Current Phoenix Metropolitan Real Estate

Market Update

 

May 31 - Although attention is drifting away from COVID-19, the weekly new infection rate is reaching new all-time highs in several states:

  1. California - 17,348 new cases in the last week - growth rate 3% per day - mortality 3.8%
  2. Alabama - 3,532 new cases in the last week - growth rate 5% per day - mortality 3.5%
  3. Arkansas - 1,238 new cases in the last week - growth rate 1% per day - mortality 1.9%
  4. Mississippi - 2,224 new cases in the last week - growth rate 3% per day - mortality 4.7%
  5. North Carolina - 4,929 new cases in the last week - growth rate 1% per day - mortality 3.3%
  6. Puerto Rico - 618 cases in the last week - growth rate 3% per day - mortality 3.6%
  7. South Carolina - 1,499 new cases in the last week - growth rate 3% per day - mortality 4.3%
  8. Utah - 1,273 new cases in the last week - growth rate 1% per day - mortality 1.2%
  9. Virginia - 7,862 new cases in the last week - growth rate 3% per day - mortality 3.1%
  10. Wisconsin - 3,353 new cases in the last week - growth rate 3% per day - mortality 3.2%
  11. West Virginia - 260 new cases in the last week - growth rate 1% per day - mortality 3.8%

In some states, an initial peak has been passed, but after a brief lull, new cases are now accelerating again:

  1. Arizona - 3,216 new cases in the last week - growth rate 4% per day - mortality 4.7%
  2. Alaska - 26 new cases in the last week - growth rate 8% per day - mortality 2.3%
  3. Hawaii - 8 new cases in the last week - growth rate 17% per day - mortality 2.6%
  4. Idaho - 213 new cases in the last week - growth rate 1% per day - mortality 2.9%
  5. Kentucky - 1,133 new cases in the last week - growth rate 2% per day - mortality 4.4%
  6. Missouri - 1,274 new cases in the last week - growth rate is 2% per day - mortality 5.8%
  7. Montana - 26 new cases in the last week - growth rate 17% per day - mortality 3.4%
  8. Nevada - 799 new cases in the last week - growth rate 1% per day - mortality 4.9%
  9. Tennessee - 2,777 new cases in the last week - growth rate 2% per day - mortality 1.6%
  10. Texas - 7,931 new cases in the last week - growth rate 1% per day - mortality 2.6%
  11. Vermont - 23 new cases in the last week - growth rate 2% per day - mortality 5.6%
  12. Washington - 1,819 new cases in the last week - growth rate 4% per day - mortality 5.1%

Fortunately, in the majority of states, new cases are falling from their initial peak:

  1. Connecticut - 2,000 new cases in the last week - peak was 7,714 on April 22 - mortality 9.3%
  2. Colorado - 2,134 new cases in the last week - peak was 4,022 on April 30 - mortality 5.5%
  3. District of Columbia - 751 new cases in the last week - peak was 1,355 on May 6 - mortality 5.3%
  4. Delaware - 932 new cases in the last week - peak was 1,644 on April 28 - mortality 3.8%
  5. Florida - 5,297 new cases in the last week - peak was 8,006 on April 7 - mortality 4.4%
  6. Georgia - 4,089 new cases in the last week - peak was 6,307 on April 13 - mortality 4.3%
  7. Iowa - 2,351 new cases in the last week - peak was 3,914 on May 7 - mortality 2.8%
  8. Illinois - 11,121 new cases in the last week - peak was 17,957 on May 4 - mortality 4.5%
  9. Indiana - 3,310 new cases in the last week - peak was 4,950 on May 1 - mortality 6.2%
  10. Kansas - 818 new cases in the last week - peak was 2,189 on May 9 - mortality 2.2%
  11. Louisiana - 2,541 new cases in the last week - peak was 11,047 on April 7 - mortality 7.0%
  12. Massachusetts - 4,639 new cases in the last week - peak was 17,321 on April 29 - mortality 7.0%
  13. Maryland - 6,520 new cases in the last week - peak was 7,632 on May 7 - mortality 4.8%
  14. Maine - 269 new cases in the last week - peak was 368 on May 26 - mortality 3.9%
  15. Michigan - 2,519 new cases in the last week - peak was 11,355 on April 7 - mortality 9.6%
  16. Minnesota - 4,345 new cases in the last week - peak was 4,943 on May 25 - mortality 4.3%
  17. North Dakota - 189 new cases in the last week - peak was 556 on May 22, mortality 2.3%
  18. Nebraska - 1,916 new cases in the last week - peak was 3,064 on May 5 - mortality 1.2%
  19. New Hampshire - 456 new cases in the past week - peak was 697 on May 7 - mortality 5.3%
  20. New Jersey - 6,203 new cases in the last week - peak was 25,720 on April7 - mortality 7.2%
  21. New Mexico - 829 new cases in the last week - peak was 1,208 on May 4 - mortality 4.6%
  22. New York - 9,295 new cases in the last week - peak was 68,882 on April 10 - mortality 7.9%
  23. Ohio - 3,562 new cases in the last week - peak was 6,445 on April 21 - mortality 6.1%
  24. Oklahoma - 458 cases in the last week - peak was 785 on May 18 - mortality 5.2%
  25. Oregon - 297 new cases in the last week - peak was 548 on May 10 - mortality 3.7%
  26. Pennsylvania - 4,658 new cases in the last week - peak was 11,920 on April 10 - mortality 7.3%
  27. Rhode Island - 867 new cases in the last week - peak was 2,733 on April 26 - mortality 4.8%
  28. South Dakota - 492 new cases in the last week - peak was 963 on May 13 - mortality 1.3%
  29. Wyoming - 85 new cases in the last week - peak was 161 on April 18 - mortality 1.8%

There are 52 entries because we include DC and PR. It is unclear why mortality can be as low as 1.2% in Nebraska yet as high as 9.6% in Michigan.

In the world as whole, the virus has accelerated in the last week and is now infecting 752,532 new people per week, up from 680,940 last week. This is the fastest rate we have yet seen, so we do not know the size of the first peak yet. The hot spots move around the world, starting in China, then Italy and Iran, then most of Western Europe, then North America and Eastern Europe and now South America. In Brazil the impact is particularly devastating, as it is still growing extremely fast and exhibiting a high mortality, overwhelming the health care system.

With the current widespread and increasing infection it is very unlikely that the virus will stop circulating in our lifetime, with or without a vaccine. Human effort has only eliminated one virus in history - smallpox (in 1977) - and that took almost 200 years after a vaccine was created by Edward Jenner in the late 1790s. Success against COVID-19 will be measured by how well we learn to control the novel corona virus and limit its impact on normal life. We are still in the second inning of that game.

I would say the impact on the Greater Phoenix housing market has been less so far than many people expected. Transaction volumes are lower than normal, but not dramatically so. Home values have not been noticeably affected at all and are likely to increase during the second half of the year.

May 30 - The Cromford Market Index for all areas and types is now higher than it was this time last year and heading upwards at a faster rate than last year.

real estate in chandler

The CMI indicates the balance in the market between buyers and sellers and at well over 150 we have a strong seller's market. Prices will increase in a strong seller's market.

What is not so healthy is the volume. Sales are down from last year, as are new listings, so the activity in the market is lower than normal, which is not surprising. However accepted contracts and listings under contract are both on an upward trend, so sales volume is likely to follow within 4 to 6 weeks. In addition we are starting to see activity increase in the luxury market. This had been slowed to a greater degree than the rest of market, but we see signs of it catching up again.

May 29 - The number of new long term rental listings has dropped to 9% below last year for the last 4 weeks. This time last month the number was up 12%, so that is big reversal.

For residential listings, new supply is even more scarce with new listings 16% below 2019 for the past 4 weeks. However this is a slight improvement over last month when we saw a drop of 23%. Sellers seem to be coming back into the market more slowly than buyers and as a result the balance in negotiations is shifting in favor of sellers.

Active listing counts without a contract are falling fast in many areas including the following (active single-family detached counts - excluding UCB & CCBS - over the past 4 weeks):

  1. El Mirage - down 50%
  2. Avondale - down 39%
  3. Maricopa - down 31%
  4. Sun Lakes - down 30%
  5. Glendale - down 29%
  6. Laveen - down 28%
  7. Queen Creek - down 27%
  8. Gilbert - down 22%
  9. Anthem - down 22%
  10. Mesa - down 20%
  11. Phoenix - down 18%
  12. Goodyear - down 18%
  13. Tempe - down 18%

Supply has not dropped as much in more expensive areas such as Paradise Valley (down 1%) or Scottsdale (down 5%).

As a result of these trends, upward pressure on prices is building again, especially for the low and mid price ranges up to $600,000

May 28 - Once again, here is our table of Cromford® Market Index values for the single-family markets in the 17 largest cities

chandler real estate

The improvement in the market from a seller's perspective is starting to shine through in this table with 7 cities showing higher CMI values than a month ago. Demand has strengthened over the last week and supply has been dropping quite sharply in several cities, mainly for low and mid-range price segments.

If we look at last week alone, we see a very positive picture:

Homes for Sale Near Me in Chandler

16 out of 17 cities are showing positive movement in favor of sellers. The only exception is Paradise Valley, but the number of new contract acceptances has been rising over the last week. PV's CMI does not look likely to fall below the 90 level into a true buyer's market.

Maricopa has risen the most places in the table (from 12th to 3rd) over the past 3 months, primarily because the number of active listings has been falling at an unusually high rate.

May 27 - The single-family permit counts for April 2020 have been published by the Census Bureau and the corresponding charts in the optional Cromford Public section of this site are now updated.

The total number of single-family permits issues in April for Maricopa and Pinal counties was 1,832. This is down 16% from 2,185 in April 2020, but probably not as low as many people were anticipating. The new home builders have only pressed the brake quite lightly which makes sense given the ongoing shortage of homes for sale.

Multi-family permits were affected more severely, down 61% from 1,527 in April 2019 to 589 in April 2020, but these are very volatile numbers from month to month and the annual rate remains high relative to historical numbers.

The effects of the COVID-19 pandemic are likely to be felt more severely by tenants and landlords than they are by single-family home-owners. This is particularly true once evictions start to be permitted again. Several states, including Arizona, enacted eviction moratoriums, but when they are restarted the numbers are likely to be extremely high and limited by the maximum capacity of the legal process in place. Texas is among the first to restart eviction proceedings and North Texas courts are reported to have a backlog of 1,110 cases already.

May 26 - We have posted the latest Case-Shiller® numbers to our long term chart here.

The latest series relates to sales between January and March 2020. For most of the 20 metropolitan areas prices accelerated compared with previous month.

Comparing with the previous month's series we see the following changes:

  1. Seattle +2.54%
  2. San Francisco +1.78%
  3. San Diego +1.56%
  4. Boston +1.53%
  5. Chicago +1.46%
  6. Cleveland +1.40%
  7. Tampa +1.32%
  8. Denver +1.30%
  9. Minneapolis +1.26%
  10. Charlotte +1.23%
  11. Washington +1.19%
  12. Los Angeles +1.15%
  13. Phoenix +1.08%
  14. Las Vegas +1.02%
  15. Atlanta +1.00%
  16. Portland +0.71%
  17. Miami +0.67%
  18. Dallas +0.56%
  19. New York +0.20%
  20. Detroit - data not available

The national average was +0.84% so Phoenix increased at higher than the national average, despite slipping from 5th to 13th place compared with last month..

The year over year comparisons are below:

  1. Phoenix 8.2%
  2. Seattle 6.9%
  3. Tampa 5.8%
  4. Charlotte 5.8%
  5. Minneapolis 5.3%
  6. San Diego 5.2%
  7. Cleveland 5.0%
  8. Portland 4.9%
  9. Atlanta 4.9%
  10. Boston 4.8%
  11. Los Angeles 4.4%
  12. Las Vegas 4.4%
  13. Washington 3.9%
  14. Denver 3.7%
  15. San Francisco 3.5%
  16. Miami 3.4%
  17. Dallas 2.8%
  18. New York 2.1%
  19. Chicago 1.6%
  20. Detroit - data not available

The national average was 4.35 %. Phoenix remained in the top spot and now has a gap of 1.3% over the number 2 city - Seattle.

May 25 - The asking prices for active listings appeared to take a steep dive in March and April, only to recover again in May.

In the Tableau chart below, the orange line is 2018, green line is 2019 and brown line is 2020.

Ahwatukee Arizona Real Estate

Those who do not inspect real estate data too carefully may jump to the conclusion that this was a buying opportunity that has now gone away. In fact the chart is not dissimilar to the S&P 500 stock price index for the same period.

However most of that dip was due to the cancellation of many high-end listings by sellers who did not want people viewing their homes during the pandemic. If we filter the listings to show only those priced under $500,000 we see the following instead:

Real estate in Ahwatukee AZ

Of course the $/SF numbers all get lower because we are only looking at homes under $500,000. We can still see a small dip, but it only lasted one week and prices have continued to rise over the last 5 weeks to reach new heights, well above last year.

If this does not look like a pricing crash, there is a good reason for that. It isn't.

Some inexperienced pundits, especially those with lucrative YouTube channels, like to promote the fallacy that home prices will fall when unemployment rises, or that homes prices fall when interest rates rise. They also seem to believe that home prices crash very badly when both of these occur at the same time. This is not necessarily true. It is certainly true that these things reduce demand. But prices do not depend exclusively on demand. Supply is just as important. If supply remains weaker than demand then prices have to stay high in the inevitable negotiation battle between buyers and sellers. Sellers never want prices to go down and they will not cut their prices if they have multiple offers. They only cut prices when they have had no offers for some time and start to feel impatient. Unless they are badly over-priced, this occurs when there are too many homes on the market. When supply is lower than demand, few listings remain without offers for very long, so prices are unable to fall, despite the wishes and prayers of thousands of potential buyers..

We do have more plentiful supply at higher price points and demand is relatively weak above $600,000. This means the average asking price for homes over $500,000 is about the same level as it was in January, after dropping from a high point in March. However the trend is now upwards rather than downwards. You may be able to negotiate a better deal from an impatient seller in locations like PV, but we are not seeing general list prices weakening at this point, even for the high-end.

May 23 - Listings under contract are really powering back towards normal levels, as can be seen in the chart below:

NEW LISTINGS FOR HOMES IN AHWATUKEE FOOTHILLS PHOENIX

The core of the market, priced between $300K and $600K now has more listings under contract then last year. Here is the Tableau chart for Greater Phoenix with that price range filter:

Scottsdale real estate

Below $300K supply is the limiting factor while above $600K, demand remains relatively weak.

May 22 - Foreclosures are very much out of fashion these days. The number of pending trustee sales in Maricopa County stands at 1,460, the lowest we have ever seen. Last year at this point we counted 1,943 which seemed like a very low number at the time. To put these totals into context, at the end of 2009 there were 51,022 pending trustee sales.

For those who like things that are out of fashion, there is a useful chart here.

May 21 - Once again, here is our table of Cromford® Market Index values for the single-family markets in the 17 largest cities

MESA AZ REAL ESTATE LISTINGS

All 17 cities are still showing CMI levels much lower than a month ago but the drop is less severe (15.8%) than last week (25.6%). This is primarily because the CMI was dropping fast during the last week of April and the first week of May. The last 2 weeks have been much better for sellers and if we look at last week alone, we see a very different picture:

 chandler real estate agents

The first thing we notice is that 11 out of 17 cities are showing positive movement in favor of sellers. The second thing we notice is that all of the numbers are small - but that is because we are only measuring a weekly change, not the usual monthly one. A change of +4% (Glendale) or -4% (Paradise Valley) is actually quite a large movement for a single week.

Paradise Valley is by far the weakest of the 17 and is only a shade above the 90 mark. Dropping below 90 would confirm a buyer's market. We do not have excessive supply in PV, but we do see unusually weak demand.

The remaining 16 cities are still seller's markets, though Tempe is hanging onto that status by its fingernails. Looking very strong are Glendale, Maricopa, Avondale, Chandler, Phoenix, Mesa, Queen Creek and Surprise. If you look at the weekly CMI chart by city you will see a favorable trend developing for these cities thanks to a clear resurgence in demand for the price ranges below $600,000.

They do not appear among our top 17 cities, but Sun City, Sun City West and Sun Lakes are all seeing weakness for sellers and much lower transaction volumes. After the high-end market it is the 55+ market that has suffered most from the effects of the COVID-19 pandemic.

May 19 - Today we are comparing the number of listings under contract with May 19 last year:

Market Segment Under Contract 2019 Under Contract 2020 Change
All Areas & Types 12,934 11,605 -10%
Greater Phoenix - All Types 12,644 11,040 -13%
Out of Area - All Types 290 565 +95%
Greater Phoenix (below):      
Single-Family Detached 10,643 9,257 -13%
Condo / Townhouse 1,759 1,501 -15%
Mobile / Manufactured 242 282 +17%
Up to $250K 4,714 3,295 -30%
$250K - $400K 4,859 4,870 +0%
$400K - $600K 1,882 1,883 +0%
$600K - $1M 789 681 -14%
$1M - $3M 350 293 -16%
Over $3M 38 30 -21%

There are some very unusual changes here. Buyer activity for out of area properties is almost double what it was last year. Perhaps the idea of a remote home has become more attractive.

Mobile and manufactured homes are more popular than last year while interest in condos and townhouses has declined.

The market between $250K and $600K is almost unchanged from last year - a shade more listings are under contract. Above $600K, buyer interest starts to decline and is the lowest for homes at the highest prices.

Overall though, listings under contract are only down 10% from a year ago, much higher than we might have expected given that the weekly rate of confirmed new COVID-19 cases has yet to reach a peak in Arizona.

May 18 - Here is a chart for the glass half full people showing that the Cromford Market Index has hit a low point and started a gently rising trend:

chandler real estate

We have falling supply and a strong upward trend in listings under contract. However this is largely neutralized by the declining sales rate, so the upward trend in the CMI is much weaker than the downtrend we witnessed over the last 2 months.

For the glass half empty people here is an annual sales rate chart that illustrates the challenge of getting back to where we were in March:

Homes for Sale Near Me in Chandler

May 17 - If we look at the monthly average sale price we can see a clear downward trend over the past few weeks:

gilbert homes for sale

Some people may interpret this as a general fall in home prices, but before they jump to this conclusion I would ask them to consider the chart below - the average home size for those same monthly sales:

gilbert real estate

The average home size is falling off a cliff - not only is the average house being sold much smaller than it was a few weeks ago, the homes that are selling tend to be in less expensive areas. Sales in the Northeast Valley have dropped further in volume and not shown significant signs of recovery as yet.

In addition homes designed for retired people (whether legally 55+ Age Restricted or not) have seen a far deeper volume decline and no recovery in sales so far. It is likely that over 55 feel clients more vulnerable, for a very good reason right now. So both selling and buying activity in retirement communities are significantly lower than regular communities. This is important because there is usually a price premium for the 55+ communities due to all the facilities provided for community by the developer. So fewer 55+ sales means lower average prices.

May 16 - The majority of market segments are showing a resurgence in demand and a rise in listings under contract as seen in the chart below for single-family homes in Chandler

realtor in gilbert

However there are some important exceptions. The luxury market is still seeing very low demand compared with normal. Here is Paradise Valley:

realtor in chandler 

Another sector of the market that has seen demand stay low is the 55+ age-restricted communities. As an example here is Sun City:

chandler realtors

May 15 - As if to support my observation of yesterday, the Cromford® Market Index for all areas and types has just reversed course and started to rise. The low point was 145.4, measured on May 13 and 14.

This could prove to be a significant turning point. The previous high point was 241.1 on March 19, so the collapse lasted less than 2 months.

May 14 - Once again, here is our table of Cromford® Market Index values for the single-family markets in the 17 largest cities

homes for sale in chandler

All 17 cities are still showing CMI levels much lower than a month ago, but if you look at last week's table you will see than many cities have not dropped much in the last 7 days. These include Avondale, Chandler, Gilbert, Goodyear, Mesa, Phoenix, Queen Creek and Surprise.

Glendale and Maricopa were even stronger and are actually up from last week. The bulk of the market is stabilizing after the dramatic changes of the past 8 weeks. However a few cities are still struggling with low demand. The most obvious example is Paradise Valley which has dropped below the 100 balance point and is the first of the 17 to show supply in excess of demand. Both are unusually low in Paradise Valley right now. There are not a lot of buyers active in Paradise Valley, but those that are can wield a lot more negotiation power than they have been used to.

We recommend that you look at the Cromford Market Index Weekly Chart by City to compare the situation in each city. Here is one example:

real estate in chandler

Here we see that Phoenix (postal city) is now at a very similar level to May 2018 and somewhat higher than May 2019. This is not a market in any trouble, but it is obviously not as hot as it was between July 2019 and early March 2020.

May 13 - When looking at the third chart of the Market Conditions Dashboard you could be forgiven for thinking that average $/SF for accepted contracts has been going down:

chandler realtors

That looks like a steep descent from $190 to $179 over the past 9 weeks.

However if you change the maximum list price to $500,000, it is like waving a magic wand, because you get the chart below:

chandler homes for sale

So the average for the market under $500,000 has increased from $162.76 to $163.73 over the same 9 weeks. In fact we see initial weakness followed by renewed strength, the same pattern that we see in the numbers of contracts accepted.

That clearly points the finger at the market over $500,000, which is seeing about 200 to 300 accepted contracts a week. This is only 10 to 15% of the overall market which is seeing 2,000 or so contracts accepted.

The upper end of the market - over $1 million - has experienced a big drop in accepted contracts and has not seen much of a recovery yet, running at less than half what we would expect to see. With only 30 to 40 accepted contracts a week (normally 80 to 100) the numbers are so small that the pricing jumps all over the place. However it would be fair to conclude that weakness in volume corresponds to weakness in demand and sellers at the top end have to decide whether to wait out the lull or accept some offers that may be lower than they would like. Most sellers are doing the former, but some may have an urgent need to sell. An urgent need to sell is always a big disadvantage in negotiations.

The lower end of the luxury market - $500,000 to $1,000,000 - is where we find most of the recent price weakness. The average list price per sq. ft. at contract acceptance has fallen from $221 to $212 over the past 9 weeks, despite a good recovery in the number of contracts accepted in the last 4 weeks.

If you have not done so already, I encourage you to play with the Market Conditions Dashboard. You can learn a lot about recent changes in the market by changing the filters and parameters.

May 12 - The Cromford® Market Index roller-coaster ride is getting to the bit where you realize you are not going to die after all.

chandler real estate

The last 7 days have seen the index slide from 149.1 to to 145.5, which feels much more friendly than the previous 6 weeks. We can stop gritting our teeth and start thinking about what happens next. The immediate prospects are looking quite decent for sellers. Supply is on a downward trend once more and contract acceptances are rising although far below normal levels for this time of year. The only thing holding the CMI down is the monthly sales rate which is still declining because contract activity was so weak in late March and early April.

A quick glance at the chart above is enough to suggest that the CMI will not even breach 140 in this down cycle, never mind get down to the balanced zone of 90 to 110. There will probably a few segments that see some further weakness, particularly at the top of the price ranges. However, the bulk of the market looks safe. Once buyers realize this they are likely to return in larger numbers to try to capitalize on low interest rates. Whether this results in more sales is an open question because lenders are likely to be more careful about approving loans than they were before March. The pool of potential buyers has been negatively affected by the huge increase in unemployment so it would be very surprising if a rapid recovery were to take place. Far more likely is a long hard slog. I think we would mostly prefer a long hard slog uphill than a continued free fall downwards.

COVID-19 cases in Arizona have not yet peaked and the weekly new infection rate continues to rise - 2,433 is the 7 day rolling average reported by the counties, which compares unfavorably with 1,911 last week and 1,329 last month. The confirmed infection rate is 0.156% which is 1 in every 640 people. This number is under counted because so few people have been tested and it is estimated that the real figure is around ten times higher at 1.5% or 1 in every 67 people. This is a long way from herd immunity which with a disease as contagious as COVID-19 would require roughly 65% of the population to acquire immunity, either by recovering from infection or from inoculation with a successful vaccine. The prognosis is that we have many quarters ahead with the pandemic restricting normal human activity. The degree of restriction will depend on human ingenuity.

Arizona is far from unusual in not having reached its initial peak infection rate. A similar situation exists in Alabama, Arkansas, California, DC, Kansas, Kentucky, Maryland, Maine, Minnesota, Mississippi, North Carolina, Texas, Utah, Virginia and Wisconsin. The USA is very diverse and states are at very different stages of the pandemic, with New York having 1 in 56 people confirmed infected while Montana has only 1 in 2,328. Mortality ranges from 9.6% of confirmed cases in Michigan to only 1.0% in South Dakota and Wyoming. Arizona stands at 4.8%, up from 3.2% last month.

A clear case can be made that the housing market will not be dramatically affected by the pandemic over the long term, no matter how severe the jolt may be in the short term. The underlying shortage of homes for sale remains intact and now the wave of Airbnb properties turning into long term rentals is dying down, there will also be a shortage of homes to rent. Even with the gloomiest of forecasts, Central Arizona has more demand for homes to live in than it has homes available. This is not 2006.

May 11 - New rental listings jumped during March as many owners of vacation rentals decided to convert them to long term rentals, but that has proven to be a short term effect. For the last 4 weeks, new rental listings have been arriving at a rate that is 2% slower than 2019. They remain 6% higher year-to-date because of the boom in March and April, but the trend is now clearly lower.

New residential re-sale listings have been scarce since early April, at one point hitting 29% below 2019 levels in mid-April. They are starting to recover now as more sellers enter the market, and are now around 15% below 2019 levels. With contract acceptances showing some momentum, new listings will have to do a lot better than this if we are to get to a balanced market. My expectation is that this may only happen in a few specialist markets (e.g. Paradise Valley, some retirement communities). The overwhelming majority of segments are likely to remain in a seller's market due to the shortage of supply.

Sellers who accept low-ball offers from buyers out of fear of the future are probably not making a sound decision and are likely to regret it. A significant fall in home values requires a glut of available homes relative to demand and that does not look at all likely based on today's trend lines. Of course no-one can predict the future with certainty, but keeping a close watch on the number of active listings is not hard. If you look back at history, home values come under downward pressure when the number of active listings becomes excessive. This is what happened between 2006 and 2011 with most of the decline in values taking place during 2007 and 2008. During those years active listing counts were vastly higher than they are now.

real estate chandler

May 9 - Although sales counts are still way below normal, we are seeing a strong recovery in the number of listings under contract this week.

homes for sale in chandler

Demand established a bottom over the past 4 weeks and is now rising again. A break of the 10,000 listing count is a clear positive signal that buyers are still very interested in Greater Phoenix housing.

May 8 - Based on affidavits of value filed during April we have collected the following statistics on iBuyer activity:

  Opendoor OfferPad Zillow Knock All iBuyers Combined
Homes Purchased in April 2020 57 30 0 1 88
Homes Purchased in April 2019 262 126 102 2 492
Annual Change in Purchases -78% +76% -100% -50% -82%
Homes Sold in April 2020 156 67 45 4 273
Homes Sold in April 2019 348 129 100 0 577
Annual Change in Sales -55% -48% -55%   -53%
Median Purchase Price in April 2020 $257,000 $263,750   $332,000 $258,350
Median Purchase Price in April 2019 $234,700 $240,462 $295,000 $405,000 $241,700
Median Sale Price in April 2020 $274,000 $264,900 $281,000 $271,284 $273,950
Median Sale Price in April 2019 $245,000 $230,400 $291.000   $245,000
Homes in Inventory at the End of April 2020 477 406 18 19 920
Homes in Inventory at the End of April 2019 943 443 404 2 1,792
Annual Change in Inventory -49% -8% -96% +850% -49%

The COVID-19 pandemic has had a much larger impact on the iBuyer operations than the rest of the market. While overall re-sales during April dropped 32% and new home closings increased 1%, iBuyer purchases fell 82% while sales declined 53%.

Presumably this was an intentional decision by the iBuyers, but it has left them with the smallest market share for several years and a drastically reduced inventory of homes to sell. Only OfferPad has a respectable inventory relative to its average sales rate. Opendoor is down almost 50% from its inventory this time last year while Zillow has just 18 homes, smaller even than Knock, whose activities are roughly the size of a small time fix and flip operation.

This lack of inventory will mean sales counts going forward will be severely down from 2019 levels and iBuyers will be less significant in the Phoenix market 2020 than they were in 2019.

May 7 - Once again, here is our table of Cromford® Market Index values for the single-family markets in the 17 largest cities

Chandler realtor

It is not looking a lot better than last week, but the average drop was 32% over the past month, which is a slight improvement over the 35% decline we measured a week ago.

We now have 16 cities in a seller's market (over 110) and Paradise Valley in a balanced market where its Cromford® Demand Index is 79.8 (20% below normal) and its supply index is 76.3 (24% below normal)

If we take a look at the weekly CMI chart for cities, we can see a more positive picture developing for sellers. The downward slope has eased up over the past week and looks like it is getting ready to find a level of stability. This applies to the following:

  • Avondale
  • Chandler
  • Gilbert
  • Glendale
  • Maricopa
  • Mesa
  • Peoria
  • Phoenix
  • Queen Creek
  • Scottsdale
  • Surprise

Comparisons with last month will still look weak for a while, but comparisons will improve for week over week measurements.

Paradise Valley looks like it will drop below 100 and could even enter a buyer's market (under 90) over the next few weeks, If you have a few million dollars burning a hole in your pocket, supply in PV is plentiful (not excessive) and there will be less competition from other buyers.

Goodyear and Tempe look like they may hit the balanced market zone (90 to 110) in the near term, but that is far from certain. They look unlikely to drop below 100 at this stage of the game.

The remaining cities look likely to remain seller's markets despite the huge decline in their CMI. However the balance in negotiations will not be as favorable to sellers as it was during the first quarter of 2020. Among these cities, Scottsdale has the highest chance of entering a balanced market, but this is still looking unlikely at the moment.

May 6 - The ARMLS database shows a 27% fall in closed listings for April compared with April 2019. This is for all dwelling types across Greater Phoenix. If we segment the market we can see how different segments fell by different amounts:

Segment Closed April 2019 Closed April 2020 Change
Single-family detached 7,799 5,658 -27.5%
Condo / Townhouse 1,455 1,048 -28.0%
Mobile / Manufactured 201 192 -4.5%
Under $250,000 3,990 2,160 -45.9%
$250,000 - $400,000 3,521 2,970 -15.7%
$400,000 - $600,000 1,208 1,171 -3.1%
$600,000 - $1,000,000 504 416 -17.5%
Over $1,000,000 232 181 -22.0%
Phoenix & North Valley 2,256 1,578 -30.4%
Northeast Valley 1,110 746 -32.8%
Southeast Valley 2,232 1,632 -26.9%
West Valley 2,280 1,649 -27.7%
Pinal County 1,016 844 -16.9%

We can see that mobile and manufactured homes were barely affected, as were sales between $400K and $600K.

The biggest fall was for homes under $250K. These had been in decline for some time because of the extreme shortage of supply at this price level.

May 5 - The number of active listings without a contract jumped in March and April but is now on a declining trend:

chandler real estate

Supply remains well below last year (green) and 2018 (orange) and is now falling at a similar rate to last May. Even with the recent decline in demand there is not enough supply to go round.

Some people still seem to fear falling home prices, but there is no reason for prices to fall when supply is lower than demand and on a declining trend. There may be a few sellers who must sell urgently for personal reasons and take a low-ball offer. But this will be a tiny minority. The majority of sellers want to achieve the highest price possible and have at least a little patience. With little competition from other sellers, they are likely to get multiple offers.

It should go without saying that multiple offers tend to push pricing higher.

I encourage you to customize the chart above for the area, price range and dwelling type you are interested in. You can find the interactive version here.

May 4 - The CMI roller-coaster is losing speed at it heads towards the ground and it now looks like it has no intention of crashing below 100

Chandler homes for sale

Closings are still falling which impacts our demand reading negatively. However new contracts are looking stable now, even bouncing up from the lowest point 2 weeks ago.

New listings are arriving slowly - about 21% below the level this time last year, so there is now no build up of inventory despite the weakened demand.

Once closed sales volumes stabilize then the CMI should flatten out. We are not sure where that level will be but it is currently looking like somewhere between 120 and 140. This is still in the seller's market zone.

What happens after that is impossible to predict. We are still very much in uncharted territory and we shall just have to watch the market numbers very closely.

May 3 - The affidavit counts for Maricopa County in April 2020 show a 27% decline compared with April 2019. New home closings were up 1% from a year ago while re-sales slumped by 32%. These numbers include single-family, condos and townhouses.

The median sales price jumped 12.7% from April 2019, helped by the rise in market share in favor of new homes (18%, up from 13% last year). The median sales price for re-sales was $301,000, up 12.3% from April 2019 while the median sales price for new homes was $362,990, up only 3.8% due to developers focusing more efforts on building affordable or entry level homes.

May 3 - The affidavit counts for Maricopa County in April 2020 show a 27% decline compared with April 2019. New home closings were up 1% from a year ago while re-sales slumped by 32%. These numbers include single-family, condos and townhouses.

The median sales price jumped 12.7% from April 2019, helped by the rise in market share in favor of new homes (18%, up from 13% last year). The median sales price for re-sales was $301,000, up 12.3% from April 2019 while the median sales price for new homes was $362,990, up only 3.8% due to developers focusing more efforts on building affordable or entry level homes.

May 2 - At the moment the average cumulative days on market for closed listings is at the lowest point in 14 years. For all areas & types It has dropped from 65 in February to 50 in April, which is the lowest reading since January 2006. Does this mean the market is in great shape? No. It shows a couple of things:

  1. The average cumulative days on market is not a very useful indicator for judging the state of the market
  2. All average days on market readings are influenced by the sales mix

One useful thing you can do with the average days on market is give a seller some idea how low it is likely to take on average to sell his home. However please use an average for the price range you are talking about. Days on market get higher as you move up market. A high end home will typically take much longer to sell than a home that is priced below the monthly median. The lower the price, the faster the sale. The current reading is being pushed lower by the low number of higher-end homes that are closing.

A much more useful guide to the state of the market is days of inventory, which measures how long it would take to sell active listings at the current annual sales rate. Excluding UCB and CCBS listings, this indicator has moved from a low point of 36.9 on March 14 to a peak of 49.4 on April 25. Both are pretty low (favorable) readings well below the long term average since Jan 2011 of 76.6. This chart tells us that the market has weakened but is still much more favorable to sellers than buyers.

May 1 - Among single-family listings there has been a 7% decline in listings under contract between April 1 and May 1. This is the opposite of last year when we saw a 7% increase. Obviously the difference between this year and last year was primarily caused by the COVID-19 pandemic. However we can see that it did not affect all price ranges equally:

Price Range 2019 2020
Up to $225K down 6% down 8%
$225K - $350K up 8% down 1%
$350K - $600K up 14% down 10%
Over $600K up 9% down 20%

The price range under $225K was little affected, being constrained by the lack of supply anyway. The lower mid-range from $225K to $350K did relatively well with almost no decline in 2020. After $350K things get a lot worse. The upper mid-range from $350K to $600K was booming last year with listings under contract gaining a massive 14% during April. This year it dropped 10%. The top end over $600K took a bigger hit, with a drop of 20% in 2020 in contrast to a very heathy gain of 9% in 2019.

This is significant damage but it could have been a lot worse if housing transactions had been curtailed by government edict, as they have in many parts of the world.

The overall effect is a drop of only 7% and a large change in the mix. Most of what is under contract is now mid-range with a bias towards the lower mid-range. The higher end of the market (over $350K) is much weaker. This means what is under contract is cheaper on average than it was last month. This is not at all due to prices falling, but due to the significant change in the mix in favor of lower priced homes. The result is that the monthly average and median prices are lower for May then April. Since the average price per sq. ft. also increases as we move up-market, the average price per sq. ft. is also negatively affected by the change in the mix, but not to as great an extent.

April 30 - Here is our usual table of Cromford® Market Index values for the single-family markets in the 17 largest cities

Chandler homes for sale

If you, like me, thought that this week's table might be a slight improvement on last week's, at least from a seller's perspective, we are both going to be disappointed.

The average decline in the Cromford® Market Image over the past month was 35.3%, even worse than the 33.5% drop we saw last week. Avondale managed to break its own record and drop 51%. All the 17 cities are moving in pretty much the same pattern and even Cave Creek with the smallest decline dropped a gut wrenching 24%.

Last week we said it was possible (but unlikely) that today's table might be worse. It turned out that it was not only possible, but likely too. Next week's table is still going to look very bad, and we have learned from our mistake and we are not going to stick out our neck again.

The trend in sales volumes is still down, but the trends in active listings and listings under contract are staring to look more favorable to sellers. The downward momentum over the past week was still strong, but not as strong as the 3 previous weeks. There are good reasons to think this rapid fall will not continue for too much longer. But how many weeks we have to wait we cannot say at the moment.

Just as before, we still have all 17 cities in a seller's market, though Paradise Valley is just a sniff away from the balanced zone under 110. We only have 2 cities over 200 whereas we had 6 last week.

Still no reason to panic about home values. The CMIs are not even close to 90 yet which is the point where that becomes a strong possibility for the medium term.

April 29 - We are seeing active listing counts fall in a number of cities now, reversing the trend of the last few weeks. It looks as though, despite the weaker demand under present conditions, there will still be no end to the shortage of supply that has been in place far many years.

The following cities show drops in their single-family detached active listings (excluding UCB & CCBS) over the last week:

  • Phoenix
  • Mesa
  • Avondale
  • Peoria
  • Cave Creek
  • Buckeye
  • Surprise
  • Gilbert
  • Glendale
  • Tempe

Exceptions are Scottsdale, Queen Creek, Paradise Valley, Fountain Hills, Maricopa, Goodyear and Chandler, all of which show small increases.

April 28 - We have posted the latest Case-Shiller® numbers to our long term chart here.

The latest series relates to sales between December 2019 and February 2020. That all seems a very long time ago and illustrates the delayed nature of the Case-Shiller index reports.

Comparing with the previous month's series we see the following changes:

  1. Seattle +1.35%
  2. Tampa +1.00%
  3. Minneapolis +0.93%
  4. San Francisco +0.90%
  5. Phoenix +0.71%
  6. Denver +0.61%
  7. Portland +0.58%
  8. Atlanta +0.48%
  9. Washington +0.46
  10. San Diego +0.46%
  11. Las Vegas +0.45%
  12. Miami +0.42%
  13. New York +0.39%
  14. Los Angeles +0.32%
  15. Detroit +0.30%
  16. Chicago +0.22%
  17. Cleveland +0.21%
  18. Charlotte +0.21%
  19. Dallas +0.11%
  20. Boston -0.05%

Phoenix slipped rose from sixth to fifth place. The national average was +0.39% so Phoenix increased at just under twice the national average.

The year over year comparisons are below:

  1. Phoenix 7.5%
  2. Seattle 6.0%
  3. Tampa 5.2%
  4. Charlotte 5.2%
  5. Minneapolis 5.0%
  6. Boston 4.9%
  7. Portland 4.9%
  8. San Diego 4.6%
  9. Atlanta 4.6%
  10. Cleveland 4.3%
  11. Washington 3.7%
  12. Detroit 3.7%
  13. Los Angeles 3.7%
  14. Las Vegas 3.5%
  15. San Francisco 3.4%
  16. Denver 3.4%
  17. Miami 3.3%
  18. Dallas 2.5%
  19. New York 1.5%
  20. Chicago 0.7%

The national average was 4.2%. Phoenix remained in the top spot and now has a gap of 1.5% over the number 2 city - Seattle. 

April 27 - The Cromford® Market Index roller coaster, descending at terminal velocity last week, has started to apply the brakes.

Chandler real estate agent

Over the last week we have moved from a daily fall of 2.5 to a daily fall of 1.6. This trend is favorable and it now looks unlikely that the CMI will drop into the balanced zone of 90 to 110 any time soon.

This is because active listings are starting to fall while listings under contract have started to rise. The CMI continues to decline because we are still seeing sales volumes decline. Given the state of listings under contract that fall in sales volume appears to have a limited lifespan and it should also stabilize fairly soon. If sales and listings under contract are stable or rising and active listings are falling then guess what - the CMI will start to rise again, indicating that prices are under upward pressure. We cannot tell you when that will occur, but it is starting to look likely rather than unlikely. Of course this depends on the weeks ahead continuing to follow current trends and in today's environment everything is uncertain. Perhaps, when they see more listings going under contract, sellers will emerge from the places they have been hiding. Perhaps the number of people losing their jobs will put a cap on how many buyers we see. Whatever occurs, you can see it first by checking the daily updates here at the Cromford® Report.

April 26 - I would like to draw your attention to a new dashboard that Tina Tamboer designed to help convey the latest state of the market to your clients.

You can find the Market Conditions Dashboard here

Staying on top of contract activity will be crucial over the next few months. This is especially true today because things looked up last week, providing a new direction just as negative headlines about the decline in closings are beginning to emerge. You may find this dashboard useful to educate your clients and help them make informed decisions for their own price point and area. 

How to read these charts to your clients...
Chart #1 - "This is how many listings went under contract as of last week in your price range and your area."
Chart #2 - "Of the contracts accepted, half of them closed with this many days or less on the market with their current agent." (half closed with more)

Chart #3 - "Of the contracts accepted over the past 4 weeks, the sweet spot for list price prior to contract was around .... per square foot"

Chart #1 - Accepted Contracts
This chart measures how many listings changed from active status to a contract status each week for the past 12 weeks. A property must exist as an active listing the day prior to contract in order to be counted. 

Chart #2 - Median Agent Days on Market - Accepted Contracts
This is not the agent days on market as is shown in monthly ARMLS reports. ARMLS days on market will continue to accrue after contract if the listing is in UCB or CCBS status. The count in this chart is based on what the ADOM was the day prior to contract acceptance, not at close.
A median means 50% of the accepted contracts were equal or higher than and 50% were equal or lower than the corresponding days on market in the chart.

Chart #3 - Average List Price per Square Foot at Contract Acceptance (4-Week Moving Average)
This is NOT the negotiated price!  We do not know the final contract price of pending listings until they close. That data is stored but it is hidden by ARMLS.  At this point we only know what the last list price was prior to an accepted contract. Properties with above average condition, location and amenities will typically be higher and those below average will be lower.

 

April 25 - There has been a bounce in contract activity over the last week and listings under contract is higher than on April 18.

chandler real estate agentts

Not exactly a huge recovery but this chart is looking a lot more cheerful than it has since March.

Most cities are seeing a similar pattern to the chart above, with certain exceptions including Anthem, Cave Creek, Fountain Hill, Glendale and Gold Canyon.

In the city charts, Paradise Valley saw a 50% decline from the peak in early March, but has also shown a small recovery in the last 7 days:

chandler real estate

Are we to believe we have seen demand stabilize? It is possible but not confirmed until we see more data points. We recommend that you check back weekly to see how this key indictor is behaving.

April 24 - [Skip this observation if you do not want to read about COVID-19]

The COVID-19 pandemic is by far the most significant factor affecting the housing market, which is why we are putting effort into tracking the statistics produced by the various health authorities, consolidated and published by Johns Hopkins University.

Just as all housing markets are local, the pandemic data varies dramatically from location to location. At present the end of day April 23 data for the USA as a whole is dominated by 2 states:

  1. New York - 268,581 confirmed cases with 20,861 deaths
  2. New Jersey - 100,025 confirmed cases with 5,428 deaths

These 2 states represent only 8.5% of the population of the USA but 42% of the total COVID-19 cases and 52% of the deaths. In New York we are seeing strong evidence that the peak new infection rate has passed. The weekly peak was 68,882, recorded on April 10 and the rate over the past 7 days has declined to 42,383. This is still a lot of new cases but fewer new cases per week relieves the extreme pressure on health services in New York and it is safe to say New York has seen the worst, at least for its first wave.

In New Jersey the situation is more nuanced and the evidence that the state has peaked is weaker. So far the peak week ended on April 7 and saw 25,720 new cases. Since then the new case number has dropped to a low of 23,269 on April 18 but has been increasing since then and it looks possible that a new and higher peak will be posted over the next few weeks.

It would be a grave mistake to assume that because New York has seen the worst, that the rest of the USA has too. The majority of states have yet to record their peak in new weekly infections and many of them are showing accelerating growth rates for new cases of COVID-19.

A false sense of security can be generated by a growth rate that slows, an apparent defeat for the virus, only for it to turn out to be a lull. Over the past 2 weeks this has famously occurred in Singapore which now has the second highest growth rate for new infections in the world. A similar effect has also taken place in a large number of the US states over the last 7 days. However the data has been ignored by most of the media because the numbers still look small next to New York and New Jersey.

It is important to remember that defeating a virus like this is not a sprint, it is a marathon. Mixing my sport metaphors, we are no more than 2 innings into a 9 innings game and we should not be celebrating a win just because we managed to level the score at the end of the first inning. The nearest relevant parallel for the current pandemic is the Spanish Flu of 1918-1920. Although this was an influenza virus not a corona virus, the symptoms were similar and the main cause of death was very similar - acute & severe pneumonia. The Spanish Flu lasted for 21 months and had 3 phases:

  1. The spring of 1918, affecting much but not all of the world and the least deadly phase. The first case in the USA was reported on March 11, 1918 in Fort Riley, Kansas.
  2. The summer and fall of 1918, widely spread by soldiers returning from World War I and much more deadly than the first wave
  3. The winter and spring of 1919, not as severe as the second wave and petering out by the fall of 1919.

Many additional deaths were caused by people taking inadvisable cures - overdoses of Aspirin were common - being recommended by many people including the US Surgeon General at the time. In Spain, the disease was referred to as the French Flu, of course. The disease did not originate in Spain, but because Spain was not involved in World War 1 it had no restrictions on reporting bad news that could affect troop morale. Thus the first media reports were from Spain.

We had no vaccine for the Spanish Flu and we have never created a successful vaccine for any corona virus including the 4 previously identified corona viruses that cause the common cold. We have no vaccine for SARS or for MERS either, both corona viruses, but less contagious than the novel virus that causes COVID-19. So we are in a similar position to where we were in May 2018. There is always a chance that the virus may peter out by this summer, but that is not at all likely. As humans we have a tendency to believe what makes us feel good rather than what is most likely to be true. There is a much higher chance that we will be able to create a successful vaccine for COVID-19, but it is unlikely to be available in volume before the middle of 2021. In the meantime, because it is so contagious, the only known mechanism for the virus to fade is for us to achieve herd immunity. That requires some 50% to 70% of the entire population to be infected and for any resulting immunity to be conferred for a reasonably long time, such as 3 to 5 years. Our base assumption at the Cromford Report is that COVID-19 will be a significant factor for the housing market during the whole of 2020 and most of 2021.

Going back to the data reported by states over the past week, the following have seen increases in their rates of new infection:

  1. Arizona +2.9% - new high on April 23 (Arizona briefly went negative between April 13 and 18, but has since changed course for the worse)
  2. Arkansas +10.7% - new high on April 23
  3. California +3.2% - new high on April 23
  4. Connecticut +2.4% - new high on April 23
  5. Delaware +4.2% - new high on April 23
  6. District of Columbia +3.5% - new high on April 21
  7. Georgia +1.0% - new high on April 13
  8. Iowa +9.4% - new high on April 23
  9. Illinois +2.2% - new high on April 23
  10. Indiana +1.8% - new high on April 21
  11. Kansas +9.1% - new high on April 23
  12. Kentucky +1.4% - new high on April 22
  13. Massachusetts +0.7% - new high on April 23
  14. Maryland +1.2% - last high on April 14, new wave emerging with higher peak likely
  15. Minnesota +6.1% - new high on April 23
  16. Mississippi +1.5% - new high on April 21
  17. Nebraska +12.2% - new high on April 23
  18. New Hampshire +3.3% - new high on April 23
  19. New Mexico +3.2% - new high on April 23
  20. North Carolina +2.7% - new high on April 23
  21. North Dakota +11.1% - new high on April 23
  22. Ohio +10.0% - new high on April 23
  23. Rhode Island +2.2% - new high on April 23
  24. Tennessee +2.1% - new high on April 23
  25. Utah +3.7% - new high on April 23
  26. Virginia +4.9% - new high on April 23
  27. Wisconsin +2.6% - last high on April 7, new wave emerging with higher peak likely
  28. West Virginia +0.4% - new high on April 23

The percentages are the daily increase in the weekly rate of new infections. These 28 states represent more than half the US population where a peak infection rate has not yet been clearly achieved. The only reason the USA as a whole has achieved a peak is because New York has achieved a peak, though at a huge cost. New York is the most heavily infected area in the world, far in excess of Italy, Spain or China. New York is into its second inning. The rest of the USA is still in its first inning.

Louisiana is in a similar position to New York having hit a peak on April 7. Michigan too (April 7 peak) and also Washington (April 8). However all 3 states are much further from herd immunity than New York. In New York 1 person in 72 is known to be infected and there are probably 10 untested or asymptomatic cases for every proven case. That means the number of people with antibodies in New York could be as high as 1 in 7. This is higher than anywhere in the world except for the microstate of San Marino. To achieve herd immunity New York would need to exceed 1 in every 2 people. This means 3.5 times as many people as we have seen infected so far.

The following more fortunate states have their outbreak relatively under control and their first peak is well behind them

  1. Alaska
  2. Hawaii
  3. Idaho
  4. Maine
  5. Montana
  6. Vermont

There will no doubt be many reading this observation who prefer not to believe it. You have every right to make up your own mind but I suggest that you should analyze the numbers reported directly from the counties before you do. These have not been interpreted by any third party or media. We do not have an agenda. You subscribe because we provide impartial information about the true state of the housing market and its likely direction from here. To survive and prosper, you should prepare for the world as it is, not as you would like it to be. We take care with the data in order to be credible. Sometimes this means we have bad news.

The good news is that the housing industry is holding up very well considering the scale of the impact of the virus. Sales volumes are inevitably going to be depressed for many months to come but we have still not reached a point where a drop in home values is looking likely. If that changes we will of course let you know immediately. We hope you will believe us, even if you prefer it were not true.

Tomorrow we will look at listings under contract and hopefully that will cheer you up, at least a bit.

April 23 - Here is our usual table of Cromford® Market Index values for the single-family markets in the 17 largest cities

Chandler real estate

You probably thought last week's table was pretty awful with an average decline of 26.3%. Well this week has an average fall of 33.5%, by far the largest monthly decline we have ever measured. Even the best performers (Fountain Hills and Buckeye) lost 20% and Avondale is the first city to ever see its CMI drop by 50% in a single month. Nevertheless it remains top of the table and well over 200. In fact we still have 6 cities over 200 and a seller's market, even in Paradise Valley.

There are several reasons why this table shows such a huge change in the balance between supply and demand

  1. We are comparing with March 23 which was close to the peak readings for CMI - the highest point was recorded on March 20.
  2. Supply has increased substantially in almost all of these cities over the past month
  3. Listings under contract have plummeted over 30% over the past month
  4. Closed listings are down significantly from a month ago

All 4 of these combine to swing the market away from sellers towards buyers, but do not be fooled - it is not yet a buyer's market and we have to see CMIs under 90 for sales prices to see downward pressure.

It is possible that next week's table could be worse, but frankly, this is unlikely. This is because

  1. We will be comparing with March 30, not such a high benchmark
  2. Supply has stopped growing over the past week and shows signs of dropping again, albeit slowly
  3. Listings under contract have stabilized in a number of cities and even shown some tentative sign of growth
  4. Closed listings - well these are still a problem - they have further to fall and could continue to drag the CMI lower for several weeks

Paradise Valley is an interesting case. It has actually seen a slight decline in supply over the past month, but demand is down drastically - listings under contract down 31% and closed listings down an eye-watering 43%. This is typical of the higher end market where sales have dropped off more sharply than in the mid range. A similar situation exists in Scottsdale but there are also plenty of mid-price listings in Scottsdale so the effect is not quite so obvious.

In general we can say that the luxury market over $1 million has gone very quiet but the range from $200,000 to $1 million remains relatively active. This down-market change in the mix will show up in all price measurements over the next couple of months. Average and median sales prices will fall but this does not mean home values are falling.

April 22 - Listings under contract are currently down 31% from the same time last year. The image below is extracted from the Tableau chart:

Scottsdale real estate

The fall in the last week was only 4%, less than the 6% we saw the previous week and much lower than the 14% the week before that. The downward momentum is dissipating and we may see a turning point fairly soon.

It seems reasonable to assume that the monthly sales rate will fall by a similar amount, but at a later time. Closed listings fell by 20% relative to 2019 in the first 2 week of April and we now anticipate closings may drop 30% or so by the end of April. Closings will probably stabilize a few weeks after the listings under contract manage to find a support level.

With these dramatic falls going on it is inevitable that the Cromford® Demand Index has a lot further to fall over the next few weeks.

However new listings are also running at 23% below 2019 and the number of active listings has fallen in many areas over the past week. The Cromford® Supply Index has been rising for the past month but this rising trend is starting to lose steam.

This situation suggests that despite the reduction in demand we are still supply constrained. Phoenix home values will not be adversely affected as long as the market remains supply constrained. In this housing is in much better shape than many other parts of the market.

It looks increasingly like the automobile market is going to be hit like the housing market was in 2006-2009. The value of used cars is plummeting so fast that many owners will owe far more than their car is worth. Rental operators are trying to dispose of cars for which they have no rental customers. There are few buyers at the auctions. Many owners of cars took out loans with long pay-off periods (over 5 years). They are probably going to be upside-down the same way that homes were in 2008. The supply of both new and used cars is higher than demand. The situation is all too familiar to those who studied the housing market in the 2000s. On top of that, a huge number of vehicles are just sitting idle while their drivers work from home.

April 21 - The Cromford® Market Index roller coaster is still plummeting to earth at close to terminal velocity:

Homes for Sale Near Me in Chandler

It has dropped 71 points in the last month, so if it carries on at the same pace it will reach 100 this time next month. That is a big if. It will depend on how supply and demand change over the next 4 weeks.

Supply: New listings are now arriving at a much slower rate than last year - and active listing counts have started to stabilize after a significant increase during March across much of the market (but with notable exceptions). This stabilization tends to slow the fall in the CMI.

Closings: Held up well during the back half of March but closings declined 20% during the first half of April. These may decline further - we do not yet know - but the April month end count will be a significant pointer. At the moment this decline is the main problem for the CMI

Contracts: Listings are still going under contract but the rate at which new contract are signed fell off sharply in mid March. That rate is still falling in mid April but the rate of decline has eased quite a bit. This remains a problem for the CMI but less so than last month.

The good news for those who want the CMI stabilize is that supply is no longer a big problem. Falling demand (contracts and sales) will probably stabilize at some point but we have not reached that point yet.

If we reach 100 then the market will be technically in balance between supply and demand, with both far below normal levels.

April 20 - The average $/SF for Greater Phoenix listings under contract peaked at $196.27 on March 10. Since then it has fallen back to $190.77, a decline of 2.8%. If we look just at the City of Phoenix, the change was from $203.09 to $200.28, a fall of 1.4%, only half the overall market.

If we look at Scottsdale and Paradise Valley, the change was from $329.90 to $333.79, a rise of 1.2%. Obviously this is much better than the overall market.

You may be thinking that if we combine Phoenix, Scottsdale and Paradise Valley a rise of 1.2% combined with a fall of 1.4% would leave us with a change close to zero. However the combination of Phoenix, Scottsdale and Paradise Valley shows a fall from $255.67 to $247.07, a decline of 3.4%. This is a bigger drop than the overall market. So the combination of 2 areas that substantially outperformed the market gives us an area that under performed the market.

How can this happen? It is all about the mix. Higher end homes typically have a much higher $/SF than average homes, primarily due to the high value of the land they sit on. Listings under contract have fallen in number and this effect is much stronger in higher priced segments of the market. Thus when we combine the 3 markets we end up with a much lower share of upscale homes on April 20 than we had on March 10. This effect accounts for most of the 3.4% dip in average $/SF.

With fewer upscale homes in the mix, price per square foot will fall between March and September this year. We normally see that effect between May and September every year as the luxury home market goes relatively quiet during the hottest months. In 2020 we expect the chart pattern to start 2 months early. There is no need to think that home values might be falling during the summer of 2020. Even though the market is weaker now than it was in early March, it still favors sellers over buyers and the underlying price pressure will stay positive until that situation is reversed. Even then there is a significant time delay between the Cromford® Market Index changing direction and sales prices changing direction. In the 2005-2008, that time delay was 15 months.

April 19 - After the first 2 weeks of April we can see 2,829 closed listings across Greater Phoenix. This is down 20% from 3,519 during the same 2 weeks of 2019. During March we saw listings under contract fall sharply but closings remained quite strong. We now expect April closings to be much lower than last year and based on the first 2 weeks, 20% is probably a reasonable guide to how much.

The really interesting thing is that the fall in closings is not affecting all price ranges equally.

The big falls in volume were at the extreme ends of the market. Closed listings over $1 million were down 30%, while closed listings under $250K were down 42%.

Between $500K and $1 million, closed listings were up 11% and between $250K and $500K they were down but only by 4%. So the range between $250K and $1 million is almost unchanged from last year - down less than 2%.

April 18 - [If you don't want to know about the COVID-19 pandemic, skip this observation]

The following US states and territories have seen the weekly rate of new COVID-19 cases fall and the number of active cases decline:

  • Alaska
  • Guam
  • Hawaii
  • Idaho
  • Montana
  • Oklahoma
  • Vermont

These are therefore the places with the least difficult challenge in starting to return to normal.

