0.7%
85207 $146.67 $150.94 2.8%
85208 $103.72 $117.57 11.8%
85209 $118.76 $123.25 3.6%
85210 $118.24 $124.84 5.3%
85212 $116.59 $119.52 2.5%
85213 $126.13 $126.75 0.5%
85215 $130.75 $135.72 3.7%
Queen Creek (including San Tan Valley) $98.64 $105.30 6.8%
85140 $95.17 $101.80 6.5%
85142 $110.04 $117.54 6.4%
85143 $85.21 $89.31 4.6%
Tempe $145.57 $153.79 5.6%
85281 $155.09 $166.85 7.0%
85282 $132.03 $142.93 7.6%
85283 $140.26 $144.28 2.8%
85284 $161.27 $164.84 2.2%
Sun Lakes 85248 $126.93 $131.47 3.6%

Influenced by the 202 extension, 85045 was the only ZIP code in this area to lose ground over the last 12 months.

October 3 – Pricing was weaker during the third quarter, as is usually the case every year, but shows signs of strengthening during the fourth quarter. Indeed, September was a much stronger month for prices than July and August. Looking at the quarterly averages by price range for the Greater Phoenix market (all property types) we see the following:

Price Range Quarterly Average $/SF 3Q 2015 Quarterly Average $/SF 3Q 2016 % Change
Up to $150K $87.49 $93.70 7.1%
$150K to $200K $104.17 $110.48 6.1%
$200K to $250K $118.65 $123.36 4.0%
$250K to $300K $128.54 $131.90 2.6%
$300K to $400K $138.70 $141.81 2.2%
$400K to $500K $153.60 $155.56 1.3%
$500K to $750K $181.06 $184.05 1.6%
$750K to $1M $225.33 $218.14 -3.2%
$1M to $2M $285.12 $272.68 -4.4%
Over $2M $395.24 $435.09 10.1%

We note that the luxury market over $2 million (albeit small with only 59 transactions during the third quarter) did a lot better from a pricing perspective than the luxury market under $2 million. Between $750K and $2 miilion average price per square foot declined. Between $400K and $750K prices kept roughly in line with inflation. Between $250K and $400K prices moved upwards by a little more than inflation. The market below $250K (which had almost 13,000 unit sales during the quarter), appreciated by more than twice the rate of inflation. Some geographical areas comfortably exceeded the highest rate shown here. We will look at prices by geography shortly.

October 2 – The number of Greater Phoenix single family active listings (excluding UCB and CCBC) by price range on October 1, 2016 compared with October 1, 2015 is as follows (single family only):

Price Range October 2015 October 2016 Growth
Under $100K 233 145 -38%
$100K-$125K 214 116 -46%
$125K-$150K 519 320 -38%
$150K-$175K 871 753 -14%
$175K-$200K 1,118 1,134 1%
$200K-$225K 920 1,018 11%
$225K-$250K 1,095 1,256 15%
$250K-$275K 825 911 10%
$275K-$300K 1,004 1,031 3%
$300K-$350K 1,533 1,498 -2%
$350K-$400K 1,382 1,349 -2%
$400K-$500K 1,544 1,728 12%
$500K-$600K 955 1,024 7%
$600K-$800K 958 1,094 14%
$800K-$1M 545 637 17%
$1M-$1.5M 540 589 9%
$1.5M-$2M 290 350 21%
$2M-$3M 283 291 3%
$3M+ 215 242 13%

The shortage of homes under $175,000 continues to drive prices up quickly at the bottom of the market.

After a pleasant fall in supply for luxury home sellers over the third quarter, they must brace themselves for the likelihood of a lot more competition arriving over the next 2 months and during the first quarter of 2017.

