Current Phoenix Metropolitan Real Estate

Market Update

 

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
  • 2015 Q2 - 40.8
  • 2015 Q3 - 40.2
  • 2015 Q4 - 42.7
  • 2016 Q1 - 42.8
  • 2016 Q2 - 42.6
  • 2016 Q3 - 42.9
  • 2016 Q4 - 41.3
  • 2017 Q1 - 39.9
  • 2017 Q2 - 39.9
  • 2017 Q3 - 39.4
  • 2017 Q4 - 37.8
  • 2018 Q1 - 37.7
  • 2018 Q2 - 37.9
  • 2018 Q3 - 37.0

These numbers are at least consistent with the TRID story although I remain a little concerned about the quality of the data source even in the listings with reasonable sounding Contract Dates.

My conclusion is that there has been a reduction in close times over the past 2 years, but that we are now back to normal after the disruption due to TRID. The biggest drop took place in 4Q 2017. This goes some way towards explaining the reductions in listings under contract that we have reported, but it does not explain the drop completely. The under contract counts still look somewhat lower than we would expect. I believe we are seeing a slight weakening trend in demand at the low and mid-range, compensated by stronger demand at the high-end.

September 20 - The Cromford® Market Index table for the single-family markets in the 17 largest cities is shown below:

Here we see an average decline of 2.2% over the past month with 5 cities improving for sellers and 12 deteriorating.

Cave Creek and Tempe have shown the strongest improvement while Fountain Hills is in full scale retreat.

We cannot remember seeing Paradise Valley so high up this chart ever before. The luxury market has improved significantly over the past year with lower supply and much stronger sales numbers.

The recent weakness in the West Valley is reflected in this table with every city deteriorating for sellers

September 19 - The number of listings under contract is surprisingly low considering all the other readings on the market. We are some 9% below the count for this time last year and that was some 6% below 2016. The last time we saw a year-over-year increase for listings under contract was at the end of April.

While this situation persists it would be a mistake to think we are in a market with strong demand.

We are in a seller's market but that is not the same thing - the seller's current advantage is created by weak supply, not strong demand.

September 18 - It appears that Californians are back in force buying up Arizona homes, comprising 7.2% of all buyers in Maricopa County during August. However we need to remember that Opendoor counts as a Californian buyer and they represent about 33% of all sales to Californians at the moment. So we need to subtract their purchases before we can make a year over year comparison.

Having taken this extra step, we see that Californian buyers took a 5.1% market share during August, excluding Opendoor. In August 2017 the equivalent percentage was 4.2%. Thus there is a growing trend, but it is not quite as big as we might have assumed. California is almost always the largest source of out-of-state buyers and that is true more than ever in 2018.

Washington buyers have increased their share from 1.4% to 1.7% over the past year, but this includes Zillow, based in Washington. Subtracting their purchases brings us back to 1.6% which is still something, but again not quite as substantial as initial analysis suggests. Washington is in second place to California.

We don't have to make an allowance for OfferPad since they are based right here in Gilbert, Arizona.

Colorado is another strong state for our buyers but they have not increased their share (1.2%) since last year. Illinois has edged up from 0.9% to 1.0%.

All other US states increased from 7.2% to 7.7%. None of these individual states has as much impact as California, Washington, Colorado or Illinois, which are the biggest long term sources of out-of-state buyers.

Foreign buyers have become very scarce. Even Canadians who were buying as much as 6% in 2011 and rivalling California for impact on our market. Canadian buyers are down below 0.4% at the moment. This is not a new phenomenon. They were below 0.4% in August 2016 and August 2017 too.

September 17 - Reports from other parts of the country suggest the following trends:

  1. A significant reduction in demand from Chinese buyers.
  2. Continued strong demand for entry-level homes
  3. Declining demand for discretionary move-up and luxury homes

These trends do not appear to match what we are seeing in the Greater Phoenix area.

For one thing, we have never had much demand from Chinese buyers so even if their demand disappeared completely we would hardly notice. The Phoenix metropolitan area is the 12th largest in the USA, but it does not register in the conscious mind of the typical Chinese person. Before you think that is strange, let me ask you what you know about the 12th largest metropolitan area in China. The first question is what is it called? - Shenzhen being the correct answer. With a metro population of well over 23 million it is roughly 6 times the size of the Greater Phoenix area. I imagine few Arizona residents have ever thought much about it, never mind considered buying a home there. The same applies in reverse.

We are seeing much stronger growth in demand for luxury home this year than in 2017. Below we compare sales during the first 2 weeks of September:

  • Total sales (all types) - 2,864 in 2018, 2,556 in 2017 - up 12%
  • Under $250K - 1,310 in 2018, 1,357 in 2017 - down 3%
  • $250K to $400K - 1,033 in 2018, 814 in 2017 - up 27%
  • $400K to $800K - 427 in 2018, 317 in 2017 - up 34%
  • $800K and up - 94 in 2018, 68 in 2017 - up 38%

No evidence there of declining demand for move-up and luxury homes. Entry level sales are down a little but that could be due to the limited availability of homes to buy at that price level.

I would therefore caution you not to assume that anything going on in the wider housing market applies to Greater Phoenix.

September 14 - We are still examining the changes that took place in the single-family market between August 1 and September 1, but this time we will segment the market by price rather than location.

The first thing that strikes us is that supply increased for homes at or under $400,000, but decreased for homes over $400,000. It is a very long time since we have said anything like that, so something different seems to be going on.

  • active listings at or under $400,000 without a contract grew 9% from 6,610 to 7,187
  • active listings over $400,000 without a contract fell 0.3% from 5,304 to 5,288

The big drop in supply was for homes between $1.5M and $2M which fell by 11%. This has been a heavily over-supplied sector in the recent past.

  • monthly sale for homes at or under $400,000 fell 7% from 5,391 to 5,038
  • monthly sales for homes over $400,000 grew 2% from 1,505 to 1,536

This analysis confirms our observations on September 12. The low to mid-range market is seeing rising supply and falling sales while the higher mid-range and luxury market is doing the opposite. This is the reason why the West Valley, with a large share of the most affordable homes, was the weakest areas during August.

About 78% of single-family sales in Greater Phoenix are priced at or below $400,000, so if this market loses steam, it will not be fully compensated by strength at the higher end.

One month does not make a trend, but we should keep our eyes on the low-to-mid-range market over the next few months.

September 13 - Below we show the Cromford® Market Index for the single-family markets in the 17 largest cities:

Here we a gradually deteriorating market from a seller's perspective. The average change of the last month is only -2.3%, but the decline is widespread with 12 of the 17 cities showing some deterioration and only 5 improving for sellers.

Cave Creek is the stand-out with a gain of 9% while Glendale and Fountain Hills saw the largest declines.

Despite this, every city is still a seller's market and well above the balanced zone of 90-110.

September 12 - We saw yesterday that the largest changes for the single-family market between August 1 and September 1 took place in the West Valley. Today we will look at the individual ZIP codes within the West Valley.

Area Active Listings (excl. UCB/CCBS) Aug Active Listing (excl. UCB/CCBS) Sep Change Sales Jul Sales Aug Change Months of Supply Aug Months of Supply Sep Change
Glendale 85301 46 46 none 34 29 down 15% 1.6 2.1 up 30%
Glendale 83302 52 48 down 8% 34 40 up 18% 2.0 1.8 down 9%
Glendale 85303 37 35 down 5% 43 32 down 26% 1.1 1.7 up 57%
Glendale 85304 46 59 up 28% 42 37 down 12% 1.5 1.9 up 32%
Glendale 85305 26 25 down 4% 16 14 down 12% 2.1 2.5 up 18%
Glendale 85306 34 42 up 24% 38 26 down 26% 1.1 1.7 up 55%
Glendale 85307 24 21 down 12% 8 5 down 37% 3.4 5.0 up 48%
Glendale 85308 180 168 down 7% 110 98 down 11% 2.1 2.3 up 6%
Glendale 85310 74 77 up 4% 46 37 down 20% 1.9 2.8 up 14%
Avondale 85323 60 61 up 2% 64 45 down 30% 1.3 2.0 up 58%
Buckeye 85326 192 197 up 3% 173 145 down 16% 1.5 1.8 up 17%
El Mirage 85335 44 44 none 63 37 down 41% 0.9 1.6 up 70%
Goodyear 85338 223 241 up 8% 109 116 up 6% 2.4 2.4 down 1%
Laveen 85339 97 122 up 26% 78 77 down 1% 1.6 2.0 up 12%
Litchfield Park 85340 124 137 up 11% 62 55 down 12% 2.4 2.9 up 19%
Peoria 85345 76 82 up 8% 67 72 up 8% 1.5 1.5 none
Sun City 85351 47 66 up 40% 69 59 down 15% 1.1 1.4 up 31%
Tolleson 85353 79 69 down 13% 70 64 down 9% 1.4 1.3 down 1%
Tonopah 85354 8 7 down 12% 5 1 down 80% 1.6 8.0 up 400%
Waddell 85355 62 63 up 2% 24 32 up 33% 3.3 2.4 down 28%
Wittmann 85361 25 29 up 16% 13 9 down 31% 2.6 3.8 up 44%
Youngtown 85363 6 10 up 67% 13 11 down 15% 0.7 1.6 up 136%
Sun City 85373 68 61 down 10% 45 36 down 20% 1.9 2.2 up 18%
Surprise 85374 85 94 up 11% 86 86 none 1.4 1.5 up 10%
Sun City West 85375 83 97 up 17% 91 83 down 9% 1.4 1.6 up 16%
Surprise 85378 20 39 up 95% 16 8 down 50% 1.6 5.6 up 246%
Surprise 85379 168 192 up 14% 124 106 down 15% 1.7 2.2 up 29%
Peoria 85381 59 56 down 5% 39 25 down 36% 1.8 3.2 up 76%
Peoria 85382 92 110 up 20% 55 69 up 26% 2.2 2.0 down 11%
Peoria 85383 418 440 up 5% 172 139 down 19% 2.7 3.6 up 30%
Surprise 85387 90 100 up 11% 30 28 down 7% 1.5 1.9 up 14%
Surprise 85388 103 120 up 17% 72 76 up 6% 1.8 1.9 up 6%
Avondale 85392 79 80 up 1% 67 55 down 18% 1.5 1.9 up 28%
Goodyear 85395 131 148 up 13% 61 53 down 13% 2.6 3.3 up 26%
Buckeye 85396 167 170 up 2% 76 81 up 7% 2.5 2.4 down 3%

We see only 6 ZIP codes with lower months of supply than a month earlier. There is a general trend in favor of buyers when we see active listings up 7% in a month with 11% fewer sales despite the maximum number of working days (23). August is not expected to be a strong month, but the cooling is surprisingly strong in locations such as:

  • Glendale 85303, 85306 and 85307
  • Avondale 85323
  • El Mirage 85355
  • Tonopah 85354
  • Wittmann 85361
  • Youngtown 85363
  • Surprise 85378
  • Peoria 85381

We have become used to reporting strong markets at the low end and weaker ones at the top over the last 6 years. However there are distinct signs of a change going on. The top end is strengthening while the low to medium price ranges are cooling, albeit from a very strong situation. Supply is still weak (though improving) in the West Valley, so the market has a long way to go before it gets back to balance. However there are some signs of consolation for West Valley buyers in the above table.

If the entry-level market were very strong we would expect the West Valley to be the top performing area. Between August 1 and September 1, the opposite was the case.

September 11 - Here is how the major areas changed between August 1 and September 1

Area Active Listings (excl. UCB/CCBS) Aug Active Listing (excl. UCB/CCBS) Sep Change Sales Jul Sales Aug Change Months of Supply Aug Months of Supply Sep Change
Central Valley 2,810 2,892 up 2.9% 1,461 1,509 up 3.3% 2.4 2.3 down 1.0%
Northeast Valley 2,166 2,183 up 0.8% 632 612 down 3.2% 4.0 4.1 up 2.1%
Southeast Valley 2,578 2,696 up 4.6% 2,027 1,892 down 6.7% 1.7 1.9 up 9.6
West Valley 3,125 3,356 up 7.4% 2,119 1,888 down 10.9% 1.8 2.2 up 19.5

The numbers are for single-family detached homes only.

We see that the deterioration in the market for sellers was concentrated in the West Valley - adding more listings without contracts than any of the other 3 are and showing a bigger drop in monthly sales rate too.

The Central Valley saw an increase in sales with a higher percentage than the increase in supply. It was therefore the area with the best trends for seller. The Northeast valley saw very little increase in supply, but there was a 3.2% drop in the sale rate. It was therefore the second best region from a seller's perspective.

The Southeast valley started and ended with the tightest supply, but it did see a 4.6% increase in active listings coupled to a 6.7% drop in sales. These trends went in the buyer's favor but not as much as in the West Valley.

September 10 - If you feel like the luxury market has improved a lot during the past year you are not mistaken. Excessive supply between 2015 and 2017 was a drag on the market keeping prices weak and inhibiting sellers during negotiations. The supply has been trending lower over the past year but the biggest change has been a surge in demand.

For the annual period that ended on August 31, we saw $8.4 billion spent on homes over $500,000 in Greater Phoenix. This is a huge 24.7% increase over the prior 12 months and almost entirely due to a 24.2% increase in the number of homes sold. The average price of these homes only rose by 0.4%.

The largest percentage increases in high-end dollar volume are to be seen in:

  1. Phoenix 85006 - up 384% (12 sales over $500K)
  2. Scottsdale 85257 - up 157% (40 sales)
  3. Rio Verde - up 163% (76 sales)
  4. Phoenix 85022 - up 142% (48 sales)
  5. Buckeye 85396 - up 132% (31 sales)
  6. Waddell 85355 - up 129% (22 sales)
  7. Surprise 85387 - up 121% (26 sales)
  8. Phoenix 85003 - up 105% (64 sales)
  9. Phoenix 85042 - up 95% (31 sales)
  10. Chandler 85224 - up 94% (23 sales)
  11. New River 85087 - up 91% (18 sales)
  12. Phoenix 85032 - up 85% (29 sales)
  13. San Tan Valley 85140 - up 85% (22 sales)
  14. Surprise 85379 - up 77% (14 sales)
  15. Phoenix 85008 - up 66% (13 sales)
  16. Mesa 85213 - up 65% (82 sales)

We excluded locations with fewer than 10 sales in the last 12 months from this table.

Few of these are generally regarded as top luxury home locations. The fact is that a rising price wave is pushing homes into the over-$500K bracket all over the place. We have more ZIP codes joining the over-half-million club, with homes selling for more than $500,000 in the following relatively inexpensive locations

  • Phoenix 85009
  • Casa Grande 85122
  • Coolidge 85128
  • Maricopa 85138
  • Maricopa 85139
  • Casa Grande 85194
  • Mesa 85208
  • Glendale 85301
  • Glendale 85307
  • Peoria 85382
  • Avondale 85392

We also see strong rises in dollar volume in most of the traditional luxury areas:

  1. Fountain Hills 85268 - up 40%
  2. Scottsdale 85262 - up 24%
  3. Scottsdale 85255 - up 23%
  4. Paradise Valley - up 23%
  5. Phoenix 85018 - up 20%

There were a few exceptions, with Carefree 85377 down 1% and Scottsdale 85259 down 7%.

September 7 - Our regular examination of the Cromford® Market Index for the single-family markets in the 17 largest cities is shown below:

We see an average decline of 3% in the CMI, telling us that the market is not quite as favorable for sellers as it was a month ago. 6 cities have improved for sellers but 11 have deteriorated.

Glendale, Goodyear, Queen Creek, Maricopa, Mesa and Fountain Hills saw the largest declines while Cave Creek was the only city showing strong improvement.

Despite the general trend, every city is still a seller's market and it would take many months of this trend before buyers start to flex their negotiation power.

September 6 - We often get asked what percentage of the market has been captured by the iBuyers (Opendoor, OfferPad and Zillow). The answer is not too hard to calculate but it does depend on what you define as "the market". The simplest calculation is to take all sales of single-family or condo/townhouses within Maricopa and Pinal County. However this includes new home sales which are not part of the market where iBuyers operate. Trustee sales, bank owned sales, GSE REO sales and HUD sales should probably be excluded from the market too, even though it is possible for an iBuyer to acquire a home through these channels.

Here is a table showing market share over the past 24 months, using the 2 different definitions of "the market":

Month Opendoor Purchases OfferPad Purchases Zillow Purchases Total iBuyer Purchases % All Sales % Sub market
Aug 2016 23 147   170 1.65% 2.00%
Sep 2016 39 139   178 1.82% 2.26%
Oct 2016 38 155   193 2.10% 2.54%
Nov 2016 45 191   236 2.59% 3.24%
Dec 2016 37 112   149 1.54% 1.98%
Jan 2017 34 60   94 1.17% 1.41%
Feb 2017 63 65   128 1.50% 1.84%
Mar 2017 57 60   117 0.97% 1.17%
Apr 2017 60 82   142 1.28% 1.53%
May 2017 58 131   189 1.51% 1.78%
Jun 2017 98 182   280 2.25% 2.67%
Jul 2017 84 160   244 2.39% 2.86%
Aug 2017 119 149   268 2.44% 2.96%
Sep 2017 117 161   278 2.79% 3.45%
Oct 2017 120 209   329 3.35% 4.09%
Nov 2017 99 236   335 3.46% 4.28%
Dec 2017 84 217   301 3.09% 3.88%
Jan 2018 67 229   296 3.52% 4.26%
Feb 2018 76 245   321 3.45% 4.14%
Mar 2018 78 265   343 2.73% 3.27%
Apr 2018 81 274   355 3.00% 3.52%
May 2018 125 282 3 410 3.15% 3.75%
Jun 2018 115 298 16 429 3.51% 4.18%
Jul 2018 98 294 31 423 3.77% 4.53%
Aug 2018 109 280 44 433 3.86% 4.63%

The August 2018 numbers are based on preliminary unverified data.

In rough terms, the iBuyers are now handling almost 1 in 20 of the available sellers in the Greater Phoenix market.

September 5 - Now let us take a look at average price per sq. ft. for new homes year-to-date:

  1. The New Home Company - $701
  2. Optima - $701
  3. Green Street - $296
  4. Statesman - $260
  5. Toll Brothers - $242
  6. Porchlight - $236
  7. Cachet - $232
  8. Highland - $232
  9. Robson - $208
  10. David Weekley - $205
  11. Shea - $200
  12. K Hovnanian - $194
  13. Blandford - $191
  14. VIP - $186
  15. Farnsworth - $184
  16. Taylor Morrison - $168
  17. Maracay - $168
  18. Mattamy - $161
  19. Towne - $157
  20. Bellago - $157
  21. Lennar - $156
  22. Woodside - $154
  23. Fulton - $152
  24. Richmond American - $148
  25. Pulte - $147
  26. William Ryan - $145
  27. Cresleigh - $145
  28. Ashton Woods - $139
  29. Elliott - $139
  30. Gehan - $138
  31. Meritage - $138
  32. William Lyon - $134
  33. KB - $132
  34. Beazer - $132
  35. Providence - $132
  36. Garrett Walker - $131
  37. Courtland - $130
  38. LGI - $124
  39. Pinnacle West - $121
  40. D R Horton - $120

It must be emphasized that land cost is an important part of the price of a new home. D R Horton achieves the lowest cost by focusing most of its development where land prices are lowest. Of the 1,332 closed sales year-to-date, 63% of them were in Buckeye, Maricopa or San Tan Valley.

September 4 - Here are the median sales prices for new homes in Maricopa and Pinal counties, sold between January and July 2018.

Developer Median Sales Price
The New Home Company $2,298,999
Toll Brothers $814,028
Optima $689,491
Porchlight $644,606
David Weekley $606,749
VIP $566,346
Green Street $552,164
Maracay $458,906
Cachet $434,499
Blandford $426,932
Mattamy $419,997
Highland $411,949
Shea $400,183
Robson $396,463
Taylor Morrison $391,055
Woodside $378,000
K Hovnanian $365,000
Cresleigh $362,066
William Ryan $356,934
Statesman $350,000
Gehan $340,765
Ashton Woods $340,698
Fulton $336,681
Farnsworth $330,031
Pulte $326,698
Lennar $316,190
William Lyon $310,093
Richmond American $309,715
Elliott $296,794
Meritage $288,008
Towne $284,353
Bellago $283,347
Beazer $281,480
KB $270,771
Pinnacle West $263,595
Courtland $263,129
Garrett Walker $259,923
Providence $230,495
D R Horton $220,000
LGI $212,900

There are many other entities but volumes for these were too small to calculate a reasonable median sales price.

Once again we can see how D R Horton and LGI are very targeted at the entry level homes where there is such a shortage of re-sale supply.

September 3 - Following up our post of August 31, here the top 25 developers in Maricopa and Pinal counties by YTD sales revenue recorded by the end of July:

  1. Lennar - $405M
  2. Taylor Morrison - $337M
  3. D R Horton - $306M
  4. Pulte - $251M
  5. Meritage - $203M
  6. Shea - $193M
  7. Mattamy - $164M
  8. Toll Brothers - $148M
  9. Fulton - $133M
  10. KB - $129M
  11. Ashton Woods - $122M
  12. Optima - $117M
  13. Robson - $109M
  14. Richmond American - $109M
  15. K Hovnanian - $104M
  16. Maracay - $103M
  17. William Lyon - $83M
  18. Blandford - $77M
  19. Beazer - $68M
  20. Woodside - $63M
  21. Garrett Walker - $60M
  22. LGI - $48M
  23. David Weekley - $47M
  24. Courtland - $40M
  25. Gehan - $40M

We note that Toll Brothers moves up from 19 by units to 8th by revenue due to their exclusive focus on higher-end homes.

In contrast D R Horton and KB drop down compared the unit table due to heavy focus on entry-level housing.

31 - After 7 months of recordings between Jan 1 and July 31, here is the top 25 ranking by closed units for local developers:

  1. D R Horton - 1,332 closed homes
  2. Lennar - 1,137
  3. Taylor Morrison - 801
  4. Pulte - 715
  5. Meritage - 620
  6. KB - 469
  7. Shea - 420
  8. Mattamy - 397
  9. Fulton - 380
  10. Ashton Woods - 328
  11. Richmond American - 292
  12. William Lyon - 263
  13. K Hovnanian - 262
  14. Robson - 255
  15. Beazer - 237
  16. Garrett Walker - 228
  17. Maracay - 219
  18. LGI - 217
  19. Toll Brothers -170
  20. Woodside - 161
  21. Blandford - 159
  22. Courtland - 142
  23. Optima - 140
  24. Gehan - 114
  25. Pinnacle West - 96

The numbers are for Maricopa and Pinal counties only.

August 30 - Another look at the Cromford® Market Index table for the largest 17 cities (single-family only):

Here we see 11 cities deteriorating for sellers and 6 improving. The overall average is a decline of 2%. This week Cave Creek is the top advancing city with +7%. Glendale is going backwards fastest with -10%. Phoenix continues to drop slowly down the table.

Some of the smaller cities are looking more positive with some outstanding values for the CMI:

  • Arizona City - 385.7
  • El Mirage - 300.9
  • Sun Lakes - 259.1
  • Gold Canyon - 236.7
  • Tolleson - 216.2
  • Apache Junction - 204.2

If you want a high CMI these days its good to be in Pinal County or an inexpensive spot in the West Valley.

August 29 - The S&P / Case-Shiller® Home Price Index® number are now out for the sales during April through June. Comparing with last month, here is how the 20 featured metropolitan areas fared:

  1. Las Vegas +1.39%
  2. Detroit +1.04%
  3. Minneapolis +1.04%
  4. Cleveland +0.99%
  5. Boston +0.85%
  6. Chicago +0.77%
  7. Phoenix +0.74%
  8. Seattle 0.73%
  9. Portland +0.70%
  10. Miami +0.66%
  11. Atlanta +0.65%
  12. San Diego +0.60%
  13. Tampa +0.60%
  14. Denver +0.60%
  15. Charlotte +0.55%
  16. Washington +0.55%
  17. Los Angeles +0.53%
  18. San Francisco +0.47%
  19. Dallas +0.39%
  20. New York -0.07%

Phoenix slipped very slightly from 6th place last month to 7th this month and came in just below the national average of +0.77%.

On a year over year basis the ranking table looks like this:

  1. Las Vegas +13.0%
  2. Seattle +12.8%
  3. San Francisco +10.7%
  4. Denver +8.3%
  5. Los Angeles +7.4%
  6. Phoenix +7.2%
  7. Boston +7.1%
  8. San Diego +6.9%
  9. Tampa +6.9%
  10. Minneapolis +6.5%
  11. Detroit +6.4%
  12. Portland +5.8%
  13. Charlotte +5.7%
  14. Atlanta +5.7%
  15. Dallas +5.2%
  16. Miami +5.2%
  17. Cleveland +5.1%
  18. New York +3.8%
  19. Chicago +3.3%
  20. Washington +2.9%

Phoenix ranked 6th in this table, up from 7th last month and well above the national average of +6.2%.

August 28 - For the largest 17 cities you can see 2 years of comparative appreciation rates using the chart here.

We see that appreciation rates have tended to converge over the past 2 years, currently ranging from a low of 4.4% for Scottsdale to a high of 10.9% for Maricopa. Two years ago the range was much wider from a low of -4.8% for Paradise Valley to a high of 11.0% for Maricopa. Maricopa has not been on top for the whole period. Avondale was in the lead between April 2017 and May 2018.

The current ranking is:

  1. Maricopa 10.9%
  2. Avondale 8.2%
  3. Queen Creek 8.1%
  4. Mesa 8.0%
  5. Buckeye 7.9%
  6. Surprise 7.9%
  7. Glendale 7.7%
  8. Cave Creek 7.6%
  9. Phoenix 7.5%
  10. Paradise Valley 7.1%
  11. Gilbert 7.0%
  12. Chandler 6.8%
  13. Peoria 6.7%
  14. Tempe 6.5%
  15. Fountain Hills 5.5%
  16. Goodyear 4.7%
  17. Scottsdale 4.4%

All these numbers are for single-family detached homes only.

August 27 - The supply of active listings in 2018 (excluding those under contract) has followed a different trend depending on the dwelling type:

  • single-family - has fallen from a peak 13,498 on January 21 to 12,392 on August 24, a drop of 8.2%
  • condo / townhouse - has fallen from a peak of 2,561 on January 21 to 1,936 on August 24, a drop of 24.4%
  • mobile / manufactured - has fallen from a peak of 684 on January 13 to 431 on August 24, a drop of 37.0%

So single-family homes have retained a much higher percentage of their supply than condos or mobile homes.

The supply has also behaved differently by county:

  • Maricopa County - has fallen from a peak of 14,783 on January 20 to 13,254 on August 24, a drop of 10.3%
  • Pinal County - has fallen from a peak of 1,917 on February 10 to 1,429 on August 24, a drop of 25.5%

So Pinal County has seen far more of its supply disappear than Maricopa County has.

These effects are all due to average price points.

  • Pinal County is on average cheaper than Maricopa County
  • condo / townhouse properties are on average cheaper than single family homes
  • mobile / manufactured homes are on average cheaper than condo / townhouse properties

Although condo / townhouse properties are cheaper on average than single-family homes, this is purely because they are much smaller on average. The average price per sq. ft. for condo / townhouse properties is currently around $170, noticeably higher than the average price of single-family properties at around $160.

Whatever way you look at the market, inexpensive homes have become much harder to find over the last 7 months.

August 24 - The Cromford® Market Index for the single-family markets in the 17 largest cities:

Another table that suggests the market is slowly and slightly cooling down. The average change over the last month is -2% and we see 11 cities deteriorating for sellers with 6 improving. The general trend is an uptick in supply despite low numbers of new listings, coupled with continued weakness in homes going under contract compared with normal.

The Northeast Valley, represented by Paradise Valley (+9%), Scottsdale (+7%) and Cave Creek (+6%), is having the best of things, but Avondale, Buckeye and Chandler all managed a 3% gain.

The strongest declines are seen in Tempe (-10%), Glendale (-8%), Fountain Hills (-8%) and Gilbert (-7%).

Avondale has consolidated its position at the head of the table. Peoria and Tempe are a little way adrift at the bottom, but even these 2 cities remain in a seller's market over 110.

August 23 - The Census Bureau reported a total of 5,937 multi-family permits across Maricopa & Pinal counties for July 2018 year-to-date. This is the highest YTD number for July since 2007.

Phoenix and Tempe completely dominate the YTD numbers in 2018 with 2,118 and 2,021 respectively. Formerly very active, Scottsdale has faded into a distant third place with 505, while Chandler (387), Gilbert (205), Peoria (183) and Mesa (155) are the principal also-rans.

August 22 - The single-family permits for Maricopa & Pinal counties during July totalled 2,138 which is a 16% increase over July 2017. The annual run rate has increased to 22,079 which is the highest we have seen since February 2008. However it is still a lot lower than between 1997 and 2007 when it was consistently over 28,000 and usually over 33,000.