Some states have seen new case rates decline and then start growing again in a second wave. These include:

  • Maine
  • Minnesota
  • New Hampshire
  • Ohio
  • Wyoming

This shows that the pattern of infection is not simple and can take unexpected turns. In Wyoming the number of active cases doubled overnight after a health worker went to two weekend parties following known contact with the virus and being tested. The test took several days and the health worker was confirmed positive early the following week.

Growth in new cases per week is seen in the following

  • North Dakota +14.1% per day
  • South Dakota +11.3% per day
  • Wyoming +10.1% per day
  • Ohio +6.6%
  • Nebraska +6.1% per day
  • Rhode Island +5.6% per day
  • Iowa +4.9% per day
  • Maine +4.9% per day
  • Minnesota +4.6% per day
  • Massachusetts +2.9% per day
  • Delaware +2.5% per day
  • New Hampshire +2.5% per day
  • Mississippi + 2.2% per day
  • North Carolina +1.4% per day
  • Illinois +1.3% per day
  • Arkansas +1.2% per day
  • Maryland +1.1% per day
  • Colorado +1.0% per day
  • Connecticut +0.8% per day
  • New Mexico +0.6% per day
  • Kansas +0.1% per day

States not mentioned in the list above have a falling rate of average cases per week. This is the first milestone to be achieved in the long trek back to normality. Arizona is at -0.2% so it has achieved this first milestone with a peak of 1,420 cases per week and a current mortality rate of 3.8%

The highest reported mortality rates are in:

  1. Michigan 7.5%
  2. New York 7.3%
  3. Connecticut 6.2%
  4. Minnesota 5.5%
  5. Oklahoma 5.4%
  6. Louisiana 5.4%
  7. Puerto Rico 5.4%
  8. Kentucky 5.3%
  9. Washington 5.3%
  10. Indiana 5.1%

These are probably higher percentages than are seen in reality, being based on confirmed cases and recorded deaths. It is likely that total cases may be as much as ten times the confirmed number or more. The number of deaths is also likely to be higher than reported, since many deaths in care homes or outside the healthcare system are likely to be missed. However the under counting of deaths is nowhere near as large as the under counting of cases.

The USA has just over 40% of the active COVID-19 cases in the world. For the other 60%, there are now 33 countries which have seen weekly new cases fall from a peak and also the number of active cases start to decline. This is the second big milestone. Among the larger countries to achieve this second milestone are:

  • Germany
  • Iran
  • Switzerland
  • Israel
  • Australia
  • Taiwan
  • South Korea
  • Thailand
  • Austria
  • Denmark
  • Norway
  • Malaysia

Focus is now shifting to the countries with the fastest rate of new cases. This includes the following countries with very large populations that are in the early stages of their waves of infection:

  1. Turkey
  2. Russia
  3. Brazil
  4. India
  5. Mexico
  6. Pakistan
  7. Bangladesh
  8. Philippines
  9. Nigeria

Singapore used to be quoted as a success story for containing the virus but is now suffering a second wave much larger than the first and new infections are growing very fast - up 19% per day.

China is starting to get back to normal, relaxing some of its stringent restrictions, but perhaps not surprisingly, its rate of new infections has risen sharply from a very low level over the past week - up 13% per day.

There are three key questions about this pandemic which will determine the success or failure of any move back to normality.

  1. Does infection by COVID-19 confer any immunity from repeat infection?
  2. And if it does, how strong is that immunity, total or partial?
  3. And how long lasting is that immunity, weeks, months, years, a lifetime?

Despite all the efforts of medical researchers round the world, the answer to all those questions is - we do not know.

Without an answer to all 3 questions it is impossible to forecast the future economic trajectory with any confidence. Please bear that in mind when reading any of our commentary about the housing market.

April 17 - The critical factor in the fate of the housing market is whether we see an excess supply over demand at some point in the medium-term future. Currently demand is being suppressed due to the COVID-19 pandemic but eventually these constraints will be removed and demand should rebound. It probably will not rebound as fast and far as it fell because the finances of some potential buyers will have been negatively affected by the recession. Lenders are very likely to be more cautious too. However as long as supply remains lower than demand there will be no downward pressure on prices and home values will therefore be sustained.

It is therefore critical to watch the charts showing active listings without a contract, such as the Tableau charts here and here.

There are several locations where supply has barely risen at all over the past month and some that have even experienced a decline.

  • Supply has declined in Arizona City, Fountain Hills and Paradise Valley
  • Supply has not risen much in Anthem, Casa Grande, Cave Creek, Gold Canyon, Scottsdale, Sun City West and Sun Lakes
  • Supply remains well below April 2019 levels in Apache Junction, Buckeye, Laveen, Litchfield Park, Maricopa, Sun City and Tolleson
  • The big rises in supply have been in Avondale, Chandler, Gilbert, Glendale, Goodyear, Mesa, Peoria, Phoenix, Queen Creek and Tempe but even here supply remains lower than in April 2019
  • Surprise has returned to the level of April 2019
  • Only El Mirage has caught up to and overtaken the April 2019 level of supply

New listing counts are still declining by larger percentages each day - last week they were down 29% from the same week in 2019. If this trend continues then it becomes more likely that supply will remain tight and stay below the diminished level of demand. However supply is also subject to the COVID-19 virus and we have little idea what rate of new listings would occur in an unconstrained environment.

Current changes are far too rapid to be usefully monitored on a monthly basis and we are glad that back in 2004 we chose to collect our housing data on a daily basis despite the challenges that arise as a result.

April 16 - Here is our usual table of Cromford® Market Index values for the single-family markets in the 17 largest cities

chandler real estate

This is the first time in many years that we have seen all 17 cities moving in the same downward direction, some faster than others, but overall with very strong momentum. The average change is -26.3% which is faster even than the -16.3% we saw last week.

A handful of cities are dropping a little slower - Buckeye, Fountain Hills, Maricopa & Cave Creek. At the other extreme, Avondale's -39% is a record. However, all cities remain seller's markets, a long way above the balanced zone of 90 to 110. We still have 7 cities over 200, representing markets that strongly favor sellers. Demand still exceeds supply, although the gap is narrowing quickly.

Listings under contract have dropped very fast, while closed sales are falling more slowly. Active listings without a contract have risen despite a weak flow of new listings. Volume is down sharply, but not nearly as much as it would have been if real estate services had been deemed a non-essential business activity in Arizona. Many other states will be experiencing faster and deeper declines in volume.

The big question now is how long will this trend continue before it stabilizes.

April 15 - The listing success rate is shown in the chart below for the last 6 months:

Gilbert Homes

We can see a fairly steep decline in the listing success rate after March 21 - falling from 89% to 82%. However 89% is abnormally high and 82% is still a long way above average

The long term average is 65% so we are still 17 points above average. The highest ever seen is 89.6% and the lowest is 20.4%.

We have never seen prices decline when listing success rates are above 65%. In fact apart from a few isolated instances, price declines tend to follow listing success rates below 50%. This chart is therefore another good one to keep your eye on.

You can find it here.

For analyzing listing success rates by segment we recommend the Tableau chart here.

April 14 - Yesterday we looked at the two separate Cromford® Market Index components for Supply and Demand. These are combined to give us the Cromford® Market Index itself. Today we will look at the short term trend in the CMI as pictured below:

REAL ESTATE IN Chandler

This looks a little bit like the scariest roller coaster ride because we cannot see the bottom. The fact is that no-one knows where this will end up. Right now we are a long way from the balanced point of 100, but we have dropped 50 points in 25 days and the CMI is falling at a faster pace each day. 90 points no longer looks such a large distance. It is possible that demand stabilizes quite quickly, but it also possible that it could continue to dissipate. Although new listings are quite light, if homes are going under contract slowly, the total number of active listings will still grow and supply will increase.

All we can promise is that you can see the CMI on our home page every day and so you will be among the first to know if it speeds up or slow

April 13 - There are two key housing projections that people want to know about during any shift in the marketplace, what will happen to home values and what will happen to sales volume. Buyers and sellers tend to be the most concerned with home values while industry professionals are concerned about sales volume.  Some people assume that these two things go hand in hand, but that’s not always the case.

To do these types of projections, we turn to our Supply and Demand Indices to guide projections for both.

chandler real estate agents

First, let’s talk about price:

When the Demand Index (green) is higher than the Supply Index (red), the market favors sellers and annual price appreciation is projected to rise.  When Supply is higher than Demand, the market favors buyers and annual price appreciation is projected to fall.  When they are together, we expect appreciation to follow closely with the rate of inflation for that time period. 

**Currently, the Demand Index is higher than the Supply Index, thus annual price appreciation is expected to continue to be positive.  The closer they get to each other, the more conservative that appreciation will be.**

Now, let’s talk about sales volume:

Sales volume depends on where both measures are in relation to “normal” levels, as determined by historical data that is seasonally adjusted for the time of year.  The Demand Index takes into account both listings under contract (Pending, AWC, UCB, and CCBS) and closed sales.  When the Demand Index starts trending below normal, it’s an indicator that sales volume will start to fall, but whether or not the market shifts towards buyers depends on whether the Supply Index is higher or lower than Demand.

** Currently the Demand Index has fallen from 7.7% above normal to 4.6% below normal over the past 4 weeks.  This is an indicator that sales volume over the next few weeks will be weaker. **

IN SUMMARY:

Prices will continue to rise and sales volume will start to show the effects of “stay-at-home” measures in the next few weeks. 

Not until Supply and Demand meet will we see prices stabilize and not until Supply is higher than Demand will we see prices decline.  A lot can happen in the next 4 weeks, however.  It’s still too early to be making apocalyptic projections for the Greater Phoenix housing market.  

April 12 - Listings under contract fell less last week than in the previous 3 weeks:

chandler realtor

It is a little early to read too much into this, but the drop in contracted listings looks a lot less ominous than it did last week. A large number of new offers are still being made and in many cases listings are attracting several multiple offers. The luxury market over $1 million has fallen back from 522 to 334 over the past 5 weeks, but had been running so far ahead of 2019 that it is only slightly below the level of last year (369) even now. This is despite both buyers and sellers acting more cautiously.

April 11 - The number of new listings is a fascinating subject at the moment and because it is the start of the selling process it is a useful indicator for the future.

Back in April 2005, new listings started to grow and reached epic proportions during 2006 and 2007 giving us early warning of the impending crash.

2020 is nothing like that. We did see a small jump in new listings that started on March 19 reaching a peak on March 25 and then dying by April 3. We now have very weak arrivals of new listings. For the last 7 days, new listings are down 21% from the same period in 2019 and down 18% from 2018.

Looking at the new listings in Greater Phoenix that were activated during the first 7 days of April in 2020 and 2019 we see the following comparisons:

Segment 2019 2020 Change
All 2879 2188 down 24%
Single-family detached 2364 1776 down 25%
Townhouse / condo 462 357 down 23%
Mobile / manufactured 53 55 up 4%
Under $200K 467 251 down 46%
$200K to $300K 1010 828 down 18%
$300K to $500K 914 812 down 11%
$500K to $1M 380 239 down 37%
Over $1M 108 58 down 46%
Phoenix 684 512 down 25%
Scottsdale 298 200 down 33%
Chandler / Gilbert / Mesa / Tempe 604 468 down 23%
Avondale / El Mirage / Glendale / Laveen / Peoria / Tolleson / Youngtown 332 272 down 18%
Surprise / Waddell / Wickenburg / Wittmann 133 151 up 23%
Sun City / Sun City West 177 96 down 46%
Litchfield Park 33 13 down 61%
Anthem / Black Canyon City / New River 35 11 down 69%
Paradise Valley 41 20 down 51%
Buckeye / Goodyear 171 137 down 23%
Carefree / Cave Creek 32 13 down 59%
Fountain Hills / Rio Verde 47 22 down 53%
Apache Junction / Gold Canyon 31 32 up 3%
Florence / Queen Creek / San Tan Valley 170 150 down 12%
Arizona City / Casa Grande / Eloy / Maricopa 108 80 down 26%

 

The general trend is a drop of between 23% and 25% but several areas fell more than 50% while others showed an increase, notably in the outer NW and Apache Junction / Gold Canyon.

We can see that in many places, the number of active listings without a contract has increased over the past month. However this is not due to high numbers of incoming new listings. It is instead due to contracts falling through and reverting to active, and more active listings failing to attract a buyer in the subdued traffic caused by the COVID-19 outbreak. While demand stays much lower than normal, even a weak supply of new listings can lead to a build up in supply. Given how very low supply was in March, this could go some way towards normalizing the market. However it is likely that demand will come back quickly once the pandemic starts to die down and restrictions are lifted.

April 10 - From the spreadsheets that we provide and update daily with the latest COVID-19 statistics, you can observe some major differences between the states. Below are some examples:

A. Infection Rate (total confirmed cases compared with total population)

  1. New York - 1 in 120
  2. New Jersey - 1 in 174
  3. Louisiana - 1 in 254
  4. Connecticut - 1 in 364
  5. Massachusetts - 1 in 367

Arizona ranks 36th at 1 in 2412 people infected. Of course this includes only people who have been tested. The actual number of people who would test positive is unknown, but is expected to be very much higher.

Least infected are:

  1. Minnesota - 1 in 4541
  2. Puerto Rico - 1 in 3189
  3. West Virginia - 1 in 3427
  4. Nebraska - 1 in 3412
  5. Hawaii - 1 in 3203

The global figure is 1 in 4847. Thus even the least infected state (Minnesota) is more infected than the average for the world as a whole.

At 1 in 120, New York is more heavily infected than any other country, state or province in the world, except San Marino (1 in 102) and the Vatican (1 in 100)

A. Weekly Rate of Increase in Confirmed Cases

  1. Delaware - 208%
  2. South Dakota - 171%
  3. Maryland - 165%
  4. Rhode Island - 163%
  5. Connecticut - 156%
  6. Pennsylvania - 155%
  7. New Mexico - 145%
  8. West Virginia - 141%
  9. Virginia - 137%
  10. Texas - 137%

The above states are showing runaway rates of new infection, which is an ominous signal unless they can quickly regain control.

Arizona is ranked 28th at 89%. This is a middle of the road number for the USA, but worse than the global average of 58%.

The slowest rates of new infection are here:

  1. Northern Mariana Islands - 38%
  2. US Virgin Islands - 43%
  3. Tennessee - 45%
  4. Washington - 47%
  5. Montana - 47%
  6. Maine - 49%
  7. Idaho - 52%
  8. Hawaii - 55%
  9. Guam - 56%
  10. Wyoming - 59%

The USA as a whole is increasing by 91%.

The fastest rate of new infections in the world is in Belarus at 389%. This is an unusual country in that their president denied that the virus was a problem in his country and refused any suggestions of restrictions in movement. He advised people to drink vodka and visit saunas instead. I am sure we wish all Belorussians good luck with that. At least we will have a yardstick to measure the effects of carrying on life as normal. A similar policy (but without the vodka and saunas) was espoused by the president of Brazil. Brazil is currently at 126% weekly growth in cases.

In North America, Mexico is in a poor position growing at 131% while Canada is slightly better than the USA at 84%. Russia is at 186% mad India at 164%. The UK is similar to the USA at 93%.

Two countries that at first appeared to be on top of the situation appear to be losing the fight to keep control - Japan (104%) and Singapore (82%).

To finish on a positive note the lowest growth in new cases can be found here:

  1. China - 0%
  2. Faeroe Islands - 4%
  3. South Korea - 4%
  4. Taiwan - 12%
  5. Australia - 16%
  6. Lebanon - 18%
  7. Austria - 19%
  8. Norway - 21%
  9. Hong Kong - 21%
  10. Italy - 25%

Italy has paid its price to get into the top 10 with the second highest mortality rate in the world (after Algeria). It deserves congratulations for getting the growth down to 25% per week.

April 9 - Here is our usual table of Cromford® Market Index values for the single-family markets in the 17 largest cities

Real estate in chandler

Amazingly, Buckeye is still showing a rise in its CMI over the last month, though it has been falling since reaching a peak of 201.5 on March 26.

The average plunge is -16.9%, much worse than the -6.2% we reported last week. Demand is down and supply is rising, although the movement in demand is the more significant.

The faster drops have occurred in the Southeast Valley. Least affected are the spots on the fringes of the conurbation, such as Buckeye, Maricopa, Fountain Hills and Surprise.

Despite the falls, all cities are still seller's markets and a long way from the balanced zone of 90 to 110. Ten cities are still over 200.

April 8 - Based on affidavits of value filed during March we have collected the following statistics on iBuyer activity:

  Opendoor OfferPad Zillow Knock All iBuyers Combined
Homes Purchased in March 2020 165 115 54 8 342
Homes Purchased in March 2019 246 92 104 0 442
Annual Change in Purchases -33% +25% -48%   -23%
Homes Sold in March 2020 261 102 67 1 431
Homes Sold in March 2019 348 118 110 0 576
Annual Change in Sales -25% -14% -39%   -25%
Median Purchase Price in March 2020 $248,500 $277,300, $269,750 $407,745 $263,300
Median Purchase Price in March 2019 $238,300 $219,254 $295,000   $240,450
Median Sale Price in March 2020 $270,000 $279,900 $300,000 $304,925 $275,000
Median Sale Price in March 2019 $250,000 $230,400 $295.000   $250,000
Homes in Inventory at the End of March 2020 576 443 63 22 1,104
Homes in Inventory at the End of March 2019 1,029 420 402 0 1,851
Annual Change in Inventory -44% +5% -84%   -40%

If we focus exclusively on the sales numbers, then the iBuyers fell 25% as a group compared to a year ago. This is the first time the iBuyers have show negative annual growth in sales. Zillow fell the furthest (40%) and OfferPad the least (14%).

The purchase numbers show that the iBuyers are failing to maintain a supply of homes to sell. Purchases are down 23% compared to a year ago, though this became part of a stated strategy for Opendoor and Zillow during March. They announced a cessation of buying operations due to COVID-19. OfferPad continues to buy homes and increased their market share as a result.

As a group, iBuyers' homes in inventory are down 40% from last year.

As a result of all the changes, iBuyers now represent a smaller part of the overall market for both purchases and sales.

April 7 - New residential listing counts took a jump between March 19 and April 3, but are now dropping back sharply and today the weekly count of new listings is down over 12% compared with the same period in 2019. This is not surprising as the pandemic saps seller motivation almost as much as it dampens buyer enthusiasm. This new trend in new listings means supply is still inadequate to meet demand even though demand has been artificially crushed by the COVID-19 outbreak and the measures taken to control it. The implication is that prices are still not seeing any prospect of experiencing any downward pressure in the near or medium term.

History shows that home prices only fall when their is a glut of homes available and sellers have to compete with each other to move them. A fall in demand, however severe, is not sufficient to drive prices lower. There has to be an excess in supply relative to that demand. We saw this between 2006 and 2009 for the entire market and for the luxury market between 2015 and 2017. You may see a few builders offer incentives to close contracts, but it would be surprising if they cut list prices or lot premiums in the current market conditions.

The same trend is not true of rental listings which continue to grow healthily. They are up nearly 35% from 2019 for the last 4 weeks. It will still take a long time before this trend results in enough rentals to meet demand. However the current situation means that rents are likely to rise less quickly than they would have done before corona virus.

Each year we see a fall in average $/SF for re-sales between late May and late September but this is a result of the sales mix containing far fewer high-end homes. This is likely to be an even stronger trend in 2020 because the luxury market has seen many homes taken off the market and what extra supply has arrived has been strongly biased towards the affordable end. The mix of what is for sale is therefore biased towards the lower $/SF which will result in lower averages in the closed figures. The fall in average $/SF during the hottest months does not mean home values are falling any more than it did in the years 2000 through 2019. You should take this into account when reading all the sales price numbers for the next 6 months.

April 6 - The chart below is not meant to be alarming, just realistic:

Chandler homes for sale

The chart shows the Cromford® Market Index over the last 6 months and the index represents the balance between supply and demand.

We can see that we peaked on March 19 at 241.1, an extremely high number caused by stronger than normal demand and extremely weak supply. Since then we have seen a sudden but modest increase in supply and a large drop in demand due entirely to COVID-19. The index is accelerating downwards at one of the fastest rates we have ever seen. However it still stands well above 200 and a balanced market reading is 100 where supply and demand are in balance. At 100, sales prices rise in line with normal inflation. So we still have a very long way to go before the market becomes balanced. If it drops below 100 then sales prices rise slower than inflation and below 90 sales prices start to build downward momentum.

The Cromford® Demand Index has dropped from 107.6 to 99.7 between March 19 and April 6 so it now officially below normal and headed south. The Cromford® Supply Index has risen from 44.6 to 47.5 over the same period. Although it has risen it still sits at less than half what we would consider normal.

Demand still exceeds supply by a large margin, but the gap is closing at an unusually fast speed. That is the reality of the situation we are in.

What we do not yet know is where it will stabilize. That will depend largely on how much closed sales and new contracts hold up. So far closings have held up quite well, but new contracts have been unusually weak for the time of year.

April 5 - We have added another spreadsheet to the COVID-19 downloads. This allows you to compare the USA statistics with the rest of the world and to see which countries are making the most progress in controlling the outbreak. It is the global summary spreadsheet here.

The bad news:

On April 4, over 40% of the new cases worldwide were inside the USA. This is ten times its expected share given the USA has 4.3% of the global population. If proof were needed that the USA was unprepared for the outbreak, then this number speaks for itself.

The good news:

Every day now, new countries are joining those that have a falling weekly rate of new cases. This is a leading indicator that the outbreak is subsiding. The current list is:

  1. San Marino -18.0%
  2. Lebanon -13.1%
  3. Faeroe Islands -10.0%
  4. South Africa -9.2%
  5. Slovenia - 8.3%
  6. China -7.3%
  7. Taiwan -6.9%
  8. Austria -4.7%
  9. Uruguay -3.7%
  10. Australia -3.4%
  11. Luxembourg -2.6%
  12. Costa Rica -2.5%
  13. Italy -2.5%
  14. Norway -2.2%
  15. Andorra -2.0%
  16. Switzerland -1.6%
  17. Lithuania -0.8%
  18. Gibraltar -0.8%
  19. Iceland -0.7%

Qatar was on this list yesterday but seems to be suffering a new surge in cases this week.

This list of 19 countries represents 22% of the world population where they have turned the corner. It has to be admitted that China is 84% of that 22%.

There are no US states or territories where the rate of new cases is slowing down. However some are dropping towards zero acceleration. These include:

  1. Guam +1.0%
  2. Arkansas +2.0%
  3. Virgin Islands +2.3%
  4. Montana +4.2%
  5. Washington +4.7%
  6. Alaska +4.7%
  7. Minnesota +5.0%

Even New York is at +6.1% which is a big improvement over +18.7% last week.

Arizona is +9.3% which is also down from +25.9% a week ago and +51.3% the week before that. This represents progress. Just need it to go negative, then we can feel better with some proper mathematical justification.

It should not be too long now before we can see the light at the end of the tunnel.

April 4 - I have some good news for sellers and home owners but bad news for buyers. The surge in new listings that started on March 19 has petered out already and we are back to new listings coming in at lower numbers than last year. The peak was March 25 when new listings were almost 20% higher than 2019 for the week. For April 4 the weekly count is down 4% compared with 2019 and the current trend looks as though new listings will drop further.

We will probably see active listings continue to rise because far fewer homes are going under contract than in a normal spring season, but if the current trend continues, new listings will also be lower than normal and therefore the rate of increase in active listings will be reduced.

April 3 - People looking at COVID-19 statistics tend to focus on the death count, especially the new death count. This often confirm our worst fears but it is not really a very useful statistic if you want to know where the pandemic is heading. It is a trailing indicator. It is also not being reported accurately since most countries in the throes of a pandemic only have effective systems for reporting deaths in hospital. Deaths in care-homes or at home are not counted since they are not usually tested for COVID-19 infection, even when that is the likely cause of death. They may be added later if a post-mortem is performed. That is a big if.

So what do I recommend as a statistician? How can you tell when the cycle begins to turn?

I recommend tracking the rolling weekly average of new confirmed cases. When you have these numbers, compare the change day to day. This will tell you when the infection rate has peaked and is starting to subside. It is a leading indicator, once infections top 100 or so. Prior to that it is not reliable because the sample size is too small.

So if you would like some good news, there are a few parts of the world where this indicator is falling day to day. Here they are:

  1. San Marino -12.3%
  2. Faeroe Islands -8.2%
  3. Lebanon -7.7% (*)
  4. Taiwan -4.9%
  5. Slovenia -4.3%
  6. China -3.9%
  7. Qatar -3.3%
  8. Switzerland -1.3%
  9. Italy -1.3%
  10. Luxembourg -1.1%
  11. South Africa -0.9%

(*) information deemed unreliable since parts of the country are controlled by non-state entities.

There are several other countries with very low rates of increase that look ready to turn negative quite soon. These include Australia, Costa Rica, Austria, Finland, Iceland and South Korea.

If this percentage is positive and growing, that is a red flag that new infections are accelerating. This is currently seen in

  1. Belarus +52.3% (-2.0% last week)
  2. Sweden +10.7% (+8.2% last week)
  3. Russia +23.3% (+21.3% last week)
  4. Japan +14.1% (+9.9% last week)
  5. India +22.5% (+19.7% last week)
  6. Greece +6.2% (+4.1% last week)
  7. Armenia +10.3% (+7.9% last week)

The president of Belarus has refused to impose any form of community constraints and stated "there are no viruses here". It currently has the fastest growth in new cases of any developed country. Sweden imposed far looser controls than its neighboring countries and is now deteriorating where the others are improving.

It is clear that tiny countries have seen far higher confirmed infection rates per head of population than most large countries. This includes Monaco, Andorra, Liechtenstein, Luxembourg, San Marino, Faeroe Islands, Gibraltar, Jersey, Guernsey and the Isle of Man. It is not clear to me why this should be true, but it is statistically significant. San Marino has the highest mortality rate in the world at 12.2%, but is also the fastest improving country bases on new cases per week.

1 in 276 of the 49,000 inhabitants of the Faeroe Islands has been confirmed infected. However they have reported no deaths and new cases are dropping faster than anywhere else except San Marino. They now have only 96 active cases with 81 fully recovered. Possibly the luckiest country in the world so far?

April 2 - Here is our usual table of Cromford® Market Index values for the single-family markets in the 17 largest cities

Chandler real estate

The supertanker that is the housing market has been slowly turning for the past 2 weeks and is now headed in a brand new direction.

Supply is still inadequate to meet demand but there are many changes compared with last month:

  • more new listings, particularly below $400,000
  • fewer new contracts getting signed
  • more listings getting cancelled
  • more contracts falling through
  • fewer sales closing

This week the average change in CMI is --5.8%. a dramatic swing from the +2.6% we reported last week. Only 3 cities are showing a gain in CMI since last month. No city's CMI advanced in the last 7 days.

The consequence is that sales volumes will drop and buyers will gain a little ground in negotiation with sellers. However sellers still have the clear advantage and there is no downward pressure on prices. The change of trend is certainly dramatic, but it would have to continue for several months before we reach a balanced market, never mind a buyer's market.

April 1 - We have posted the latest Case-Shiller® numbers to our long term chart here.

The latest series relates to sales between November 2019 and January 2020. That all seems a very long time ago.

Comparing with the previous month's series we see the following changes:

  1. Seattle +0.71%
  2. Los Angeles +0.34%
  3. Las Vegas +0.33%
  4. San Diego +0.31%
  5. Denver +0.27%
  6. Phoenix +0.24%
  7. Portland +0.17%
  8. Tampa +0.16%
  9. Atlanta +0.14%
  10. Dallas +0.12%
  11. Miami +0.05%
  12. Washington +0.00%
  13. Detroit -0.09%
  14. Charlotte -0.11%
  15. New York -0.29%
  16. Cleveland -0.31%
  17. Boston -0.34%
  18. San Francisco -0.48%
  19. Minneapolis -0.66%
  20. Chicago -0.86%

Phoenix slipped from first to sixth place. The national average was +0.02% so Phoenix increased at twelve times the national average.

The year over year comparisons are below:

  1. Phoenix 6.9%
  2. Seattle 5.1%
  3. Tampa 5.1%
  4. San Diego 5.1%
  5. Charlotte 4.9%
  6. Boston 4.5%
  7. Atlanta 4.5%
  8. Portland 4.1%
  9. Cleveland 3.9%
  10. Denver 3.8%
  11. Washington 3.5%
  12. Detroit 3.5%
  13. Minneapolis 3.4%
  14. Los Angeles 3.4%
  15. Las Vegas 3.2%
  16. San Francisco 3.0%
  17. Miami 2.9%
  18. Dallas 2.6%
  19. New York 0.8%
  20. Chicago 0.6%

The national average was 3.9%. Phoenix remained in the top spot and opened up a gap of 1.8% over the number 2 city - Seattle.

Meanwhile on the COVID-19 front, at the end of March:

  • The USA has 4.3% of the world population
  • It has 34% of the newly reported confirmed cases of COVID-19
  • It has 28% of the active cases
  • It has 22% of the total cases
  • It has 10% of the total deaths
  • It has 4% of the total recoveries
  • Global mortality rate outside China is 5.0% (deaths as a percentage of confirmed cases)
  • Mortality rate in China is 4.1%
  • Mortality rate in Italy is 11.7%

I cannot stress enough that the statistics indicate a very serious outbreak like nothing seen since the Spanish Flu in 1918.The Spanish Flu of 1918 killed more Americans than both the world wars combined. The USA is now the epicenter of the 2020 pandemic, overtaking Italy, which replaced China. Current statistics make it look likely that the USA will hold that position for at least the month of April. Please keep yourself and your loved ones safe.

 

March 31 - Although we do not normally talk much about the intricacies of the mortgage market, momentous things have been taking place over the past two weeks which are likely to have a knock-on effect on the housing market. For more details we refer you to a well-written article by Dan and Barry Habib and published at the mbshighway.com web site.

Unintended consequences of actions taken by the Federal Reserve are making life very tricky for mortgage lenders and mortgage service companies. Many of them will struggle over the coming weeks and home loans may become much more difficult to obtain. Housing demand is falling sharply anyway, and this has the potential to drive it even lower.

So what has gone wrong? It is complicated, but in a nutshell:

  1. Far more home loans are being paid off after a very short time because refinancing is very popular when rates are low. This is a problem for mortgage service companies because it causes them to lose money. They typically pay 1% up front for the right to service a loan, and if it has a life of less than 3 years they never recoup those up-front costs
  2. Job losses caused by COVID-19 mean far fewer new home loans are being created. They also mean the mortgage service company may not receive the monthly payments they are expecting for the loans they service. They have a responsibility to make the payments to the owner of the loan even though they have not received anything from the borrower.
  3. The government has unilaterally granted forbearance for borrowers if they are unable to make their mortgage payments due to the pandemic. This applies even if they have not yet made the first payment on the loan. This makes the loan a disaster - the lender cannot sell a loan which is delinquent on the first payment date. They must hold on to the loan which ties up their available credit.
  4. Many mortgage service companies finance much of the 1% they pay for the right to service loans. The value of loan servicing has been slashed in half overnight so these service companies are facing margin calls.
  5. Many loans in process have rate locks. Borrowers have been breaking those locks in the expectation that when the Fed Funds Rate dropped from 1% to zero, mortgage rates would also drop by a similar amount. The world does not work like that. However mortgage lenders hedge their rate locks by shorting Mortgage Backed Securities. The Fed is buying a huge amount of MBS paper driving the prices up sharply. The lenders short position is creating big losses for the lenders for locks that the borrower has broken anyway. The lenders are throwing money away to give locks the borrowing did not use. Not good for anyone.

Life for lenders is very difficult right now so they are having to increase rates rather than lower them, and they are still losing much more money than they planned in ways they never anticipated. They cannot handle the quantity of refinance loan applications they are receiving so they are raising rates in an attempt to slow down applications. The markets for new government loans, jumbo loans and anything that does not fit ideal parameters have all but dried up.

So the result is the opposite of what the government intended. Instead of home loans getting cheaper and easier to obtain, they are getting more expensive and harder to obtain. At least they are until someone steps in and sorts this mess out.

As if things weren't bad enough.

March 30 - The Cromford® Market Index reached its peak on March 19, but in the last 10 days has turned tail and is now losing about 1 point per day. This is one of the steepest rates of decline we have seen. However it is still at a level that pushes prices higher. The weekly chart for monthly average sales price per square foot looks like this:

The CMI above 110 tells us that buyers outnumber sellers and prices are experiencing upward pressure. However averages can be affected by the sales mix and over the last 2 weeks we have seen a sudden surge of low to mid priced listings that are being snapped up quickly by eager buyers who have been starved of such supply for many months. These are priced below the average $/SF because they are predominantly smaller homes from cheaper locations around Phoenix. As these close we will see the monthly average $/SF dragged down by these homes.

We can already see the impact these new listings are having on the average $/SF for active listings:

This is an unusual situation - the evaporation of the tourism industry almost overnight has emptied hotel rooms and turned many a vacation rental property into a liability instead of an asset. We think most of them are being offered as long term rentals. Hence the surge in long-term rental listings on ARMLS over the past 4 weeks. However when the stock market is in turmoil, cash is king. Investors of all stripes like to own cash during turbulent times and these homes will find plenty of offers even with 2 out of 3 iBuyers declaring a moratorium on online offers.

March 29 - The Greater Phoenix housing market carried on as normal until March 18 and then suddenly reacted to the COVID-19 pandemic. You can see what happened in our weekly charts. Here are the active listings:

We see the following:

  • a sharp increase in new listings during the last 2 weeks
  • active listing counts remain far below where they were at the end of March during the past 5 year
  • if they continue the current trend we will catch up with 2019 in about 6 weeks time

It is not yet clear if the surge will be short-lived or the start of a long-term trend. At the moment supply remains very low. Around 30,000 to 35,000 represents normality. No doubt many owners of vacation rentals would suddenly like to sell their properties because a massive number of cancellations hit them almost overnight. This represents a finite source of supply which will probably dry up in the near to medium term. In addition a lot of listings that were under contract have fallen through over the last two weeks. They usually go back into active status and create an upward trend in active listings.

Here are the under contract listings:

We see a sudden sharp drop in listings under contract. This is caused by many listings successfully closing but not being replaced by new contracts. Some buyers have pulled out of pending transactions and this seems to be particularly true at the higher end of the market. However volumes are small at the top end so this has little impact on the total number under contract. There are also plenty of pending and UCB listings falling through among the low to mid-price ranges. These are far more numerous than high-end listings and therefore have more impact on the chart above. Most of the decline is because the pandemic has suppressed buyer interest.

While the change is certainly sudden, it is much less severe in Central Arizona than the housing freeze in the UK where the government has recommended that no-one should be buying or selling any real estate for the duration of the lock down. Lenders in the UK are not writing any new home loans unless the buyer is putting up at least 40% down payment. This is because appraisers are not allowed to enter properties so there are no valuations available for loans. UK buyers are not supposed to enter properties for sale, so very few offers are being made sight unseen.

Arizona's restrictions are much less draconian. Governor Ducie has determined that as well as real estate services, pawnshops, golf courses, payday lenders, appraisers and title companies are included among Arizona's "essential services". House construction and new home sales are also defined as an essential service in Arizona, though these have been curtailed in many other states and foreign countries.

March 28 - Since the primary thing affecting the housing market is COVID-19 I thought we would compare how Arizona is faring with other parts of the United States.

You can find a spreadsheet containing this data in our downloads section here.

You can also see how the outbreak has impacted supply, demand and the contract ratio with a couple of new sets of presentation charts here.

Now for the comparisons.

A. Confirmed Cases

Arizona had 665 confirmed cases as of March 27 which places it 22nd among the states. The top 5 are

  1. New York - 46,262
  2. New Jersey - 8,825
  3. California - 4,791
  4. Washington - 3,700
  5. Michigan - 3,657

Of course a state with a higher population is likely to have more cases, so it is more useful to compare infection rates. Arizona has an infection rate of 1 in 10,945 people which places it in 38th position. The top 5 are:

  1. New York - 1 in 421
  2. New Jersey - 1 in 1,006
  3. Louisiana - 1 in 1,693
  4. Washington - 1 in 2,058
  5. Massachusetts - 1 in 2,145

It is clear that the infection spreads most easily when people live in high density areas and come into close contact with each other. Older cities like New York and New Orleans are particularly susceptible to high transmission rates.

B. Deaths

Deaths are a trailing indicator while cases are a leading indicator. Arizona has reported 13 deaths caused by COVID-19, placing it in 19th position. The states reporting the highest number of deaths are:

  1. New York - 606
  2. Washington - 175
  3. Louisiana - 119
  4. New Jersey - 108
  5. California - 94

Again, it is more useful to compare the number of deaths to the number of confirmed cases, giving us a mortality rate - the percentage of people with a confirmed case who have already died. This can change a lot over time because:

  • many people may have the disease but it has not yet been confirmed because no test has been performed - this is particularly true in the USA compared with other countries because only a tiny proportion of the US population has been tested and it is not easy to obtain a test when you are self-isolating
  • it is possible to be infected and show no symptoms
  • many of the active cases are serious or critical but have have not resulted in a death yet

The hardest hit by mortality rate are:

  1. Vermont - 5.4%
  2. Washington - 4.7%
  3. Louisiana - 4.3%
  4. Puerto Rico - 3.8%
  5. Georgia - 3.0%

Arizona is currently at 2.0% mortality placing it 17th. Five locations have yet to report a death as of March 27 - Hawaii, Nebraska, Wyoming, US Virgin Islands and Rhode Island. Clearly it helps to be either an island or a large state with a very low population density. In Arizona we have a large and lightly populated land area, but the vast majority of the people live in Maricopa County, which therefore has a higher infection rate.

C. Growth of Infections

A crucial measure is how fast infections are increasing. When this starts to fall below 10% per week, the curve has been flattened and the disease can be claimed to be somewhat under control. No state is close to this target, and Arizona has a weekly growth rate of 753% placing it 6th in the nation. The top 5 are:

  1. West Virginia - 1271%
  2. Missouri - 1164%
  3. Indiana - 1141%
  4. Idaho - 900%
  5. New Jersey - 892%

Nebraska is the luckiest state by this measure - it has a weekly growth rate of 130%. Washington state is at 143% which is a big improvement over two weeks ago when they were at 628%.

Arizona is the 14th largest state by population, so its current growth rate of 753% per week is considerably worse than the US average and means it is a long way from bringing the outbreak under control. Let us hope it can make as much progress over the next 2 weeks as Washington state managed to achieve.

The world as a whole is at a 116% weekly growth rate, with China at 0.5% and the world excluding China at 165%. Only 2 states we already mentioned (Nebraska and Washington) are better than the global average excluding China. Outside China, the lowest growth rate is in South Korea, where they are seeing 8% per week.

D. The USA as a whole

The USA has 99,908 active cases as of March 27 representing 23% of all the active cases in the world. It has only 4% of the world population so it is now far more infected that the global average.

The USA has reported 2,522 recovered cases which is only 2% of the global total, so it has lower herd immunity than the global average. It has 6% of the deaths reported, already more than its fair share. It has an unusually large proportion of people who do not properly comprehend the nature of the danger and have dismissed it as no worse than seasonal flu. This view is not commonly found outside the USA and places the USA in greater danger than most foreign countries.

The current COVID-19 mortality rate in the USA is 1.6%, currently trending higher (it was 1.3% last week). One in every 3,179 people are confirmed infected. It was 1 in 17,091 last week and 1 in 151,627 the week before that (March 10). The situation is deteriorating rapidly.

The country has put major effort into tackling the financial issues caused by the pandemic, but not as much work has yet gone into the extraordinary measures that will be needed to meet the medical needs - protective equipment for ALL medical workers, the widespread provision of testing facilities, a huge number of additional ICU beds, ventilators. etc. The solution to the pandemic will need to focus harder on addressing and suppressing the cause, not merely the financial effects.

March 27 - Here is our usual table of Cromford® Market Index values for the single-family markets in the 17 largest cities

 Chandler homes for sale

The supertanker that is the housing market is still changing direction as fast as it can, which is to say, slowly. We now have 7 cities with CMI values that are lower than a month ago. However we also have 10 that are higher and the average change is +2.6%. Take the 3 lowest priced cities (Maricopa, Buckeye and Avondale) out of that list and the average change is +0.1%.

For the last week, the market is cooling with supply increasing and demand in decline in most but not all areas. However it is dropping from a very hot temperature and will take quite a while to reach normal room temperature (a CMI of 100).

The impact of the COVID-19 pandemic looks more significant with every passing day and now seems to us like an event so momentous that the CMI could conceivably be driven back to 100 or even lower. At the moment we are in uncharted waters so any predictions are practically worthless. The CMI will give us a very good idea of which direction we are headed and how fast but forecasting how long that trend will continue is not possible with any confidence.

If we knew what the real extent of corona virus infection was, we could get a better handle on the future. However the USA has not tested enough people without symptoms to know if asymptomatic carriers are rare or common. A controlled test of a large randomly selected population is urgently required. If a large percentage have already been infected and felt no symptoms, that would be very good news. However the opposite would be very bad news. At the moment, everyone is merely guessing. Without a massive testing program the whole country is flying blind.

Yesterday the USA became the country with the largest number of confirmed COVID-19 cases in the world, exceeding both Italy and China. There is no sign of a slowdown in any of the COVID-19 numbers published to date. In fact most show alarming acceleration rates. The systematic testing is therefore critical.

Meanwhile new supply is arriving quite fast, particularly for rentals and low to mid-priced re-sales:

  • New rental listings are up 8% year-to-date compared with 2019 and up 27% in the last 4 weeks compared to the same time last year
  • New residential listings are down 5% year-to-date but up 2% in the last 28 days and up 18% in the last week compared to the same periods last year

Single-family active listings are up 94% in Laveen, 55% in El Mirage, 18% in Queen Creek and 17% in Gilbert since the same time last month. This is a sharp turn-around from extreme shortages in February, though even with these increases, inventory remains very low by long term standards.

NOTE: As a service to our subscribers, we are creating Excel spreadsheets which provide a summary of COVID-19 statistics. The first of these is published on March 26 and provides details by country for the following data:

  1. Country name
  2. Population (in 1,000s)
  3. Number of confirmed cases
  4. Number of deaths reported
  5. Number of people who have been reported as recovered from infection
  6. Active cases
  7. Mortality rate (among confirmed cases)
  8. Infection rate (expressed as 1 out if N people)
  9. New cases (that day)
  10. New deaths (that day)

We have included the most heavily infected countries and plan to add additional countries over the next few days.

We have also added a spreadsheet covering the states and territories of the USA.

These spreadsheets may be found in the Spreadsheet Downloads section of our site.

March 26 - The COVID-19 pandemic is now hitting the USA harder than ever and the worst is yet to come. Each state has a different situation with a wide range of infection rates, mortality rates and acceleration rates. There is no state where things look good. At 66,790 the USA now has the highest number of active COVID-19 cases of any country in the world. Please take steps to protect yourself and your loved ones.

New York state has the worst outbreak within the USA and its infection rate is higher than Italy, with 1 in 590 people confirmed as infected as of March 25 and probably many more undetected. For comparison, Italy currently stands at 1 in 813. New York's mortality rate is 1.1% - that is 1.1 deaths per 100 confirmed cases. This number is rising daily. There were no deaths in New York as recently as 2 weeks ago, but 350 in the last week. For comparison, Italy's mortality rate is currently 10.1%.

As of March 25, the USA had 68,211 confirmed cases with 1,027 deaths, 394 people fully recovered and 66,790 active cases of which 1,452 are serious or critical. The USA now has almost 4 times the infection rate of China, once the epicenter of the pandemic.

In Arizona, things are not currently as serious as New York, but the rate of increase is alarming. Arizona reported 401 confirmed cases, 6 deaths and 392 active cases with 3 recoveries, as of March 25. This is up from 27 confirmed cases, 0 deaths, 26 active cases and 1 recovery one week ago. The exponential growth means the numbers are likely to explode over the next four weeks. Arizona's mortality rate stands at 1.5% with 1 in 18,151 people infected.

With their outbreak largely suppressed for now, China provides a useful guide to the end state of a well-controlled epidemic. They had 81,285 confirmed cases as of March 25 with a mortality rate of 4.0% and 1 in 17,689 people infected. Note that Arizona's infection rate now is close to where China's stands today. This is because they China has a vast population outside Hubei province and most of the infections were confined to Hubei due to the intensity of their lock down policy across the country. As they relax these restrictions, new cases are starting to increase so it remains to be seen if China can keep the corona virus under control.

The impact of COVID-19 on the housing market has been relatively mild so far, but is likely to become more dramatic over the next few months. Both buying and selling activities are likely to be muted with volumes declining. At this early stage it is impossible to predict where we will be in 3 months time, but we will be monitoring and reporting every day as usual.

What happens to future home values will depend on long-term supply and demand trends. Because the virus is now widespread and out of control in the USA, it is impossible to predict the future with any degree of confidence. We will not know where we really stand until the rate of new cases has peaked and the economy is well on the road to recovery. When that occurs is extremely hard to predict at this early stage. Those worried about home values can take some comfort from the Cromford® Market Index standing well above 200 as of today. In our experience, it would need to fall below the balanced range of 90 to 110 before we would expect home values to decline. That is a long way down, but then the COVID-19 outbreak is probably the most disruptive event to take place in the USA in the last century. What is most surprising to me is the apparently widespread lack of understanding of its severity that still persists even today. This lack of understanding can only amplify the negative consequences.

Here is what we see so far related to supply:

  1. New rental listings are up 8% year to date and up 25% in the last 4 weeks, compared to 2019.
  2. New residential listings are down 6% year to date but up 1.4% in the last 4 weeks, compared to 2019.

As a result buyers and especially potential tenants have more to choose from than expected, especially in the most popular price ranges. This should be reducing the number of offers on any one property and therefore going a little way to re-balance the market from where it stood in February. Sellers still have the advantage but it is now on a weakening trend.

March 25 - The Census Bureau has published numbers showing the single-family and multi-family building permits for February. They paint a picture of a construction industry running full pelt to build homes to meet demand.

Single-family permits totalled 2,350 for Maricopa and Pinal counties, up from 1,830 in February 2019. Multi-family permits were even stronger, with 1,623 across Maricopa and Pinal, up from 237 in February last year.

The annual rate for single-family permits stands at 25,948 units while the multi-family annual rate is 13,914. The latter is by far the largest we have ever recorded.

We shall have to wait to see the March numbers before we find out what effect the corona virus pandemic is having on the builders' plans.

NOTE:

John Kenneth Galbraith: "The only function of economic forecasting is to make astrology look respectable"

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March 24 - I wrote yesterday that "real estate is not considered an essential business activity in an international medical emergency". I based that on the policies of other governments (now including the UK) but this has since proven to be incorrect in Arizona. Pennsylvania specifically defines real estate activities and construction as non-essential here. New York has a wider definition of essential services, but still excludes most real estate from that list. Doug Ducey clearly has a different view on what is essential. It is going to be tricky trying to determine what is essential as each state seems to have made its own unique list. Personally I have never found essential oils essential, so I guess everything is a matter of opinion.

I would still give the same advice I gave yesterday. The novel corona virus is proving to be far more resilient and easier to transmit than most so infection rates are soaring and are nowhere near peak levels yet. The speed of transmittal means that many millions will be infected and mortality rates will soar when hospitals are no longer able to accept severely ill patients for treatment.

Over the last 4 days, the housing market has reacted to what is happening and the Cromford® Market Index chart shows a powerful upward trend transformed into a sharp downward trend.

chandler real estate 

This is caused by the increased supply that we discussed on March 22 and the reduced demand that we will discuss today. Note however that we are still well over 200 and that the CMI has to drop below 100 before pricing is given downward pressure. What we should see is a reduction in the acceleration of pricing as the CMI falls.

We will also see under contract average prices and average $/SF fall because we are seeing far more supply at the low to mid-range thanks in part due to the arrival of Airbnb properties onto the market for sale. This does not indicate that house values are falling, merely that the mix of homes for sale has moved very quickly in favor of low priced homes (and these also tend to have a lower price per sq. ft.) These will quickly become homes under contract and then homes closed, so there is likely to be a wave of weaker averages and medians.

Be prepared for this to be widely misinterpreted as a fall in home values.

Comparing March 23 with March 16 (1 week apart) we see:

  • Pending listings drop from 7,659 to 7,229 (down 5.6%)
  • Active listings with UCB & CCBS status fall from 5,073 to 4,639 (down 8.6%)
  • Listings under contract fall from 12,732 to 11,868 (down 6.7%)

However closed listings stand at 8,203 for the month ending March 23, up from 8,074 last week.

With listings under contract falling, we expect sales numbers to start declining soon. The Cromford® Demand Index has dropped from 107.5 to 106.5 but we expect this to fall much further as transaction become scarcer. The Cromford® Supply Index remains extremely low at 44.6 but this will probably rise as more listings stay active instead of going under contract.

March 23 - Before we address the decrease in demand that occurred over the past few days (see March 24), we need to look at yesterday's COVID-19 case numbers. This is because they are extremely concerning and we believe that they will have a greater impact on the USA housing market (and every other aspect of life) than most people seem to be anticipating.

We are in a very uncertain world, so please take everything we write as personal observations on what is happening and what might happen. The level of uncertainty is extreme so nobody can predict the future with any confidence. We will try to inform you as best we can, but every day is providing new information that can dramatically alter the situation.

A couple of basic numbers for the USA as a whole (including all states and territories):

  • Confirmed cases of COVID-19 as of March 22 = 33,976
  • Deaths attributed to COVID-19 as of March 22 = 417

Our concern is that the confirmed cases has jumped dramatically from 3,949 to 33,976 over the past 7 days. This is an increase of 760%. This could be either due to an increase in the number of tests being carried out, finding many previously unconfirmed or undiagnosed cases, or the infection is hitting much faster and harder than before. Either way, it implies a level of novel virus transmission faster and more widespread than anything we have seen for the last 100 years.

Confirmed cases are now growing at a faster rate inside the USA than in most other countries. Here is a table showing how the USA compares with several other major nations:

Country Cases (Mar 22) Cases (Mar 15) Growth
USA 33976 3949 760%
China 67800 67794 0.01%
Italy 59138 24747 139%
Spain 28768 7798 269%
Germany 24873 5795 329%
Iran 21638 13938 55%
France 16018 4499 256%
South Korea 8897 8162 9%
Switzerland 7245 2200 229%
UK 5683 1140 399%
Netherlands 4204 1135 270%
Belgium 3401 886 284%
Austria 3244 860 277%
Norway 2383 1221 95%
Sweden 1934 1022 89%
Portugal 1600 245 553%
Denmark 1395 864 61%
Brazil 1593 162 883%
Malaysia 1306 428 205%
Turkey 1236 6 20500%
Czechia 1120 253 343%
Japan 1086 839 29%
Israel 1071 251 327%
Ireland 906 129 602%

At this growth rate, it is likely that the USA will overtake China and Italy in a matter of days. It already has twice the infection rate as China (i.e. cases relative to population size).

The numbers show that only a tiny number of countries have implemented effective strategies in controlling the spread of the novel corona virus:

  • China - implemented an almost total lock down on January 23 and now is seeing only 0.01% weekly growth in cases, mostly people arriving in China from abroad
  • South Korea - implemented a fast and easy testing program with drive-through facilities and a smartphone app to track infected individuals - 9% weekly growth

Japan has been reasonably effective is restraining weekly growth to 29% and some of the Scandinavian countries, although they were initially hit very hard, seem to be having some limited success with their extensive shut downs. I would not describe the virus as under control until the weekly growth rate in confirmed cases drops below 10%.

Each state or territory within the USA has implemented their own strategy, with varying degrees of "lock down", but all of which are much looser than the intense restrictions on movement implemented successfully in China. Social distancing is helping, but from the numbers above it is not sufficient to control the virus and is being largely ignored by a small but significant percentage of the population who do not seem to understand the seriousness of the situation. There is more than enough non-compliance to allow the virus to spread widely and quickly.

As the virus spreads, we expect more stringent lock down measures to be implemented. Real estate activity will be increasingly limited causing volumes to drop. How far and fast they drop in Arizona will depend on decisions made at the state and county government levels. Real estate is not considered an essential business activity in an international medical emergency. It is possible that sales will cease closing if title companies and/or county recorder offices are temporarily closed.

Actions to control the virus spreading reduce the mortality but they lengthen the duration of the outbreak. If no action is taken, then more people will die but the economy will restart early.

As the number of recovered COVID-19 people grows, they are expected to have at least some level of immunity from further infection by the same virus. How long this immunity lasts and how complete the protection will be we do not currently know. In most pandemics the infected-but-recovered population starts to grow from very low numbers to a significant percentage of the population. Eventually the disease slows due the shortage of new hosts. At the time of writing there are only 178 infected-but-recovered people reported in the USA by Johns Hopkins University. This lucky group of people will eventually run into many millions.

During the outbreak, there is little reason to suppose that house values will be significantly affected, up or down. However sales volumes will inevitably collapse for a while until the outbreak dies down. It will not even be possible to calculate meaningful home price numbers if there are too few closed sales to measure effectively. These volumes will not be due to housing market issues. They are due to medical issues. People should not be worrying about the housing market, they should be worrying about their health and how to survive a significant period with little to no transaction activity. Once the pandemic recedes, the market will come back and pricing will once again be determined by the balance between supply and demand.

We encourage our subscribers (and everyone else too) to stay home as much as possible and if forced to leave for any essential reason, maintain a 6 foot distance from all other people, shower and change your clothes immediately you return. Wash your hands frequently and thoroughly and disinfect things that you frequently touch. Please protect the especially vulnerable. In particular, keep all children well away from the elderly or infirm. Make sure you are still around when the recovery starts.

March 22 - In the first few days of last week there was little sign of the pandemic having an effect of the housing market. However, Thursday, Friday and especially, Saturday, has given us much more to chew on. There are a number of effects happening at the same time, all of which combine to create a sharp slow down in demand an increase in supply. The effects differ by geography and price range.

More Supply

Active listings without a contract across all areas & types stood at 12,086 on Saturday - up 9% from a week earlier. This is a sudden change from the previous week when counts were close to flat week on week. This is due to a couple of large effects and one small one:

  • a significant increase in new listings arriving
  • a significant decrease in buyer activity, so listings are not going under contract as quickly
  • a few more listings have been taken temporarily off market, but this is a minor effect compared with the 2 above

Since we are all supposed to be avoiding physical human contact, it is not surprising that showing activity has dropped dramatically. Few normal buyers are willing to make an offer without viewing a property, though some investors may be tempted. Since real estate activity has been declared a non-essential business, buying and selling, as well as construction are likely to drop sharply, especially if a close-down is ordered by government, as it has in several states. In fact I am surprised that showings remain as high as they do. Some people are clearly not taking the pandemic seriously enough, which is a big mistake that will cause the virus to spread more quickly and incur a higher mortality rate.

The increase in listings is heavily skewed towards the mid price end of the market. Between Sunday 15 and Sunday 22, we see an over all increase of 11% in active listings without a contract. However there is NO increase in active listings over $800,000. between $150,000 and $300,000 we have an increase of 19% in a single week.

Of course we were starting from an excruciatingly low inventory of active listings between $150,000 and $300,000, so it is not hard to see a high percentage increase from such an abnormally low base.

Why are we seeing more active listings so quickly?

  1. Short term and vacation rental operators have seen their business evaporate overnight. Airbnb bookings are at their lowest in memory and smart owners realize they now have an asset that is expensive to own and run with little to no income to support it. They are placing these properties up for sale or for long term rental, or both.
  2. Opendoor is the largest iBuyer and it has stopped its buying operation completely. We normally see a few hundred homes purchased each month by Opendoor. These do not hit the MLS until many week later after the residents have moved out and they have been readied for sale. Sellers now need to place these listings with agents or with one of the iBuyers that is still providing online offers. It is quite possible that these other iBuyers will do the same thing shortly. This will increase the number of MLS listings temporarily.
  3. A huge amount of wealth has been destroyed on the stock market in the last month as the indexes return to 2016 levels. This leaves cash in short supply and some owners may need to turn fixed assets in liquid assets at short notice.
  4. A large number of snowbirds have returned to their winter homes, in Canada or the northern US states. This is especially true of elderly and retired visitors. Being on vacation during a pandemic was not their plan.

We see the following increases for single-family homes in the 17 largest cities:

  1. Avondale 46%
  2. Gilbert 20%
  3. Chandler 19%
  4. Mesa 19%
  5. Buckeye 15%
  6. Queen Creek 15%
  7. Tempe 14%
  8. Phoenix 14%
  9. Glendale 14%
  10. Peoria 13%
  11. Surprise 11%
  12. Goodyear 11%
  13. Maricopa 9%
  14. Scottsdale 6%
  15. Cave Creek 4%
  16. Paradise Valley 3%
  17. Fountain Hills -5%

The Southeast Valley is seeing the largest percentages, as well as Avondale, which had an extremely low number of listings to start with

By dwelling type, condos and townhomes are being added most quickly, consistent with the liquidation of Airbnb assets:

  1. Condo / townhouse 15%
  2. Single-family detached 10%
  3. Mobile or manufactured 6%

The speed of change is as high as we have ever seen and underscores why it is important to monitor the housing market on a daily basis, not once a month as most people do.