October 1 – Sellers will be hoping that we do not see too much of an increase in active listings between August and the end of November. Looking at the changes between September 1 and October 1, we can see a few ZIP codes where it looks like they will be disappointed. The active listing counts have not risen too much overall, but in the following ZIP codes we see relatively large increases in active single family listings for just one month:

  • Phoenix 85034 +100%
  • Fort McDowell 85264 +100%
  • Phoenix 85033 +55%
  • Mesa 85208 +47%
  • Superior 85173 +45%
  • Youngtown 85363 +38%
  • Sun City West 85375 +32%
  • Phoenix 85014 +31%
  • Sun City 85351 +31%
  • Glendale 85302 +30%
  • Rio Verde 85263 +27%
  • Eloy 85131 +26%
  • Phoenix 85023 +25%
  • Phoenix 85006 +24%
  • Gilbert 85296 +24%
  • Phoenix 85051 +23%
  • Gold Canyon +23%
  • Gilbert 85297 +23%
  • Scottsdale 85250 +23%
  • Gilbert 85234 +22%

September 30 – Even now there are those who would have you believe there is a wave of foreclosures coming along or a secret haul of REOs about to be released. Some suggest short sales are about to explode. There is absolutely no truth to any of these rumors. These people probably also believe that vaccines cause autism and that global warming is a hoax, so using factual evidence is not going to work on them. However for our subscribers I can report that the REO database in Maricopa County is down to a mere 1,100 parcels. September’s count of completed trustee sales in Maricopa County was a miniscule 230, 42% below 2015 and down from a peak of 5449 in March 2010. New notices of trustee sale amounted to just 544 in September, half of what we used to see in 2002 and down 95% from the peak of 10,712 in March 2009.

September 29 – This week the table of Cromford® Market Index values for the single family markets in the largest 17 cities shows more cities deteriorating for sellers than improving. This is the first time we have seen this situation since the first quarter and is due to the usual seasonal effects. We expect supply to increase between September and November, yet so far the increase has been fairly small in most areas. The 55+ areas are seeing the strongest growth in supply, but again this is normal for the time of year.

Big movers include Cave Creek and Paradise Valley to the upside. There are no double digit movers to the downside, though Avondale has descended from dizzy heights to almost join the rest of the pack.

September 28 – Single family permits for new homes in August gave us no surprises. There were 1,637 in Maricopa and Pinal, only 6% more than August 2015. As such this is a modest increase compared with earlier months.

Year to date totals for 2016 (with 2015 in parentheses) are:

  1. Phoenix 1,750 (1,459)
  2. Mesa 1,461 (1,110)
  3. Gilbert 1,153 (1,359)
  4. Peoria 1,105 (1,029)
  5. Unincorporated Pinal County 1,005 (1,008)
  6. Buckeye 967 (702)
  7. Chandler 924 (705)
  8. Queen Creek 755 (699)
  9. Goodyear 720 (891)
  10. Unincorporated Maricopa County 699 (543)

Scottsdale has slipped out of the top 10 to be replaced by Unincorporated Maricopa County.

September 27 – It is the time of the month for the S&P/Case-Shiller® Home Price Index® numbers and this month’s release covers sales between May and July 2016. Month over month changes look like this:

  1. Portland +1.16%
  2. Chicago +0.92%
  3. Denver +0.89%
  4. Detroit +0.83%
  5. Phoenix +0.78%
  6. Tampa +0.73%
  7. Dallas +0.68%
  8. San Diego +0.65%
  9. Boston +0.64%
  10. Minneapolis +0.64%
  11. Los Angeles +0.58%
  12. Seattle +0.56%
  13. New York +0.55%
  14. Las Vegas +0.52%
  15. Cleveland +0.50%
  16. Miami +0.41%
  17. Atlanta +0.39%
  18. Washington DC +0.37%
  19. Charlotte +0.35%
  20. San Francisco -0.02%

Phoenix is much higher up this list than it has been for many months. Portland and Denver continue their very strong run, while Chicago and Detroit have improved to join them. Seattle and San Francisco are showing unexpected weakness compared with the recent past.

The year over year table looks like this:

  1. Portland +12.40%
  2. Seattle +11.19%
  3. Denver +9.42%
  4. Dallas +8.33%
  5. Tampa +7.76%
  6. Miami +7.05%
  7. San Diego +6.03%
  8. San Francisco +6.01%
  9. Los Angeles +5.50%
  10. Las Vegas +5.39%
  11. Detroit +5.34%
  12. Charlotte +5.33%
  13. Atlanta +5.28%
  14. Phoenix +5.19%
  15. Minneapolis +4.99%
  16. Boston +4.20%
  17. Chicago +3.71%
  18. Cleveland +2.45%
  19. Washington DC +2.02%
  20. New York +1.74%

Phoenix is looking less impressive in this longer term view. Portland, Seattle and Denver are the top three as usual. These are all primary destinations for millennials.