Many developers are trying harder to meet the demand for more affordable homes, which is probably why Unincorporated Pinal County is the number one source of permits this July with 300. The vast majority of these are located in the loosely defined area we know as San Tan Valley. The inexpensive areas of Buckeye and Maricopa also appear among the top 6 locations with 211 and 204 permits respectively. The top 6 are rounded out by Phoenix (250), Mesa (222) and Queen Creek (167).

Overall, the numbers suggest a mood of optimism among the developers, though moderated by caution based on their unhappy experience of 2007-2009.

August 21 - In the first 3 weeks of August we have seen fewer new listings appear than during the same 3 weeks last year. We currently count 6,147 which is 3.4% less than the 6,361 for last year. This gap seems to be widening because we saw a 1.4% drop after 2 weeks and a 0.3% increase after the first week.

The gap is visible for all dwelling types but is largest for mobile homes. We have seen only 111 versus 133 new mobile home listings which is a drop of over 16%.

The gap is also larger for Pinal County at 4.8% versus Maricopa County (3.2%).

August 20 - In most years the active listing count (excluding UCB and CCBS listings) hits a low point in August and then starts to rise until Thanksgiving. In 2018 we hit the low point slightly early in July and have already been drifting upwards for 4 weeks now. This might be considered a negative sign for sellers, but the change is so slight I would not want to make too big a deal out of it.

There are some areas that have seen a dramatic rise, often from abnormally low levels. Florence is probably the best example. At the end of June we had just 100 active listings without a contract, but since then the count has shot up 38%. The trend does not affect mobile homes, but single-family listings have jumped from 71 to 111, an increase of 56% in just 8 weeks. A similar but smaller event has occurred in Casa Grande and Coolidge. The only areas outside of Pinal County with a jump like this (albeit more moderate) are Litchfield Park and Surprise.

August 17 - We have examined the new listings for Greater Phoenix that arrived in the first 2 weeks of August. Overall we saw 4,079, down from 4,208 in the same period last year. The interesting stuff comes when we look at individual price ranges:

Price Range New Listings 2017 New Listing 2018 Change Sales Rate Change in Annual Sales Rate
Up to $150K 408 275 down 33% 8,697 down 20%
$150K to $200K 789 542 down 31% 17,257 down 13%
$200K to $250K 871 843 down 3% 20,496 up 6%
$250K to $300K 638 706 up 11% 15,044 up 10%
$300K to $400K 688 803 up 17% 16,376 up 12%
$400K to $500K 334 379 up 13% 7,639 up 14%
$500K to $1M 371 441 up 19% 7,711 up 14%
Over $1M 109 90 down 17% 1,882 up 19%

We see that the market under $200K is contracting fast with both new listings and sales falling. However the new listing arrival rate is falling faster than the sales rate.

From £200K to $250K we have sales up and new listings down, a market improving for sellers. From $250K to $1M the supply is growing at a similar rate to sales, with a couple of ranges getting a larger increase in supply than sales ($300K to $400K and $500K to $1M).

Over $1M the situation is vastly improved for sellers because supply has fallen while sales rate up by the largest percentage of any price range.

August 16 - Once again we show the Cromford® Market Index table for the single-family markets in the 17 largest cities:

Only 5 cities improved for sellers over the past month, 3 of them in the Northeast Valley. Once again Paradise Valley and Scottsdale were the biggest gainers.

Avondale has regained its place at the head of the table despite losing 1%. The Southeast Valley has lost the dominance it held in the early part of the year, with Tempe (down 14%) and Gilbert (down 8%) the biggest decliners. Only Mesa remains above 200 although it went backwards by 2%. Chandler managed a 1% advance.

All 17 cities remain seller's markets, but 12 out of the 17 weakened for sellers.

August 15 - The total number of active listings (including those in UCB or CCBS status) is 19,736 today for all areas & types across the ARMLS database. This is just slightly above June 15, 2011 when we saw 19,696. We have to go all the way back to October 2005 to find another 15th date (19,715) with lower active listings.

Active listing counts have been on a declining trend since April 2014 when we hit a short term peak of 30, 506. We would consider somewhere between 30,000 and 35,000 to be sufficient for a balanced market. The all-time record high for a 15th date is 58,195 in November 2007.

Even if we are hearing about signs of a fall in demand, mainly at a national level and in regions outside Arizona, supply is so low at the moment, demand would have to drop a lot more for us to reach a balanced (and smaller) market.

August 14 - Inspired by a question from Tracy Royce, we have created a new Tableau chart in Cromford® Public which allows you to examine the intended use stated on the Affidavits of Value by buyers in Maricopa and Pinal counties.

For the second quarter of 2018, the following breakdown is observed for Greater Phoenix as a whole:

  1. Owner Occupier (Primary Residence) - 74.0%
  2. Investor - 10.9%
  3. Second Home - 10.7%
  4. iBuyer - 3.2%
  5. Unknown - 1.2% (mostly trustee sales)

Since iBuyers are acting as intermediaries and create one extra transactions than we would have seen without them, we concluded that the overall sales count is 3.2% higher than it would have been normally. Their share in 2Q 2017 was 1.7%, in 2Q 2016 was 1.3% and in 2Q 2015 was 0.2%.

We can see that iBuyers are not involved with home sales over $500,000 nor with the new home market. Excluding those sales from the total, they currently have a 4% market share, up from 2.1% a year ago.

If we focus on the 55+ communities (both legally restricted and targeted by marketing), then we see a very different picture:

  1. Owner Occupier - 64.0%
  2. Second Home - 28.0%
  3. Investor - 6.3%
  4. Unknown - 1.0%
  5. iBuyer - 0.7%

Since the iBuyer buying process is fairly passive, we conclude that the owners of 55+ properties are far less attracted to the iBuyer web sites than the average seller. We also see that investors show far less interest in 55+ homes than average. However 55+ properties are very popular as second homes.

Investors are far more active purchasing condos (16.6%) than single-family homes (9.8%)

iBuyers have tended to prefer the opposite with a 2.5% share in condo purchases and a 3.3% share in single-family purchases.

Top cities for the percentage of purchases by iBuyers in 2Q 2018 were:

  1. Waddell - 10.6%
  2. Tolleson - 9.5%
  3. Anthem - 9.1%
  4. Laveen - 8.0%
  5. San Tan Valley - 6.1%
  6. Glendale - 5.2%
  7. Avondale - 4.9%
  8. Surprise - 4.9%
  9. Arizona City - 4.8%
  10. Buckeye - 4.8%

August 13 - Sometimes it can be revealing to examine a market by breaking it into just a few large geographic areas. Below is a table of some key statistics for single-family homes comparing August 2018 with August 2017.

Area Annual Change in Annual Sales Rate Annual Change in Active Listings (excluding UCB/CCBS) Annual Change in Days of Inventory
Central & North Valley +2.4% -1.5% -5.3%
Northeast Valley +6.3% -16.3% -19.7%
Pinal County +4.2% -16.5% -19.8%
Southeast Valley -0.1% -16.3% -16.3%
West Valley +2.3% -9.4% -12.3%

For sellers, every area has seen an improvement, but the Central & North Valley has seen by far the lowest percentage reduction in days of inventory. This is primarily due to a very small drop (-1.5%) in active listings compared to the rest of the valley.

The Northeast Valley and Pinal County have both seen a big improvement for sellers with an almost 20% drop in days of inventory. Both had a large 16% decline in active listings without a contract while they both saw strong increases in annual sales, with the Northeast the strongest of all.

The Southeast Valley saw a similar fall in active listings to Pinal County and the Northeast, but the annual sales rate has not managed any growth. It therefore lags behind the other two areas in positive movement for sellers.

The West Valley managed a similar increase in the annual sales rate to the Central Valley but saw a more significant drop in active listings.

Ranking the areas by improvement for seller's prospects we have:

  1. Pinal County
  2. Northeast Valley
  3. Southeast Valley
  4. West Valley
  5. Central & North Valley

It is surprising how different the areas are to one another and also how much the Northeast Valley has improved for sellers over the past 12 months.

August 10 - We have an unusually low number of listings under contract at the moment. Looking at the weekly chart for all areas & types we can see that in the last 10 years only 2008 and 2014 had lower counts at this point of the year. This is particularly unusual given that sales volume remains strong.

Certain cities have a significant shortfall of single-family contracts compared with last year:

  1. Fountain Hills - down 41%
  2. El Mirage - down 26%
  3. Avondale - down 24%
  4. Litchfield Park - down 21%
  5. Surprise - down 19%
  6. Sun City - down 18%
  7. Tempe - down 17%
  8. Glendale - down 16%
  9. Chandler - down 15%
  10. Casa Grande - down 15%

Fountain Hills had a large number of listings under contract in April, as many as 109, its highest count since 2012, but has slumped to just 41 as of this week.

Since the sales rates are holding up, you could argue that listings are closing more quickly or are being entered into ARMLS only after closing. This is certainly true of some listings, but since a drop in listings under contract is usually the first sign of a fall in demand, we are watching this situation closely. We suggest that you do too. As yet we are drawing no conclusions but we are wondering if the sales rate will follow suit over the next few months.

August 9 - The table below shows the Cromford® Market Index values for the single-family markets in the 17 largest cities by dollar sales volume.

We again see a big divergence between the Northeast Valley and the rest of the market.

The Northeast Valley continues to improve for sellers with a 26% increase in the CMI for Paradise Valley over the last month and a 10% rise for Scottsdale. Cave Creek has also gained a healthy 5% but Fountain Hills has started to fade after a very strong run over the past 3 months.

The rest of the market is looking a little bit tired. All cities are still seller's markets, but every city outside the Northeast (except Buckeye and Goodyear) showed at least a slight move in favor of buyers over the last month. Much of the change is due to weaker numbers of listings under contract. Tempe has also gained supply faster than normally expected for the season. Tempe, Gilbert and Avondale were the biggest losers. The change was modest for Mesa, Chandler, Surprise, Glendale, Phoenix and Queen Creek.

Supply remains very low, but has started to show early rises between $200,000 and $400,000.

It is unusual that Mesa should be top of the table while its close neighbor Tempe has hit the bottom. We are living in interesting times.

August 8 - Zillow has now purchased 62 homes and sold 10. All are in Maricopa County and none in Pinal.

The average purchase price of the 10 homes that have been sold was $309,700, which is just 0.4% below their average Zestimate of $311,036. The average sale price was $319,080, 2.3% higher than Zestimate. This means the average gross margin was 2.9%.

It took an average of 15 days to list the homes purchased, a further 23 days to get a contract and 20 days to close. These are lower numbers than the existing iBuyers (Opendoor and OfferPad), but remember we are only measuring the homes that sold, which by definition are the ones that sold quickly. There are plenty of homes that will take longer but are not closed yet.

Indeed, the first home purchased by Zillow is still active and has had no offers after 71 days and numerous Open House events. It has had 2 price reductions and is now on offer for $415,000 (having been purchased for $410,000). Zillow is offering an additional $2,500 commission to the buyer's broker on top of the 3% already offered.

There are now 10 listings in UCB status (the other iBuyers always use Pending status). There are 24 Active with no contracts and 18 not listed yet.

Zillow has announced a huge reduction in its targets for home sales in 2018. Forecast revenue is now down from $255 million to $40 million. They stated to investors that home closings are taking longer than anticipated.

August 7 - Between 2014 and 2016 we saw a strong upward trend in the supply of luxury homes, particularly in the Northeast Valley. That trend came to a halt in 2017 and we are now seeing a downward move. On August 1, 2018 we counted 2,365 single-family active listings (including UCB and CCBS) across the Northeast Valley and priced over $500,000. This is the lowest start-of-month count since September 2015 and is down 11% from a month ago and 8% lower than this time last year. The downward trend has gained momentum in the last 8 weeks.

Luxury buyers may have become used to having plenty of supply to choose from, and certainly supply is abundant compared with the market below $500,000. However supply is dropping faster than for several years and as a consequence sellers are gaining significant negotiation advantage. This is reflected in the rise in the Cromford® Market Index numbers for Scottsdale, Paradise Valley and Fountain Hills.

We normally see an increase in active listings from September through November but this is unlikely to change the narrative. Buyers of luxury homes have had their best times (the spring of 2016 was the peak) and their search is likely to become trickier over the next few months.

August 6 - The daily chart showing Average Annual Appreciation based on Monthly Average $/SF has been unusually stable for the last 6 months. The appreciation rate (by this measure) has stayed very close to 8% with only slight dips to 7% and occasional surges towards 10%.

If home prices are rising by 8% a year, then they are getting much less affordable. Average incomes are rising by something like a quarter of this rate. Rents are also rising at a steep rate (see this chart). The cost of shelter is rising as a percentage of income.

The effect is to make existing home owners feel more wealthy since their equity is growing fast. However, the incentive for people to move up and the enthusiasm of first-time buyers is in gradual decline. We have a low Cromford® Supply Index because remarkably few people wish to sell their house. We also have a declining Cromford® Demand Index because fewer people are trying to buy. At the moment demand remains much higher than supply across most sectors, so it feels like we have strong demand. Do not be fooled. The CSI stands at 59.1, the lowest level since 2015, but the CDI is at 96.5, the lowest level since March 2015. This is a key reason why we do not have bubble conditions (in which demand rises artificially due to speculation).

August 2 - The table showing the Cromford® Market Index values for the single-family markets in the largest 17 cities appears below. 

 

There is a surprising amount of movement here. First we should point out that every one of the 17 cities is a seller's market. However only 7 of the 17 saw improvement for sellers over the past month and 10 saw deterioration.

Once again the biggest moves upward came from the Northeast with Paradise Valley up a staggering 32% and Scottsdale up 11%.

The biggest decliners were Tempe down 17% and Avondale down 12%.

Mesa remains on top for the second week, even though it took a 1% hit over the month.

July 31 - The last Tuesday of the month is always the date for publication of the Case-Shiller® Home Price Index®. The numbers released today include sales that closed between March and May 2018. Looking at the month to month change in the index we get the following raking table:

  1. Seattle +2.23%
  2. Cleveland +1.35%
  3. Chicago +1.28%
  4. Las Vegas +1.27%
  5. Portland +1.24%
  6. Phoenix +1.08%
  7. San Francisco +1.08%
  8. Minneapolis +1.07%
  9. Atlanta + 1.00%
  10. Denver +0.85%
  11. Miami +0.79%
  12. Boston +0.78%
  13. Charlotte +0.76%
  14. Detroit +0.76%
  15. San Diego +0.65%
  16. Washington +0.63%
  17. Dallas +0.63%
  18. Tampa +0.49%
  19. Los Angeles +0.48%
  20. New York -0.04%

Phoenix has moved up from 15th to 6th over the last month, a rapid change which now has us well over the national average of 1.06%. It is also unusual to see Cleveland and Chicago among the top 3 in this table, while Los Angeles and San Diego are much lower than usual.

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

  1. Seattle +13.6%
  2. Las Vegas +12.6%
  3. San Francisco +10.9%
  4. Denver +8.5%
  5. Los Angeles +7.6%
  6. San Diego +7.3%
  7. Phoenix +7.3%
  8. Detroit +7.1%
  9. Boston +7.0%
  10. Tampa +6.5%
  11. Minneapolis +6.4%
  12. Charlotte +6.0%
  13. Portland +5.9%
  14. Atlanta +5.6%
  15. Dallas +5.6%
  16. Cleveland +5.0%
  17. Miami +5.0%
  18. New York +4.2%
  19. Chicago +3.3%
  20. Washington +3.1%

Phoenix has moved up from 10th to 7th place over the last month. The national average was 6.4%

July 30 - The month of June was the busiest for new single-family home permits since June 2007, 11 years ago. The Census Bureau reported a total of 2,307 for Maricopa and Pinal counties combined, and 3,056 for the State of Arizona as a whole. Those interested in the details by city or county can obtain charts going back to 1996 from the Cromford® Public section of the web site.

The latest number represents an increase of 28% from a year ago. Clearly developers are planning to build at a faster rate and the 12 month rolling average has reached 21,785, the highest since February 2008.

The top 10 locations for 2018 year to date are:

  1. Phoenix - 1,942
  2. Unincorporated Pinal County -1,272
  3. Buckeye - 1,104
  4. Mesa - 835
  5. Gilbert - 830
  6. Goodyear - 778
  7. Surprise - 761
  8. Maricopa - 741
  9. Peoria - 722
  10. Queen Creek - 630

July 27 - Below is an image extracted from a Tableau chart on our Cromford® Public pages.

The Transaction Type filter has been used to select only new home sales. We can see an obvious upward trend from 2011 to 2015 reversing and heading downward between August 2015 and June 2018. Clearly developers are attempting to head off affordability problems by building smaller homes. This goes some way to address the chronic shortage of affordable re-sale homes. The annual average has dropped a total of 8.3% since peaking in 2015 and there is no sign of it halting at the moment. However, the average new home is still roughly 20% larger than the average re-sale, which is currently 1,919 sq. ft.

July 26 - Although the numbers for the overall market have not moved much over the last month, there are some significant winners and losers when we look at the Cromford® Market Index for the single-family markets in the 17 largest cities:

The Northeast Valley provides the big winners over the last month: Paradise Valley (+32%), Fountain Hills (+11%) and Scottsdale (+10%). Cave Creek did not follow that trend and lies in 16th place.

The West Valley's Goodyear was the best of the rest with a gain of 9%. However Avondale dropped by 15% and fell from 1st place to 3rd. Peoria gained 1% but still ended up in the bottom position of the table.

In the Southeast Valley, Mesa moved into the top spot by holding steady, while Tempe (-15%), Chandler (-7%) and Gilbert (-5%) showed weaker conditions.

Overall we have 9 cities deteriorating for sellers, while 8 improved. This is the first time we have seen the negatives outnumber the positive for several months. Phoenix continues to drift slowly lower, representing about 25% of the market.

If it were not for booming sales in the luxury market we would probably be seeing a market that is cooling slightly. However every city in the list is still firmly in the seller's market zone over 110.

It seems that rising prices and climbing interest rates have coupled with low supply to dampen some of our buyers' enthusiasm at the low end of the market.

July 25 - Scottsdale has been one of the larger markets showing a strong decline in active listings without a contract. At 1,500 the count is the lowest we have seen for Scottsdale single-family homes since September 12, 2013. This time last year we saw over 1,800. The trend is still downwards, but we normally see an upswing during the third quarter. I wonder how low it will go in 2018 before this takes effect..

July 24 - Back from vacation to find little has changed in the Greater Phoenix housing market. However the Days of Inventory measure (365 x active listings / annual sales rate) has declined to its lowest level since October 2005. Hovering between 75 and 76 days (for all areas & types), we are now a shade lower than the minimum level of 2012. We are unlikely to approach the freakish readings of early 2005 which registered as low as 30 and should have been a warning of a bubble about to pop. However we can conclude that the market is now even more favorable to sellers than it was in the frenzied market of 2012.

July 14 - Mike Orr is on vacation for 10 days. Normal observation service will be resumed on July 24.

July 13 - We are seeing some exceptionally low numbers among active listing counts in the Northeast. Carefree has just 44 active single-family listings without a contract, which is easily the lowest we have ever recorded. The long term average is 99.

Rio Verde has just 34, again the lowest we have ever recorded. The long term average is 92.

July 12 - Our usual weekly look at the Cromford® Market Index for the 17 largest cities and their single-family markets:

11 cities are showing favorable moves for sellers over the past month while 6 are showing moves that favor buyers.

The biggest improvement is for Paradise Valley (up 23%), yet it remains at the bottom of the table.

The biggest decline is for Avondale, yet it remains at the top of the table (just).

Significant improvements are experienced by Goodyear, Scottsdale and Fountain Hills.

Tempe and Chandler are the other significant moves backwards.

July 11 - The Gross Rent Multiple (GRM) measures how many year's rent would be equivalent to the purchase price of a property. The lower the number the better the return on investment a landlord gets. Unless maintenance and taxes are unusually high, it is easier to make a property cash flow if the GRM is low. A typical number for the Phoenix area would be about 14. For tenants you could argue that a high number means they are getting more for their rent dollar than a property with a low GRM.

There are some areas with particularly low average GRMs, but these are often small and remote locations where homes are relative cheap and rents relatively high. If you can find a tenant you are in luck, but the remote location means that demand for rental homes may be much lower than in a more central area. Examples would include:

  • Aguila 85120 - GRM = 8.8
  • Valley Farms 85193 - GRM = 7.7
  • Coolidge 85128 - GRM = 10.8

However 2 areas of Phoenix stand out as having low GRMs:

  • Phoenix 85009 - GRM = 10.9
  • Phoenix 85034 - GRM = 10.8

This explains why landlords tend to have a much stronger appetite for homes in less desirable areas than ordinary home buyers.

The places that have the best reputations as being desirable tend to have high GRMs. They are more difficult for landlords to cash flow but you could argue they may make up for this with stronger appreciation. I am not sure I would agree with that argument. Certainly the majority of landlords avoid these locations. However the high purchase price of such homes tend to make renting them a more attractive option if you are only going to stay for a handful of years or less. Example of high GRMs include:

  • Phoenix 85018 - GRM = 19.5
  • Gold Canyon 85118 - GRM = 17.6
  • Paradise valley 85253 - GRM = 21.1
  • Scottsdale 85255 - GRM = 18.9
  • Scottsdale 85262 - GRM = 22.6
  • Rio Verde 85263 - GRM = 18.3
  • Scottsdale 85266 - GRM = 19.8
  • Fountain Hills 85268 - GRM = 17.8
  • Carefree 85377 - GRM = 20.1

The average GRMs shown above are based on the 2017 full year numbers.

July 10 - Based on Affidavits of Value filed in Maricopa and Pinal counties we can summarize the activities of iBuyers during June:

June 2018 Opendoor OfferPad Signpost (Zillow)
Number of homes purchased - Maricopa 283 86 16
Number of homes purchased - Pinal 16 29 0
Number of homes purchased in total 299 115 16
Percentage share of iBuyer purchases 70% 27% 4%
Number of homes sold - Maricopa 236 85 0
Number of homes sold - Pinal 18 27 0
Number of homes sold 254 112 0
Percentage share of iBuyer sales 69% 31% 0%

The situation a year ago was like this:

June 2017 Opendoor OfferPad
Number of homes purchased - Maricopa 165 80
Number of homes purchased - Pinal 17 18
Number of homes purchased in total 182 98
Percentage share of iBuyer purchases 65% 35%
Number of homes sold - Maricopa 88 37
Number of homes sold - Pinal 9 13
Number of homes sold 97 50
Percentage share of iBuyer sales 66% 34%

Opendoor has grown 98% over the year and increased its market share slightly.

OfferPad has grown 53% and lost some market share, but has become the largest iBuyer in Pinal county.

Signport has achieved a 4% market share for purchases in just over 1 month but has yet to record a sale.

There were 9,883 sales in June 2017 excluding new homes and homes over $500,000. iBuyers had a 2.2% share of this market in June 2017.

In June 2018 there were 9,205 sales with the same exclusions, making the iBuyer share 4.3%

We can conclude that the iBuyer market share has almost doubled from 2.2% to 4.3% in 12 months.

July 9 - Looking at the single-family market under $250,000 we of course see a lack of supply. Comparing areas with last year:

Area Active Listings excluding UCB & CCBS Now Last Year Change
Northeast Valley 175 239 -27%
Phoenix & North Valley 983 1,260 -22%
Pinal County 581 796 -27%
Southeast Valley 545 836 -35%
West Valley 1,085 1,653 -34%
Greater Phoenix 3,369 4,784 -30%

We see that the Southeast Valley has experienced the largest percentage decline in supply, but the West Valley is close behind. Phoenix and the North Valley has experienced the smallest percentage decline but this is still a hefty 22%.

By comparing with the annual sales rate we get the days of inventory as follows:

Area Days of Inventory Listings Now Last Year Change
Northeast Valley 35 42 -17%
Phoenix & North Valley 31 37 -16%
Pinal County 37 49 -24%
Southeast Valley 22 26 -15%
West Valley 26 35 -28%
Greater Phoenix 28 35 -20%

We see that the West Valley has experienced the largest percentage decline in days of inventory with Pinal County in second place. The Southeast Valley has experienced the smallest percentage decline, but it was already in the worst shape for supply last year and now has just over 3 weeks available.

July 6 - We have added a tab to the Tableau Chart showing List Price versus Sales Price. The new tab shows how the median percentage of list price has changed over time.

The measure gets higher as the market gets more favorable to sellers. in July 2018 we are seeing 99.24% versus 98.93% last year. We usually see a peak around July and then a fall back reaching an annual low point in January. The series of higher highs and higher lows shows the market is still getting hotter rather than cooler.

We also note that the median is somewhat higher than the average because the lower end of the market invariably achieves a higher percentage of list than the mid-range or high-end. The median is less affected by high-end sales than the average.

July 5 - Today we take another look at the Cromford® Market Index for the single-family markets in the largest 17 cities:

We see 10 cities with improving conditions for sellers and 7 cities deteriorating. The major decliners were Avondale (-11%) which has seen lower sales and increasing supply but still remains at the top of the table, and Chandler (-6%), falling slightly behind its Southeast Valley rivals Mesa and Gilbert.

Moving strongly in a positive direction for sellers were Paradise Valley, which has seen a downward trend in supply, Goodyear and Scottsdale.

With the bottom 7 cities all rising, all 17 cities are comfortably inside the seller's market zone.

July 4 - Rental prices have increased sharply over the past 3 months, up from 89 cents per sq. ft. per month in March to 96 cents per sq. ft. per month in June. These are still very low by the standards of cities like San Francisco or New York, but for Phoenix they represent a big increase. Between 2006 and 2014 they remained flat around 70 cents for the entire period.

This calculation is based on leases closed through ARMLS, which represent a relatively small subset of the market. Yet it is large enough to be a representative sample and an 8% rise in just 3 months is a little alarming. The cost of homes to rent is increasing faster than the cost of homes to buy.

It gives us some insight into the motives of Progress Residential and Cerberus paying market price to turn single-family homes into rentals.

July 3 - The monthly median sales price is a popular measurement that often gets a lot of attention in the news media. Real estate data often contains a certain amount of garbage data so when you receive a list of sales prices there will be a few that look like $0, $100 or $100,000,000. If you use average sales price these pieces of garbage really mess up the answer. To avoid this problem, you have to do a lot of work to detect the garbage and supply the correct data. This is the approach we take. However if you use median sales price instead of average sales price, the garbage has almost no effect on the median, so you can be lazy and just ignore the garbage. As you can imagine, this lazy person's approach is very popular.

Real estate analysis is the only discipline that I know that pays a lot of attention to medians. Almost everyone else regards them as a mathematical construct of little interest. You never hear Wall Street referring to median share prices. The only exception would be population demographics, where median age is often a useful measurement. The Census is another area in which a certain percentage of data is garbage.

There are times when median sales prices can become misleading, and now is one of them. They work great when the mix of homes being sold remains constant. However, we have a very low number of low-end homes available and a plentiful supply of high end homes. This means the mix is highly skewed in favor of expensive homes, compared with normal. This makes the median sales price shift upwards to a much greater extent than if the mix had stayed constant. We therefore get an over-optimistic impression of how much prices are increasing. This makes for good headlines but will lead to plenty of disappointment when sellers find out their home has not really increased in value as much as the median.

We saw a similar but opposite effect during the housing crash when the market was dominated by bank-owned homes and the median sales price collapsed much faster than other price measurements.

Let us look at the change between May and June 2018

Measurement (all areas & types) May 2018 Jun 2018 Change Observation
Median Sales Price $262,900 $267,329 +1.69% a large jump in median price
Average Sales Price $332,239 $332,743 +0.15% a tiny increase in average price
Average Price per Square Foot $164.35 $163.59 -0.46% a fall in average price per sq. ft
Average Square Foot 2,022 2,034 +0.59% a significant rise in average home size

 

The median price jumped almost 1.7% in a single month, about 10 times faster than inflation. It implies falsely that prices are accelerating higher.

The sales mix caused the average home size to rise almost 0.6%. 2, 022 to 2,034 sq. ft. is an unusually large change month to month and 2,034 is one of the highest readings we have ever seen.

Average price rose by a small 0.15%, less than the increase in average home size.

The average price per sq. ft. fell almost 0.5%. Price per sq. ft. was weaker in June than May.

Note that the change in the median sales price gives us a very unrealistic picture of what is happening in the market. We recommend using the average price per sq. ft. which is much more laborious to calculate but is much less prone to changes in the sales mix. It is quite normal for the average $/SF to decline between May and September. The heat of the summer has this effect almost every year.

July 2 - At this half-way point in the year, it is tempting to assume that not much has changed since January. The overall Cromford® Market Index is bouncing around within a narrow range between 150 and 170 and everything looks pretty stable. However when we look at individual ZIP codes we see some that are reaching new lows in single-family active listing counts while others are moving much higher.