We will look more closely at the demand side tomorrow.

March 21 - The COVID-19 outbreak continues to dominate almost everything and in the last couple of days it is starting to have significant effects on the housing market numbers.

We are now seeing a much higher number of new listings coming onto the market. Over the last 7 days we saw 2,750 new listings, up 10% from the same week last year. Until this week we had experienced a drop of around 8% in new listings year to date. We will be reporting more about this shortly.

Meanwhile here is a table ranking the US states by their COVID-19 infection rate as of March 20:

  State or Territory Infection Rate Cases Cases Last Week
1 New York 1 in 2341 8310 421
2 Washington 1 in 4997 1524 568
3 Louisiana 1 in 8642 538 36
4 District of Columbia 1 in 9940 71 10
5 New Jersey 1 in 9980 890 29
6 Guam 1 in 12055 14 0
7 Colorado 1 in 15865 363 49
8 Massachusetts 1 in 16829 413 123
9 Michigan 1 in 18093 552 16
10 Connecticut 1 in 18379 194 11
11 Rhode Island 1 in 19619 54 14
12 Vermont 1 in 21519 29 2
13 Illinois 1 in 21664 585 46
14 Maine 1 in 24004 56 1
15 Georgia 1 in 25284 420 42
16 Delaware 1 in 25628 38 4
17 Nevada 1 in 27020 114 17
18 Wisconsin 1 in 28130 207 19
19 Tennessee 1 in 29334 233 26
20 Wyoming 1 in 30469 19 1
21 New Hampshire 1 in 30912 44 6
22 Arkansas 1 in 31437 96 6
23 California 1 in 33580 1177 282
24 Oregon 1 in 37010 114 30
25 Mississippi 1 in 37202 80 1
26 Florida 1 in 38154 563 50
27 North Dakota 1 in 39588 19 1
28 Maryland 1 in 40584 149 18
29 South Carolina 1 in 40866 126 13
30 Utah 1 in 41118 78 9
31 Pennsylvania 1 in 42265 303 41
32 New Mexico 1 in 48780 43 10
33 Minnesota 1 in 49044 115 14
34 Nebraska 1 in 52301 37 13
35 Hawaii 1 in 54466 26 2
36 Alabama 1 in 59102 83 5
37 Alaska 1 in 60976 12 1
38 North Carolina 1 in 61013 172 17
39 South Dakota 1 in 63211 14 8
40 Kansas 1 in 66225 44 5
41 Ohio 1 in 67568 173 13
42 Virginia 1 in 69979 122 30
43 Iowa 1 in 70126 45 17
44 Montana 1 in 71276 15 1
45 Texas 1 in 73638 394 43
46 Idaho 1 in 77761 23 1
47 Indiana 1 in 78309 86 13
48 Oklahoma 1 in 80775 49 2
49 Arizona 1 in 93371 78 9
50 Kentucky 1 in 95057 47 14
51 Missouri 1 in 115875 53 2
52 Puerto Rico 1 in 204499 14 0
53 West Virginia 1 in 256410 7 0

The good news for us is that Arizona has one of the lowest infection rates in the USA at 1 in 93371.

The really bad news is that cases are growing at an extremely fast exponential rate. It is out of control in every state and territory, just as it is in most countries of the world. Only extreme and early isolation measures can slow this growth down. So far only China and South Korea have achieved anything close to that. Though a few other southeast Asian countries have much lower exponential growth rates, they are still exponential growth rates at the moment, which eventually means widespread infection unless further more extreme isolation action is taken.

Few people other than died-in-the-wool mathematicians and scientists fully understand how shocking and devastating an exponential growth rate like this can be if it goes unchecked. The total number of confirmed cases in the USA is 19,383 as of March 20, up from 2,247 a week ago. This is an 8-fold increase in 7 days. The UK has seen a 5-fold increase in the last week reaching 3,983 cases.

As a thought experiment, imagine if the US numbers kept increasing at the same rate as over the last week, then we would in theory reach

  • 167,201 cases on March 27
  • 1,442,304 cases on April 3
  • 12,441,558 cases on April 10
  • 107,322,972 cases on April 17
  • the entire population of the USA by April 19

In fact a pandemic tends to slow down after it infects 25% of the population and peak before it infects 50% of the population. It then spreads much more slowly because it is running out of suitable hosts. At roughly 70% the population achieves "herd immunity" and transmission slows substantially. The Spanish Flu of 1918 only managed to infect about 25% of the world's population. People travelled far less and more slowly in those days as any virus can only spread as fast as its hosts move. However it is estimated that 50 million fatalities occurred in 1918-1920 and possibly as many as 100 million.

Please take care and isolate yourself as much as you possibly can from physical human interaction in every part of your life.

March 20 - Here is our usual table of Cromford® Market Index values for the single-family markets in the 17 largest cities

chandler homes for sale 

This is a picture of the real estate supertanker still headed in the same direction it has been following for several months. However something powerful has yanked the steering hard to port and beneath the surface there are changes going on. Next week we will probably see much more of those changes showing up.

The corona virus pandemic is having major impacts on the way we live our lives and housing will be dragged into unexpected waters that it has never navigated before. We will be reporting on all those changes as they take place.

The Greater Phoenix housing market enters this uncharted territory from a very strong position with low supply and above normal demand. In the table above 15 out of 17 cities have a higher CMI score than they did a month ago. All of the scores are far above normal (which is 100). However, fewer cities are rising compared to a week earlier. In the table below we include the next 12 cities and list those that are seeing CMI drop over the last 7 days:

  • Anthem - down from 224.7 to 215.1
  • Apache Junction - down from 280.5 to 278.4
  • Cave Creek - down from 230.0 to 225.7
  • Chandler - down from 382.4 to 381.1
  • El Mirage - down from 405.2 to 374.4
  • Gilbert - down from 369.1 to 363.9
  • Laveen - down from 378.7 to 340.4
  • Paradise Valley - down from 178.8 to 174.9
  • Queen Creek - down from 265.5 to 262.8
  • Sun City - down from 140.4 to 135.8
  • Tolleson - down from 380.7 to 359.1

This is 11 out of 29, and we expect the list to get longer next week as demand starts to weaken while supply rises.

In the last couple of days we have seen new listings arrive at a faster pace. Some of these represent iBuyer inventory which is not being replenished. Others are Airbnb vacation rentals that no longer have enough reservations and are being placed for sale. These homes are mostly at the low to mid price point which is where we have the lowest supply. This will help rebalance the market if the trend keeps up. Some existing listings have been taken off the market. This is most noticeable at the higher end in areas like Scottsdale.

March 19 - From looking at the housing numbers every day you would not be able to tell that we have a dangerous worldwide pandemic. There are a few slight changes in trend as mentioned on March 17, but compared with the chaotic financial markets, the housing market is steady as a rock.

One more thing that has changed over the past 2 weeks is that we are starting to see a higher number of new rental listings compared to last year. Until February 18 we we getting fewer new rental listings than a year earlier. This gradually changed and as of this morning we are running at 16% above 2019 for the last 28 days. Today's count for 28 days is 2,353 while on the same date last year we saw 2,027.

The number of active rental listings is 2,237 for all areas & types - not a high number by any means, but the first time we have seen more than 2,200 since December 19, 2019.

 

March 18 - A number of people seem to assume that we are heading for a recession and that home prices will fall. The first assumption is quite reasonable. The second assumption is based on fear and has little analytical data to back it up. Obviously anything can happen in a uncertain and disrupted world, but a fall in home prices is still looking very unlikely from today's numbers.

In 2005 the housing industry started to sicken because homes were being used as speculative commodities not for places to live. In 2005 I met a man in his early 20s who owned 12 homes in the Phoenix area, all with no occupants. How had he been able to buy them? 100% loans from unscrupulous lenders who went bust between 2007 and 2010. The housing industry (and more particularly the lending industry within it) was the cause of the 2008 recession. Phoenix was a hot spot for the cause of the problem, as was Las Vegas.

In 2020, housing is an innocent bystander to a probable recession caused by a pandemic. It has supply at extremely low levels and most homeowners have a large amount of equity. Even if they lost all their income and could no longer pay their mortgage, they could quickly find a buyer to release that equity. There is little likelihood of them facing foreclosure because the lender can be paid off with the sale proceeds. Only when demand collapses do the banks have to foreclose to get their money back. At the moment demand is still well above normal and has only shown very tiny signs of easing. In 2006 demand fell off a cliff yet home builders continued to build even more new homes because lenders continued to write ill-advised loans in huge numbers.

In 2020 builders are probably going to have to build fewer homes than they wish because of shortages of labor and materials. We are unlikely to see a glut of homes on the market for a very long time. A successful vaccine for the novel corona virus is more likely to appear before a surplus of homes could possibly develop.

Because the virus has not been contained yet, except in several parts of Southeast Asia, we are likely to see a lot of people out of work. We do not yet know how long it will take to get control of the pandemic in Arizona, but many people may be out of work for quite some time. These people are more likely to be renters rather than homeowners. Landlords may find it much harder to collect rents and the yields from their portfolios are likely to fall. Some may decide to evict tenants and sell their properties. At the moment the extra supply would be welcomed and receive multiple offers, even in these troubled times. The evicted tenants still exist and therefore still represent demand for shelter of some sort. There will be hardship, but not a flood of homes with no-one to live in them.

Housing demand is created by the existence of people and increases when more people turn up and decreases if they go away. In 2005 the people we were building new homes for were largely imaginary. In 2020 they are very real and migration trends have been very favorable with families and individuals moving to Arizona from other parts of the USA.

All the indicators for the Central Arizona housing market remain very healthy at the moment and we will report any change as soon as we spot one. There is no cause for panic and if you are delaying a purchase because you think the price will come down, you are probably making a poor decision.

March 17 - We said yesterday that we should see some effects of the pandemic very soon and this morning I am seeing the first small signs of a change in the market.

1. Some sellers have started to take their homes off the market to avoid the risk of having potential buyers in their home.

The total number of listings in Temporarily Off Market status (TOM) is 1,127 with 10,992 active with no contract and 5,077 active with UCB or CCBS status. The TOM count was 1,065 a week ago so we have seen an increase of 5.8% over 7 days. Not huge yet but if this trend continues at this pace we will start to see a significant drop in available supply. The ratio of actives (excluding UCB and CCBS) to TOM is 9.75 to 1. This time last year the ratio was 15.7 to 1. However we were at 9.8 to 1 in early January before the pandemic had really registered in the public's mind. This is definitely a new figure to watch. We may also see some unseasonal growth in cancellations.

2. The count of listings under contract shows signs of stabilizing instead of growing fast

Last year the number of homes under contract grew 12.9% between February 16 and March 16. In 2020 the same growth is only 9.7%. This is a subtle change but it is the first sign we have seen of demand starting to wane. This despite mortgage interest rates that make homes more affordable than last year. Most of the slow down happened in the last 7 days. We saw no growth in the number of listings under contract over the past week whereas during the same period last year we saw a growth of 3%.

We have not seen a slow down in closings yet. You would not expect that since the contract would have been signed many weeks ago and the number of people cancelling signed contracts is likely to be small at the moment. It is possible that this could change.

So we have signs of a falling trend in supply and also signs of a falling trend in demand. Which one proves to be stronger in the medium term we do not yet know, but the combination will affect volumes of business negatively. There is no sign as yet that pricing will be affected, but pricing is currently on a strong upward trend and this may falter if demand drops more quickly than supply.

The Cromford® Market Index continues to rise from its already extraordinarily high level, almost at 240. However its momentum is starting to ease a little.

March 16 - Several subscribers have asked me what effect the corona virus is having on the housing market numbers and the answer so far has been almost none. I know this is hard to believe, but we scour the data every day for any sign of a change. I am sure we will spot something very soon but I cannot report something if it has not happened.

Remember that the housing market is a bit like a giant oil tanker at sea. You can swing the wheel hard to port and nothing appears to happen for several minutes. It is inevitable that it will veer to port sometime, but it is hard to say when.

Today has been a dismal day for news, so I thought subscribers might like something hopeful....

There are now several parts of the world where the corona virus has been properly addressed and is now largely under control. Unfortunately for us these places are all in Southeast Asia. However, they do show that it is possible to contain the virus if you are willing to take drastic action on a very timely basis.

There are several provinces in China where COVID-19 is now inactive. As an example, Anhui province has over 62 million inhabitants and detected its first case of COVID-19 on January 22, 2020. Over the following few weeks, 990 people became infected. 6 of them died but the other 984 have now recovered and:

  • no person is currently sick with COVID-19
  • no new cases have been found since February 28

It is worth noting that Anhui is an eastern neighbor of the province where the virus originated (Hubei).

One person in a Hefei plastics factory in Anhui Province had no symptoms but was tested on March 3 and had a positive result. So they quarantined the entire workforce (some 500 people) and tested them all. All tests were negative and the original worker still has no symptoms. They believe it was a false positive and he has not been counted as a confirmed case. Everyone is now back at work.

The tactics used in Anhui were:

  • Suspension of all travel by air, road and rail
  • Everyone stopped work and went home to isolation until February 24
  • A large number of virus tests were carried out on both healthy and sick patients

There are also success stories elsewhere - Macau has had only 10 cases, all recovered and no new cases for several days, Nepal has only 1 case - now recovered. South Korea has seen over 8,000 cases but has implemented a huge testing program and is now seeing small numbers of new infections relative to its population size. The mortality rate in South Korea is now well under 1% and much lower than we are seeing in many other locations, especially Italy.

I see signs asking if I have recently travelled within China. Ironically, China is now one of the few countries where you are least likely to catch the virus. In most parts of China they are concerned about foreigners who might bring the virus with them from their country. I am not planning to visit China in the foreseeable future, but if I were, I would avoid Hubei for a while, as a few new cases still pop up there. Outside Hubei, the disease has been contained. The big question is what will happen if China relaxed their restrictions - would the virus start spreading all over again? They cannot stay hunkered down forever and they have not built up much of a herd immunity with only 81,000 infections among 1.4 billion people. Even so, they are in a much stronger position than most other developed countries that have yet to find a way to control the virus. Of course, the Chinese economy has taken a major hit to achieve this.

March 15 - As the corona virus is likely to have more impact on the economy than anything else in 2020 we have decided to provide observations and statistics about it and the potential and actual impact it has on the Central Arizona housing market.

You can find lots of statistics about the virus online but surprisingly few places provide what I regard to be the key measurements:

  1. What proportion of the population is known to be infected - the "infection rate per million"?
  2. What proportion of those infected have recovered?
  3. What proportion of those infected have died?
  4. What is the minimum mortality rate for those confirmed as infected, if no new cases arise?

Most internet sources provide counts, which are of course essential, but not always very meaningful. For example it may not seem very noteworthy that 101 people in San Marino have been confirmed as infected and 5 have died. But when you consider the fact that the population of San Marino is only 33,400, you can deduce that is the most infected country in the entire world with a rate of 3,024 per million and still rising fast. It has risen 3-fold in the last week. There are also 150 deaths per million, almost 3 times the rate in Hubei, China, the province where the first case was identified.

I am pretty sure that few people realize that San Marino is the worst affected country in the world, in relation to its size. In fact many people do not even realize that it exists. It is a small independent nation surrounded by Italy, which is not a good location these days.

Few people would guess that the second most infected county is Iceland, although they have not suffered any mortalities at all yet. Iceland has 510 confirmed cases per million inhabitants. The most infected state in the USA is Washington with 76 per million inhabitants.

Arizona has less than 2 infections per million as of March 14, rather low compared with surrounding states (CA = 9, NV = 7, NM = 5 and UT = 3. Unfortunately, all these numbers are expected to grow exponentially from these levels.

March 14 - We have all learned a lot about the novel corona virus since my last observation on that subject dated February 29. There is now little doubt that it will spread to every corner of the globe and will have a huge effect on the world, both in human and economic terms. It will therefore have an effect on the Phoenix housing market but these changes will be minor compared with the effect on families who lose loved ones and the businesses directly affected, included:

  • Hotels & vacation rentals
  • Transportation - especially airlines
  • Cruise operators
  • Restaurants
  • All tourism-related jobs
  • Sports
  • Entertainment
  • Physical retail
  • Retail landlords

There will be an increase in demand for healthcare workers, but the USA already had a shortfall of over 1 million healthcare professionals.

We anticipate a recession during 2Q and 3Q 2020 both globally and in the USA. This will impact employment levels and disposable income. Whether the recession lasts longer than that is impossible to say at the moment.

What we know about covid-19 includes:

  • it adds 1 to the 18 previously known corona viruses that can infect a human host
  • it is related to the SARS and MERS viruses but has many differences from them
  • it is not an influenza virus, but the symptoms are quite similar
  • it probably mutated in 4Q 2019 from an animal host and the first human infection occurred in Wuhan the capital city of Hubei province in inland China on November 17, 2019. Wuhan is a city of 11 million people. The metro area contains 19 million people, about 4 to 5 times the size of Greater Phoenix.
  • it is possible for the virus to mutate further which could change its characteristics
  • a person carrying the virus may be infectious for up to 5 days before the first symptoms occur and up to 37 days after the last symptoms disappear
  • infected people may experience no symptoms whatsoever, especially if they are young, making it almost impossible to screen people for transmission control
  • it is very easily transmitted through breathing, though coughs and sneezes add to the exposure
  • there is no effective cure and a vaccine is probably some 12 to 18 months away from being generally available
  • most people infected have only mild symptoms, but a percentage develop life-threatening complications, especially related to their ability to supply oxygen to major organs
  • risk factors for severe cases include
    • old age
    • smoking
    • high blood pressure
    • cancer
    • diabetes
    • other pre-existing illness
    • obesity

Here are the types of effects we can anticipate for the housing market, though nothing is certain in these very uncertain times:

  • investors will probably lose some enthusiasm for additional purchases
  • other buyers may defer or cancel buying decisions due to fear of losing their jobs
  • extremely low mortgage rates may compensate somewhat for the slowdown in demand
  • sellers may be less willing to allow strangers to view their home for fear they may be carrying the virus
  • new home builders may experience shortages of supplies and build times may extend, reducing total supply
  • people who are self-isolating, in quarantine or simply sent home by their employer are far less likely to go house hunting, or to list their home for sale

We therefore expect a fall in demand for homes. The foot fall at new home subdivisions is already dropping substantially as if to confirm this.

We expect a slight reduction in supply too, thus balancing some of the drop in demand.

Overall we anticipate volumes declining for several months but it will probably remain a seller's market

In the medium term, we may see homes coming onto the market that were previously Airbnb / VRBO properties. We may see a long hiatus in tourist visits and the owners may tire of the high vacancies if they are highly leveraged.

Lower sales volumes may mean we need fewer agents, fewer title and escrow staff and fewer lending professionals. This will add to the recessionary trend.

In the long term we are likely to see a temporary fall in population due to the increased mortality rates. In the UK the government has advised us to expect 60% of the population to contract the virus and to expect some 500,000 additional fatalities, mostly among the aged (like me). This represents some 0.8% of the total population. The government in the USA has made no similar projection but if it were to reflect the UK numbers, then the population of Central Arizona would decline by about 35,000. This is about half the usual number of net migration arrivals each year, so would probably not have a lasting effect on housing demand. However it does disproportionately affect the older age groups, so we would expect more noticeable demand drops in locations with unusually high median ages. These include Sun City, Sun City West, Sun Lakes, Carefree, Rio Verde, Wickenburg, Tonopah and Desert Hills.

I am unable to visit my mother (age 91) who is in a care-home for the elderly. This is sad but a very necessary precaution as care-homes are extremely vulnerable and even if I feel fine I may be carrying the virus. I am keeping fairly isolated socially and not attending any events or meetings as I am considered part of the high-risk group (age 68). I am concerned for 2 of my close relatives who work in pubs. Their risk of infection is very high, but their youth is likely to work in their favor. It is a great comfort that the virus seems to have very little impact on children.

March 13 - The table below shows the Cromford® Market Index values for the single-family markets in the 17 largest cities:

Chandler homes for saleIn one way, this is more favorable to sellers than last week - there is only one city deteriorating for them. However the average CMI changed by +7.9% which is slightly below the +8.4% we saw seven days ago.

Either way, life got even more difficult for buyers and the negotiation advantage favors sellers to an extreme degree.

It is notable that Buckeye and Maricopa saw the largest increases, both of which have a relatively large supply of homes for sale. However their supplies are dropping at an alarming rate, probably fueled by very low interest rates which makes home more affordable even at higher purchase prices..

The stock market is having a dreadful time with the the S&P500 entering a bear market this week. This kind of event usually means the top end of the housing market loses a lot of demand. 178.8 is still a very high CMI for Paradise Valley but it would not be a surprise if this fell further over the next few weeks. In PV supply is well below the seasonal norm, but it can hardly be described as scarce and the Cromford® Demand Index shows a clear declining trend.

Elsewhere supply is very tight and demand is holding up with sellers in Tempe, Avondale, Glendale, Phoenix and Scottsdale seeing double digit percentage rises in their CMI.

March 12 - One of the reasons we have a chronic shortage of homes for sale is the simple fact that fewer people are placing homes for sale on the MLS. Here is an image of the Tableau chart comparing the number of new listings each month:

Chandler homes for sale

We can see that the low flow of new listings started in November 2019 and has continued for the last 4 months. The worst months were November 2019 (down 10.3% from the year before) and January 2020 (down 10.5%). December was not much better (down 7.4%) but February showed some signs of improvement as it was down only 3.21%.

However, March is not looking too promising so far. In the first week we saw 2,333 new listings compared to 2,616 last year. This is a decline of 10.8%.

The 2,881 for March 2020 in the chart above includes listings up to March 11, but it is not fair to compare with March 11 last year as there is a strong weekly cycle meaning that realistic comparisons require us to use multiples of 7 days only.

March 11 - Based on affidavits of value filed during February we have collected the following statistics on iBuyer activity:

  Opendoor OfferPad Zillow Knock All iBuyers Combined
Homes Purchased in February 2020 177 89 49 6 321
Homes Purchased in February 2019 244 70 132 0 446
Annual Change in Purchases -27% +27% -63%   -28%
Homes Sold in February 2020 345 123 85 6 559
Homes Sold in February 2019 228 104 77 0 409
Annual Change in Sales +51% +18% +10%   +37%
Median Purchase Price in February 2020 $260,200 $248,148, $254,300 $351,544 $256,600
Median Purchase Price in February 2019 $232,950 $220,443 $326,900   $246,000
Median Sale Price in January 2020 $257,000 $257,900 $275,000 $288,425 $260,000
Median Sale Price in January 2019 $247,000 $245,200 $301.000   $253,000
Homes in Inventory at the End of February 2020 675 430 76 15 1,196
Homes in Inventory at the End of February 2021 1,129 411 406 0 1,946
Annual Change in Inventory -40% +5% -81%   -39%

If we focus exclusively on the sales numbers, then the iBuyers grew 37% as a group compared to a year ago. Market leaders Opendoor grew the fastest at 51% while late entrant Zillow only grew 10%.

However the sales numbers are not really the important ones. The purchase numbers show that the iBuyers are struggling and failing to maintain a supply of homes to sell. Purchases are down 28% compared to a year ago and they are unable to replenish their inventory. This is unlikely to be a deliberate strategy. Like other buyers, iBuyers are faced with an intractable shortage of homes to buy at their preferred price points and therefore cannot grow their businesses in Greater Phoenix beyond the current level. At the current sales rates they will run short of homes to sell over the next few months.

As a group, iBuyers' homes in inventory are down 39% from last year. This is not surprising given that active listings (excluding those under contract) are down 42%. But it means that at the current monthly sales rate Opendoor has only 1.9 months of inventory. Zillow has even less, just 0.9 months. OfferPad is a little better off since they have a slightly larger inventory than last year (up 5%) and their current stock of homes represents 3.5 months of supply.

Without more purchases, the iBuyers' sales numbers will have to drop over the next few months due to lack of inventory.

With strong appreciation in both home prices and rents, it is not surprising that the buy-to-rent players are also very active buyers of homes at the same price point as iBuyers. These include small scale investors but also large commercial operations including Cerberus and Progress Residential.

Although the inventory of homes held by iBuyers has fallen from 1,946 to 1,196, this still represents a major share of the total supply in the pipeline at these price points. In the entire ARMLS database today we can see only 4,388 active listings (excluding UCB and CCBS) at $400,000 or less within Maricopa and Pinal counties.

March 9 - Using the affidavit data for Maricopa County in February we see some interesting unit sales numbers compared with 2019:

Price Range Closings 2019 Closings 2020 Change
Up to $250,000 3,270 2,662 -18.6%
$250,000 to $500,000 3,769 4,768 26.5%
$500,000 to $1,000,000 811 1,103 36.0%
Over $1,000,000 165 258 56.4%

These numbers include both single-family and townhouse / condo properties.

The largest percentage growth was in homes over $1 million, up more than 56% from a year earlier.

Homes under $250K have become hard to find and the lack of supply drove closings down almost 19%.

With the recent negative developments in the markets for stocks and commodities we would anticipate the demand for homes over $1,000,000 to be less impressive when we look at numbers for the next few months.

March 5 - The Cromford® Market Index values for the single-family markets in the 17 largest cities are shown in the table below:

The average change over the last month is +8.4%, just a tiny bit lower than the 8.5% we saw last week.

Sellers are still gaining negotiation power in 14 out of 17 cities, particularly in Tempe, Maricopa, Buckeye, Glendale, Avondale and Phoenix.

Peoria and Cave Creek are close to a standstill, but at a high level over 230.

Paradise Valley is retreating, dropping 9% over the last month but still over 180. Buckeye will almost certainly overtake PV in the next few days.

March 3 - We have the preliminary affidavit counts for Maricopa County in March and they show a market that is clearly booming.

February sales total for single-family and condo / townhouse properties was 8,741, up from 8,015 in February 2019. This is a rise of 9.1%. New homes rose 13.1% to 1,383 while re-sales, despite being hampered by very limited supply, rose 8.3%.

The monthly median sales price was $307,000, up 12.5% from $273,000 a year ago. The new home median was $362,324, up 6.5%, while the re-sale median was $294,6000, 13.3% higher than last year.

March 2 - Although there a few exceptions, the collapse in available supply in most ZIP codes is nothing short of staggering. Comparing the number of single-family active listings (excluding UCB and CCBS) as of March 1 with the same date last year we see the largest percentage declines in the following ZIP codes:

  1. Aguila 85320 - down 83%
  2. Phoenix 85031 - down 82%
  3. Phoenix 85045 - down 81%
  4. Stanfield 85172 - down 80%
  5. Casa Grande 85193 -down 80%
  6. Mesa 85202 - down 80%
  7. Laveen 85339 - down 75%
  8. Glendale 85309 - down 75%
  9. Glendale 85307 - down 75%
  10. Phoenix 85022 - down 74%
  11. Chandler 85224 - down 73%
  12. San Tan Valley 85143 - down 73%
  13. Avondale 85392 - down 72%
  14. Tolleson 85353 - down 71%
  15. Phoenix 85037 - down 71%
  16. Glendale 85306 - down 70%
  17. Phoenix 85006 - down 70%
  18. Tempe 85283 - down 70%
  19. Surprise 85378 - down 69%
  20. Chandler 85225 - down 68%
  21. Phoenix 85015 - down 68%
  22. Tempe 85284 - down 68%
  23. Phoenix 85024 - down 68%
  24. Chandler 85286 - down 67%
  25. Glendale 85310 - down 67%

So there are 25 ZIP codes that have lost over two thirds of their single-family supply over the last 12 months. This includes some of the larger ZIP codes such as 85339 (down 104 homes) and 85143 (down 137 homes).

139 ZIP codes are lower and only 8 ZIP codes have more supply than this time last year. All of those that gained supply are small (85034, 85131, 85173, 85263, 85324, 85332, 85337, 85354) and most are distant from the center of Phoenix (e.g. Superior, Gila Bend, Black Canyon City, Eloy, Rio Verde, Congress).

Trying to buy when supply is so low can be a frustrating affair. I am even receiving calls in the UK from Phoenix buyers trying to make an all-cash unsolicited offer on my home. However when I tell them I live in a rented house in Leicestershire, they wish me a nice day and hang up.

February 29 - With everybody talking about the corona virus, we have been asked what effect it will have on the housing market. The honest answer is that we do not know and as you already know, we are not in the business of speculating. We deal with the interpretation of known facts and we currently know very little about the course of the covid-19 viral infection wave.

The facts we can refer to concern past pandemics of a similar nature. These include

  • 1918 - The Spanish Flu (H1N1) - killed between 20 million and 100 million people of all ages (figures are very imprecise)
  • 1957 - The Asian Flu (H2N2) - killed about 2 million people, the majority elderly
  • 1968 - Hong Kong Flu (H3N2) - killed over 1 million people, the majority over 65
  • 1997 - Bird Flu (H5N1) - killed 352 people
  • 2009 - Swine Flu (H1N1) - killed more than 18,000 people

The symptoms of corona virus infection are similar to seasonal flu but the mortality rate may be higher. Though the vast number of infected people recover, it becomes lethal quickly in certain cases. At the moment far more people die each day of seasonal flu than the corona virus, because it is widespread throughout the world and very infectious. There are between 3 million and 5 million serious cases of seasonal flu each year of which about 10% are fatal. We pay almost no attention to seasonal flu because it has been around all our lives.

The Spanish Flu pandemic of 1918-9 is the most recent example of a very deadly worldwide disease flaring up. So far the signs are that covid-19 is infectious to a similar degree, but much less deadly. Estimates of the number of people who went down with the Spanish Flu are in the range of 500 million, about 25% of the world population at the time. The number of deaths is estimated at between 5% to 20% of those infected. 675,000 of these deaths were in the USA. The origin of the virus remains unknown. We do know it had very little to do with Spain.

One major difference seems to be that the Spanish Flu hit the young and working population hard, rather than picking off the frail and elderly like most diseases. The workforce was decimated (in its literal sense) and many families lost breadwinners. The vast majority of people who have died from covid-19 are over 60 and many are over 80. The primary effects are therefore on people beyond working age. The Spanish Flu reduced the working population and led to a significant increase in average wages in the year that followed.

For the corona virus, it is the secondary effects of the disease that are most impactful on the economy – market panic, reduction of travel, slowing of production and cancelation of events.

This is the first time a pandemic has had a dramatic and instant effect on stock markets. In the past the impact on markets has been less obvious. For those interested, here is a study from 2006:

http://www-stat.wharton.upenn.edu/~steele/Pandemic/Resources/FidelityPandemic.pdf

In theory, housing should be relatively unaffected compared with travel and tourism. However a widespread economic slowdown is never a good thing and home builders’ stocks have tumbled over the last week along with the rest of the stock market. Whether this is an impulsive overreaction or not is yet to be determined.

When stock markets go down then the luxury market tends to slow down. However it has been running at a record pace over the past 4 months, so a slow down would not be unusual anyway. The rest of the housing market is not usually affected by the stock market. However a general economic slowdown would be felt, should it take place. At the moment the Greater Phoenix housing market is super-heated, so it would take a lot of change for it to cool down to normal. We see no sign of this at the moment, but you can be sure that we will report any change the day we see it.

February 27- Below is our regular chart showing the Cromford® Market Index values for the single-family markets in the 17 largest cities:

chandler homes for sale

We still have a strong trend moving in favor of sellers with the average increase in CMI over the last month standing at 8.5%. However that is down slightly from 2 weeks ago when we measured 9.8%.

We have 2 cities moving against the general trend (Peoria & Paradise Valley) but only PV showed a significant move downwards.

There are now 14 cities over 200.

The favorable trend for sellers is driven by the decline in active listings without a contract combined with a continued rise in demand measures.

February 26 - The Census Bureau has released permit counts for January 2020. Although December numbers were disappointing, January shows a brighter picture with the largest total of single-family permits in Maricopa and Pinal counties for any month since June 2007. That total for these counties is 2,427, up 45% from 1,673 in 2019. This is the sort of annual increase that could make a small dent in the supply problem we are facing, particularly under $300,000. A 100% increase would not be out of place and closer to matching the current level of demand.

If 100% sounds like a tall order, it represents 3,346 homes, a number than was easily exceeded as long ago as March 1998. It was also exceeded for most of the period between 2002 and 2006. In the latter years of that period builders were over-supplying to meet speculative demand but this is not an issue we face today.

The current January total of 2,427 was exceeded in January 1997 and in January of every year from 1999 to 2007.

February 25 - We have posted the latest Case-Shiller® numbers to our long term chart here.

The latest series relates to sales between October and December 2019. Comparing with the previous month's series we see the following changes:

  1. Phoenix +0.59%
  2. Seattle +0.21%
  3. Washington +0.16%
  4. Portland +0.15%
  5. Tampa +0.14%
  6. San Diego +0.09%
  7. Boston +0.09%
  8. Las Vegas +0.09%
  9. New York +0.08%
  10. Miami +0.07%
  11. Charlotte +0.05%
  12. Los Angeles +0.04%
  13. San Francisco +0.04%
  14. Atlanta -0.08%
  15. Detroit -0.10%
  16. Chicago -0.10%
  17. Denver -0.11%
  18. Dallas -0.21%
  19. Minneapolis -0.61%
  20. Cleveland -0.71%

Phoenix jumped from fifth to first place. The national average was +0.08% so Phoenix increased at seven times the national average and almost three times as fast as the number 2 city.

The year over year comparisons are below:

  1. Phoenix 6.5%
  2. Charlotte 5.3%
  3. Tempe 5.2%
  4. San Diego 4.7%
  5. Boston 4.5%
  6. Atlanta 4.1%
  7. Seattle 4.1%
  8. Denver 3.7%
  9. Portland 3.7%
  10. Minneapolis 3.7%
  11. Cleveland 3.6%
  12. Washington 3.4%
  13. Detroit 3.4%
  14. Miami 3.2%
  15. Los Angeles 2.7%
  16. Las Vegas 2.6%
  17. Dallas 2.6%
  18. San Francisco 2.1%
  19. Chicago 1.0%
  20. New York 1.0%

The national average was 3.8%. Phoenix remained in the top spot and opened up a gap of 1.2% over the number 2 city.

February 24 - We have mentioned many times that prices are a trailing indicator, but some price measurements trail further behind others. The last to show changed market conditions are the closed prices. Before them we see signals from listings that are under contract. The earliest signals from prices come from active listings. When sellers feel optimistic they list at increasingly higher prices and when their optimism is justified the market responds by paying these higher prices.

The chart above illustrates that asking prices for active listings (excluding those that are UCB or CCBS) are rising in 2020 at a much faster rate than they have in the past 4 years. It shows a 6.2% increase in average $/SF over a period of just 7 weeks. This is a warning that the price of listings under contract are also likely to follow this trend, and in their turn closed prices are probably going to rise sharply over the following several months.

Eventually prices will rise so much that they start to weaken demand but we have seen almost no sign of this so far.

Price rises can also be countered by a large influx of new supply. This is what happened in the second half of 2005 and 2006 because at that time we had a large number of vacant homes that had been purchased for purely speculative reasons. At the first sign of market weakness these homes were listed for sale by their investor owners, creating a surge of new listings. There is little likelihood of this happening in 2020 because there are so few vacant homes compared with 2005.

February 22 - Mike has returned from a trip to frozen arctic Norway to find the housing market in Central Arizona still very hot and hugely unbalanced with supply heading down and demand on the rise.

Sales are particularly strong among the higher price ranges where supply is not such a severe constraint. Jumbo loans are easier to obtain than last year so this supercharges the demand at the top end.

The table below is for Greater Phoenix and all property types

Price Range Closed Listings YTD 2020 Closed Listings YTD 2019 Change
$600K - $800K 492 327 +50%
$800K - $1M 200 128 +56%
$1M - $1.5M 166 109 +52%
$1.5M - $2M 73 44 +66%
$2M - $3M 58 42 +38%
Over $3M 34 16 +113%

February 15 - Mike is on a short vacation for a week so observations will be absent for 7 days. Normal service will resume on February 22.

February 14 - Our usual look at the Cromford® Market Index values in the single-family markets of the 17 largest cities is shown below:

 

Once again we have 16 out 17 cities still improving for sellers, despite the extreme advantage that sellers have enjoyed for many months. Scottsdale is the only exception and even here the move in favor of buyers is very modest.

We now have 1 city over 400 for the first time in many years, 4 cities over 300 and 13 cities over 200. This is a truly extraordinary state of affairs reflecting above average demand meeting severely restricted supply.

We use Chandler as an example. Here there are only 213 active listings without a contract. The average for Chandler over the last 20 years is 1,019. The Cromford Supply Index is down to 28 (100 is normal). This is even lower than we measured in 2005.

In some ways, Avondale is even more extreme with only 65 active listings without a contract (average 300). Here the Cromford Supply index is down to 25.4. However this has not quite reached the low of 24.6 we saw for Avondale in 2005.

February 13 - Where did all the listings go? I am not referring to the active listings that have had offers accepted and got closed. I am wondering about the listings that never were, Why are there so few new listings arriving in 2020 compared with prior years. In order to investigate I compared the number of year-to-date listings with last year by price range:

Based on List Date and ignoring every other characteristic except List Price, here is what we find as of February 12:

List Price Range New 2020 New 2019 Change
Under $100K 225 302 -25%
$100K - $125K 117 209 -44%
$125K - $150K 283 445 -36%
$150K - $175K 395 643 -39%
$175K - $200K 653 1167 -44%
$200K - $225K 814 1339 -39%
$225K - $250K 1323 1671 -21%
$250K - $275K 1098 1193 -8%
$275K - $300K 1169 1219 -4%
$300K - $350K 1647 1619 +2%
$350K - $400K 1182 1231 -4%
$400K - $500K 1398 1506 -7%
$500K - $600K 802 822 -2%
$600K - $800K 743 748 -1%
$800K - $1M 337 369 -9%
$1M - $1.5M 306 327 -6%
$1.5M - $2M 140 167 -16%
$2M - $3M 118 141 -16%
Over $3M 77 87 -11%
All 12827 15205 -16%

On average we have seen a 16% drop in new listings year over year, a very unusual event.

The range most affected is under $250K, which is down 34%. This is not a surprise, but it is the price range most in demand too.

The top end is also down significantly above $1.5M. The mid-range between $250K and $1.5M is the least affected and one range between $300K and $350K has even seen a slight increase.

February 11 - Based on affidavits of value filed during January we have collected the following statistics on iBuyer activity:

  Opendoor OfferPad Zillow Knock All iBuyers Combined
Homes Purchased in January 2020 213 89 66 2 370
Homes Purchased in January 2019 244 66 111 0 421
Annual Change in Purchases -13% +35% -41%   -12%
Homes Sold in January 2020 306 103 62 3 493
Homes Sold in January 2019 184 82 37 0 302
Annual Change in Sales +66% +26% +68%   +56%
Median Purchase Price in January 2020 $245,700 $266,000, $259,200 $447,980 $251,900
Median Purchase Price in January 2019 $243,000 $220,520 $313,000   $251,000
Median Sale Price in January 2020 $260,000 $274,900 $293,950 $476,347 $264,950
Median Sale Price in January 2019 $248,500 $235,950 $306.000   $250,000
Homes in Inventory at the End of January 840 464 159 15 1,478

The iBuyers as a group purchased 13% fewer homes in December 2019 than they did in December 2018. They followed this with a 12% decline in January 2020. Although OfferPad saw an annual increase in January 2020, this was mainly due to an abnormally weak number in January 2020 rather than a strong one this year.

The sales numbers are a completely different picture, with 56% annual growth for the group and significant growth for all the iBuyers.

The difference between the purchase and sales numbers is a reflection of current market conditions. Selling a home around $200,000 to $300,000 is easier than falling off a log. Successfully buying a home at this price is a major challenge. Not only are there very few homes available for purchase at this price range, the iBuyers compete with buy-to-rent players including large commercial operations like Cerberus and Progress Residential. The latter company was the second largest purchaser of homes during 2019 in the Phoenix area after Opendoor, buying under a number of different legal entities with the same PO Box number in Scottsdale.

Although the inventory of homes held by iBuyers has fallen from 1,582 to 1,478, this represents a large percentage of the total supply in the pipeline at these price points. in the entire ARMLS database today we can see only 5,720 listings at $400,000 or less.

February 10 - We have posted a new Tableau chart which shows a map of the Phoenix area, color-coded by the average sale price during the last 90 days. This map will be updated on a month basis. You can find it here.

Lots more data about each ZIP code will pop up if you hover over the ZIP code you are interest in.

 

February 7 - The table below shows the Cromford® Market Index for the single-family markets in the 17 largest cities:

chandler homes for sale

It is similar to last week in that Scottsdale is the only city not leaning even further in favor of sellers.

The average improvement over the past month was +10.5%, a shade lower than the +11.2% we recorded last week.

Not only do we have 11 cities improving for sellers by more than 10%, we now have 1 city over 400, 4 over 300 and 13 over 200. Remember than 90 to 110 represents a normal balanced market. There are more than a few agents who have never experienced a normal balanced market since the last time we saw that situation was November 2015.

February 6 - The agent production numbers for 2020 year-to-date have been posted here.

If you exclude agents who work for or with developers and/or iBuyers, then the top 3 for dollar volume are:

  1. Robert Joffe
  2. Beth Rider
  3. Beth Thompson

If we include everybody then the top 10 are:

  1. Jacqueline Moore
  2. George Laughton
  3. Derek Dickson
  4. Robert Joffe
  5. Beth Rider
  6. Beth Thompson
  7. Joseph Elberts
  8. Joshua Peters
  9. Jeffrey Sibbach
  10. Joanne Hall

If we rank by sides then the top 3 excluding agents with iBuyers & developers are:

  1. Beth Rider
  2. Alan Aho
  3. Joanne Hall

February 5 - We have January affidavit of value counts for Maricopa County and these show 7,922 closings of single-family and condo / townhouse properties. This is up a strong 15% from January last year. New home closings were up 22% while re-sales increased by 14%

The median sales price was $297,000 a 10% jump from $275,711 in January 2019. The new home median was $365,706, up 7% while the re-sale median was $285,000, up 10%.

Though we are seeing strong closings, they are lower than January number for 2004 through 2007. The reason is that between 2004 and 2007 we had much higher number of new homes being constructed so supply was not as much a constraint as it is now. January 2005 retains the record high of 10,955 (for the month of January) and this included 2,884 new homes, a number that exceeds January 2020's new homes by 150%.

We are setting new record highs for median sales price; the previous cycle peaked at $265,000. However we must remember that the median house of 2006 was much smaller than the median house of 2020.

On a price per sq. ft. basis, measured across the whole of ARMLS closed listings, current prices are still lower than the summer of 2006 at $182. In May 2006 they almost reached $191 before falling back and eventually collapsing to around $80 in 2011.

February 4 - What we have learned over the past 20 years is that if active listings do not manage to increase during January then the chance of them increasing during any month in the first half of the year is minimal. So what you see on the MLS now is almost certainly a larger selection than you will face as a buyer for the next 5 months. That is a sobering thought given how tiny the current selection is.

In fact the active counts (excluding UCB or CCBS) are already starting to hit new lows. For example:

  • Phoenix single-family - 1,609 - the lowest total since 2012
  • Scottsdale single-family - 1,221 - the lowest total since 2005
  • Avondale single-family - 66 - the lowest total since 2012
  • Glendale single-family - 235 - the lowest total since 2005
  • Tempe single-family - 102 - the lowest total since 2012
  • Goodyear single-family - 274 - the lowest total since 2013

February 2 - In a sign of the times, third parties purchased 80.4% of the properties sold at trustee sales in Maricopa County during January. This is the highest percentage in 15 years and only the third time in history that the percentage has exceeded 80%.

Another sign of the times is that this represented only 86 properties. This is ten times less than were being purchased by third parties ten years ago. In those days (January 2010) third paries only purchased about 20% of trustee sales and the other 80% went back to the beneficiary (i.e. lender).

We saw 4,337 trustee sales in January 2010 and only 107 in January 2020. Low numbers make for extremely competitive bidding from eager buyers.

February 1 - When supply is very low, an ordinary level of demand feels like very strong demand because there are so many buyers chasing each available home for sale. However there are some indications that the level of demand is starting to increase beyond ordinary. One of these is at the national level where the Mortgage Banker's Association has reported a massive jump in loan applications. The 3-week moving average has risen 20% since December to a new high point for the cycle. This is probably for a number of reasons:

  • low interest rates
  • confidence in the strength of the economy
  • loosening lending standards
  • buyers wanting to avoid missing out as prices start to accelerate upwards again

Whatever the reasons, a surge in demand in January, before the spring buying season has properly got underway, suggest we are going to have an extremely unbalanced situation with demand rising and supply falling even further.

January 31 - Sometimes I feel like a scratched vinyl record repeating over and over - the crucial issue for the housing market in Greater Phoenix is a chronic and severe lack of inventory.

Below is a table showing how the supply of single-family active listings (excluding UCB & CCBS) has collapsed in the last 12 months:

City Active Jan 30, 2019 Active Jan 30, 2020 Change
Anthem 106 61 -42%
Apache Junction 98 61 -38%
Arizona City 50 37 -26%
Avondale 176 75 -57%
Buckeye 480 377 -21%
Casa Grande 278 279 0%
Cave Creek 247 151 -39%
Chandler 537 228 -57%
El Mirage 54 29 -46%
Fountain Hills 233 169 -27%
Gilbert 663 268 -60%
Glendale 554 236 -57%
Gold Canyon 165 136 -18%
Goodyear 450 283 -37%
Laveen 139 36 -74%
Litchfield Park 149 104 -30%
Maricopa 353 223 -37%
Mesa 1,019 558 -45%
Paradise Valley 347 269 -22%
Peoria 691 352 -49%
Phoenix 3,113 1,642 -47%
Queen Creek 775 420 -46%
Scottsdale 1,846 1,239 -33%
Sun City 223 129 -42%
Sun City West 197 130 -34%
Sun Lakes 101 72 -29%
Surprise 629 379 -40%
Tempe 182 110 -40%
Tolleson 97 42 -57%

 

The worst affected cities are Laveen, Gilbert, Glendale, Avondale, Chandler and Tolleson with well under half the supply they had this time last year.

As we mentioned yesterday, Casa Grande is an unusual exception - relatively flush with supply - 1 more listing than last year.

January 30 - The table below shows the Cromford® Market Index for the single-family markets in the 17 largest cities in Central Arizona:

chandler homes for sale

This still looks exceptionally strong for sellers although Scottsdale spoiled the pattern by posting a very slight decline since December 30.

The average increase in CMI is 11.2% which is nothing short of amazing given how high the numbers are already and the time of year.

Most of the increase is due to supply weakening further although demand has also strengthened in quite a few cities.

Chandler now has a lower supply reading than it has ever recorded, even at the height of the bubble era. Today it has 228 active listings without a contract. The long term average is 1,021 and the peak number is 2,481.

We have 4 cities over 300, 12 over 200 and no cities under 150. Remember that 100 represents a normal balance market.

Among the 12 cities below these 17 we have Anthem, Apache Junction, El Mirage and Tolleson over 300, with Arizona City and Laveen over 200.

Only Casa Grande looks close to normal with a CMI of 119.1 which is trending lower. Casa Grande has a lot of new building going on thanks to having plenty of available land, and relatively plentiful re-sale supply. In fact it has far more supply than Chandler, a city of over a quarter of a million people, whereas Casa Grand has less than 60,000 inhabitants. Its supply index is 102.1. If you are a buyer in Central Arizona right now, you will find the easiest search and negotiations in Casa Grande. Having said that, 119.1 is still a seller's market.

January 29 - Unlike the single-family situation, permits for multi-family are at record highs. There have been 11,131 units permitted in the last 12 month, the first time we have seen more than 11,000 in any 12 month period.

The top ten locations for new multi-family unit permits in 2019 were:

  1. Phoenix 6,061
  2. Tempe 1,299
  3. Scottsdale 657
  4. Peoria 627
  5. Mesa 494
  6. Goodyear 456
  7. Chandler 447
  8. Glendale 337
  9. Surprise 229
  10. Gilbert 182

January 28 - We have posted the latest Case-Shiller® numbers to our long term chart here.

The latest series relates to sales between September and November 2019. Comparing with the previous month's series we see the following changes:

  1. Charlotte +0.59%
  2. Tampa +0.50%
  3. Boston +0.48%
  4. Las Vegas +0.37%
  5. Phoenix +0.36%
  6. Los Angeles +0.31%
  7. San Diego +0.28%
  8. Washington +0.21%
  9. San Francisco +0.21%
  10. Atlanta +0.20%
  11. Miami +0.15%
  12. Dallas +0.15%
  13. Denver +0.05%
  14. Seattle +0.01%
  15. New York -0.01%
  16. Portland -0.07%
  17. Cleveland -0.08%
  18. Detroit -0.28%
  19. Minneapolis -0.46%
  20. Chicago -0.62%

The national average was +0.15% so Phoenix increased at more than twice the national average but fell from second to fifth place in the table.

The year over year comparisons are below:

  1. Phoenix 5.9%
  2. Charlotte 5.2%
  3. Tampa 5.0%
  4. Atlanta 4.2%
  5. Cleveland 4.0%
  6. Minneapolis 3.9%
  7. San Diego 3.9%
  8. Boston 3.8%
  9. Denver 3.7%
  10. Portland 3.3%
  11. Seattle 3.3%
  12. Washington 3.2%
  13. Detroit 3.2%
  14. Miami 3.1%
  15. Dallas 2.8%
  16. Los Angeles 2.7%
  17. Las Vegas 2.6%
  18. New York 0.8%
  19. San Francisco 0.5%
  20. Chicago 0.4%

The national average was 3.5%. Phoenix remained in the top spot for the nation as a whole.

January 27 - The Census Bureau had more bad news for home buyers in Arizona today. The number of single-family permits issued during December 2019 for Maricopa & Pinal counties was only 1,940. This is down slightly from November and much lower than December 2018 when we saw 2,354.

The total for 2019 was 24,674, up from 23,442 in 2018. This is an annual increase of only 5.2% or 1,232 homes a year. This is nowhere near enough to do anything significant to relieve the desperate shortage of single-family homes for sale in 2020.

I am sure many people expected this number to at least top 25,000, but to start to make a dent in the supply problems we would need to see something closer to 35,000.

Now I know there are lots of reasons why home builders would have major problems in achieving 35,000 new single-family builds in 2020, but I would still point out that they exceeded 36,000 in both 1998 and 1999. Life for developers seemed so easy then with plenty of affordable land close to amenities.

To study building permits in more detail you can add a subscription to Cromford® Public.

January 26 - The supply situation is going from dire to horrid from a buyer's perspective. This is the time of year when supply should be rising strongly. Instead it is falling, at least as long as you count only active listings that are not in UCB or CCBS status. Contracts are getting signed quickly already and the UCB and CCBS counts are rising. These listings are usually of little interest to buyers since they already have a contract.

Among the larger cities, we see the following with drops in their single-family active listing counts (excluding UCB and CCBS) over the past week:

  • Phoenix down from 1,833 to 1,746
  • Mesa down from 577 to 571
  • Scottsdale down from 1,303 to 1,283
  • Peoria down from 395 to 375
  • Queen Creek down from 466 to 440
  • Avondale down from 95 to 87
  • Cave Creek down from 159 to 157
  • Buckeye down from 416 to 383
  • Maricopa down from 245 to 235
  • Chandler down from 273 to 260
  • Glendale down from 276 to 262
  • Gilbert down from 325 to 291
  • Surprise down from 408 to 402
  • Tempe down from 128 to 125
  • Goodyear down from 306 to 295

Of the 17 we focus on each week, only 2, Fountain Hills and Paradise Valley, have more single-family active listings than a week ago.

It is quite shocking how poor the flow of new listings has been over the past 3 weeks and the effects on the market will be noticed for several months..

January 25 - The annual sales rate through ARMLS (all areas & types) has just crossed 100,000. This is the first time this has happened since March 31, 2012.

January 23 - The usual weekly table of Cromford® Market Index values is now showing a full house:

chandler homes for sale

We rarely see all 17 cities moving in the same direction over a month.

Chandler is looking the strongest of all from a seller's perspective. Gilbert and Peoria are not far behind.

The highly unusual imbalance across most of the market is due to very low supply. Demand is close to normal except in Paradise Valley where it is unusually high right now. I read comments reporting high demand, but that is because in the real world it is very difficult to tell the difference between high demand and low supply. You have to examine the numbers relative to long-term trends to determine which is the real factor. Our numbers show that supply is below half its normal level whereas demand is only 1 to 2% above average.

The result is the same in any case; more demand than supply means prices have to rise in an attempt to re-balance the market.

January 21 - The flow of new listings continues to be unusually low, so that we still have a few cities with fewer single-family active listings without a contract than they had at the start of the year:

  • Cave Creek
  • Chandler
  • Gilbert
  • Glendale
  • Maricopa
  • Paradise Valley
  • Surprise

This is highly unusual but we are not on completely unchartered territory. This happened once before - in 2005.

January 20 - A copy of Tina's 2020 Market Update Powerpoint presentation is now available in the downloads section. Please do NOT share it with social media or with non-subscribing real estate professionals. It is intended for Cromford Report subscribers to use when informing their clients.

January 17 - Below is the usual table showing the Cromford® Market Index values for the single-family markets in the 17 largest cities:

We still have 3 cities deteriorating for sellers over the last month. However the declines are small in all 3 cases and all 3 have seen an increase over the past week. The remaining 14 have all improved for sellers, many by an extremely large amount.

The average change is +9.2%, up from 8.8% last week.

We now have 4 cities over 300 and 11 over 200. This level of imbalance in favor of sellers has not been seen since 2005.

Most people are still underestimating the impact this will have on pricing.

January 16 - It is almost unheard of for the number of active listings on January 15 to be lower than the count on January 1. That is still true in 2020 for the market as a whole, where we see 12,234 active listings without a contract compared with 12,141 at the start of the year. That is a rise of 0.8%. Last year the equivalent rise was from 17,339 to 18,581, a climb of 7.2%. Obviously 2020 is seeing a far weaker pattern. So much so that significant segments of the market have broken the rules and reported lower active counts on Jan 15 than Jan1.

Examples of this include the single-family markets in:

  • Avondale
  • Cave Creek
  • Chandler
  • Glendale
  • Maricopa
  • Mesa
  • Queen Creek
  • Surprise
  • Tempe

There is also a new event for Cave Creek to report. For the first time ever the average price of single-family active listings in Cave Creek exceeded $1 million on January 14.

January 15 - I am afraid I have bad news for buyers who were hoping for a flood of new listings in 2020. Not only are they not getting a flood, new listings are well below what we would normally expect. After 2 full weeks we have seen fewer than 4,000 new listings across all areas & types - down 15% from last year at this time.

This is an unexpected turn for the worse for supply and if it keeps up we are going to see unusually weak supply during the key buying season that kicks off in February. The competition for the listings that do exist will be intense.

January 14 - We just published the monthly update to our table of annual average price per sq. ft. for 41 cities. You can find it here.

Last month we had only 2 locations (Coolidge and Wickenburg) where the annual average $/SF had increased more more than 10%.

This month there are far more cities on that list, 7 out of 41:

  1. Paradise Valley 10.5%
  2. Rio Verde 12.5%
  3. Desert Hills 10.3%
  4. Wickenburg 11.6%
  5. Eloy 10.5%
  6. Florence 10.1%
  7. Coolidge 11.1%

We expect this list to grow as 2020 progresses. The imbalance between supply and demand implies strong upward pressure on pricing in almost all locations. At the moment we are seeing Buckeye, Maricopa, Tolleson, Queen Creek and Youngtown over 8% so these are probably the most likely candidates to top 10% appreciation in the coming months. Most of the larger cities are around 6% at present but heading higher.

January 11 - Based on affidavits of value filed during December we have collected the following statistics on iBuyer activity:

  Opendoor OfferPad Zillow Knock All iBuyers Combined
Homes Purchased in December 2019 257 95 68 3 423
Homes Purchased in December 2018 296 103 88 0 487
Annual Change in Purchases -13% -8% -23%   -13%
Homes Sold in December 2019 304 108 77 4 493
Homes Sold in December 2018 184 84 48 0 302
Annual Change in Sales +65% +29% +60%   +56%
Median Purchase Price in December 2019 $252,300 $256,400 $271,200 $263,940 $256,900
Median Purchase Price in December 2018 $227,450 $220,108 $310,000   $235,850
Median Sale Price in December 2019 $256,000 $259,950 $290,000 $398,580 $263,000
Median Sale Price in December 2018 $245,000 $234,000 $338.200   $245,000
Homes in Inventory at the End of December 933 478 155 16 1,582

The iBuyers as a group purchased 13% fewer homes in December 2019 than they did in December 2018. All of them except Knock saw reduced purchases. Knock was not buying homes in Phoenix in December 2018. Opendoor and OfferPad tend to focus exclusively on homes under $350,000 with a strong preference for those under $250,000. However these properties are an endangered species in Phoenix. Competition for the extremely limited supply is intense. iBuyers compete with each other for a rapidly diminishing pool of homes with additional competition from buy-to-rent investors, including large operators like Cerberus who have been buying up to 45 homes a month. There are also ordinary folk who want to use these homes as primary residences, and these still manage to buy 68% of the homes under $350,000. Another 9% are bought as second homes or vacation properties. The iBuyers account for 6.0% of re-sale home purchases below $350,000. However they have not managed to increase their share over the past 12 months. They were at 6.3% in 4Q 2018. Unless they move up-market their business volume is likely to fall further in 2020.