September 26 – The Cromford® Market Index has run out of momentum and is likely to drift sideways or a little lower over the next 2 months. At 151.1, it has the same reading as a week ago and the Supply Index has slowly started to rise from its minimum of 70.2. The Demand Index is almost stationary at 106.3. Unless something happens to spur more demand we expect little change between now and the end of the year.

September 25 – Distressed sales are still contracting. During August the total number of distressed single family sales dropped another 20% from August 2015 while non-distressed sales grew by 14%. Reversions to beneficiary actually rose by 14% from 133 to 149 but true distressed sales dropped as follows:

  • third party purchases at trustee sale – down 9% from 180 to 164
  • HUD sales – down 57% from 30 to 13
  • bank owned homes – down 33% from 141 to 94
  • GSE owned homes – down 23% from 53 to 41
  • short sales & pre-foreclosures – down 16% from 210 to 177

September 24 – Looking at the public record data for the month of August, we can see that once again, new homes are grabbing market share. Among single family homes recorded deeds grew by 34% over August 2015 while the total only grew by a (still healthy) 14%. Examining dollar volume, single family grew by 22% overall while condos and townhomes grew by 31%. The single family market is still almost 10 times as large as the attached home market.

September 23 – This is the time of year when active listing counts start to climb, but so far the incoming listings are surprisingly light, especially considering how heavy they were during the first quarter. New listings since the beginning of September (all areas & types) are down 1.1% compared to 2015 but up 2.7% compared with 2014.

September 22 – The Cromford® Market Index for the single family markets in the 17 major cities show we are still in a favorable market for sellers:

Admittedly we have 8 cities showing some deterioration with 9 improving, but the percentage improvements tend to be much larger than the percentage deteriorations.

The more expensive cities are recovering from a disappointing first half year and have shown significant increases in their CMI over the last 2 months. The least expensive cities, such as Avondale, Surprise, Queen Creek, Maricopa and Buckeye are all lower over the last month, though only Avondale has shown a significant cooling off. Avondale could stand to lose some steam and is still top of the table, which is starting to get boring.

September 21 – Within the luxury market for single family homes over $1 million, most areas of the valley have seen a declining average price per sq ft over the last 12 months. However there are two exceptional areas bucking that trend. The first is immediately south and east of Camelback Mountain in ZIP codes 85018 and 85251 where the annual average has soared from $350 to around $380 per sq ft in the last 6 months. Most of this area is known as Arcadia and is shared by the cities of Phoenix and Scottsdale. The second exceptional area is the 85255 ZIP code which has seen a more gentle rise from around $360 to over $370 per sq. ft. over the last 2 years.

Paradise Valley has lost its crown as the most expensive ZIP code for million dollar homes with the annual average $/SF dropping from $375 in the summer of 2015 to just $354 this month. 85253 lies in fourth place with 85251, 85018 and 85255 all showing a higher average $/SF for homes over $1 million. Of course, these ZIP codes contain far more homes under $1 million than does Paradise Valley, so if we measure pricing for ALL homes within the ZIP code, 85253 still comes out ahead. Nevertheless it is clear that Arcadia and the DC Ranch area are currently very much in fashion with million dollar home buyers and are getting more attention in 2016 than they used to.

September 20 – It may be surprising how many countries are now in Stage 5 of Demographic Transition. This is situation where the birth rate is exceeded by the death rate. This is not because of abnormally high death rates. In fact these are generally lower than at any time in history. Armed conflict is actually at an all time low, despite all the violence that fills the headlines. Medicine reaches almost everywhere in the world. It is the birth rate which is reaching new lows, including here in America.

Here are the countries where the 2015 birth rate was lower than the death rate, according to the CIA World Fact Book