Supply Moving Higher:

  • Phoenix 85006 - 74 active listings excluding UCB & CCBS - the highest count since 2011
  • Phoenix 85008 - 68 active listings excluding UCB & CCBS - the highest in over 2 years
  • Phoenix 85013 - 63 active listings excluding UCB & CCBS - the highest in 15 months
  • Phoenix 85015 - 79 active listings excluding UCB & CCBS - the highest in over 4 years
  • Phoenix 85023 - 74 active listings excluding UCB & CCBS - the highest in 14 months
  • Phoenix 85053 - 52 active listings excluding UCB & CCBS - the highest in 19 months
  • Phoenix 85083 - 115 active listings excluding UCB & CCBS - the highest in over 4 years
  • Phoenix / Anthem 85086 - 291 active listings excluding UCB & CCBS - the highest in 14 months
  • New River 85087 - 88 active listings excluding UCB & CCBS - the highest in over 4 years

The low inventory plaguing most of the valley does not apply in the above areas, so buyers may do well by shopping there.

Supply Reaching New Lows:

  • Phoenix 85045 - 26 active listings excluding UCB and CCBS - second lowest level since 2013
  • Mesa 85206 - 46 active listings excluding UCB and CCBS - the lowest number we have ever recorded for the start of a month
  • Gold Canyon 85118 - 115 active listings excluding UCB and CCBS - the lowest level in 6 years
  • Casa Grande 85122 - 103 active listings excluding UCB and CCBS - the lowest level in 6 years
  • Florence 85132 - 80 active listings excluding UCB and CCBS - the lowest level in 6 years
  • Paradise Valley 85253 - 267 active listings excluding UCB and CCBS - the lowest level in almost 3 years
  • Scottsdale 85255 - 424 active listings excluding UCB and CCBS - the lowest level in almost 3 years
  • Scottsdale 85257 - 46 active listings excluding UCB and CCBS - the lowest level in 3 years
  • Scottsdale 85258 - 82 active listings excluding UCB and CCBS - the lowest level we have ever recorded for the start of a month
  • Scottsdale 85262 - 360 active listings excluding UCB and CCBS - the lowest level in almost 3 years
  • Rio Verde 85263 - 43 active listings excluding UCB and CCBS - the lowest level in almost 3 years
  • Fountain Hills 85268 - 161 active listings excluding UCB and CCBS - the lowest level in almost 5 years
  • Casa Grande 85294 - 36 active listings excluding UCB and CCBS - the lowest level we have seen since the ZIP code was first created in 2007
  • Gilbert 85298 - 137 active listings excluding UCB and CCBS - the lowest level in over 5 years
  • Aguila 85320 - 7 active listings excluding UCB and CCBS - the lowest level in almost 7 years
  • Arlington 85322 - 0 active listings excluding UCB and CCBS - the lowest level in almost 5 years
  • Surprise 85374 - 110 active listings excluding UCB and CCBS - the lowest level in almost 3 years
  • Sun City West 85375 - 87 active listings excluding UCB and CCBS - the lowest level we have ever recorded for the start of a month
  • Carefree 85377 - 53 active listings excluding UCB and CCBS - the lowest level in almost 5 years
  • Surprise 85378 - 15 active listings excluding UCB and CCBS - the lowest level in 14 months
  • Buckeye 85396 - 178 active listings excluding UCB and CCBS - the lowest level in almost 3 years

It is counter-intuitive that the ZIP codes showing growth in supply should be all in the central and north valley. However it is true. Phoenix is better supplied than most of the other large cities.

Many of the ZIP codes hitting low points are in southern Pinal County and the Northeast Valley.

The 4 most expensive ZIP codes (85253, 85255, 85262 and 85377) are all in the list of ZIP codes making new lows in supply. It would appear that wealthy people are spending some of their tax cuts on luxury homes. The strong increase in luxury sales in 2018 has made inroads into what used to to be an excess of supply.

June 29 - Our regular look at the Cromford® Market Index for the single-family markets in the largest 17 cities is below:

Here we see 9 cities improving for sellers over the past month and 8 deteriorating.

The cities at the bottom of the table are improving - Scottsdale, Goodyear and Paradise Valley in particular, with Surprise also up 8%.

Most of the falls were modest with the largest being Avondale at -6% but still top of the league.

All 17 cities are in the seller's market zone over 110.

June 28 - We often get asked to produce statistics for subdivisions. This is usually a case of be careful what you ask for, because in almost all cases, the results are very unsatisfactory. The reason is that good quality statistics require large sample sizes. Particularly if you are trying to measure prices in any way, a small number of sales will result in meaningless statistics. You can certainly do the math, but the results will be worthless.

There are over 28,000 legal subdivisions in Maricopa and Pinal counties so the average number of annual sales per subdivision is less than 4 and the average number of sales per month is zero. 4 is not just a small sample, it is a negligible sample. You would not conduct a political opinion survey by asking 4 people. Useful statistics cannot be obtained for legal subdivisions. The only statistics that have value for them are sales counts and turnover rate, and even those will vary enormously from year to year.

We recommend an annual sales rate of at least 400 homes before attempting to take seriously any price statistics for that segment. This is especially true if you are trying to measure average appreciation. There are a few large Master Planned Communities that get close to or even exceed that number, but they are very few indeed. Even a huge community like McDowell Mountain Ranch (containing dozens of legal subdivisions) averages only 250 sales a year. To compensate for the low sample size, we have to measure over very long periods, Anything less than a quarter is pointless and annual measurements are preferred.

The same problems arise with some ZIP codes. Many people do not realize that ZIP codes vary enormously in the number of homes they contain. Some can have as many as 20,000 (e.g. 85032, 85308, 85383) but some have fewer than 50. If we are looking for at least 400 sales a year and there are fewer than 4,000 homes in the ZIP code, we are unlikely to be happy with the statistics we obtain for that ZIP code. When we look at annual sales by ZIP code there are 39 of the 155 ZIP codes in Maricopa and Pinal that do not make the grade for meaningful appreciation statistics. These include some significant ones like 85355, 85123, 85305, 85128, 85263, 85378 and 85377.

There are ZIP codes that are definitely big enough for analysis. The top 10 by annual sales rate are:

  1. Queen Creek 85142 (3,116 sales per year) - includes areas of San Tan Valley in Pinal as well as the town of Queen Creek
  2. Peoria 85383 (3,071)
  3. Buckeye 85326 (2,443)
  4. Mesa 85212 (2,255)
  5. Maricopa 85138 (2,094)
  6. Buckeye 85396 (2,072)
  7. Goodyear 85338 (2,036)
  8. San Tan Valley 85140 (1,991)
  9. San Tan Valley 85143 (1,950)
  10. Sun City 85351 (1,903)

Note that Phoenix itself is plagued by tiny ZIP codes. 85032, 85041, 85018, 85016, 85020 and 85051 are the big ones, but 85034, 85004, 85012, 85003, 85054, 85045 and 85007 are all too small having under 400 sales a year.

Please remember to consider sample size when interpreting statistics, particularly if you are using a lot of filters in the Tableau charts.

June 27 - The Census Bureau has released the new single-family home permit counts for May and for Maricopa and Pinal counties the total is 2,112. This is the second month running with a total over 2,000 since April's total was 2,185. Prior to this, the last month with a number over 2,000 was way back in August 2007.

The growth in single-family permits between May 2017 and May 2018 was 115 or 5.8%. The growth in single-family new home sales between the same two months was 15.3%, so permit growth is not running away.

In fact we need to put this number into historical context. At no time between 1996 and 2006 did the annual number of permits drop below 29,500. In 2018, 10 years beyond the collapse of the housing market, we are still forecasting a total of less than 24,000 permits. It is really not surprising that we are experiencing a shortage of supply.

June 26 - The latest S&P / Case-Shiller® Home Price Index® report was released today covering sales between February and April. The 20 cities are ranked as follows based on the month-to-month change in their index:

  1. Seattle +2.69%
  2. Boston +1.86%
  3. Minneapolis +1.82%
  4. Las Vegas +1.61%
  5. Detroit +1.41%
  6. Denver +1.19%
  7. Chicago +1.18%
  8. Washington +1.14%
  9. Portland +1.09%
  10. San Francisco +0.99%
  11. San Diego +0.98%
  12. Dallas +0.90%
  13. Los Angeles +0.89%
  14. Cleveland 0.86%
  15. Phoenix +0.84%
  16. Atlanta +0.82%
  17. Charlotte +0.77%
  18. Miami +0.50%
  19. Tampa +0.47%
  20. New York -0.58%

At 0.84% for a single month, Phoenix may seem to be moving fast, but it ranked only 15th out of 20 and fell well below the national average of +1.01%

The year-over-year changes look like this:

  1. Seattle +13.1%
  2. Las Vegas +12.7%
  3. San Francisco +10.9%
  4. Denver 8.6%
  5. Los Angeles +8.3%
  6. San Diego +7.8%
  7. Detroit +7.4%
  8. Tampa +7.2%
  9. Boston +6.9%
  10. Phoenix +6.8%
  11. Minneapolis +6.5%
  12. Charlotte +6.0%
  13. Portland +5.9%
  14. Dallas +5.7%
  15. Atlanta +5.5%
  16. Miami +5.0%
  17. Cleveland +4.9%
  18. New York +4.0%
  19. Washington +3.2%
  20. Chicago +3.0%

In this longer term picture, Phoenix fell right in the middle of the table and just above the national average of +6.4%

June 25 - Zillow has purchased 16 homes in the Greater Phoenix area since they started their iBuyer program. Only 6 are listed on ARMLS while the other 10 are marked as "coming soon" at the Zillow site. There are no closed sales but one homes is under contract accepting backup offers. The other 2 major iBuyers rarely use UCB status.

Their first home purchased May 18 is still active but has had a price cut from $425,000 to $418,500, which is $8,500 more than they paid for it.

In the last month Opendoor has completed 295 purchases and 225 sales while OfferPad has completed 103 purchases and 84 sales.

For their sales, Opendoor averaged a sales price of $247,775 on homes that cost them an average of $235,638, so their gross margin was 4.9%. They also made buyer concessions averaging $1,954 and paid an average of $6,848 in buyer's agent commission. So their gross margin after these selling expenses was 1.3%.

For their sales, OfferPad averaged a sales price of $265,106 on homes that cost them an average of $245,768, so their gross margin was 6.9%. They made buyer concessions averaging $1,850 and paid average buyer's broker commission of $7,623. So their gross margin after these selling expenses was 3.3%.

We are not able to report on the fees charged to home sellers or the refurbishing expenses as these are not revealed to the public.

June 22 - Each week we like to check how new listings compare with the same point in the same month in prior years. This is only possible once a week since you have to compare full weeks. There are far more new listings on Thursdays and Fridays so it is only a fair comparison when the date can be divided by 7. After June 21, 2017 we had 6,749 new listings activated for Greater Phoenix and after June 21, 2018 we had 6,746. This is a negligible difference. We conclude that the overall rate of new supply is almost identical.

Of course the listings in 2018 tend to be higher priced than in 2017.

  • We have had 153 new listings over $1 million versus 167 in the first 3 weeks of June last year (down 8%)
  • We have had 682 new listings between $500,000 and $1 million versus 605 (up 13%)
  • We have had 3,117 new listings between $250,000 and $500,000 versus 2,721 (up 15%)
  • We have had 2,794 new listings under $250,000 versus 3,256 (down 14%)

So we are getting fewer new listings at the top and bottom but more in the mid-range up to $1 million.

There is little change in the mix by dwelling-type

Pinal county is getting fewer new listings than in 2017 (down 7%) while Maricopa is getting very slightly more (up 1%)

June 21 - Once again we take a look at the single-family market in the 17 largest cities, represented by the Cromford® Market Index and how it has changed over the past month.

Cities improving for sellers outnumber those deteriorating by 9 to 7.

The biggest improvements are in Scottsdale, Goodyear and Surprise.

None of the backwards movements exceeded 5%

Paradise Valley moved out of the balanced zone and into a seller's market.

Nothing to scare sellers or give buyers much relief in any of this data.

June 20 - Here are the major and secondary cities ranked by the change in the annual single-family sales rate over the past 12 months.

  1. Buckeye +17.2%
  2. Fountain Hills +16.3%
  3. Litchfield Park +13.2%
  4. El Mirage +10.2%
  5. Paradise Valley +10.0%
  6. Arizona City +8.5%
  7. Queen Creek +8.5%
  8. Apache Junction +7.7%
  9. Maricopa +7.2%
  10. Surprise +6.9%
  11. Peoria +6.3%
  12. Gold Canyon +6.0%
  13. Tempe +5.1%
  14. Scottsdale +4.7%
  15. Phoenix +2.8%
  16. Sun City +2.7%
  17. Cave Creek +2.3%
  18. Mesa +2.2%
  19. Tolleson +1.1%
  20. Sun Lakes +0.7%
  21. Goodyear +0.5%
  22. Sun City West +0.0
  23. Glendale -0.4%
  24. Gilbert -2.0%
  25. Avondale -3.9%
  26. Chandler -4.2%
  27. Anthem -8.7%
  28. Casa Grande -9.8%
  29. Laveen -17.1%

Quite a wide range from -17% to +17%. Note the strong growth in some of the more expensive areas like Paradise Valley and Fountain Hills.

A growing annual sales rate is generally a positive indicator. The opposite is usually true of a declining rate, although in some cases (e.g. Avondale) the underlying cause is a lack of inventory rather than a lack buying interest.

June 19 - My favorite Tableau chart is Days of Inventory. The reason is that it packs a lot of information into just one chart and shows you the history since 2011 as well as current conditions. It is updated weekly and currently shows 57.8 days of inventory for Greater Phoenix as a whole. This excludes active listings with an existing contract (UCB or CCBS) even though they still count as active to ARMLS.

The lower the number the more the market favors sellers over buyers. 57.8 is the lowest we have seen since 2012 but we got down to 42.9 then. However the 2012 number was driven down by investors and their ravenous appetite for bank-owned homes. If we filter out everything except normal transactions then we stand at 58 days, lower than any point in the last 8 years.

If you are expecting the market to weaken then watch this chart. It will have to rise much like it did in the second half of 2013. No-one knows the future for sure, but this chart will quickly indicate if the market is headed for a change.

It is always possible to find sectors of the market that are behaving differently from the rest. For example the city of Mesa stands at just 41 days, but if you restrict the chart to homes over $1 million, there are 517 days of inventory, not far below the long term average of 587. The high-end market in Mesa therefore feels nothing like the frenzied market at the low end. If we confine ourselves to homes in the sector between $175,000 and $250,000, so beloved of iBuyers and landlords, there are only 21 days of inventory, less than a third of the long term average of 68. It therefore indicates why we see strong appreciation at the low end and weak appreciation at the top.

You can conduct similar analyses for most cities round the valley. One exception to the pattern is Anthem and New River, an area which seems to be losing the plot. Here there are 108.5 days of inventory, which is above the long term average of 94 and the annual average of 100. This a distinctly negative signal, but it does seem to be confined to this specific area. It was down at 72 as recently as the start of 2018. This illustrates how the Days of Inventory chart reinforces the message we get from the Cromford® Market Index. Both are leading indicators.

June 18 - Hybrid agency Purplebricks announced that they will be launching into the Phoenix and Las Vegas housing markets this week. Although they are virtually unknown in Phoenix as yet, Purplebricks was founded in 2012 by Northern Irish entrepreneurs Michael and Kenny Bruce. They quickly rose to dominate the UK online estate agency market, where they now have over 5% of the 520,000 or so listings in the country creating strong competition to the traditional agencies. After launching in California in 2017, they have teamed with local broker Marcus Fleming to recruit agents to promote their business model in the Phoenix area.

Purplebricks charges a flat non-refundable fee of $3,600 for listing a home for sale and provides a "Local Real Estate Expert" to act as the seller's agent. Much of the selling process is performed through their web-site. Properties are listed with the local MLS and buyer's agents are paid commission in the normal way. So the cost to the seller is $3,600 plus the commission to the buyer's agent (typically 3%). This not as attractive a deal as they offer in the UK, where there are no buyer's agents and their fixed price is £849 outside London and £1,199 in the London area. At the moment the higher fee is equivalent to $1,600. It therefore remains to be seen if their value proposition will click in Arizona. Some would argue their closest competitor would be Redfin. Redfin charges a 1.5% fee to sellers rather than a flat fee.

The expected benefits for their "Local Real Estate Experts" are that they spend a great deal of corporate money and effort on advertising and tend to generate a lot of seller leads. As of today there are 12 agents shown at the ADRE site who are part of Purplebricks. A large number of these had prior experience with Redfin. We should expect their recruiting efforts to continue. At the moment there is just 1 for-sale listing for Purplebricks on ARMLS, but then they do not launch officially until tomorrow.

June 15 - Below is our regular table showing the Cromford® Market Index for the 17 largest cities and their single-family housing markets;

Here we see 11 cities showing a swing in favor of sellers and 6 improving for buyers.

Scottsdale is benefitting from lower supply and strong demand and is out highest percentage gainer with 12% over the past month. Surprise is just behind with a 10% improvement. The remaining improvements are rather modest except for Tempe and Maricopa at 7%.

Buckeye and Glendale were the biggest movers in favor of buyers, while Phoenix continues to decline.

Not in the table above, Anthem is down to 95.9, its lowest level since 2014 and is showing an advantage to buyers.

June 14 - As I gaze at the ranking table for cities by annual average price per sq. ft., it is very obvious that the best performers for appreciation over the last 12 months have been the remote parts of the central valley.

Here is a different version where the cities are ranked in order by appreciation rate:

We have been pointing out how well Coolidge has been doing for a couple of years now, but anyone can see that 25% is a pretty impressive gain for a single year.

All of the top 6 locations are on the fringes of the valley and among the top 10, only Youngtown could be classed as a more central location.

We see Florence, Maricopa and Rio Verde also looking very promising for appreciation over the next 12 months.

The big cities are way down the table, with Queen Creek at 9% leading the pack and Scottsdale at just under 5% the worst performer among the big 12. We expect better things from Scottsdale over the next 12 months given the recent improvement in its Cromford® Market Index.

We think many investors are missing the opportunities in these smaller and far-flung locations. There are exceptions however. Things are looking difficult at the moment for Anthem and New River while Gold Canyon and Carefree just don't enjoy the publicity of Paradise Valley and Scottsdale and tend to get neglected by out-of-state buyers. Despite their beautiful surroundings these upscale locations tend to appreciate more slowly as a result, even when supply is scarce.

In the West Valley, Youngtown, El Mirage and Sun City have been the top price gainers, while in the Southeast, Apache Junction, Queen Creek and Mesa are top.

In the Northeast, Fountain Hills and Cave Creek are the leaders, both at the edge of the conurbation.

Phoenix itself has been only a modest performer, ranked at 27 out of 42 and returning below average appreciation of 6.7%.

June 13 - The single-family market in the Northeast Valley continues to swing in favor of sellers, especially at the low-end.

For homes below $500,000:

  • active listings (excluding UCB & CCBS) dropped 31% from 542 to 376 between June 1, 2017 and June 1, 2018
  • quarterly sales (Mar-May) dropped 8% from 947 to 867 between 2017 and 2018
  • average $/SF for those sales climbed 5.2% from $194.52 to $204.72
  • months of supply fell from 1.7 to 1.3

Clearly the shortage of homes for sale is causing the sales rate to decline.

For the mid-range between $500,000 and $1 million:

  • active listings (excluding UCB & CCBS) dropped 18% from 1,257 to 1,037 between June 1, 2017 and June 1, 2018
  • quarterly sales (Mar-May) rose 16% from 865 to 1,006 between 2017 and 2018
  • average $/SF for those sales climbed 2.8% from $218.66 to $224.73
  • months of supply fell from 4.4 to 3.1

For the high-end over $1 million:

  • active listings (excluding UCB & CCBS) dropped 8% from 1,348 to 1,238 between June 1, 2017 and June 1, 2018
  • quarterly sales (Mar-May) rose 31% from 318 to 416 between 2017 and 2018
  • average $/SF for those sales climbed 2.0% from $355.44 to $362.60
  • months of supply fell from 12.7 to 8.9

All three price ranges show a shift in favor of sellers in Northeast.

June 12 - The single-family luxury market has grown in volume since last year. Using ARMLS data for the 3 months March, April, May we see:

  • a 26% increase in sales between $500,000 and $1 million
  • a 33% increase in sales between $1 million and $2 million
  • a 41% increase in sales over $2 million

All this activity has caused inventory to fall compared to last year

  • inventory between $500,000 and $1 million has dropped from 4.9 months to 3.5 months
  • Inventory between $1 million and $2 million has dropped from 10.7 months to 7.7 months
  • inventory over $2 million has dropped from 18.8 months to 12.8 months

So far this has not had a big effect on pricing. The average price per sq. ft. is up only 2.3% compared to a year ago for homes over $500,000.

June 11 - The data is preliminary, based on affidavits of value recorded during May, but here are the statistics for iBuyers in Maricopa County during May 2018.

iBuyer Homes Purchased May 2018 Homes Sold May 2018 Homes Purchased May 2017 Homes Sold May 2017
Opendoor 257 235 118 63
OfferPad 99 66 49 33
Zillow (Signpost Homes) 3 0 0 0

In addition, we had 2 institutions actively buying during May - Cerberus and Progress Residential. Both are converting homes into rentals.

So far Zillow has purchased 5 homes (to June 8) at an average of 100.3% of their Zestimate. Only 1 is listed on ARMLS and it currently remains active. The others are listed as "coming soon" on the Zillow site.

For comparison, over the last 3 weeks Opendoor has paid an average of 96.9% of Zestimate while OfferPad has paid 94.5% of Zestimate. Clearly gross margins are getting squeezed with 5 major players trying to buy homes which are already pretty scarce. The competition is also likely to be putting pressure on the size of the fees charged by iBuyers to home sellers.

June 8 - The local press has been headlining that sales prices for homes in Maricopa County have hit an all-time high. This is a very misleading statement that I take strong issue with. Although the median sales price has recovered to 2006 levels, the conclusion that sales prices in general are higher than June 2006 is completely wrong.

There are very few homes that would sell in 2018 for more than they would have sold for in 2006. The vast majority of homes in the valley have not recovered the value they had in 2006 and are still quite a long way from doing so. If home sellers believe they can sell their home for more than it was worth in June 2006, they are going to be bitterly disappointed, unless they live in the heart of Arcadia or a few isolated parts of South or Central Scottsdale. These media stories make life hard for agents trying to set reasonable asking prices when taking new listings.

The first problem is that the stories in the media are comparing the monthly median sales price for May 2018 with that for June 2006. The homes that sold in May 2018 are a very different collection from the homes that sold in June 2006, so this is an apples to oranges comparison. Let us compare the two sets of homes:

  1. June 2006
    • number of affidavits describing the property as a single-family home = 10,715
    • median sales price = $280,000
    • percentage of homes that were new builds = 28%
    • average sales price = $357,067
    • average home size = 1,840
  2. May 2018
    • number of affidavits describing the property as a single-family home = 9,987
    • median sales price = $285,000
    • percentage of homes that were new builds = 14%
    • average sales price = $354,727
    • average home size = 2,007

We can see that the sales mix is very different between June 2006 and May 2018. In June 2006 we had twice as many new homes as in May 2018 and the average homes size in 2018 is over 9% larger than in 2006. The average price per sq. ft. is much lower in 2018 than 2006.

A second problem is that affidavits of value are woefully inaccurate about property types. Hundreds of townhomes and condos are mis-classified as single-family properties every month. Therefore any numbers quoted for single-family homes in May are likely to be wrong until the affidavits have been checked and corrected, which takes several weeks.

In general, median sales prices are often misused and should NEVER be the basis for comparing the values of homes or comparing new home prices with re-sale prices.

A much more reasonable measurement is average price per sq. ft. which, though not perfect, adjusts for the difference in the average home size. In June 2006 the average price per sq. ft. of single-family homes sold in Maricopa County through the MLS was $193.65 while the average for May 2018 was $170.02.

We therefore estimate that the average single-family home in Maricopa County has a 14% rise in price to achieve before it reaches its value in June 2006. Individual homes will obviously vary quite a bit.

While the median sales price has recovered the level of June 2006, the value of the average home has certainly not achieved this. Do not let your clients be misled.

June 7 - Our regular table of Cromford® Market Index numbers for the 17 largest cities and their single-family markets is shown below:

Buyers will be dismayed that the balance of power is moving towards sellers again. 12 of the 17 cities are swinging in favor of sellers with Surprise, Maricopa and Scottsdale the biggest movers in that direction. Fountain Hills and Cave Creek have also improved significantly over the past month.

The areas moving in favor of buyers do include some large cities - Phoenix, Glendale and Peoria, and Buckeye has moved down the highest percentage. Buckeye tends to have much better supply than elsewhere as it is relatively cheap and quick to build new homes there.

We have 4 of the 17 cities over 200, but there are 4 more among the secondary cities:

  • Apache Junction - 225
  • Arizona City - 323
  • El Mirage - 257
  • Tolleson - 207

At only 99.2, Anthem is the only area below 100. This is quite startling give that it was over 200 in January. The market has swung dramatically in favor of buyers in Anthem

June 6 - The preliminary recording data is in for May 2018 in Maricopa County, allowing us to publish the usual median price spreadsheet.

Overall sales of single-family and condo/townhouse homes rose 3.5% over May 2017 while the median sales price rose 8.2%. A large part of the increase in the median sales price occurred in the last month, rising from $260,950 to $270,400. New home sales rose a strong 14.2% while re-sales only managed a 2.1% increase. Pricing was the other way round with re-sales increasing their median by 8.7% while new homes managed a 7.6% rise, more than half of which came between April and May. The median for new homes is $349,945, which is 34.7% higher than the $259,800 for re-sales. However we must remember that new homes are still much larger than re-sales for the price per sq. ft. is much closer.

The summary is that prices are rising fast but sales volumes are rising more slowly now among re-sales. New homes are selling well and pricing for them is picking up momentum.

June 5 - Yesterday we focused on Fountain Hills, a town that has been improving for sellers. Today we will focus on a location that is going the opposite way - Anthem. The market in Anthem has weakened significantly in the last few months, with its Cromford® Market Index dropping from 163 in March to around 100 today.

Other negative movements:

  • total active listings 182 versus 155 last year
  • pending listings 26 versus 61 last year
  • monthly sales 51 versus 66 last year
  • days of inventory 112 versus 89 last year
  • contract ratio 47.5 versus 75.6 last year

It is clear that supply is rising and demand is falling in Anthem, very different from most other parts of the valley.

As a result, the situation in Anthem is getting much more difficult for sellers and much better for buyers.

June 4 - Sometimes a geographic location behaves quite differently from surrounding areas and it is not always easy to discern why. A case in point right now is Fountain Hills, which has seen supply fall and sales rise quite dramatically over the past 3 months

Here is the weekly active listings chart for Fountain Hills showing listings without a contract

In most years, supply increases during the first quarter and then starts to fall. However, in 2018 (the orange line) supply has fallen sharply over the past 3 month and has plummeted from 363 to 242 in just 10 weeks (all property types).

Meanwhile the year-to-date sales chart looks like this:

This chart compares sales year-to-date between 2017 and 2018 and you can see that 2018 has opened up a 17% lead, most of which has happened since March.

The Cromford® Market Index for Fountain Hills has risen from 116.8 on February 20 to 180.4 on June 4.

Sellers in Fountain Hills must be delighted with these developments.

June 3 - Cerberus seems to have just about finished the acquisition phase of their big investment in Greater Phoenix homes. Now they are busy renting them out. You can see many of their rental listings on ARMLS under Bullseye Property Management (Nick Stratton). The ownership is vested in Cerberus but the rentals are marketed under the name First Key Homes. Some homes were purchased as new from builders but the majority were re-sales purchased at full market price from the MLS.

June 1 - The most recent S&P / Case-Shiller® Home Price Index® report was released earlier this week and shows a lot of upward movement in pricing. It is based on sales that closed during the first quarter of 2018 and does not include sales from April or May.

The 20 featured cities are ranked as follows for month-to-month change in their index:

  1. Seattle +2.84%
  2. San Francisco +2.15%
  3. Minneapolis +1.65%
  4. Las Vegas +1.45%
  5. Denver +1.43%
  6. Boston +1.18%
  7. Washington +1.14%
  8. Detroit +1.11%
  9. Chicago +1.10%
  10. Portland +1.01%
  11. San Diego +1.02%
  12. Charlotte +1.01%
  13. Phoenix +0.95%
  14. Los Angeles +0.94%
  15. Atlanta +0.78%
  16. Dallas +0.71%
  17. Miami +0.66%
  18. Tampa +0.61%
  19. Cleveland +0.35%
  20. New York +0.08%

Despite a strong increase of almost 1%, Phoenix is only ranked in 13% place. It did beat the national index which rose 0.84%.