Zillow and Knock are more likely to buy more expensive homes, but these take longer to turn around and sell and are a higher risk with higher holding costs. Zillow's business has moved away from these homes over $350,000 over the past year. Zillow's purchase volume has been declining since February 2019 and they remain number 3 in the Phoenix market. Knock's volume is relatively tiny and they have little discernible effect on the market.

The picture with sales is much different. December 2019 saw 56% more closings than December 2018 with Opendoor growing the fastest at 65%. However sales cannot continue to grow indefinitely if purchased are declining. At the moment inventory is dropping slightly as homes that are sold outnumber homes that are purchased.

Opendoor has purchased a total of 10,288 homes as of the end of 2019 with inventory at 933, down from a peak of 1,129 in February 2019.

OfferPad has purchased a total of 3,661 homes as of the end of 2019 with inventory at 478, down from a peak of 491 in November 2019.

Zillow has purchased a total of 1,461 homes as of the end of 2019 with inventory at 155, down from a peak of 406 in February 2019.

Knock has purchased a total of 38 homes and had 16 in inventory at the end of 2019.

The iBuyer inventory of 1,582 represents a large chunk of the market. To put this number into perspective, ARMLS has only 3,899 listings below $300,000 in active status without a contract (UCB or CCBS).

January 10 - The table below shows the Cromford Market Index values for the single-family markets in the 17 largest cities:

 Gilbert real estate

We now see 2 more cities deteriorating from a seller's perspective - Surprise & Maricopa. Although Tempe continues to look lower compared with a month ago, it has started to move higher over the last couple of weeks having bottomed out on December 30 at a lofty 196.8. None of these cities can even remotely be considered a balanced market, let alone a buyer's market. The lowest number in the chart is 144 which indicates a strong seller's market in Buckeye.

The balance of negotiation power moved strongly in favor of sellers in Gilbert, Peoria, Chandler, Paradise Valley, Fountain Hills, Mesa, Avondale and Goodyear.

The average monthly change was +8.8%, up from +8.2% last week.

January 9 - The biggest problem facing buyers is the shortage of homes for sale. The problem gets worse the lower the price range, but exists at all price levels up to $1 million. Buyers must be hoping for a strong flow of new listings during the first quarter. Unfortunately early indications are exactly the opposite, with the weakest start to the year we have recorded since 2005.

The first 7 days gave us only 1,739 new listings. In most previous years we have seen in excess of 2,000, so this is a surprisingly low number. It is a little too early to be drawing firm conclusions, but the first signs suggest that the supply problem will intensify rather than get resolved. We will be looking again after 14 days have elapsed.

January 8 - The Agent Production Tableau Chart for 2019 has been updated for the full year and published here.

The top 10 agents for Greater Phoenix as a whole, measured by dollar volume, were:

  1. Beth Rider
  2. Jeff Sibbach
  3. Andrew Bloom
  4. Chris Karas
  5. Robert Joffe
  6. Carol Royse
  7. Bruno Arapovic
  8. Jennifer Wehner
  9. Joan Levinson
  10. Kenny Klaus

It took $84 million in volume to get into this top 10.

In the West Valley, the following names appeared in the top 10:

  1. Beth Rider
  2. Carin Nguyen
  3. Bruno Arapovic
  4. Nathan Martinez
  5. Patrick McClain
  6. Sharon Cunningham
  7. Alan Aho
  8. Brandon Howe
  9. Spencer Lindahl
  10. Joanne Hall

It took $34 million to appear in this list.

In the Southeast Valley, the following names appeared in the top 10:

  1. Kenny Klaus
  2. Beth Rider
  3. Carol Royse
  4. Rick Metcalfe
  5. Shanna Day
  6. Brian Cunningham
  7. Ben Leeson
  8. Bruno Arapovic
  9. Damian Godoy
  10. Rachael Richards

It took $32 million to appear in this list.

In the Northeast Valley, the following names appear in the top 10:

  1. Andrew Bloom
  2. Chris Karas
  3. Joan Levinson
  4. Jeff Sibbach
  5. Walt Danley
  6. Robert Joffe
  7. Julie Pelle
  8. Daniel Wolski
  9. Lisa Lucky
  10. Scott Grigg

It took $54 million to get into this list

For Phoenix and the North Valley, the following names appear in the top 10:

  1. Bobby Lieb
  2. Robert Joffe
  3. Beth Rider
  4. Tucker Blalock
  5. Russell Shaw
  6. Jennifer Wehner
  7. Lisa Jones
  8. Oleg Bortman
  9. Jason Mitchell
  10. Bonny Holland

It took $24 million to get into this list

For Pinal County, the following names appear in the top 10:

  1. Ben Leeson
  2. Denver Lane
  3. Gary Todd King
  4. Robin Rotella
  5. David Morgan
  6. Wade Jurney
  7. Beth Rider
  8. Damian Godoy
  9. Jody Sayler
  10. Rick Metcalfe

It took $16 million to get into this list.

Congratulations to all the above. 2020 starts a new table and we will publish the first numbers in February and update them every month thereafter..

January 7 - The Maricopa County affidavit counts for December 2019 are in and show the largest monthly count of new home sales since 2007. They were up 17% from December 2018 to reach 1,812. Re-sales were up 16% to reach 7,713.

The monthly median price came in at $303,026, up 11% from $274,000 in December 2018.

If we focus exclusively on re-sales, the median sale price was $285,000, up 11% from, $256,000. The pricing fireworks we predicted last summer are starting to get lit.

The new home median came in at $365,995, up 5% from $349,990 in December 2018. Developers are focusing to a greater extent on the entry-level price points. This is doing little to improve the desperately low supply below $300,000.

January 6 - Days of inventory measures the number of active listings divided by the annual sales rate multiplied by the number of days in a year. The lower it gets, the harder it is to find a home for sale. At the beginning of 2020 here are the ZIP codes with the lowest readings for single-family inventory:

  1. Mesa 85208 - 19
  2. Mesa 85202 - 20
  3. Glendale 85306 - 20
  4. Gilbert 85296 - 20
  5. Surprise 85378 - 21
  6. Chandler 95225 - 22
  7. Mesa 85201 - 23
  8. Phoenix 85027 - 23
  9. Phoenix 85032 - 24
  10. Chandler 85224 - 25

If you are house-hunting in these areas you will find very few homes to choose from. Normal values are between 120 and 150.

You will find more choice (relative to the number of buyers) in the following ZIP codes at the other end of the scale:

  1. Arlington 85322 - 548
  2. Aguila 85320 - 292
  3. Wickenburg 85390 - 280
  4. Phoenix 85034 - 274
  5. Paradise Valley 85253 - 256
  6. Scottsdale 85262 - 253
  7. Carefree 85377 - 225
  8. Morristown - 85342 - 222
  9. Fort McDowell 85264 - 219
  10. Rio Verde 85263 - 211

These tend to fall into one of 2 camps - very expensive or very remote from the center of the valley. The only exception is 85034 which is an inexpensive ZIP code close to Sky Harbor, but overwhelmingly dominated by commercial property and with very few residences.

January 5 - We measure dollar volume on a weekly basis for all areas & types. The latest chart looks like this:

January 5 - We measure dollar volume on a weekly basis for all areas & types. The latest chart looks like this:

chandler homes for sale

The lonely dark brown dot at the left represents the first week of 2020 and has a value of $2,742,696,250. This is the highest dollar volume we have ever measured for the beginning of the year and is up a massive 26% from this time last year. Coming second and third are 2018 and 2019 with 2006 in fourth place.

Dollar volume is important as it defines the commission earning potential for real estate agents. We conclude this is the best January ever for agents in Greater Phoenix.

You can find the interactive version of the chart here.

January 4 - The annual sales rate is climbing steadily now and despite the lack of supply, this applies to most segments of the market.

There are a few cities where there is no obvious upward trend for single-family home sales:

  • Anthem
  • Arizona City
  • Fountain Hills
  • Laveen
  • New River
  • Paradise Valley
  • Sun City West
  • Sun Lakes
  • Wickenburg

In most of these locations, the trend is steady. Arizona City is unusual in that it is showing a declining trend.

The most impressive growth can be found in Casa Grande, Florence and Queen Creek, where supply is not as big a constraint.

Check out your favorite city here.

January 2 - Here is the first table of 2020 showing the Cromford® Market Index values for the single-family markets in the 17 largest cities.

chandler homes

Former rebel Fountain Hills is now firmly on board with the program, but Tempe is still holding out as the only city with a downward trend, favorable for buyers.

The average monthly change is +8.2%, up from 7.9% last week.

Things have become a lot more difficult for buyers in Gilbert, Peoria, Chandler and Paradise Valley over the past month.

The primary driver of this trend is a falling supply, which will likely be reversed once we get into the meat of January. In most years we see a strong flow of new listings during the first quarter. These usually arrive faster enough to build up a greater supply of active listings by the end of January, even in the face of strong demand. Demand has weakened a little over the last 3 weeks so it remains to be seen how it fares in the new year.

January 1 - .As expected, a large number of active listings expired at midnight on December 31, so we enter the new year with an even lower number of listings available for purchase.

Some areas are worse affected than others. You can check any local ZIP code of interest in the monthly ZIP Code active listings chart.

For example, 85086 is starting the year with only 163 active single-family listings as seen below

December 31 - We have posted the latest Case-Shiller® numbers to our long term chart here.

The latest series relates to sales between August and October 2019. Comparing with the previous month's series we see the following changes:

  1. Tampa +0.64%
  2. Phoenix +0.53%
  3. Los Angeles +0.42%
  4. Atlanta +0.37%
  5. Charlotte +0.37%
  6. New York +0.29%
  7. Washington +0.28%
  8. Miami +0.27%
  9. Boston +0.04%
  10. Denver +0.02%
  11. Dallas -0.08%
  12. Minneapolis -0.19%
  13. Las Vegas -0.19%
  14. San Diego -0.23%
  15. Seattle -0.31%
  16. San Francisco -0.38%
  17. Chicago -0.42%
  18. Portland -0.49%
  19. Cleveland -0.50%
  20. Detroit -0.55%

The national average was +0.10% so Phoenix increased at more than 5 times the national average and rose from fourth to second in the table.

The year over year comparisons are below:

  1. Phoenix +5.8%
  2. Tampa +4.9%
  3. Charlotte +4.8%
  4. Atlanta +4.2%
  5. Minneapolis +4.2%
  6. Boston +3.4%
  7. Denver +3.3%
  8. Cleveland +3.3%
  9. Miami +3.3%
  10. Detroit +3.1%
  11. Washington +3.0%
  12. San Diego +2.9%
  13. Dallas +2.9%
  14. Portland +2.7%
  15. Seattle +2.5%
  16. Las Vegas +2.3%
  17. Los Angeles +2.0%
  18. New York +0.8%
  19. Chicago +0.5%
  20. San Francisco -0.4%

The national average was +3.3% so most of the 20 cities did worse than the average. Phoenix, however, remained well clear of the rest at the top of the table.

December 30 - Listings under contract weakened during December and the Cromford® Demand Index for all areas and types has eased from 107.3 to 103.0 during the month. Although the Cromford® Market Index reached 200 on December 27, it has not managed to break higher and has slipped to 199.4. These are small changes but suggest that demand is tiring just a little.

chandler real estate

chandler homes for sale

December 28 - We note that the days of inventory reading today for all areas & types has dropped below 60 to 58.5. The normal range is 120 to 150.

It has only once been lower than this at the end of December - in 2004 when we were close to the height of the bubble.

December 27 - The table below shows the Cromford® Market Index values for the single-family markets in the 17 largest cities:

chandler real estate

The market has managed to improve further for sellers with only one city moving in favor of buyers. Tempe has developed a habit of being out of step.

With 10 cities over 200 and an average change in CMI of 7.9% over the last month, there is little to encourage buyers.

December 26 - Single-family supply is down dramatically from this time last year in most locations. Counting active listings without a contract here is what we find:

  • Gilbert - down 50% from 615 to 307
  • Glendale - down 46% from 574 to 310
  • Mesa - down 45% from 985 to 539
  • Chandler - down 40% from 502 to 299
  • Avondale - down 39% from 147 to 90
  • Phoenix - down 38% from 3,034 to 1,876
  • Peoria - down 36% from 637 to 407
  • Queen Creek - down 33% from 725 to 484
  • Tempe - down 32% from 195 to 133
  • Surprise - down 32% from 630 to 429
  • Goodyear - down 27% from 445 to 325
  • Cave Creek - down 26% from to 225 to 167
  • Scottsdale - down 24% from 1,689 to 1,276
  • Fountain Hills - down 20% from 227 to 181
  • Buckeye - down 14% from 456 to 392
  • Paradise Valley - down 14% from 308 to 265
  • Maricopa - down 11% from 310 to 277

The overall decline in these 17 cities is 34%. We have not yet reached the lowest point which will occur on January 1 as a large number of active listings will expire at the end of 2019.

December 24 - Across Greater Phoenix during November there were 52 closed MLS listings over $2 million. This may not sound like a dramatic number but the previous record high for November was 34. That's a jump of 53% from the previous record and a rise of 86% compared to November 2018.

It was not just a record high for the valley as a whole, 2 key cities made new records:

  • Scottsdale - 24 (previous November record 18)
  • Paradise Valley - 20 (13)

These 2 locations accounted for the bulk of the sales over $2 million. Phoenix supplied 5 but this merely equaled the previous record. Other contributions came from Peoria (1), Chandler (1) and Cave Creek (1).

However you look at it, the high end market is selling well. This is a good thing because, unlike the lower end of the market, supply is plentiful over $2 million.

December 22 - The chart below measures active listing counts on a weekly basis. You can find the original interactive version here.

chandler homes for sale

We can see that 2019 started with more active listings than 2018 and initially surged to peak at almost 24,000 in February and March. Since then the supply has collapsed reaching a low point this week just below 16,400. This is the lowest measured for week 51 since 2004. You can see from the chart the huge drop that has taken place since December last year. We will therefore be entering 2020 with buyers at a huge disadvantage due to a shortage of homes to bid on.

The numbers above are for all areas & types and include active listings in UCB or CCBS status. Therefore the number of homes freely available for purchase across Greater Phoenix is much lower. If we confine ourselves to listings without a contract of any sort and located within Grater Phoenix, the count drops from 16,389 to 12,192. If we look at homes under $300,000 the number collapses to 4,395. This is a very meagre total for the Greater Phoenix area, especially compared with 7,216 last year.

December 20 - Below is a table showing the Cromford® Market Index for the single-family markets in the 17 largest cities:

chandler homes for sale

Tempe & Fountain Hills remain resistant to the overall upward trend in CMI but are still seller's markets. The remaining 15 cities improved further for sellers and became even more difficult for buyers. We now have 10 cities over 200 and 15 cities over 160. The average change over the last month was +7.4%, up from 6.5% last week.

The contrast with last year at this time is very striking.

December 19 - We have witnessed a very strong move upwards in average sales price per square foot over the past 3 months. Here are the single-family numbers for the major cities:

City Monthly Average $/SF Dec 19 Sep 19 Change
Phoenix $187.23 $177.90 +5.2%
Mesa $167.11 $163.98 +1.9%
Scottsdale $282.75 $255.85 +10.5%
Avondale $136.94 $127.31 +7.6%
Queen Creek $140.63 $136.71 +2.9%
Peoria $164.41 $155.39 +5.8%
Surprise $144.39 $139.27 +3.7%
Gilbert $169.51 $165.23 +2.6%
Glendale $153.59 $151.48 +1.4%
Chandler $182.69 $176.16 +3.7%
Tempe $190.51 $190.99 -0.3%
Goodyear $147.26 $143.15 +2.9%

Remember this is over just 3 months. The increases in Scottsdale and Phoenix are profound because together these make up a very large percentage of the overall market.

December 17 - During the first 2 weeks of December there have been 3,462 closed listings. This is up from 3,013 during the same period in 2018. This is by far the highest total we have ever recorded for these 2 weeks.

So we have a record number of closings and a record low number of new listings. Things are only getting harder for buyers.

December 16 - For the first 2 weeks of December we have seen 3,080 new listings hit the market in Greater Phoenix. This is down from 3,404 last year and is the lowest total of new listings we have ever recorded for this period. In 2008 we counted 6,123, most of them lender-owned.

December 12 - The market is swinging in favor of sellers again as inventory declines. Below is a table showing the Cromford® Market Index values for the single-family markets in the 17 largest cities:

chandler real estate

The average change over the last month was +6.5%, up from +4.7% last week.

Only Tempe & Fountain Hills are moving in a direction that favors buyers and both of them are still seller's markets.

Avondale, Glendale, Chandler, Gilbert, Cave Creek, Maricopa and Paradise Valley all improved for sellers by 10% or more.

December 11 - As expected, active listing counts are declining in December in line with the usual seasonal pattern.

Active listing counts have have been low for so long we have started to feel like low numbers are normal. But they are not normal. We can compare the current counts with the long term average since January 2001. The table below illustrates this:

City Active Dec 11, 2019 Long Term Average Difference
Avondale 89 370 -76%
Gilbert 360 1,168 -69%
Chandler 354 1,028 -66%
Glendale 332 957 -65%
Mesa 584 1,665 -65%
Phoenix 2,021 4,682 -57%
Tempe 134 305 -56%
Surprise 438 949 -54%
Peoria 442 924 -52%
Queen Creek / STV 515 1,000 -49%
Scottsdale 1,323 2,375 -44%
Goodyear 337 574 -41%
Maricopa 273 439 -38%
Cave Creek 173 270 -36%
Fountain Hills 177 260 -32%
Buckeye 397 507 -22%
Paradise Valley 276 333 -17%

The numbers above are for single family listings only and exclude active listings with UCB and CCBS status.

 

December 10 - Based on affidavits of value filed during November we have collected the following counts of iBuyer activity:

  Opendoor OfferPad Zillow Knock All iBuyers Combined
Homes Purchased in November 2019 282 96 45 6 429
Homes Purchased in November 2018 253 97 78 0 428
Annual Change in Purchases +11% -1% -42%   +0%
Homes Sold in November 2019 273 63 63 4 403
Homes Sold in November 2018 181 85 36 0 302
Annual Change in Sales +51% -26% +75%   +33%
Median Purchase Price in November 2019 $248,500 $232,850 $251,300 $336,500 $246,300
Median Purchase Price in November 2018 $232,500 $223,243 $311,000   $243,000
Median Sale Price in November 2019 $250,000 $248,000 $297,000 $341,320 $254,000
Median Sale Price in November 2018 $245,000 $234,000 $239.400   $240,000
Homes in Inventory at the End of November 980 491 163 17 1,651

 

On the buying side, iBuyers have shown almost zero grown compared with a year ago. This is surprising given that the overall market has grown during the same period. It means iBuyers (as a whole) have lost market share since this time last year. However Opendoor is an exception since it grew purchases by 11%. OfferPad's purchases are roughly level with last year while Zillow bought significantly fewer homes last month than they did in November 2018. Knock was not active in Phoenix 12 months ago. Of course the supply of homes below $300,000 is becoming increasingly limited and this is the a major reason the iBuyers are seeing limitations to their growth.

On the sales side we are still seeing growth of 33% overall. However OfferPad's sales are down 26% compared with a year ago.

We are seeing very little change in the pricing measures as all buyers except Knock are targeting the market around $225,000 to $275,000. Zillow appears to be avoiding the higher priced homes that they purchased when they first started in 2018.

Inventory stands at 1,651 as of the beginning of December. It was 1,626 last month, so little change there.

December 9 - Sales in the Northeast Valley over $500,000 have been exceptionally strong since March, with last month producing the highest November total in history. We counted 444 closed transactions though ARMLS. This is up 26% from November 2018, when we saw 351. Sales over $2 million achieved a new record of 51 (26 last year) while sales under $1 million were up 15% to 281. Sales between $1 million and $2 million were up 38%, setting another all-time record for November at 112. 

These numbers are particularly impressive, given that November had only 18 working days for title companies to close transactions.

December 6 - When it comes to growth in dollar volume it is the outer parts of the valley that are making the heaviest gains. Below is a table showing the change in dollar volume for the first 10 months of 2019 compared to the same period in 2018. This is based on recorded deeds, not ARMLS data:

City Dollar Volume 2018 Dollar Volume 2019 Change
Coolidge $28M $57M +102%
Tonopah $8M $12M +55%
Queen Creek $593M $866M +46%
Casa Grande $227M $298M +32%
Gold Canyon $173M $226M +31%
Waddell $117M $143M +22%
Florence $186M $225M +21%
El Mirage $123M $148M +20%
Litchfield Park $311M $362M +16%
Wittmann $32M $37M +16%
Tolleson $171M $198M +16%
Maricopa $501M $572M +14%
Surprise $1,199M $1,365M +14%
San Tan Valley $1,035M $1,170M +13%
Glendale $1,223M $1,379M +13%
Apache Junction $178M $200M +13%
Sun City $392M $441M +12%
Buckeye $985M $1,103M +12%
Youngtown $26M $29M +10%
Goodyear $865M $941M +9%

December 5 - It is only a week since Thanksgiving, but the housing market has changed in favor of sellers once again. Here is the Cromford® Market Index table for the single-family markets in the 17 largest cities.

The average change in CMI over the last month is +4.7%, up sharply from +2.1% last week.

Only 2 cities moved in favor of buyers (Tempe & Fountain Hills) while the 15 that moved in favor of sellers were led by Glendale, Cave Creek, Paradise Valley and Chandler.

With supply on a downward trend for the next 4 weeks we expect the CMI readings to move higher for at least a month.

December 4 - The affidavits of value filed in Maricopa County for November show an increase of 6% in recorded sales compared with last year. Not bad considering the 5% lower number of working days.

The new home market did a lot of the heavy lifting - up 14%, while re-sales were up a more modest 5%.

The median sales price rose 8% to $295,000. The median for new homes was $354,990 (up 3%) while re-sales came in at $280,000 (up 9%).

December 1 - The contract ratios are looking very strong today. It is very unusual for the contract ratio to be higher on December 1 than it was on November 1, but for all areas & types we are looking at 69.0, up 3% from last month. It is also up a mighty 66% from December 1, 2018.

This is a sign of a market that is heating up. Supply is falling again and demand is strengthening. There is a lot of upward pressure on pricing, which in theory at least, should moderate the demand.

December 1 - The contract ratios are looking very strong today. It is very unusual for the contract ratio to be higher on December 1 than it was on November 1, but for all areas & types we are looking at 69.0, up 3% from last month. It is also up a mighty 66% from December 1, 2018.

This is a sign of a market that is heating up. Supply is falling again and demand is strengthening. There is a lot of upward pressure on pricing, which in theory at least, should moderate the demand.

November 29 - The table below shows the Cromford® Market Index values for the single-family markets in the 17 largest cities:

Chandler homes for sale

As we predicted, the direction has changed rapidly and is now moving in favor of sellers. We have 12 cities improving for sellers (twice as many as last week) and only 5 still showing deterioration. Only Fountain Hills is showing major deterioration due to a significantly increased supply.

Cave Creek, Glendale and Chandler have improved most rapidly over the past month.

The average monthly change in CMI is +2.1%, up from -1,2% last week.

November 28 - There are far more luxury homes under contract than we would normally expect to see at this time of year. As of last Saturday we had 164 homes over $1.5 million in either Pending or Active-UCB or Active-CCBS status. The highest we had seen previously at this stage of the year was 117 in 2017.

We are seeing under contract counts that are normally only seen in the spring. Something is causing strong motivation among luxury home buyers. The stock market hitting new heights may have more than a little to do with it.

November 27 - At the end of October we had seen 20,791 single-family permits across Maricopa & Pinal counties, up 6% from 19,600 in October 2018.

The top 10 cities for single-family permits in 2019 so far are:

  1. Phoenix - 3,393 (3,087)
  2. Buckeye - 2,068 (1,856)
  3. Unincorporated Pinal County - 2,009 (2,285)
  4. Mesa - 1,728 (1,649)
  5. Maricopa - 1,608 (1,098)
  6. Surprise -1,414 (1,170)
  7. Goodyear - 1,368 (1,118)
  8. Queen Creek - 1,220 (1,112)
  9. Peoria - 1,187 (1,099)
  10. Gilbert - 998 (1,262)

The numbers in parentheses are the YTD counts for October 2018.

We note that Gilbert continues to fade in importance having been the number one city for new development not so many years ago. Maricopa's growth is very strong compared to last year.

Scottsdale , Chandler, Glendale and Tempe no longer feature in the top ten for single-family permits. However they have a major role in multi-family permits these days, alongside Phoenix.

November 26 - The S&P / Case-Shiller® Home Price Index® numbers have been released covering sales between July and September 2019. Here are the cities ranked by the one month change:

  1. Tampa +0.72
  2. Cleveland +0.52%
  3. Los Angeles +0.50%
  4. Phoenix +0.46%
  5. Miami +0.31%
  6. Charlotte +0.29%
  7. New York +0.26%
  8. Dallas +0.22%
  9. Las Vegas +0.18%
  10. Atlanta + 0.16%
  11. Minneapolis +0.14%
  12. San Diego +0.05%
  13. Portland +0.04%
  14. Denver -0.05%
  15. Detroit -0.06%
  16. Washington -0.23%
  17. Seattle -0.29%
  18. Boston -0.43%
  19. San Francisco -0.61%
  20. Chicago -0.74%

Phoenix was top last month, but this measure is fairly volatile. The national average was +0.12% so Phoenix increased at almost 4 times that rate.

The year over year reading is more stable and rankings are as follows:

  1. Phoenix +6.0%
  2. Charlotte +4.6%
  3. Tampa +4.5%
  4. Minneapolis +4.2%
  5. Atlanta +4.0%
  6. Detroit +3.6%
  7. Boston +3.5%
  8. Cleveland +3.2%
  9. Miami +3.1%
  10. Denver +3.0%
  11. Dallas +3.0%
  12. Las Vegas +2.9%
  13. San Diego +2.8%
  14. Washington +2.7%
  15. Portland +2.7%
  16. Seattle +1.7%
  17. Los Angeles +1.7%
  18. New York +0.8%
  19. Chicago +0.6%
  20. San Francisco -0.7%

The bottom 6 are all cities that used to have a lot of buyers from China. Phoenix does not and never has, but is comfortably top of the table now with higher rises to come once the fourth quarter sales start to be included in the index. The national average was +3.2%, so Phoenix was close to double that rate.

November 23 - We measure long term appreciation by measuring the change in average price per square foot for closed listings between January 1, 2001 and today. It is expressed as the interest rate that would deliver the same return on investment. Here are the cities ranked by long term appreciation rate for single-family homes:

  1. Tempe 3.9%
  2. Phoenix 3.8%
  3. Mesa 3.7%
  4. El Mirage 3.7%
  5. Chandler 3.7%
  6. Sun City 3.7%
  7. Peoria 3.6%
  8. Glendale 3.6%
  9. Gilbert 3.5%
  10. Scottsdale 3.5%
  11. Apache Junction 3.4%
  12. Buckeye 3.4%
  13. Sun City West 3.4%
  14. Sun Lakes 3.4%
  15. Fountain Hills 3.2%
  16. Avondale 3.0%
  17. Cave Creek 3.0%
  18. Tolleson 2.9%
  19. Arizona City 2.9%
  20. Paradise Valley 2.8%
  21. Surprise 2.8%
  22. Goodyear 2.7%
  23. Anthem 2.7%
  24. Gold Canyon 2.6%
  25. Casa Grande 2.3%
  26. Litchfield Park 2.3%
  27. Queen Creek 2.0%
  28. Maricopa 2.0%
  29. Laveen 1.3%

November 22: - The chart below illustrates how the Cromford® Market Index acts as a forecasting tool for appreciation. The black line is the CMI measured monthly and the green columns are the annual appreciation rate based on average $/SF, also measured month

 

chandler real estate

Because it measures the balance between supply and demand:

  • a value around 100 means prices will rise in line with general price levels for things other than houses
  • a value well under 100 means prices will fall
  • a value well over 100 means prices will rise faster than the cost of other commodities

A casual glance at this chart tells us that prices are likely to rise much faster in 2020 than they did in 2019. This is especially true if the CMI rises from its current value just over 190.

November 21 - The table below shows the Cromford® Market Index values for the single-family markets in the 17 largest cities:

 

Chandler homes for sale

We see the number of cities moving in favor of sellers is 6. up from 5 last week. The average change in CMI is -1.2% which compares with -3.4% last week.

We are just about done with the downward trend now and leading the way are Cave Creek, Glendale and Chandler, with Maricopa, Tempe and the all-important Phoenix also improving over the last month.

The lowest performers from a sellers perspective are Fountain Hills, Buckeye, Mesa, Peoria, Queen Creek and Avondale

To keep things in perspective, a normal balanced market reading is 100, so all the 17 cities are seller's markets and 8 of them are over 200. It's tough to be a buyer in this situation

November 18 - We like to measure the first 2 weeks of November to see how they compare with the same period in 2018:

New Listings: down

  • We saw 3,946 new listings across Greater Phoenix (all dwelling types) between Nov 1 and Nov 14, 2019
  • We saw 4,455 new listings across Greater Phoenix (all dwelling types) between Nov 1 and Nov 14, 2018
  • The difference is a drop of 11%
  • This is unusual - when the market is strong we usually see more new supply

Closed Listings: up

  • We counted 2,937 closed listings across Greater Phoenix (all dwelling types) between Nov1 and Nov 14, 2019
  • We counted 2,463 closed listings across Greater Phoenix (all dwelling types) between Nov1 and Nov 14, 2019
  • The difference is a rise of 19%

The combination of higher sales and lower new supply is great news for sellers and bad news for buyers. It also adds further fuel to the rise in home prices.

If you wish you can check out the numbers for your chosen sub-segment of the market. The charts you need are here and here.

November 15 - Measured across the entire ARMLS residential database, there were slightly fewer active listings on November 15 than October 15. This pattern is unusual. The last time it happened was in 2011 during the mad REO clear out sales, when investors were scrambling to buy before prices rose much higher. This year it happened because new listings have been less numerous than usual and listings have been selling quickly.

November 14 - The table below shows the Cromford® Market Index values for the single-family markets in the 17 largest cities:

chandler homes for sale

The slight pull-back in the balance between buyers and sellers is now running out of steam and the situation will reverse over the next several weeks.

The average decline in the CMI is 3.4% (down from 4.9% last week) and we now have 5 of the 17 cities showing an improving situation for sellers over the past month. Cave Creek, Chandler and Glendale are leading this way forward.

The underlying cause is a weak supply of new listings in November coupled with elevated sales rates and a higher than normal number of listings under contract. Once the usual drop in supply really gets going in late November then sellers are likely to regain much if not all of the advantage they have lost over the past 2 months.

Everywhere is still a seller's market with the weakest situation in Buckeye at 130.7, still a long way from the balance point of 100.

November 12 - The average price per square foot for listings under contract has been very lively over the past few months. See the chart below:

chandler homes for sale

It was reading $181.97 as recently as October 17 (see daily observation of that date) and has risen almost $5 in a little over 3 weeks.

This is the steepest climb we have seen for a very long time and illustrates some of the after-effects of the huge rise in the CMI during the first 9 months of the year.

Home prices have a great deal of upward momentum.

November 10 - The market remains exceptionally favorable for sellers. There are numerous ways to show this but one simple method is to measure the listing success rate. The current level of 84.2% is by far the highest we have seen for November (week 45) since we started recording this measure in 2006.

chandler real estate

The original Flash chart can be found here if you would like to see the years prior to 2014.

November 8 - Based on affidavits of value filed during October we have collected the following counts of iBuyer activity:

  Opendoor OfferPad Zillow Knock All iBuyers Combined
Homes Purchased in October 2019 285 113 66 2 466
Homes Purchased in October 2018 206 134 90 0 430
Annual Change in purchases +38% -16% -26%   +8%
Homes Sold in October 2019 345 83 83 5 516
Homes Sold in October 2018 224 85 25 0 334
Annual Change in Sales +54% -2% +132%   +54%
Median Purchase Price in October 2019 $248,300 $250,000 $267,800 $276,000 $250,300
Median Purchase Price in October 2018 $239,600 $230,204 $332,000   $244,950
Median Sale Price in October 2019 $250,000 $249,900 $333,500 $293,381 $260,100
Median Sale Price in September 2018 $250,470 $243,250 $323.000   $251,000
Homes in Inventory at the End of September 971 458 182 15 1,626

 

On the buying side, iBuyers have grown only 8% compared with a year ago. This not any higher than the overall unit growth experienced by the market. However Opendoor grew purchases by 38% while OfferPad and Zillow bought less than they did in October 2018.

The picture is rather different for sales, which are up 54%. far higher than the market as a whole. Zillow grew the most at 132% but they will be unable to keep up this pace because of their low purchase numbers. Their inventory is down to only 182. Opendoor achieved 54% growth in sales, in line with the iBuyers as group. Opendoor inventory is 5 times as high as Zillow and more than twice that of OfferPad whose inventory is quite large relative to sales.

November 7 - Here is the table of Cromford® Market Index values for the single-family markets in the 17 largest cities:

chandler homes for sale

Here we see little change from last week. Cave Creek is improving quickly for sellers while Fountain Hills is doing the opposite. Goodyear, Buckeye and Paradise valley have seen a more significant inflow of new supply than the rest. Glendale, Chandler and Maricopa are the only cities other than Cave Creek bucking the general trend.

We have seen fairly weak new listing flow for the first week of November so it looks like the movement in favor of buyers will be short lived and relatively insignificant to the overall picture. We remain in a strong seller's market for the top 15 cities in this list and in a moderate seller's market for the bottom 2.

November 5 - The preliminary numbers for October, based on affidavits filed in Maricopa County, confirm robust pricing trends and strong sales counts..

Across all sales of single-family and townhouse / condo properties within the county, the unit count was 9,680, up 7% from October last year. The median sales price climbed 9% from $271,000 to $292,000.

For new homes, the unit count rose 6% to 1,456 while the median sales price gained 6% to $369,660. The re-sale market produced 8,224 recorded deeds, a rise of 7%, while the median sales price rose 9% to $280,000. The average new home is much larger than the average re-sale which goes some way to explain the large difference in median prices between new homes and re-sales..

Noveber 2 - If you are a buyer looking for the extra supply that arrived over the last month, here are some of the places you won't find it:

  • Phoenix 85003, 85004, 85012, 85014, 85015, 85016, 85018, 85020, 85031, 85032, 85040, 85044, 85050, 85083, 85085, 85086
  • Mesa 85205, 85208, 85213
  • Coolidge 85128
  • Maricopa 85139
  • Sun Lakes 85248
  • Chandler 85249, 85286
  • Scottsdale 85254, 85257, 85259
  • Superior 85173
  • Tempe 85282, 85283
  • Glendale 85302, 85304, 85305, 85308
  • Cave Creek 85331
  • Litchfield Park 85340
  • Morristown 85342
  • Waddell 85355
  • Wittmann 85361
  • Surprise 85378, 85379
  • Peoria 85381, 85383

The above ZIP codes all have fewer single-family active listings on November 1 than they had a month earlier. UCB and CCBS listings are excluded.

Here are the best spots to look with a significant increase in active listings:

  • Phoenix 85017, 85021, 85023, 85028, 85035, 85043, 85045, 85053
  • Mesa 85203, 85206, 85215
  • Gold Canyon 85118
  • Apache Junction 85119, 85120
  • Arizona City 85123
  • Chandler 85224
  • Florence 85132
  • Scottsdale 85262, 85266
  • Rio Verde 85263
  • Fountain Hills 85268
  • Tempe 85281
  • Gilbert 85295, 85296
  • Glendale 85303, 85306, 85307, 85310
  • Buckeye 85326, 85396
  • El Mirage 85335
  • Goodyear 85338, 85395
  • Peoria 85345, 85382
  • Youngtown 85363
  • Sun City 85373
  • Surprise 85374, 85387
  • Sun City West 85375
  • Carefree 85377
  • Wickenburg 85390

November 1 - We start the month with a look at the Cromford® Market Index values for the single-family markets in the 17 largest cities:

chandler homes for sale

At first this looks like a big improvement over last week since we have 4 times as many cities showing better conditions for sellers. However the average monthly change in the CMI is -4.6% which is only a tad better than the -5.0% we saw last week. The downward trend is slowing but has yet to reverse. It is likely to do this well before Christmas.

With weaker new listing numbers we expect this table to get quite a bit greener over the next 2 months. We do have four cities showing severe shifts down (Fountain Hills, Paradise Valley, Buckeye & Goodyear). However we normally see active listing counts decline quickly between the third week of November and the end of the year which will bring a boost for the CMI numbers as long as demand holds steady.

We are still in a market that strongly favors sellers and the upward price pressure this implies is starting to become more evident in sales recordings.


October 30 - The S&P Case-Shiller® Home Price Index® was released yesterday for August 2019. It covers sales between June 1 and August 31.

Here are the month to month changes:

  1. Phoenix +0.90%
  2. Tampa +0.34%
  3. Miami +0.34%
  4. Cleveland +0.28%
  5. Atlanta +0.23%
  6. Minneapolis +0.17%
  7. Charlotte +0.14%
  8. Boston +0.12%
  9. New York +0.12%
  10. Detroit +0.11%
  11. Chicago +0.10%
  12. Dallas +0.04%
  13. Washington +0.00%
  14. Los Angeles -0.01%
  15. Portland -0.03%
  16. Denver -0.16%
  17. San Diego -0.16%
  18. Las Vegas -0.18%
  19. Seattle -0.29%
  20. San Francisco -0.47%

The national average was +0.20%. Phoenix rose from 3rd to 1st place in this table and is far out in front. 9 out of 20 cities were negative month to month.

The year over year changes were as follows:

  1. Phoenix +6.3%
  2. Charlotte +4.5%
  3. Tampa +4.3%
  4. Atlanta +4.0%
  5. Boston +3.9%
  6. Minneapolis +3.9%
  7. Detroit +3.8%
  8. Las Vegas +3.3%
  9. Cleveland +2.9%
  10. Denver +2.9%
  11. Miami +2.9%
  12. Dallas +2.8%
  13. Washington +2.7%
  14. Portland +2.6%
  15. San Diego +2.3%
  16. Chicago +1.4%
  17. Los Angeles +1.0%
  18. New York +0.9%
  19. Seattle +0.7%
  20. San Francisco -0.1%

The national average was 3.2%. Phoenix once again extended its lead at the top of the table.

October 29 - At last we are beginning to see single-family permits open up a noticeable lead over last year. The year-to-date count for Maricopa & Pinal counties was 18,469 at the end of September. This is up 4.6% from the same time last year. The advance has more to do with the weak numbers during September 2018, when developers were understandably feeling pessimistic about the demand situation. September 2019 gave us 1,916, not a spectacular number but a big improvement on the 1,511 we saw the previous September. The present rate will struggle to keep up with the current level of demand and has little to no chance of making life easier for buyers by increasing the overall level of supply.

October 28 - The supply of new listings has weakened again since September and it is looking increasingly likely that the 4Q peak in active listing counts will occur earlier than usual. In most years we see active listing counts reach a peak during the third week of November and then decline quite sharply as we head into the holiday season. At the moment several segments are struggling to exceed the peak made during the the third week of October. 

October 25 - It is time for another look at how the Cromford® Market Index values are behaving in the single-family markets of the 17 largest cities:

chandler homes for sale

Only Cave Creek has improved for sellers over the past month. This is a little ironic as Cave Creek was bottom of the table for several weeks in September.

All the other cities have seen the balance shift in favor of buyers. However 8 cities remain above 200 so this is still a market which favors sellers to an extraordinary extent. Only the bottom 2 cities (Buckeye and Paradise Valley) are below 150. Remember that 100 represents a normal balanced market where sellers and buyers have equal negotiation power.

October 24 - The first 3 weeks of October produced 6,515 new listings across Greater Phoenix. This is down 3% from 6,708 last year and is the lowest count we have ever seen for these 3 weeks. New listing counts were slightly higher in September than last year, but October has gone back to the weakness in new supply that we saw in June, July and August.

October 23 - When comparing month-to-date numbers it is crucial to use periods which consist of 7, 14, 24 or 28 days otherwise any comparison is destroyed by the natural weekly cycle.

Comparing the first three weeks of October with the same three weeks of 2018 we can see that closed listings for Greater Phoenix are up from 4,239 to 4,513, an increase of 6.5%. The total for Pinal County alone is up from 393 to 470, an increase of 19.6%, so Maricopa's growth was much slower at 5.0%. Closed listings for homes over $1m were down 12% while those between $500k and $1m were up 28%,

October 22 - We have added 5 documents to the download section as follows:

  • Market Update - Rentals - Trends and Rent Versus Buy Decision
  • Market Update - Flip Transactions - Influences and Activity Map
  • Market Update - Supply - Influences and Listing Charts
  • Market Update - Demand - Influences and sales Charts
  • Market Update - General Market

October 21 - Two new presentation downloads are available in the Powerpoint section here.

Lots of information for those interested in the luxury markets of the Northeast Valley

October 19 - Some of the larger percentage increases in supply at this time of year tend to occur in the smaller cities. Here are a few examples on the change in active listing counts between August 13 and October 13, 2019 (excluding UCB and CCBS listings):

  • Tonopah - up 91% from 11 to 21
  • Wickenburg - up 67% from 64 to 107
  • Youngtown - up 63% from 8 to 13
  • Rio Verde - up 57% from 47 to 74
  • Eloy - up 33% from 27 to 36
  • Coolidge - up 30% from 44 to 57
  • Waddell - up 28% from 58 to 74
  • Florence - up 27% from 98 to 124

For comparison, Phoenix was little changed from 2,293 to 2,285 over the same period, although its supply has been on the rise since hitting a low point of 2,055 on September 5.

Not all smaller cities followed the same pattern. Carefree was up only 12% while Wittmann was down 5% and New River was down 26%.

October 18 - Price momentum is rising, and in normal markets this tends to bring the market closer to balance. It does this by giving sellers better reasons to sell and giving buyers greater affordability problems.

We can see this in the Cromford® Market Index table for the 17 largest cities and their single-family markets:

Chandler homes for sale

Only 3 of the 17 cities are showing improvement for sellers, though, interestingly, Cave Creek is one of them, having under performed the average for the last several months.

The largest declines are seen in Buckeye, Paradise Valley, Fountain Hills, Goodyear and Avondale.

We expect this downward trend in the CMI to continue for another 5 weeks and then most likely it will peter out. Nothing is for certain in this business however.

October 17 - We have a Tableau chart that tracks the weekly average of $/SF for listings under contract. You can find the live version here.

This was looking weak during the second and third quarters but has perked up dramatically since August 7.

Chandler homes for sale

$181.97 is the highest we have seen since the bubble year of 2005.

The recent advance is even more extreme for condos and townhomes, reaching $210.03.

October 14 - Prices have started to show new upward momentum over the past 4 weeks as shown in the chart below:

Chandler homes for sale

The green line represents the average pending list price per sq ft and this is a leading indicator for average sales price per sq. ft. The red line represents the latter and it is now starting to follow suit.

Higher prices should encourage more sellers and discourages buyers which will eventually have a balancing effect on the market. If you ever see that higher prices encourage buyers to buy more,m that's when you have a bubble developing. This is what happened in 2004 and early 2005, but it is not happening now.

October 11 - The table below shows the Cromford® Market Index values for the single-family markets in the 17 largest cities:

 Chandler homes for sale

We now see the majority of cities (12 out of 17) deteriorating for sellers and only 5 improving. Mind you, the cities still showing improvement include some very large ones: Phoenix, Mesa, Scottsdale, Peoria & Tempe.

The average monthly change in the CMI is -3.5%. It was -1.6% last week.

The overall picture is still of a market that is heavily imbalanced in the seller's favor, but the recent additional supply and slight fall in demand is reversing the trend of the third quarter.

October 10 - After the first full week of October we can report some detected changes in volumes compared with the first week of October in 2018.

New listings totalled 2,214 across Greater Phoenix which is up 3% from 2,144 last year. New listings are flowing more freely than they did over the previous 3 months.

Closed listings totalled 1,443 across Greater Phoenix, which is up 4% from 1,387 last year, Closings are running ahead of 2018 but not by as great a percentage as in September.

More new listings, more closings and higher prices all add up to an expanding market with higher dollar volumes for agents, title companies & lenders.

October 9 - Based on affidavits of value filed during September we have collected the following counts of iBuyer activity:

  Opendoor OfferPad Zillow Knock All iBuyers Combined
Homes Purchased in September 2019 374 85 53 2 560
Homes Purchased in September 2018 190 119 63 0 461
Annual Change in purchases +97% -29% -16%   +38%
Homes Sold in September 2019 344 97 136 2 535
Homes Sold in September 2018 271 94 10 0 355
Annual Change in Sales +27% +3% +1260%   +54%
Median Purchase Price in September 2019 $243,300 $224,865 $259,700 $354,773 $242,850
Median Purchase Price in September 2018 $241,700 $226,162 $271,050   $240,900
Median Sale Price in September 2019 $247,000 $260,000 $300,500 $292,388 $262,000
Median Sale Price in September 2018 $248,000 $244,000 $308.000   $247,500
Homes in Inventory at the End of September 1,031 428 199   1,723

 

On the buying side, iBuyers have grown 38% compared with a year ago. However almost all of this growth is accounted for by Opendoor, who are up 97%. OfferPad bought 29% fewer homes than in September last year while Zillow is down 16%. The only other growth is from Knock who were not operating in Phoenix 12 months ago.

On the selling front, iBuyers achieved an impressive 54% growth in units and this was distributed among all 4 players. Zillow had barely started selling homes last year so their percentage growth is enormous. Given their relative size, Opendoor's growth of 27% is impressive.

It must be pointed out that buying homes is very much harder in today's market than selling them. This is particularly true in the iBuyers' favorite price range.

Zillow's direction is not clear - they appear to be buying far too few homes to sustain their sales rate and their inventory has collapsed to under 1.5 months. Opendoor is buying slightly more than they are selling and are keeping inventory around 3 months. OfferPad seems to have reached a steady state of around 100 homes a month. They have declined to move upmarket even though the shortage of homes under $250,000 must be limiting their growth. They have plenty of inventory at about 4.4 months.

October 7 - Probably the most interesting graph on our site right now is tucked away in an obscure corner of the Tableau Charts section.

This shows the year-over-year percentage change in the active listing price per sq. ft.

Notice how it crashed to below zero between February and April, only to zoom upward to reach 9% over the past 5 months.

This is a leading indicator with typically a 3-6 month lag. The chart is telling us that sales prices should have been comparatively weak during the third quarter but they will bounce back strongly in the fourth quarter.


October 5 - Among the next 12 cities not included in the top 17, this is how their CMI has fared over the past 4 weeks:

  • Anthem -0.7%
  • Apache Junction +2.7%
  • Arizona City -6.6%
  • Casa Grande +2.7%
  • El Mirage -0.6%
  • Gold Canyon +1.7%
  • Laveen -0.8%
  • Litchfield Park -0.7%
  • Sun City -3.6%
  • Sun City West -5.5%
  • Sun Lakes -1.7%
  • Tolleson -0.2%

The average change was -1.1%. With 3 cities improving for sellers and 9 deteriorating, this is a similar picture to the top 17 cities we discussed yesterday.


October 4 - The Cromford® Market Index values for the single-family markets in the 17 largest cities are shown in the table below:

 

For the first time in many months we see the majority of cities moving in favor of buyers. We have only 7 cities still showing an improvement for sellers.

All cities are strong seller's markets but the average change in the CMI over the last month was -1.6%. Last week we saw +1.5%.

Most changes were fairly modest but Avondale, Cave Creek and Buckeye were leaders in the downward movement. Tempe was the only big mover in favor of sellers.

This set up looks like a modest decline in the CMI over the next 7 weeks followed by a rising trend after Thanksgiving. However nothing is for certain in this business.

October 3 - The average days on market for closed listings across all areas and types fell to 58 during September. This is the lowest monthly figure since February 2006. 

Prior to the introduction of UCB status we tended to see average days of around 60 to 70 in a normal balanced market. Days on market continue to accrue for UCB and CCBS listings, but stop for pending listings. The switch by many agents, avoiding pending and using only UCB when their listings go under contract, has caused typical days on market to increase to a range of 90 to 100 in a normal balanced market. The last time we were close to that situation was in 2014.

While 58 would have been close to normal in 2002, it it is indicative of a strong seller's market in 2019.

October 2 - In contrast to yesterday's observation, here are the ZIP codes which have experienced the largest percentage rise in single-family supply over the last month:

  1. Phoenix 85034 - up 67%
  2. Mesa 85208 - up 52%
  3. Phoenix 85033 - up 46%
  4. Waddell 85355 - up 32%
  5. Phoenix 85009 - up 29%
  6. Sun City 85373 - up 28%
  7. Phoenix 85045 - up 28%
  8. Phoenix 85024 - up 28%
  9. Sun City 85351 - up 25%
  10. Gilbert 85233 - up 25%

October 1 - In most segments of the market we start October with more active listings than we started September. That is usual most years but given how steep the decline in supply had been between March and September, it was not a certainty in 2019. In addition the situation is not universal. For some areas supply is even scarcer now than last month while for others supply has increased significantly..

Here are examples of the ZIP Codes where single-family supply has declined even further between September and October:

  1. Phoenix 85053 - down 40%
  2. Mesa 85201 - down 39%
  3. Black Canyon City 85324 - down 36%
  4. El Mirage 85335 - down 27%
  5. Phoenix 85027 - down 24%
  6. Apache Junction 85120 - down 22%
  7. Phoenix 85032 - down 20%
  8. Phoenix 85044 - down 20%
  9. Mesa 85202 - down 19%
  10. Phoenix 85054 - down 19%

These are based on active listing counts excluding those in UCB and CCBS status.        

September 30 - The days of inventory reading is one of our favorite mechanisms for measuring the balance in the market between supply and demand. In a balanced market, for all areas & types in the ARMLS database, somewhere between 120 and 150 days is normal. Higher than 150 represents a buyer's market and lower than 120 represents a seller's market.

Below is the weekly chart for the last 5 years.

We can see that for the first half of 2019, days of inventory was higher than in 2018 but well below 120. Since the crossover point in July, 2019 has favored sellers more strongly than 2018.

We can also see the sudden change in direction at the beginning of September, as days of inventory rose from 66 to 68. However this is a very minor change compared with the balanced zone of 120 to 150 days. It will be difficult to detect any difference between 66 and 68 out there in the market. For buyers the good news is that at least inventory has stopped going down. In fact it is likely to rise until we reach mid to late November, when another downward trend is to be expected.

September 26 - The Cromford® Market Index values for the single-family markets in the 17 largest cities are featured in the chart below:

Here we see 11 cities improved for sellers over the past month while 6 cities moved in favor of buyers. The overall average was a shift of 1.5% in favor of sellers, well below the 4.8% we saw last week.

Generally we see supply starting to move higher, as is normal for the time of year, but demand is remaining stronger than usual for the season.

Because we have experienced low supply for a long time, we have become quite used to it. However the current situation represents a very unbalanced market with a strong advantage for sellers.

Despite the fact that there is very little movement on average, some cities are changing a great deal. Tempe is up 22% while Cave Creek is down 15%

September 25 - Judging from the building permit numbers for August it appears that multi-family construction is booming while single-family is merely treading water. You can see all the details in our permit charts within the Cromford® Public section of the site.


September 24 - The S&P Case-Shiller® Home Price Index® was released today for July 2019. It covers sales between May 1 and July 31.

Here are the month to month changes:

  1. Cleveland +1.11%
  2. Minneapolis +0.74%
  3. Phoenix +0.72%
  4. San Diego +0.69%
  5. Portland +0.67%
  6. Las Vegas +0.65%
  7. Tampa +0.40%
  8. Chicago +0.37%
  9. Miami +0.34%
  10. Charlotte +0.27%
  11. Detroit +0.23%
  12. Seattle +0.23%
  13. Dallas +0.22%
  14. Boston +0.19%
  15. Atlanta +0.09%
  16. Denver +0.05%
  17. San Francisco +0.00%
  18. New York -0.06%
  19. Washington -0.12%
  20. Los Angeles -0.29%

The national average was +0.39%. Phoenix rose one place from 4th to 3rd in this table.

The year over year changes were as follows:

  1. Phoenix +5.8%
  2. Las Vegas +4.7%
  3. Charlotte +4.6%
  4. Tampa +4.5%
  5. Minneapolis +4.2%
  6. Detroit +4.1%
  7. Atlanta +4.0%
  8. Boston +3.9%
  9. Cleveland +3.2%
  10. Denver +3.1%
  11. Miami +2.7%
  12. Washington +2.7%
  13. Dallas +2.7%
  14. Portland +2.5%
  15. San Diego +2.0%
  16. Chicago +1.6%
  17. Los Angeles +1.1%
  18. New York +0.9%
  19. San Francisco +0.2%
  20. Seattle -0.6%

The national average was 3.2%. Phoenix extended its lead at the top of the table.

September 23 - Echoes of 2004 and 2005 are being heard. We are now seeing flips of new homes among the recorded deeds.

This is a sign of an extreme seller's market and far from normal. The following homes were recently sold:

  • 221 E Wisteria Dr, Chandler
  • 231 E Wisteria Dr, Chandler
  • 271 E Wisteria Dr, Chandler

The builder was Mattamy Homes and surely it cannot have escaped their notice that the same individual bought all 3 homes. All 3 were quickly resold to third parties with gross margins of $40,000 on each one. These were not cheap homes either, all were resold for over $500,000.

When people buy new homes to flip instead of live in, I regard it as a red flag for the market. In 2004 there were hundreds of red flags and it did not end well.

Thanks to Tom Ruff for bringing these deeds to my attention.

September 19 - It is time to take another look at the Cromford® Market Index values for the 17 largest cities and their single-family markets:

The average rate of increase in the CMI has dropped from 7.7% last week to 4.8% this week.

We now have 3 cities showing deterioration for sellers, one of them quite severe (Cave Creek).

Tempe is still going gang busters, belatedly joining its east valley cousins in the upper echelons. Scottsdale and Gilbert are still seeing improvements over 10% but the rest of the table is starting to look more ordinary, at least in terms of percentage changes.

It is far from ordinary in absolute terms. Normal is 100, so the worst performer is still way above normal and 9 cities are over 200 which is highly unusual.

It is still a strong sellers market, but it is no longer getting even more unbalanced at a crazy pace, which is what happened during the previous 4 months.

September 18 - We are seeing an upward trend in active listing counts at last, bringing a little more choice to buyers, but the effect is small and patchy. Considering single-family listings that are not under contract:

There are fewer active listings as of September 17 than 2 weeks ago on September 3 in

  • Mesa (607 versus 615)
  • Peoria (461 versus 486)
  • Queen Creek (527 versus 530)
  • Avondale (87 versus 91)
  • Glendale (391 versus 395)
  • Tempe (127 versus 135)

There are more active listings in

  • Phoenix (2,149 versus 2,089)
  • Scottsdale (1,238 versus 1,222)
  • Maricopa (310 versus 286)
  • Buckeye (384 versus 333)
  • Cave Creek (202 versus 187)
  • Fountain Hills (140 versus 135)
  • Paradise Valley (242 versus 225)
  • Chandler (409 versus 377)
  • Gilbert (441 versus 440)
  • Surprise (453 versus 417)
  • Goodyear (339 versus 314)

So there are still 6 major cities with fewer active listings than 2 weeks ago despite the overall trend. The rise in active listings is most pronounced in Buckeye (up 15%), with healthy growth of 8% or so in Maricopa, Cave Creek, Paradise Valley, Chandler, Surprise and Goodyear

September 17 - After 2 weeks of September we see that the closed listing count is 3,008 for Greater Phoenix. This is higher than 2,930 that we measured in 2018, but only by 2.7%. During the first week the difference was 6.7% so it appears that the 2019 advantage is fading a little.

New listings totalled 4,108 which is 4% below the 2019 count of 4,275. New supply is still below last year but at this time of year we see lower rates of listings going under contract, so supply tends to increase anyway. What we do not see is a sudden increase in new listings. This is what signals a turn in the market - just as it did in the second quarter of 2005.

September 16 - I am seeing a few media articles referring to the housing crash as taking place in 2009-2011. This is incorrect. The first signs of the crash (though noted by very few) were visible in 2Q 2005. The market was deteriorating quickly from that point and started to turn very nasty by 3Q 2006. 2007 and 2008 were the most dreadful years for housing. By 2Q 2009 the market was in recovery mode, although clearing the backlog of foreclosed homes took a long time and prices did not start to take off again until the latter part of 2011.

September 15 - When the market changes direction, the sequence of events is as follows:

  1. The Cromford® Market Index changes direction
  2. The average $/SF for active listings changes direction
  3. The average $/SF for listings under contract changes direction
  4. The short term (e.g. monthly) average $/SF for closed listings changes direction
  5. The long term (e.g. annual) average $/SF for closed listings changes direction

This generally happens over a period of 9 to 15 months in total.

We have seen a big example of number 1 in the list above over the past 7 months. We are now witnessing item 2 coming into effect.


Normally the average $/SF for active listings slumps during the third quarter. The fact that it did not do this in 2019 is a striking indicator of strength. The last 2 weeks have seen a distinct move upward. Coupled with the normal seasonal trend we expect to see strong upward movement in this measure over the rest of 2019.