Country Birth Rate (per 1,000) Death Rate (per 1,000) Net Migration (per 1,000)
AUSTRIA 9.41 9.42 +5.56
BELARUS 10.70 13.36 +0.7
BOSNIA & HERZEGOVINA 8.87 9.75 -0.38
BULGARIA 8.92 14.44 -0.29
CROATIA 9.45 12.18 +1.39
CZECHIA (CZECH REPUBLIC) 9.63 10.34 +2.33
ESTONIA 10.51 12.40 -3.60
GERMANY 8.47 11.42 +1.24
GREECE 8.66 11.09 +2.32
HUNGARY 9.16 12.73 +1.33
ITALY 8.74 10.19 +4.10
JAPAN 7.93 9.51 0.00
LATVIA 10.00 14.31 -6.16
LITHUANIA 10.10 14.27 -6.27
MOLDOVA 12.00 12.59 -9.67
MONACO 6.65 9.24 +3.83
POLAND 9.74 10.19 -0.46
PORTUGAL 9.27 11.02 +2.67
ROMANIA 9.14 11.90 -0.20
RUSSIA 11.60 13.69 +1.69
ST PIERRE et MIQUELON 7.42 9.72 -8.49
SERBIA 9.08 13.66 0.00
SLOVENIA 8.42 11.37 +0.37
UKRAINE 10.72 14.46 -2.25

There are only 2 countries outside Europe in this list and only one in North America, the tiny French islands of St. Pierre et Miquelon. The former Eastern Bloc is well represented, but they have been joined by Portugal, Greece, Monaco, Italy and Germany.

Some of these countries (e.g. Austria, Czechia, Monaco, Portugal, Italy) are maintaining their population growth purely by strongly positive net migration. However even though Germany has been making headlines for its intake of migrants, the numbers were insufficient in 2015 to overcome the disparity between births and deaths. The same is true of Russia, Belarus, Croatia, Greece, Hungary and Slovenia.

The countries with the worst problems are those with negative net migration as well as deaths exceeding births. In Ukraine and Bulgaria, depopulation is giving rise to an every increasing number of ghost towns. Real estate is likely to lose value rapidly in this environment.

This list is getting longer each year (Austria just joined it), and it is likely to continue to expand over time to include all of Europe and much of the developed world, especially as the baby boomers exceed 80 years of age. This will not be a popular piece of advice, but we should be watching out for similar developments in the USA over the next 50 years. The trends are already starting to be seen in the US census numbers,

September 19 – The chart below describes the 5 stages of Demographic Transition.

We could describe the 5 stages as:

Stage 1 = Pre-industrial (e.g. USA in 1800)

Stage 2 = Developing (e.g. Afghanistan)

Stage 3 = Industrial (e.g. Mexico)

Stage 4 = Post-Industrial (e.g. USA today)

Stage 5 = Decline (e.g. Japan)

In many ways it is good that the human population stabilizes and even declines. This could prevent the exhaustion of the world’s natural resources. However our economies are based on assumptions of continual growth in GDP and this assumption underlies such things as the capitalist system, social security and eventual repayment of national debt. In a country with declining population all of these things become very difficult to sustain.

September 18 – Yesterday I looked at a small city in the USA whose population decline has led to weak home prices. Today let us look at Japan, the third largest economy in the world, but the first and primary example of a long term declining population. Has their weak population trend been followed by a decline in home prices? A resounding yes is the correct answer. Although prices can be high in parts of Tokyo and elsewhere (just as they are in New York, London, Shanghai or Moscow) prices for the country of Japan as a whole have been on a down trend for the last 25 years. Look at the chart below using data from the Federal Reserve Bank of Dallas. This shows the “real home price index” for Japan, which is adjusted for inflation.

The home price index for the US is shown in comparison (based in the index produced by the FHFA).

With the index at 83.16, home prices in Japan have declined close to the lowest level since records started, when adjusted for inflation. They are almost 50% below the peak level reached in 1991.

September 17 – I have mentioned many times that the fundamental driver of housing demand is population growth. If the population declines then we do not need so many homes. If we get a situation where population starts to fall then it is natural for home prices to go into a long term slow decline in real terms. We have seen this within the USA is areas like the western part of upstate New York (e.g. cities such as Elmira). Between 2010 and 2015, 41 of the 50 counties of upstate New York lost population. You might think of New York itself as expensive, and it certainly is in Manhattan. But upstate New York has very cheap housing and these homes are unlikely to show long term appreciation while population continues to exit for other states. The median sales price in Elmira NY is $86,920 and the average price per sq. ft is $62. It has very affordable housing, but the climate does leave a lot to be desired once you have gotten used to Arizona.