The year-over-year-changes were as follows:

  1. Seattle +13.0%
  2. Las Vegas +12.4%
  3. San Francisco +11.3%
  4. Denver +8.6%
  5. Los Angeles +8.1%
  6. Detroit +7.9%
  7. San Diego +7.7%
  8. Tampa +7.5%
  9. Phoenix +6.8%
  10. Portland 6.7%
  11. Charlotte +6.2%
  12. Atlanta +6.2%
  13. Minneapolis +6.1%
  14. Dallas +5.8%
  15. Boston +5.7%
  16. New York +5.2%
  17. Miami +5.0%
  18. Cleveland +4.6%
  19. Washington +3.0%
  20. Chicago +2.8%

In this table, Phoenix managed to appear in the top half, but its increase was only slightly higher than the national index which rose 6.5%.

So we conclude that although Phoenix is experiencing strong home price appreciation, it is not out of line with the rest of the USA.

May 31 - We look once again at how the Cromford® Market Index has changed for the single-family markets in the 17 largest cities:

Sellers have benefited since last week with 10 cities showing an improving situation for sellers and only 7 showing deterioration.

Many of the improvements are quite large including:

  1. Fountain Hills - up 12% because of higher sales and lower inventory
  2. Maricopa - up 11%
  3. Cave Creek - up 10%
  4. Surprise - up 8%

The deteriorating markets saw lower percentage changes, the highest being -7% for Glendale

One slightly disturbing aspect of this table is the continuing decline of Phoenix, which represents 25% of the market by units. The annual sales rate has started to fall in Phoenix and supply has been more resilient than in many other areas. Average and $/SF prices have shot up over the past several weeks which may be having a slightly dampening effect on latent demand. Sellers need to be wary of getting over-confident in this situation.

May 30 - The second Zillow purchase was recorded today - 22734 N 123rd Dr in Sun City West - a 5 bedroom 2 story detached home built in 2011

They paid $312,000 (excluding any seller fees deducted from this amount) for this home with a Zestimate of $317,114.

It is not currently shown as coming soon or for sale, but the sale to Signpost Homes is shown at the Zillow site.

May 29 - Despite reports of Greater Phoenix's housing market being "over-valued" (e.g. CoreLogic), we expect prices to continue rising while the Cromford® Market Index remains over 110. The CMI compares demand with supply and throughout its existence has always given us at least 3 to 6 months warning of any shift in pricing trends. Despite many fears, the housing market always gives plenty of warning before major changes occur, as long as your are paying attention and do not believe "it's different this time".

In the chart below you can see the CMI collapsed in 2005 long before prices started falling. The CMI exceeded 100 in early 2009 showing that it was safe to enter the market again. The sharp drop in the CMI in late 2013 warned us that appreciation rates would fall, but because it did not drop far below 100 they never became negative.

The CMI is currently well over 150 and would need to see another collapse below 100 before prices have any significant chance of declining.

May 28 - It takes longer to analyze new home sales because the vast majority of them do not appear in the MLS and we have to wait for the recorded deeds to be transcribed from images, entered, verified and corrected. Only then can we tally up the numbers with some accuracy. The new home numbers for April are quite surprising.

  • There were 1,425 new single-family closings, up only 2% from April 2017. Since April 2018 had a 5% advantage in working days (21 over 20), this is an unexpectedly weak number.
  • Single-family dollar volume was down 1% compared to April 2017, largely because the average new home was 6% smaller than in 2017

Although new single-family home numbers were unexpectedly weak, new townhouse / condos were unexpectedly strong.

  • There were 166 new townhouse / condos recorded, up from 132 in April 2017
  • New townhouse / condo dollar volume grew 66%, up from $49 million to $81 millio
  • The average new townhouse / condo price was $485,459, up from $367,921 a year ago

Clearly there is a lot of growth in luxury condos:

Optima Kierland had 29 closings at an average price of $977,688 and an average price per sq. ft. of $741, more than 4 times the overall average price per sq. ft. for the valley. This was by far the biggest contributor to the surge in dollar volume. Most of the buyers were from Arizona, though 3 were from California and 1 each from Alaska, Kansas, Connecticut and Colorado.

Other condo developments selling in volume during April 2018 were

  • Aire on McDowell
  • Cays at Downtown Ocotillo
  • Che Bella Villas
  • Contour
  • Copper Leaf
  • Enclave at Borgata
  • Rhythm
  • Terrace at Green Gables
  • Toscana Vacation Suites (all buyers were out-of state)
  • Villages at Aviano
  • Villages at Country Club
  • Villagio at Happy Valley

May 25 - Once again we publish below the Cromford® Market Index for single-family markets in the 17 largest cities.

This shows 8 cities improving for sellers and 9 deteriorating. However the situation is a little more positive for sellers than last week.

The major improving cities are Cave Creek, Fountain Hills, Maricopa and Avondale. Going in the other direction are Goodyear, Glendale and Tempe. Phoenix is also slightly losing steam with a growing inventory. Things are looking up in Scottsdale and Surprise.

This is still a strong seller's market with 4 cities over 200 and only 1 city lower than 110.

May 24 - Zillow has created the subsidiary Signpost Homes Inc. to operate its home buying and selling business, which was approved by the Arizona Corporation Commission on May 1. Their first acquisition was recorded on May 18 - 6630 S Nash Way in Chandler 85249. This was purchased for $410,000. The affidavit of value states the transaction was all cash and that the buyer intends to use the property as a non-primary or secondary residence. Fidelity was the title company.

The home is listed as "coming soon" on the Zillow site with an "expected on market" date of May 29. The asking price is $425,000. The current Zestimate is $412,568. It had previously been listed on ARMLS since March 16, and this listing expired on April 30.

Zillow's buying price appears to be very close to the Zestimate and it also appears that Zillow will make 2% gross margin if the home sells for the typical 98.7% of list price for Chandler.

May 23 - The US Census Bureau has just released permit counts for the month of April and all 10 of the charts in the Cromford Public section of the web-site have been updated accordingly.

In Maricopa and Pinal counties, we see a total of 2,185 single-family permits. This is the highest monthly total since June 2007 and a 19% increase over April 2017. Clearly the builders are planning to compensate for the shortage of re-sale inventory.

The annual rate for single-family permits has risen to 21,163, up 12% from 18,893 this time last year. the year-to-date total in 2018 is 7,334, up 11% over 2017 but still 35% below 2007, which was a year when the market was in the process of collapsing.

Although permit levels are increasing, the rate of change is insufficient to have a big impact on the overall shortage of homes for sale. It is however swinging the balance of supply between new and re-sale in favor of new.

May 22 - This is the last installment of our series on days of inventory. Today we list the ZIP codes with relatively high days of inventory:

  1. Phoenix 85016 - 149
  2. Superior 85173 - 158
  3. Wickenburg 85390 - 164
  4. Scottsdale 85255 - 173
  5. New River 85087 - 180
  6. Phoenix 85004 - 180
  7. Valley Farms 85191 - 182
  8. Carefree 85377 - 215
  9. Scottsdale 85266 - 225
  10. Morristown 85342 - 239
  11. Rio Verde 85263 - 252
  12. Casa Grande 85193 - 255
  13. Paradise Valley 85253 - 268
  14. Arlington 85322 - 304
  15. Scottsdale 85262 - 315
  16. Stanfield 85172 - 365
  17. Fort McDowell 85264 - 438
  18. Aguila 85320 - 730

Some of these (85172, 85173, 85191, 85193, 85264, 85320, 85342) have fairly small numbers of active listings, but their annual sales rates are extremely low, so sellers must be very patient.

Others are quite large but have far higher inventory levels than the rest of the valley.

Apart from scattered tiny communities in Pinal County, this list mostly comprises places that are in the North, such as Wickenburg, Morristown, North Scottsdale, Carefree, Rio Verde, Fort McDowell. We also see relatively central but expensive locations like Paradise Valley and Phoenix 85016.

If you are tired of sellers who are too big for their boots, go visit Aguila or Fort McDowell. Not many homes to choose from (14 and 6 respectively) but at least the sellers will be pleased to see you. The nearest we have to that situation in the larger and denser locations is Scottsdale 85262. With 485 active listings and a sales rate of only 562 per year, you should find more respect for your offers.

May 21 - Today we are resuming our analysis of days of inventory by ZIP code. We have so far covered 90 ZIP codes with days of inventory at 70 or lower. Now we look at those between 71 and 140.

  1. Phoenix 85045 - 71
  2. Tempe 85281 - 72
  3. Wittmann 85361 - 73
  4. Phoenix 85028 - 73
  5. Phoenix 85048 - 73
  6. Goodyear 85338 - 75
  7. Mesa 85207 - 75
  8. Glendale 85310 - 76
  9. Tempe 85284 - 78
  10. Litchfield Park 85340 - 79
  11. Tonopah 85354 - 81
  12. Waddell 85355 - 82
  13. Phoenix 85014 - 83
  14. Buckeye 85396 - 83
  15. Phoenix 85006 - 87
  16. Phoenix 85007 - 88
  17. Scottsdale 85251 - 88
  18. Scottsdale 85260 - 89
  19. Goodyear 85395 - 90
  20. Phoenix 85013 - 90
  21. Phoenix 85021 - 91
  22. Phoenix 85083 - 92
  23. Anthem 85086 - 96
  24. Phoenix 85085 - 98
  25. Surprise 85387 - 98
  26. Scottsdale 85298 - 100
  27. Apache Junction 85119 - 104
  28. Peoria 85383 - 110
  29. Phoenix 85054 - 115
  30. Fountain Hills 85268 - 117
  31. Casa Grande 85194 - 122
  32. Phoenix 85018 - 124
  33. Gold Canyon 85118 - 130
  34. Scottsdale 85259 - 132
  35. Black Canyon City 85324 - 132
  36. Congress 85332 - 133
  37. Phoenix 85012 - 134
  38. Eloy 85131 - 135
  39. Cave Creek 85331 - 138
  40. Phoenix 85003 - 139

Relative to the rest of the valley we are seeing more inventory available in the North Valley (e.g. Anthem, New River, Black Canyon City, Cave Creek, Phoenix 85085 and 85083).

Some of the central Phoenix ZIP codes are relatively well-off for supply (85003, 85012, 85013 for example)

East Apache Junction (85119) has far more supply than the west (85120).

May 18 - We interrupt our series on inventory numbers to post the latest table showing the Cromford® Market Index for the single-family markets in the 17 largest cities:

Here we see 8 cities showing improvement for sellers while 9 cities show deterioration. The general trend has improved since last week, from a seller's perspective.

There are 4 cities showing a strong improving trend:

  1. Fountain Hills - up 14%
  2. Cave Creek - up 14%
  3. Maricopa - up 11%
  4. Avondale - up 11%

Avondale is the first major city to exceed 250 since the heights of the bubble.

There are 5 cities showing significant deterioration over the month:

  1. Tempe - down 13%
  2. Goodyear - down 11%
  3. Glendale - down 8%
  4. Peoria - down 7%
  5. Chandler - down 6%

Of these 5, Chandler is the only one which has changed direction and improved for seller's over the past week. The 3 largest cities in the Southeast (Mesa, Gilbert, Chandler) are all over 200, reflecting very low supply.

The City of Phoenix has seen supply grow over the past month, unlike most of the surrounding cities. However, Goodyear and Glendale have also seen supply growth, as have Peoria & Gilbert. Among the secondary cities, Anthem, Tolleson and Buckeye are the only ones with more supply than a month earlier. Anthem has experienced a major downtrend in its CMI over the past 5 months. It was measured at 208 in late December and is down to 111.8 this week.

May 17 - Yesterday we listed the 40 ZIP codes with the lowest inventory relative to their annual sales rate. These ranged from 17 to 36 days of inventory (all very low). Today we are looking at the next tier of ZIP codes - those with between 37 and 70 days of inventory. This ranges from very low to much lower than normal.

  1. Phoenix 85051 - 37
  2. Peoria 85382 - 37
  3. Phoenix 85032 - 37
  4. Gilbert 85295 - 37
  5. Phoenix 85053 - 37
  6. Sun City West 85375 - 39
  7. Laveen 85339 - 39
  8. Mesa 85208 - 40
  9. Mesa 85206 - 40
  10. Mesa 85209 - 42
  11. Avondale 85392 - 42
  12. Mesa 85205 - 42
  13. Peoria 85381 - 42
  14. Buckeye 85326 - 43
  15. Glendale 85301 - 43
  16. Chandler 85226 - 44
  17. Phoenix 85042 - 44
  18. Glendale 85304 - 44
  19. Tolleson 85353 - 46
  20. Sun City 85373 - 46
  21. Phoenix 85023 - 48
  22. Surprise 85374 - 49
  23. Chandler 85249 - 49
  24. Mesa 85213 - 51
  25. Scottsdale 85257 - 51
  26. Phoenix 85034 - 52
  27. Arizona City 85123 - 53
  28. Scottsdale 85250 - 54
  29. Phoenix 85022 - 54
  30. Casa Grande 85122 - 55
  31. Gilbert 85298 - 56
  32. Queen Creek 85142 - 57
  33. San Tan Valley 85140 - 57
  34. Mesa 85212 - 58
  35. Glendale 85305 - 59
  36. Surprise 85379 - 60
  37. Surprise 85388 - 61
  38. Mesa 85215 - 61
  39. Coolidge 85128 - 62
  40. Phoenix 85044 - 63
  41. Glendale 85308 - 63
  42. Florence 85132 - 65
  43. Sun Lakes 85248 - 66
  44. Phoenix 85015 - 66
  45. Scottsdale 85254 - 67
  46. Maricopa 85138 - 68
  47. Surprise 85378 - 69
  48. Phoenix 85050 - 70
  49. Phoenix 85008 - 70
  50. Phoenix 85020 - 70

Here we are starting to see more expensive areas included in the table, such as 85250 and 85254.

The overall inventory for Greater Phoenix is 64 days. We consider a normal range to be 120 and 150 days, so inventory for all dwelling types across Greater Phoenix is roughly half of what would be considered normal.

May 16 - While inventory is low for the market as whole, some areas are much worse than others. In general the lowest priced areas have the weakest supply, but there are anomalies and exceptions. We are going to compare ZIP codes by days of inventory - the active listing count (excluding UCB and CCBS) divided by the annual sales rate and multiplied by 365 (the number of days in a year). For this analysis we are including all dwelling types.

Here are the 10 ZIP codes with the lowest days of inventory as of May 16:

  1. Phoenix 85035 - 17
  2. El Mirage 85335 - 18
  3. Mesa 85202 - 21
  4. Phoenix 85033 - 22
  5. Mesa 85203 - 23
  6. Gilbert 85296 - 24
  7. Youngtown 85363 - 24
  8. Phoenix 85037 - 24
  9. Phoenix 85009 - 25
  10. Mesa 85210 - 25

25 is an extremely low reading for days of inventory. All of the above are in West Phoenix, West Mesa or the El Mirage / Youngtown area, with the exception of 85296, which is rather more expensive

The next group of 10 is as follows:

  1. Phoenix 85043 - 25
  2. Mesa 85204 - 26
  3. Glendale 85306 - 26
  4. Gila Bend 85337 - 26
  5. Tempe 85282 - 27
  6. Glendale 85307 - 27
  7. Tempe 85283 - 27 (includes Guadalupe)
  8. Chandler 85224 - 28
  9. Peoria 85345 - 29
  10. Phoenix 85040 - 29

This is still mostly in the inner West Valley and the inner Southeast Valley

The next group of 10 is:

  1. Chandler 85225 - 30
  2. Gilbert 85233 - 30
  3. Glendale 85303 - 30
  4. Mesa 85201 - 31
  5. Glendale 85302 - 31
  6. Phoenix 85031 - 31
  7. Gilbert 85297 - 31
  8. Phoenix 85027 - 32
  9. Chandler 85286 - 32
  10. Phoenix 85019 - 32

This is a slightly more diverse group, but 32 days is still a very low number for days of inventory.

The we come to:

  1. Apache Junction 85120 - 33
  2. Phoenix 85017 - 33
  3. Sun City 85351 - 33
  4. San Tan Valley 85143 - 34
  5. Gilbert 85234 - 34
  6. Phoenix 85041 - 34
  7. Avondale 85323 - 35
  8. Phoenix 85029 - 35
  9. Phoenix 85024 - 36
  10. Maricopa 85139 - 36

A much more diverse group with a couple of more expensive areas (85234 and 85024). Still little chance of buyers finding a property without multiple offers.

May 15 - Zillow is now active as our third iBuyer, though we have yet to see any deeds recorded in their name. This is normal as it would take several weeks before they close on their first purchase.

Meanwhile our existing iBuyers have settled into patterns that have been fairly consistent over the past 6 months. During that period we see the following for Opendoor:

  • The average sales price was $236,438 with an average gross margin of $10,844 (4.6%) across 1,083 sales
  • Average turn round time between acquisition date and sales date was 97 days.
  • The maximum price paid was $490,000.
  • Their market share (excluding new home and distressed sales) was 2.3% for the 6 months and 2.8% for March 2018.

The equivalent for OfferPad:

  • The average sales price was $245,752 with an average gross margin of $21,217 (8.6%) across 656 sales
  • Average turn round time between acquisition date and sales date was 108 days.
  • The maximum price paid was $700,500.
  • Their market share (excluding new home and distressed sales) was 1.4% for the 6 months and 1.3% for March 2018.

So iBuyer sales exceeded 4% market share during March 2018, the last month for which we have verified data.

Using unverified data we counted 309 iBuyer sales during April 2018, down from 390 in March. This suggests they slipped back to slightly under 4% of sales during April. However purchases were higher in April than March and they are off to a slightly faster start for sales in May with 116 closed during the period May 1 to May 11.

Cerberus has slowed down a lot ,making only 26 purchases during the first 11 days of May.

May 14 - The single-family market in the Northeast Valley has strengthened the negotiating power of sellers over the last 12 months. Two trends have worked in sellers' favor. Supply, measured by the number of active listings without a contract, is down 14%, while the sales rate has increased. Monthly sales for April were up 12% while the annual sales rate has climbed 7%. The most interesting things is how these trends varied by price range.

For supply, it is the range below $500,000 that was most affected with months of supply down from 2.1 to just 1.5 and a 31% drop in active listings. The range between $500,000 and $1 million was down 16% in active listings pushing our months of supply lower from 5.7 to 4.1. Over $1 million there was a drop in supply, but only by 5%. There is currently just under a year of supply over $1 million.

For demand, the most impressive sales volume increase occurred above $1 million where the quarterly sales rate has jumped 32%. The range between $500,000 and $1 million rose a healthy 18%. The lower end under $500,000 was constrained by supply and saw a 5% fall in the quarterly sales rate.

So supply has fallen most at the lower end of the market while demand has increased most at the higher end. In the middle, the combination of lower supply and higher demand is welcomed by sellers but makes life tougher for the increased number of buyers.

May 11 - It has been a while since we last looked at what Canadians are up to in the Greater Phoenix housing market. The answer is - not a lot. In April 2018 the annual transaction count for Canadians across Maricopa and Pinal counties hit the lowest level since 2009. They represent only 0.9% of all transaction sides, their lowest percentage since our records for them began in 2009. At their peak in 2011 Canadians represented 2.5% of the market.

The annual purchase count in April 2018 stood at 769 which represents a slight recovery from the low point of 564 in December 2016. However it is still a very low number compared with the peak of buying in December 2011 when we saw 4,340.

Canadians have reduced the rate at which they are selling their Central Arizona homes to 1,640 a year, but that is still more than double their purchase rate. The peak exodus was August 2016 when the annual sales rate hit 2,824.

The number of sales has exceeded the number of purchases every month since February 2015. The net change over that time represents a loss of 4,658 in Canadian owners.

May 10 - The Cromford® Market Index values for the 17 largest cities and their single-family markets show quite a lot of movement in both directions:

We have 7 cities improving for sellers and 10 cities deteriorating. As last week, 16 cities are seller's markets (over 110) while one (Paradise Valley) is in the balanced zone (90 to 110).

Among the improving cities we have the following showing significant change:

  1. Fountain Hills - up 15%
  2. Cave Creek - up 12%
  3. Maricopa - up 11%
  4. Avondale - up 8%

Among the deteriorating cities, here are biggest movers:

  1. Tempe - down 13%
  2. Goodyear - down 11%
  3. Glendale - down 10%
  4. Chandler - down 9%
  5. Peoria - down 7%

Although the market remains heavily skewed in favor of sellers, the overall trend is for this imbalance to fade very slightly.

May 8 - Just as the supply situation is very different at the two ends of the market, the sales counts are behaving very differently too. Sales counts for the luxury market over $500,000 are dramatically higher than last year, unhampered by any supply shortage and fueled by buyer optimism. Sales counts under $250,000 are down compared to last year, largely due to a lack of sufficient supply.

So far in 2018 we have seen 3,398 closed listings over $500,000 across Greater Phoenix (all dwelling types). At the same point in 2017 we had seen only 2,679.

That is an increase of almost 27%. Thanks to the plentiful supply, price rises have been fairly modest in this sector so that the dollar volume is up 29%. Nevertheless that represents a huge increase in overall business volume, more than enough to make up for the increased number of active agents and brokers.

Below $250,000 we see a year-to-date reduction is sales of 11% and a reduction in dollar volume of 7%.

In the middle ground between $250,000 and $500,000, year-to-date sales are up 23% and dollar volume is also up 23%.

The increased sales volume is even more extreme for homes over $1,000,000, where unit counts are up 32% and dollar volume up 33%.

Despite the huge increase in luxury sales, supply remains fairly plentiful over $500,000 and very strong over $1,000,000. However the number of active listings no longer seems too large relative to the sales activity and the counts are starting to come down from the peaks of 2016. Sellers over $500,000 are starting to exercise a little more negotiating power, especially if they hold a modern home or one that has been recently upgraded.

May 7 - Initial results from examining the recorded deeds in Maricopa County show that April was not as strong for sales as February or March, relative to last year. Total unit sales for single-family and condo/townhouse properties came to 10,712. However April 2018 had 21 working days, one more than April 2017. This means that the apparent 7.4% growth in sales over last year, really represents a 2.2% increase in sales per working day. This compares with 10.8% in February and 9.0% in March.

The new home total of 1,295 was up 3.9% over April 2017, but after adjusting for the number of working days, this becomes a 1.0% decline. Given that both February and March showed more than 14% increases after adjusting for the number of working days, it appears that demand has weakened a bit, probably caused by the jump in interest rates.

The number of listings under contract has also weakened a little over the past month. The Cromford® Demand Index is now less than 100 in the majority of cities, the exceptions being Buckeye, Cave Creek, Fountain Hills, Litchfield Park, Maricopa, Mesa, Paradise Valley, Peoria, Queen Creek and Scottsdale. The chronic lack of supply tends to mask any weakness in demand. However the following cities are showing unusually low Cromford® Demand Index levels:

  • Anthem 75.0
  • El Mirage 80.9
  • Sun City 81.6
  • Sun Lakes 78.6

The market is still heavily favoring sellers because of the weak supply, but we need to keep a watchful eye out for possible weakness in demand. One place where demand is not at all weak is the luxury market, which is seeing a large increase in sales volumes over 2017, something we will examine in detail in a future observation.

May 4 - Looking at the changes in the Cromford® Market Index among the 17 largest cities and their single-family markets, we see:

We see 11 of the 17 cities showing deterioration for sellers with just 6 showing improvement.

16 of the 17 are currently in a seller's market with Paradise Valley the only exception, lying in the balanced zone between 90 and 110.

Among the gainers, Fountain Hills, Maricopa, Buckeye and Cave Creek are the four leaders.

Among the losers, Tempe, Glendale, Chandler and Goodyear fell the largest percentage over the past month.

The movement overall is not huge, but the trend over the past month is for the extremely strong market to lose just a little of that strength.

May 3 - Yesterday we looked at where supply was most plentiful relative to the number of homes that exist within in a ZIP code. Today we look at the opposite; the ZIP codes with the least number of homes for sale:

For single-family homes:

  1. Gila Bend 85337 - 0.0%
  2. Palo Verde 85343 - 0.0%
  3. Phoenix 85035 - 0.2%
  4. Mesa 85210 - 0.2%
  5. Phoenix 85033 - 0.3%
  6. Mesa 85203 - 0.3%
  7. Mesa 85204 - 0.3%
  8. Phoenix 85053 - 0.3%
  9. Phoenix 85037 - 0.3%
  10. Phoenix 85019 - 0.3%
  11. Phoenix 85031 - 0.3%
  12. Phoenix 85027 - 0.3%
  13. Glendale 85302 - 0.3%
  14. Mesa 85202 - 0.3%
  15. Phoenix 85009 - 0.3%
  16. El Mirage 85335 - 0.3%
  17. Phoenix 85040 - 0.3%
  18. Glendale 85306 - 0.3%
  19. Chandler 85224 - 0.3%
  20. Phoenix 85017 - 0.4%

For townhomes & condos:

  1. Peoria 85381 - 0.0%
  2. Mesa 85213 - 0.0%
  3. Phoenix 85009 - 0.0%
  4. Phoenix 85043 - 0.0%
  5. Phoenix 85041 - 0.0%
  6. Glendale 85307 - 0.0%
  7. Tolleson 85353 - 0.0%
  8. Laveen 85339 - 0.0%
  9. Buckeye 85326 - 0.0%
  10. Phoenix 85083 - 0.0%
  11. Phoenix 85023 - 0.1%
  12. Glendale 85306 - 0.2%
  13. Mesa 85204 - 0.2%
  14. Peoria 85383 - 0.2%
  15. Peoria 85345 0.2%
  16. Mesa 85202 - 0.2%
  17. Gilbert 85234 - 0.3%
  18. Glendale 85302 - 0.3%
  19. Mesa 85203 - 0.3%
  20. Phoenix 85022 - 0.3%

These tend to be affordable locations reasonably close to the center of the valley. Gila Bend has no active listings. Palo Verde has no active listings, but then there are only 33 homes in the entire ZIP code.

Phoenix 85035 (part of Maryvale) has the lowest percentage of active listings of all types - just 1 in 452 homes are for sale.

Way out in the far West Valley, Aguila 85320 has 1 in 12 homes for sale. Still some negotiation power for buyers who are prepared to live that close to California.

Among the more well known areas, Scottsdale 85262 has the most plentiful supply - 1 in 16 homes there are for sale.

May 2 - In Maricopa County 1.0% of single-family homes and 1.1% of townhomes / condos are currently listed for sale on ARMLS without an existing contract. We normally expect to see an average of around 1.6%.

Some areas have far more of their single-family homes for sale, for example:

  1. Aguila 85320 - 8.3%
  2. Fort McDowell 85264 - 8.0%
  3. Scottsdale 85262 - 6.6%
  4. Paradise Valley 85253 - 5.1%
  5. Rio Verde 85263 - 4.8%
  6. Carefree 85377 - 4.4%
  7. Scottsdale 85255 - 3.5%
  8. Morristown 85342 - 3.2%
  9. New River 85087 - 2.9%
  10. Arlington 85322 - 2.8%
  11. Phoenix 85108 - 2.7%
  12. Scottsdale 85259 - 2.6%
  13. Fountain Hills 85268 - 2.5%
  14. Phoenix 85016 - 2.3%
  15. Cave Creek 85331 - 2.2%
  16. Phoenix 85085 - 2.2%
  17. Wickenburg 85090 - 2.2%
  18. Buckeye 85396 - 2.1%
  19. Peoria 85383 - 2.1%
  20. Anthem 85086 - 1.8%

If you are a buyer who is tired of having so few homes to choose from, then these ZIP codes would give you some relief. They do include many very expensive locations however. None are perfect for the first-time home buyer on a limited budget.

If you are looking for a condo or townhouse then these are the ZIP codes with the highest percentage of homes listed for sale without a contract:

  1. Mesa 85212 - 7.4%
  2. Phoenix 85045 - 5.6%
  3. Phoenix 85004 - 5.3%
  4. Phoenix 85003 - 5.9%
  5. Rio Verde 85263 - 4.9%
  6. Scottsdale 85262 - 4.6%
  7. Phoenix 85054 - 3.4%
  8. Glendale 85305 - 3.3%
  9. Carefree 85377 - 3.3%
  10. Phoenix 85012 - 3.1%
  11. Wickenburg 85390 - 3.1%
  12. Goodyear 85395 - 2.9%
  13. Phoenix 85006 - 2.8%
  14. Scottsdale 85266 - 2.8%
  15. Sun Lakes 85248 - 2.6%
  16. Phoenix 85050 - 2.5%
  17. Paradise Valley 85253 - 2.4%
  18. Phoenix 85016 - 2.3%
  19. Scottsdale 85255 - 2.3%
  20. Buckeye 85396 - 2.1%

May 1 - The contract ratio compares the number of listings under contract with the number of listings active with no contract. It tells us how hot the market is for any chosen sector. It tends to be lower for higher priced segments where there is always a good supply of active listings. Rather than compare with a standard value, it makes sense to compare segment with its long term average and maximum values. This way we can see how hot the segment is compared with its history.