Buyers may be encouraged that the active listing count has started to rise at last, as it usually does in September every year. However they will be dismayed to see the prices on the new listings being added. Homes are now getting more expensive at a faster rate.

September 13 - Comparing supply and demand with this time last year we see the following changes for the single-family markets:

City Active Listings excluding UCB & CCBS Sales per Month Listings Under Contract
Phoenix -25.7% +5.5% +11.2%
Mesa -29.3% +6.1% +12.5%
Scottsdale -17.6% +8.2% +6.9%
Chandler -18.4% +3.2% -4.7%
Glendale -26.5% +25.0% +8.0%
Gilbert -21.7% -4.5% +12.7%
Surprise -18.3% +27.4% +19.8%
Peoria -31.9% +27.5% +8.4%
Queen Creek -6.2% +36.3% +47.7%
Avondale -43.2% +19.8% +18.8%
Tempe -34.6% +0.0% -10.7%
Goodyear -6.8% +40.1% -1.3%

Supply is down everywhere, most obviously in Avondale, Tempe and Peoria. Goodyear and Queen Creek are least affected by this trend.

The monthly sales rate is up everywhere except Gilbert and Tempe. It is up most dramatically in Goodyear and Queen Creek. This is no doubt because these 2 cities have supply that has stayed relatively good.

Listings under contract are mostly higher, but not in Tempe, Chandler or Goodyear. The most dramatic increases are in Queen Creek, Surprise and Avondale.

We can see now why Avondale has been top of our weekly CMI chart for many months - supply is appallingly low and demand high. Most other cities have strong demand but the main factor is very low supply. The exceptions are Goodyear and Queen Creek where supply is well below normal but more freely available than the other cities. Here it is a sharp increase in demand that has been powering their CMI higher.

September 12 - The Cromford® Market Index values for the single-family markets in the 17 largest cities are shown in the table below:

 

Although broadly positive for sellers this is not as strong a picture as we saw last week. For one thing we have the first red circle for several weeks - shame on you Cave Creek - it was you last time too.

The average monthly change in CMI is an increase of 7.7%. This is down from 9.9% last week.

We only have 4 cities increasing by 10% or more - Tempe, Gilbert, Scottsdale and Maricopa.

Several cities in our list have actually seen their CMI decline over the last week as inventories start to rise (as they usually do in September). These include Avondale, Buckeye, Cave Creek, Chandler, Glendale and Peoria.

Among the secondary cities Anthem, Arizona City, Gold Canyon, Laveen and Sun City West all saw their CMI decline since September 5.

The market remains heavily out of balance in favor of sellers, but there is now little to no increase in the imbalance. It would be entirely normal to see a gentle fall in the CMI over the next 2 months because supply always strengthens between September and the end of November before falling again in December.

September 10 - At this point we are seeing a sudden change in the Cromford® Market Index. It has reached a plateau just above 200 and is now seeking a new direction.

Demand has stabilized at some 7% above normal. Normally we expect to see supply increase between early September and Thanksgiving and although new listings remain weaker than last year we expect a slight upward trend in the number of active listings. However supply is currently about 47% below normal, so a slight increase will not change things very much. We would need roughly 29,000 active listings to get back to normal, rather than the 15,000 we actually have.

This means we should expect the CMI chart to drift lower over the next couple of months. Does this mean the market is weak? Not at all. Remember that 100 represents a balanced market where prices should rise at the same rate as general inflation. At 203 the CMI is more than double its normal value. Sellers remain in charge but their advantage is no longer increasing. This is the point where pricing is expected to start reacting to the rise in CMI that we have seen over the past 6 months.

September 9 - Based on affidavits of value filed during August we have collected the following counts of iBuyer activity:

  Opendoor OfferPad Zillow Knock All iBuyers Combined
Homes Purchased in August 2019 370 110 72 8 560
Homes Purchased in August 2018 289 118 44 0 461
Annual Change in purchases +28% -7% +64%   +24%
Homes Sold in August 2019 373 105 141 2 535
Homes Sold in August 2018 291 109 15 0 355
Annual Change in Sales +28% -4% +840%   +50%
Median Purchase Price in August 2019 $243,150 $259,581 $270,700 $388,500 $253,635
Median Purchase Price in August 2018 $235,100 $227,568 $324,150   $236,311
Median Sale Price in August 2019 $250,000 $239,900 $299,900 $479,998 $255,000
Median Sale Price in August 2018 $246,000 $234,900 $315.000   $245,000
Homes in Inventory at the End of August 1,001 440 282   1,723

Note that we have included Knock for the first time this month. They have been active since April and have purchased 25 homes over 5 months, selling 7 of these on.

Zillow sold almost twice as many homes as it purchased. Although the sales number is its highest yet, its purchase count of 72 is the lowest since September 2018. It is clearly trying to focus on the lower price points these days and supply is very tight and competition for homes is intense from all kinds of buyers. Zillow's inventory is now rather low - only 2 months worth at the current sales rate and the lowest it has been since December 2018.

Opendoor is managing to achieve a 28% annual growth rate on both sales and purchases. They hold 2.8 months of inventory. OfferPad is struggling to maintain the volumes they achieved in 2018. Annual growth is slightly negative. They hold about 4 months of inventory

September 5 - Our regular weekly feature - the CMI table for the 17 largest cities and their single-family markets - is shows below:

The housing market is still getting better for sellers and worse for buyers in all 17 cities. The only silver lining for buyers is that the average CMI increase was 9.9%, down from 11.9% last week.

A handful of cities have seen cooling over the last week. These include Cave Creek and Glendale, the weakest last week, but the handful also includes the mighty Avondale which has had an unexpected surge in active listings from 72 to 92. Peoria and Chandler can also be added to the list of cities whose CMI fell over the past 7 days. In contrast Tempe and Scottsdale have shown additional upward momentum.

The overall picture remains that of a very strong seller's market with demand above average and supply far below normal.

September 4 - The market is suffering a severe shortage of inventory, so let us take a look at which price ranges are most affected. To do this we are using the Tableau chart which can be found here. This shows the Months of Supply excluding any UCB or CCBS listings. Months of Supply is a very seasonal measure but if we compare the number for August 31, 2019 with that for September 1, 2018 we eliminate any seasonal effect. We have included all dwelling types within Greater Phoenix.

Here is the result:

Price Range Months of Supply 2019 Months of Supply 2018 Change
Under $200K 0.9 0.9 none
$200K-$250K 0.7 1.2 down 42%
$250K-$300K 0.8 1.6 down 50%
$300K-$400K 1.2 2.1 down 43%
$400K-$600K 1.8 2.5 down 28%
$600K-$1M 3.2 4.1 down 22%
Over $1M 8.9 8.7 up 2%

The supply shortage extends up to $1 million but the price ranges that are most affected are those between $200K and $400K, with that between $250K and $300K (around the median sales price) down the most.

A normal figure for months of supply would be between 4 and 5, so 2018 was already quite tight. Supply remains relatively plentiful above $1 million, depending more on how picky the buyer is willing to be.

September 3 - Another chart illustrating the sudden surge in average price per square foot for pending listings:

Closed $/SF has been falling for several months in accordance with the usual seasonal weakness of the third quarter. However the chart above suggest the bounce back in the fourth quarter could have some vigor.

September 2 - We are starting to see some perkiness in the average $/SF for listings under contact, especially those in pending status.

This could be a sign of the move in home pricing that is likely to follow the big upward move in the Cromford® Market Index over the past 4 months.

You can check it out for yourself here.

August 31 - Is anyone still interested in foreclosures? Ten years ago it was the number one topic as the state reeled from the after effects of the real estate bubble bursting. Almost everyone believed in "shadow inventory", a concept introduced by analysts who did not do their research accurately and because it sounded so ominous, lapped up by the media. The so called shadow inventory was a hoax, though not a deliberate one. It shows how easy it can be to jump to wrong conclusions if you base research on bad data or incorrect assumptions about how foreclosures work.

We still have no shadow inventory but foreclosures are happening. In Maricopa County during August 2019 there were 450 Notices of Trustee Sale (NOTS) and 110 Trustee Deeds (TD) recorded. These are low numbers, particularly for a month like August which contained the maximum number of working days (23). Trustees do not work on weekends, so the number of working days is what counts, not the number of calendar days. These numbers are for all property types, including commercial and vacant land.

110 trustee deeds can be compared with the highest monthly total of 5,449, recorded in March 2010.

450 NOTS can be compared with the highest monthly total of 10,712, recorded in March 2009.

So we see that foreclosures still take place but they are now a tiny part of the market, representing less than 1% of the transactions that occur in Maricopa County.

August 29 - The table below shows the Cromford Market Index for the single-family markets in the 17 largest cities;

 

Another week with all 17 cities showing improvement from a seller's perspective compared with a month ago.

The average change in CMI was +11.8%, down from +12.3%, so we see the slightest hint that the market is no longer accelerating. It is however still moving very fast in favor of sellers (and consequently higher pricing).

So many areas stand out - Avondale, Tempe, Scottsdale, Maricopa, Buckeye, Gilbert - all improved by 15% or more.

The slowest movers in the last week were Glendale and Cave Creek. A couple of months back Tempe was the slowest mover but it has now got with the program and is heating up quickly.

August 28 - Phoenix appears in the headlines regarding the S&P / Case-Shiller® Home Price Index® this month.

The latest numbers are based on sales that closed during the 3 months April to June 2019, so they are a bit dated by the time they are published. The month to month changes for the 20 focus cities are as follows:

  1. Detroit +1.24%
  2. Minneapolis +1.13%
  3. Boston +1.07%
  4. Phoenix +0.88%
  5. Cleveland +0.83%
  6. Chicago +0.74%
  7. San Diego +0.68%
  8. Portland +0.66%
  9. Charlotte +0.61%
  10. Seattle +0.56%
  11. Atlanta +0.52%
  12. Las Vegas +0.50%
  13. Washington +0.48%
  14. Dallas +0.44%
  15. Denver +0.42%
  16. San Francisco +0.22%
  17. Tampa +0.20%
  18. Los Angeles +0.16%
  19. Miami +0.09%
  20. New York -0.33%

Phoenix ranks 4th in this list, up from 11th last month. The national average change was +0.58%

The year over year numbers are as follows:

  1. Phoenix +5.8%
  2. Las Vegas +5.5%
  3. Tampa +4.7%
  4. Charlotte +4.5%
  5. Atlanta +4.5%
  6. Detroit +4.2%
  7. Boston +3.9%
  8. Minneapolis +3.9%
  9. Cleveland +3.4%
  10. Denver +3.4%
  11. Washington +2.9%
  12. Miami +2.8%
  13. Dallas +2.7%
  14. Portland +2.4%
  15. Los Angeles +1.6%
  16. Chicago +1.5%
  17. San Diego +1.3%
  18. New York +1.1%
  19. San Francisco +0.7%
  20. Seattle -1.3%

The national average was +3.1%.

Now we see why Phoenix hit the headlines. It took over the number one spot from Las Vegas in the year over year table.

August 26 - Year-to-date single-family permits hit 14,321 for Maricopa and Pinal counties as of the end of July. This is up from 2018, but only just. The annual growth of 3% is hardly going to have much impact on the dire shortage of homes for sale. Now if by some magic we could get to 21,777, the figure for 1998, then we could expect some relief for sellers. However home builders face huge obstacles in getting back to the heyday of 1998-2006 even though demand is certainly there.

If you have added a subscription to Cromford® Public, then you can see 10 charts on permit counts here.

August 24 - There were 5,152 closed listings across Greater Phoenix (all dwelling types) during the first 3 weeks of August. This is up from 4,705 in the same period last year, a rise of almost 10%.

It is not the highest number of closings we have ever seen for this period. That was in 2005 when we counted 5,557. However it is the second highest total we have ever recorded. Demand remains unusually strong in Phoenix this summer.

August 23 - Measuring the number of new listings for the first 3 weeks of August gives us a total of 5,935 across Greater Phoenix (all types). The equivalent measurement in 2018 was 6,356, so we are down almost 7%.

This is not the lowest number of new listings we have seen for the period - there were only 5,623 in 2014 - but it is the second lowest since we started measurements in 2001.

August 22 - It is time to publish the weekly table showing the Cromford® Market Index for the single-family markets in the 17 largest cities:

Sellers can celebrate:

  • all 17 cities became more favorable for sellers over the past month
  • we have almost half the 17 cities over 200
  • no city is under 150
  • the smallest percentage improvement was 3% (Cave Creek) - still pretty good
  • 11 cities improved by 12% or more

There is almost no good news for buyers that I can find, except perhaps that the average change in CMI was +12.3%, down very slightly from +12.6% last week. Even 12.3% is an enormous number by normal standards.

I must stress again that this tremendous imbalance between supply and demand is very likely to result in faster increases in sales prices in due course. However we must expect a time delay with the effect likely to be noticeable during the fourth quarter and becoming more significant during the first half of 2020. Once prices have increased sufficiently then we can expect a cooling of demand will follow and the market will start to move towards balance again. No market can stay unbalanced indefinitely.

August 19 - Although the shortage of active listings is pretty widespread, it does not affect everywhere. Probably the most obvious example of a location with a strong supply of homes for sale is Casa Grande. Here is the chart:

 

Here we see far more homes available than last year and a flat trend for active counts since last December. With a population of around 56,000, Casa Grande is far smaller than Avondale with about 86,000 inhabitants. Yet Casa Grande has 279 single-family homes available for purchase on ARMLS, whereas poor Avondale only has 71.

August 17 - The active listings chart for Scottsdale looks quite different from Phoenix:

 

The general shape in 2019 is very similar to 2018. However it has stayed lower than last year at all stages, with the gap reaching its largest amount in the last 3 weeks. The chart for Fountain Hills has the same basic shape.

Paradise Valley is similar, except that 2019 and 2018 have been running neck and neck until 2 weeks ago.

Cave Creek is fairly similar to Scottsdale, although levels have been significantly below last year at all times and the gap is starting to narrow.

August 16 - I cannot stress enough how unusual the active listing counts look this year, collapsing after hitting a peak at the beginning of March. In February it looked like we would have far more supply than last year but the situation has changed dramatically since then. I would like to take a look at the single-family charts for various cities to illustrate what I mean. These charts all exclude UCB and CCBS listings from the counts.

Here is Phoenix:

 

 

We note how listing counts were rising last year from April through top November. The opposite trend is taking place in 2019.

Many cities show similar patterns to the Phoenix chart, including Mesa, Peoria and Glendale. However other cities have their own messages and we will look at those in subsequent posts.

August 15 - The Cromford® Market Index table for this week shows a full house:

All 17 cities swung in favor of sellers over the last month. We have no city below 150 and 7 above 200. This is extraordinary.

3 cities improved by more than 20% and another 9 improved by more than 10%.

Buyers may be liking the interest rates, but the lack of available inventory is a nightmare for them. No doubt many will turn to the new home market which has seen surprisingly stable pricing under these circumstances.

The average change in CMI was +12.6%, up slightly from 12.5% last week.

At some point this trend in favor of sellers has to change direction, but there is scant evidence of that at the moment

August 12 - There were 1,527 closed listings during the first week of August, measured for all types across Greater Phoenix. This is a strong reading once again, up from 1,435 last year. We have to go back to the bubble year of 2005 to find a higher number (1,597).

With new listings at a low ebb and closings at a high, this is the most unbalanced market we have seen in favor of sellers since 2005. However pricing has yet to respond, perfectly illustrating the time delay inherent in price movements in reaction to big changes in supply and demand. In 2Q 2005 it took 15 months between the CMI falling from its peak and pricing following suit (in 3Q 2006).

August 11 - The first 7 days of August saw 2,002 new listings activated across Greater Phoenix. This is down from 2,163 last year and the second lowest total for the first week of August since we started collecting data in 2001. The only year with fewer new listings was 2014. The highest total for this week was in 2006 when we saw a staggering 3,654 new listings, a clear sign of the problems looming over the market prior to the crash..

August 9 - The Cromford® Market Index for the single-family markets in the 17 largest cities is shown below:

 

The market is still heating up with the average monthly change in CMI at 12.5%, up from 12.1% last week.

Only Cave Creek cooled, and then only by a very small amount (0.5). The remaining 16 cities improved for sellers. 12 improved by 10% or more.

We have 7 cities over 200 and only one below 150.

The market favors sellers to greatest degree since August 2005.

August 8 - Based on affidavits of value filed during July we have collected the following counts of iBuyer activity:

  Opendoor OfferPad Zillow All iBuyers Combined
Homes Purchased in July 2019 364 86 78 529
Homes Purchased in July 2018 295 98 31 424
Annual Change in purchases +24% -12% +152% +25%
Homes Sold in June 2019 350 71 114 535
Homes Sold in June 2018 245 104 6 355
Annual Change in Sales +43% -32% +1800% +51%
Median Purchase Price in July 2019 $234,950 $244,024 $275,700 $242,350
Median Purchase Price in July 2018 $238,900 $229,412 $320,000 $240,250
Median Sale Price in July 2019 $250,000 $249,900 $298,875 $255,000
Median Sale Price in July 2018 $255,000 $241,500 $259.450 $252,500
Homes in Inventory at the End of July 1,004 445 351 1,800

iBuyers purchased almost as many homes as they sold in July leaving inventory close to the same level as last month.

We can see significant growth in iBuyer activity compared to this time last year, a 25% increase in purchases and a 51% rise in sales. In recent months, Opendoor has consolidated its position as the dominant player while OfferPad and Zillow have experienced little change in volumes since the beginning of 2019.

August 6 - Multi-family permits had been in a declining trend between October and March, but came back with a bang during the second quarter. We now see 5,653 permits at the half-way mark of 2019, the highest total since 2007 and up from 4,481 last year.

The second quarter of 2019 was by far the strongest quarter for multi-family permits since we started recording them in 2002.

Those subscribers with access to Cromford® Public can see the details here.

August 5 - At the half-way mark, 2019 has produced 12,028 single-family permits across Maricopa and Pinal counties, according to the US Census Bureau. This is slightly ahead of 2018 when they reported 11,753. In fact it exceeds all years since 2007, but is nowhere near the quantities seen between 1996 and 2007. It is no wonder we are experiencing a shortage of housing supply. There was no sign of acceleration during the second quarter with 6,438 permits, down from 6,604 last year.

It seems likely that permit counts will start growing again during the second half of 2019 given the surge in demand. With resale homes in very short supply, more buyers are turning their attention to new homes. At least you don't have a bidding war to contend with when you buy new, though unless you are prepared to take a spec, you may have a relatively long wait for completion.

August 4 - There is now doubt that the market is a lot hotter than it was this time last year. If we use the Contract Ratio to compare the various price ranges we get the following numbers for the single-family market within Greater Phoenix:

Price Range Contract Ratio Aug 1, 2019 Contract Ratio Aug 1, 2018 Change
Under $100K 44.8 66.7 -33%
$100K - $125K 114.3 65.7 +74%
$125K - $150K 134.7 173.6 -22%
$150K - $175K 128.4 237.9 -46%
$175K - $200K 147.9 133.7 +11%
$200K - $225K 182.5 110.8 +65%
$225K - $250K 171.1 95.0 +80%
$250K - $275K 145.6 83.9 +74%
$275K - $300K 129.6 73.6 +76%
$300K - $350K 98.5 65.7 +50%
$350K - $400K 80.9 58.3 +39%
$400K - $500K 70.5 50.4 +40%
$500K - $600K 53.1 43.3 +23%
$600K - $800K 43.9 41.2 +7%
$800K - $1M 37.6 27.4 +37%
$1M - $1.5M 24.7 26.0 -5%
$1.5M - $2M 15.3 15.0 +2%
$2M - $3M 13.8 16.4 -16%
Over $3M 9.5 7.0 +36%

The market between $200K and $500K is the most dramatically affected with fewer active listings and more listing under contract. This price range accounts for 65% of the market by dollar volume and 78% by unit counts.

The luxury market is more patchy, but the ranges between $600K and $1M and over $3M are significantly improved for sellers compared with last year.

August 1 - The Cromford® Market Index values for the single-family markets in the 17 largest cities by dollar volume are as follows

 

This is an astonishing situation. CMI values were already very high last month but they have increased by an average of 12.1% since July 1. Only Cave Creek showed slight cooling and Glendale increased by just 2%. The other 15 cities jumped by 8% or more.

We have 7 cities over 200 and the 6 cities at the bottom of the table all increased their CMI by at least 10%. We note that the least expensive cities (Maricopa, Buckeye, Queen Creek, Avondale, Surprise) rose by very large percentages reflecting the strength of the market under $300,000. However the 3 most expensive cities (Paradise Valley, Scottsdale, Fountain Hills) posted gains of 13% to 15% too.

Given that July is usually a month where the market is coasting, this is a remarkable shift in favor of sellers.

The issue underlying these changes is lack of supply. Demand has not changed very much over the last month, but supply has crashed. The reason is not hard to find. There are simply too few listings coming onto the market. July 2019 gave us the lowest count of new listings across Greater Phoenix that we have ever recorded for any July since we began keeping records in 2001. Because this followed a June with very weak new listing counts, we are seeing a failure to replace the homes that have been sold. Agents are hunting for new listings, iBuyers are trying hard to attract sellers and investors are campaigning intensely for everyone to sell them their homes. Despite these effort, home owners are unmoved. Given the massive increase in the housing stock since 2001 it is amazing that we have fewer new listings in 2019 than in 2001.

Pricing has not yet responded to this imbalance in the market, but upward pressure is building. Pricing is a lagging indicator while the CMI is a leading indicator. The table above suggests that appreciation rates will increase over the next 12 months unless we see a massive increase in new supply..

July 31 - The S&P / Case-Shiller® Home Price Index® numbers were published yesterday. These cover sales for the months of March through May 2019.

The month to month changes looked like this:

  1. Minneapolis +1.71%
  2. Cleveland +1.40%
  3. Detroit +1.16%
  4. Portland +1.03%
  5. San Diego +0.99%
  6. Charlotte +0.99%
  7. Seattle +0.98%
  8. Los Angeles +0.84%
  9. Chicago +0.81%
  10. Atlanta + 0.74%
  11. Phoenix +0.74%
  12. Washington +0.69%
  13. Las Vegas +0.62%
  14. Denver +0.56%
  15. Dallas +0.51%
  16. Boston +0.51%
  17. San Francisco +0.27%
  18. Miami +0.18%
  19. Tampa +0.12%
  20. New York +0.05%

The national average was a strong +0.84% and Phoenix was slightly below that in the middle of the table. The national media appears to be very late in figuring out that the housing market is seeing a recovery and because the HPI is published very late compared with the period it is measuring, it may be some time before they catch up.

The year over year numbers are as follows:

  1. Las Vegas +6.4%
  2. Phoenix +5.7%
  3. Tampa +5.1%
  4. Atlanta +4.7%
  5. Charlotte +4.5%
  6. Detroit +4.0%
  7. Cleveland +3.6%
  8. Minneapolis +3.6%
  9. Boston +3.6%
  10. Denver +3.6%
  11. Miami +3.3%
  12. Washington +2.9%
  13. Dallas +2.6%
  14. Portland +2.4%
  15. Los Angeles +1.9%
  16. New York +1.9%
  17. Chicago +1.6%
  18. San Diego +1.3%
  19. San Francisco +1.0%
  20. Seattle -1.2%

The national average was +3.4%. Phoenix was second only to Las Vegas and far out-performed the national average.

July 15 - Mike is on vacation (cruising the Mediterranean) for the next 2 weeks so observations will become much scarcer until his return on July 30. Normal service will be resumed on July 31.

July 11 - The Cromford® Market Index table below covers the single-family markets in the 17 largest cities.

 

We now have 2 cities showing a move in favor of buyers over the last month and 15 moving in favor of sellers. You might be forgiven for thinking that this makes the table less favorable for sellers than last week. You would be wrong however, as the average change in CMI is 9.4%, up from 9.0% last week.

We have a large number of cities moving a great deal in favor of sellers - Queen Creek, Fountain Hills, Paradise Valley, Goodyear, Avondale, Chandler, Surprise and Peoria are all in double figures. We have 5 cities over 200 and no cities under 130.

This is now an exceptionally strong market with no sign at all of the weakness we were seeing between September and February.

July 10 - Based on affidavits of value filed during June we have collected the following counts of iBuyer activity:

  Opendoor OfferPad Zillow All iBuyers Combined
Homes Purchased in June 2019 309 84 112 505
Homes Purchased in June 2018 297 115 16 411
Annual Change in purchases +4% -27% +600% +18%
Homes Sold in June 2019 280 96 111 487
Homes Sold in June 2018 256 106 0 362
Annual Change in Sales +9% -9% N/A +35%
Median Purchase Price in June 2019 $244,800 $219,174 $305,000 $248,000
Median Purchase Price in June 2018 $240,300 $223,000 $335,000 $235,000
Median Sale Price in June 2019 $250,000 $241,500 $309,900 $259,000
Median Sale Price in June 2018 $245,250 $231,000 N/A $242,000
Homes in Inventory at the End of June 990 420 387 1,797

iBuyers purchased slightly more homes than they sold in May.

We can still see significant growth in iBuyer activity compared to this time last year. However growth since the beginning of 2019 has been very limited. Given that the re-sale market has been very strong in May and June, the iBuyers have lost some market share over the last 2 months. They represented 4.8% of May purchases, lower than the 4.9% they achieved in August 2018 and a lot lower than the peak of 6.9% that they achieved in December 2019. They achieved a 4.9% share of sales in May, equal to their September 2018 share and down from the peak of 6.3% which was hit in March 2019. We cannot give you the percentage of June sales because we do not yet have figures for the total market sales. However we estimate 3% share for Opendoor, around 1% for Zillow and a little below 1% for OfferPad, making just below 5% in all.

Breaking consistently through the 5% market share appears to be proving a little difficult, though whether this is entirely due to the decreasing supply of homes below $300,000 or other factors we cannot say. Certainly the chosen market price range for Opendoor and OfferPad is shrinking fast. Since Zillow tends to target slightly higher price ranges that is slightly less of a constraint for them. Homes below $225,000 are becoming scarce and this scarcity is rapidly spreading up towards $300,000.

iBuyers have a larger share of inventory - 1,797 represents a very significant number, given that we only have 9369 active listings below $500,000 on ARMLS (excluding UCB and CCBS). The iBuyer inventory does include homes that are under contract but have not yet closed. So if we include the listings under contract on ARMLS below $500,000 we get a total of 19,299.

iBuyers thus appear to hold roughly 9% of inventory under $500,000 excluding new homes and the (tiny) distressed market. Their share of inventory below $300,000 is higher still.

July 8 - We saw only 1,831 new listings added during the first week of July across all areas & types. This is down 8% from last year and continues the weak supply trend that started in June. This is unusual and is causing more problems for buyers. The gap between supply and demand is getting wider.

July 6 - For the last 8 weeks, the monthly sales rate has recorded new all-time records for the time of year. The closest rivals were the years 2005 and 2011. 

The current situation is remarkable given that, in mid February, 2019 was running lower than 8 of the earlier years (2005, 2010-2013, 2016-2018).

July 5 - The Cromford® Market Index table below shows the state of play in the single-family markets of the 17 largest cities within Greater Phoenix:

We still have 16 out 17 cities showing conditions becoming more favorable for sellers. The lone exception is Tempe which has slipped down the table to 14th.

Quite remarkably, the average change in CMI over the past month is 9.0%, up from 8.6% last week. Many cities are well over this 9% average, including Goodyear, Fountain Hills, Queen Creek, Paradise Valley, Chandler & Avondale.

We now have 4 cities over 200 and 7 cities over 190.

This is the greatest imbalance in favor of sellers that we have seen in almost 6 years.

July 4 - Active listing counts are still plummeting and they have been low for so long that it can be difficult to place them in proper context. We thought it would be instructive to compare current levels with peak levels and long term averages.

The figures below are for active single-family detached listings excluding UCB and CCBS listings:

City Active on July 3, 2019 Peak Level Long Term Average Level % Average
Avondale 108 1,116 379 28.5%
Buckeye 372 1,279 512 72.7%
Cave Creek 197 516 273 72.2%
Chandler 455 2,481 1,049 43.4%
Fountain Hills 157 531 264 59.5%
Gilbert 538 2,766 1,192 45.1%
Glendale 439 2,567 976 45.0%
Goodyear 383 1,300 581 65.9%
Maricopa 323 1,092 445 72.6%
Mesa 699 3,657 1,699 41.1%
Paradise Valley 272 579 336 81.0%
Peoria 568 2,073 939 60.5%
Phoenix 2,462 11,416 4,765 51.7%
Queen Creek 598 2,354 1,015 58.9%
Scottsdale 1,506 4,362 2,410 62.5%
Surprise 438 2,273 966 45.3%
Tempe 171 580 311 55.0%

We can see why Avondale so frequently tops the CMI table with an extremely low supply compared with its long term average.

Mesa, Chandler, Glendale, Gilbert and Surprise are all below 50% of their long term average,

July 2 - In June, the average monthly rent per sq. ft. was $1.01 for listings closed through ARMLS. This the first time we have recorded a figure over $1.

In June 2006 the average monthly rent was only 71 cents per sq. ft., so rents have increased by 42% since then. In comparison the average purchase price per sq. ft. has moved from $188.53 to $172.02 since June 2006, a fall of 9%.

So average rent has increased 42% while purchase prices have fallen 9% since June 2006 on a cost per sq. ft. basis.

No wonder most investors are feeling pleased with themselves. Tenants are not doing so well. Buying in 2006 or 2007 was obviously a bad idea, but since 2009 purchasing a home in Greater Phoenix has generally proven to be an excellent investment compared with renting.

July 1 - The housing market in Greater Phoenix is not content with just recovering from the slight air pocket in demand that occurred in 4Q 2018 and 1Q 2019. It is now setting up to be the hottest it has been since 2005, As an example we have just 1.9 months of supply across all areas & types as of July 1, 2019. This is the lowest number at the start of any month since October 2005.

1.9 months is a very low reading (4.5 months is normal) and what makes it even more surprising is that this supply includes listings in UCB or CCBS status, since they are theoretically open to new offers. If we exclude those UCB and CCBS listings, then the months of supply number drops to 1.6.

:

June 30 - For an analyst, the housing market is more interesting now than it has been for at least 5 years. This is because it is doing things it does not usually do. For example, the average list price per sq. ft. for active listings usually declines quite a lot during the summer every year, staring around week 18. In 2019 the average is still increasing as late as week 26.

This is the chart that shows the effect, which is very striking:

To play with and study this chart in more depth please click here.

June 28 - This is the time of year when demand starts to fade and inventory begins to grow. However 2019 does not seem to have read the script and is playing it all wrong. Demand is staying quite high for the time being while inventory is dropping. This gives us the following table of Cromford Market Index scores for the 17 largest cities and their single-family markets:

The average change in CMI is 8.6%, similar to last week. These days the primary reason for the CMI rising is lower inventory levels. The flow of new listings has been unusually weak during June. Demand is little changed from last month but certainly stronger than last year at this time.

Only Tempe is holding out from the party with its 8% decline. Goodyear is having its best month for a very long time while Queen Creek is also accelerating. Paradise Valley, Chandler and Fountain Hills also improved much more than we would normally expect.

June 27 - Across all areas & types, closed listings on ARMLS are currently achieving 98% of final list price. This is the highest we have seen for many years and confirms the strength of sellers' negotiation powers caused by the imbalance between very low supply and stronger than normal demand.

Here are the numbers for June 27 in prior years:

  • 2001 - 97.51%
  • 2002 - 97.26%
  • 2003 - 97.59%
  • 2004 - 98.10%
  • 2005 - 99.44%
  • 2006 - 97.21%
  • 2007 - 96.13%
  • 2008 - 95.28%
  • 2009 - 96.04%
  • 2010 - 96.07%
  • 2011 - 96.06%
  • 2012 - 97.67%
  • 2013 - 97.53%
  • 2014 - 96.93%
  • 2015 - 97.22%
  • 2016 - 97.48%
  • 2017 - 97.61%
  • 2018 - 97.89%
  • 2019 - 98.00%

June 26 - Despite the Greater Phoenix housing market making new record highs for sales volume and pricing, the national media greeted the S&P/Case-Shiller® Home Price Index® release for April 2019 with a surprisingly negative interpretation. I wonder how they would react if prices actually went down. Not much chance of that happening here any time soon, but here are the city rankings:

Month over month change:

  1. Boston +1.86%
  2. Detroit +1.62%
  3. San Francisco +1.59%
  4. Chicago +1.20%
  5. Portland +1.12%
  6. Seattle +1.06%
  7. Charlotte +1.01%
  8. Minneapolis +1.01%
  9. Los Angeles +0.99%
  10. Atlanta +0.98%
  11. Washington +0.90%
  12. Denver +0.80%
  13. Phoenix +0.78%
  14. Tampa +0.70%
  15. Cleveland +0.69%
  16. Dallas +0.63%
  17. Las Vegas +0.58%
  18. San Diego +0.50%
  19. Miami +0.14%
  20. New York 0.00%

These are big increases month to month and the US average was 0.93%. However the media described it as flat lining, preferring to focus on the Case-Shiller seasonally-adjusted numbers (which I consider close to meaningless). The non-seasonally adjusted numbers look strong and Phoenix could only manage 13th place and slightly below the national average.

Year over year change:

  1. Las Vegas +7.1%
  2. Phoenix +6.0%
  3. Tampa +5.6%
  4. Atlanta +4.9%
  5. Charlotte +4.2%
  6. Miami +3.9%
  7. Boston +3.9%
  8. Denver +3.8%
  9. Detroit +3.5%
  10. Cleveland +3.5%
  11. Minneapolis +3.0%
  12. Dallas +2.7%
  13. Washington +2.6%
  14. Portland +2.6%
  15. New York +2.1%
  16. Chicago +1.9%
  17. San Francisco +1.8%
  18. Los Angeles +1.5%
  19. San Diego +0.8%
  20. Seattle +0.0%

Phoenix is second only to Las Vegas in the year over year table and easily beat the national average of 3.5%.

I would also point out that most buyers from China have picked up their toys and headed for home over the past 2 years. This has certainly slowed the markets in New York, Los Angeles, Seattle and San Francisco. It has had hardly any discernible impact on Phoenix (or Las Vegas) because we did not have many Chinese buyers in the first place.

It really is strange how the press picks up a pretty robust set of numbers and turns them into bad news. Yes they are not showing double digit appreciation, but have we not learned that double digit appreciation is unhealthy over the long term?

June 25 - The number of new listings arriving in June is low compared to last year. A 3% drop may not sound like much but it can quickly make homes relatively scare in certain areas. One area that has been affected is Mesa:

With over 1,000 listings available and not under contract in January, Mesa is now approaching the 700 mark, lower than at any point in 2018. In fact it is lower than at any time since 2013.

For a city as large as Mesa (the 36th largest city in the USA by population), 700 active listings is nowhere near sufficient to keep buyers satisfied. 1,500 would be considered a normal number and we have not seen that many since 2014.

June 21 - Not only is demand continuing to strengthen compared with seasonal norms, supply is dropping faster than usual for the time of year. We can see this well in the volatile months of supply charts. Here is an example for single family homes in the city of Phoenix:

Note how we were far higher than 2018 and 2017 in February at 4.1 months, but between March and June supply has dropped sharply and is now lower than 2 months and well below 2018 and 2017. We are at the lowest point since June 2013, but remember that the 2013 market shocked us by deteriorating rapidly in the second half reaching 4.3 months by December. Below 1.9 months in Phoenix is low enough to be considered seriously imbalanced and buyers are facing tough times unless more supply comes along quickly.

June 20 - The market continues to improve for sellers at an astonishing rate, Here is the Cromford® Market Index table for the 17 largest cities:

Now we have only 1 city - Tempe - that is not improving for sellers, and it is still firmly in a seller's market at 147.7.

Maricopa has joined the program (up 1%) and the more expensive locations like Paradise Valley (up 16%), Scottsdale (up 11%) and Fountain Hills (up 12%) are rivaling the rest of the valley for the rate of improvement. This week the stars include Goodyear (up 17%), Avondale (up another 13%) and Surprise (up 12%).

The average CMI increase was 8.5%, up marginally from last week. In normal times an improvement of 7 or 8% would be considered excellent for sellers but at the moment it only gets your city less than half way up the table.

Market sentiment has shifted in a remarkable way since the first quarter.

June 18 - In most respects the market today is stronger than it was 12 months ago. Those measurements that indicate this include:

  • The Cromford® Market Index is 161.5 - up from 160.0
  • The Contract Ratio is 77.6 - up from 71.7
  • Average sales price as a percentage of list is 98.02% - up from 97.82%
  • Active listings excluding UCB & CCBS number 16,003 - down from 16,213
  • Sales per month is 9,626 - up from 9,534
  • Days on market for active listings is 95 - down from 97
  • Market Distress Index is 1.4 - down from 2.0
  • This weeks sales as percentage of long term average is 120.8% - up from 107.3%

There are still a few indicators that have not overtaken last year, but these tend to be the long term non-volatile measurements.

  • Days Inventory 82 versus 79
  • Listing Success Rate - 83.2% versus 83.6%
  • Days on Market for Monthly Sales - 65 versus 61

Prices are higher by 5 to 7% and dollar volume is at record levels.

The recovery is complete, so where do we go from here? We shall have to watch closely to find out.

June 16 - After 2 complete weeks have elapsed we can take a fair reading of how June is doing. It is good news for sellers once again. Closed listings are very strong as can be seen here. Up from 3,540 last year to 4,019 across Greater Phoenix, which is an increase of 13.5%. This is also a long-term record high for the first 2 weeks of June in terms of both unit sales and dollar volume through ARMLS.

Additional good news for sellers appears when we examine the new listing counts here. At the time of writing, we have seen only 4,229 so far in June, down from 4,750 last year. These numbers will change over the coming days as delayed listings are activated, but the difference between June 2018 and June 2019 is substantial.

The slow arrival of new listings and large number of closings will cause the Cromford Market Index to keep climbing over the next few weeks. It is normal for the number of listings under contract to decline during June so things should be a little quieter in July and August.

June 15 - The number of active listings on the market has been falling since mid-February. It has also been falling at a much faster rate than it did in 2018. The decline is not primarily due to a shortage of new listings. As of June 11 we had seen 0.45% more new listings than at the same point last year. The primary reason is the higher rate at which they have been going under contract, with the result that fewer homes are left for other people to buy.

  • Change in active listings without a contract, Feb 16 to Jun 15, 2019 = down 19.5%
  • .Change in active listings without a contract, Feb 16 to Jun 15, 2018 = down 9.5%

This drop in available supply has combined with the increased sales rate to drive the Cromford® Market Index up from 126.1 to 159.9 between Feb 16 and Jun 15. In 2018 it moved from 158.1 to 159.8 over the same period.

We note that the CMI is now slightly higher than last year but with a much steeper trajectory.

June 13 - You start to wonder how long this can continue, but the trend in favor of sellers keeps accelerating:

The average increase in CMI over the past month is 8.3%, eclipsing the 7.4% we saw last week. Tempe and Maricopa are still not cooperating, but the other 15 cities are really going for it.

Avondale is not only top of the table but its CMI rose the most (16%) as its inventory keeps demisang.

Surprise, Paradise Valley, Scottsdale, Gilbert, Phoenix, Goodyear and Fountain Hills all rose by more than 10%. Mesa, Buckeye, Chandler and Glendale are not far behind.

Inventory is falling faster now as new listings are arriving at a slower pace. The spring selling season is lasting longer than it did last year. We usually do not see so much demand once temperatures exceed 110 degrees. It seems buyers want to grab those low interest rates while they still can, even though there is a chance they might fall further.

The market is clearly stronger now than it was at this point last year.

June 12 - Based on affidavits of value filed during May we have collected the following counts of iBuyer activity:

  Opendoor OfferPad Zillow All iBuyers Combined
Homes Purchased in May 2019 340 100 101 541
Homes Purchased in May 2018 283 125 3 411
Annual Change in purchases +20% -20% +3267% +32%
Homes Sold in May 2019 322 111 119 552
Homes Sold in May 2018 260 89 0 349
Annual Change in Sales +24% +25% N/A +58%
Median Purchase Price in May 2019 $242,650 $233,356 $290,000 $245,251
Median Purchase Price in May 2018 $212,000 $228,600 $312,000 $231,000
Median Sale Price in May 2019 $249,000 $239,900 $300,000 $255,000
Median Sale Price in May 2018 $242,500 $240,000 N/A $240,000
Homes in Inventory at the End of May 961 432 386 1,779

iBuyers sold slightly more homes than they purchased in May.

Overall growth looks strong relative to 12 months ago, but there has been little change over the past several months Zillow appears to have reached a steady level at just over 100 purchases a month. OfferPad has stayed at roughly that same level for the last 2 years. Opendoor has been at the 250-300 level for most of the last 15 months, although May's total of 340 sets a new record for them. iBuyer purchase activity has been steady over the past 3 months while overall market activity has increased.

Market share of iBuyer purchases is approximately 5% for May, having peaked at almost 7% last December. Sales activity is also around 5% having peaked at just over 6% in March.

That 5% is split 3% to Opendoor, 1% to OfferPad and 1% to Zillow at the moment.

June 8 - June has a major drawback this year for those looking to see high sales counts. It starts and ends with a weekend, when title companies do not close escrows. Despite this disadvantage, the month has got off to a flying start during the first 7 days with 1,932 closed listings on ARMLS across Greater Phoenix. The same period last year gave us only 1,732 closings. So we are up almost 12% so far. This is enough to compensate for the 10% drop in working days compared to June 2018. Will the rest of June be this strong? Watch this space.

Not only does 1,932 closings represent a very large increase from last year, it is a record number for the first week of June.

June 6 - Although June is very likely to deliver lower volume numbers than May, the balance between buyers and sellers is swinging hard in favor of sellers.

Here to illustrate that is the table showing the Cromford® Market Index numbers for the single-family markets in the 17 largest cities:

15 of the 17 cities are swinging in favor of sellers and 7 of them by more than 10%. The average change is +7.4%, up from 5.9% last week.

Only 2 cities are refusing to join the party - Tempe & Maricopa. Both of them are seller's markets but they have cooled over the past month.

We note that Scottsdale and Buckeye are now improving strongly for sellers while Avondale, Mesa, Gilbert, Surprise & Phoenix are continuing the strong upward trends that have been in place for some time.

There is no little doubt that 2019 will overtake 2018 for its overall CMI rating very shortly.

June 5 - Dollar volume during May was the highest we have ever seen for ARMLS closings in a single month. The following ZIP codes saw huge increases in single-family dollar volume compared with May 2018:

  1. Glendale 85305 - up 196% ($5M)
  2. Glendale 85307 - up 182% ($5M)
  3. Goodyear 85395 - up 117% ($20M)
  4. Phoenix 85031 - up 95% ($3M)
  5. Phoenix 85019 - up 92% ($3M)
  6. Coolidge 85128 - up 88% ($2M)
  7. Scottsdale 85259 - up 87% ($29M)
  8. Phoenix 85053 - up 77% ($7M)
  9. Phoenix 85040 - up 69% ($5M)
  10. Youngtown 85363 - up 69% ($1M)
  11. Mesa 85215 - up 68% ($7M)
  12. New River 85087 - up 67% ($5M)
  13. Scottsdale 85266 - up 63% ($22M)
  14. Sun City 85351 - up 63% ($7M)
  15. Phoenix 85054 - up 61% ($2M)
  16. Mesa 85204 - up 54% ($7M)
  17. Sun City 85373 - up 56% ($5M)
  18. Mesa 85202 - up 55% ($4M)
  19. Glendale 85302 - up 55% ($5M)
  20. Apache Junction 85119 - up 49% ($3M)

June 4 - We know that the ARMLS numbers in May produced all-time record highs for monthly unit sales and dollar volume. Now let us look at the numbers from Maricopa County's recorded deeds. These include a lot of transactions that took place outside of ARMLS, such as the majority of new home closings, FSBOs and investor purchases.

For single-family homes and condos / townhouses, we saw a total of 12,041 affidavits of value. This is up 3% from May 2018 and it is the highest monthly count since June 2006. Unlike the ARMLS numbers it is not an all-time record. The bubble years of 2005 and 2006 saw a very large number of transactions conducted outside the MLS. New homes exceeded 4,000 a month several times during the bubble years, whereas in May 2019 we see less than half that number at 1,535. This is actually 1% lower than May 2018, so we can conclude re-sales are driving the recovery in demand a little harder than new homes.

The median new home sold at $364,990, which is much higher than the peak median during the bubble - $311,928. The re-sale median stands at $275,000, up less dramatically from the bubble peak of $253,418.

June 1 - The weaker demand that started in 3Q 2018 and ran through 1Q 2019 has caused a slightly slower rate of annual appreciation in recent months. However appreciation rates remain well above inflation and significantly above percentage rises in earnings. They also remain broadly similar to where they stood 12 months ago. Many locations have seen higher rates than a year ago (including Queen Creek, Buckeye, Mesa, Tempe, Paradise Valley, Phoenix, Gilbert and Goodyear).

The lower interest rates we are now seeing have spurred demand that is now higher than 2018 and it is possible that we will see the appreciation trend reverse and turn higher again in the not too distant future.

Here are the appreciation rates for the single-family markets in the 17 largest cities measured using the annual average sales price per sq. ft. for closed listings.

  1. Queen Creek 10.7% (8.9%)
  2. Maricopa 9.0% (9.5%)
  3. Buckeye 8.8% (8.1%)
  4. Mesa 8.2% (7.1%)
  5. Tempe 7.8% (5.8%)
  6. Avondale 7.5% (8.6%)
  7. Glendale 7.4% (7.6%)
  8. Paradise Valley 7.2% (3.6%)
  9. Phoenix 7.1% (6.8%)
  10. Gilbert 6.9% (6.7%)
  11. Goodyear 6.6% (5.4%)
  12. Chandler 6.5% (6.7%)
  13. Surprise 6.3% (8.2%)
  14. Peoria 5.7% (6.7%)
  15. Scottsdale 5.0% (6.7%)
  16. Cave Creek 4.3% (5.8%)
  17. Fountain Hills 3.3% (6.7%)

The numbers in parentheses are the appreciation rates 12 months ago. The most affordable areas are looking strong while the Northeast Valley dominates the bottom of the table.

If you would like to study this further the appropriate chart is here.

May 31 - The Cromford® Market Index for the single-family markets in the 12 secondary cities that were not included in yesterday's table are as follows:

  1. El Mirage 257.8 (276.6)
  2. Apache Junction 217.2 (179.7)
  3. Arizona City 186.8 (210.2)
  4. Tolleson 188.5 (176.8)
  5. Anthem 194.7 (173.1)
  6. Laveen 192.9 (173.6)
  7. Sun City West 156.3 (130.0)
  8. Sun City 127.5 (97.2)
  9. Gold Canyon 146.9 (122.8)
  10. Sun Lakes 121.9 (87.6)
  11. Litchfield Park 102.1 (101.4)
  12. Casa Grande 101.3 (100.2)

The top city El Mirage has a higher CMI than Avondale, but it is trending downward. The only other location showing a downward trend is Arizona City.

Although they are moving slightly higher, Casa Grande and Litchfield Park are still very much in the balanced zone and not seller's markets like all the rest.

May 30 - Our regular weekly check on the Cromford Market Index for the single-family segment in the 17 largest cities is show below:

This shows the market accelerating in favor of sellers with the average CMI up by 5.9% from a month ago.

We have more cities showing double digit percentage improvement (Avondale, Surprise, Mesa, Phoenix, Scottsdale, Buckeye, Gilbert) with the same 4 cities bringing up the rear as last week (Maricopa, Goodyear, Paradise Valley & Tempe).

Demand has been improving as interest rates have fallen while supply is on a downward trend.

June 2019 should be an excellent month for sellers, even better than May 2019.

May 29 - The Census Bureau has managed to catch up after the disruption of the government shutdown and in the Cromford® Public section we have updated the building permits charts to the end of April 2019.

The year-to-date single-family count for Maricopa & Pinal counties is 7,769, up 6% from April 2018.

The top ten cities are:

  1. Phoenix 1,375
  2. Buckeye 717
  3. Mesa 690
  4. Unincorporated Pinal County 685
  5. Goodyear 602
  6. Maricopa 580
  7. Surprise 449
  8. Peoria 443
  9. Gilbert 439
  10. Queen Creek 408

Notable by their absence from the top 10 are the large cities of Scottsdale (181), Chandler (131), Glendale (96) and Avondale (29). They join Tempe (23) as having low single-family new home growth rates.

May 28 - The latest report on the Case-Shiller® Home Price Index® covers sales that closed during the first quarter of 2019.

The month to month changes look like this:

  1. San Francisco +2.13%
  2. Seattle +1.64%
  3. Boston +1.55%
  4. San Diego +1.16%
  5. Minneapolis +1.05%
  6. Denver +1.01%
  7. Washington +0.93%
  8. Cleveland +0.92%
  9. Charlotte +0.77%
  10. Portland +0.70%
  11. Atlanta +0.67%
  12. Miami +0.59%
  13. Chicago +0.59%
  14. Los Angeles +0.49%
  15. Tampa +0.47%
  16. Phoenix +0.43%
  17. Detroit +0.39%
  18. Dallas +0.27%
  19. Las Vegas +0.08%
  20. New York -0.10%

These percentages are dramatically higher than we saw last month and Phoenix has dropped from 11th to 16th place. The national average was +0.65%, so Phoenix fell below that.

The year to year changes were as follows:

  1. Las Vegas +8.24%
  2. Phoenix +6.06%
  3. Tampa +5.28%
  4. Atlanta +4.66%
  5. Miami +4.26%
  6. Denver +4.26%
  7. Charlotte +3.99%
  8. Boston +3.77%
  9. Minneapolis +3.75%
  10. Cleveland +3.47%
  11. Detroit +3.32%
  12. Dallas +2.97%
  13. Washington +2.83%
  14. Portland +2.59%
  15. New York +2.30%
  16. Chicago +1.81%
  17. Seattle +1.64%
  18. San Francisco +1.35%
  19. Los Angeles +1.33%
  20. San Diego +1.29%

Unlike the month-to-month numbers, Phoenix stands out as a top mover in the year to year increases. It is also well above the national average of +3.72%.

May 26 - We are still seeing pessimistic commentary about the housing market in many national press reports. It is extremely hard to reconcile that commentary with the facts on the ground in Greater Phoenix. I suppose things must be a lot worse outside Arizona. In the ARMLS database we are recording the highest ever spending on housing.

Below is the monthly dollar volume of closed sales for all areas & types, measured every Saturday. The most recent number for May 25, 2019 is $3.636 billion. This is the highest number we have ever recorded, surpassing the prior record set in June 2018.

May 25 - In a dramatic change from 2 months ago, the number of active single-family listings without a contract in Phoenix is now lower than it was last year:

 

May 24 - We noted yesterday that Maricopa, Goodyear and Paradise Valley are the laggards in the CMI stakes among the largest 17 cities. Among the secondary cities we have a few more examples of cities that are not doing as well as last year:

  • Casa Grande - the weakest market of all with its CMI dipping below 100. Supply is above normal are marginally exceeds demand
  • Litchfield Park - a balanced market with an increasing supply and demand below normal
  • Sun Lakes - weak for several months but starting to improve now

Meanwhile Anthem, Apache Junction, Gold Canyon, Laveen and Sun City West are leading the secondary cities for their balance shifting in favor of sellers.

May 23 - Below is our table showing the Cromford® Market Index for the single-family markets in the 17 largest cities by dollar volume:

The market has staged a remarkable recovery over the last few months, and more remarkably still, has started accelerating again over the past 2 weeks. The average monthly CMI change has increased from 3.9% to 4.4%.

Driving the charge are Mesa, Surprise, Avondale, Phoenix and Buckeye. Scottsdale and Gilbert are now close behind.

Failing to get with the program are Tempe, Paradise Valley, Goodyear and Maricopa. However Paradise Valley has lifted itself out of the balanced zone below 110 and is now officially a seller's market again.

The Greater Phoenix area is benefitting from strong inward population migration, according to the census. Private sector income is reported to show good growth in April and interest rates remain much lower than anyone expected back in 4Q 2018. Although we are nearing the end of the peak buying season, the market seems to have plenty of life left in it and conditions for sellers continue to improve in most sectors.

May 21 - The Cromford® Market Index has been on a strong upward trajectory since late February, rising from 125.7 on Feb 20 to 148.2 3 months later. Two of the most important components of the overall market are Phoenix and Mesa, number one and two cities by unit volume.

Both cities look impressive over the past 2 months and are now in striking distance of last year's line.

Both cities are also doing much better than 2017, which seemed like a very good year at the time.

Not all cities are doing as well as this but if Phoenix and Mesa are in good shape then it is hard for the Central Valley as a whole to do poorly.

May 19 - Although new listings are arriving at roughly the same rate as last year, active listing counts are declining more quickly than they were at this time in 2018. This is because they are going under contract faster.

The number of active listings without a contract peaked in 2019 on February 16 at 19,693. As of May 18, it has declined 10.6% to 17,597, These numbers are for all areas & types within the ARMLS database.

Comparing with last year, we saw a peak of 17,815 on February 10, 2018 and by May 18, it had declined to 16,499. This is a drop of 7.4%.

We can see that we still have 7% more active listings than last year, but the gap is closing because demand is now stronger than it was a year ago.

May 16 - The latest table of CMI values for the single-family markets in the 17 largest cities is shown below:

Like last week we have 13 cities improving for sellers and 4 cities deteriorating.

3 of the cities deteriorating were the same as last week - Paradise Valley, Goodyear and Maricopa. However Tempe has joined them while Avondale has found a second wind.

Another positive sign is that the average change has risen to 3.8% (3.2%) last week, so the whole of this market is accelerating again, albeit only a little.

Stand-out cities include Mesa (up 13%), Surprise (up 12%) and Phoenix (up 10%).

Only Paradise Valley is outside the seller's market zone (110 plus) and not by very much. Since supply in Paradise valley is now falling, it may not stay in the balanced zone very long.

May 15 - According to Maricopa County affidavit data, there were 11,146 homes sold in April 2019. This total includes single-family homes as well as townhomes and condos. It was up 4.1% from April 2018 when we counted 10,712.

New homes showed the highest percentage growth, up 7.4% from 1,309 to 1,406. Re-sale transactions were up less than half as much at 3.6%. Nevertheless, both are showing positive growth which contrasts with the declining trends we saw over the previous six months.

The situation was reversed when we look at median sales prices. Re-sales increased 5.9% to reach $268,000 while new homes increased only 3.7% to reach $349,560. Developers have been throwing more efforts at the entry level market and this has caused new home sizes to trend lower, which has in turn caused prices to trend higher at a slower rate..

May 10 - Looking deeper into the affidavit counts we can see that the recovery in unit sales has not been uniform across market sectors.

When we look at broad geographic areas we find that

  1. Central & Northern unit sales were up 6.0% from April 2018
  2. West Valley unit sales were up 5.8% from April 2018
  3. Southeast Valley unit sales were up 3.4% from April 2018
  4. Northeast Valley unit sales were down 2.6% from April 2018
  5. Pinal County unit sales were down 12% from April 2018

Phoenix and the West Valley have come back strongest with the Southeast Valley slightly behind and the Northeast Valley a long way behind. Pinal County is struggling with a very strong 2018 to compare against.

For the broad price ranges we see:

  1. Unit sales over $1 million increased 16%
  2. Unit sales between $250K and $500K increased 14.5%
  3. Unit sales between $500K and $1M increased 12.5%
  4. Unit sales below $250K fell 8.4%

The unit count below $250K is hampered by the lack of supply in that price range, rather than a shortage of demand. We note the strong performance of the luxury sector over $1 million.

May 9 - The regular weekly table of Cromford® Market Index numbers looks like this:

Another good result for sellers with 13 cities showing improvement from their perspective. Only 4 of the 17 cities showed movement in favor of buyers.

The average movement in CMI value was +3.2%, little changed from last week's +3.3%.

The top cities showing improved conditions for sellers were Mesa, Surprise, Phoenix and Cave Creek.

Paradise Valley and Goodyear were the strongest movers in favor of buyers.

Paradise Valley has slipped into the balanced zone as demand has faltered after a very strong period in March. All the other 16 cities are seller's markets.

May 8 - The hottest ZIP codes on May 1 were the following, based on their single-family contract ratio:

  1. Phoenix 85040 - 253
  2. Phoenix 85017 - 250
  3. Youngtown 85363 - 250
  4. Surprise 85378 - 231
  5. Mesa 85210 - 212
  6. Mesa 85204 - 203
  7. Phoenix 85019 - 195
  8. Gilbert 85234 - 178
  9. Glendale 85307 - 175
  10. Mesa 85208 - 174
  11. Phoenix 85031 - 170
  12. Tempe 85282 - 165
  13. Mesa 85201 - 160
  14. Mesa 85203 - 156
  15. Apache Junction 85120 - 154
  16. Gilbert 85295 - 153
  17. Peoria 85345 - 148
  18. Phoenix 85033 - 146
  19. Phoenix 85009 - 144
  20. Phoenix 85037 - 143

Anything over 100 can be regarded as a hot contract ratio and the top 52 ZIP codes were over 100 on May 1, 2019.

The contract ratio measures how much of the supply is already tied up in escrow, so a high number means there are few active listings relative to the number of UCB, CCBS and pending listings.