People often tell me that jobs are the real driver of housing. This is not really correct. Job growth will often spur population growth since people will move to a city for a job. However people will also move to a city to retire. In fact much of the population growth in Greater Phoenix since 2010 is due to the increase in people over 65. Most of these people do not have a job and are not seeking one. They are moving for the climate and for leisure activities. Certainly there has been migration into Arizona for jobs, but some people of working age have left Arizona for work elsewhere, particularly those who do not have a legal right of residency. Many of those in the construction industry in 2008 are never coming back. Despite widespread belief to the contrary, detailed research suggests there has been net migration from Arizona to Mexico since 2010, not the other way round. This is probably because the economy in Mexico is growing faster and creating jobs faster than in Arizona. This does not mean our housing market has suffered, because the influx of retired people and second home buyers (e.g. Canadians, Californians, Washingtonians) has more than compensated for any loss of working age population to other US states, Mexico and Central America.

Job growth has helped the housing market in Central Arizona, but it is not the number one driver of demand. That would be population growth. This is why I am so concerned about birth rates dropping fast. This can lead to population declines over the long term, especially if deaths start to exceed births. This will not affect the housing market in the short or even medium term, but is likely to have a long term impact.

September 16 – The Census Bureau recently reported that the median household income surged 5.2% in 2015 from 2014. This is the largest jump ever reported, from $53,718 to $56,516. Despite this the median income has still not regained its high point of $57,909 attained in 1999.

With women now obtaining college degrees in much higher numbers than men, it is not surprising to see earnings for women rising 2.7% while men’s only rose 1.5%. A significant gender wage gap still exists, but it is closing.

The biggest message for me is that median household incomes did not rise at all in rural areas. Rural areas are seeing job losses and depopulation, which is obviously bad for rural housing markets.

The median household income in major cities surged by a remarkable 7.3% in a single year. This is likely to drive home prices higher in urban and close-in suburban areas.

September 15 – The Cromford® Market Index for the single family market in the 17 largest cities is telling us something about the luxury market.

We notice that the best positive moves for sellers are in Paradise Valley, Cave Creek and Scottsdale. These three cities have experienced weaker pricing trends than the rest of the valley over the last year, but remember that the Cromford® Market Index is a leading indicator while price is a trailing indicator. The CMI is saying that the current balance between buyers and sellers has swung significantly in favor of the sellers and this is likely to affect pricing going forward unless the situation is quickly reversed. Why are these three cities doing better? Well in Paradise Valley the change has taken place over the last 7 weeks with the Demand Index recovering strongly from 84.5 to 118.7 today. At the same time the Supply Index has dropped from 102.0 to 88.6. So we have a strengthening of demand and a fall in supply, a powerful combination which is likely to cheer up those sellers who have been facing negative appreciation for the last year.

The Demand Index has improved in Scottsdale (100.3 to 109.9 in 7 weeks) and in Cave Creek (102.5 to 121.1)

In the West Valley, the trends are mixed for sellers, with Avondale, Goodyear and Surprise deteriorating for sellers while Buckeye, Peoria and Glendale improved.

In the Southeast, Gilbert, Chandler and Tempe all improved for sellers while Mesa and Queen Creek eased up just a little.

Phoenix has been cooling recently and looks in danger of being overtaken by Scottsdale next week.

September 14 – A chart published by Motley Fool using data from the Census Bureau shows us the average net worth of an American, segmented by age group.

A message to the millennials out there. The equity in their own home represents 84% of the net worth of the average person 65 year or older. If you do not own a home you are building no home equity.

If you do not start building home equity at a young age, it can be difficult to catch up later. Please don’t say I didn’t warn you.

September 13 – Which ZIP codes have the most luxury home transactions? Well if we define luxury single family homes as those that sell for $500,000 or more the top 20 ZIP codes based on annual closed ARMLS listings up to August 31, 2016 are:

  1. Scottsdale 85255 – $737 million a year
  2. Paradise Valley 85253 – $539 million a year
  3. Scottsdale 85262 – $389 million a year
  4. Phoenix 85018 – $348 million a year
  5. Scottsdale 85259 – $255 million a year
  6. Scottsdale 85266 – $222 million a year
  7. Scottsdale 85254 $163 million a year
  8. Scottsdale 85258 – $155 million a year
  9. Cave Creek 85331 – $151 million a year
  10. Scottsdale 85260 – $150 million a year
  11. Fountain Hills 85268 – $141 million a year
  12. Chandler 85249 – $119 million a year
  13. Peoria 85383 – $96 million a year
  14. Phoenix 85016 – $93 million a year
  15. Mesa 85207 – $92 million a year
  16. Scottsdale 85251 – $83 million a year
  17. Gilbert 85298 – $72 million a year
  18. Anthem 85086 – $67 million a year
  19. Sun Lakes 85248 – $65 million a year
  20. Queen Creek 85142 – $65 million a year

ZIP codes are not created equal in size. In fact 85255 has an unfair advantage being enormous in comparison with most others in our area. In contrast, Carefree 85377 is tiny so does not make the top 20.