In the table below we are studying single-family homes in Greater Phoenix by price range:

Price RangeContract Ratio May 1, 2018Long Term AverageMaxLast Time at This LevelComments
Under $100K 65.1 146.7 800.3 Feb 2018  
$100K - $125K 153.8 136.9 518.3 Jun 2017  
$125K - $150K 170.0 117.1 325.1 Apr 2018  
$150K - $175K 275.5 101.7 275.5 never record high
$175K - $200K 234.2 83.1 234.2 never record high
$200K - $225K 167.5 66.4 189.4 June 2012  
$225K - $250K 131.5 58.6 146.4 June 2012  
$250K - $275K 117.8 56.1 124.5 April 2018 record high last month
$275K - $300K 105.1 49.3 113.3 June 2012  
$300K - $350K 93.5 43.6 95.1 June 2012  
$350K - $400K 74.3 37.9 90.2 May 2013  
$400K - $500K 69.1 32.3 75.7 June 2012  
$500K - $600K 53.4 26.3 60.5 May 2012  
$600K - $800K 42.7 22.2 51.9 June 2013  
$800K - $1M 28.9 16.9 33.6 May 2013  
$1M - $1.5M 27.9 14.4 30.0 June 2012  
$1.5M - $2M 14.0 11.7 21.9 April 2018 record high was June 2013
$2M - $3M 15.4 8.1 15.4 never record high
Over $3M 9.9 5.1 10.0 June 2015  

 

  • Under $150K, the fire is going out for lack of fuel. There are simply too few listings for it to function as a normal market.
  • Between $150K and $200K we have just set new records for the contract ratio (which has only been measured since October 2006). This market is extremely hot, but is in danger of running out of fuel before too long.
  • Between $200K and $350K the market is very hot, but not quite as frenzied as the summer of 2012. However the range $250K to $275K did set a new record last month.
  • Between $350K and $1.5M the market is much hotter than average but not yet close to breaking record levels set in 2012 or 2013.
  • The range between $1.5M and $2M is the coolest but is still well above average. Not in sight of its record set in 2013
  • The range between $2M and $3M has not been this hot since we started measuring contract ratios in 2006. It is unusual that its contract ratio exceeds that for $1.5M to $2M.
  • The range over $3M is very hot and very close to its all time record.

The supply over $1M remains adequate, but the number of homes going under contract is very strong.

Contract ratio is a seasonal measurement so we expect it to peak in May or June for each year.

April 30 - Over the last year here is how the big cities rank for appreciation rate. Here we have used the change in the annual average $/SF for single-family homes.

  1. Avondale 9.0%
  2. Maricopa 9.0%
  3. Queen Creek 8.4% (includes San Tan Valley unincorporated area)
  4. Buckeye 8.2%
  5. Surprise 7.8%
  6. Glendale 7.4%
  7. Peoria 6.9%
  8. Mesa 6.9%
  9. Fountain Hills 6.2%
  10. Gilbert 6.0%
  11. Chandler 5.9%
  12. Phoenix 5.9%
  13. Goodyear 5.3%
  14. Cave Creek 5.0%
  15. Tempe 4.9%
  16. Scottsdale 4.3%
  17. Paradise Valley 3.4%

We can see clearly that the highest appreciation rates have been in the cities with lower overall pricing while those with higher pricing have appreciated more slowly. However they are all bunched together more closely now than they were this time last year. The range at the end of April 2017 was 2.2% (Fountain Hills) to 9.7% (Avondale). Two years ago the spread was even wider with Paradise Valley at -1.5% and Glendale at 10.0%.

In the Southeast valley, Mesa has consistently out-performed Chandler, Gilbert and Tempe. However the top performing cities have been Maricopa and Queen Creek throughout most of the last 2 years.

In the West Valley, Avondale and Buckeye have outperformed the rest while Goodyear and Peoria have been the laggards.

In the Northeast Valley there has been less consistency, although Paradise Valley and Fountain Hills has generally lagged the other cities. Having said this, Fountain Hills is currently number one among the Northeast cities,

April 27 - The housing market in Greater Phoenix is very strong but it is no longer improving for sellers. The Cromford® Market Index for the single-family markets in the top 17 cities is shown in the table below:

We note that only 6 out of the 17 are showing improved conditions for sellers compared with March 26 while 11 are showing some deterioration.

The 3 cities with the strongest improvement are Fountain Hills, Buckeye and Maricopa, on the fringes of the valley.

Among the cities where conditions are worsening for sellers, Tempe, Goodyear, Chandler, Paradise Valley, Glendale and Peoria are most prominent.

Gilbert has overtaken Chandler to take the number 2 slot. At number 9, Buckeye is now at its highest place ever.

To puts things into perspective, 16 of the cities are still seller's markets while Paradise Valley is in the balanced zone with a slight bias in favor of sellers. Not really anything for buyers to celebrate, but at least things have stopped moving against them.

April 26 - Zillow is actively soliciting Instant Offers on its web-site now. If you enter a Phoenix area address, the home will appear with a prominent "Get Started" button which did not appear last week.

A couple of obvious differences from Opendoor and OfferPad:

  • Zillow does not appear to be limiting themselves to homes under $500,000
  • They state that it will take 2-3 business days to get an offer, rather longer than the existing iBuyers, where 24 hours is the norm

Having flirted with high sellers charges of around 9% this time last year, Opendoor seems to have settled down to a seller's fee of 5.5% to 6% in 2018. The 9% level hurt their volume, but 6% seems to be pulling in an increasing number of sellers. The monthly rates for Opendoor are currently 278 purchases per month and 254 sales per month. This is up from 210 and 241 respectively at this point last month.

OfferPad are less active, with a purchase rate of 72 and a sales rate of 86 per month.

On top of these we still have Cerberus acquiring homes in the same price range to turn them into rentals. Their buying rate has eased from 270 last month to 155 in April.

For once, a new entrant has decided not to launch first in Phoenix. The UK-based flat-fee brokerage Purplebricks has targeted Californio and New York with massive marketing spending. Good luck with that. The Purplebricks model has been extremely successful in the UK and Australia, but we will have to wait and see how they fare in the USA. The rules of the housing game are very different between the UK and the USA, in fact there is very little common ground. Almost everything you learn at AZ real estate school does not apply in the UK. There is no licensing of real estate agents in the UK, caveat emptor is the legal guide (i.e. no disclosures), there are almost no buyer's agents and seller's agents have no fiduciary duty to their clients. They also charge a lot less, but you tend to get less than what you pay for.

April 25 - The latest S&P Case-Shiller® Home Price Index® was published yesterday and includes sales between December 1, 2017 and February 28, 2018.

Here are the month to month change percentages:

  1. Seattle 1.74%
  2. Denver 1.23%
  3. San Diego 1.11%
  4. Detroit 1.10%
  5. Los Angeles 1.03%
  6. Las Vegas 1.03%
  7. San Francisco 1.02%
  8. Phoenix 0.92%
  9. Charlotte 0.77%
  10. Boston 0.74%
  11. Dallas 0.57%
  12. Miami 0.56%
  13. New York 0.50%
  14. Cleveland 0.44%
  15. Portland 0.42%
  16. Atlanta 0.40%
  17. Washington 0.39%
  18. Tampa 0.34%
  19. Minneapolis 0.34%
  20. Chicago 0.05%

In 8th place, Phoenix has improved from 12th last month but not quite joined the upper echelons. It is well ahead of the national average of 0.42%

Seattle's pace is extreme again, gaining close to 2% in a single month.

Here are the year over year changes:

  1. Seattle 12.7%
  2. Las Vegas 11.6%
  3. San Francisco 10.1%
  4. Detroit 8.4%
  5. Denver 8.4%
  6. Los Angeles 8.3%
  7. San Diego 7.6%
  8. Tampa 7.1%
  9. Portland 6.7%
  10. Atlanta 6.5%
  11. Charlotte 6.4%
  12. Phoenix 6.4%
  13. Dallas 6.4%
  14. New York 6.0%
  15. Minneapolis 5.8%
  16. Boston 5.7%
  17. Miami 4.6%
  18. Cleveland 4.1%
  19. Chicago 2.6%
  20. Washington 2.4%

Phoenix is still in the middle of the pack, moving up from 14th place last month, and very close to the national average of 6.3%.

April 23 - A quick look at the rental market on ARMLS shows we currently have 1.1 months of supply, the same as this time last year. The average rent per sq. ft. per month stands at 90.3 cents. On April 23, 2017 it stood at 85.8 cents, so the annual increase is 5.3%.

Fewer listings are being placed through ARMLS. We currently have 2,102 active compared with 2,566 last year. Closed leases have dropped from 2,186 per month down to 1,868.

It appears that a higher percentage of the rental market is taking place outside of ARMLS listings.

The average rent for active listings on ARMLS is $2,323, up from $2,155 last year, an increase of 7.8%. This is higher than one would expect and is because many listings below $2,000 are leased without recourse to ARMLS advertising.

April 21 - For the first 3 weeks of April we have seen 3% more new listings added than last year. This is not a huge number (238 to be exact) but it is a change. During the first 3 months of 2018 we saw 1.3% fewer new listings than in 2017. On its own this will not have much significance, but if new listings continue to run ahead of last year it may start to ease the supply shortage just a little.

Another change in April is that the Cromford® Market Index has started to decline. This is the first time since 2007 that we have seen a decline during April. The decline is being driven by a fall in the Cromford® Demand Index. This has dropped from a peak of 103.1 on March 23 to 100.7 on April 21. The Cromford® Supply Index has also fallen slightly during this period from 64.1 to 63.7. The change in the Demand Index is the more significant of the two and it now stands well below last year at this time when we saw 105.3. Remember that demand includes the purchases by Cerberus who are acquiring most of their rental homes from ARMLS for-sale listings. So the underlying demand from owner occupiers appears to be noticeably weaker than last year at this point.

Of course, with supply remaining very low, it is difficult to detect weaker demand in the real world. Only careful day by day study of the numbers reveal the weakening trend. The trend has not lasted long so far, but if it continues for a few months then it could become more significant. It could then show up as fewer homes under contract and lower closings. With 5.2% more agents active than last year, this could become a problem for agent productivity and earnings.

We are not sounding an alarm here, just keeping a close watch on data signals that are a little surprising.

April 19 - For the first time in many weeks we have more cities with a downward than upward trend in their Cromford® Market Index:

10 cities deteriorated for sellers over the last month while 7 improved. Once again, Fountain Hills did very well while Buckeye and Maricopa pleased sellers too.

Paradise Valley slipped below 110 and is now in the balanced market zone. Tempe, Scottsdale, Goodyear, Peoria and Surprise were the other cities with significant trends lower.

Avondale consolidated its position at the top of the table.

There are two modest trends influencing the action:

  1. New listings are now running slightly ahead of 2017 for April
  2. Sales and listings going under contract are slightly less strong (compared with normal) than they were during the first quarter

This has caused a slight downward trend in the overall market CMI, which stands at 158.3 today, down from 160.2 last month.

April 18 - Another investment corporation has moved into the Phoenix market, buying 52 single family homes in one transaction. The buyer is Luxor Capital Group which spent $13.1 million in cash on the rental properties. The seller was Living Well Homes, a Canadian investor who bought them during the ideal period in 2011. Luxor is similar to Cerberus but much smaller. Cerberus took a bit of a breather in the first 2 weeks of April but surged back into action this week. Its current run rate is about 190 homes purchased per month, down from 270 last month. Cerberus is also very active buying single family homes in Las Vegas, though its real estate business remains small compared to its other lines of business. For example, it is currently in talks attempting to purchase the Italian national airline Alitalia.

At present, Opendoor is buying about 280 homes per month while OfferPad is buying about 65 per month. Of course the homes purchased by Opendoor and OfferPad come back onto the re-sale market pretty quickly. So far homes purchased by Cerberus and Luxor become or stay part of the single family rental market. Almost all of Cerberus purchases come from MLS listings, so the reduction in available homes for purchase is significant and not good news for buyers at the affordable end of the market..

The only good news for buyers is that demand trends are drifting down a little, but so far not nearly enough to compensate for the lack of inventory. The drift down may be associated with higher interest rates, though the connection is not conclusive.

April 16 - It was recently reported that a new record high of $18,800,000 was recorded for a single family home sold in Scottsdale 85255 during March. This sale did not go through the MLS so it does not affect the MLS record of $17,500,000 set earlier this year.

A glance at the Affidavit of Value also shows that the purchase price included $2,500,000 in personal property, so the price for the home itself was only $16,300,000 and would therefore not set a new record anyway. The seller was based in California and the buyer in Oregon, intending to use the Silverleaf home as a non-primary or secondary residence.

April 15 - OfferPad sold a total of 359 homes in Maricopa & Pinal Counties during the first quarter of 2018 at an average price of $254,221. This is a 162% increase in unit volume over 2017, with market share (by unit) growing from 0.5% to 1.2%.

The average price paid rose 6.4% compared to the first quarter of 2017. Since OfferPad focuses exclusively on low to medium priced homes, the market share by dollar volume is a little lower, but grew from 0.4% to 1.0% between 1Q 2017 and 1Q 2018.

OfferPad achieved $91.4 million in home sale during 1Q 2018, while Opendoor sold $161.2 million

Total sales dollars from all sellers was $9,448.0 million, up from $8,282.3 million in 1Q 2017, an increase of 14.4%

Since the market was expanding so quickly over the last year (especially in terms of dollar volume), the impact of iBuyers on traditional agents was less than if the market had been stable and prices growing at normal inflation rates.

It is not yet clear if there is a limit on iBuyer market penetration, and if so, what that limit might be.

April 14 - I am sure almost everyone has noticed Zillow`s announcement that they intend to start operating as an iBuyer in Phoenix. However they have not yet started so we have no statistical data to share about them. I somehow doubt that they will be using Zestimates as the basis for their instant offers, given that, in general, Zestimates are rather high compared with estimates produced by other automated valuation models.

What we can share is information about how the existing iBuyers fared during the first quarter of 2018, although the data for March is still preliminary rather than final.

Opendoor sold a total of 665 homes in Maricopa & Pinal Counties during the first quarter of 2018 at an average price of $242,449. This is a 46% increase in unit volume over 2017, with market share (by unit) growing from 1.6% to 2.2%.

The average price paid jumped 9.5% compared to the first quarter of 2017. Since Opendoor focuses exclusively on low to medium priced homes, the market share by dollar volume is a little lower, but grew from 1.2% to 1.7% between 1Q 2017 and 1Q 2018.

Opendoor had a rather quiet patch during 2Q 2017, when it appeared to experiment to determine price elasticity. However it it growing fast again now.

Total quarterly unit sales were up 4.8%, so traditional agents were able to grow their business despite the impact of Opendoor and OfferPad, who we will examine tomorrow.

April 13 - Our regular look at the Cromford® Market Index for the single-family markets in the largest 17 cities shows a wide range from 111 to 226. However all of these represent seller's markets. 90-100 is the balanced range and below 90 represents a buyer's market.

We see 9 cities showing improvement for sellers and 8 showing deterioration.

Fountain Hills is the stand-out performer over the last month with supply dropping sharply and buoyant sales. The other cities showing strong trends are predominantly lower-cost areas such as Buckeye, Maricopa, Queen Creek (which includes San Tan Valley) and Avondale.

The most expensive areas, Paradise Valley and Scottsdale, have weakened over the last month.

Still very much favoring sellers, the Southeast Valley has changed very little since March 12.

Phoenix has continued to improve gradually although that trend seems to have run out of steam in the last 10 days.

April 12 - Based on 2017 Agent Production numbers:

  • To be in the top 20%, an agent needed at least 10 transaction sides
  • To be in the top 10%, an agent needed at least 17 transaction sides
  • To be in the top 5%, an agent needed at least 25 transaction sides
  • To be in the top 2%, an agent needed at least 38 transaction sides
  • To be in the top 1%, an agent needed at least 50 transaction sides
  • To be in the top 100, an agent needed at least 71 transaction sides

These calculations exclude iBuyer agents and new home sales people. Agents are ranked by numbers of transaction sides rather than by dollar volume.

April 11 - We have updated the Agent Production Tableau chart to include all of the 1Q transactions. You can find it here.

A new name has sprung to the top - Daniel Noma, who represents Cerberus Capital Management when it buys homes. With 482 sides up to April 8, Daniel is second only to Jacqueline Moore (698 sides), who represents Opendoor when they purchase homes. In third place is Brian Bair who represents the second major iBuyer in Phoenix - OfferPad (339 sides).

Among the more traditional agents, the top 10 based on transaction dollars so far in 2018 are:

  1. Jeffrey Sibbach
  2. Beth Rider
  3. Walter Danley
  4. Jason Mitchell
  5. Mike Domer
  6. Joan Levinson
  7. Lisa Lucky
  8. JoAnn Callaway
  9. Robert Joffe
  10. Scott Grigg

April 10 - Yesterday we looked at the highest ranked ZIP codes for long term appreciation since 2001. Today we do the reverse and look at the weakest ZIP codes by the same measure,

Here are the top 20 for low long term appreciation.

RankZIP CodeLong Term RateStarting $/SFCurrent $/SF
1 Fort McDowell 85264 -2.42% $280.00 $183.52
2 Morristown 85342 -1.75% $164.08 $120.99
3 Laveen 85339 0.59% $97.79 $108.28
4 San Tan Valley 85143 0.83% $87.66 $101.19
5 Maricopa 85139 0.99% $73.77 $87.38
6 Scottsdale 85262 1.01% $230.05 $273.47
7 Tonopah 85354 1.34% $74.93 $94.32
8 Waddell 85355 1.39% $93.48 $118.63
9 Casa Grande 85122 1.48% $70.39 $90.63
10 San Tan Valley 85140 1.52% $88.62 $114.89
11 Queen Creek 85142 1.80% $94.30 $128.20
12 Casa Grande 85193 1.91% $63.92 $88.56
13 Arizona City 85123 1.95% $62.34 $86.99
14 Rio Verde 85263 2.00% $133.41 $187.70
15 Litchfield Park 85340 2.00% $92.14 $129.70
16 Carefree 85377 2.02% $168.79 $238.31
17 Goodyear 85338 2.08% $86.49 $123.40
18 Phoenix 85085 2.09% $101.88 $145.48
19 Wickenburg 85390 2.10% $108.38 $155.08
20 Phoenix 85045 2.10% $106.17 $154.27

 

For owners, the least impressive areas for return on investment over the long term from 2001 onwards have been:

  • Pinal County (85122, 85123, 85139, 85140, 85142, 85143, 85193)
  • The Far Northeast Valley (85262, 85263, 85264, 85377)
  • Southwest Valley (85338, 85339, 85340, 85354, 85355)
  • Outer Northwest Valley (85342, 85390)

Past performance is not a guarantee of future returns, as they often say.

April 9 - We can rank ZIP codes by their long term appreciation rate. We use the annual average price per sq. ft. and calculate the average appreciation rate between January 2001 and today. We used only single-family detached homes for this exercise.

Here are the top 20. Some of them might surprise you.

RankZIP CodeLong Term RateStarting $/SFCurrent $/SF
1 Stanfield 85172 6.26% $39.91 $113.73
2 Phoenix 85034 6.04% $48.12 $132.49
3 Gila Bend 85337 5.93% $22.76 $61.54
4 Scottsdale 85251 5.19% $114.17 $273.48
5 Phoenix 85006 5.18% $82.53 $197.30
6 Eloy 85131 5.04% $49.39 $115.33
7 Scottsdale 85257 4.92% $88.83 $203.42
8 Phoenix 85003 4.51% $119.29 $255.52
9 Phoenix 85008 4.50% $78.89 $168.60
10 Phoenix 85018 4.49% $139.67 $298.07
11 Phoenix 85014 4.47% $96.42 $205.16
12 Phoenix 85013 4.26% $96.38 $198.13
13 Tempe 85281 4.26% $89.90 $184.64
14 Phoenix 85015 4.22% $73.17 $149.27
15 Scottsdale 85250 4.18% $119.65 $242.39
16 Phoenix 85004 4.12% $106.23 $213.33
17 Phoenix 85012 4.11% $112.01 $224.39
18 Tempe 85282 4.04% $79.84 $158.24
19 Scottsdale 85254 3.97% $105.78 $207.20
20 Black Canyon City 85324 3.91% $70.65 $136.89

For owners, the best areas for return on investment over the long term from 2001 onwards have been:

  • Central and East Phoenix (85003, 85004, 85006, 85008, 85012, 85013, 85014, 85015, 85018)
  • South and Central Scottsdale (85250, 85251, 85254, 85257) including the "magic" ZIP code 85254
  • North Tempe (85281, 85282)
  • A handful of areas on the outer fringes (Gila Bend, Stanfield, Eloy, Black Canyon City), none of which tend to be on investor target lists

Many areas are missing from the top 20 list. The best performers in their respective areas are:

  • Southeast Valley: Chandler 85224 (3.87%)
  • West Valley: Glendale 85306 (3.70%)
  • Northeast Phoenix: 85032 (3.84%)
  • North Scottsdale: 85255 (3.71%)

April 6 - Below is the table of Cromford® Market Index values for the single-family markets in the 17 largest cities:

We have 10 cities improving for sellers, 6 deteriorating and 1 neutral. This is a positive picture overall but the size of the movements are unusually large. On the positive side we have:

  1. Avondale up 18%
  2. Fountain Hills up 17%
  3. Buckeye up 11%
  4. Maricopa up 10%
  5. Queen Creek up 9%
  6. Glendale down 7%

Then on the negative side we also have some sizable moves:

  1. Tempe down 12%
  2. Surprise down 10%
  3. Paradise Valley down 9%
  4. Peoria down 8%
  5. Scottsdale down 6%

With our largest city Phoenix showing a 4% rise, the trio of Chandler, Gilbert and Mesa slightly up (and already very high), the market is showing continued strength. All cities are still in the seller's market zone (over 110).

Some parts of the USA are reporting slowing price rises, but we are not seeing that in Greater Phoenix. Appreciation is higher in 2018 than it has been for several years. The annual $/SF for all areas & types is 7.3% above this time last year. The increase last year was 5.2%, with 5.5% the year before that while 2015 gave us 5.3%. Back in 2014 we were still experiencing the coiled-spring effect and $/SF had jumped 17.7%.

Recent weakness on Wall Street could possibly impact demand in the high end luxury market, but the remainder of the market is showing few (if any) signs of weakness.

April 5 - Unfortunately the activities of Cerberus makes a terrible supply shortage even worse. As of April 1, the low-end of the market looks like this:

Price RangeActive SFD (not UCB or CCBS)Annual Sales RateDays of InventoryNormal Days of InventoryWorst Affected
Up to $100K 64 466 50 76  
$100K - $125K 38 641 22 81  
$125K - $150K 87 2,102 15 79 Yes
$150K - $175K 184 5,305 13 78 Yes
$175K - $200K 547 9,476 21 81 Yes
$200K - $225K 642 8,142 29 103  
$225K - $250K 934 9,048 38 113  
$250K - $275K 713 6,773 38 116  
$275K - $300K 844 6,570 47 128  

Anything single-detached below $275K is now extremely hard to find, and remember the above numbers are for the whole of Greater Phoenix. In the more central areas the supply is negligible.

April 4 - Now we have more details available about Cerberus purchases in March we can take a look at where the homes they have purchase are located.

So far they are very concentrated in Phoenix, Glendale and Tempe, these 3 cities representing 77% of all purchases. Mesa, Chandler and Peoria add another 16%. There is a scattering of homes in Surprise, Scottsdale, San Tan Valley, Gilbert & Queen Creek, but it is clear that Cerberus want to be near the center of the valley. Scottsdale is mostly too expensive for them. There are no purchases in Buckeye, Maricopa, Casa Grande, Sun City or Anthem. However there is just 1 in Florence, easily the furthest out we have seen.

Popular ZIP codes include 85032 (47 homes purchased), 85282 (35), 85051 (38), 85015 (30), 85304 (30) and 85302 (29). These numbers represent a significant share of the homes bought during the last 4 months.

If you are buying a home in the ZIP codes targeted by Cerberus, it would be realistic to expect a competing offer from them close to asking price.

April 3 - Back in 2012 and 2013 everyone was asking the Cromford Report when the institutional investors would dump their single-family holdings and cause a glut of homes to appear on the market. When I gave the answer "not anytime soon, maybe never" a lot of people looked dubious. But in fact, very few of those rental homes have come back onto the open market even today. A few have changed ownership as consolidation of companies took place, but the total number of institutional investor homes has changed very little since those days.

Now things are changing again. However it is not causing homes to come onto the market - quite the reverse. A new very large operator entered the Phoenix market in late November and has been buying up lower priced homes to turn them into rentals. It is already very tough to buy a home below $250,000, now buyers have Cerberus Capital Management to contend with as a competitor.

Purchase quantities:

  • Nov 2017 - 4
  • Dec 2017 - 28
  • Jan 2018 - 66
  • Feb 2018 - 222
  • Mar 2018 - 263

So we can see that Cerberus is purchasing almost as many homes now as Opendoor, representing about 3% of the market by unit. In doing so they are reducing inventory available for sale and increasing inventory available for rental.

Cerberus is privately held and probably the second institutional investor that can accurately be called a hedge fund company. Although many of the early institutions to invest in single-family homes were referred to as hedge funds, most were REITs and all but a few were publicly traded. Blackstone is publicly traded but is otherwise in a similar place to Cerberus, even bigger and heavily diversified.

Cerberus is also huge, managing over $30 billion in invested capital and focusing on high return (and high risk) distressed investments. Former vice-president Dan Quayle and former treasury secretary John Snow are among the executives, along with founder Stephen Feinberg. They have investments in retail, banking, weapon manufacturing, health care, government services, financial services, apparel, paper, transport, autos and real estate, to name just a few. One of their biggest real estate holdings is in Spain. There they own 80% of a joint venture holding the former assets of bank BBVA - bought at a 61.5% discount from book value and including a large number of foreclosed homes. This mirrors a slightly earlier transaction where Blackstone purchased real estate holdings from Santander, for 10 billion euros.

About 70% of their purchases up to the end of February came from normal listings on ARMLS. Almost all the rest were from other investors as the second part of a fix and flip. Many of these were listed on the MLS too. In fact 20 of their homes were purchased from Opendoor and OfferPad. The average sales price was $231,746 and median $228,000. All were recorded as cash sales. They are paying current market prices.

April 2 - Dollar volume of residential sales through ARMLS exceeded $3 billion in March. This is only the third time a single month has exceeded $3 billion in home sales.

The other 2 months were nearly 13 years ago in June and August 2005.

April 1 - Not so long ago the market was dominated by bank sales and short sales, and misinformed sources predicted this would continue for a long time thanks to the "shadow inventory" myth. In fact the banks were never "hiding" inventory but the myth spread because of incorrect calculations a large data corporation and the media's delight in a negative conspiracy theory.

Now we have a large number of ZIP codes with not one single-family REO for sale and no short sales either:

  • Phoenix 85003 85004 85006 85007 85024 85034 85053
  • Stanfield 85172
  • Valley Farms 85191
  • Casa Grande 85193
  • Mesa 85201 85203 85210
  • Scottsdale 85251
  • Fort McDowell 85264
  • Tempe 85281 95282 85283
  • Glendale 85301 85306 85307 85310
  • Aguila 85320
  • Arlington 85322
  • Gila Bend 85337
  • Morristown 85342
  • Palo Verde 85343
  • Youngtown 85363
  • Surprise 85378

The list of ZIP codes with no REO listings (but 1 or more short sales is somewhat longer. However REO activity is extremely low even compared with before the bubble of 2004-2006.

In addition to the above, the following have no single-family REOs:

  • Phoenix 85012 85013 85014 85016 85017 85019 85020 85021 85022 85027 85029 85033 85043 85048 85054 85083 85085
  • Apache Junction 85119
  • Queen Creek / San Tan Valley 85142 85143
  • Superior 85173
  • Mesa 85203 85207 85209 85210 85212
  • Scottsdale 85250 85257 85259
  • Paradise Valley 85253
  • Rio Verde 85263
  • Tempe 85284
  • Gilbert 85295 85296 85297
  • Glendale 85302 85303 85304 85305
  • Litchfield Park 85340
  • Waddell 85355
  • Wittmann 85361
  • Carefree 85377
  • Peoria 85381
  • Buckeye 85396

These lists include some of the ZIP codes that were most affected by the wave of bank sales. For example Phoenix 85043 had 272 REOs listed on ARMLS in February 2009 along with 142 short sales or pre-foreclosures. Now it has just 1 short sale and only 73 listings in total.

These days the ZIP codes with the highest number of REOs are some of those that were least affected during the crash. Scottsdale 85255, Sun City 85351 and Peoria 85353 each have 5. This is not because they have unusual levels of distress (they don't). It is just because they are very large ZIP codes with much higher numbers of homes than the average ZIP code.

March 30 - The Cromford® Market Index table for the single-family markets in the 17 largest cities is shown below:

We still have slightly more cities (10) showing improvement for sellers than deterioration (7).

A pattern emerges where cities with the cheapest homes have seen great improvement. These include Avondale (+21%), Buckeye (+8%) and Maricopa (+9%).