If you have a buyer who wants plenty of choice then they generally have to look upmarket where contract ratio are always relatively low. A few areas remote from the valley center will also show low contract ratios. On May 1, the lowest contract ratios were here:

  1. Congress 85332 - 6
  2. Carefree 85377 - 14
  3. Aguila 85320 - 17
  4. Paradise Valley 85253 - 19
  5. Wickenburg 85390 - 21
  6. Scottsdale 85262 - 26
  7. Wittmann 85361 - 26
  8. Scottsdale 85255 - 30
  9. Tonopah 85354 - 30
  10. Fountain Hills - 31

May 7 - Based on affidavits of value filed during April we have collected the following counts of iBuyer activity:

  Opendoor OfferPad Zillow All iBuyers Combined
Homes Purchased in April 2019 265 125 103 493
Homes Purchased in April 2018 274 82 0 356
Annual Change in purchases -3% +52% N/A +38%
Homes Sold in April 2019 351 102 101 554
Homes Sold in April 2018 254 88 0 342
Annual Change in Sales +38% +16% N/A +62%
Median Purchase Price in April 2019 $234,700 $240,462 $295,000 $243,900
Median Purchase Price in April 2018 $245,700 $228,600 N/A $241,950
Median Sale Price in April 2019 $245,000 $225,500 $291,000 $243,900
Median Sale Price in April 2018 $242,500 $240,000 N/A $242,000
Homes in Inventory at the End of April 943 443 404 1,789

iBuyers sold a lot more homes than they purchased in April, something which we saw to a lesser extent in March, but have not seen prior to March.

In March their sales represented 6.3% of the available market (which excludes new homes, REOs, HUD homes and trustee sales), by far their best month to date, and up from 3.4% last year. In other words they grew from 1 out of every 25 homes to 1 out of every 16. We don't have percentage numbers for April yet as we have not counted all the non iBuyer transactions.

On the buying side, Opendoor bought slightly fewer homes than April last year, OfferPad jumped 52% while Zillow bought fewer homes than the month before. Zillow was not in operation in April 2018.

March purchases represented 4.8% of the available market, the lowest share since July 2018, but up from 3.3% in March 2018. It appears that Opendoor and Zillow have been concentrating on selling what they already had while OfferPad has been focused on growing purchases as well as sales.

May 5 - April 2019 was a resounding success for closed listings considering the history of the prior 6 months when sales were comparatively weak year over year. Let us look at how the individual cities fared comparing the single-family closings for the various cities. Here they are ranked by the percentage change (rounded to the nearest whole number) in sales for April 2019 over April 2018.

  1. Coolidge +113%
  2. Arizona City +73%
  3. Rio Verde +60%
  4. Laveen +52%
  5. Carefree +50%
  6. Youngtown +42%
  7. Anthem +29%
  8. Cave Creek +29%
  9. Eloy +27%
  10. Waddell +24%
  11. Gold Canyon +21%
  12. Wittmann +20%
  13. Peoria +16%
  14. Apache Junction +15%
  15. Surprise +15%
  16. Glendale +14%
  17. Goodyear +12%
  18. Mesa +9%
  19. El Mirage +9%
  20. Tolleson +9%
  21. Casa Grande +7%
  22. Florence +6%
  23. Maricopa +6%
  24. Gilbert +6%
  25. Phoenix +6%
  26. Tempe +5%
  27. Queen Creek +3%
  28. Sun Lakes +2%
  29. Buckeye +1%
  30. Scottsdale - no change
  31. Paradise Valley - no change
  32. Litchfield Park -1%
  33. Sun City -1%
  34. Sun City West -1%
  35. Avondale -2%
  36. Fountain Hills -3%
  37. Chandler -13%
  38. New River -33%
  39. Wickenburg -40%

Particularly strong in this list are several cities in Pinal County (Coolidge, Arizona City, Apache Junction, Gold Canyon and Eloy) and the Northwest Valley (Glendale, Peoria, Surprise, Waddell, Wittmann and Youngtown). These are all relatively affordable cities. We saw less impressive numbers from the exclusively 55+ areas Sun City, Sun City West and Sun Lakes, With the notable exception of Rio Verde, Carefree & Cave Creek, the Northeast Valley fared worse than average.

In the Southeast Valley, Mesa was the standout with Chandler doing surprisingly poorly.

May 2 - Another week goes by and it is time to look at the Cromford® Market Index values for the single-family markets in the 17 largest cities:

This shows another positive set of changes for sellers and deterioration from a buyer's perspective. We have only 4 cities moving down and 13 moving up.

The biggest improvement was in Mesa with Cave Creek, Phoenix, Surprise, Queen Creek, Peoria and Tempe all doing well too.

The only serious decline was in Paradise Valley which was doing well back in March but is in full retreat now.

All 17 of the largest cities are inside the seller's zone (over 110) and the average change over the last month was 3.3%. This is down from 4.1% last week.

May 1 - We have major news today after a massive number of homes closed escrow on Tuesday.

In April 2019 the ARMLS database saw more closed listings (9,647) than April 2018 (9,185). This is a significant sign that the recovery in demand is growing in strength and the first time we have seen year over year sales growth since August 2018.

As a result, the annual sales rate rose between March and April 2019. Another significant signal of market health.

Before we get over-excited, remember that April this year had one more working day than April last year. This is a 4.8% advantage . The number of closed listings was up by 5.0%. The difference is closings per day was only 1 listing per day, almost negligible. Nevertheless it was still a win, even when you make the adjustment.

Nobody would have predicted this strong a recovery back in January.

April 30 - The S&P / Case-Shiller® Home Price Index® report was released this morning for sales between December 2018 and February 2019.

The month to month movement for the 20 focus cities that are reported were:

  1. San Diego +0.94%
  2. Denver +0.91%
  3. Tampa +0.66%
  4. San Francisco +0.64%
  5. Seattle +0.57%
  6. Washington +0.29%
  7. Las Vegas +0.27%
  8. Atlanta +0.24%
  9. Dallas +0.17%
  10. Detroit +0.15%
  11. Phoenix +0.14%
  12. New York +0.13%
  13. Miami +0.10%
  14. Portland +0.07%
  15. Chicago +0.04%
  16. Los Angeles +0.02%
  17. Charlotte -0.13%
  18. Cleveland -0.31%
  19. Minneapolis -0.35%
  20. Boston -0.38%

Here Phoenix is in the middle of the pack and slightly below the national average of +0.21%

For a year-over-year view we get:

  1. Las Vegas +9.7%
  2. Phoenix +6.7%
  3. Tampa +5.4%
  4. Atlanta +4.7%
  5. Denver +4.7%
  6. Minneapolis +4.4%
  7. Miami +4.3%
  8. Charlotte +4.2%
  9. Detroit +4.0%
  10. Dallas +3.4%
  11. Boston +3.2%
  12. Portland +3.0%
  13. Washington +3.0%
  14. Seattle +2.8%
  15. Cleveland +2.8%
  16. New York +2.6%
  17. Chicago +2.2%
  18. Los Angeles +1.8%
  19. San Francisco +1.4%
  20. San Diego +1.1%

Here Phoenix is second only to Las Vegas and well above the national average of 4.0%.

April 28 - Another sign of the market's resurgence can be found in the weekly dollar volume chart, shown below:

Here we see 2019 edging above 2018 over the last 3 weeks even though, back in January and February, 2019 was struggling to stay ahead of 2017, never mind 2018.

Slightly fewer homes are closing than last year, but they are selling for somewhat higher prices, so the dollar volume is just a tad higher this year. the number of agents in the ARMLS roster is also just a tad higher, so agent productivity is very similar to last year. Even so, that is a big improvement on how things looked back at the start of 2019.

You can see from the chart above that 2019 has seen a strong acceleration in dollars spent starting in late February.

April 25 - The regular weekly table of Cromford® Market Index numbers looks like this:

In many ways this looks more favorable to sellers than last week. We have only 3 cities deteriorating (as opposed to 5 last week).

However the average improvement is 4.0%. lower than last week's 4.6%.

The market is still warming up, but the rate of warming is slowing a little. Nevertheless, supply is falling and demand is increasing. Sellers like both of those trends.

Mesa shows the strongest improvement over the past month, with Tempe, Phoenix, Peoria and Surprise coming next.

We also note that Buckeye spent just a few days in the balanced zone under 110 and has edged upward again. We therefore have all 17 cities in a seller's market,


April 24 - Gone are the days when Canadians were a crucial segment of home buyers in Central Arizona. Back in the heyday of 2009 through 2011, they represented as much as 5% of all buyers.

In the past 12 months only 645 homes were purchased by people with Canadian home addresses. This is down 85% from the peak of February 2012. Not only that, Canadians are selling up and leaving. They sold more than twice as many homes (1440) as they purchased in the last 12 months. During March 2019 they sold 173 and purchased just 63.

The last time we saw a positive movement from Canadians was in March 2015 when the previous 12 months saw 1,506 purchases and 1,442 sales. Since March 2015 a net 5,284 Canadian home owners have sold up and left the valley.

Home buyers from other overseas countries are negligible in number. We never had the large number of Chinese buyers that were to be seen in California, Washington or New York.

The conclusion is that almost all out-of-state purchasing of Arizona homes is now driven by people from the other 49 states that make up the USA. California is by far the dominant state in that collection and it has been so every month since we first started compiling data.

In the last 12 months we have seen 5,852 home buyers with California addresses, up from 5,226 a year ago. If you want to know which state has the best return on marketing dollars for Arizona real estate - the answer is obvious. We may worry about the declining affordability of homes in Greater Phoenix, but to the typical Californian, our home prices are crazy low even now.

April 23 - Early April saw a stronger flow of new listings than last year, but that has eased off now with Easter weekend falling later than usual. Price cuts have also declined from the high levels of March while the total number of active listings without a contract is trending lower.

Demand is still strengthening at the moment so with supply trending lower and prices trending higher I cannot think of anything that buyers should be annoyed about. Some national observers have commented that Phoenix is the healthiest market in the country and while I am not in a position to confirm that (because I do not have data for the rest of the country), I can confirm that the vital signs in Phoenix are looking very healthy.

April 19 - For the single-family market, the following locations have more listings under contract than in 2018:

  • Anthem
  • Apache Junction
  • Casa Grande
  • Cave Creek
  • Coolidge
  • Eloy
  • Glendale
  • Gold Canyon
  • Goodyear
  • Laveen
  • Mesa
  • Peoria
  • Queen Creek
  • Scottsdale
  • Sun City
  • Sun City West
  • Sun Lakes
  • Surprise
  • Tolleson
  • Waddell

We note that Pinal County, 55+ locations and the West Valley dominate this list. However Scottsdale appears too, having just overtaken 2018 this week.

April 18 - The regular weekly table of Cromford® Market Index numbers looks like this

 

The market is still improving for sellers with an average 4.6% rise across the 17 cities. However it was 5.4% Tlast week and we now have 5 cities showing deterioration rather than 3.

My conclusion is that the market improvement is slowing a little. Many of the very largest cities (Phoenix, Mesa, Glendale) are showing strong advances over the last month. All of the declining cities show relatively small downward movement. So the market is still improving in favor of sellers, just not quite as quickly as 2 weeks ago.

One additional change is that we now have only 16 of the 17 cities in the seller's market zone. Buckeye has dropped below 110 and is now considered a balanced market.

April 17 - The growth in listings under contract has been quite remarkable over the past few weeks.

We can see that we started the year a long way behind 2018 but last Saturday we had caught up.

As of today we can see 13,215 listings under contract - and on April 17, 2018 there were 13,070.

That is probably worth repeating - we now have MORE listings under contract than we did at this time last year.

April 16 - In contrast to single-family permits, multi-family building permits are slumping across central Arizona. The last 3 months reported (December through February) have seen only 665 multi-family permits across Maricopa and Pinal counties. This is in marked contrast to December 2017 through February 2018, when there were 2,853. Other counties like Pima and Yavapai are seeing growth in multi-family permits, but multi-family developers appear to have lost a lot of momentum in Maricopa and Pinal counties.

This should free up construction resources (especially skilled labor) and allow them to be applied to single-family construction.

April 15 - The Census Bureau is starting to catch up with the backlog of work caused by the government shutdown in December and January. We now have building permit data published for February and have updated the 10 permit charts in the Cromford Public section of the web site.

February 2019 sees the rolling 12 month average for single-family permits in Maricopa and Pinal counties rise to 23,739. This is up 14% from 20,858 in February 2018 and is the highest we have seen since January 2008, just over 11 years ago. For the month of February 2019 the bureau counted 1,830 single-family permits which is up 15% from the 1,593 they counted in February 2018.

Year to date at the end of February we have seen 3,503 single-family permits across Maricopa and Pinal. This is up 9% from last year. It seems the slight hesitancy from developers that we saw in January has completely disappeared. Very little evidence can be seen of any significant slow down in home building, at least in the single-family sector.

Year to date the top areas for single-family building permits have been:

  1. Phoenix 620
  2. Buckeye 355
  3. Unincorporated Pinal County 341 (mainly San Tan Valley)
  4. Mesa 289
  5. Maricopa 255
  6. Gilbert 221
  7. Peoria 208
  8. Goodyear 207
  9. Queen Creek 190
  10. Surprise 174
  11. Casa Grande 142
  12. Unincorporated Maricopa County 117
  13. Scottsdale 104
  14. Glendale 44
  15. Chandler 42

Buckeye, San Tan Valley and Maricopa are all looking busy and Casa Grande is seriously growing, ahead of major cities like Scottsdale, Chandler and Glendale.

April 11 - The regular weekly table of Cromford® Market Index numbers looks like this:

As last week, the only cities seeing deteriorating conditions for sellers over the last month were Buckeye, Fountain Hills and Scottsdale. Pretty mild downward changes for them, though.

Strong improvements were seen for Cave Creek, Glendale, Tempe, Mesa, Maricopa and Phoenix. The latter represents 25% of the market so is pretty important.

The average change over the last 31 days was 5.4%. Last week it was 6.2%. At some point the improvement in the market must start to decelerate and I would say this point was possibly sometime in the last 7 days. If I am correct, we will still see improvement over the coming weeks but the rate of improvement will probably be slowing gradually. We have witnessed a very favorable change in interest rates over the past 4 months and that effect will gradually dissipate unless rates continue to fall even further. Meanwhile prices continue to rise which will re-introduce affordability concerns during the second half of the year.

April 10 - March was rather a good month for the luxury single-family home market. Sales were up 10% from 92 to 101 for homes over $2 million, though there was a fall of 7% from 322 to 299 for homes between $1 million and $2 million. Compared to March 2018, the monthly average price per sq. ft. rose 8% for homes over $500,000, while average time on market dropped 3%. Days of inventory for single-family homes over $500,000 fell from 232 to 212 because the annual sales rate rose 14% while the active listing count climbed only 4%.

I would say the luxury market overall is in a better shape today than it has been since 2015 though there are still a handful of weaker locations..

April 9 - Today we have published the Agent Production table for 2019 year to date. You can find it here.

When we published the 2018 numbers, quite a few agents wrote to question why our numbers were different from their own calculations. In every case their own calculations were different because they had included transactions that are NOT included in our table. These included:

  1. Listings for geographies outside Greater Phoenix
  2. Sales which were never listed on ARMLS (e.g. new homes or pocket listings).
  3. Listings in which the agent was a co-seller or co-lister (not counted by us - all credit goes to the listing or selling agent only)
  4. Listings for vacant land or commercial properties (e.g. multi-family).

April 8 - Today would be a good time to take a look at what the iBuyers did during March. We don't have verified data as yet but we do have affidavit counts which should not be too far away from the correct numbers of purchases and sales.

  Opendoor OfferPad Zillow All iBuyers Combined
Homes Purchased in March 2019 247 92 105 444
Homes Purchased in March 2018 265 78 0 343
Annual Change in purchases -7% +18% N/A +29%
Homes Sold in March 2019 347 83 109 539
Homes Sold in March 2018 285 131 0 357
Annual Change in Sales +22% -37% N/A +30%
Median Purchase Price in March 2019 $238,300 $219,254 $295,000 $248,000
Median Purchase Price in March 2018 $242,900 $213,050 N/A $237,300
Median Sale Price in March 2019 $250,000 $237,561 $295,000 $248,000
Median Sale Price in March 2018 $250,000 $236,000 N/A $237,250
Homes in Inventory at the End of March 1,029 420 402 1,851

Although iBuyer purchases are up 29% overall from March 2018, almost all this growth is accounted for by the new entrant Zillow. There has been a slight decline in purchase volumes for the original 2 players.

On the sales side, growth has taken off compared to February, growing 30%, but OfferPad's March sales were far below their total in March last year.

We made the following observation last month but it still applies: The median prices for both purchases and sales have increased for iBuyers as a whole, because Zillow is operating over a broader price range than the original 2 players. While Opendoor and OfferPad still concentrate most of their attentions on the low end of the market, Zillow frequently buys homes in the mid range. As a result they often take a bit longer to sell them.

April 6 - The preliminary recording counts for Maricopa County show that in March 2019, closings were down 13% compared with March 2018. However, at 9,846 they were 2% higher than March 2016. New home sales were down 15% year over year while re-sales were down 12%. This relative weakness in new home closings has reversed the situation from the previous 3 months.

The overall median sales price was $275,711, up 4% from a year ago, with new homes at $350,169, up 5%, and re-sales at $265,000, up 5%.

These numbers do not reflect much of the recent recovery in demand because closings are the final step in the process. It is increases in the number of listings under contract that is the main reason the Cromford® Demand Index has been rising.

April 4 - The regular weekly table of Cromford® Market Index numbers looks like this:

 

In one way this is not as good as last week since Fountain Hills has gone slightly negative, like Scottsdale and Buckeye who are still refusing to join the party.

However the average change in CMI over the month is now +6.2% which is up from +5.9% last week.

The strongest mover upwards is Cave Creek, with Glendale, Mesa, Avondale, Tempe, Maricopa, Phoenix and Goodyear all showing significant improvement for sellers.

All these cities are still in the seller's market zone (over 110).

April 3 - We show below the months of supply chart for all areas & types with the last 4 years selected.

 

We can see that 2019 has more supply than 2018 relative to demand (as measured by the monthly sales rate). However it is now lower than both 2016 and 2017 and has dropped from its peak on February 1 at a faster rate than the other 3 years.

This is due to a fairly subdued rate of incoming new listings and a rapid increase in demand due to more attractive interest rates.

This chart shows why sellers should be pretty happy with the current situation. Meanwhile buyers can be pleased that they have more choice than last year, at least between $200K and $600K, and can lock in lower rates for the time being. There is something for everyone to be happy about in this chart.

April 1 - We are taking a look at the active listing count by price range:

Price Range Active (excl. UCB/CCBS) April 1, 2019 Active (excl. UCB.CCBS) April 1, 2018 Change
Up to $150K 115 189 -39%
$150K - $175K 158 184 -14%
$175K - $200K 532 547 -3%
$200K - $225K 720 642 +12%
$225K - $250K 1,145 934 +23%
$250K - $275K 980 713 +37%
$275K - $300K 1,033 844 +22%
$300K - $350K 1,619 1,297 +25%
$350K - $400K 1,384 1,154 +20%
$400K - $500K 1,848 1,542 +20%
$500K - $600K 1,188 976 +22%
$600K - $800K 1,179 1,208 -2%
$800K - $1M 760 712 +7%
$1M - $1.5M 689 746 -8%
$1.5M - $2M 436 470 -7%
$2M - $3M 384 398 -4%
Over $3M 362 341 +6%

As we have for several years, we see a significant decline in available listings at the low end below $175K. However, the mid-range between $200K and $600K has seen a strong increase in supply compared with this time last year. This trend peters out above $600K and we have less supply than last year between $600K and $3M, although there is a slight bump between $800K and $1M. Above $3M we see even more homes for sale than last year, already a very large number compared with the annual sales rate.

Those with budgets of less than $200K have an even poorer selection of homes to chose from, and it was already pretty meager last year. Those looking to spend $200K to $600K have a much larger pool of homes to consider. Luxury home buyers over $600K will find a more limited range than last year unless they are planning to spend more then $3M in which case the world is their oyster, in more ways than one.

March 28 - Another week goes by and it is time to look at the Cromford® Market Index values for the single-family markets in the 17 largest cities:

This is one of the most positive tables we have seen for quite some time.

Only 2 cities (Scottsdale and Buckeye) have deteriorated for sellers over the past month and they have only moved down 4% and 1% respectively.

15 cities improved for sellers and the average change for all 17 was a very healthy +5.9%.

Cave Creek has improved dramatically, while Avondale and Glendale surged by 13%.

Most of the improvement comes from increased demand, no doubt fueled by lower interest rates and increased loan limits. However supply has started to decline too.

The question now is whether this improvement in market dynamics (from a seller's perspective) will continue over the next month or two.

March 26 - The S&P / Case-Shiller® Home Price Index® data has been release for the sales period November 2018 to January 2019.

Here is how the 20 focus cities fared on a month to month basis:

  1. Tampa +0.30%
  2. Miami +0.26%
  3. Charlotte +0.25%
  4. Denver +0.22%
  5. Dallas +0.13%
  6. New York +0.02%
  7. Washington -0.11%
  8. Phoenix - 0.12%
  9. Detroit -0.15%
  10. Portland -0.19%
  11. San Diego -0.22%
  12. Atlanta -0.26%
  13. Seattle -0.27%
  14. Los Angeles -0.28%
  15. Las Vegas -0.33%
  16. Minneapolis -0.36%
  17. Boston -0.40%
  18. Chicago -0.51%
  19. Cleveland -0.62%
  20. San Francisco -1.30%

14 of the cities, including Phoenix, saw a decline in the HPI between Oct-Dec and Nov-Jan. This is primarily a seasonal effect in many locations. The previous upward trend in pricing used to be enough to overwhelm the seasonal effect, but with less upward pressure, the seasonal effect become more obvious. The average month-to-month change for the USA as a whole was -0.18%.

Here is the change in HPI on a year to year basis:

  1. Las Vegas +10.5%
  2. Phoenix +7.5%
  3. Minneapolis +5.1%
  4. Tampa +5.1%
  5. Charlotte +5.1%
  6. Denver +5.0%
  7. Detroit +5.0%
  8. Atlanta +4.9%
  9. Miami +4.8%
  10. Boston +4.6%
  11. Seattle +4.1%
  12. Dallas +3.8%
  13. Cleveland +3.8%
  14. Portland +3.3%
  15. Washington +3.1%
  16. New York +3.0%
  17. Los Angeles +2.9%
  18. Chicago +2.4%
  19. San Francisco +1.8%
  20. San Diego +1.3%

We note that all 20 cities saw positive price movement year over year and the average for the USA as a whole was 4.3%

This is one of the most positive tables we have seen for quite some time.

Only 2 cities (Scottsdale and Buckeye) have deteriorated for sellers over the past month and they have only moved down 4% and 1% respectively.

15 cities improved for sellers and the average change for all 17 was a very healthy +5.9%.

Cave Creek has improved dramatically, while Avondale and Glendale surged by 13%.

Most of the improvement comes from increased demand, no doubt fueled by lower interest rates and increased loan limits. However supply has started to decline too.

The question now is whether this improvement in market dynamics (from a seller's perspective) will continue over the next month or two.

March 26 - The S&P / Case-Shiller® Home Price Index® data has been release for the sales period November 2018 to January 2019.

Here is how the 20 focus cities fared on a month to month basis:

  1. Tampa +0.30%
  2. Miami +0.26%
  3. Charlotte +0.25%
  4. Denver +0.22%
  5. Dallas +0.13%
  6. New York +0.02%
  7. Washington -0.11%
  8. Phoenix - 0.12%
  9. Detroit -0.15%
  10. Portland -0.19%
  11. San Diego -0.22%
  12. Atlanta -0.26%
  13. Seattle -0.27%
  14. Los Angeles -0.28%
  15. Las Vegas -0.33%
  16. Minneapolis -0.36%
  17. Boston -0.40%
  18. Chicago -0.51%
  19. Cleveland -0.62%
  20. San Francisco -1.30%

14 of the cities, including Phoenix, saw a decline in the HPI between Oct-Dec and Nov-Jan. This is primarily a seasonal effect in many locations. The previous upward trend in pricing used to be enough to overwhelm the seasonal effect, but with less upward pressure, the seasonal effect become more obvious. The average month-to-month change for the USA as a whole was -0.18%.

Here is the change in HPI on a year to year basis:

  1. Las Vegas +10.5%
  2. Phoenix +7.5%
  3. Minneapolis +5.1%
  4. Tampa +5.1%
  5. Charlotte +5.1%
  6. Denver +5.0%
  7. Detroit +5.0%
  8. Atlanta +4.9%
  9. Miami +4.8%
  10. Boston +4.6%
  11. Seattle +4.1%
  12. Dallas +3.8%
  13. Cleveland +3.8%
  14. Portland +3.3%
  15. Washington +3.1%
  16. New York +3.0%
  17. Los Angeles +2.9%
  18. Chicago +2.4%
  19. San Francisco +1.8%
  20. San Diego +1.3%

We note that all 20 cities saw positive price movement year over year and the average for the USA as a whole was 4.3%

March 25 - In another sign that new homes are becoming more popular relative to re-sales, there were 1,673 single-family building permits issued in January 2019, according to the Census Bureau, still running very late after the disruption of the government shutdown. This is the highest total for January since 2007. It follows an extremely strong December number.

March 24 - Year to date new home closings across Greater Phoenix stand at 2,621. This is slightly ahead of the 2018 number which was 2,617. Someone should clearly explain to the home builders that they are supposed to be in a housing slump. Instead they are closing more home sales in 2019 than in any year since 2006.

Single-family homes are outselling 2018 by a wider margin. Condos and townhouse closings are well down on both 2017 and 2018.

The lower end of the luxury market is doing particularly well. New homes between $500,000 and $1 million are up from 315 in 2018 YTD to 420 in 2019 YTD.

March 21 - The Cromford® Market Index table for the single-family markets in the 17 largest cities looks like this:

This shows much greater strength than a month ago with an average increase in the CMI of 5.5%, comparing favorably with the 3.8% increase we saw last week.

Only 5 cities saw a decline and 4 of those were of 1% or less. Only Scottsdale saw a noticeable decrease (-4%).

Cave Creek, Avondale, Glendale and Paradise Valley all advanced more than 10% with Mesa, Tempe, Goodyear and Queen Creek improving by at least 6%.

There is still no city among the 17 in a balanced market (below 110). The top 7 are strong seller's markets.

March 20 - While we cannot claim to know much about the US housing market outside Arizona, it is clear that Greater Phoenix has a far more buoyant housing market than implied in the prevailing news reports. We turn our attention today to pricing. The important prices are what homes actually sell for, not what they are listed at. There are thousands of price changes every week, some up as well as many down, but we don't really know what a home is worth until someone stumps up the money, usually with the help of a lender who has insisted on a professional appraisal. Sale prices are reality whereas asking prices sometimes have a dreamlike quality, especially at the upper end of the market.

Sales prices in March 2019 are looking very strong. Here are the current readings for average price per sq. ft. (our preferred measuring tool):

Sector March $/SF Now March $/SF Last Year Change Remarks
Greater Phoenix - all types $174.24 $161.40 +8.0%  
Greater Phoenix - single-family $174.63 $161.03 +8.4%  
Greater Phoenix - condo / townhouse / patio home etc. $182.35 $174.33 +4.6%  
Greater Phoenix - mobile / manufactured $96.02 $95.44 +0.6% small sample size - volatile measure
Greater Phoenix - under $250,000 $135.88 $126.43 +7.5%  
Greater Phoenix - $250,000 to $500,000 $158.36 $154.24 +2.7%  
Greater Phoenix - $500,000 to $1 million $212.26 $206.51 +2.8%  
Greater Phoenix - over $1 million $391.40 $338.54 +15.6% small sample size - highly volatile measure
  12 Month $/SF Now 12 Month $/SF Last Year Change  
Greater Phoenix - all types $164.37 $153.33 +7.2%  
Greater Phoenix - single-family $164.06 $153.01 +7.2%  
Greater Phoenix - condo / townhouse / patio home etc. $176.60 $164.52 +7.3%  
Greater Phoenix - mobile / manufactured $98.19 $92.15 +6.6%  
Greater Phoenix - under $250,000 $131.24 $121.67 +7.9%  
Greater Phoenix - $250,000 to $500,000 $155.64 $149.56 +4.1%  
Greater Phoenix - $500,000 to $1 million $204.82 $201.29 +1.7%  
Greater Phoenix - over $1 million $340.28 $333.11 +2.2%  

Can you spot the weakness in today's market prices?

No, neither can I.

March 19 - Here is another observation comparing 2019 with previous years. The contract ratio is a reliable measure of how hot a market is, but it is subject to seasonal effects. If we compare March 19 for each of the last 14 years we eliminate any seasonal issues and should be able to make a very fair comparison.

For the whole of the ARMLS database, the contract ratio was as follows:

  • 2019 - 62.1
  • 2018 - 73.2
  • 2017 - 62.7
  • 2016 - 55.9
  • 2015 - 53.7
  • 2014 - 41.1
  • 2013 - 92.9
  • 2012 - 134.7
  • 2011 - 63.2
  • 2010 - 59.2
  • 2009 - 25.8
  • 2008 - 12.2
  • 2007 - 16.4
  • 2006 - 26.9

We can conclude that 2019 is far stronger than the market between 2006 and 2009 and also hotter than 2014 through 2016. Admittedly it is cooler than 2018, but it is very similar to 2017 and 2011. Sellers are not in as strong a position as they were in 2018 at this time, but they are better placed than in 8 out of the last 13 years. That makes 2019 better than average.

You could legitimately argue that 2011 through 2014 were affected by the presence of a large number of short sales. This tends to increase the contract ratio because these listings stay under contract for a long time awaiting lender approval.

So let us look at just the non-distressed listings for Greater Phoenix:

  • 2019 - 64.1
  • 2018 - 75.3
  • 2017 - 62.5
  • 2016 - 54.2
  • 2015 - 50.2
  • 2014 - 34.7
  • 2013 - 57.4
  • 2012 - 52.9
  • 2011 - 25.3
  • 2010 - 23.2
  • 2009 - 9.7

This is a better table and tells us that March 2019 is the second hottest of the last 11 years and similar to March 2017. In March 2017 we were feeling pretty good having experienced 3 straight years of strong growth. The only fault of 2019 is that it does not compare so well with 2018. If we ignore 2018 then it is the hottest year in the last 10. Why would anyone think the Greater Phoenix market is in trouble? I guess because people focus too much on short term trends and fail to consider the longer term perspective. I am confident that Cromford Report subscribers are not among those people.

March 18 - In the market above $500,000 we saw Greater Phoenix active listings (including UCB and CCBS) rise during February to reach a total of 5,267, which is 5% higher than last year. Does this mean the luxury market is swinging in favor of buyers?

No. The annual sales rate has rise by almost 18% in the last 12 months, so relative to demand, supply has actually grown weaker. We had 202 days of luxury inventory across Greater Phoenix on March 1. The same reading in 2018 was 228.

The luxury market is balanced when the days of inventory reading lies between 246 and 303. It would take a massive shift in the balance to get from 202 days to 334 days, where a buyer's market starts to take over.

The weakest part of the luxury market is over $2 million. There we see 30 months of inventory, far above the 11 months we find for homes between $1 million and $2 million. This in turn is much higher than the 6 months that exists for homes between $500,000 and $1 million. It is the range between $1 million and $2 million that has shifted most in favor of sellers; quarterly sales are up 7% from a year ago while active listings without a contract are down 7%.

March 15 - The ranking table of annual average price per square foot has been published for March and it is striking how much the outlying areas have out-performed the inner parts of the valley.

Top locations for appreciation between March 2018 and March 2019 are:

  1. Tonopah - up 43.7%
  2. Arizona City - up 18.5%
  3. Coolidge - up 16.0%
  4. Youngtown - up 15.8%
  5. Wickenburg - up 15.6%
  6. Carefree - up 14.1%
  7. Casa Grande - up 11.8%
  8. El Mirage - up 11.3%
  9. Florence - up 11.2%
  10. Tolleson - up 11.0%

Of the top 6, only Youngtown could be considered part of the central area, and it is certainly one of the least expensive of those areas, even after an almost 16% rise in average $/SF.

In the top 10, 7 are locations on the outer edge of the valley. The remaining 3 are in the inner West Valley.

March 14 - The Cromford® Market Index values for the single-family markets in the 17 largest cities are shown below:

This shows that the recent strength in the market is intensifying with 12 out of the 17 cities showing improving conditions for sellers. No sign here of us getting close to a buyer's market (below 90).

Maricopa, Scottsdale and Peoria are the main holds outs for the pessimists.

The average change over the past month is 3.8%, up from 1.7% last week.

Avondale is not only on top of the table, it has the highest percentage improvement over the past month. Cave Creek, Paradise Valley, Glendale, Goodyear and Fountain Hills are all up 6% or more.

March 12 - The general perception out there seems to be that the housing market is in trouble. I am simply NOT seeing evidence of that in Phoenix. Yes, the market is cooler than last year, but the first half of last year was unusually strong and makes a difficult comparison. If we are to be fair to 2019 we should compare it with long term averages and not try to create alarming headlines to attract readers' eyeball

So let us look at a series of measurements over the next several days and see how 2019 is doing. First off is the listing success rate:

We are currently running at an 82.4% success rate. This means that in the last month 82.4% of listings that terminated were closed and 17.6% were either cancelled or expired. This is a very high success rate by long term standards. The average over the last 18 years is 64.1%. You will notice there was a big dip in January but this happens every year because a large number of listings expire on December 31.

On March 11, 2018 the success rate was higher - 83.8% - but not a lot higher. 2019's success rate is better than 2017 (80.9%), 2016 (76.4%), 2015 (73.0%), 2014 (70.1%), 2013 (79.2%), 2012 (79.0%), 2011 (65.2%), 2010 (63.2%), 2009 (47.2%), 2008 (32.7%), 2007 (44.0%), 2006 (57.5%). All of these were measured on March 11.

We have to go all the way back to the bubble year of 2005 (84.3%) to find another year with a higher success rate as of March 11.

If anyone thinks 2019 is bad, then I have to conclude they have no idea what bad looks like.

March 11 - With the unverified affidavits counted from Maricopa and Pinal counties we can give you a reasonable estimate of the iBuyer transaction counts in February and how they compare with last year. These are not the final numbers, based on verified data. Those will be published, in a couple of weeks or so, on the Tableau charts within the Cromford Public section of our site, but the numbers below should not be too far from the truth.

  Opendoor OfferPad Zillow All iBuyers Combined
Homes Purchased in February 2019 246 70 133 450
Homes Purchased in February 2018 245 76 0 321
Annual Change in purchases 0% -8% N/A +40%
Homes Sold in February 2019 228 76 77 381
Homes Sold in February 2018 226 131 0 357
Annual Change in Sales +1% -42% N/A +7%
Median Purchase Price in February 2019 $232,950 $220,443 $326,900 $250,079
Median Purchase Price in February 2018 $236,300 $207,250 N/A $230,000
Median Sale Price in February 2019 $254,363 $250,608 $320,675 $267,547
Median Sale Price in February 2018 $233,500 $234,900 N/A $234,000
Homes in Inventory at the End of February 1,129 411 406 1,946

Although iBuyer purchases are up 40% overall from February 2018, all this growth is accounted for by the new entrant Zillow. There has been a slight decline in purchase volumes for the original 2 players.

On the sales side, growth is more modest at 7%, with OfferPad's February sales far below their total in February last year.

The median prices for both purchases and sales have increased for iBuyers as a whole, because Zillow is operating over a broader price range than the original 2 players. While Opendoor and OfferPad still concentrate most of their attentions on the low end of the market, Zillow frequently buys homes in the mid range. As a result they often take a bit longer to sell them.

Gross margins are highest for OfferPad, with Opendoor in the middle and Zillow operating on the smallest gross margins.

March 8 - As a follow up to the post on March 6, here are the areas which have seen the greatest increase in their annual sales rate over the past year:

ZIP Code 2018 Sales Rate 2019 Sales Rate Change
Arlington 85322 0 6 infinite
Aguila 85320 4 8 +100%
Phoenix 85034 7 14 +100%
Stanfield 85172 3 5 67%
New River 85087 177 236 +33%
Superior 85173 35 46 +31%
Rio Verde 85263 110 141 +28%
Morristown 85142 20 25 +25%
Black Canyon City 85324 24 29 +21%
Phoenix 85004 20 24 +20%
Casa Grande 85193 11 13 +18%
Phoenix 85085 462 544 +18%
Eloy 85131 103 119 +16%
Wickenburg 85390 157 181 15%
Arizona City 85123 263 300 +14%
Congress 85332 17 19 +12%
Buckeye 85396 879 977 +11%
Surprise 85387 369 409 +11%
Scottsdale 85266 385 422 +10%
Scottsdale 85255 1,038 1,135 +9%
Surprise 85378 1,465 1,594 +9%

This includes many of the most obscure and little-known parts of the valley. If your friend thinks they really know Phoenix real estate well, ask them to point out Stanfield and Arlington on the map.

March 7 - Below is a chart showing the Cromford Market Index for the single-family markets in the 17 largest cities by dollar volume: 

The market is improving for sellers with 10 cities rising while 7 have been falling over the past month. The average change is +1.7%, a significant improvement from -1.1% last week.

Leading the way upward are Avondale, Paradise Valley, Glendale and Fountain Hills. Notably late to the party are Maricopa and Scottsdale.

The majority of cities are showing rises over the past week, with Scottsdale, Surprise, Peoria and Maricopa the only exceptions.

Among the cities outside the top 17 the following have shown rises in their CMI in the last week:

  • Apache Junction
  • Arizona City
  • Casa Grande
  • Gold Canyon
  • Litchfield Park
  • Sun City
  • Tolleson

The following declined over the past week:

  • Anthem
  • El Mirage
  • Laveen
  • Sun City West
  • Sun Lakes

The overall picture shows rising demand from a fairly weak level and stable but chronically low supply which is starting to decline. Sales prices continue to rise, despite the large number of list price cuts.

March 6 - Thanks to the downshift in demand, the annual sales rate for single-family homes across Greater Phoenix is down 2.7% from 77,467 to 75,366 according to the ARMLS database.

Here are the ZIP codes with the greatest reduction in annual sales:

ZIP Code 2018 Sales Rate 2019 Sales Rate Change
Fort McDowell 85264 5 2 -60%
Coolidge 85128 246 191 -22%
Glendale 85305 194 154 -21%
Carefree 85377 109 87 -20%
Glendale 85303 457 366 -20%
Gila Bend 85337 10 8 -20%
Phoenix 85045 200 161 -19%
Mesa 85201 314 257 -18%
Tempe 85282 550 456 -17%
Phoenix 85020 458 383 -16%
Gilbert 85297 781 666 -15%
Maricopa 85139 406 348 -14%
Tempe 85283 454 392 -14%
Chandler 85286 805 701 -13%
Glendale 85306 381 332 -13%
Scottsdale 85257 447 390 -13%
Sun City 85351 847 742 -12%
Mesa 85215 314 278 -11%
Phoenix 85022 657 584 -11%
Gold Canyon 85118 510 454 -11%

March 4 - We have the preliminary numbers for Maricopa County recordings in February.

There were 8,015 sales in total, down 6% from last year. This is an improvement on January where sales were down 10% compared with 2018.

New home sales totalled 1,222 and were down only 1%. resales were down 7%.

The overall median sales price was $273,00, up from $260,490 in February 2018. The new home median was $340,308, barely changed from $338,906 last year because builders are focusing more attention on the entry market by building smaller homes. The re-sale median climbed from $249,900 to $260,000.

All the above include single-family and condo / townhouse properties.

March 1 - The market started the year far behind 2018 in terms of demand - the monthly sales rate was down 11% on January 1 from a year earlier while the count of listings under contract was down 17%. At the end of January these numbers had changed to down 17% and 14% respectively. At the end of February they had changed to down 8% and 12% respectively.

What can we conclude from this? First, we know the under contract count is a leading indicator for closed sales. The 17% gap at the start of January suggested that January closings would be weak and they were indeed, down 17%. The slight improvement in under contract counts to 14% down suggested a mild recovery in February. We actually saw an even stronger recovery to just 8% down. This is quite respectable when you consider that because pricing was up year over year, the dollar volume in February was $2,127 million, not far (2.6%) below 2018s $2,184 million.

At 12% down compared with last year, under contracts counts are recovering from 17% and 14% down at the beginning of the previous 2 months. We anticipate that March sales will reflect that recovery and it is possible that the sales gap could narrow further, even enough to close the dollar volume gap completely. This assumes that current trends continue, which is not certain, but reasonably likely.

February 28 - Here is the table showing the Cromford® Market Index for the single-family markets in the 17 largest cities:

Although the market is starting to recover, the average change in the CMI compared with a month ago is -1.1%. This is an improvement from last week's observation when we saw a change of -2.2% over the month.

7 cities are already showing improvement, with Fountain Hills and Glendale leading the charge. The remaining 10 cities are showing deterioration compared with January 28, with Maricopa, Peoria and Scottsdale down the most.

If we compare the CMI values with last week's table we see that 10 cities have higher CMIs than a week ago.

Higher are:

  • Avondale
  • Glendale
  • Gilbert
  • Mesa
  • Fountain Hills
  • Tempe
  • Paradise Valley
  • Queen Creek
  • Goodyear
  • Cave Creek

Unchanged is:

  • Chandler

Lower are:

  • Surprise
  • Phoenix
  • Scottsdale
  • Peoria
  • Maricopa
  • Buckeye

It is only in the last week that the CMI trend has changed, but the market is no longer deteriorating and is slowly moving in favor of sellers.

 

February 26 - The S&P/ Case-Shiller® Home Price Index® was published today covering the 3 months October through December 2018.

Here are the 20 focus cities ranked by their month to month change in home price index:

  1. Los Angeles +0.25%
  2. Las Vegas +0.17%
  3. New York +0.17%
  4. Miami +0.09%
  5. Atlanta +0.07%
  6. Phoenix +0.05%
  7. Dallas +0.03%
  8. Charlotte -0.04%
  9. Tampa -0.05%
  10. Denver -0.14%
  11. Washington -0.18%
  12. Portland -0.28%
  13. Cleveland -0.36%
  14. Detroit -0.39%
  15. Boston -0.47%
  16. Minneapolis -0.50%
  17. Seattle -0.63%
  18. San Diego -0.69%
  19. Chicago -0.70%
  20. San Francisco -1.43%

Although it only managed to eke out a tiny month to month rise, Phoenix was placed 6th out of 20 and compared favorably with the national average which was -0.14%

On a year over year basis, the HPI changes were:

  1. Las Vegas +11.4%
  2. Phoenix +8.0%
  3. Atlanta +5.9%
  4. Minneapolis +5.5%
  5. Denver +5.5%
  6. Detroit +5.3%
  7. Boston +5.3%
  8. Tampa +5.3%
  9. Charlotte +5.2%
  10. Miami +5.2%
  11. Seattle 5.1%
  12. Cleveland +4.6%
  13. Dallas +3.9%
  14. Portland +3.9%
  15. Los Angeles +3.7%
  16. San Francisco +3.6%
  17. New York +3.3%
  18. Chicago +3.0%
  19. Washington +2.7%
  20. San Diego +2.3%

In this table Las Vegas and Phoenix are a long way ahead of the rest of the pack. The national average is 4.7% and none of the 20 cities is negative year over year.

February 24 - 2019 is starting to look stronger now after a powerful third week of February. In January, we saw contract activity pick up for the second half and February seems to be doing the same, only more so. The count of listings under contract for all areas and types jumped from 9,886 to 10,600, a rise of 714 listings or 7.2% between Feb 16 and Feb 23. Surprisingly, this is a much stronger jump than in 2018 when the same week produced a rise from 11,451 to 11,896. This was only 3.9%.

The Cromford® Demand Index is firmly on the rise again having hit a low point of 86.0 on January 24 and rebounding to 89.2.

The Cromford® Supply Index is still rising but stands at 70.8, still far below the normal range of 90 to 110. However active listings without a contract are slightly lower than this time last week. If a top can be formed this early in the year, it will be a good omen. New listings are currently arriving more slowly than in 2018 and with all the new contract activity, it would not be surprising if active listing counts fell away from this point.

The simplest and clearest positive sign is that the Cromford® Market Index has turned around. It hit 125.7 last Tuesday but now stands at 126.1 with upward momentum building.

It seems that the market has finally decided it wants to warm up again, now that typical mortgage interest rates are back around 4.5% instead of close to 5%.

February 21 - Once again we show below the Cromford® Market Index numbers for the single-family markets in the 17 largest cities by dollar volume:

The picture is similar to last week with an average decline of 3.1%, a very slight improvement over -3.3% on February 14.

We have 5 cities improving for sellers and 12 deteriorating. The significant positive moves came from Glendale and Fountain Hills. The biggest deterioration came from Maricopa, Peoria, Chandler, Cave Creek, Scottsdale and Paradise Valley.

Will still have a seller's market in all 17 cities although the 5 cities at the bottom of the table are showing only a mild advantage for sellers in the 110 to 120 range.

Over most of the valley we are not seeing demand get any weaker, and a gentle recovery is underway. We are not seeing supply climb sharply either and it may peak fairly soon. The market is well behaved and losing steam slowly and gently. The overall market CMI looks poised to stabilize in the mid 120s, which is where the City of Phoenix currently lies (126.1).

At this stage, any landing looks likely to be soft and any recovery looks likely to be slow and gentle too. Of course things could change at any moment, but there seems to be insufficient downward momentum to take us into the balanced zone (90 to 110), never mind a buyer's market (under 90).

Not too much to worry about and not very much to get excited about either. Just a quieter market than 2018 and 2017 and similar in many ways to 2016.

February 20 - Comparing the annual sales rate across Greater Phoenix for all dwelling types by price range we find the following:

Price Range Annual Sales Rate Feb 18, 2019 Annual Sales Rate Feb 18, 2018 Change
up to $100K 2,039 2,968 down 31%
$100K to $125K 1,760 2,634 down 33%
$125K to $150K 3,307 4,674 down 29%
$150K to $175K 5,181 8,214 down 37%
$175K to $200K 8,737 11,181 down 22%
$200K to $225K 10,286 10,195 up 1%
$225K to $250K 10,451 9,564 up 9%
$250K to $275K 8,435 7,567 up 11%
$275K to $300K 7,164 6,545 up 9%
$300K to $350K 10,048 8,759 up 15%
$350K to $400K 7,023 6,064 up 16%
$400K to $500K 7,767 6,876 up 13%
$500K to $600K 3,654 3,047 up 20%
$600K to $800K 3,110 2,636 up 18%
$800K to $1M 1,281 1,112 up 15%
$1M to $1.5M 1,079 879 up 23%
$1.5M to $2M 392 341 up 15%
$2M to $3M 279 223 up 25%
over $3M 134 123 up 9%

A collapse in sales volume below $200K is balanced by increases in sales above this point. Especially impressive is the unit sales growth between $500K and $3M. The overall effect is a 2% drop in unit sales.

Although the annual sales rate has declined 2%, the annual dollar volume has increased 7% from $28B to $30B. With an extra $2 billion spent on residential real estate compared with the prior 12 months, the market does not look too bad to me.

February 19 - The annual sales rate has been in decline since the summer of 2018 but not uniformly across all segments of the market. Let us look first at the single-family markets in the broad geographic areas:

Segment Peak Annual Sales Peak Month Current Annual Sales Change
Phoenix & Central Valley 16,947 Apr 2018 16,544 down 2.4%
Northeast Valley 7,551 Aug 2018 7,195 down 4.7%
Southeast Valley 22,355 May 2018 21,462 down 4.0%
West Valley 23,296 Jul 2018 22,654 down 2.8%
Pinal County 8,626 Aug 2018 8,362 down 3.1%

We can see that the greatest fall in annual sales has been in the Northeast Valley (down almost 5%) in the shortest time (peaking in August).

In contrast, Phoenix and the Central Valley is down the least (2.4%) and the slowest (peaking in April).

February 18 - The lower echelons of the luxury market have performed very well over the past few months, but the upper end has been much weaker.

  • quarterly sales between $500K and $1M - up 3% from 1,402 to 1,444 (compared with the same 3 months a year ago)
  • quarterly sales between $1M and $2M - up 3% from 284 to 292
  • quarterly sales over $2M - down 14% from 83 to 71

Quarterly sales were also down year-over-year- for the rest of the market under $500K so the $500K to $2M sector has been the strongest price range, especially the $500K to $1M sector.

January 2019 saw a big jump in active listings for homes over $500K - up 19% and now 5% higher than the start of February 2018. Sales were weaker than January 2018, down 5%. Luxury sellers therefore have more competition from other sellers and fewer buyers.

February 15 - Despite the cooling in the market, and almost certainly one of the causes of this cooling, appreciation rates continue to run well above inflation. Here are the latest appreciation rates for the single-family markets in the 17 largest cities. These percentages are based on the annual average price per sq. ft. The numbers in parentheses show what the rates were 12 months ago.

  1. Maricopa 10.2% (7.9%)
  2. Queen Creek (including San Tan Valley area) 9.7% (8.3%)
  3. Mesa 8.5% (7.0%)
  4. Avondale 8.5% (9.4%)
  5. Tempe 8.2% (5.0%)
  6. Phoenix 8.2% (5.4%)
  7. Buckeye 8.2% (7.3%)
  8. Glendale 8.1% (7.0%)
  9. Gilbert 8.0% (5.4%)
  10. Surprise 7.4% (7.9%)
  11. Paradise Valley 7.0% (1.3%)
  12. Chandler 7.0% (5.0%)
  13. Cave Creek 6.6% (4.2%)
  14. Peoria 6.3% (7.0%)
  15. Goodyear 6.2% (6.1%)
  16. Scottsdale 5.7% (4.1%)
  17. Fountain Hills 3.6% (4.5%)

You can see more detail in the Major City Appreciation chart which covers the last two years measured on a weekly interval.

February 14 - Below is our usual table showing the Cromford® Market Index for the single-family markets in the 17 largest cities:

Here we see 13 cities that have deteriorated for sellers over the past month and 4 that have improved.

Fountain Hills and Glendale have the largest gains, while the largest falls took place in Paradise Valley, Maricopa, Peoria, Chandler and Cave Creek. Phoenix, Scottsdale and Queen Creek fared poorly too.

The message is that the market is significantly cooler but all 17 cities are still above the balanced zone between 90 and 110, with even Paradise Valley still in a seller's market, if only just.

The average change over the last month is -3.3%, a deterioration from -2.8% last week.

Those looking for good news for sellers do have something to cheer. The Cromford® Demand Index has reversed course and started to increase. For the overall market it has already risen from 86.0 on Jan 29 to 87.9 on Feb 14. This is the first rise in the CDI since March 2018.

Cities with rising CDI include the following:

  • Apache Junction
  • Arizona City
  • Avondale
  • Buckeye
  • Cave Creek
  • Fountain Hills
  • Gilbert
  • Glendale
  • Gold Canyon
  • Goodyear
  • Laveen
  • Mesa
  • Paradise Valley
  • Phoenix
  • Queen Creek
  • Scottsdale
  • Surprise
  • Tempe
  • Tolleson

Those with a CDI that continues to fall include:

  • El Mirage
  • Peoria
  • Sun City West
  • Sun Lakes

Overall, demand has stopped declining and is tentatively beginning to recover. Supply continues to rise, although this is normal for the season. The signals are mixed and we still need to watch vigilantly to see which direction the market decides to go.

February 12 - The crucial question of the moment is how demand is building during the early stages of the spring selling season. Here is the daily chart of listings under contract:

The same chart one year ago looked like this: 

The first thing we notice is that the overall shape is quite similar. The second is that in 2018 we had just topped the 11,000 listing mark, whereas in 2019 we have not yet breached 10,000. We should also note that in 2018 we were starting from a higher base - 7,583 - some 1,282 - 20% more than the 6,301 we measured on January 1, 2019.

We can also see that in 2019 we have yet to beat the August number whereas in 2018 we had comfortably exceeded it.

The good news is that the recent growth in 2019 is looking healthy - up 55% from the Jan 1 start. In 2018 we saw a 49% growth in listings under contract at this stage. In absolute terms we are still a little behind 2018 with a year-to-date increase of 3,497 versus 3,671. However this is only a 5% shortfall, much lower than the 20% shortfall we started with.

We conclude that 2019's spring season is likely to be somewhat lower in sales counts than 2018 but not as much lower as once feared. The slump in listings under contract that we saw in December has largely been negated.

The gradual recovery in demand is reflected in the Cromford® Demand Index which has risen to 87.5 after hitting its short term low of 86.0 on January 25. This still well below normal (100) but we are now moving higher instead of lower.

February 11 - One of the reasons we like annual averages is that the large sample size tends to deliver very consistent messages. A good example is the annual average price per square foot for all areas & types. The daily chart looks like this:

Notice how the slope of the chart is very consistent for long periods of time.

We can see that the steep upward slope of August through November has been replaced by a gentle upward slope. Long term average prices are still rising but at a significantly reduced pace. This is because there is now much less of a disparity between supply and demand. Even so, demand still exceeds supply, so the direction of the chart remains upward. If supply were to exceed demand, then the chart would eventually start to slope downwards.

However, remember that sales prices are a trailing indicator, so there is a long time lag between the market balance changing and sales prices following suit.

February 8 - After 7 full days it is time to check how February is looking for both sellers and buyers.

New Listings:

New listings are arriving at a similar rate to the last 2 years. Including those still in delayed status, they are a little higher than 2018 (up 2.1%) but a little lower than 2017 (down 4.2%) for the same week. However if we look over the last 4 weeks, we are up 2.7% from 2018 and 3.4% from 2017. These are not big increases, but they do give potential buyers a little more choice. They also give sellers a little more competition. If we only count new listings that have been activated, then the first week of February saw 2,383 new listings across Greater Phoenix, compared with 2,546 in 2018 and 2,693, so we are seeing a slight decline there. The decline is almost entirely in listings priced below $250,000, which are down from 1,095 in Feb 2018 to 888. Between £250K and $500K we see an increase from 1,040 to 1,088 and above $500K a tiny decline from 411 to 407.

Active Listings:

Across Greater Phoenix, active listings without a contract have climbed from 17,964 on Feb 1 to 18,282 on Feb 8, a rise of 318 or 1.8%. During the same period last year we saw active listings without a contract rise grow from 16,132 to 16,245, a rise of 113 or 0.7%. Available supply is therefore growing faster than last year, but not at a rate that should cause concern.

Under Contract Listings:

Across Greater Phoenix , listings under contract climbed from 8,438 on Feb 1 to 9,292 on Feb 8, a rise of 854 or 10.1%. During the same period last year we saw listings under contract grow from 9,817 to 10,757, a rise of 940 or 9.6%.

This reading has given us mixed signals so far this year, with weak numbers during the first 2 weeks of January, stronger growth during the latter part of January and moderate numbers in early February. Over the last 5 weeks listings under contract have grown 48%, adding 3,013 listings, while last year they grew 41% adding 3,146. We can conclude that the gap is slowly closing but we have a long way to go to catch up with 2018. The reading on Feb 8 was still 14% behind Feb 2018, but this is better than Jan 4 when we were down by 18%.

Sellers are lowering their asking prices more now than at any time in the past 3 years with a total of $38M in price cuts during the last week. This corresponds to some improvement in demand which is reflected in the rising Cromford® Demand Index numbers.

February 7 - Once again we share the Cromford® Market Index numbers for the single-family markets in the 17 largest cities:

Only 4 cities show improvement while 13 show deterioration in the market from a seller's perspective. There are only 2 cities that have improved strongly for sellers over the past month - Fountain Hills and Glendale. Paradise Valley, Cave Creek, Goodyear and Chandler saw the most deterioration.

During the last 2 weeks of January we saw a significant improvement in the rate of homes going under contract. The first week of February was nothing special in this respect and certainly not stronger than last year, so has to be seen as mildly disappointing after the encouraging signs in late January. In addition, new listings arrived in stronger numbers during early February than they did last year, so although supply remains low overall, the gap between supply and demand narrowed for most segments of the market.

None of the 17 largest cities has entered the balanced zone between 90 and 110, but some of the smaller cities have. We see Casa Grande at 108.9, Sun City West at 105, Litchfield Park at 101.6, Gold Canyon at 99.4 and Sun City at 91.2.

In summary, demand was a little weaker than we expected and supply a little stronger. The market does not seem to have decided which way it wants to go.

February 6 - We now have preliminary numbers for iBuyer activity during January across Maricopa and Pinal counties:

Jan 2019 Opendoor OfferPad Zillow
Number of Homes Purchased 247 66 112
Number of Homes Sold 186 60 37
Average Price of Homes Purchased $250,721 $232,114 $324,589
Average Price of Homes Sold $253,091 $258,192 $323,164
Median Price of Homes Purchased $243,000 $220,520 $313,000
Median Price of Homes Sold $248,500 $247,950 $306,000
Total Value of Homes Purchased $61.9M $15.3M $36.4M
Purchase Units Annual Growth 18% -1% N/A
Sold Units Annual Growth 18% -42% N/A
Inventory at end of month 1,111 417 350
Annual Inventory Change 33% 18% N/A

Overall iBuyer purchases were up 16% over January 2018, while iBuyer sales increased by 37%.