September 12 – The Black Knight Financial Services Mortgage Monitor is always worth a read. The latest report is based on July 2016 and for the first time in a long while we see some states with worse home loan delinquency rates than they had one year ago. These states are:

  1. North Dakota – non-current loans up 21.5%
  2. Alaska – non-current loans up 6.1%
  3. Wyoming – non-current loans up 2.5%
  4. West Virginia – non-current loans up 1.8%

All four of these states are heavily dependent on the energy sector (oil, gas and coal), so this delinquency deterioration is almost certainly due to the job losses that have occurred in conjunction with low energy pricing over the past 24 months.

Arizona has a 3.6% non-current rate, down by 5.3% from this time last year. Washington and Oregon, with their booming economies and booming housing markets, have moved past Arizona with improvements of 18.9% and 18.6% respectively.

Colorado is positioned to become the next state with the lowest delinquency rate of all, as North Dakota finally gives up that spot.

Nevada has seen the largest drop in delinquency over the past year, down by 20.3%.

September 11 – One of the best charts for showing price strength or weakness for a city is the annual appreciation chart for major cities. Here we see the single family markets compared among 17 cities based on the change in their annual average price per sq. ft. This chart uses weekly measurements and you can compare any set of cities but if we switch them all on we see they divide into 5 distinct groups at the moment:

1. The leaders:

  • Maricopa at 11.6%
  • Buckeye at 9.6%
  • Avondale at 9.5%

2, The main pack bunched together:

  • Glendale at 7.4%
  • Queen Creek at 7.3%
  • Phoenix at 7.3%
  • Tempe at 7.0%
  • Surprise at 6.7%
  • Peoria at 6.7%

3. Another bunch just behind them:

  • Goodyear at 6.1%
  • Mesa at 6.0%
  • Chandler at 5.7%
  • Gilbert at 5.5%

4. The laggards:

  • Cave Creek at 3.1%
  • Fountain Hills at 2.4%
  • Scottsdale at 1.4%

5. And trailing far behind:

  • Paradise Valley at -4.5%

It may surprise you how much this chart changes over time. Only a year ago, Paradise Valley was top at 9.3%, though a year before that it was at the bottom again at 3.9%.

Since September 2015 we have seen Glendale on top for a long time to be overtaken by Buckeye in June and then Maricopa at the end of July.

September 10 – More observations from the Maricopa County recorded deeds in August 2016, compared to August 2015:

  • the percentage of single family homes that were purchased to become rentals fell from 11.1% to 10.5%
  • the percentage of condo/townhouse homes that were purchased to become rentals rose from 20.4% to 22.4%
  • the percentage of homes of all types that were purchased to become rentals fell from 12.3% to 12.1%

Rental sales are below the long term average and the percentage is getting unusually low for single family homes. However condos & townhomes have retained more of their popularity with landlords.

September 9 – Looking at the Maricopa County recorded deeds in August (rather than the closed ARMLS listings), we see the following when comparing August 2016 with August 2015:

  • the percentage of re-sale single family and condo homes purchased to become rentals was 13.4% in both months – no change
  • the percentage of new single family and condo homes purchased to become rentals was 2.9% in both months – no change
  • the percentage of all single family and condo homes purchased to become rentals went down from 12.3% to 12.1%
  • the percentage of single family and condo sales that were newly constructed increased from 11.1% to 13.0%
  • the percentage of single family and condo homes that were purchased as second homes went down from 8.9% to 8.7%

While new homes are rapidly gaining market share at the expense of re-sales, primary residences are slowly gaining market share at the expense of second and vacation homes. In other words, Canadians and other snowbirds are slowly moving out and being replaced by local full time residents.

September 8 – Here are all the major and secondary cities where the Cromford® Market Index is lower than at the same time last year.