Those with more expensive homes have done less well, including Paradise Valley (-10%), Scottsdale (-5%) and Cave Creek (-0%). Fountain Hills is an exception, rising 12% since last month.

March 29 - OfferPad, the second largest iBuyer in Phoenix, purchased another 76 homes during February. This is an increase over February 2017 which saw 63 purchases, but not as dramatic a growth as for Opendoor, which was experiencing something of a lull during the first half of 2017. Here are a few things we can deduce from the recorded deeds and affidavits of value.

  1. Total expenditure was $16.3 million. ($11.9 million 2017)
  2. Average purchase price was $214,972. ($188,335 in 2017)
  3. 82% of purchases were single-family homes, while 18% were condos or townhomes. In February 2017 the split was 83% and 17%. OfferPad appears to neutral about whether a home is attached or not.
  4. 77% of purchases were in Maricopa County, while 23% were in Pinal. This means Pinal is relatively stronger for OfferPad than Pinal. February 2017 saw a 84% / 16% split which is neutral.
  5. Maximum price paid was $385,000. OfferPad avoids higher priced homes as a deliberate strategy. The maximum in February 2017 was $382,000.
  6. Average price paid was $115.56 per sq. ft. in February 2018. The average price paid per sq. ft. was $102.96 in February 2017. This is an 12% increase, and clearly OfferPad is staying focused on cheaper properties than Opendoor, despite the scarcity of sellers at the low end. This may be a reason their acquisition volume grew by a lower percentage.
  7. Average age of a home purchased was 2000, up from 1995 last year..

We have to assume that the price stated is the gross purchase price and this has not been reduced by any of the seller-paid fees. If anyone knows any different, please let us know too.

The Greater Phoenix market had 9,297 sales during February 2018, so OfferPad acquisitions represented 0.8% of the total market. Last year saw a 0.7% share.

Like Opendoor, OfferPad files its Affidavits of Value with the intended use "to be used as a non-primary or secondary residence". Most investors use the option "to be rented to someone other than a qualified family member". This means an analysis of the data will count OfferPad purchases as second home purchases and not as investor purchases. We will all therefore under count investment activity and overcount second home activity. Once the home is resold it will be captured as a flip.

Since OfferPad`s HQ is in Gilbert, these purchases count as in-state transactions.

All of the recording for OfferPad is handled by First American Title.

The bulk of these purchases state there is no lender involved. However First International Bank and Trust is occasionally mentioned.

March 28 - Opendoor, the largest iBuyer in Phoenix, purchased another 245 homes during February. This is a huge increase over February 2017 which saw only 65 purchases. Here are a few things we can deduce from the recorded deeds and affidavits of value.

  1. Total expenditure was $60.2 million. ($13.3 million in Feb 2017)
  2. Average purchase price was $245,624. ($205,332 in Feb 2017)
  3. 91% of purchases were single-family homes, while 9% were condos or townhomes. In February 2017 the split was 97% and 3%. Opendoor has shown a bias towards single-family homes.
  4. 90% of purchases were in Maricopa County, while 10% were in Pinal. This means Maricopa is relatively stronger for Opendoor than Pinal. February 2017 saw a 75% / 25% split which favored Pinal County.
  5. Maximum price paid was $450,000. Opendoor avoids higher priced homes as a deliberate strategy. The maximum in February 2017 was $324,200.
  6. Average price paid was $131.02 per sq. ft. in February 2018. The average price paid per sq. ft. was $111.16 in February 2017. This is an 18% increase, so clearly Opendoor is having to move more upmarket in order to increase its volumes, thanks to the scarcity of sellers at the low end.
  7. Average age of a home purchased was 1997.

We have to assume that the price stated is the gross purchase price and this has not been reduced by any of the seller-paid fees. If anyone knows any different, please let us know too.

The Greater Phoenix market had 9,297 sales during February 2018, so Opendoor acquisitions represented 2.6% of the total market. Last year saw a 0.8% share.

Unlike most fix and flip operations, Opendoor files its Affidavits of Value with the intended use "to be used as a non-primary or secondary residence". Most investors use the option "to be rented to someone other than a qualified family member". This means an analysis of the data will count Opendoor purchases as second home purchases and not as investor purchases. We will all therefore under count investment activity and overcount second home activity. Once the home is resold it will be captured as a flip.

Since Opendoor`s HQ is in San Francisco, this tends to overstate our counts of out-of-state purchases.

Most of the recording for Opendoor is handled by Fidelity National Title with Chicago Title picking up most (but not quite all) of the remainder. Of course, both are part of the FNF corporation.

The bulk of the lending on these purchases (51%) is from Deutsche Bank, though Goldman Sachs is also mentioned (9%). However 35% of affidavits state that the home was purchased with all cash. 5% were financed by what was stated to be a "private lender".

March 27 - The S&P / Case-Shiller Home Price Index is published today and covers sales that were recorded between November 2017 and January 2018.

Here is how the 20 urban areas stack up for the month to month change in their index:

  1. San Diego 0.76%
  2. Seattle 0.73%
  3. Atlanta 0.68%
  4. Denver 0.66%
  5. Miami 0.61%
  6. Las Vegas 0.60%
  7. Los Angeles 0.57%
  8. Tampa 0.45%
  9. Portland 0.43%
  10. San Francisco 0.39%
  11. Charlotte 0.38%
  12. Phoenix 0.34%
  13. Dallas 0.24%
  14. Boston 0.21%
  15. Detroit 0.12%
  16. Minneapolis 0.09%
  17. New York 0.04%
  18. Cleveland 0.03%
  19. Chicago -0.04%
  20. Washington -0.44%

Phoenix has slipped from 9th place last month to 12th this month, but beat the US national average which was only 0.05%

Taking the year over year view we see the following:

  1. Seattle 12.9%
  2. Las Vegas 11.1%
  3. San Francisco 10.2%
  4. Denver 7.6%
  5. Los Angeles 7.6%
  6. Detroit 7.6%
  7. San Diego 7.4%
  8. Portland 7.1%
  9. Dallas 6.9%
  10. Tampa 6.7%
  11. Atlanta 6.5%
  12. Charlotte 6.0%
  13. Minneapolis 5.9%
  14. Phoenix 5.9%
  15. Boston 5.3%
  16. New York 5.2%
  17. Miami 4.0%
  18. Cleveland 3.5%
  19. Washington 2.4%
  20. Chicago 2.4%

The national average was 6.2% and Phoenix fell slightly below that. For those who are concerned that Phoenix prices are rising too fast, consider that we remain below average for the country in absolute prices and in the rate of increase.

March 26 - The multi-family permit count for February was 782, bringing the count for the past 12 months to 9,950 units. This highlights the continuing strength of multi-family construction. Unlike the single-family market, multi-family is fully recovered back to pre-crash levels.

However the multi-family market is dominated by far fewer cities. Over the past 12 months the counts are as follows:

  1. Phoenix 4,472
  2. Tempe 1,608
  3. Chandler 1,602
  4. Mesa 706
  5. Scottsdale 630
  6. Peoria 456
  7. Goodyear 348
  8. Surprise 135
  9. Gilbert 115
  10. Unincorporated Pinal County 104
  11. Paradise Valley 43
  12. Fountain Hills 6
  13. Guadelupe 5
  14. Apoache Junction 4

In Phoenix, Tempe and Chandler, we now have more multi-family units being planned than single-family. This is particularly true for Tempe which has almost exited single-family new construction.

March 23 - At 1,593, single-family permits in Maricopa & Pinal counties were down slightly in February from January, but up 8.7% from February 2017. The new home market continues to expand, but it is revealing to look back at the permit counts from 20 years ago. February 1998 saw 2,557, which was unexceptional at the time.

Year to date numbers for 2018 show dramatic changes from 2017:

Place2018 YTD2017 YTDChange
Phoenix 611 373 +64%
Buckeye 355 301 +18%
Unincorporated Pinal County 336 255 +32%
Maricopa 225 172 +31%
Peoria 222 259 -14%
Gilbert 214 187 +14%
Goodyear 213 176 +21%
Unincorporated Maricopa County 204 69 +196%
Surprise 194 85 +128%
Queen Creek 149 226 -34%
Scottsdale 109 100 +9%
Chandler 67 40 +68%
Mesa 65 376 -83%

Mesa has dropped from first place to 13th and with Chandler at low levels in both years and Queen Creek going backwards, this does not bode well for the availability of new homes in the Southeast Valley. New home buyers in that area will find more if they head further out to either Maricopa or San Tan Valley.

San Tan Valley provides the bulk of permits classified under Unincorporated Pinal County. With the effort to incorporate San Tan Valley now stalled and the town of Queen Creek annexing more parts of Pinal County that San Tan Valley "claims", the geographic borders of this part of the valley are going to get even more confusing than they already are.

Phoenix is now growing faster than it has for 10 years, measured by new home permits, while the ambitious city of Buckeye is now number 2 in the valley for year-to-date permits and one of the 10 fastest growing cities in the USA.

March 22 - Here again is the table of Cromford® Market Index values for the single-family markets in the largest 17 cities:


Avondale is back at the top again, thanks to two favorable trends for sellers - lower inventory and higher demand. Glendale and Goodyear are also higher, but by relatively small amounts. However Surprise and Peoria are lower, especially the former which saw the opposite trends to Avondale with lower demand and increased supply.

The Southeast Valley saw little change over the month while the Northeast Valley deteriorated, except for Fountain Hills.

Maricopa and Buckeye both improved significantly, the least expensive cities in the list and both relatively well-supplied with active listings. Buckeye is seeing its highest CMI since 2013.

Phoenix, representing about 25% of the market, continued to improve and also hit its highest CMI since 2013. Because of its size, it is hard for the market to deteriorate when Phoenix is improving steadily. Although the balance is nearly even with 9 cities improving and 8 deteriorating, the strong performance of Phoenix keeps the overall market direction positive for sellers.


March 20 - The primary characteristic of the current housing market in Greater Phoenix is a lack of inventory. Part of the problem is that, despite having 5.5% more agents, we are getting 2.5% fewer new listings than last year.

Measuring year-to-date as of March 18:

  • Greater Phoenix has seen 2.8% fewer new listings than last year
  • Out of Area new listings have grown by almost 8% (not much use to people looking for a home in Greater Phoenix)

The dwelling type that is worst affected is Single Family Detached - these are down 3.4%. Condos and townhomes are down only 1.1% and mobile and manufactured homes are up 7.4%.

Here are the cities that have seen the biggest drop in new listings:

  1. Laveen - down 17.3%
  2. Fountain Hills - down 15.8%
  3. Sun City West - down 11.0%
  4. Avondale - down 10.1%
  5. Gilbert - down 7.4%
  6. Gold Canyon - down 6.3%
  7. Mesa - down 6.1%
  8. Tempe - down 4.8%
  9. Sun City - down 4.7%
  10. Casa Grande - down 4.7%

Buyers might want to know where new listings have grown since last year, giving them more opportunities:

  1. Paradise Valley - up 12.4%
  2. Florence - up 11.6%
  3. Cave Creek - up 10.2%
  4. Queen Creek - up 4.8%
  5. Anthem - up 2.0%

That is the complete (short) list.

So to get to see more new listings than in 2017, buyers will have to either plan to spend more than $1 million in PV, or head up to the northern hills in Cave Creek or Anthem or the far southeast in Queen Creek and Florence.

Everywhere else there has been a drop in new listings since year. The biggest 2 cities for listings are Phoenix and Scottsdale, where new listings are down 2.5% and 2.6% respectively, close to the average for the area as a whole.

March 19 - A new record high was set for residential sales through ARMLS at the end of February. 20450 N 108th Pl., Scottsdale 85255 closed for $17,500,000. The previous record was $15,650,000, set as recently as last December.

This property was originally listed at $24,500,000 in 2011 when newly constructed and the listing was cancelled in 2017 after 2011 days, having had its price cut to $19,950,000 in 2016. It was then relisted at $17,995,000 in June 2017. Cumulative days on market was 2,261 (6.2 years).

It boasts 5 kitchens, 2 elevators and 8 garages and was constructed by custom home builder Linthicum.

Congratulations to the listing agents Mike Domer & Delania Munro and the selling agent Frank Aazami.

DC Ranch Community must be delighted to receive the $87,500 community transfer fee.

The buyers (from Regina Saskatchewan in Canada) got a discount of 29% off the original list price. Not bad for a new home. Also not bad for a second home. I wonder what their primary residence is like.

March 18 - Are conditions improving for buyers? No. They are improving for sellers though. The overall listing success rate has just reached 84.1%. This is the highest reading since July 2005.

In the last 20 years there have only been 4 months with a higher listing success rate - between March 11, 2005 and July 10, 2005. Those were also months where almost half the closed transactions did not even hit the MLS.

Ten years ago in January 2008, the listing success rate reached an all-time low of 20.4%. Remember how bad that felt when 4 out 5 listings expired or were cancelled?

Sellers should enjoy the current conditions. They will not last forever.

March 16 - The CMI table we showed yesterday ranks the top 17 cities by the current balance between buyers and sellers. This is a leading market indicator. A good trailing indicator is the annual appreciation rate based on the annual average sales price per square foot. Here is how the same 17 cities stack up:

  1. Avondale 9.3% (9.0% this time last year)
  2. Queen Creek 8.3% (7.3%)
  3. Maricopa 8.3% (10.1%)
  4. Surprise 7.8% (6.4%)
  5. Buckeye 7.7% (9.8%)
  6. Glendale 6.9% (6.7%)
  7. Mesa 6.8% (6.9%)
  8. Peoria 6.8% (5.9%)
  9. Phoenix 5.7% (6.9%)
  10. Goodyear 5.8% (6.8%)
  11. Gilbert 5.5% (5.4%)
  12. Tempe 5.1% (5.8%)
  13. Chandler 5.0% (6.1%)
  14. Cave Creek 5.0% (4.9%)
  15. Scottsdale 4.5% (1.8%)
  16. Paradise Valley 3.3% (1.1%)
  17. Fountain Hills 3.2% (2.8%)

March 15 - Taking another look at the Cromford® Market Index for the single-family markets in the 17 largest cities and how they have changed over the last month:

We have 9 cities showing improvement for sellers and 8 showing deterioration. All 17 are in a seller's market but some much more than others. The slight change in favor of sellers is reflected in the overall CMI for all areas & types which has edged up from 157.9 to 160.3 over the past 4 weeks. This is the highest reading since August 2013.

For those thinking back to 2005, we reached a peak of 312.9 on April 4, 2005, so we are still a long way below that. Back in 2004 it took only 11 months to go from 160 to 313, fueled by almost unlimited availability of finance and buyers' irrational expectations. At the moment we don't see the same easy finance or buyer enthusiasm, but the market is very hot and the current cryptocurrency craze proves the human race still is very skilled in self-deception.

Over the last month, the stand-out performer has been Avondale where demand has strengthened at the same time as supply has dwindled. Other winners include Maricopa, Buckeye and Goodyear, while Phoenix continues its long improving trajectory.

Paradise Valley, Surprise and Cave Creek are all weaker than last month though Cave Creek has managed to stay above the 110 level which represents the top of a balanced market.

The Southeast Valley is treading water with only small changes over the past month. Its cities still dominate the top half of the table.

March 14 - The single-family luxury market (over $500,000) has improved quite a lot since this time last year. Supply is not the problem that it is under $500,000, but the sales rate has risen significantly across all the luxury segments.

Over the last 3 months we have seen 25% more closings than during the same period last year. Sales are up most between $1 million and $2 million with an increase of 37%. The supply of active listings (excluding UCB & CCBS) is up 2% in this range but it is down 4% for all homes over $500,000. The higher sales rate means the supply feels much lower even though it is only down slightly. This is good for pricing which has increased just over 5% (in $/SF) compared with a year ago.

Average days on market are down 13% and days of inventory (a key measurement) is down 18% from 282 to 231.

The listing success rate is higher too, with only Carefree and Fountain Hills below 50%. Unusually high success rates are to be seen in parts of the Southeast Valley (85048, 85248, 85249).

March 13 - We still see occasional claims that pricing is back to the levels during the bubble years but we refute these claims. We still have quite a long way to go in most segments of the market, with just a handful of special exceptions.

First of all, people make the mistake of using median sales prices. This is NOT a fair way to compare 2018 with 2006. In 2006 the median single-family house size across Greater Phoenix was far smaller (1,741 sq. ft.) than the median house size in 2018 (1,886 sq. ft.). That is a difference of 8%, so the median sales price in 2018 would need to exceed that in 2006 by at least 8% before we could realistically claim pricing had recovered to 2006 levels.

It is also not fair to use monthly average price per sq. ft. because this is a volatile measure and if one month pops up the next may drop back down again. We can call a recovery only when prices are consistently higher than they used to be.

We need to use a long term measure and one that incorporates the change in home sizes. For this reason we like the annual average price per square foot. With this measure in mind we can examine the pricing by ZIP code for single-family-homes. Such a chart can be found here.

The following ZIP codes have an annual average price per square foot for single-family homes that exceeds the maximum achieved in 2005-2009.

  1. Phoenix 85006 - $195.45 versus the peak of $192.44 in July 2007
  2. Eloy 85131 - $114.80 versus the peak of $111.08 in December 2007
  3. Scottsdale 85251 - $271.92 versus the peak of $252.02 in September 2007
  4. Scottsdale 85257 - $202.07 versus the peak of $193.68 in November 2006.

The following are within 5% of recovery:

  1. Phoenix 85008 - $168.93 versus the peak of $177.47 in April 2007
  2. Phoenix 85013 - $197.84 versus the peak of $207.02 in April 2007
  3. Phoenix 85014 - $203.29 versus the peak of $212.21 in December 2007
  4. Scottsdale 85250 - $240.93 versus the peak of $251.14 in February 2007
  5. Tempe 85281 - $184.28 versus the peak of $193.90 in January 2007

The following are within 10% of recovery:

  1. Phoenix 85003 - $253.68 versus the peak of $273.60 in February 2008
  2. Phoenix 85015 - $147.76 versus the peak of $160.91 in April 2007
  3. Phoenix 85018 - $294.17 versus the peak of $315.83 in April 2007
  4. Mesa 85202 - $146.49 versus the peak of $159.38 in October 2006
  5. Mesa 85204 - $141.33 versus the peak of $155.00 in November 2006
  6. Chandler 85224 - $158.38 versus the peak of $175.41 in September 2006
  7. Tempe 85282 - $157.25 versus the peak of $166.70 in August 2006
  8. Chandler 85286 - $154.05 versus the peak of $168.13 in September 2007 (note that this ZIP code did not exist in 2006)

All the other ZIP codes are adrift of their peak levels by more than 10%. Looking at a few of the largest in terms of the number of existing homes, we see

  1. Phoenix 85032 - $165.37 versus the peak of $189.08 (12% below)
  2. Phoenix 85041 - $111.21 versus the peak of $146.24 (24% below)
  3. Mesa 85207 - $161.92 versus the peak of $201.16 (19% below)
  4. Chandler 85225 - $151.67 versus the peak of $171.16 (11% below)
  5. Gilbert 85234 - $147.71 versus the peak of $178.08 (17% below)
  6. Chandler 85249 - $148.14 versus the peak of $182.04 (19% below)
  7. Scottsdale 85255 - $281.60 versus the peak of $325.31 (13% below)
  8. Scottsdale 85262 - $269.89 versus the peak of $374.69 (28% below)
  9. Paradise Valley 85253 - $357.25 versus the peak of $479.21 (25% below)
  10. Scottsdale 85254 - $204.45 versus the peak of $237.63 (14% below)
  11. Glendale 85308 - $147.51 versus the peak of $178.63 (17% below)
  12. Buckeye 85326 - $105.00 versus the peak of $153.92 (32% below)
  13. Goodyear 85338 - $122.49 versus the peak of $167.59 (27% below)
  14. Peoria 85345 - $126.58 versus the peak of $156.04 (19% below)
  15. Surprise 85374 - $137.52 versus the peak of $168.66 (18% below)
  16. Sun City West 85375 - $134.07 versus the peak of $154.94 (13% below)
  17. Peoria 85383 - $147.54 versus the peak of $187.56 (21% below)

The strongest recovery has been in Scottsdale 85251 where the average $/SF is now 8% higher than during the bubble.

More generally, locations close to the intersection of the 101 and 202 in Tempe have recovered better than average, as well as several areas north and east of Central Phoenix.

March 12 - A gap is starting to open up in 2018 new listings compared with 2017 and 2016.

Today represents a whole number of weeks since the start of the year so we can do a fair comparison. We have seen 24,701 new residential listings across all areas & types. This is down 1.1% from the March 12 reading in 2017 and down 3.0% from 2016. So total supply is down, but the picture is even worse if we are looking purely at affordable homes, say those under $250,000 (which is almost 50% of the market, by units).

Year to date we have seen only 10,103 new listings of all types across Greater Phoenix with an asking price below $250,000. Last year there were 12,018 and in 2016 there were 13,383. The best year for homes under $250,000 was 2010 when we had seen over 25,000 new listings by March 12.

Is supply of affordable homes going to get better? I don't think so.

There are several factors working against generating more supply at the moment:

  1. Many homes are being taken out of the purchase and long-term-rental markets to feed the short-term-rental market, thanks to the success of Airbnb and similar offerings.
  2. Mobile home parks are being purchased for development into more expensive housing (e.g. Tempe Mobile Home Park (42 sites) recently sold to the Treehouse Group).
  3. Rising interest rates mean that existing loans start to look much more attractive than new loans, encouraging owners to stay where they are instead of moving.
  4. Prices are still rising at 7% or more, so today's $240,000 house is likely to be next year's $257,500 house, so no longer affordable by our definition.

Despite an upward trend in permits, we are unlikely to see affordable supply growing in the short or medium term, unless we start to redefine our thoughts about what is affordable:

March 9 - The Contract Ratio is our favorite way of measuring the heat of a market, although it does not correct for seasonality. To overcome this defect we like to compare contract ratios for the same date each year. Below we look at how the cities compare with each other and with how they were 12 months ago:

CityContract Ratio March 8, 2018Contract Ratio March 8, 2017Change
Avondale 148.0 138.7 +6.7%
El Mirage 135.6 260.0 -47.8%
Gilbert 128.2 94.0 +36.4%
Chandler 125.0 97.8 +27.8%
Tolleson 116.7 103.9 +12.3%
Sun City West 115.5 48.4 +138.6%
Mesa 110.1 88.2 +24.8%
Queen Creek 109.7 77.9 +40.8%
Buckeye 103.8 71.0 +46.2%
Glendale 102.1 102.7 -0.6%
Apache Junction 94.9 76.9 +23.4%
Laveen 92.4 77.8 +18.8%
Surprise 88.7 93.6 -5.2%
Sun Lakes 88.6 56.9 +55.7%
Tempe 86.5 91.1 -5.0%
Phoenix 84.8 73.7 +15.1%
Sun City 83.4 66.0 +26.4%
Florence 81.9 68.7 +19.2%
Peoria 77.5 67.3 +15.2%
Maricopa 72.6 99.2 -26.8%
Anthem 67.6 64.2 +5.3%
Arizona City 66.7 54.7 +21.9%
Goodyear 65.0 58.8 +10.5%
Casa Grande 63.0 67.2 -6.3%
Litchfield Park 61.0 48.5 +25.8%
Scottsdale 37.8 30.1 +25.6%
Gold Canyon 34.8 32.2 +8.1%
Cave Creek 34.5 36.6 -5.7%
Fountain Hills 28.1 24.2 +15.2%
Paradise Valley 19.5 17.1 +14.0%

With the contract ratio we are comparing how many homes are already in escrow with the number of homes still freely available. It therefore measures current demand versus current supply and the higher the number, the more it favors sellers over buyers.

The vast majority of locations are hotter than last year, but there are notable exceptions - El Mirage, Glendale, Surprise, Tempe, Maricopa, Casa Grande and Cave Creek.

The rise of Sun City West and Sun Lakes suggests that a lot of demand is coming from older people, many moving here from out of state.

Buckeye and Queen Creek are also much hotter than last year at this time.

March 8 - The single-family Cromford® Market Index chart for the 17 largest cities is looking like this:

The West Valley continues to improve with Avondale up an astonishing 19% over the last month and Buckeye & Peoria up 7% and 6% respectively.

The Southeast Valley is stable and very favorable to sellers, but Chandler at the top is giving up a little ground.

The deteriorating cities include Cave Creek and Paradise Valley, with the former in danger of slipping into a balanced market.

March 7 - Looking at the recordings in Maricopa during February we can see some significant changes in 2018 versus 2017.

16.6% of buyers were investors. This is the highest percentage for 2 years and much higher than the 14.5% we observed in February 2017.

Second homes are back in fashion. 17.9% of owner-occupied homes were second homes rather than primary residences. This is the highest percentage since March 2014, almost 4 years ago. In February 2017 the percentage was only 13.9%

It seems that traditional primary residence buyers are fading a little, dropping from 75% in February 2017 to 70% of purchases in February 2018.

March 4 - Prices are moving upwards faster than last year or 2016. The rate of appreciation, based on the annual average price per square foot across all areas & types within the ARMLS database, reached 7% on March 3, 2018. The last time we saw an overall number of 7% or more was in February 2015, when the appreciation rate was declining fast.

Now it is has been on a clear upward trend since November 2017.

Previous periods where appreciation has exceeded 7% were:

  • April 2004 to Feb 2007 (bubble rise and fall)
  • July 2012 to Feb 2015 (rebound after collapse)

Overall appreciation rates over 7% are abnormal and we therefore need to monitor the market closely for signs of over-heating. You can monitor the overall appreciation rate using our weekly chart.

March 3 - A little late with the Cromford® Market Index table for the largest 17 cities, but here it is. Only single-family homes are included.

Clearly the Southeast Valley is out-performing the rest of the valley, holding the top 4 spots. However, both Chandler and Queen Creek saw slight declines and only Tempe retains much momentum.

The West Valley has started to catch up with significant improvements for sellers in Avondale, Peoria, Buckeye and Peoria. At number 12, Buckeye is now in the highest position we have seen for a very long time.

The Northeast Valley is bringing up the rear with all components weaker than they were a month ago. The situation in Cave Creek is the least favorable for sellers, although it remains in the seller`s market zone (over 110).

The Central Valley (Phoenix) has been on a long slow improving trend and is looking very promising for sellers.

March 2 - Multi-family permits were very strong in January, almost entirely thanks to a huge project in Tempe. We have 1,300 multi-family units year-to-date which is the second highest total in history. 2006 remains the record holder with 1,322.

March 1 - January saw much stronger single-family permit counts than last year. The Census Bureau reports 1,613 units across Maricopa and Pinal County, up 21% and the highest January total since 2007.

Big totals came in from:

  1. Phoenix - 326
  2. Buckeye - 161
  3. Unincorporated Pinal County - 124
  4. Gilbert - 121
  5. Peoria - 116
  6. Maricopa - 110
  7. Unincorporated Maricopa County - 106

February 28 - The S&P Case-Shiller Index report for the 3 months ending December 2017 was released yesterday. Here are the changes in the index over the last month:

  1. Las Vegas +0.76%
  2. Los Angeles +0.68%
  3. Seattle +0.57%
  4. Denver +0.55%
  5. San Francisco +0.53%
  6. Tampa +0.31%
  7. Atlanta +0.26%
  8. San Diego +0.22%
  9. Phoenix +0.21%
  10. Portland +0.17%
  11. Charlotte +0.15%
  12. Dallas +0.06%
  13. New York +0.01%
  14. Miami -0.11%
  15. Detroit -0.02%
  16. Boston -0.20%
  17. Washington -0.21%
  18. Cleveland -0.29%
  19. Minneapolis -0.38%
  20. Chicago -0.60%

Phoenix increased by a very modest 0.21% but this was enough to place us above the middle of the pack. The US national index increased by 0.23%.

Our closest neighbor Las Vegas is currently enjoying much stronger appreciation.

When we examine the year over year changes we find:

  1. Seattle +12.7%
  2. Las Vegas +11.1%
  3. San Francisco +9.2%
  4. Los Angeles +7.5%
  5. Denver +7.4%
  6. San Diego +7.4%
  7. Detroit +7.1%
  8. Dallas +6.9%
  9. Portland +6.8%
  10. Tampa +6.2%
  11. Charlotte +5.9%
  12. Phoenix +5.6%
  13. Boston +5.5%
  14. New York +5.4%
  15. Atlanta +5.4%
  16. Minneapolis +5.2%
  17. Miami +3.6
  18. Cleveland +3.5%
  19. Washington +2.8%
  20. Chicago +2.6%

Over the last 12 months Phoenix has appreciated by less than the national average , which was 6.3%.

This means that Phoenix is getting relatively more affordable, despite being less affordable in absolute terms. Prices have been rising much faster in the large California cities of San Francisco, Los Angeles and San Diego.

February 27 - Turning to the West Valley, here are the ZIP codes ranked by annual average $/SF. We have included the western most parts of Phoenix.