Unsold iBuyer inventory grew by 58% over the last 12 months to a total of 1,878 homes. This includes homes not yet ready for re-sale as well as those being marketed. Clearly inventory has grown faster than transaction volume.

The January numbers are not final yet because we have to check the data carefully (for duplicates, filed in wrong county, wrong parcel, wrong date, etc.) before it is published in the Tableau charts within the Cromford® Public section of our site.

The range of gross margins achieved can be seen in the Tableau Fix and Flip charts within the Cromford Public section. The charts include filters for each iBuyer. The margins for January are not yet available, but for December 2018 the median gross margins we calculate for homes that closed were:4.1% for Opendoor, 5.8% for OfferPad and 2.5% for Zillow. Zillow tends to buy more expensive homes and the median gross margins were $9,950 for Opendoor, $13,873 for OfferPad and $5,800 for Zillow. In December iBuyer transactions represented 7% of purchases and 4.5% of sales.

Median hold times for homes that closed in December 2018 were 102 days for Opendoor, 78 days for OfferPad and 70 days for Zillow. However Zillow has sold relatively few (only a third) of the homes it has purchased so the 70 days is likely to grow over the next few months.

iBuyers have achieved significant penetration of the Greater Phoenix market since Opendoor started operation in August 2014. However they face a number interesting challenges as their business matures:

  • gross margins are lower and getting smaller as competition increases
  • hold times are lengthening, incurring additional costs
  • a large amount of capital is tied up in inventory (1,878 homes at an average of $250,000 = $464,500,000)

No doubt iBuyers are or will be pursuing additional ancillary revenue generated by their transactions, such as mortgage generation, title insurance, etc. This will help to deliver more margin out of a single home purchase and sale.

February 5 - We have preliminary numbers from Maricopa County for recordings during January 2019.

Total recorded sales for single-family and condo/townhouse properties was 6,898, down almost 10% from 7,647 in January 2018. This is a larger drop in recorded sales than we experienced in December (7.4%).

In December 2018 new home closings held up much better than re-sales, but this effect disappeared in January. New home closings numbered 944, down 9.7% from January 2018. Re-sales were down almost the same percentage at 5,954.

The overall median sales price was $270,000, up 7% from January 2018. The re-sale median was up 8% to $258,900 while the new home median was up 5% to $342,618.

February 4 - Butch Leiber is running several classes in February for those who would like to get more out of the Cromford® Report.

Cromford 101 - Unraveling the Mysteries of the Cromford® Report

This class walks people through the basics of using Cromford® in their business and leaves them with a better understanding of the charts and how to use them to generate more business. (Cromford Subscribers Only) 

East Valley:  February 13 2019, 11:00 AM - 1:30 PM
Caliber Home Loans - 16430 N Scottsdale Rd., Scottsdale, AZ 85254
Registration Link:  http://bit.ly/cromford213

West Valley:  February 21 2019, 11:00 AM - 1:30 PM
Caliber Home Loans - 1616 N Litchfield Rd. #215, Goodyear, AZ 85395
Registration Link:  http://bit.ly/cromford214

Cromford 201 - Digging Deeper with the Cromford® Report

This class teaches how to use the report every day in business and how to find the right chart, for the right occasion, the best charts to "predict" market change and the best charts to use in marketing to make an agent look and talk like an expert. (Cromford Subscribers Only)

East Valley:  February 14 2019, 11:00 AM - 1:30 PM
Caliber Home Loans - 16430 N Scottsdale Rd., Scottsdale, AZ 85254
Registration Link:  http://bit.ly/cromford214

West Valley:  February 20 2019, 11:00 AM - 1:30 PM
Caliber Home Loans - 1616 N Litchfield Rd. #215, Goodyear, AZ 85395

Registration Link:  http://bit.ly/cromford220

February 1 - Below is the table of Cromford® Market Index numbers for the single-family markets in the 17 largest cities by dollar volume:

This gives us a mixed picture with 7 cities improving for sellers over the past month and 10 cities showing deterioration. The average change in CMI for the 17 cities is -1.4%. Last week we reported +0.7% and suggested it looked a little ominous. We expect a little more negative movement over the next 2 weeks for 2 reasons.

  1. Slow contract activity during the first 2 weeks of January led to a larger rise in active listings than last year
  2. Low contract numbers in November and January led to a very slow closing rate during January

However, we are more optimistic for sellers than we were in mid January. The second half of January saw contract activity pick up nicely and this has 2 expected results which could show up in the CMI by mid February:

  1. Active listing counts should stop rising and may start to fall back slowly in a normal seasonal pattern
  2. Closed listing counts should start to rise as the additional contract signings in January come through escrow

It is not clear if the boost in contract activity will continue into February but a combination of lower interest rates and higher FHA loan limits tends to support that outcome. We have also heard new home builder report increased buyer traffic in recent weeks.

Several cities have seen significant upticks in their Cromford® Demand Index over the past 2 weeks, including:

  • Apache Junction
  • Avondale
  • Buckeye
  • Casa Grande
  • Cave Creek
  • Fountain Hills
  • Glendale
  • Gold Canyon
  • Maricopa
  • Scottsdale
  • Surprise
  • Tempe
  • Tolleson

Notably absent from this list are Phoenix, Chandler, Mesa and Gilbert. Also relatively weak are Sun City, Sun City West and Sun Lakes, all 55+ locations.

All 17 of the largest cities remain in the seller's market zone over 110 though Paradise Valley and Goodyear look like they may drop into the balanced zone between 90 and 110.

January 31 - Following up yesterday's post, here are the changes in the number of listings under contract over the past 2 weeks, compared with the same 2 weeks in January 2018:

Market Segment Rise in Listings Under Contract 2019 Rise in Listings Under Contract 2018 Change
Greater Phoenix all types 1,787 1,591 +12%
Phoenix - single-family 287 287 +0%
Mesa - single-family 140 148 -5%
Scottsdale - single-family 156 66 +136%
Chandler - single-family 70 50 +40%
Glendale - single-family 59 62 -5%
Gilbert - single-family 79 72 -10%
Surprise - single-family 87 57 +53%
Peoria - single-family 71 43 +65%
Queen Creek - single-family 66 79 -16%
Avondale - single-family 18 36 -50%
Tempe - single-family 32 24 +33%
Goodyear - single-family 62 46 +35%
Maricopa - single-family 28 18 +47%
Buckeye - single-family 38 54 -70%
Cave Creek - single-family 19 8 +138%
Fountain Hills - single-family 7 5 +40%
Paradise Valley - single family 5 6 -17%

The biggest positive change is in the price ranges from $500K to $1M. Here there has been a 101% increase comparing the 2 week growth in listings under contract between 2018 and 2019. This is reflected in the very good numbers in the table above for Scottsdale and Cave Creek, which have a lot of homes inside that price range.

There is also a 20% improvement in the range from $200K to $500K and a 12% improvement in listings over $1M. The bad news is that listings under contract under $200K are off by 32%. This remains a bigger market by unit count than than the market between $500K and $1M, but it is hindered by a lack of supply.

January 30 - It looks like closings will be pretty dismal in January 2019. January is always a very slow month for closed listings and after low contract activity in November and December it would be surprising if January's count was anything other than bad. After 4 complete weeks of January we are at 4,166 for Greater Phoenix (all dwelling types), which is down from 4,847 at the sme point in 2018. That's a 14% drop.

However, things are looking more positive when we look at contracting activity in January, especially over the last 2 weeks.

For all areas & types across the ARMLS database, we have grown from 7,253 to 9,077 listings under contract, a rise of 25%. In the same 2 weeks last year we saw an increase from 8,765 to 10,389, a rise of under 19%. We are still far behind, but catching up at a surprisingly speedy rate.

What is even more impressive is that the absolute number of listings under contract grew by 1,824 compared with 1,624 last year, a 12% improvement.

I am not ready to pop any champagne corks, but this is strong evidence of a surge in buyer interest over the past 2 weeks. The market started the year very cool compared to 2018, but is now heating up much faster than last year. This is great news for sellers and suggests that buyers should act fast before the real buying season gets underway and they have to deal with more competition from other buyers

It seems likely (but not certain) that the Cromford® Market Index will continue to decline for a short while yet due to the low closing rate, but as active counts top out and contracts and closings start to climb, I would cautiously expect the index to reverse direction and start increasing again before too long. A buyer's market looks increasingly unlikely to happen in 2019.

January 29 - The last Tuesday of every month is the date for release of the S&P/Case-Shiller® Home Price Index® data.

This month the sales period covered is September through November 2018 and here are the month to month percentage changes for the 20 focus cities:

  1. New York +0.43%
  2. Tampa +0.38%
  3. Phoenix +0.32%
  4. Miami +0.32%
  5. Atlanta +0.28%
  6. Dallas +0.20%
  7. Charlotte +0.16%
  8. Boston +0.08%
  9. Las Vegas -0.01%
  10. Washington -0.02%
  11. Minneapolis -0.16%
  12. Los Angeles -0.30%
  13. Denver -0.32%
  14. Detroit -0.35%
  15. Portland -0.48%
  16. San Diego -0.63%
  17. Cleveland -0.66%
  18. Chicago -0.69%
  19. San Francisco -0.71%
  20. Seattle -0.73%

More than half of the cities had a negative move between October and November although the national average was still positive at +0.05%. Phoenix slipped from 1st to 3rd place being overtaken by New York and Tampa.

For the year over year change we get:

  1. Las Vegas +12.0%
  2. Phoenix +8.1%
  3. Seattle +6.3%
  4. Atlanta +6.2%
  5. Denver +6.2%
  6. Minneapolis +5.8%
  7. Detroit +5.7%
  8. Tampa +5.7%
  9. San Francisco +5.6%
  10. Boston +5.6%
  11. Charlotte +5.5%
  12. Miami +5.0%
  13. Cleveland +4.6%
  14. Los Angeles +4.4%
  15. Portland +4.4%
  16. Dallas +4.0%
  17. New York +3.5%
  18. San Diego +3.3%
  19. Chicago +3.1%
  20. Washington +2.7%

The national average was 5.2%. Phoenix remains well ahead of that number though far behind Las Vegas.

No city is showing negative appreciation on a year over year basis.

January 26 - For those in search of good news for sellers, pickings have been thin for the last few weeks, but we have something this morning.

Greater Phoenix listings under contract increased substantially between January 19 and January 26, from 7,194 to 8,175, an increase of 13.6%. Last year we saw an increase of only 10.2% to 9,597. We are still some way behind last year in under contract listing counts, but we have started to catch up rather than fall further behind.

One week does not make a trend, but this is something for the optimists among us to hang their hat on.

The breakdown by price range is also interesting:

  • listings under $250K were up 13.5%
  • listings between $250K and $500K were up 13.8%
  • listings between $500K and $1M were up 15.3%
  • listings over $1M were up 8.%
  • there was no growth in listings over $2M

There is a developing theme - the relative strength of the market in homes priced between $500K and $1M, with $800K to $1M the top performing range within that group.

January 25 - Since the critical factor at the moment is contracting activity, it makes sense to study the contract ratio for the market as a whole as well as various segments. The contract ratio tells us what proportion of the unresolved listings on ARMLS are under contract, compared with those without any contract. Under contract means they are pending, UCB or CCBS status. Resolved means they are closed, expired or cancelled. Delayed or temporarily off market listings are ignored.

The contract ratio is a seasonal measurement so we need to compare January 25, 2019 with other January 25 numbers from prior years.

Market Segment Contract Ratio 2019 Contract Ratio 2018 Contract Ratio 2017 Contract Ratio 2016
All areas & types 43.7 56.2 49.3 42.1
Greater Phoenix - Single-Family Detached 45.0 59.6 51.2 44.4
Greater Phoenix - Townhouse 54.1 66.9 63.0 51.2
Greater Phoenix - Apartment Style 40.6 56.2 48.8 39.2
Greater Phoenix - Gemini / Twin 50.5 60.2 64.7 53.1
Greater Phoenix - Patio Home 48.4 49.1 47.8 44.9
Greater Phoenix - Mobile Home 48.1 37.3 34.7 27.3
Phoenix SFD 43.7 67.9 58.7 56.3
Mesa SFD 55.7 87.0 61.6 50.5
Scottsdale SFD 27.0 29.1 24.8 21.8
Chandler SFD 59.6 102.5 70.4 57.5
Glendale SFD 58.9 76.5 75.6 66.2
Gilbert SFD 61.0 94.4 76.7 64.4
Surprise SFD 58.3 78.3 58.5 58.4
Peoria SFD 43.4 60.4 57.1 43.4
Queen Creek SFD 54.4 76.9 64.1 51.8
Avondale SFD 61.5 66.9 84.1 67.3
Tempe SFD 60.0 100.0 68.6 55.5
Maricopa SFD 49.2 58.2 58.4 36.4
Buckeye SFD 57.3 65.6 49.2 46.1

The overall market is cooler than 2017 and 2018 but slightly hotter than 2016.

We note that mobile homes are following a different pattern and are much hotter in 2019 than they were in any of the last 3 years. In fact they have been on an entirely positive trend from 2016-2019.

We also see that Phoenix now has a significantly cooler market than in 2016, unlike the majority of cities. In contrast Scottsdale has cooled only a little compared with 2018 and is hotter than 2016 and 2017.

January 24 - It is time to look at the Cromford® Market Index values for the 17 largest cities:

At first glance this looks reasonably positive with 9 cities improving for sellers over the past month and 8 cities deteriorating. However it is not as good as last week and the average change is only +0.7% whereas last we saw +2.0%. This is a little ominous.

Paradise Valley is clearly in trouble, down 12% from a month ago, probably thanks to the terrible performance of the stock market in Q4 2018. It has dropped from 8th to 15th in just 3 weeks.

Goodyear looks like it is headed for the balanced market zone (90 to 110).

What is most concerning is the comparison with last week's numbers. 13 of the 17 cities have declined since January 17 and only 4 have improved (Buckeye, Fountain Hills, Glendale and Tempe).

It is still early in the year and we cannot reach firm conclusions, but there is little evidence so far of a fast take off for the re-sale market in 2019. Optimists will need to pin their hopes on February.

January 23 - Contracts accepted in ARMLS across Greater Phoenix during the first 3 weeks of 2019 totalled 5,259. During the same period last year the total was 5,980. The decline of 12% is significant and worse than we saw in the first 3 weeks of December (8%). Our conclusion is that demand remains weak and has shown little to no signs of recovery so far.

Almost all of the decline in contracts accepted took place in homes priced under $250,000. These were down 23% from 2,943 to 2,275. Homes between $250,000 and $500,000 declined by only 3% from 2,456 to 2,384 while homes over $500,000 increased by 3% from 581 to 600.

January 22 - After 3 complete weeks of January it is fair to compare the first 21 days of 2019 with the first 21 days of 2018.

Closed listings dropped from 3,638 to 3,121, a decline of 14%. The fall was slightly steeper for condos/townhouses (16%) and even steeper for mobile homes (22%).

As expected, due to lack of inventory, closings dropped the most for homes under $250K, falling by 24%. The mid-range from $250K to $500K was down only 4% while the lower reaches of the luxury sector, from $500K to $1M saw a 3% gain in 2019. The upper end of the luxury market was not so fortunate, dropping 20% compared to 2018.

January 21 - The Cromford Market Index stayed fairly level through most of December and the first half of January but has started to drift a bit lower. Here is the short term chart:

Although the index is still above 130, it is losing a bit of altitude because:

  • active listing counts are rising
    • new listings have started to arrive slightly faster than they did in January 2018
    • active listings are going under contract a little slower than usual
  • closing rates are still a little slower than usual for what is usually a very slow month
  • pending, UCB and CCBS listings are growing from a very low level, but not at a particularly impressive rate

Most agents, sellers and developers were probably hoping for a better reaction to 30-year fixed interest rates moving back down to about 4.65% from the 4.85% level. From the evidence so far, demand has not emerged from the doldrums that started last September.

The changes are not enormous but the market is slowly moving in favor of buyers. It still has a long way to go before we can truly describe it as a buyer's market. What happens immediately after the Super Bowl will be crucial, because in a strong year, this is when we see contract activity pick up dramatically.

In the past, government shutdowns have coincided with a marked loss of demand, but they have tended to be brief affairs.

January 18 - There are a number a false myths circulating in the housing industry at the moment. Many are obviously untrue when you examine the history of the market, but are often stated as if they were natural laws.

  • when interest rates rise, home prices fall - this is hardly ever true, but I hear it claimed quite often
  • when sales volumes fall, home prices fall - this is hardly ever true, but certainly happened in the great crash of 2005-2009, so is fresh in our memory

Home prices fall when supply exceeds demand by a substantial margin. If supply is lower than demand then it is extremely unlikely that home prices will fall. We can find no examples in history of prices falling when demand exceeds supply.

Rising interest rates decrease demand, but they can also decrease supply if many home owners have an existing mortgage with a low rate. If supply is abundant and interest rates rise, then it is likely that home prices will fall. However it is surprisingly uncommon to find this situation in the last 70 years. This is because interest rate have tended to fall far more often than they have risen, and because supply has tended to be low far more often than it has been abundant. At the moment, interest rates are on an upward trend (although this trend has halted recently) but supply is a very long way from being abundant, Supply remains very low by historic standards, though it is slowly increasing.

Sales volumes fall when demand falls, but this tells us nothing about supply. Supply sometimes rises when sales volume falls (as in 2005-2009). If it rises enough to exceed demand then prices will fall until the balance is restored between supply and demand. Eventually lower prices will stimulate demand (as it did between 2009 and 2013). However it is often the case that demand falls without falling enough to match supply, and in this case prices continue to rise. This has been a common situation in the last 70 years and is also the situation right now.

If demand falls so much that it matches supply, then prices stabilize. We have not reached that point, but it did occur in 2014 for a short period. Demand then bounced back and has exceeded supply ever since.

If demand falls so much that it drops below supply, then price will tend to move lower. This is a relatively uncommon occurrence, but happened between 1989 and 1991, between 2006 and 2009 and for a short period between 2010 and 2011. The 1989 and 2010 declines were very mild, but the 2006-2009 decline was a true bubble bursting. This is something that tends to happen only once or twice a century, after almost everyone who remembers it has passed on. Bubbles require a suspension of disbelief that is impossible for someone who has already experienced one. In 2005 the most popular false myth was that house prices never go down.

January 18 - There are a number a false myths circulating in the housing industry at the moment. Many are obviously untrue when you examine the history of the market, but are often stated as if they were natural laws.

  • when interest rates rise, home prices fall - this is hardly ever true, but I hear it claimed quite often
  • when sales volumes fall, home prices fall - this is hardly ever true, but certainly happened in the great crash of 2005-2009, so is fresh in our memory

Home prices fall when supply exceeds demand by a substantial margin. If supply is lower than demand then it is extremely unlikely that home prices will fall. We can find no examples in history of prices falling when demand exceeds supply.

Rising interest rates decrease demand, but they can also decrease supply if many home owners have an existing mortgage with a low rate. If supply is abundant and interest rates rise, then it is likely that home prices will fall. However it is surprisingly uncommon to find this situation in the last 70 years. This is because interest rate have tended to fall far more often than they have risen, and because supply has tended to be low far more often than it has been abundant. At the moment, interest rates are on an upward trend (although this trend has halted recently) but supply is a very long way from being abundant, Supply remains very low by historic standards, though it is slowly increasing.

Sales volumes fall when demand falls, but this tells us nothing about supply. Supply sometimes rises when sales volume falls (as in 2005-2009). If it rises enough to exceed demand then prices will fall until the balance is restored between supply and demand. Eventually lower prices will stimulate demand (as it did between 2009 and 2013). However it is often the case that demand falls without falling enough to match supply, and in this case prices continue to rise. This has been a common situation in the last 70 years and is also the situation right now.

If demand falls so much that it matches supply, then prices stabilize. We have not reached that point, but it did occur in 2014 for a short period. Demand then bounced back and has exceeded supply ever since.

If demand falls so much that it drops below supply, then price will tend to move lower. This is a relatively uncommon occurrence, but happened between 1989 and 1991, between 2006 and 2009 and for a short period between 2010 and 2011. The 1989 and 2010 declines were very mild, but the 2006-2009 decline was a true bubble bursting. This is something that tends to happen only once or twice a century, after almost everyone who remembers it has passed on. Bubbles require a suspension of disbelief that is impossible for someone who has already experienced one. In 2005 the most popular false myth was that house prices never go down.

17 - The single-family markets in the 17 largest cities generate the following Cromford® Market Index information:

This does not look quite as encouraging as last week with 5 of the 17 cities showing deterioration for sellers and 12 showing improvement.

The big positive moves are in the West Valley (Avondale and Peoria) while the big negative move is in the Northeast Valley (Cave Creek).

Paradise Valley has seen conditions deteriorate quickly, having looked strong as recently as early January.

The average move over the past month was +2.0%, but this is down from +2.6% last week.

Another reference point is the high number of cities (20 out of 29) where the CMI went down over the past week:

  • Anthem
  • Apache Junction
  • Arizona City
  • Buckeye
  • Cave Creek
  • Gilbert
  • Gold Canyon
  • Goodyear
  • Laveen
  • Litchfield Park
  • Mesa
  • Paradise Valley
  • Phoenix
  • Queen Creek
  • Scottsdale
  • Sun City
  • Sun City West
  • Sun Lakes
  • Surprise
  • Tempe

Gold Canyon is the only city which has dropped below 100.

Over the past week, we have seen the demand index rise in the following:

  • Avondale
  • Buckeye
  • Casa Grande
  • El Mirage
  • Fountain Hills
  • Glendale
  • Maricopa
  • Peoria
  • Tolleson

This is rather a short list (8 out of 29 cities). Although almost all areas remain a seller's market thanks to the chronic low supply, demand is staying stubbornly weak in the majority of locations. Where we go from here is not exactly clear.

January 16 - After 2 full weeks it is fair to compare closed sales counts with the same 2 weeks last year.

Across Greater Phoenix for all dwelling types we have seen 1,980 closings, down 14% from 2018.

By price range the changes are:

  • Under $250K - down 25.2% from 1,186 to 887
  • Between $250K and $500K - down 3.9% from 893 to 858
  • Between $500K and $1M - up 7.9% from 178 to 192
  • Over $1M - down 18.9% from 53 to 43

The range between $500K and $1M has been relatively strong.

The range over $3M was particularly weak with closings dropping from 7 to 3.

January 15 - New listing counts are a little lower than last year with 4,383 added and activated in the first 2 weeks. The same period in 2018 gave us a count of 4,627, so we are looking at a drop of 5.3%. However, the use of the relatively new "Delayed" status means more listings are being added without being activated. If we examine the total number of residential listings created (whether activated or not) we find 4,684 in 2019 and 4,657 in 2018, a small increase of 0.6%.

Active listing counts are rising faster than last year because although there are a lower number of new listings activated, fewer listings are going into Pending or UCB status.

During the first 2 weeks of 2018 we saw active listing counts (excluding UCB and CCBS) climb from 16,697 to 17,667, a rise of 5.8%.

In 2019 we saw an increase from 17,339 to 18,581, a rise of 7.2%.

Unless demand starts to increase, which is certainly possible given that interest rates have eased, we expect to see active listing counts peak later in the spring than they did in 2018.

January 14 - Well 2019 is off to a rather flat start so far with most numbers well below those of January 2018.

The monthly sales rate is at 6,102 which is down 10% from the 6,816 we saw last year. Most of those sales occurred in December since the year to date count is only 1,835, down 20% from the same point last year.

Listings under contract are at 7,115, up 12.9% from 6,301 at the start of the year. The equivalent numbers in 2018 were 8,356, up 10.8% from 7,543. Although the fact that the counts are down substantially, the growth rate is a little higher, a positive signal.

Mortgage rates have dipped recently so we may see more demand arrive soon. In most years we don't really get buyers returning in large numbers until the Super Bowl is over.

In 2019 so far, new listings have been arriving at a similar rate to 2018. With the lower demand they are turning into listings with contracts more slowly, so active listing counts are rising faster than last year. However, active listing counts remain low by historic standards and unless they rise very much higher we have little chance of significant downward pressure on closed prices. List prices are more fragile as sellers adjust to the slower demand. Average price per sq. ft. for most segments remains strong, particularly when we look at pending listings.

The listing success rate stands at 74.3%, still well above the long term average, but down from 76.8% at this time last year.

Although the market is cooler and smaller than last year, it is not in any significant trouble. The CMI is drifting slightly lower, something that happens in January for most years.

January 10 - The regular Cromford Market Index table for the single-family markets in the largest 17 cities is below:

14 out of 17 cities have seen conditions change in favor of sellers over the past month and only 3 have moved the other way. Only one (Cave Creek) has moved in favor of buyers in a big way (CMI down 11%)

The West Valley is stronger with Avondale up 16% and Peoria up 13%.

Demand remains weak, but the important thing to remember is that supply is even weaker, so the balance still favors sellers, even though volumes are on a downward trend.

Prices remain on a clear upward trend.

January 9 - A few agents have contacted us to suggest that their revenue and side counts are too low in the Agent Performance Table for 2018. So far, every case has shown the table to be correct because the agents were including transactions in their totals that are intentionally not included in the table.

The most common reasons why a transaction is not included in the table are:

  • it was a land transaction not a residential sale
  • it was a new home sale that did not get a listing on ARMLS
  • it was outside of the ARMLS territory (out of area)
  • the agent was a co-listing agent or co-selling agent, not the listing agent or selling agent

We are very willing to correct any errors in the table if you find any, but please make sure you have excluded the inappropriate transactions from your comparison.

January 8 - We have just got a chance to study the affidavits that were filed in Maricopa County during December and they paint a much rosier picture of the housing market than we get from examining the ARMLS data. Why is this?

  • new home sales are holding up far better than re-sales
  • new home prices are gaining strength which is not reflected in MLS data since most new home sales are not in the MLS database

December's new home sales (single-family and condo / townhouse) totalled 1,544 which is up 10% from December 2017, while re-sales totalled 6,624, down 11% from a year earlier.

The median sales price of a new home in December was $349,990, up 6.6% from a year earlier

The median sales price of a re-sale home in December was $256,000, up 5.6% from December 2017.

This data suggests buyers are increasingly being attracted to new homes rather than the limited choice available for re-sale. They took 19% of the market in December 2018 while only managing 16% in December 2017.

January 7 - I have started to see a few writers claim that Phoenix is becoming a buyer's market. I think this is a huge stretch. It is possible that we have forgotten what a buyer's market really feels like. We have seen a noticeable downturn in demand but that alone does not constitute a buyer's market.

In a buyer's market, supply is higher than demand and currently we still have very low supply and little sign of a significant increase on the horizon. The weaker demand is still more than enough to match the current level of supply. Consequently sales prices still upwards momentum, although this has eased a little since last spring.

I also hear talk of lower prices, but this talk is not referring to closed sales prices. It refers to the fact that many sellers are adjusting their expectations and bringing list prices more in line with market conditions. This is not resulting in closed prices going lower than last year, as we would expect in a true buyer's market. In fact the average price per sq. ft. for listings under contract continues to hit new highs.

We have become used to a hot, growing market that strongly favors sellers and now that it is cooler, contracting in volume and moderately favoring sellers, we have a tendency to over-react and make more of the change than it really deserves. We have to stay calm and realistic and be guided by the numbers. These numbers look like a cooling off, not a downturn. We experienced a similar, though more severe, cooling off in 2013-2014, but the last significant downturn took place between late 2005 and 2009 and was followed by a 2 stage recovery from 2009 through 2013. There was also a mini-downturn in 2010-2011 which interrupted the recovery but had little lasting significance in hindsight.

There has been no decrease in loan approval rates and buyers have little to stop them apart from their own desires and perceptions. Many appear to think the current state of the market will mean lower prices for them if they wait to buy later. In this, they are very likely mistaken, but it will take time for them to realize this. Population growth in Central Arizona is still increasing faster than the number of homes. Despite a less friendly tax code since 2017, owning a home still makes better financial sense than renting unless you expect to own the home for less than 3 years. None of the conditions for closed prices to fall are currently in effect.

It seems more likely that demand will come back up, rather than more supply will appear out of nowhere. It is certainly possible that new facts come into play (e.g. interest rates) which could change the picture, but most measurements that impact the housing market are in normal to good ranges. Affordability has dropped below the ideal range but compared with neighboring California, we are amazingly affordable. 2019 is very unlike the situation in 2005, when almost every number was highly unusual and flashing danger signals, even though most of the population chose to ignore them.

As in most things, the numbers are more reliable that emotions. We will continue to report the natural numbers without adding any artificial ingredients.

January 5 - We have updated the Agent Production Table for 2018 to include all data in ARMLS as of January 4. You can find it here.

Based on dollar volume (not sides) the top 25 agents during 2018 were as follows:

Rank Name 2018 Dollars 2017 Dollars
1 Beth Rider $180M $159M
2 Jeff Sibbach $172M $152M
3 Andrew Bloom $123M $72M
4 Jason Mitchell $111M $114M
5 Walt Danley $110M $84M
6 Carol Royse $88M $64M
7 Robert Joffe $87M $103M
8 JoAnn Callaway $77M $75M
9 Lisa Lucky $76M $71M
10 Ashley Pickens $75M $43M
11 Joan Levinson $72M $73M
12 Carin Nguyen $71M $60M
13 Chris Karas $70M $75M
14 Jennifer Wehner $69M $64M
15 James Wexler $69M $42M
16 John Gluch $67M $72M
17 Deborah Beardsley $66M $20M
18 Kenny Klaus $66M $96M
19 Scott Grigg $62M $26M
20 Bobby Lieb $62M $51M
21 Russell Shaw $59M $72M
22 Mike Domer $57M $33M
23 Don Matheson $54M $44M
24 Jason Penrose $54M $58M
25 Bruno Arapovic $52M $24M

This table excludes:

  • agents working for home builders
  • agents working for iBuyers

If you wish to include these, the Tableau chart has filters that allow this. There may be some home builder agents that are not yet identified as such. If you spot any, please let me know.

Dan Noma handles Zillow iBuyer transactions but also acts as a non-iBuyer agent. However the volume of Zillow transactions is now so large that we have decided to include him as an iBuyer rather than a regular agent.

If you feel any of these numbers are incorrect, please let me know. Many of the top agents in this list lead large teams. In most cases all team members funnel their transactions through the team leader's MLS ID. For team that do not do this, ARMLS does not provide team member information, so I can only include other team members if you let me know exactly who was on your team during which time period. I can then aggregate the transactions under the team leader, if you so desire. Otherwise the transactions will appear under the individual team members because that is what appears on the MLS listing data.           

January 3 - Below is the regular table showing the Cromford® Market Index for the single-family markets in the 17 largest cities.

Despite the lower demand we have been experiencing the market index has improved in the majority of cities over the past month. Only 5 of the 17 are showing deterioration for sellers and only 1 of these is experiencing strong deterioration (Cave Creek).

Avondale, Paradise Valley, Peoria and Tempe are showing the largest monthly improvements, mainly thanks to lower inventory.

The average monthly change in the CMI is +2.6%, an improvement from +1.9% last week.

January 2 - We started 2019 with remarkably few listings in escrow. Across all areas & types in the ARMLS database we counted 17,339 active listings, 2,561 UCB or CCBS and 3,740 pending. This gives us a contract ratio of 36.34. Now January 1 is always a low point for listings under contract (pending + UCB + CCBS), but at 6,301, 2019 is down 17% from 7,583 last year and the lowest we have seen since since 2008 when we had an unbelievably weak 3,632 during the collapse of the bubble.

There is no doubt at all that this number will grow over the next few months, bit the real question is by how much. Sellers would like to see more buyers back in the game. Buyers seems suspicious that something bad is happening to the market, but the only bad thing is the fact that so many of them are holding back. If they stopped holding back, we would be back in a hot market once more. It is an unusual situation with both supply and demand far below normal. The big question is whether they are holding back by choice (fear) or because they cannot do anything at current prices (lack of affordability). Fear can be easily overcome, given time, but prices are not likely to move lower in the current circumstances. We would need a glut of homes to hit the market and there is no sign of that coming from anywhere. Employment remains strong and typical homeowners have plenty of equity. There are very few weak hands among the sellers, even though some investors may choose to take profits at this point..

If we look at the single-family sector by price range, we find the following change in the contract ratios:

Price Range Contract Ratio Jan 2018 Contract Ratio Jan 2019 Change
$150K to $175K 88.3 68.1 -23%
$175K to $200K 91.1 63.5 -30%
$200K to $225K 75.5 55.6 -26%
$225K to $250K 67.4 52.2 -23%
$250K to $275K 62.6 45.5 -27%
$275K to $300K 60.9 45.5 -25%
$300K to $350K 52.8 39.4 -25%
$350K to $400K 40.3 35.8 -11%
$400K to $500K 37.1 32.0 -14%
$500K to $600K 34.1 25.2 -26%
$600K to $800K 28.6 25.5 -11%
$800K to $1M 21.6 17.6 -19%
$1M to $1.5M 14.1 14.8 +5%
$1.5M to $2M 12.0 9.4 -22%
$2M to $3M 7.4 12.9 +74%
Over $3M 8.6 5.6 -35%

Two price ranges are stronger than last year - $1M to $5M and $2M to $3M

The biggest percentage fall is for homes over $3M, which is not surprising given the antics of the stock market over the past 3 months. The price range up to $350K have all fallen by 23% to 30% which is a significant cooling off across a broad range of prices. The cooling effect is much less noticeable between $350K and $1M although for some reason $500K to $600K has dropped 26%.        

December 29 - Most of the market indicators are looking pretty healthy at the moment: 

  • the Cromford® Market Index is now looking stable and for all areas & types stands comfortably over 130
  • the days of inventory count at 78 is just a tad higher than it was at this time last year (77)
  • average days on market are low (66), lower than last year (69) and have risen only moderately in the past few months
  • active listing counts are low by historic standards and now stand just above last year
  • listing success rate stands at 870.8% (very high), slightly down from this time last year

The primary measure that is looking rather poor is the under contract count, as can be seen in the image taken from the weekly chart below:

You can find the live chart here.

At 6,458, listings under contract are down 20% from 8,043 last year and at the lowest point since 2008. 2007 was also much lower the the current total,

We shall be watching closely to see what sort of ramp up we get during the first 3 months of 2019.

December 28 - We normally publish the building permit data at this point but the Census Bureau is closed due to the government shutdown so unfortunately we will not have any more permit data until the shutdown is over. 

December 27 - The Cromford® Market Index numbers for the single-family markets in the 17 largest cities:

Things continue to get better for sellers, a trend which started back on November 30, although you would not think so based on some of the gloomy commentaries in the media.

The average change in the CMI values is +1.9% which compares favorably with +0.3% last week.

We see 12 cities showing improvements for sellers and only 5 showing deterioration over the past month. All 17 cities are seller's markets (over 110).

Paradise Valley and Avondale are leading the recovery, up 12% and 11% respectively. This shows it is not confined to a specific price range, as Paradise Valley is our most expensive city while Avondale is among the least expensive.

Cave Creek has the least favorable market index trend of the 17 (down 9%). This is because demand has been declining while supply remains flat. Among the cities that experienced a decline during the past month, Fountain Hills, Queen Creek, Surprise and Glendale have shown a rise over the past week. This is another positive signal as we enter the new year.

The table above is a far more positive picture for sellers than we were expecting to see based on the situation in mid November. Although demand is certainly weaker than last year, supply remains far below normal and insufficient to meet even the subdued demand. Consequently sellers remain firmly in control of the market and prices will continue to rise while this situation continues.

December 26 - The S&P/Case-Shiller® Home Price Index® numbers have been released for the latest sales period (August through October) and the 20 focus cities fared as follows on a month to month basis:

  1. Phoenix +0.70%
  2. New York +0.41%
  3. Las Vegas +0.33%
  4. Charlotte +0.30%
  5. Tampa +0.27%
  6. Atlanta +0.16%
  7. Miami +0.14%
  8. Boston +0.13%
  9. Los Angeles +0.11%
  10. Washington +0.02%
  11. Dallas +0.01%
  12. Detroit -0.02%
  13. San Diego -0.12%
  14. Minneapolis -0.13%
  15. Denver -0.28%
  16. Chicago -0.35%
  17. Cleveland -0.52%
  18. Portland -0.55%
  19. San Francisco -0.71%
  20. Seattle -1.05%

Once again Phoenix is at the top of the table having opened up a gap ahead of number 2 New York.

We see almost half of the focus cities with negative changes, but this is partly due to seasonality and the national average was +0.10%. Phoenix was seven times the national average and is over-performing again. As a result, it even made a mention in the Case-Shiller press release. Seattle took another large hit for a single month while San Francisco and Portland are slowing after very strong gains over the past 4 years.

For the year over year numbers we see:

  1. Las Vegas +12.8%
  2. San Francisco +7.9%
  3. Phoenix +7.7%
  4. Seattle +7.3%
  5. Denver +6.9%
  6. Tampa +6.4%
  7. Detroit +6.0%
  8. Atlanta +6.0%
  9. Minneapolis +5.9%
  10. Los Angeles +5.5%
  11. Boston +5.4%
  12. Charlotte +5.0%
  13. Portland +4.9%
  14. Cleveland +4.8%
  15. Miami +4.8%
  16. Dallas +3.9%
  17. San Diego +3.8%
  18. Chicago +3.3%
  19. New York +3.1%
  20. Washington +2.9%

The national average was +5.5% so Phoenix was well ahead of that, and it moved up to 3rd place from 5th place last month. None of the focus cities is showing a negative move year over year.

December 24 - After 3 full weeks of December we can once again make some comparisons with the same period in 2017. For December 1 to December 21

  • we have seen 4,590 new listings added, 6.0% fewer than the 4,881 we saw in 2017
  • there have been 4,668 closed listings, 5.1% fewer than the 4,919 we saw in 2017
  • we have seen 4,735 accepted offers, 8.4% fewer than the 5172 we saw in 2017

The situation with new listings is almost the same as last week, down 6% showing that sellers have little enthusiasm for today's market

Closed listings are down 5% although they were slightly above 2017 last week, so we immediately see that the third week has had a sharp drop in closing activity. Indeed, we had 16% fewer closings during the third week of December. After the first 2 weeks were roughly level, this drop is quite a major change. However it was impossible for closings to stay high indefinitely while accepted contracts continued to fall.

Accepted contracts fell further during the third week leaving us down 8.4% after 3 weeks compared with down 7% after 2 weeks. The third week of December was down 11% compared with the same week in 2017.

We hesitate to read too much into a single week of data, but it is clear that demand is not recovering. In fact it is weakening further as buyers step up their strike action. December 15 to 21 was the worst week of 2018 so far for year over year comparisons of demand. We still see low levels of supply, but demand is now so weak that active listing counts are not falling away quickly as they usually do during the second half of December. They are just drifting slightly lower.

It looks like December will probably be a low volume month in all respects: low demand, even lower supply and a low number of closings.

December 22 - We are still seeing fewer accepted contracts than in December 2017. This means active listings stay active longer so average days on market increases. It also means the count of listings under contract is much lower than last year. How much lower? Let us take a look at various segments:

Market Segment Under Contract Dec 21, 2017 Under Contract Dec 21, 2018 Change
All Areas & Types 8,558 7,229 down 15.5%
Greater Phoenix, All Types 8,365 7,072 down 15.5%
Greater Phoenix - Single-Family Detached 6,846 5,801 down 15.3%
Greater Phoenix - Condo / Townhouse 1,317 1,090 down 17.2%
Greater Phoenix - Mobile / Manufactured 202 181 down 10.4%
Greater Phoenix - Under $250K 4,078 2,922 down 28.3%
Greater Phoenix - $250K to $350K 2,087 1,972 down 5.5%
Greater Phoenix - $350K to $500K 1,191 1,200 up 0.8%
Greater Phoenix - $500K to $1M 774 761 down 1.7%
Greater Phoenix - Over $1M 235 217 down 7.7%
Northeast Valley 1,079 867 down 19.6%
Central & North Valley 1,870 1,532 down 18.1%
Southeast Valley 2,326 1,891 down 18.7%
Pinal County 842 755 down 10.3%
Paradise Valley 61 65 up 6.6%
Scottsdale 85254 98 57 down 41.8%
Peoria 85383 121 163 up 34.7%
Queen Creek 85142 167 177 up 6.0%
Sun City 85351 130 100 down 23.1%

Although the decline in listings under contract is quite noticeable, it is not at all consistent. The most significant decline is for homes below $250K. In this price segment there is a dearth of attractive homes to tempt buyers. It also seems that buyers with less than $250,000 to spend are very discouraged by higher interest rates.

There are plenty of examples of ZIP codes with higher listings under contract than last year. Among them are 85172, 85307, 85355, 85194, 85281, 85324, 85305, 85140, 85387 and 85383, all with increases of over 30%. I am struggling to find a common thread that binds those.

There are even more examples of ZIP codes with a huge fall in listings under contract, including 85040, 85332, 85131, 85233, 85284, 85043, 85087, 85377, 85303, 85044, 85304, 85210, 85254, 85045, 85018, 85048, 85119, 85248, 85249, 85379, 85262, 85206, 85390, all having more than a 33% reduction. Again there is no obvious pattern, though the area of Ahwatukee, South Tempe and South Chandler is prominently represented.

This looks to me like a buyer's strike, but one without a lot of conviction. Sellers would probably be best advised to wait it out until more buyers arrive in late January and early February. Unless sellers have a strong need to sell quickly there is no obvious reason for drastic action. The laws of supply and demand are still working in sellers' favor and a little patience will probably prove wise.

December 21 - Here is a list of the cities where the CMI is higher than it was last week:

  • Anthem
  • Arizona City
  • Avondale
  • Casa Grande
  • Chandler
  • El Mirage
  • Gilbert
  • Litchfield Park
  • Maricopa
  • Mesa
  • Paradise Valley
  • Peoria
  • Phoenix
  • Queen Creek
  • Scottsdale
  • Sun City West
  • Sun Lakes
  • Tempe

The exceptions are:

  • Apache Junction
  • Buckeye
  • Cave Creek
  • Fountain Hills
  • Glendale
  • Gold Canyon
  • Goodyear
  • Laveen
  • Sun City
  • Surprise
  • Tolleson

I think we can agree that the cities gaining advantage for sellers are more significant than the ones going the other way. These numbers are for single-family homes only.

In the overall market for all areas & types the CMI has not yet completed its downward cycle. It stands at 132.0 and was 132.3 last week. This is a very modest decline however and there is no sign of enough momentum to force it below 130.

Both the demand index and the supply index are falling, telling us that the market is getting less active. The monthly sales rate is down 9.9% while the number of listings under contract is down 14.9% from this time last year. Sales momentum has evaporated faster than prices have increased, which means dollar volume is moving lower. This is bad news for agents, lenders and title companies, but because supply remains weaker than demand, sellers should not be fooled into thinking that buyers now have an advantage.

Sales may take longer and time on market may increase, but we do not have the right conditions for prices to decline. Based on the CMI staying above 130 we anticipate upward pressure on pricing to continue. The only city with a CMI below 110 is Casa Grande at 101 and even here it rose from 100.5 last week.

December 20 - A Christmas present for sellers in the Cromford® Market Index table this week. The following is for the single-family markets in the 17 largest cities.

A much greener table than those we have published for the past 2 months, we have 11 cities showing improvements for sellers and only 6 still deteriorating. The recent downturn is now complete as the overall average change in the CMI in this table is +0.2% instead of the -1.5% we reported last week.

Paradise Valley and Maricopa are the strongest upward movers, while Glendale, Queen Creek and Surprise are the primary downward trending cities.

Remember that the CMI tells us about the balance between buyers and sellers. It does not tell us about the size of the market. Both supply and demand are weak at the moment so the market is contracting. That means fewer transactions and less business to go round. However those worried about falling prices can take some comfort. The numbers in the table above support significant upward pricing pressure. This means homes will probably get even more unaffordable and sales volumes are likely to fall further. Listings are receiving remarkably few acceptable offers in the middle of December, but we are also seeing very low numbers of new listings.

Normally when demand goes weak we see a build up of supply, but in this cycle, we are not seeing this effect..

December 17 - We now have 2 complete weeks of December data in hand so it is fair to compare with the same 2 weeks in past Decembers:

  • we have seen 3,268 new listings across Greater Phoenix, 6% lower than the 3,478 we saw in 2017 and the second lowest total after 2014
  • there have been 2,949 closed listings across Greater Phoenix, slightly above the 2,937 we saw in 2017
  • there have been 3,340 accepted offers on listings across Greater Phoenix, down 7% from the 3,607 we saw in 2017

At 6% the drop in new listings is not as severe as for the first week of December which was down 11%. However it indicates we still see subdued flows of new supply in December, well below the average over the past 18 years.

Closings are running at a good pace, but new contracts are now down 7% having been down 4% after the first week. Buyer enthusiasm is low partly because of higher cost of ownership but also because there is a shortage of attractive inventory for them to choose from.

The combination of low contracts and normal closings means that the number of listings in escrow is unusually low and declining further. This means there is excess capacity at title companies and we will enter January with an extremely low number of homes under contract.

December 16 - Demand is lower today than it was this time last year, but the decline is modest compared with the downturns of 2006-8, 2010 and 2013-14.

One way of measuring demand downturns is to look at the contract ratio. This indicator has the advantage of being applicable to small sectors of the market but it is subject to seasonality. We can avoid the seasonality effects by comparing the same dates in different years. Let us take a look at December 2018 versus December 2017 to see how much the contract ratio has changed.

On December 15, 2018 the contract ratio for all areas & types across the ARMLS database stands at 40.9. This is a 19% decline from 50.8 on December 15, 2017 - a noticeable downturn but not a dramatic one.

On December 15, 2013 the contract ratio was 35.6 and had suffered a 54% decline since December 15, 2012 when it was 78.0. We can see that the downturn that started in mid-2013 created more than twice the annual decline that we are seeing in mid-December 2018. This was a dramatic fall, but it was not enough to stop prices from rising. It did cause them to rise at a much lower rate however.

On December 15, 2010 the contract ratio was 43.2 having been 52.2 a year earlier. This was a 17% decline and gives us a similar percentage decline to the one we experiencing today. In 2010 the fall in demand was due to the expiry of large government incentives to encourage home purchases. This occurred during a period when delinquency rates for home loans were very high and negative equity was widespread. New supply was pouring onto the market, much of it distressed in the form or short sales or lender owned homes. As a consequence the price rises experienced between 2009 and 2010 were given up again in 2011 to reach a second low point.

In 2018, home loan delinquencies are at an extremely low level and home equity is at a high level. Consequently the fall in demand is merely causing sales rates to drop and allowing buyers a little more negotiation power than a year ago. This is likely to lead to a slower appreciation rate but is very unlikely to lead to home values falling.

Before buyers get too excited about their improving circumstances, we should point out that this is because there are slightly fewer of them about. The supply is still very low by long term standards. In fact the total number of active listings on ARMLS as of December 15, 2018 is the lowest we have recorded for any December 15 since 2004, which was close to the height of the bubble. Indeed it is the second lowest total for December 15 since our records began.

December 15 - Today we are taking a deeper look into the annual sales rate and how it has changed over the past 12 months.

If we compare the annual period ending December 12 2018 with that ending December 12, 2017, we see a small increase of 0.3% over all areas and types. However single-family detached sales are down 0.2% while mobile home sales are up 7.6% and condo sales are up 2.0%. Condo sales includes the following ARMLS dwelling types:

  • Townhouse
  • Apartment Style / Flat
  • Loft Style
  • Gemini / Twin Home
  • Patio Home

Mobile home sales include:

  • Mfg / Mobile Housing
  • Modular / Pre-Fab

Sales in Greater Phoenix are up by 0.2% while out-of-area sales are up 3.5%.

Comparing the broad areas around Phoenix we find

  • the central valley is up 1.0% (all types)
  • the northeast is up 2.6%
  • the southeast is down 1.4%
  • the west is flat
  • Pinal County is up 2.4%

This demonstrates the better performance of the higher end of the market (which dominates the northeast), relatively unconstrained by supply problems. Pinal County is growing faster than Maricopa County.

December 14 - Among the 12 cities that are too small to be included in the weekly survey, the following have seem their Cromford® Market Index rise over the last week:

  • Anthem
  • Arizona City
  • El Mirage
  • Litchfield Park
  • Tolleson

7 of the 12 cities are still showing some deterioration for sellers. The overall picture is of a market stabilizing after a mild downturn. This does not bear much similarity to what we read in the press of a major retreat or even slump in the housing market. But then if the headlines did not grab your attention you would not read the adverts alongside..

The reality in Greater Phoenix is that we have shifted from a strong seller's market with high volumes to a moderate seller's market with slightly lower volumes. In due course this is likely to adjust appreciation rates from the 8%-10% level to more like 6%-8%. If the CMI drops below 120 I would change our prediction to 4%-6% but at the moment there is little sign of a fall much below 130. At a CMI of 100 we would expect appreciation Of course things could change at any point but it would need a new factor coming into play.

The housing market has seen 3 factors put a slight dent in demand:

  1. Mortgage interest rates are at a much higher level than in 2017, though still far below long term averages
  2. The cost of home ownership has risen faster than rents
  3. The tax law changes since 2018 have removed many of the tax benefits of owner-occupied housing relative to renting

We definitely do not have anything approaching a crash or a slump, which would require a large increase in supply. Supply remains weak because many existing homeowners are more reluctant to move. Doing so would require them to give up their existing cheap loan and take out a new more expensive one. They are tending to stay put, which is good news for the likes of Home Depot and home remodelling and redecorating companies.

Other parts of the country are reporting weaker markets at the upper levels, but in Greater Phoenix, the luxury market is looking strong. Supply of higher end homes is down from last year and demand is holding up rather well. Of course the luxury market in Arizona is priced like the mid-range market in many parts of California. Population flows are favoring Arizona too, so it looks as though Phoenix will have one of the leading housing markets over the coming year, even though it is likely to be somewhat less active than 2018.

December 13 - The Cromford® Market Index for the single-family markets in the 17 largest cities is shown below:

 

With 10 cities showing deterioration for sellers over the last month and 7 showing improvement, this is better for sellers than last week and a huge improvement from mid November when every city was deteriorating. The average change in the CMI is only -1.5%, up from -3.6% last week.

Glendale was the last city to enter the downturn but it looks like being the last to leave too. Queen Creek's market is also weak while Avondale and Surprise make up the remaining big downward movers over the past month. When we look at changes over the past week we can see the following cities improved for sellers:

  • Avondale
  • Buckeye
  • Chandler
  • Gilbert
  • Goodyear
  • Maricopa
  • Paradise Valley
  • Peoria
  • Scottsdale
  • Tempe

This list is as long as last week at 10, but there has been some change in the members with Cave Creek and Mesa dropping out while Peoria and Gilbert have joined.

Though we still have a little deterioration overall, the movement is now very slight. The overall Cromford® Market Index for all areas & types has declined from 132.8 to 132.3 which means we are still very much in a seller's market and 2019 will start with sellers still dominant. The last time buyer's had a slight advantage (CMI below 100) was July 1, 2014. The last time they had a clear advantage (CMI below 90) was November 11, 2010.

December 12 - Closings in November were sharply down from a year earlier. Many people believe the primary reason for this is the steep increase in mortgage rates that took place between September and October. According to Freddie Mac, the average rate on a 30-year fixed loan rose from 4.63% to 4.83%. We had seen an even steeper rise between January and February from 4.03% to 4.33% which did not seem to have much effect on buyer enthusiasm here in Greater Phoenix. However this earlier increase was spread over many weeks whereas the rise between September and October took place during 1 week between October 4 and October 11. The sudden sharp increase seemed to take the wind out of the sails of many buyers. It makes sense, from a timing perspective, for this to negatively affect contracts in October and closings in November.

Rates peaked at 4.94% between November 8 and November 15 and have since been on a downward trajectory. The poor performance of the stock market has driven investors into treasury bonds, raising their prices and hence lowering yields. These yields have a major influence on mortgage rates and so we are now down to 4.75% for a 30-year fixed loan as of December 6. The trend is now downward until the stock market starts booming again and money comes back out of its safe havens.

It now looks as though closings are strengthening in December and this may be because buyers are anxious to lock down their lower rates before they start to rise again.

December 11 - Trying to determine how many buyers in Maricopa County come from California is slightly complicated. We need to exclude many banks and companies like Opendoor who are headquartered in CA.

If we look only at the people who buy as individuals or couples, then we see significant growth over the last year. The annual purchase rate for people with Californian addresses is up 23% to 4,391. It is also up 43% from 2 years ago.

A similar (and slightly more pronounced) situation exists in Pinal County, where purchases by Californian couples or individuals are up 30% from last year and up 47% from 2 years ago. The absolute numbers are smaller however with the annual rate at 655. This is in line with the relative sizes of the Maricopa and Pinal markets.

We conclude there is a lot of truth in the rumor than more people are moving sideways from California to Central Arizona. In doing so they can often get 2 to 3 times as much home for the same money or release equity while same-sizing. Their property taxes will also be significantly lower.

The favorite locations for 2018's Californian buyers to originate are as follows:

  1. San Diego
  2. San Jose
  3. Los Angeles
  4. San Francisco
  5. Irvine
  6. Huntingdon Beach
  7. Corona
  8. Riverside
  9. Fremont
  10. Sacramento
  11. Anaheim
  12. Long Beach
  13. Temecula
  14. Mission Viejo
  15. Rancho Cucamonga
  16. Chula Vista
  17. Carlsbad
  18. Oceanside
  19. Murietta
  20. Simi Valley

The potential inter-state movement here from California is vast and the current numbers represent only a trickle, given the total size of the Californian population.

December 10 - Now we have complete data for the first week of December we can compare the numbers for those 7 days with the same period last year. We want to know about new listings, contract activity and closed sales. Here are the numbers:

  • new listings - there were 1,649 new listings added to ARMLS across Greater Phoenix, which is 11% lower than the 1,857 we saw in 2017
  • accepted offers - there were 1,726 accepted offers within ARMLS across Greater Phoenix, which is 4% lower than the 1,807 we saw in 2017
  • closed sales - there were 1,353 closed listings across Greater Phoenix, barely changed from 1,357 in 2017

The conclusion for this particular period is that new supply was unusually weak while demand was a bit stronger than anticipated and not much below this time last year.

This is more evidence that the market is stabilizing and no longer in much of a downtrend.

December 7 - Based on affidavits filed at the Maricopa County Recorder's office in November, home sales were 6% lower in November 2018 than November 2017. However, condo and townhouse sales were up 2% while single-family detached sales were down 7%. We also note that more of the condo / townhouse sales were for owner-occupation rather than rental - 18.7% were intended to be used as rental properties in November 2018 compared with 19.4% in 2017.

The same source shows us that new home sales increased 2% year over year while re-sales declined 7%.

December 6 - Below is the table showing the Cromford® Market Index for the single-family markets in the 17 largest cities:

Now we are really starting to see some significant improvement for sellers. Most obviously 5 of the 17 cities have seen a movement in favor of sellers over the past month. The moves are relatively small, with only Paradise Valley making a significant move of 6%. We also still have 12 cities that have deteriorated, but that is distinctly better than the 16 we had last week.

The downturn still has some distance to run, but it seems to be rapidly running out of steam.

Looking at the changes over the last week, we see the following cities have a higher CMI than last Thursday:

  • Avondale
  • Chandler
  • Mesa
  • Cave Creek
  • Maricopa
  • Scottsdale
  • Paradise Valley
  • Goodyear
  • Tempe
  • Buckeye

So more than half of the cities have a higher CMI than 7 days ago. Gray clouds are all around, but that tiny silver lining we referred to on November 15 now looks very shiny and thick. We should be seeing some sunshine quite soon.

The average decline in CMI is 3.6%, down from 5.9% last week and 8.0% the week before.

The remaining problem areas are concentrated in Queen Creek, Glendale and Surprise.

All 17 cities are still over 110 and therefore seller's markets.

December 4 - Monthly sales totals have tended to look more robust in public records than they have in ARMLS data over the past few months. This is because volumes of new home sales and normal non-MLS sales have held up better than normal MLS sales. The strength of non-MLS sales is largely because iBuyer purchases are now some 4% to 5% of the market and about 90% of them do not involve an MLS listing until after they have been purchased by the iBuyer. It is also true that iBuyer transactions tend to create higher sales overall. What would have been a single sale prior to iBuyers entering the market becomes 2 sales - one from seller to the iBuyer and one from iBuyer to the eventual purchaser.

We now have preliminary counts for Maricopa County affidavits in November and after adjusting for the number of working days in each month we see the following year-over-year changes in sales volume for single-family homes, condos and townhomes:

  • Nov 2018 - down 5.9%
  • Oct 2018 - down 2.7%
  • Sep 2018 - up 1.5%
  • Aug 2018 - up 1.4%
  • Jul 2018 - up 5.2%
  • Jun 2018 - up 3.0%
  • May 2018 - up 3.5%
  • Apr 2018 - up 2.2%
  • Mar 2018 - up 9.0%
  • Feb 2018 - up 10.8%
  • Jan 2018 - up 0.4%

The November % change is the most negative since September 2014 (down 6.8%). However the year-over-year sales declines that we saw in 2013 and 2014 were far more severe. The worst case was December 2013 when it dropped 15.5% from December 2012.

In summary, the November affidavit counts confirm a significant downturn in demand but also imply the downturn is not as severe as we experienced in 2013 and 2014.