  1. Glendale
  2. Surprise
  3. Avondale
  4. Tempe
  5. Buckeye
  6. Sun City
  7. Casa Grande
  8. Sun City West
  9. Litchfield Park
  10. Arizona City
  11. Sun Lakes
  12. Paradise Valley
  13. Gold Canyon

The West Valley is not as strong for sellers as it was this time last year. These areas have seen the largest percentage price increases and price increases are supposed to cool the market.

The 55+ areas are also cooler than they were this time last year.

September 7 – Overall the market is in a similar position to last year at this time, as measured by the Cromford® Market Index. Here are all the major and secondary cities that have a Cromford® Market Index higher than at the same time last year:

  1. Phoenix
  2. Mesa
  3. Scottsdale
  4. Chandler
  5. Gilbert
  6. Peoria
  7. Queen Creek
  8. Goodyear
  9. Maricopa
  10. El Mirage
  11. Apache Junction
  12. Anthem
  13. Laveen
  14. Cave Creek
  15. Fountain Hills
  16. Tolleson

Most of the East Valley looks good by this measure.

September 6 – As a counterpoint to yesterday’s post, we now take a look at the ZIP codes at the bottom of the appreciation table:

  1. Phoenix 85034 -33.7% ($85.46 to $56.66)
  2. Arlington 85322 -11.4% ($88.04 to $77.99)
  3. Phoenix 85004 -7.8% ($192.67 to $178.04)
  4. Casa Grande 85194 -6.3% ($118.40 to $110.94)
  5. Gila Bend 85337 -5.1% ($51.63 to $49.02)
  6. Paradise Valley 85253 -4.9% ($354.88 to $337.60)
  7. Scottsdale 85262 -4.5% ($281.58 to $268.81)
  8. Gold Canyon 85118 -3.6% ($153.68 to $148.09)
  9. Eloy 85131 -3.2% ($100.45 to $97.26)
  10. Scottsdale 85266 -3.2% ($232.27 to $224.92)

A lot of these are ZIP codes with low (85131, 85194) or very low (85004, 85034, 85322, 85337) transaction counts, so even when we look at annual averages, their appreciation rates can be very volatile. This does not apply to 85253, 85262, 85266 or 85118. These are active and very important ZIP codes and here we see real signs of the significant weakness in the upper end of the luxury market that has been evident since August 2015. These are not the only luxury areas that have depreciated. 85016 and 85260 were just outside the list of 10 at -1.4% and -0.5%. The largest luxury ZIP code of all, 85255, just squeezed itself into positive territory at +1.0%.

Not all luxury ZIP codes fared badly however. We see 85251 at +12.0% and 85018 at +5.1%. Proximity to shopping and trendy restaurants seem to be increasingly important in today’s market.

September 5 – We would like to shine the spotlight on the ZIP code appreciation chart. This is for single family homes only and uses the annual average sales price per square foot as of September 1 2016, comparing it with September 1, 2015. We see some interesting ZIP codes at the top of the appreciation table:

  1. Superior 85173 +23.8% ($47.17 to $58.38)
  2. Phoenix 85031 +22.9% ($70.71 to $86.88)
  3. Phoenix 85009 +22.8% ($75.45 to $92.62)
  4. Phoenix 85017 +20.3% (78.36 to $94.26)
  5. Morristown 85342 +20.2% ($95.71 to $115.03)
  6. Phoenix 85040 +20.0% ($80.14 to $96.16)
  7. Phoenix 85019 +20.0% ($79.62 to $95.54
  8. Phoenix 85033 +18.3% ($80.91 to $95.69)
  9. Glendale 85301 +19.1% ($79.65 to $94.03)
  10. Youngtown 85363 +17.2% ($79.97 to $93.71)

These ZIP codes in the top ten are all relatively inexpensive even now and have been appreciating some 5 times as fast as the overall valley. They are also appreciating faster than rents are rising, so it is possible some of the landlords in these areas may decide to try to cash out their capital gains at some point. If they bought properties at the low point, many are looking at some pretty startling percentage increases. Here are the gains from the minimum level:

  1. Superior 85173 +82% from $32.02
  2. Phoenix 85031 +251% from $24.72
  3. Phoenix 85009 +275% from $24.68
  4. Phoenix 85017 +242% from $27.58
  5. Morristown 85342 +57% from $73.81
  6. Phoenix 85040 +151% from $38.37
  7. Phoenix 85019 +220% from $29.88
  8. Phoenix 85033 +230% from $29.04
  9. Glendale 85301 +185% from $33.03
  10. Youngtown 85363 +137% from $39.56

Of course these increase ignore the costs of refurbishment. At the time of the market bottom, most of these homes were in poor condition and needed a lot of TLC to get them back into rentable or saleable condition. However those people brave enough to take on the risk and the work have been paid back handsomely.