We will use an extended definition of the Southeast which includes parts of Pinal County

RankCityZIP2017 $/SF2016 $/SF% Change
1Wickenburg 85390 $152.07 $126.76 +20.0%
2Peoria 85383 $150.33 $140.88 +6.7%
3Glendale 85310 $148.06 $137.42 +7.7%
4Goodyear 85395 $145.19 $139.30 +4.2%
5Glendale 85308 $143.09 $134.86 +6.1%
6Peoria 85382 $137.50 $131.74 +4.4%
7Surprise 85387 $137.11 $129.42 +5.9%
8Surprise 85374 $134.32 $126.99 +5.8%
9Peoria 85381 $132.41 $123.45 +7.3%
10Litchfield Park 85340 $130.34 $121.60 +7.2%
11Sun City West 85375 $129.50 $123.51 +4.8%
12Wittmann 85361 $129.09 $120.98 +6.7%
13Buckeye 85396 $128.31 $126.46 +1.5%
14Glendale 85306 $126.98 $120.12 +5.7%
15Goodyear 85338 $123.30 $115.58 +6.7%
16Peoria 85345 $122.81 $112.12 +9.5%
17Surprise 85378 $120.66 $106.75 +13.0%
18Glendale 85307 $120.62 $109.21 +10.4%
19Glendale 85304 $120.55 $113.25 +6.4%
20Glendale 85305 $120.29 $113.61 +5.9%
21Waddell 85355 $117.30 $110.88 +5.8%
22Avondale 85392 $115.24 $105.65 +9.1%
23Glendale 85303 $113.97 $104.94 +8.6%
24Sun City 85373 $113.81 $107.04 +6.3%
25Glendale 85302 $112.28 $102.55 +9.5%
26Surprise 85379 $111.92 $104.06 +7.6%
27Surprise 85388 $111.03 $103.67 +7.1%
28Sun City 85351 $109.90 $97.05 +13.2%
29El Mirage 85335 $108.79 $98.27 +10.7%
30Avondale 85323 $107.70 $99.84 +7.9%
31Phoenix 85043 $107.64 $95.23 +13.0%
32Phoenix 85035 $106.95 $96.95 +10.3%
33Phoenix 85037 $106.42 $96.35 +10.5%
34Buckeye 85326 $104.70 $95.63 +9.5%
35Tolleson 85353 $102.95 $96.15 +7.1%
36Phoenix 85033 $102.54 $89.15 +15.0%
37Youngtown 85363 $101.77 $90.82 +12.1%
38Phoenix 85009 $99.06 $84.85 +16.7%
39Phoenix 85031 $92.60 $80.45 +15.1%
40Glendale 85301 $90.55 $81.77 +12.1%
41Tonopah 85354 $88.59 $90.21 -1.5%
42Arlington 85322 $77.19 $71.98 +7.2%

Tonopah sticks out like a sore thumb here with the only negative appreciation. Most of the West Valley looks strong though Northern Buckeye (85396) is relatively weak.

At first, Wickenburg looks like it is being helped by the new 55+ homes being built by Trilogy. But in fact this is not the case since Trilogy at Wickenburg Ranch is in Yavapai County and sales are not included in our Cromford Public data.

February 24 - We are now going to compare ZIP codes within the Southeast Valley region to see which are the most expensive and most affordable and report on how much prices have changed over the past year. To do this with the greatest accuracy we will use the county recordings from Cromford Public and include all single-family, condos and townhomes. We will use the annual average $/SF for 2017 and compare with 2016.

We will use an extended definition of the Southeast which includes parts of Pinal County

RankCityZIP2017 $/SF2016 $/SF% Change
1Tempe 85281 $183.02 $168.02 +8.9%
2Tempe 85284 $175.46 $170.61 +2.8%
3Chandler / Sun Lakes 85248 $164.22 $155.89 +5.3%
4Phoenix 85044 $163.29 $156.35 +4.4%
5Chandler 85226 $163.04 $155.55 +4.8%
6Mesa 85207 $162.16 $155.08 +4.6%
7Phoenix 85045 $159.56 $143.93 +10.9%
8Phoenix 85048 $159.50 $156.29 +2.1%
9Gold Canyon 85118 $156.90 $151.68 +3.4%
10Chandler 85286 $156.56 $147.82 +5.9%
11Chandler 85224 $152.44 $145.65 +4.7%
12Mesa 85215 $151.75 $138.23 +9.8%
13Gilbert 85298 $151.71 $145.33 +4.4%
14Tempe 85283 $151.56 $143.03 +6.0%
15Tempe 85282 $150.65 $139.36 +8.1%
16Chandler 85249 $150.18 $143.65 +4.5%
17Gilbert 85233 $149.55 $141.79 +5.5%
18Chandler 85225 $147.86 $135.72 +8.9%
19Gilbert 85234 $147.28 $138.91 +6.0%
20Gilbert 85296 $146.20 $136.06 +7.5%
21Gilbert 85297 $141.66 $135.20 +4.8%
22Mesa 85213 $140.24 $130.62 +7.4%
23Gilbert 85295 $139.45 $131.98 +5.7%
24Mesa 85209 $139.08 $130.58 +6.5%
25Mesa 85205 $137.38 $128.47 +6.9%
26Mesa 85212 $136.35 $126.69 +7.6%
27Mesa 85204 $135.04 $122.79 +10.0%
28 Apache Junction 85119 $135.02 $121.93 +10.7%
29Mesa 85206 $134.28 $124.54 +7.8%
30Mesa 85202 $132.50 $121.89 +8.7%
31Mesa 85203 $132.35 $119.92 +10.4%
32Mesa 85208 $130.38 $119.63 +9.0%
33Mesa 85201 $129.89 $114.16 13.8%
34Mesa 85210 $129.75 $119.83 +8.3%
35Queen Creek 85142 $127.13 $119.93 +6.0%
36Apache Junction 85120 $124.86 $114.60 +9.0%
37San Tan Valley 85140 $117.58 $112.27 +4.7%
38San Tan Valley 85143 $98.45 $90.28 +9.0%
39Florence 85132 $97.18 $87.63 +10.9%
40Maricopa 85138 $93.84 $86.01 +9.1%
41Maricopa 85139 $84.69 $80.35 +5.4%

We can see that 85045 has recovered well from the temporary slump caused by the building of the 202 freeway extension.

Tempe 85281 is the most expensive location based on average $/SF, but many of its homes are relatively small apartments, so it does not have a particularly high average or median sales price.

Mesa 85201 is the fastest appreciating ZIP code, ideally placed at the intersection of 101 and 202 freeways, though with many older properties in need of renovation. Several years ago I suggested to the Mesa City authorities that this area of West Mesa had the most potential for gentrification and increases in property value.

We note that Florence and Apache Junction are among the fastest appreciating areas of the wider Southeast Valley.

February 23 - The table of Cromford® Market Index values for the single-family markets in the 17 largest cities looks like this today:

Here we see a mixed picture. 10 cities improved but only one (Tempe) by more than 10%. 7 cities deteriorated including 3 (Fountain Hills, Cave Creek and Maricopa) by more than 10%.

The Southeast Valley dominates the top of the table due to very low supply. This includes 4 major cities over 200 which is quite unusual.

On the other hand we now have 3 cities below 120 having had zero just a few weeks ago

February 20 - Now let us compare new build pricing with re-sales for the Northeast Valley.

Again we will use the county recordings from Cromford Public and include all single-family, condos and townhomes. We will use the annual average $/SF for 2017 and compare with 2016.

Note that this process will NOT include the few custom homes where the owner purchases the vacant lot before the homes is constructed. These homes do not appear in the county records until they are eventually re-sold. Since no land changes hand after new construction completes there is no recorded deed that includes the improvements. The price paid is known only to the builder and the buyer, not to you, me or the county assessor. We only know the price paid for the land.

RankCityZIPResale 2017 $/SFNew Build 2017 $/SF% New Premium
1Paradise Valley 85253 $334.17 $568.63 +70%
2Phoenix 85018 $259.12 $335.70 +30%
3Scottsdale 85262 $262.37 $310.37 +18%
4Scottsdale 85255 $267.05 $317.54 +19%
5Scottsdale 85251 $231.31 $338.05 +46%
6Scottsdale 85266 $236.39 $277.71 +17%
7Rio Verde 85263 $180.08 $290.16 +61%
8Scottsdale 85258 $228.81 $312.29 +36%
9Carefree 85377 $223.06 $288.92 +30%
10Scottsdale 85259 $222.61 $279.17 +25%
11Phoenix 85016 $210.01 $371.08 +77%
12Phoenix 85054 $207.70 $244.95 +18%
13Scottsdale 85260 $208.86 $323.27 +55%
14Scottsdale 85254 $207.72 $355.88 +71%
15Scottsdale 85250 $205.63 $376.80 +83%
16Fountain Hills 85268 $193.20 $325.01 +68%
17Cave Creek 85331 $185.70 $208.66 +12%
18Scottsdale 85257 $187.52 $252.15 +34%
19Phoenix 85028 $187.87 $194.51 +35%
20Fort McDowell 85264 $187.05 N/A N/A
21Phoenix 85050 $177.02 $210.09 +19%
22Phoenix 85032 $154.28 $255.52 +66%

The average $/SF numbers for new homes in most of the Northeast Valley exceed re-sales by much larger percentages than in the rest of the Greater Phoenix area.

Luxury buyers tend to be willing to pay much higher premiums for homes that fit the latest styles and fashions and for the privilege of being the first owner.

February 19 - We are going to compare ZIP codes within a region to see which are the most expensive and most affordable and report on how much prices have changed over the past year. To do this with the greatest accuracy we will use the county recordings from Cromford Public and include all single-family, condos and townhomes. We will use the annual average $/SF for 2017 and compare with 2016.

We will start with the Northeast Valley (including Northeast Phoenix):

RankCityZIP2017 $/SF2016 $/SF% Change
1Paradise Valley 85253 $367.50 $329.45 +11.5%
2Phoenix 85018 $271.92 $255.32 +6.5%
3Scottsdale 85262 $271.83 $262.16 +3.7%
4Scottsdale 85255 $270.80 $275.28 -1.6%
5Scottsdale 85251 $244.06 $230.10 +6.1%
6Scottsdale 85266 $242.81 $228.50 +6.3%
7Rio Verde 85263 $231.69 $202.32 +14.5%
8Scottsdale 85258 $230.78 $221.76 +4.1%
9Carefree 85377 $229.91 $226.34 +1.6%
10Scottsdale 85259 $228.52 $219.23 +4.2%
11Phoenix 85016 $220.25 $198.47 +11.0%
12Phoenix 85054 $213.80 $202.23 +5.7%
13Scottsdale 85260 $210.56 $199.58 +5.5%
14 

December 29 - Supply, or rather the lack of it, is the big issue in the Greater Phoenix market below $1 million. It was already low 12 months ago, but in some areas it has dropped dramatically since then. Here is a table comparing the days of inventory under $1 million (excluding UCB and CCBS listings) in December 2017 with December 2016:

CityDays of Inventory Dec 2017Days of Inventory Dec 2016Notes on Change
Anthem
58
71
 
Apache Junction
87
113
 
Arizona City
92
127
 
Avondale
45
42
very low supply but higher than last year
Buckeye
72
86
 
Carefree
172
320
 
Casa Grande
74
115
 
Cave Creek
97
112
 
Chandler
36
47
extremely low supply
Coolidge
47
89
very low supply
El Mirage
26
32
extremely low supply
Eloy
138
164
 
Florence
90
130
 
Fountain Hills
138
120
one of the few areas where inventory has risen
Gilbert
36
48
extremely low supply
Glendale
45
56
very low supply
Gold Canyon
104
221
huge collapse in supply since 2016
Goodyear
68
68
 
Laveen
46
54
very low supply
Litchfield Park
75
75
 
Maricopa
73
70
 
Mesa
44
57
very low supply
New River
121
163
 
Paradise Valley
109
127
 
Peoria
55
67
 
Phoenix
57
64
 
Queen Creek
50
63
 
Rio Verde
275
305
 
Scottsdale
80
106
 
Sun City
48
56
very low supply
Sun City West
47
71
very low supply
Sun Lakes
55
87
 
Surprise
55
83
 
Tempe
41
53
very low supply
Tolleson
47
44
low supply but higher than last year
Waddell
52
60
 
Wickenburg
241
263
 
Wittmann
127
98
one of the few areas where inventory has risen
Youngtown
32
75
extremely low supply

I would say anything below 50 is unusually low and below 40 is extremely low. Chandler and Gilbert are struggling with a supply crisis. Tempe and Mesa are not far behind them. Transaction volumes are dropping due to a lack of homes to buy.

For the Southeast Valley, we are no longer in territory where the market is guaranteed to be well-behaved. Unless we see a major increase in supply, prices may have to rise rapidly to get the imbalance between supply and demand back to within normal limits.

For the Northwest Valley, things are approaching the extremes of the Southeast but are not there yet.

For the Northeast and Southwest Valley, times are good for sellers under $1 million, but have not reached the unusual levels of supply shortage that we are seeing elsewhere.

Phoenix has dropped from 64 to 57 days over the past year and may very well drop below 50 during 2018.

For buyers who cannot stand the pressure, outer locations like Wickenburg, Rio Verde, Carefree, Eloy, New River, Fountain Hills and Wittmann offer the best chance of having your offer taken seriously.

2018 is likely to be a very interesting year to watch the market. Supply cannot keep dropping without limit.

December 28 - It does not normally get too exciting in the housing market around Christmas, but the latest table of Cromford® Market Index numbers shows us a market that is quickly changing to become even more extreme. Several cities have seen supply dropping unusually fast in December.

14 out of 17 cities saw the balance move in favor of sellers and buyers are in real trouble in many areas. Yes we will see more listings arrive in January but not enough to compensate for the huge supply deficit that has built up, especially in the southeast and northwest areas.

Glendale, Tempe and Chandler are the big movers over the past month with Chandler exceeding the 200 mark for the first time since 2013. Just behind these we have Gilbert, Mesa, Surprise, Avondale, Phoenix, Peoria and Cave Creek all advancing by 7% or more.

Buckeye improved for sellers by 3% meaning we now have no large cities with a CMI below 120.

The excitement is not confined to the large cities. We have El Mirage now over 300 and Anthem and Apache Junction over 200. At 123.8, Sun City is the lowest CMI among the secondary cities.

There really is no place a regular buyer can go to find a balanced market anymore.

December 27 - The latest S&P/Case-Shiller® Home Price Index® data was published yesterday and covers sales closed between August and October 2017.

The month to month change for the 20 cities that Case-Shiller identifies separately was:

  1. San Francisco - up 1.16%
  2. Las Vegas - up 0.99%
  3. Tampa - up 0.59%
  4. Charlotte - up 0.48%
  5. New York - up 0.38%
  6. Dallas - up 0.36%
  7. Phoenix - up 0.28%
  8. Detroit - up 0.21%
  9. Los Angeles - up 0.21%
  10. Denver - up 0.10%
  11. Washington - up 0.06%
  12. San Diego - up 0.01%
  13. Miami - down 0.07%
  14. Minneapolis - down 0.07%
  15. Seattle - down 0.07%
  16. Atlanta - down 0.13%
  17. Cleveland - down 0.18%
  18. Boston - down 0.22%
  19. Portland - down 0.30%
  20. Chicago - down 0.55%

We note that 7 of the 20 lost ground between September and October, but this is a common seasonal pattern. Last year, 7 cities also lost ground, but not the same ones as in 2017. Looking stronger than last year at this time are:

  • Los Angeles
  • San Francisco
  • Denver
  • Washington
  • Chicago
  • Detroit
  • Charlotte
  • Las Vegas
  • New York

In 7th place, Phoenix was slightly ahead of the national gain of 0.16% for the month, but last year it managed a healthier 0.36%. Pricing was not very impressive for Phoenix between August and October, but November was exceptionally strong. We should see that strength start to show up in the Case-Shiller numbers published at the end of January.

The year over year table looks like this:

  1. Seattle - up 12.7%
  2. Las Vegas - up 10.2%
  3. San Diego - up 8.1%
  4. San Francisco - up 7.7%
  5. Denver - up 7.2%
  6. Detroit - up 7.1%
  7. Dallas - up 7.1%
  8. Portland - up 7.1%
  9. Boston - up 6.9%
  10. Tampa - up 6.9%
  11. Los Angeles - up 6.5%
  12. Charlotte - up 6.4%
  13. Phoenix - up 6.0%
  14. New York - up 5.9%
  15. Minneapolis - up 5.4%
  16. Atlanta - up 5.0%
  17. Cleveland - up 4.7%
  18. Miami - up 4.4%
  19. Chicago - up 4.1%
  20. Washington - up 3.1%

The national figure was 6.2% so Phoenix was very close to this national average for the year Oct 2016 - Oct 2017.

December 26 - In the Cromford® Public section of the site we include a fascinating chart that allows us to look at all closed transactions and compare pricing between the different transaction types, such as

  • how new home price per sq ft compares with re-sales
  • how MLS transactions compare with non-MLS normal sales
  • how investor flip pricing compares with normal sales

When we look at the whole Greater Phoenix market and the annual average $/SF in November we see that the hierarchy is much as you would expect:

  1. New homes $159.11
  2. Normal MLS sales $151.94
  3. Investor flips $133.68
  4. Normal non-MLS sales $129.00
  5. Short sales $121.76
  6. Bank sales $117.33
  7. Pre-foreclosures $114.23
  8. GSE REO sales $109.37
  9. Trustee sales $102.33
  10. HUD sales $97.46

Agents will be delighted to see that sales through the MLS sell for a much higher average $/SF than sales outside the MLS. However this is primarily because we are looking at the the whole market and MLS sales tend to include far more high-end homes than the other categories. New homes also sell for a much higher price per sq. ft. at the extreme upper price points.

If we restrict our chart to the mid-range from $250,000 to $500,000 we get a completely transformed picture:

  1. Investor flips $152.71
  2. Normal MLS sales $149.57
  3. Normal non-MLS sales $145.81
  4. New homes $145.35
  5. HUD sales $138.65 (very small sample)
  6. GSE REO sales $132.34
  7. Short sales $127.03
  8. Pre-foreclosures $126.79
  9. Bank sales $122.07
  10. Trustee sales $121.81

Normal MLS sales still out-perform normal sales that did not go through the MLS, but the difference is less than 3%.

What may be surprising to many is that the investor flips are selling for the highest price per sq. ft. and that this has been largely true since 2014 for this crucial mid-range segment. Those professional fix and flippers really seem to have got their act together. Remember that that they rarely enter the market over $1 million so are at a disadvantage if we look at the chart for the whole market.

It may also be surprising to find that new homes sell for a lower average price per sq. ft. than normal re-sales and that this has been true since at least 2012. This can partly be explained by the fact that the majority of new homes are further out than re-sales and homes that are further from the center of the valley tend to sell for lower prices on average. The gap between new home $/SF and normal non-MLS homes has narrowed over the past 18 months within the $250,000 to $500,000 price range.

22 - We are almost at the end of the year and year-to-date sales through ARMLS are up sharply for all price ranges over $200,000:

Price RangeSales YTD% Change
Under $200K 30,001 down 12%
$200K - $250K 18,706 up 17%
$250K - $300K 13,209 up 16%
$300K - $500K 20,725 up 21%
$500K - $800K 5,467 up 23%
$800K - $1M 1,090 up 21%
$1M - $2M 1,166 up 21%
Over $2M 354 up 23%

Under $200K the market is constrained by the short supply, but it still managed to be the most significant price range for unit sales.

December 21 - The Cromford® Market Index table for the single-family markets in the 17 largest cities:

 

 

There are only 5 of the 17 cities showing any deterioration and only one of these (Paradise Valley) made a significant move over the past month.

The remaining 12 cities are improving for sellers, which means things are getting even tougher for buyers. Several cities made major moves, mainly caused by supply dropping still further below normal:

  1. Glendale
  2. Cave Creek
  3. Tempe
  4. Chandler
  5. Peoria
  6. Surprise

The 3 largest Southeast Valley cities are still holding the top 3 spots but Surprise and Glendale are making an effort to catch up.

December 20 - I have just been studying the deeds recorded for single-family homes in Paradise Valley over the past 3 months and there are some interesting changes going on.

  1. New home sales volume has risen dramatically - 11 closings versus 4 last year
  2. The average $/SF for these 11 new homes was more than 50% higher than the average $/SF for the 89 resales over the same period.
  3. The $/SF for new homes keeps rising while that for re-sales is slowly declining.
  4. 3 of the new homes had very small lot sizes for Paradise Valley - around 13,000 sq. ft.

The premium for new homes in Paradise Valley over re-sale pricing is now the highest I have ever seen.

December 19 - It would be great if the number of new listings was on an increasing trend to give some relief to exasperated buyers. However this is not what we are seeing. The third quarter is nearly over and we have had 1% fewer new listings added to ARMLS than in the same period in 2016.

This is a change for the worse (for buyers). During the third quarter we saw 2% more listings than in 2016. During the second quarter there was a slight increase of just over 1% and in the first quarter an increase of only 0.6%. So for the first 9 months of 2017 it looked as though we were seeing a small trend in favor of additional listings. The fourth quarter has reversed that trend and it is making the supply shortage even more pronounced. All this is good news for sellers, but not those at the top of the market.

The other unfortunate effect is that we are getting extremely few listings at the low-end of the market and too many at the top-end of the market. The luxury market is very susceptible to fashion changes and the switch in demand away from Tuscan style towards Contemporary styles has left many sellers with homes that are considered "in need of modernization" by luxury buyers even though they are not very old and in good working order. This means the very high-end new home market, which can deliver the latest fashion, is much more healthy than the high-end re-sale market. The gap in pricing per square foot between a new luxury home and a re-sale luxury home is as wide as we have ever seen. At the same time the gap in pricing between the low-end and the high-end re-sale home is closing, because low-end homes are appreciating quickly while high-end re-sale homes are either barely appreciating or even depreciating a little. This could be regarded as an ongoing correction because during the crash from 2006 through 2011 low-end home lost value much more dramatically than high-end homes creating the biggest differential we have ever seen. At the moment the bounce back for the low-end still has a long way to run.

December 18 - Our friend Jim Belfiore specializes in new home data analysis, especially during the construction phase and first closing. If you ever need information on the new home market then Jim is a great source as he collects information that is simply not available elsewhere by visiting the individual sales offices for each developer's subdivision. In January each year he publishes a document that summarizes the Greater Phoenix new home market and we assist by providing an annual summary of the re-sale market for comparison. This is for single-family homes purchased through a normal transaction (no short sales, REOs, etc.).

The segmentation for this analysis uses Jim`s customized definition of 60 market areas. The top performing areas for annual appreciation between Dec 2016 and Dec 2017 were:

  1. Sky Harbor South (85040) 12.8%
  2. El Mirage (85335) 12.5%
  3. Southeast Glendale (85301) 11.6%
  4. Downtown Phoenix (85003, 85004, 85007) 10.6%
  5. Coolidge / Florence (85128, 85132, 85191) 10.5%
  6. North Surprise (85387) 10.3%
  7. Casa Grande (85122, 85193, 85194) 9.5%
  8. West Phoenix (85043) 9.4%
  9. Apache Junction (85119, 85120) 9.4%
  10. I-10 and I-17 (85009, 85015, 85017, 85019, 85031, 85033, 85035) 9.1%

We note that Pinal County makes a very strong showing in this top ten list, given its small share of the overall market.

The worst performing areas for appreciation were:

  1. North Scottsdale (85255, 85259, 85262, 85266) -0.1%
  2. New River (85087) 0.8%
  3. Fountain Hills (85268) 1.0%
  4. South Tempe (85284) 1.7%
  5. Gold Canyon (85118) 2.1%
  6. Paradise Valley (85253) 2.4%
  7. North Buckeye (85396) 2.5%
  8. Ahwatukee (85044, 85045, 85048) 2.5%
  9. Cave Creek / Carefree (85331, 85377) 3.0%
  10. NE Phoenix (85050, 85054) 3.1%

This table is dominated by the Northeast Valley and the South Tempe and Ahwatukee area.

The above numbers reflect the re-sale market, not the new home market since 90% of new home sales do not go through the ARMLS database.

December 16 - It is easy to get complacent about the low inventory and assume that this is somehow the "new normal". The long term decline in active listings just keeps going and we have now reached the point where days of inventory is the lowest we have seen for week 50 since 2004 (at the height of the bubble). The inventory figure for all areas & types including UCB and CCBS listings is just 82. Normal is between 120 and 150. If we extract the UCB and CCBS listings the number drops to 69. Even this low number understates the situation because it includes out of area listings and luxury homes, which remain in good supply.

To try to get a handle on what life is like in the regular market, let us focus on homes priced at under $500,000 in Greater Phoenix. The inventory for this segment is 52 days. If we use $250,000 as the price limit we have just under 40 days of inventory. These are not normal readings and we start to wonder how low can these numbers go.

We encourage you to use the Days of Inventory Tableau chart and the weekly Flash chart to examine how out-of-line the current situation is.

December 15 - Once again we are looking at the Cromford® Market Index for the single-family markets in the 17 largest cities:

We see 4 exceptions, but 13 of the cities are improving for sellers with a reduction in supply as the common cause.

Although the 3 at the top are all in the Southeast Valley, the Northwest Valley has had a good month with Glendale, Surprise and Peoria all improving by 8% or more.

The situation for buyers is more difficult than it was at this point last year. Only in the luxury market sector are there sufficient homes for sale to satisfy demand.

December 14 - While prices continue to rise for the bulk of the market, things are rather different for luxury homes, especially re-sales (as opposed to new builds).

At price levels over $2 million, the small number of sales makes measurement tricky, so we tend to focus on long term averages. The 12-month average sales price per square foot for homes over $2 million looks like this.

 

During the period April 2016 to April 2017, pricing for the high-end seemed to making some progress after a slow slide that started in June 2015. However pricing has been weakening again since June 2017 and despite strong sales volumes the average for November 2017 was lower than the figure for August 2014.

The picture looks particularly troubling for the "big 3" ZIP codes - 85253, 85255 and 85262 which tend to dominate sales over $2 million. The chart for them looks like this:

Prices remained flat to slightly higher between August 2014 and April 2017 but the last 5 months look suspiciously like capitulation.

December 13 - Here are the top 20 ZIP codes in Maricopa County for purchases by in-state buyers. In other words they attract the least interest from out-of-state buyers. To show that this is not necessarily a disadvantage many of these ZIP codes have seen higher than average appreciation over the last few years.

The percentage number given in the table is the percentage of purchases by out-of-state buyers.

  1. Apache Junction 85120 - 4%
  2. Phoenix 85034 - 4%
  3. Phoenix 85009 - 5%
  4. Phoenix 85033 - 5%
  5. Phoenix 85019 - 5%
  6. Phoenix 85031 - 6%
  7. Gila Bend 85337 - 6%
  8. Phoenix 85017 - 6%
  9. Phoenix 85027 - 6%
  10. Youngtown 85363 - 6%
  11. Phoenix 85043 - 6%
  12. Mesa 85204 - 7%
  13. Phoenix 85051 - 7%
  14. Phoenix 85035 - 7%
  15. Mesa 85202 - 7%
  16. Glendale 85303 - 8%
  17. Phoenix 85006 - 8%
  18. Glendale 85306 - 8%
  19. Mesa 85213 - 8%
  20. Phoenix 85029 - 8%

This table includes many of the fastest appreciating parts of the valley and most of them are at the more affordable end of the market. One exception is Mesa 85213 which is one the more expensive and desirable ZIP codes in Mesa, yet seems to be little known to people from out-of-state. Part of the Citrus Sub-Area, 85213 includes many million dollar homes on large lots, but is often overlooked by luxury buyers because it is not as well known as Scottsdale, Paradise Valley or Fountain Hills.

December 12 - So far in 2017 16% of the recorded home sales in Maricopa County have been to out of state buyers and 84% to buyers with a mailing address inside Arizona.

The top 20 ZIP codes for purchases by out of state buyers are as follows:

  1. Aguila 85320 - 50%
  2. Scottsdale 85262 - 48%
  3. Carefree 85377 - 45%
  4. Scottsdale 85266 - 38%
  5. Rio Verde 85263 - 37%
  6. Arlington 85322 - 36%
  7. Surprise 85374 - 35%
  8. Morristown 85342 - 33%
  9. Sun City West 85345 - 32%
  10. Scottsdale 85255 - 31%
  11. Surprise 85387 - 31%
  12. Buckeye 85396 - 31%
  13. Phoenix 85054 - 30%
  14. Wickenburg 85390 - 30%
  15. Fountain Hills 85268 - 29%
  16. Goodyear 85395 - 29%
  17. Fort McDowell - 29%
  18. Sun Lakes 85248 - 27%
  19. Mesa 85215 - 25%
  20. Scottsdale 85251 - 25%

This list is dominated by locations that are on the outer edges of the conurbation. Several of the locations that are top of this list have seen weak pricing compared with the rest of the valley. One of the reasons for this is that migration into Arizona is weaker than it was during the 2000-2007 era. In 2004 we saw 30,564 purchases by out of state buyers. 2017 year to date is 16,443 with only December to go.