The affidavit counts exclude transactions that are exempt from filing an affidavit. These include HUD sales and trustee sales. They also include some REO sales filed by a few out-of-state title companies who erroneously think REO sales are exempt. They are clearly wrong, but for some reason the Arizona authorities have not sought to correct the title company misinterpretation of Arizona statutes. Servicelink, Quality Escrow and NexTitle are the primary offenders.

December 3 - The daily Cromford® Market Index chart looks like this:

The rate of decline reached maximum during late October and subsided during November. We are now seeing a moderate rate of decline which looks as though it might not drop much below 130.

November 30 - The usual weekly table showing the Cromford® Market Index for the single-family markets in the 17 largest cities is shown below:

At first sight this looks pretty bad for sellers, with 16 out of 17 cities moving in favor of buyers over the past month. However there are in fact several pieces of good news for sellers buried in the details.

First of all the average decline is down to 5.9% from 8% last week.

Secondly, every city is still above 110 and therefore inside the seller's market zone.

Thirdly, we have several cities that saw their CMI rise over the past week. These are:

  • Buckeye - up from 111.4 to 112.4
  • Cave Creek - up from 142.0 to 142.6
  • Chandler - up from 159.8 to 160..7
  • Goodyear - up from 120.4 to 121.2
  • Maricopa - up from 124.4 to 127.1
  • Mesa - up from 156.4 to 157.0
  • Paradise Valley - up from 121.8 to 122.5
  • Peoria - up from 119.7 to 120.4

That is almost half of the 17 cities that have staged a turnaround, albeit by very small amounts. We can see that supply is dropping again and demand is stabilizing. The present downturn looks like it is shaping up to be both relatively minor compared to 2013 and relatively short-lived too.

Among the smaller cities outside the top 17, we are also seeing improvements for sellers over the last week in the following:

  • Anthem
  • Arizona City
  • Casa Grande
  • El Mirage
  • Litchfield Park
  • Sun City

At the moment I see only a small chance of the current trajectory taking us into a balanced market, and a buyer's market is not a likely outcome at all. This means that in the short term prices will continue to have upward momentum, although somewhat less than they had before September. Any buyers who think by opting out today they will be able to come back and find lower prices next year are very likely to be disappointed. It would take a massive change in the market for this to happen and there is absolutely no evidence of such a change in today's numbers.

November 29 - In the Cromford® Public section of this web-site we provide a chart which compares the annual average price per square foot over time for each transaction type. The current figures look like this:

  1. New homes $168.16
  2. Normal MLS sales $164.16
  3. Investor Flip sales $143.21
  4. Normal non-MLS sales $137.86
  5. Short sales $131.15
  6. Bank owned sales $124.41
  7. Pre-foreclosures $124.34
  8. GSE REO sales $115.54
  9. Trustee sales $111.21
  10. HUD sales $101.76

The annual change for these values are as follows:

  1. Pre-foreclosures 10.36%
  2. Trustee sales 10.21%
  3. Normal MLS sales 9.18%
  4. Bank owned sales 8.86%
  5. Normal non-MLS sales 8.72%
  6. Investor flip sales 8.70%
  7. Short sales 7.76%
  8. GSE REO sales 7.64%
  9. New home sales 6.32%
  10. HUD sales 4.42%

Although new homes are the most expensive transactions on a price per sq. ft. basis, the average $/SF is growing slowest apart from HUD sales (of which there are now very few). This is partly because many developers are aiming at lower price points where demand is strongest and competition from the supply of existing homes is very weak.

November 28 - It happens every year. As soon as Thanksgiving is over, the number of active listings starts to drop. For example, in the city of Phoenix, single-family listings without a contract are down from the peak of 3,263 reached on November 18 to 3,157 on November 27, a level we last saw on October 31. This is slightly higher than the 3,058 we measured on October 27 last year, but the drop in contract activity is being matched by a drop in new listing activity.

Both buyers and sellers are fewer in number than they were in November 2017. This increases competition among agents.

November 27 - The S&P/Case-Shiller® Home Price Index® numbers have been released for the latest sales period (July through September) and the 20 focus cities fared as follows on a month to month basis:

  1. Phoenix +0.75%
  2. Las Vegas +0.64%
  3. Tampa +0.58%
  4. Cleveland +0.29%
  5. New York +0.23%
  6. Atlanta +0.22%
  7. Charlotte +0.20%
  8. Miami +0.20%
  9. Detroit +0.11%
  10. San Francisco +0.02%
  11. Boston -0.01%
  12. Dallas -0.01%
  13. Chicago -0.06%
  14. Portland -0.06%
  15. Minneapolis -0.07%
  16. Denver -0.13%
  17. Los Angeles -0.16%
  18. Washington -0.23%
  19. San Diego -0.35%
  20. Seattle -1.34%

Suddenly Phoenix has jumped from the number 5 spot to top of the table

We see half of the focus cities with negative changes, but the national average was +0.08%. Phoenix was almost ten times the national average and is definitely an over-performer again. Seattle took another large hit for a single month while Las Vegas is no longer out in front in a league of its own.

For the year over year numbers we see:

  1. Las Vegas +13.5%
  2. San Francisco +9.9%
  3. Seattle +8.4%
  4. Denver +7.3%
  5. Phoenix +7.2%
  6. Tampa +6.7%
  7. Detroit +6.3%
  8. Minneapolis +6.0%
  9. Atlanta +5.7%
  10. Los Angeles +5.5%
  11. Cleveland +5.2%
  12. Portland +5.2%
  13. Charlotte +5.2%
  14. Boston +5.0%
  15. Miami +4.6%
  16. Dallas +4.3%
  17. San Diego +4.0%
  18. Chicago +3.0%
  19. Washington +2.9%
  20. New York +2.6%

The national average was +5.5% so Phoenix was well ahead of that, and it moved back to 5th place from 6th place last month. None of the focus cities is showing a negative move year over year.

November 26 - Comparing the annual non-distressed single-family sales in Greater Phoenix between November 1, 2017 and October 31, 2018 with the previous year we find that the annual sales rate increase was 2.0% and the annual average $/SF rose by 7.3%.

The top performing areas for appreciation were as follows:

  1. Florence & Coolidge (85128 & 851320 - up 15.6%
  2. Sky Harbor South (85040) - up 13.9%
  3. Far West Phoenix (85037) - up 12.1%
  4. I-10 and I-17 (85009, 85015, 85017, 85019, 85031, 85033, 85035) - up 11.8%
  5. Maricopa (85138 & 85139) - up 10.7%
  6. Southwest Phoenix (85043) - up 10.3%
  7. Tolleson (85353) - up 10.2%
  8. Sky Harbor North (85006, 85008, 85014, 85034) - up 10.1%
  9. El Mirage (85335) - up 10.0%
  10. South Buckeye (85326) - up 9.8%

The bottom performing areas for appreciation were as follows:

  1. Gold Canyon (85118) - up 3.1%
  2. South Tempe (85284) - up 3.5%
  3. North Goodyear (85395) - up 3.8%
  4. Downtown Phoenix (85003, 85004, 85007) - up 4.1%
  5. Northeast Phoenix (85050, 85054) - up 4.1%
  6. North Surprise (85387) - up 4.5%
  7. North Phoenix (85083, 85085, 85310) - up 5.0%
  8. North Scottsdale (85255, 85259, 85262, 85266) - up 5.1%
  9. South Scottsdale (85250, 85251, 85257) - up 5.3%
  10. Anthem (85086) - up 5.4%

November 24 - For the first time in many years, the monthly dollar volume today is lower than it was this time last year. This confirms the market slowdown and indicates that the drop in monthly sales volume is now having a greater impact than the annual rise in average sales price.

The last time this crossover occurred was in December 2013. On that occasion dollar volume remained lower than the prior year for 9 months but re-crossed in September 2014 and has remained above the prior year from then until today.

If history is any guide, the dollar volume is likely to remain lower for the rest of 2018 and part of 2019. However it is unlikely to remain lower for the whole of 2019. In fact we can gauge the severity of the current downturn by how long it takes to cross back over the prior year's dollar volume. We are unable to make any specific prediction for this date, but we can see that the current downturn has so far proven to be less dramatic than the one that occurred in 2013.

November 23 - Looking at the third week of November and comparing with the same period in 2017 we see the following:

  • New listings total 1,764, down 13.0% from 2017 and the lowest number we have ever recorded since 2000 for the third week of November.
  • Closed listings total 1,832, down 12.3% from 2017
  • Accepted offers total 1,875, down 9.5% from 2017

The figures above are for all dwelling types across Greater Phoenix.

Clearly the market is far less active than it was this time last year, but it is not just buyers who are down. The steepest fall was in the number of new listings, showing that sellers are also losing enthusiasm. If this trend continues we will probably find we have too much capacity in the support functions for residential real estate transactions. It appears that many potential move-up buyers are deciding to stick with the mortgage they already have. This reduces the number of sellers as well as the number of buyers but it is good news for the businesses that support home improvement.

The changes are not uniform across all price ranges:

  • Closed listings were down 25.7% for homes under $250,000
  • Closed listings were down 4.6% for homes between $250,000 and $300,000
  • Closed listings were up 17.9% for homes between $300,000 and $400,000
  • Closed listings were down 7.6% for homes between $400,000 and $800,000
  • Closed listings were up 14.5% for homes between $800,000 and $1.5 million
  • Closed listings were down 14.3% for homes over $1.5 million

November 22 - Once again we take a look at the Cromford Market Index numbers for the single-family markets in the largest 17 cities:

The market is starting to show signs of pulling out of its dive. The above table looks pretty negative for sellers but it has a few more positive elements than last week.

First we have 1 city - Paradise Valley - that showed a small improvement from last month. Second, we have an average change of -8.1%, better than the -9.2% we saw last week.

We still have every city in the seller's market zone above 110. In fact Buckeye, the closest we have to a balanced market, moved up from 110.8 last week. Fountain Hills is also higher than last week

Avondale, Queen Creek, Chandler, Tempe & Scottsdale are down by 10% or more since last month, but we still see no signs of any of these 17 cities breaching the 110 mark. Until they do, the long-term average sales price per sq. ft. is very unlikely to fall below current levels. In fact we would not expect this to become a real possibility until CMI values have dipped well below 100.

November 21 - To read the news you would that the housing market was having a really hard time. A phrase like "the worst slowdown in years" (Bloomberg) sound ominous, but we need to remember that the housing market had been growing at an accelerating pace between 2015 and 2018 and a slowdown is inevitable at some point when prices rise for many years.

Talking specifically about Greater Phoenix

  • We are having a slowdown
  • It has been expected for at least a year
  • It is quite a modest slowdown, the least dramatic in the last 20 years
  • It is still the worst slowdown in years, because it is the only slowdown since 2013/2014.
  • The 2013/2014 slowdown was much more severe that the current slowdown
  • Sales prices did not decline during the 2013/2014 slowdown, they merely stabilized for a while before resuming an upward trajectory
  • So far there is no sign that sales prices will decline due to the current slowdown
  • There are more cuts in list prices than we have seen for a good while, but these are not likely to lead to cuts in the average sales price per sq. ft. which is based on closed contract prices
  • There is no sign yet of sales prices even moderating, although that would be likely if the drop in demand continues for a long period
  • It would take a large increase in supply to start putting downward pressure on pricing, and the supply of new listings is currently getting weaker, not stronger.

To give you some idea of how benign the current slowdown is let us have a look at the average price per sq. ft. for listings under contract:

This is for all types of dwellings within Greater Phoenix.

The chart is a leading indicator of future sales pricing and shows a strong rise in prices for homes in escrow over the past 2 months.

If buyers are going on strike, waiting for prices to come down or interest rates to drop (or both), then they are likely to be disappointed. It is more likely that prices will rise (and who knows what interest rates will do?).

November 16 - During the second full week of November we made the following observations compared with the same period in 2017:

  • New listings: 2,039 in 2018 versus 2,095 in 2017, a decline of 3.3%
    • new listings under $250K fell 19% from 1,001 to 809
    • new listings between $250K and $500K rose 16% from 794 to 924
    • new listings over $500K rose 2% from 300 to 306
  • Closed listings: 1,272 in 2018 versus 1,392 in 2017,a decline of 8.6%
    • closed listings under $250K fell 20% from 720 to 574
    • closed listings between $250K and $500K rose 4.4 % from 542 to 566
    • closed listings over $500K rose 1.5% from 130 to 132
  • Accepted offers: 1,828 in 2018 versus 2,083 in 2017, a decline of 12%
    • accepted offers on listings under $250K fell 24% from 1,080 to 821
    • accepted offer on listings between $250K and $500K rose 4% from 802 to 831
    • accepted offers on listings over $500K fell 12% from 201 to 176

All the above numbers are for all property types across Greater Phoenix.

The conclusions we can make are as follows:

  1. The market is contracting with new listings, closed listings and accepted offers all down from last year
  2. Accepted offers showed the largest decline, showing that weaker demand is the primary change compared to last year.
  3. Although sales and offers have fallen in the segment below £250K, so has the supply of new listings. All have declined by a similar amount, around 20%. The market remains favorable for sellers, though much smaller than last year.
  4. New supply between $250K and $500K is arriving 4 times as fast as listings are going under offer or closing, leading to an increase in choice for buyers and weakening sellers' negotiation power.
  5. The market over $500K, which remained stronger than 2017 during October is starting to show signs of demand weakness with the 12% drop in accepted offers. New listings and closings were in balance.           

November 15 - Looking at the Cromford® Market Index table for the single-family markets in the 17 largest cities we see another big downward change over the past month: 

 

Now we have 100% of the cities showing a decline as even Glendale has surrendered. Glendale does have the lowest monthly fall at -3%. The average change is -9.2%, just 0.1% higher than last week, the tiniest of silver linings.

There are more silver linings if we look very closely.

The first positive is that every city is still over 110 and so is officially classified as a seller's market despite the big decline in buyer interest. Buckeye has stabilized in the last week and only fell 0.1 over the last 7 days. Other cities that have stabilized over the last week are Peoria and Goodyear, while Paradise Valley has managed a very slight increase over the past 2 weeks. So we would then have all 5 cities at the bottom of the table refusing to drop further. Those higher up the table are still rushing to join them in the 110 to 130 zone. It looks like Tempe, Maricopa & Fountain Hills are preparing to join the stabilized group soon, now they have dropped below 130.

Top of the table Avondale declined by the largest percentage (-16%).

The overall impression is that cities are unlikely to fall much below 110 on the current trends. This is much cooler than the market in the first half of 2018, but it certainly is not a market crash, just a return to a healthy more-balanced situation. Many potential buyers are taking a break, but it would not be surprising if they came back again once they have got used to the current interest rate environment. They are probably hoping that closed sales prices will fall, which is unlikely given the continued shortage of homes for sale. It is likely that asking prices will have to get more attractive however, which will cause sales price increases to moderate.

We clearly have a rapidly cooling market but there is absolutely no sign of serious cause for alarm in the data we are studying. Sellers will need a little more patience and flexibility on their terms and asking prices. Buyers may feel less outnumbered by other competing buyers and as a result can do their house-hunting in a less frenetic and stressful way.

Both of these seem like good news to me.

November 14 - The Home Opportunity Index (HOI) is published by the National Association of Home Builders in conjunction with Wells Fargo Bank. It calculates the percentage of homes listed for sale that could be afforded by a family earning the median income.

The chart below shows the HOI for the USA in green and for Phoenix in blue.

In the third quarter of 2018 homes were the least affordable they had been since 2008 and the HOI is no longer inside the normal range of 60-75. This helps to explain why we are seeing a weakening trend in demand.

We also see that Phoenix no longer has a significant affordability advantage over the USA as a whole, something we have had for most of the past 30 years. Houses in Phoenix are cheaper than average, but incomes are also lower than average.

November 13 - Today we make another comparison between 2013 and 2018, this time looking at listings under contract.

We can see that 2013 had much higher numbers of listings under contract, but this was primarily caused by the large number of short sales in escrow.

We can also see that although 2018 has seen a sharp fall-off in listings under contract between April and November, the decline in 2013 was steeper. Again, this shows that the cooling of the market in 2018 is not as severe as in 2013.

We note that the cooling of the market in 2013 did not cause prices to stop rising. We can deduce that the cooling in 2018 is unlikely to stop prices from rising. However it may stop them from rising quite so fast.

November 12 - Although we have entered a market down-cycle, it is much less severe than the last down-cycle which commenced in 3Q 2014. To illustrate this let us take a look at a series of charts that compare 2018 with 2013.

Here we can see that active listings have risen in 2018 from the end of July, but they have not yet exceeded the level of early April. The count for November 10 (week 45) was 22,112 (all areas and types). Our current down-cycle features a relatively small build-up of inventory.

In 2013, active listings started rising in late May and surged between July and November by roughly 7,000 listings. The count for week 45 was 26,900. This illustrates how much more severe the market slowdown was in 2013 compared with 2018. We also have far fewer active listings in 2018 than we did in late 2013.

November 9 - We like to study weeks much better than months. Weeks are more consistent in length and therefore comparing (say) week 45 of 2018 with week 45 of earlier years usually gives us an accurate understanding of how the current market compares with the past. Even if there was a holiday during a week, reducing its working-day count from 5 to 4 or even 3, the corresponding week almost always has the same working-day count. Months have the annoying habit of being inconsistent in length. Even a month like November which always has 30 days, has a variable number of working days, between 17 and 20, so comparing November 2018 with earlier Novembers is fraught with problems. Most analysts ignore this problem and compare months anyway, sometimes leading to spurious conclusions.

Anyway, we would now like to look at the week at the start of November, one which has just completed. Comparing with the same week last year we find:

  • new listings are down from 2,353 to 2,178, a drop of 7%
  • closed listings are down from 1,245 to 1,133, a drop of 9%
  • accepted offers are down from to 2,281 to 1,904, a drop of 17%

The market is clearly less busy than last year at this time. New supply is coming onto the market more slowly while existing listings are closing at an even slower rate. The biggest decline is in contract signings. This latter change is the one with the most significance and implies that higher interest rates and higher prices are finally cooling the market down, as economic theory tells us they should.

Buyers are much less active than they were last year, so despite the fact that we have more demand than supply, sellers will not be in as strong a position as they were this time last year. A corollary is that the remaining buyers are going to enjoy better negotiating power and are more likely to win concessions from sellers. This is reflected in the charts which show seller paid closing costs and price changes.

Everything is orderly and the market is operating as we would expect. This is not unusual greed or fear at work (as we would see in a bubble), just the normal operation of a cyclical market. The only slightly surprising thing is how long it took for the higher interest rates and higher prices to have an impact. In 2017 we were expecting to see this effect become clearly observable by mid-2018, but the signs were only very small at this point. Now the effects are very clear and this makes for a different market sentiment.

November 8 - Once again we are showing the table of Cromford® Market Index values for the single-family markets in the 17 largest cities:

If you thought last week's average 8.4% decline was impressive, then you will be even more impressed with the 9.3% fall we have this week.

Glendale managed a very small increase but the other 16 cities saw declines, most of them over 10%.

The common story is that listings are going under contract slower than usual which makes active listings start to build up. We are NOT seeing an increase in the number of new listings arriving.

Despite the declines, all the cities (even Buckeye) are still in the seller's market zone over 110. Remember that 100 represents normality. We expect Buckeye will drop below 110 by next week, but the overall market is still much stronger than it was for all of 2014, all of 2015 and most of 2016. We are approaching a more balanced market at some speed, but given the continued weak supply, we are very unlikely to overshoot. We would need a large increase in supply to create a buyer's market. It is not at all obvious where this extra supply would come from. The situation is very different from 2005 when tens of thousands of empty homes had been purchased by speculators with ill-advised and reckless loans. Anyone who thinks the current situation is a bubble bursting is very much mistaken. It is merely the normal process of an over-heated market cooling down, something we expect to see several times a decade. True bubbles in housing tend to occur once or twice a century.

November 6 - There was a significant decline in the number of MLS listings going under contract in October. The total of accepted offers was 8,133 which was down 2% from September (a much shorter month with 17% fewer working days) and it was down 8% from October 2017.

However the decline was not universal across all price ranges. Almost all the decline occurred in the price range up to $225,000. This saw just 2,630 accepted contracts, down 28% from 3,651. Between $225,000 and $350,000 accepted contracts rose 5% to 3,226 while between $350,000 and $800,000 they grew 10% to 2,003. Between $800,000 and $2 million there was a slight decline of 1% to 240 while over $2 million we saw a 31% increase to 34.

Seeing the huge drop-off in contracts under $225,000 we expect to see a strong upward trend in average price per sq. ft. over the coming months, since the mix of homes closing will be skewed towards the higher end.

November 5 - Looking at the affidavit counts for October in Maricopa County, we see 9,042 for single-family and condo residences, up 1.7% from October 2017. New homes sales were up 5.9% while re-sales were up only 1.0%. These sales counts do show some modest annual growth, unlike the ARMLS closings which were down year-over-year. The reason the public recordings show more growth are:

  • 90% of new home sales do not get recorded in the ARMLS database and these are still showing a healthier trend than re-sales.
  • 90% of iBuyer purchases do not get recorded in the ARMLS database and these are well up from 2017 levels.
  • October's fall in MLS sales was more severe in Pinal County (-8%) than in Maricopa County (-1%)

November 2 - This is the first month since September 2016 where months of supply (3.1) is higher than 12 months earlier. This transpired for two reasons. First, the monthly sales rate for October was unusually weak compared with the previous 24 months, especially considering it had 23 working days. Second, the active listing count rose sharply during October due to the low rate at which listings went under contract.

Although it is valid to conclude that the market is cooling, 3.1 months is still lower than average and the market is merely heading towards normality. We would consider 4 to 5 months normal for a balanced market in early November. For example November 2014's reading was 4.7 months and the market was reasonably balanced between buyers and sellers at that point.

November 1 - The cooling of the market is accelerating according to the weekly table of Cromford® Market Index values for the single-family markets in the 17 largest cities:

 

Here we have 16 cities deteriorating for sellers and only 1 (Glendale) improving over the past month.

All 17 cities remain in the seller's market and so those hoping for prices to fall have nothing to celebrate yet. We would need CMI values to fall below 90 for that to occur and even the lowest ranked (Buckeye) is above the balanced zone of 90 to 110.

The average change over the past month is -8.4%, the largest decline we have seen since 2013. This means we are experiencing a profound change in market conditions. The decline is not as rapid or severe as 2013, but sellers need to note that their bargaining power is on the wane. Buyers are less numerous and have lowered enthusiasm.

It is unusual to see many cities with double digit percentage declines with Paradise Valley, Buckeye, Gilbert, Mesa, Avondale, Goodyear, Chandler and Maricopa all holding that dubious honor. Among the secondary cities, Casa Grande is the weakest with a CMI of 110.8, just outside of the balanced zone.

At some point we expect this plummeting behavior to slow and bottom out. We are not seeing this yet, but it is quite likely that we see some slowing of the trend during November. Watch this section of the web sites for the earliest news of this.

October 31 - The Greater Phoenix area is relatively unaffected by international buyers, with the single exception of Canadians. Unlike Californio or Washington State, we get little attention from the Chinese. The good news is that we are therefore seeing little to no effect from the significant downturn in Chinese buying of American real estate. This downturn is probably a consequence of the imposition of tariff barriers to trade. Chinese holders of significant commercial real estate assets have been selling many of them in 2018 to release liquid funds to repatriate. Most of these assets are on the east and west coasts.

The bad news is that Arizona is no longer attracting much Canadian interest either. The annual purchase rate across Maricopa and Pinal counties is standing at an unimpressive 768 homes for the 12 months starting October 2017. At least this is up from the low point of 564 attained in December 2016, but it is a far cry from the 4,351 we saw in February 2012.

Canadians are selling almost twice as many homes as they are buying. 1,524 is the current annual sales rate, though this has declined from a peak of 2,824 in August 2016.

So the vast majority of the housing demand across Phoenix is now coming from domestic sources. The table below shows how much annual housing demand comes from each state or territory:

  1. Arizona 92,012
  2. California 4,380
  3. Washington 1,867
  4. Illinois 1,250
  5. Colorado 1,245
  6. Minnesota 777
  7. Oregon 658
  8. Texas 654
  9. Wisconsin 505
  10. Utah 387
  11. Michigan 377
  12. Nevada 373
  13. New York 355
  14. Florida 318
  15. Iowa 302
  16. Ohio 291
  17. North Dakota 262
  18. Pennsylvania 252
  19. New Mexico 252
  20. Idaho 232
  21. Nebraska 230
  22. Missouri 224
  23. Montana 221
  24. Indiana 189
  25. Virginia 188
  26. New Jersey 162
  27. South Dakota 161
  28. Kansas 151
  29. Alaska 147
  30. Georgia 138
  31. North Carolina 131
  32. Massachusetts 126
  33. Wyoming 114
  34. Hawaii 107
  35. Maryland 106
  36. Tennessee 92
  37. Oklahoma 87
  38. South Carolina 79
  39. Connecticut 78
  40. Arkansas 39
  41. Kentucky 38
  42. Alabama 38
  43. Louisiana 33
  44. New Hampshire 31
  45. Maine 25
  46. Delaware 23
  47. Armed Forces in Europe (AE)
  48. Rhode Island 19
  49. Mississippi 18
  50. Vermont 17
  51. West Virginia 16
  52. Armed Forces in the Pacific (AP)
  53. Washington DC 11
  54. Guam 8
  55. Puerto Rico 5

The numbers indicate the annual sales rate for homes intended as first or second residences (not investment properties) and exclude purchases by the out-of-state iBuyers (Opendoor and Zillow).

Alberta and British Columbia used to rank quite high in this table, but AB is now equivalent to North Dakota and BC to Kansas.

October 30 - The S&P/ Case-Shiller® Home Price Index® numbers have been released for the latest sales period (June through August) are the 20 focus cities fared as follows on a month to month basis:

  1. Las Vegas +1.15%
  2. Tampa +0.54%
  3. Detroit +0.52%
  4. Cleveland +0.52%
  5. Phoenix +0.40%
  6. Minneapolis +0.32%
  7. Atlanta +0.30%
  8. Charlotte +0.22%
  9. Chicago +0.20%
  10. Miami +0.13%
  11. Los Angeles +0.13%
  12. Boston +0.06%
  13. Denver -0.02%
  14. Washington -0.03%
  15. New York -0.03%
  16. Dallas -0.04%
  17. Portland -0.10%
  18. San Francisco -0.29%
  19. San Diego -0.46%
  20. Seattle -1.58%

We are starting to see a larger number of cities with negative changes - 8 this month, although the national average was +0.22%. Phoenix was almost double the national average and is starting to look like an over-performer again, although it slipped from 3rd to 5th place in the table above since last month. Seattle took an unusually large hit for a single month while Las Vegas is out in front in a league of its own.

For the year over year numbers we see:

  1. Las Vegas +13.9%
  2. San Francisco +10.6%
  3. Seattle +9.6%
  4. Denver +7.7%
  5. Tampa +7.0%
  6. Phoenix +7.0%
  7. Los Angeles +6.2%
  8. Minneapolis +6.0%
  9. Detroit +6.0%
  10. Atlanta +5.8%
  11. Cleveland +5.6%
  12. Boston +5.5%
  13. Portland +5.4%
  14. Charlotte +5.2%
  15. Miami +5.0%
  16. San Diego +4.8%
  17. Dallas +4.7%
  18. Chicago +2.9%
  19. New York - 2.8%
  20. Washington +2.8%

The national average was +5.8% so Phoenix was well ahead of that, though it slipped from 5th place last month to 6th place today.

October 29 - The Cromford® Market Index for all areas and types is really diving at the moment as can be seen in the chart below:

 

This is partly because of more supply, but then we get more supply at this point every year. It almost always peaks around Thanksgiving and then plunges again during December. Supply is not what we need to worry about at this stage.

The primary reason for the plummeting CMI is the weakness of demand. Closed listings had been running well ahead of 2017 for most of the year but started to falter a couple of months ago. Monthly closings were 1.2% ahead of 2017 as recently as October 2. Today they are 7.3% below 2017. Pending listings are 13.5% below 2017 levels and UCB listings are down 9%.

We can argue about what is causing the drop in demand, but we can no longer argue about its existence

October 26 - Below is a table showing the Cromford® Market Index for the single-family markets in the 17 largest cities:
Although all cities are still in the seller's market zone over 110, this is the most negative picture we have seen for a very long time.

16 of the 17 cities have deteriorated for sellers over the past month and only 1 (Glendale) has improved. Paradise Valley and Buckeye have fallen the most, representing both the top and bottom end of the price spectrum. The Southeast Valley mid-range strongholds of Chandler, Gilbert and Mesa are all down 7 to 9% while the Northeast Valley's Scottsdale and Fountain Hills are down 8%. The big West valley cities including Peoria and Surprise are holding up reasonably well in comparison. Phoenix continues to drift lower as it has for many months now.

The market is cooling fast with weakened demand being the primary culprit. Supply remains low and still inadequate to meet demand, so sales prices continue to rise. However the fall in seller negotiation power is leading to a flattening trend in asking prices across many price ranges.

We anticipate falling sales volumes, which is bad news for agents, brokers and title companies, though the downwards trend is not as steep as we saw in 2013 and 2014. Lenders will probably also see lower volumes though the rising interest rates create opportunities to increase spreads.

The rest of the USA has been reporting weaker demand for several months now. It seems that Greater Phoenix is joining the rest of the country. However we must emphasize that the current figures represent a return to normality rather than a dire situation. Loan delinquency is very low and most home owners have substantial equity, so there are almost none of the dangerous conditions that prevailed in 2006 and 2007.

October 25 - The Census Bureau has released the single-family housing permit counts for September and they are a little lower than we have been used to seeing. A total of 1,511 permits for Maricopa and Pinal counties is down 7% from 1,625 in September 2017. This means the 12 month rolling average is slightly down from 22,388 last month to 22,274 this month.

The third quarter total is still up over last year, increasing from 5,423 to 5,912.

It appears that an additional degree of caution has overtaken the home builders, though supply still remains far below demand.

October 24 - Time to check on how sales have been doing for the first 3 weeks of October:

Segment Closed Listings 2018 Closed Listings 2017 Change
All areas & types 4,372 4,639 down 6%
Greater Phoenix - all types 4,214 4,504 down 6%
Greater Phoenix - Single-Family Detached 3,479 3,711 down 6%
Greater Phoenix - Condo/Townhouse 641 691 down 7%
Greater Phoenix - Mobile Homes 94 102 down 8%
Greater Phoenix - Below $200K 884 1,413 down 37%
Greater Phoenix - Between $200K and $300K 1,694 1,611 up 5%
Greater Phoenix - Between $300K and $400K 805 749 up 7%
Greater Phoenix - Between $400K and $1M 732 667 up 10%
Greater Phoenix - $1M and over 99 64 up 55%

Overall, the unit counts are down everywhere and for all dwelling types. However the steepest drop is at the bottom end, mainly because of lack of supply. The mid range is up over last year but the increase is far less than during the first half of 2018.

For the luxury market over $1M sales have seen a very healthy increase.

These changes in the sales mix (in favor of the top end) will make the average sales price, median sales price and average $/SF all look very strong, and much stronger than the underlying change in home values. Remember this when interpreting the price charts during the fourth quarter.

October 23 - What we are witnessing in the Greater Phoenix housing market right now is nothing like a crash or a bubble deflating. However there are many clear signs that the market is softening after 3 years of growing strength. So far we have not seen enough to make any dent in the upward progress of average sales price per sq. ft. In fact this measure looks very strong in October as the market from $500K up to $3M is holding on to more momentum than the mid-range from $250K up to $500K. We should not expect to see negative changes in sales price $/SF any time soon because it is very much a trailing indicator. There are many other places to look for a change in the market and we will cover one of them today - the listing success rate.

Since exceeding 85% in mid-April the listing success rate has been gently moving lower and on October 22 we measure it below 78%.

This is still well above the long-term average but is the lowest we have seen for a long time. This means 22 out of 100 listings are failing to find a buyer instead of 15 out of 100 six months ago. Inverting the measure, the listing failure rate has increased by about 50% from below 15% to more than 22%. It sounds worse when we put it that way, but whatever way you look at it, sellers are not feeling as secure and confident as they did just a few months ago.

October 22 - In an effort to understand more clearly how the market has changed since last year we segmented the Greater Phoenix market by price range and compared the contract ratios:

Price Range Contract Ratio Today Contract Ratio Last Year Change
Under $100K 51.0 46.8 up 9%
$100K to £125K 87.4 90.6 down 4%
$125K to $150K 83.9 91.8 down 9%
$150K to $175K 92.1 95.9 down 4%
$175K to $200K 93.2 85.5 up 9%
$200K to $225K 78.6 81.2 down 3%
$225K to $250K 68.8 73.0 down 6%
$250K to $275K 57.0 67.5 down 16%
$275K to $300K 52.1 62.6 down 17%
$300K to $350K 47.7 53.8 down 11%
$350K to $400K 42.7 45.1 down 5%
$400K to $500K 39.0 38.3 up 2%
$500K to $600K 35.5 32.0 up 11%
$600K to $800K 30.3 26.8 up 13%
$800K to $1M 23.0 20.5 up 12%
$1M to $1.5M 19.7 18.8 up 5%
$1.5M to $2M 13.3 11.4 up 16%
$2M to $3M 15.0 10.8 up 39%
Over $3M 4.9 7.0 down 30%

The weakest trend is for homes priced between $250K and $350K (and also for homes over $3M, though this segment has very few sales and is therefore very volatile). Between $250K and $350K we are seeing more available supply and fewer homes going under contract. It is this lower mid-range sector which is exhibiting the most significant weakening. As this is a very high volume part of the market it affects the overall market numbers. It is also a very popular price range for new homes, which for the most part are excluded from our numbers since 90% of them are not listed on the MLS.

The strongest trend is for homes priced between $500K and $3M. Here supply has fallen 5% compared with last year while 7% more homes are going under contract. However it is not as much improved as it was during the first half of 2018.

October 20 - The Cromford® Market Index for all areas and types stands at 149.1 today. This is significant because it is lower than at the same point in both 2016 and 2017. As recently as one month ago it stood above both these years at 158.2.

The market appears to be hitting an air-pocket with falling demand and rising supply. There are a number of possible causes and probably a combination of them is driving this change in market direction:

  • mortgage interest rates have now risen enough to dampen buyer enthusiasm
  • mortgage interest rates have now risen enough to cause sellers to defer move-ups or downsizing
  • we are starting to see the end of the wave of boomerang buyers
  • home prices have risen enough to seriously affect affordability
  • interest from foreign buyers is at an extreme low (which means mostly Canada in Arizona)
  • recent tax changes have removed incentives for home ownership over rental
  • home purchase has become more expensive relative to home rental

Black Knight Financial Services estimates that the monthly mortgage payment required to buy the average home in the USA has increased 16% since January. Wages are up an average of 3% and rents are up an average of 8% across Greater Phoenix in the last year. Official government measures of inflation might be relatively low, but inflation in the cost of shelter is very high. Eventually demand is susceptible to costs rising beyond a tipping point. While rents are rising fast they are rising less fast than mortgage payments.

The CMI is a leading indicator. The most widely followed trailing indicator is sales price. This is still rising and is likely to continue to do so for several months at least.

October 18 - The market is in a cooling trend as evidenced by the Cromford® Market Index for the single-family markets in the 17 largest cities:

Here we see 13 of the cities deteriorating for sellers and of the the cities improving, only 1 (Glendale) improved by a significant percentage over the past month.

Among the declining cities, Paradise Valley, Buckeye are down by double digits. Scottsdale, Fountain Hills, Mesa and Chandler are all down 7% to 8%.

We are not getting a flood of new listings (quite the opposite in fact), but active listing counts are rising because contract activity is weakening. The Cromford Demand Index and Contract Ratio measures tell us that buyers have lost enthusiasm. However under $200,000 we still see multiple offers in most situations thanks to to the continued lack of listings within that price range.

October 17 - The contract ratio is an excellent guide to how hot or cold a market is, and we are seeing the following readings compared to October 17 last year:

Market Segment Contract Ratio 2017 Contract Ratio 2018 Change
All Areas & Types 53.0 50.0 down 6%
Greater Phoenix - Single-Family Detached 55.9 51.7 down 8%
Greater Phoenix - Townhouse 70.1 66.5 down 5%
Greater Phoenix - Apartment Style 48.9 45.0 down 8%
Greater Phoenix - Twin / Duplex 68.2 89.6 up 31%
Greater Phoenix - Patio Home 53.3 58.1 up 9%
Greater Phoenix - Mobile Home 34.1 41.5 up 22%
Single-Family - Phoenix 59.3 52.0 down 12%
Single-Family - Mesa 79.4 66.5 down 16%
Single-Family - Scottsdale 30.1 28.7 down 5%
Single-Family - Chandler 78.2 68.6 down 12%
Single-Family - Glendale 64.8 67.7 up 4%
Single-Family - Gilbert 75.9 73.8 down 3%
Single-Family - Surprise 61.0 59.8 down 2%
Single-Family - Peoria 53.7 49.2 down 8%
Single-Family - Queen Creek (including San Tan Valley) 73.6 61.4 down 17%
Single-Family - Avondale 73.0 68.8 down 6%
Single-Family - Tempe 51.0 49.6 down 3%
Single-Family - Goodyear 46.9 45.2 down 4%
Single-Family - Maricopa 65.5 57.4 down 12%
Single-Family - Buckeye 62.4 59.6 down 5%
Single-Family - Cave Creek 35.5 34.0 down 4%
Single-Family - Fountain Hills 25.2 23.2 down 8%
Single-Family - Paradise Valley 20.4 14.7 down 28%
Single-Family - Casa Grande 66.5 41.6 down 37%
Single-Family - Sun City 62.5 69.0 up 10%
Single-Family - El Mirage 162.5 98.1 down 40%
Single-Family - Apache Junction 61.3 63.3 up 3%
Single-Family - Anthem 58.8 37.6 down 36%
Single-Family - Laveen 75.4 93.2 up 24%
Single-Family - Sun City West 78.8 79.6 up 1%
Single-Family - Litchfield Park 42.9 38.7 down 10%
Single-Family - Tolleson 72.7 86.8 up 19%
Single-Family - Arizona City 35.8 72.5 up 103%
Single-Family - Sun Lakes 64.0 62.9 down 2%
Single-Family - Gold Canyon 29.0 28.5 down 2%
Single-Family - Florence 55.3 71.0 up 28%

The majority of segments are cooler than last year, with dramatic declines in Anthem, El Mirage, Casa Grande and Paradise Valley. This is a situation that has developed over just the last 6 weeks.

However mobile homes are hotter than last year, as are patio homes and twin/duplex homes and a handful of cities - Florence, Glendale, Arizona City, Sun City, Sun City West, Tolleson, Laveen and Apache Junction. 

October 15 - The second week of October has continued the new trends started in the first week, an important signal for the market. New listings are well below last year but active listing counts have grown relatively fast. This means listings are going under contract more slowly. Closed listings are less numerous than last year too.

These all add up to a smaller market with lower activity, but not necessarily lower pricing. Demand is weaening but supply is also weak and needs to grow a lot if it is to match even a weaker demand level.

The Cromford® Market Index is still over 150 so we have a strong seller's market. However it is falling very fast with supply increasing and demand falling. If this trend continues for a couple of months we could be well on the way back to a balanced market. Change is in the air, but it is still too soon to be certain how this will develop. It is clear that this is an important time to be watching the market carefully.

Here are a few key numbers from the first 2 weeks of October:

Measure for first 2 weeks of October 2017 2018 Change
New Listings - Greater Phoenix 4,916 4,226 down 14%
Active Listings Change - Greater Phoenix 827 871 up 5%
Closed Listings 2,845 2,646 down 7%
Pending Listings at end of period 5,786 4,973 down 14%
UCB & CCBS Listings at end of period 3,773 3,559 down 6%

 

All of these changes are negative for sellers, as evidenced by the short term Cromford® Market Index chart.


October 11 - The Cromford® Market Index table for the single-family markets in the 17 largest cities is shown below:

We see 7 cities showing an improvement for sellers and 10 deteriorating. This does not sound too bad until we calculate that the average change is -2.8%, considerably worse than last week's -1.9%.

Buckeye, Fountain Hills and Paradise Valley have seen the largest declines while Tempe was the only city to see a double digit percentage improvement.

Despite the shortage of new listings, active listings are growing because fewer homes are going under contract. Over the last month there has been a decline in the enthusiasm of both buyers and sellers.

October 10 - We are examining the first week of October in more detail to study how new listing counts dropped unexpectedly. We counted 2,017 new listings in Greater Phoenix during the first full week which is down dramatically from the same week in 2017. The overall decline is 23% year over year and this is the lowest number of new listings we have ever seen for the first week of October. The previous record low was 2,343 in 2014.

  • Homes priced up to $250K dropped from 1,147 to 764, a decline of 33%
  • Homes priced between $250K and $500K dropped from 1,003 to 929, a decline of 7%
  • Homes priced over $500K dropped from 454 to 324, a decline of 29%

So the mid-range had the smallest decline while the top and bottom saw large falls in new listing counts.

If we chop more finely, we do see a handful price ranges with a growth in new listings:

  • Up to $25K increased from 5 to 6
  • $25K to $50K increased from 7 to 8
  • $250K to $300K increased from 319 to 351
  • $800K to $1M increased from 43 to 45
  • Over $3M increased from 16 to 22

Segmenting by dwelling type we see:

  • Single-family listings fell by 20%
  • Condo listings fell by 33%
  • Mobile home listings fell by 29%

Mortgage rates tend to increase when the economy is strong. According to realtor.com the average 30 year fixed loan in Arizona is now at 5.01%, up from 4.83% just 7 days ago. People usually worry about higher rates discouraging buyers and while that is a reasonable concern, I am also of the opinion that higher rates discourage sellers, because in most cases they are going to move somewhere else and pay a higher rate too. If they have the option to stay put, they may choose to do so when rates are increasing.

For whatever reason, sellers are surprisingly rare this month. Even if we change the measurement week to Oct 3 to Oct 9, the picture does not change - new listings down 25% from 2,520 in 2017 to 1,885 in 2018. This latter total is once again the lowest we have ever recorded for those dates.

We live in interesting times.

October 9 - Filing the latest version of the long term interest chart on Cromford Public, it struck me that mortgage rates have been climbing very slowly but somewhat relentlessly. Freddie Mac reported an average of 4.63% during September for the 30 year fixed. This is the highest we have seen since May 2011, more than 7 years ago. Of course in 2011 this seemed like a very low rate because we had experienced rates over 6% almost continuously between 1970 and 2008, with occasional short periods in the mid 5s.

Now we have a lot of homeowners with loans bearing rates of 3.5% to 4.25% taken out over the past 7 years. To move to a new home, they will need to pay off that cheap loan and take out another at closer to 5%. This effect is likely to be a drag on the supply of re-sale homes for a long time to come. It is likely to be good news for remodelling companies as many home owners decide to preserve their cheap financing by staying in place and spending their upgrade money on improving and modernizing their existing home instead.

October 8 - After the first full week of October it is striking that the month is off to an unusually slow start.

New listings are 14% lower than they were during the same period in 2017. It is a very long time since we saw a drop-off like that..

Closed sales are also down, with 1,338 closed during the first week of October 2018, down over 10% from the 1,494 we had in 2017. The annual sales rate has taken a step lower as a result.

It is not exactly clear what is causing this, but both supply and demand are weaker than expected. One week does not make a trend, but this is so different from what we have seen so far this year that I feel I should point it out. If the rest of the month continues in this vein then it would represent a significant change of sentiment.

We will watch carefully and report whether the second week is similar to the first or gives us a snap-back to normal.

October 5 - Until September we had seen extremely strong sales numbers for the Northeast Valley's luxury single-family homes (over $500,000). Here are the comparisons with the year before:

Month Sales Year Earlier Change
December 2017 374 292 +28%
January 2018 354 265 +34%
February 2018 336 268 +25%
March 2018 549 454 +21%
April 2018 504 426 +18%
May 2018 590 504 +17%
June 2018 534 504 +8%
July 2019 438 352 +24%
August 2018 447 348 +28%
September 2018 314 338 -7%

The wheels seem to have come off the cart last month. Could we have seen this coming. Yes!

The under contract count on September 1 was down 2% from the year before, suggesting that year over year growth would stall. Now September 2018 had only 19 working days and thus a 5% disadvantage compared with September 2017. Adding that 5% to the 2% drop in under contract listings we get -7%, exactly the drop in sales during September. It does not always work this cleanly. What do we expect for October? Well the under contract count is almost identical to 2017 as of October 1, so we would anticipate roughly the same unit sales, adjusted for the number of working days. October 2018 has 23 working days compared with October 2017's 22, so this will add 5% to our estimate. We should therefore expect a resumption of sales growth this month, but only 5%, unimpressive in the context of the last 10 months.

The lack of sales is concentrated at the bottom end between $500,000 and $600,000, where unit counts fell 32% from a year earlier. This is probably connected to the shortage of supply since active listing counts are down 21% in this price range.

October 4 - The table below shows the Cromford® Market Index for the single-family markets in the 17 largest cities 

We have 6 cities showing an improvement for sellers, 2 more than last week, with Glendale and Goodyear joining the other 4. However 11 cities showed deterioration for sellers and the average monthly change was -1.9%, slightly higher than the -1.8% we recorded last week. The trend remains down with rising supply and falling demand.

Tempe was the standout city for improving selling conditions while Fountain Hills, Paradise Valley and Buckeye showed significant weakness.

October 3 - Although Zillow has ramped up its purchases as an iBuyer, it has sold relatively few homes so far. The total number of homes purchased by the end of September was 157 while the total number of sales was 33, leaving 124 in inventory.

When we compare with Opendoor's start-up in 2015 and 2015, we see a similar pattern. By July 2015 they had 132 homes in inventory, having purchased 169 and sold 37. The main difference was that it took Opendoor 12 months to reach this stage and Zillow has taken less than half this time. The first mover has to prove the concept and break rocks. Followers benefit from that ground-breaking.

OfferPad has a somewhat different trajectory. They have tended to keep a lower inventory and sell their homes more quickly. By the time they had purchased 154 homes (in July 2016, they had sold 64 and only had 90 left in inventory.

Lifetime statistics as of the end of September are:

  Opendoor OfferPad Zillow
Purchases 5,945 2,175 157
Sales 5,063 1,893 33
Inventory 882 282 124

 

October 2 - Based on affidavit filings, the 3 main iBuyers operating in Greater Phoenix purchased 358 homes across Maricopa and Pinal counties in September. This is down from 446 purchases in August, but up from 278 in September last year.

Opendoor only purchased 188, making it their quietest month for purchases since September last year when they bought 161.

OfferPad purchased 105, in line with recent months but down from 117 in September 2017.

Zillow purchased 65, their largest total since starting in May. They seem to be stealing some market share from the other 2, possibly because they are buying at slightly higher prices. Certainly they are making less gross margin when they sell. The median gross margin for Zillow was 5% in July but only 3% in August. We have not yet been able to calculate the September number. Their 3% gross margin is immediately eaten up by commission paid to the buyer's broker, so they are living off the seller fees, to which we do not have access. This iBuyer business clearly involves a large amount of capital tied up and seriously low margins. Some may question why Zillow wishes to engage in the market, but it does seem to be growing in popularity with sellers. iBuyer transactions now represent roughly 1 in 20 home sales (excluding new homes and foreclosures).

Gross margins for Opendoor were around 6% in August and for OfferPad around 8%. Both of these are down from 8% and 11% respectively in August 2017. The additional competition seems to be causing gross margins to tighten.

September was a low activity month with only 19 working days thanks to a weekend at both ends. All the sales counts will be lower than normal for this reason.

October 1 - Nate Randleman used our Tableau chart showing average $/SF over the long term to calculate how prices had appreciated over the past 18 years. For Maricopa County the average was $97.63 in September 2000 and it was $166.51 in September 2018. The difference between these 2 numbers represents a long term average appreciation rate of only 3%.

Nate believes most clients (and probably many agents) would expect the number to be much higher since we have experienced very positive appreciation since 2011. They sometimes forget how much we went backwards between 2000 and 2011. We have spent much of the time since 2011 recovering from the crash of 2007-2008.

Overall, a long term appreciation rate of 3% is far from excessive and supports the theory that we are not significantly over-valued at today's prices.

What Nate did not know is that this Long Term Appreciation rate appears in all of our snapshots, so he could have saved himself some calculating. Here are the numbers extracted from a few of our snapshots (there are well over a hundred on the site). It may be that many of these will surprise you.

Market Segment Sub-set Long Term Appreciation (Jan 2001 - Sep 2018)
All Area & Types in ARMLS   2.9%
Single-Family Detached Anthem 2.5%
  Apache Junction 3.1%
  Arizona City 2.4%
  Avondale 2.8%
  Buckeye 3.1%
  Carefree 2.1%
  Casa Grande 1.9%
  Cave Creek 3.0%
  Chandler 3.5%
  Coolidge 3.2%
  El Mirage 3.3%
  Eloy 5.9%
  Florence 2.6%
  Fountain Hills 3.1%
  Gilbert 3.3%
  Glendale 3.4%
  Gold Canyon 2.4%
  Goodyear 2.4%
  Laveen 0.8%
  Litchfield Park 2.1%
  Maricopa 1.6%
  Mesa 3.6%
  New River 2.3%
  Paradise Valley 2.5%
  Peoria 3.5%
  Phoenix 3.6%
  Queen Creek 1.5%
  Rio Verde 2.3%
  Scottsdale 3.4%
  Sun City 3.4%
  Sun City West 3.1%
  Sun Lakes 3.3%
  Surprise 2.6%
  Tempe 3.7%
  Tolleson 2.5%
  Tonopah 1.7%
  Waddell 1.6%
  Wickenburg 2.4%
  Wittmann 4.3%
  Youngtown 3.4%

September 28 - The Cromford® Market Index for the single-family markets in the 17 largest cities is shown in the table below:

Sellers may be dismayed to see 13 of the 17 cities showing the balance of power shifting away from them. However they can console themselves with the fact the the average shift is only -1.8% which is down from the -2.2% we saw last week. This is partly because 2 of the 4 improving cities (Tempe and Cave Creek) improved by large percentages.

Among the decliners, Buckeye (-10%) and Fountain Hills (-18%) are the most prominent, but Surprise(-7%) and Mesa (-7%) declined significantly too.

Scottsdale has changed course after a strong run in the last 3 months.

September 27 - The Census Bureau has just released the single-family building permit counts for August. The total for Maricopa and Pinal counties was 2,263, up 16% from 1,954 in August 2017. The count for the 12 months Sep 2017 to Aug 31 is 22.388 which is up 12.7% from 19,865 last year. Maricopa and Pinal account for 74% of Arizona's single-family permits.

Year-to-date in 2018 we have 16,154 permits which is up 13.6% from 2017.

The increases all exceed the increase in the overall sales rate, which implies:

  1. The market share for new homes should increase over the next year
  2. Supply should gradually improve if developers build as quickly as the permits indicate

For the past 12 months the breakdown by city is as follows:

  1. Phoenix 15.7%
  2. Unincorporated Pinal County 11.0%
  3. Buckeye 10.1%
  4. Mesa 7.9%
  5. Gilbert 6.8%
  6. Maricopa 6.1%
  7. Peoria 6.1%
  8. Unincorporated Maricopa County 6.0%
  9. Goodyear 5.9%
  10. Surprise 5.8%
  11. Queen Creek 5.2%
  12. Scottsdale 3.0%
  13. Chandler 2.4%
  14. Avondale 1.2%
  15. Florence 1.1%
  16. Glendale 0.9%
  17. Tempe 0.7%
  18. Wickenburg 0.7%
  19. Casa Grande 0.7%
  20. Eloy 0.6%
  21. Fountain Hills 0.4%
  22. Paradise Valley 0.4%
  23. Apache Junction 0.4%
  24. Litchfield Park 0.3%
  25. Cave Creek 0.2%
  26. Carefree 0.1%
  27. Coolidge 0.1%
  28. everywhere else 0.1%

September 26 - The S&P / Case-Shiller® Home Price Index® report was published yesterday covering sales during May, June and July 2018. The month to month change in indexes were as follows:

  1. Las Vegas +1.39%
  2. Cleveland +1.35%
  3. Phoenix +0.74%
  4. San Francisco +0.64%
  5. Tampa +0.61%
  6. Atlanta +0.54%
  7. Portland +0.47%
  8. Miami +0.44%
  9. Detroit +0.41%
  10. Minneapolis +0.39%
  11. Chicago +0.33%
  12. Denver +0.33%
  13. Dallas +.18%
  14. Washington +0.16%
  15. Charlotte +0.15%
  16. Los Angeles +0.13%
  17. Boston +0.14%
  18. New York +0.09%
  19. San Diego +0.01%
  20. Seattle -0.01%

Moving up from 7th to 3rd place, Phoenix is retaining more price momentum compared with the rest of the country, although it is not alone - Las Vegas and Cleveland are doing even better. The national average was +0.45%

It is quite a while since we saw a negative change in Seattle, albeit a very tiny one.

The year-over-year table looks like this:

  1. Las Vegas +13.7%
  2. Seattle +12.1%
  3. San Francisco +10.8%
  4. Denver +8.0%
  5. Phoenix +7.5%
  6. Tampa +6.8%
  7. Los Angeles +6.4%
  8. San Diego +6.2%
  9. Detroit +6.2%
  10. Boston +6.0%
  11. Minneapolis +6.0%
  12. Atlanta +5.8%
  13. Cleveland +5.7%
  14. Portland +5.6%
  15. Charlotte +5.6%
  16. Miami +5.0%
  17. Dallas +5.0%
  18. New York +3.4%
  19. Chicago +3.0%
  20. Washington +2.7%

Phoenix moves up to 5th place from 6th last month and is now well above the national average of 6.0%.

I have to admit it makes me nervous when Las Vegas is number one in both these tables.

September 25 - Consistent with the slight decline in the Cromford® Market Index we are seeing a slight decline in the listing success rate over the past 6 months. At the end of March the success rate for all areas & types was very high at 85%. Now it is merely high at 81%. This might seem like a very small drop but it does mean a 27% increase in the number of listings that failed to sell (from 15% to 19%). This is also consistent with the higher pace of price cuts that we have seen recently.

All in all, the market remains strong for sellers but not as strong as it has been and with a slow cooling trend.

September 24 - Long-time subscribers will have become familiar with the third-quarter slump in prices that happens every year in Greater Phoenix. It is not so much that home values go down; more that the sales mix moves away from more expensive properties and the price pressure from the second quarter eases away.

Despite the seller's market that prevails over the whole valley, the third quarter slump was in full force in 2018. However, it has now run its course and we can see the pressure building for another upward price trend in the fourth quarter. Take a look at the Tableau chart for Under Contract $/SF and you can see a sharp upward turn over the past few weeks. This happened at the same time in 2017 and was followed by 9 months of powerful upward movement. Unless there is a significant change in market conditions we are likely to see something similar over the next 9 months. Such a significant change would involve either a large increase in new listings or a major fall in the sales rate, neither of which are looking likely at the moment.

September 21 - One possible explanation for the low under contract counts we see these days is that lenders are taking less time to approve loan applications than they used to. This would shorten the time to close and result in fewer listings under contract for the same number of closed sales.

You would think that it would be fairly easy to check this hypothesis. It ought to be possible to measure close times by calculating the difference between the Contract Date and Close Date for each listing that closed on ARMLS. Unfortunately there are 85,044 closed listings where this calculation has a negative result, implying that the listing agent believes the purchase contract was signed AFTER the close of escrow. There are another 105,873 closed listings where the Close Date and Contract Date are exactly the same. This leads me conclude that the Contract Date data in ARMLS is of low quality and cannot be trusted. The Close Date is also of fairly poor quality, but we have the advantage of being able to cross check that date with the date the sale was recorded and therefore apply corrections to this field. At least that gets rid of the thousands of listings which are supposed to have closed on a Saturday, Sunday or public holiday (impossible since the county recorder does not work on those days).

Making the best of a bad job, we can examine the listings where the Close Date is at least 14 days later than the Contract Date. Closing times shorter than this are unlikely to have involved a third party lender. This test applies to 79% of the closed listings so it is a pretty decent sample. Using these records we find the following:

  • average closing time in 2014 was 39.9 days
  • average closing time in 2015 was 40.7 days
  • average closing time in 2016 was 42.4 days
  • average closing time in 2017 was 39.3 days
  • average closing time in 2018 was 37.6 days

This gives us evidence of a 4.5% reduction is closing time between 2017 and 2018, following a more substantial reduction of 7.3% between 2016 and 2017.

Mind you, 2018's closing times are not exceptional. We were seeing closing times of 33 to 36 days throughout the years 2001 to 2008. It seems the easier it is to get a loan approved (as in 2004 to 2006) the quicker the close occurs. That make intuitive sense. The record low was 33.8 days in 2005. 2005 was really the year of the bubble bursting, even though people tend to focus on the collapse of Lehman Brothers in 2008, a long time after its collapse became inevitable.

We know that TRID (TILA-RESPA Integrated Disclosure) lengthened closing times in the fourth quarter of 2015 and then times started improving once everyone got used to the new procedures. Let us check the quarterly numbers:

  • 2014 Q1 - 39.9
  • 2014 Q2 - 40.0
  • 2014 Q3 - 40.1
  • 2014 Q4 - 39.4
  • 2015 Q1 - 39.4