September 4 – Although the Cromford® Market Index for all areas & types reached 150 a few days ago, it looks unlikely to make much further upward movement in the weeks ahead. This is the time of year when supply starts to creep up so we doubt that the Cromford® Supply Index is going to drop below 70. The Cromford Demand Index has been stationary around 106 for some time and looks like it may settle back just a little. This means we are expecting the CMI to stay in the high 140s to low 150s for the foreseeable future. This is not bad news. We do not want a strong market to get too strong. We have all seen where that takes us, back in the heady days of 2004 and 2005.

September 3 – You do not have to actually read any of the words or numbers in a snapshot to get a good idea of how the market is doing. You can get a general picture by examining which color is dominant in the trend symbols. The ST symbols show the short term trend and the LT symbols show the long term trend. They are green when the change between last month and this month (ST) or between the same month last year and this month (LT) is favorable for sellers. They are red when it is favorable for buyers. So for example we can see that things are not very good for sellers in the price range $2 million to $3 million:

While sellers are having a great time in the price range from $250,000 to $275,000:

September 2 – The monthly sales counts for August compare with August 2015 as follows (single family only):

Price Range August 2015 August 2016 Growth
Under $100K 119 87 -27%
$100K-$125K 213 97 -54%
$125K-$150K 567 380 -33%
$150K-$175K 681 667 -2%
$175K-$200K 722 830 15%
$200K-$225K 544 611 12%
$225K-$250K 551 697 26%
$250K-$275K 374 521 39%
$275K-$300K 415 519 25%
$300K-$350K 453 622 37%
$350K-$400K 335 448 34%
$400K-$500K 342 495 45%
$500K-$600K 152 217 43%
$600K-$800K 155 158 2%
$800K-$1M 63 67 6%
$1M-$1.5M 44 62 41%
$1.5M-$2M 26 23 -12%
$2M-$3M 13 9 -31%
$3M+ 6 5 -17%

Under $150K, sales have collapsed since last year due to lack of supply. The shortage of homes under $150,000 has also caused the median sales price to rise much faster than the underlying rise in home values.

Given that most new single family homes sell between $225K and $600K, we observe that re-sale volume increases in this limited price range are similar to the increases experienced by developers.

Sales are relatively weak between $600K and $1M and particularly lackluster over $1.5M but look good between $1M and $1.5M, thanks in part to an easy comparison. August 2015 was particularly poor for the luxury market, immediately following a steep decline in the stock market.

September 1 – The month starts with another look at the Cromford® Market Index for the single family markets in the largest 17 cities.

Some interesting changes have been going on since August 1. The cities improving the most for sellers are the expensive ones, in stark contrast to the earlier months of 2016. Paradise Valley is up a surprising 43% while Scottsdale is up 14%, Cave Creek up 14% and Fountain Hills up 7%. All have seen big drops in their active listing counts over the past couple of months. However much of the decline has been due to cancellations, so we will have to wait and see if these cancelled listings come back onto the market in the fall. Meanwhile sellers who are still in the market have much less competition which drastically improves their negotiation power.

The rest of the market is mostly treading water, with the exception of Maricopa, up 8% and Gilbert up 5%. Avondale saw the steepest decline but it is still way out in front. If El Mirage was one of the top 17 cities then it would be placed even higher than Avondale.


  • Between $250,000 and $500,000 – up 1.2%
  • $500,000 and over – down 3.0%

The overall average appreciation rate is 7.3%. but this is obviously misleading. It is too low to represent the entry range accurately and far too high for the rest of the market.

Among the top performing ZIP codes for appreciation we find:

  1. Glendale 85301 – up 20.3%
  2. Youngtown 85363 – up 15.6%
  3. Sun City 85351 – up 14.2%
  4. Tolleson 85353 – up 14.0%
  5. Glendale 85303 – up 13.7%

The top 2 ZIP codes were the lowest price areas one year ago, but they are catching the rest of the pack.

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