The total sales count is lower and the percentage of sales going to out of state buyers has dropped from 20% to 16%.

The flip side of this is that in-state demand has increased from 80% to 84%. Areas that appeal most to in-state buyers have seen stronger appreciation. We shall look at this list tomorrow.

December 11 - After peaking on July 28 at 8.6% the appreciation rate for all areas & types went into a declining trend until November 9 when it bottomed out at 3.6%. It then changed course and over the last 5 weeks has risen sharply to reach between 7% and 7.5%. You can see this sudden change in the chart here. Such a rapid change in direction is quite unusual.

The turn-around corresponded with a change in trend for cancellations too. These had been slowly rising during the summer and fall, but are now on a declining trend again, which can be seen here.

December 8 - The preliminary numbers for Maricopa County recordings are in for November 2017.

Total sales of single-family and condo units rose 5.7% over November 2016 to 8,720. Re-sales climbed 6.4% while new homes grew only 1.6%. This is is surprising as for the last couple of years growth in new home sales has been much stronger than re-sales. Both November 2016 and November 2017 had the same number of working days, so we do not have to make any adjustments.

The overall median sales price was $255,000, up 6.3% from $240,000 a year ago. For new homes the median was $328,419, up 2.7% from $319,739. Re-sale median increased 8.0% to $243,000. This under-performance by new homes is easily explained since they do not really compete in the lowest end of the market. Much of the appreciation we see today is concentrated in the price ranges between $100,000 and $200,000. Only in very far-flung areas can you buy a new home in that price range. Hence new homes are not seeing as much appreciation as re-sales.

December 7 - The Cromford® Market Index table for the single-family markets in the 17 largest cities continues to show an improving market for sellers (and a worsening one for buyers).


Only 4 cities show a deteriorating situation for sellers, with Paradise Valley and Avondale in particular continuing their recent trend.

The other 13 cities show at least some improvement, with top gainers being Surprise, Cave Creek, Glendale, Tempe & Peoria.

There is a significant gap after the the top 3 Southeastern cities, but Surprise is making a concerted effort to join them.


December 6 - We tend to think of Paradise Valley as an area where inventory is always high relative to sales rates. There were 9.9 months of inventory as of November 15, for example. However, it is all about the money. If you look exclusively at single-family homes under $1 million in Paradise Valley, there were only 1.9 months of inventory, lower than the Greater Phoenix average. There were 11 active (excluding UCB and CCBS) and the annual sales rate is 70.

For homes between $1 million and $2 million, the number is closer to what you might expect, 7 months of inventory (based on 103 active and an annual sales rate of 177).

For homes between $2 million and #3 million it stretches to 14.9 months (based on 87 active and an annual sales rate of 70).

For homes between $3 million and $5 million it edges upward again to 17.1 months (based on 64 active and an annual sales rate of 45).

Where it really gets eye-popping is for homes over $5 million. There are 114 months of inventory here - almost 10 years! This is based on having 38 active listings (excluding UCB and CCBS) and only 4 sales in the last year.

December 5 - In October there were 926 multi-family units permitted, bringing the 12-month total to 9,746. The 2017 year to date count is 7,475, slightly ahead of 2016's October YTD of 7,374. Last year, November and December were huge months for multi-family permits with 1,144 and 1,127 respectively.

The multi-family boom shows no sign of easing up but it is spreading further afield. Initially building was confined to a corridor just a few miles wide, either side of Scottsdale Road and Rural Road. It was ironic that Rural Road was the center of high density urban development. Now we have Phoenix, Mesa, Glendale, Goodyear, Chandler and Peoria all involved heavily while Scottsdale appears to have slowed down, possibly saturated by the large supply of expensive rental apartments built bet wen 2012 and 2016. Tempe remains very active and we now seeing large number of permits from other parts of Arizona, including Flagstaff and Prescott Valley. Tucson is conspicuous by its low level of multi-family permits.

December 2 - The short and medium term outlook for the Greater Phoenix housing market is currently good. However in the past I have mentioned the exposure we have to falls in fertility rates and the consequent impact on long term demand. The latest data is not looking good at all. If you only care about the next 5 years or so, then you need not read on. But if you care about 2030 and beyond, you should be concerned.

Arizona's fertility rate is falling at the fastest rate ever seen and is dropping at the 4th fastest rate among the states of the USA. Wyoming has the fastest decline, followed by New Mexico. Utah is next, but Utah is starting from a position of having the highest fertility rate in the USA. I am confident readers can guess the reason for that. But even LDS mothers are having fewer children. With the current rate of decline the next generation of native Arizonans will be smaller than the present one and they will need fewer houses. We will be entirely dependent on inward migration to keep the housing demand healthy. But fertility rates are below replacement levels across the developed world, almost without exception. We are likely to see migration rates easing up due to low population growth overall. Mobility is on a clear downward trend across the country too.

Between 1973 and 2007 the USA experienced rising fertility rates, but the last 10 years have undone that and 2018 looks almost certain to set a new low record below 1.75 live births per female.. Remember that 2.05 is the replacement rate (implying no natural in-place population growth).

Most people are not taking this threat seriously at all, because it is insidious and hardly ever makes the news. But in the long term fertility decline can have a very negative effect on the economy. Fewer people usually means a smaller economy, especially if the fertility rate is dropping at an annual rate of almost 6%. This is what has happened in Arizona between 2015 and 2017 and the signs are that it is still accelerating. The impact will probably be felt in 2030-2040 when the small number of current infants come of age requiring fewer resources.

If I am still around in 2030, don't say I didn't warn you. If I am not around, I won't care anyway.

December 1 - The Cromford® Market Index values for the single-family markets in the 17 largest cities appear in the table below:

This is showing the improvement we expected with only 7 cities showing deterioration over the last month compared with 12 last week. 10 cities are improving for sellers, double the number last week.

Paradise Valley and Avondale are the only 2 cities showing major moves backwards while Surprise and Tempe are showing the greatest improvement.

November 30 - The S&P / Case-Shiller® Home Price Index® report that was released on Tuesday covers sales between July and September. The month to month movement in the HPI was as follows:

  1. Las Vegas 0.97%
  2. New York 0.89%
  3. Tampa 0.88%
  4. Cleveland 0.68%
  5. Phoenix 0.59%
  6. Miami 0.59%
  7. San Francisco 0.51%
  8. San Diego 0.46%
  9. Los Angeles 0.42%
  10. Boston 0.42%
  11. Dallas 0.39%
  12. Charlotte 0.28%
  13. Denver 0.24%
  14. Portland 0.17%
  15. Atlanta 0.16%
  16. Chicago 0.05%
  17. Minneapolis 0.01%
  18. Detroit -0.13%
  19. Washington -0.21%
  20. Seattle 0.28%

Phoenix was well ahead of the national average of 0.35% and now appears in the top 5 of the 20 major cities reported by Case-Shiller.

The longer term trends, represented by the annual change in the index, was as follows:

  1. Seattle 12.9%
  2. Las Vegas 9.0%
  3. San Diego 8.2%
  4. Portland 7.3%
  5. Tampa 7.2%
  6. Boston 7.2%
  7. Dallas 7.2%
  8. Denver 7.2%
  9. San Francisco 7.0%
  10. Detroit 6.9%
  11. Charlotte 6.2%
  12. Los Angeles 6.2%
  13. Phoenix 6.1%
  14. Cleveland 5.4%
  15. Minneapolis 5.4%
  16. Atlanta 5.4%
  17. New York 5.2%
  18. Miami 5.0%
  19. Chicago 3.9%
  20. Washington 3.1%

In this table we are only 13th out of 20 and roughly in line with the national average.

Las Vegas stands out as being at number 1 and 2 in these tables while Seattle jumps out for being top of the long term but bottom of the short term table.

November 29 - Yesterday we looked at Opendoor over the past 12 months and today we will do the same for OfferPad.

  • first purchase was in November 2015
  • first sale was in January 2016
  • there were 891 purchases during the last 12 months (Nov 2016 - Oct 2017)
  • annual average purchase price was $213,192
  • annual median purchase price was $198,900
  • there were 621 sales during the last 12 month
  • annual average sales price was $232,590
  • annual median sales price was $215,000
  • median gross margin was $24,900 for homes sold in the last 12 months
  • average gross margin was $28,576
  • average time from purchase to sale = 111 days

It is immediately striking that although OfferPad took almost a week longer to turnaround their purchases into closed sales, they have been achieving much higher gross margins than Opendoor. In fact more than twice as much. This could be because they are doing more extensive refurbishment and upgrade, or it could be because they are just negotiating better prices on one or both ends of the flip.

OfferPad`s top line revenue for a typical home is looking like $18,000 in fees and $25,000 in gross margin , making $43,000 in all, some 36% higher than Opendoor.

November 28 - There is considerable interest in the so-called iBuyers of homes. Opendoor and OfferPad are the main operators in Greater Phoenix. With the data gathered from public records we provide Tableau charts about Opendoor and OfferPad purchases and sales within the Cromford Public section of our web-site.

Here is a summary of what we know about Opendoor`s Greater Phoenix operations so far.

  • first purchase was in August 2014
  • first sale was in November 2014
  • there were 1,602 purchases during the last 12 months (Nov 2016 - Oct 2017)
  • annual average purchase price was $213,636
  • annual median purchase price was $204,550
  • there were 1,512 sales during the last 12 month
  • annual average sales price was $223,119
  • annual median sales price was $214,000
  • median gross margin was $13,000 for homes sold in the last 12 months
  • average gross margin was $11,779
  • average time from purchase to sale = 105 days

Typically an iBuyer will charge the seller 9% of the agreed purchase price. This percentage can vary however, based on the iBuyer`s business objectives. The fee is not disclosed in public records since the price stated on the affidavit of value is the gross figure prior to the fees. The seller will receive the gross figure less the fees and less any other close of escrow costs.

Thus the iBuyer typically receives 9% of the purchase price plus the gross margin on sale as top line revenue. From this they will have to cover refurbishment costs, selling costs and two sets of closing costs, including the commission for the buyer`s agent, if there there is one.

For a typical home this looks like $31,500 in top line revenue, consisting of $18,500 in fees and $13,000 in gross margin.

Opendoor's operation grew quickly in 2015 and 2016 but the acceleration has slowed down in 2017 as they face more competition from OfferPad. They are also operating very much at the low end of the market, which is rapidly contracting in size due to diminishing supply. Annual purchases grew by 15% between October 2016 and October 2017.

During the last 12 months, 1,512 sales represents 1.1% of the market in Maricopa and Pinal Counties. The total transaction count over that time was 133,476. Of course you could argue that Opendoor was involved in 2 transactions for every home they sold, the first as buyer and the second as seller. However every one of the 133,476 transactions we monitored had both a buyer and a seller, so there were 266,952 transactions sides of which Opendoor represented 1.2%.

Annual sales were running at $337 million at the beginning of November. Opendoor has never paid more than $550,000 for a home. Because of this focus on the low end, Opendoor has a smaller share of the dollar value, just over 0.87%.

November 27 - Although we saw on Friday that the average location within Greater Phoenix had increased the contract ratio by 10%, there are some areas where the market is cooler than last year. For buyers the lower competition will be welcome in the following locations:

  1. Avondale - down from 97.9 to 57.3
  2. Morristown - down from 27.3 to 17.6
  3. Waddell - down from 52.7 to 38.6
  4. Wickenburg - down from 20.7 to 16.3
  5. Tolleson - down from 77.8 to 62.9
  6. Goodyear - down from 62.2 to 51.3
  7. Fountain Hills - down from 29.1 to 25.2
  8. Anthem - down from 52.5 to 46.6
  9. Laveen - down from 84.6 to 80.6
  10. El Mirage - down from 177.5 to 170.0

El Mirage makes this list by dropping 4% but still remains the hottest location in the whole valley. At 170 its contract ratio is very high with 68 listings under contract and only 40 active.

November 24 - We like to use the Contract Ratio when determining how hot or cold the market is within a certain segment. Comparing Thanksgiving 2017 with Thanksgiving 2016, the following locations have show the biggest increase in temperature:

  1. Carefree - from 11.4 to 28.7
  2. Arizona City - from 23.2 to 45.9
  3. Litchfield Park - from 31.6 to 59.3
  4. New River - from 24.4 to 42.6
  5. Gold Canyon - from 17.5 to 30.1
  6. Sun Lakes - from 40.6 to 67.3
  7. Surprise - from 43.1 to 67.0
  8. Tonopah - from 31.9 to 48.6
  9. Wittmann - from 29.4 to 43.3
  10. Tempe - from 51.4 to 68.9

Many of these locations have been cold or cool for some time but are showing signs of warming up. Carefree, for example has 29 homes under contract compared with only 16 last year, while active listings without a contract are down from 140 to 101. Although it is low by most locations standards, 28.7 is a high reading for Carefree.

The numbers above include all dwelling types and price ranges.

The contract ratio for Greater Phoenix as a whole has increased 10% from 49.2 to 54.1.

November 23 - Another of our regular looks at the Cromford® Market Index for single-family markets in the 17 largest cities shows us this:

Only a handful of big moves here, but they are backwards with

  • Paradise Valley down 15%
  • Avondale down 10%
  • Fountain Hills down 7%

The outlook is for an improvement in this table over the next few weeks (at least for sellers) with falling supply and a small uptick in demand.

The dominance of the Southeast Valley is striking with all of the top 3 places and 4 out of the top 6.

November 22 - Looking at sales year to date compared with this time last year, we see an overall increase of 6.4%. This is down from 9.0% at the mid-point of the year and sales during the second half of 2017 are are up only 3.1% compared to this time last year.

It is also noticeable that single-family detached homes are behind the curve. They are up 5.8% year to date while attached homes are up 10.0% and mobile homes are up 8.1%.

Geographically there has been the highest growth in the tiny part of Yavapai County that falls within the ARMLS Greater Phoenix area - up 15.7%. Pinal County comes next with an 11.2% increase while Maricopa County lags at 5.9%.

The greatest growth in price ranges is for homes over $2 million - these are up 27.3%. Next comes $500,000 to $1 million where sales are up 22.1%. Between $1 million and $2 million sales are up 18.6% and the dominant range between $200,000 and $500,000 is up 18.0%. The big loser is the price range below $200,000 where sales are down 11.5%. Sales below $200,000 still account for 33% of all sales but this is down from 40% in 2016. The lack of volume growth below $200,000 is driving median sales prices higher at a faster rate than average price per square foot.

November 21 - We are looking at the active listing counts compared with the same point in 2016 and excluding UCB listings we are down 11.7%. UCB listings are down also but only by 4.1%. Attached homes are down slightly more (12.1%) than single-family detached homes (down 11.8%). Mobile home listings are only down by 8.4%.

In Maricopa County active listings excluding UCB are down by 10.8% while Pinal has dropped much harder - down 18.4%.

Most of the missing listings are below $200,000 where the count has dropped 31.6% since last year. We also see fewer listings between $500,000 and $1 million (down 8.9%) and between $200,000 and $500,000 (down 6.8%). However supply is up over $1 million. Between $1 million and $2 million we have 8.2% more active listings while over $2 million the increase is a more modest 3.8%.

November 20 - The daily Cromford® Market Index chart shows us that the index has halted its recent swoon and is little changed over the past week. Demand has started to show a little growth over the past 2 weeks and the usual increase in supply that we see between September and November has proven to be nothing special in 2017. This means we will probably see a recovery in the index during December when supply always falls hard.

The conclusion is that most sellers remain in a strong position and there is little relief on the horizon for buyers. Only in the higher echelons over $1.5 million do sellers hold a weak hand. This due to the prolonged over-supply of expensive homes, something that Phoenix has in common with many other parts of the USA.

November 17 - Each month we publish the ranking table showing 41 cities in Maricopa and Pinal County ordered by average sales price per square foot. 

There are still some cities that are appreciating at rates over 10%:

  1. Coolidge
  2. Wickenburg
  3. El Mirage
  4. Arizona City
  5. Eloy

Only one of these (El Mirage) is wholly within Maricopa County. Wickenburg is split between Maricopa and Yavapai while the remaining 3 are in Pinal County. Although it is at the bottom of the table, Coolidge has been catching up with the other 40 for quite some time.

There are 2 cities with negative appreciation over the past year.

  1. Tonopah
  2. Carefree

Carefree has also suffered the loss of its traditional second place to Scottsdale.

November 16 - Today we take another look at the Cromford Market Index for the single-family markets in the largest cities:

The bad news for sellers is that there are 12 cities where conditions deteriorated from a seller's perspective. The good news is that all 17 cities are still in a seller's market and both the top and bottom entries moved upwards.

Buckeye is the only city that improved significantly while Avondale, Fountain Hills, Paradise Valley, Peoria and Surprise all deteriorated by 5% or more over the past month.

November 15 - Over the last 3 years the average home in Maricopa County has turned over at an annual rate of 1 in 14. This means only 1 out of every 14 homes has been sold during the prior 12 months. In other words it takes 14 years for the average home to come up for sale. This excludes new homes sales which cannot be said to "turn over". This is quite a bit less than homes turned over ten or fifteen years ago and this lower mobility is a phenomenon that has occurred across the whole of the USA and in many other countries too.

The areas with the lowest annual turnover are as follows:

  1. Gila Bend 85337 - 1 in 35.8 homes per year
  2. Phoenix 85034 - 1 in 23.3
  3. Aguila 85320 - 1 in 21.7
  4. Fort McDowell 85264 - 1 in 19.0
  5. Tempe 85284 - 1 in 18.0
  6. Tempe 85283 - 1 in 17.3
  7. Mesa 85210 - 1 in 17.2
  8. Phoenix 85035 - 1 in 17.2
  9. Chandler 85226 - 1 in 17.0
  10. Surprise 85387 - 1 in 16.8

Now what real estate agents usually want to know is where the highest turnover rates are because high turnover implies plenty of business for agents.

Here are the top spots in Maricopa County:

  1. Surprise 85388 - 1 in 11.1
  2. Gilbert 85297 - 1 in 11.5
  3. Sun City 85351 - 1 in 11.6
  4. Sun City West 85375 - 1 in 11.6
  5. Anthem 85086 - 1 in 11.7
  6. Surprise 85379 - 1 in 11.7
  7. Phoenix 85006 - 1 in 11.7
  8. Sun City 85373 - 1 in 11.8
  9. Phoenix 85007 - 1 in 12.2
  10. Phoenix 85018 - 1 in 12.3

November 14 - The market in the Northeast Valley is seeing very different conditions from those we examined yesterday in the Southeast Valley. Active listings jumped 9% during October giving buyers plenty of new homes to consider but supply is not arriving in the price ranges that most need it. Relative to demand we are short of homes under $500,000 but have plenty of homes over $1 million and a surplus over $2 million. This means our balanced market breaks down into a seller’s market under $500,000 and a buyer’s market over $2 million, with balance only applying somewhere in between those extremes. Comparing the average price per square foot over the past 3 months with the same period in 2016, we find strong appreciation of 6% or more in several less expensive areas such as 85257, 85254 and 85331. However, the price movement was negative for the big ZIP codes 85255 and 85262 which were down 7% and 4% respectively. The ample supply of high-end homes means transaction rates are well up from last year, but sellers are finding their pricing power is very limited.

November 13 - In the last year, supply has fallen further in the Southeast Valley than any other part of Greater Phoenix. Although October is usually when we see an increase, days of inventory have dropped from 65 to 64 which is 21% lower than last November. The low supply is starting to slow sales. There were only 2 more closed listings during October 2017 than during October 2016 and given that we had 2 more working days in October 2017 the effective sales rate per day is 10% lower than last year. The annual sales rate is 4% higher than this time last year but has been in decline since June. If we exclude active listings with an accepted offer, months of supply has dropped from 2.1 to 1.7 over the last 12 months. For homes under $250,000 supply has dropped from 1.1 to 0.8 months. Buyers under $250,000 are certainly having a hard time. Even buyers over $500,000 have less choice than normal with less than 5 months of supply compared with over 7 months this time last year.

The top ZIP codes for appreciation, comparing quarterly $/SF for August through October with the same 3 months in 2016, are as follows:

  1. Mesa 85206 - 12.2%
  2. Mesa 85203 - 10.2%
  3. Mesa 85212 - 10.2%
  4. Mesa 85204 - 9.8%
  5. Chandler 85224 - 9.7%
  6. Tempe 85281 - 9.5%
  7. Queen Creek 85142 - 8.8%
  8. Sun Lakes 85248 - 8.8%
  9. Mesa 85208 - 8.3%
  10. Mesa 85202 - 7.9%

November 10 - The average sales price per square foot for all areas & types just hit a new high point of $152.01 today. This is the first time we have exceeded $152 since March 2008 almost 10 years ago, although we came pretty close on June 21. The third quarter dip is now well behind us and pricing has regained the sort of momentum we expected for the fourth quarter. Closed sales are no longer running well ahead of last year, but are still slightly higher than this time last year. Year to date we are up almost 8%. New supply over the last month is down 1% compared with the same period in 2016, so a slight weakening in sales momentum seems to be counter-balanced by a slight weakening in new supply. The market is healthy for sellers but the lack of volume growth is slightly concerning for agents, given that we have 6% more agents active than this time last year. Dollar volume is up 15% for annual sales but only 3% up for the most recent monthly period. To preserve or increase revenues per agent we need the dollar volume growth to exceed the growth in agent numbers. That goal was easily exceeded in the first half of this year but is looking less certain for the second half.

November 9 - Let us have another look at the Cromford® Market Index for the single-family markets in our 17 largest cities.

All 17 are in the seller's market zone over 110, but only one out the 17 (Buckeye) saw any significant improvement in market conditions for sellers over the past month. Three other cities improved but by less than 1% (Chandler, Cave Creek and Tempe).

We see significant deterioration for sellers in Fountain Hills, Avondale, Surprise and Peoria.

Generally the Southeast Valley is doing better than the rest of the Greater Phoenix area because supply is more limited. We have never seen Chandler, Mesa and Gilbert hold the top 3 spots like they do today. However, even Mesa and Gilbert have weakened since last month.

November 8 - The last 3 months make an interesting comparison with the same period last year for the high end market. The good news for sellers is that sales increased 37% for single-family homes over $2 million, from 46 to 63. This was a much higher percentage increase than for luxury homes as a whole. These were up 15%.

The bad news, unsurprisingly, is that many prices had to be cut to achieve these sales. The average price per square foot during August to October 2016 was $471.37, but during the same period in 2017 the average was $398.03, a drop of almost 16%. Now this does not mean the average value of a high-end home dropped that much, because sample sizes of 46 and 63 are not large enough to eliminate variations due to changing mix, but the trend is still clear. The high end of the market remains under pressure from over supply and those who are in a hurry to sell are having to drop prices. This effect is most noticeable in the far Northeast in ZIP codes like 85262, 85255 and 85268.

Between $500,000 and $1,500,000 the situation is better for sellers as the inventory of homes for sale is more limited relative to demand. Between $500,000 and $1,000,000 we see average $/SF is up 1.2% from this time last year while between $1,000,000 and $2,000,000 a rise of 0.5% can be reported.

November 7 - Most ZIP codes are still quite some way below the peak pricing that we saw during the housing bubble of 2004-2007. Just a few are edging above that mark however.

The most realistic way to measure this is to use the annual average price per square foot. Any measure shorter than a year will have occasional spikes that make a comparison difficult for an area as small as a ZIP code. The median sales price could also be used but this is an easier benchmark to breach. Here are the ZIP codes where single-family homes that have made the real breakthrough:

  1. Eloy 85131
  2. Scottsdale 85257
  3. Scottsdale 85251

South Scottsdale and Old Town Scottsdale are in great shape, but things get a lot less rosy when we venture into the far north. Scottsdale 85262 is only at 70% of the peak while 85266 and Carefree are at 72%.

November 6 - The Mortgage Interest Deduction is not as important as many in the housing industry believe. It only comes into play for taxpayers who itemize their deductions and for many people the standard deduction is already larger than the total of their itemized deductions. With the proposed tax changes under review in 2017, the standard deduction will increase while many other deductions will be reduced. This will mean the Mortgage Interest Deduction will become irrelevant except to a very small percentage of home owners in Arizona. Only filers with incomes well over $200,000 are likely to find it worthwhile to itemize their deductions. Needless to say, this is a lot higher than the typical income level to be found across Greater Phoenix.

The limit on the size of the mortgage for which mortgage interest can be deducted is proposed to fall from $1,000,000 to $500,000 and property tax deductions will be limited to $10,000. In California these limits may look rather low, but in Arizona there are few people who will be affected. This because our property taxes are much lower than California and our average mortgage is much smaller too.

The net effect of the proposed tax changes will be to lessen the tax advantages of home ownership versus home rental. This could divert some demand away from homes for sale towards homes for rent. Neither type of home is easy to find in affordable form in the Phoenix area right now, though expensive homes are easy to find for both rent and purchase. It also means the tax proposals will be unpopular with real estate agents, who much prefer people to buy rather than rent. This is confirmed by the strong opposition to the tax reforms voiced by the National Association of REALTORS®

Another thing that agents will dislike is the new incentive created for high end homeowners not to sell their home. Existing mortgages will have their interest deductibility preserved but any new mortgage will be under the new rules. The national mobility is rather low at the moment so this tax change will probably reduce mobility further, especially at the high end. On the other hand, people involved in re-modelling and renovating will be pleased about the changes, as owners decide to stay with their existing mortgage and update their home instead. Perhaps this effect will reduce the over-supply of high end homes coming onto the market.

From a builder’s perspective, they too prefer incentives to buy rather than rent, so most are in opposition to the tax proposals. However it will be high end builders like Toll Brothers and those with a greater exposure to expensive markets on the coast who will be most negatively affected. The Arizona market will feel very minor effects in comparison and the low and mid-range demand for new homes is likely to remain intact..

Those involved in rentals will love the changes because rental demand will get a boost. Doubling the standard deduction will give most filers the tax benefit of owning a home without the bother of having to actually purchase one. The likely increase to their take-home pay will probably make it easier for tenants to pay their rent on time and agree to the rent increases that landlords love to impose. The tax changes are therefore friendly to landlords and real estate investors.

November 4 - In contrast to yesterday's observation, here are the 20 ZIP codes with the highest average days on market. Plenty of patience is required from sellers in these areas:

  1. Crown King 86343 - 389 days
  2. Aguila 85320 - 357 days
  3. Carefree 85377 - 213 days
  4. Scottsdale 85262 - 201 days
  5. Congress 85332 - 201 days
  6. Stanfield 85172 - 190 days
  7. Kirkland 86332 - 186 days
  8. Wickenburg 85390 - 180 days
  9. Rio Verde 85263 - 178 days
  10. Paradise Valley 85253 - 163 days
  11. Fort McDowell 85264 - 161 days
  12. Casa Grande 85194 - 145 days
  13. Superior 85173 - 142 days
  14. Scottsdale 85266 - 141 days
  15. Morristown 85342 - 138 days
  16. Phoenix 85004 - 136 days
  17. Phoenix 85003 - 134 days
  18. Scottsdale 85255 - 130 days
  19. Gold Canyon 85118 - 128 days
  20. Eloy 85131 - 121 days

November 3 - Here are the top 20 ZIP codes based on the lowest average days on market for closed listings. Homes here sell faster than anywhere else in Greater Phoenix:

  1. El Mirage 85335 - 37 days
  2. Mesa 85210 - 42 days
  3. Peoria 85345 - 42 days
  4. Mesa 85202 - 43 days
  5. Phoenix 85027 - 44 days
  6. Mesa 85204 - 44 days
  7. Glendale 85307 - 44 days
  8. Phoenix 85037 - 44 days
  9. Phoenix 85031 - 45 days
  10. Chandler 85224 - 45 days
  11. Mesa 85201 - 45 days
  12. Phoenix 85040 - 45 days
  13. Youngtown 85363 - 46 days
  14. Phoenix 85043 - 46 days
  15. Phoenix 85051 - 47 days
  16. Chandler 85225 - 47 days
  17. Glendale 85306 - 48 days
  18. Glendale 85302 - 48 days
  19. Gilbert 85296 - 49 days
  20. Tempe 85282 - 49 days

The measurement was taken from November 2016 through October 2017 for all dwelling types.

November 2 - Our weekly look at the Cromford® Market Index for the single-family markets in the 17 largest cities gives us a table like this:

All 17 cities are in the seller's market zone over 110. However the situation deteriorated for sellers over the last month in 12 of the 17 cities, particularly in Fountain Hills, Surprise, Avondale and Peoria.

Once again Paradise Valley and Buckeye were the only 2 cities to improve for sellers by more than 1%. Queen Creek, Tempe and Chandler managed small improvements which shows relative strength at this time of year.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

 

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

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

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

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

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

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

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

 

 

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

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

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

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

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

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

Cities showing a declining trend in appreciation rate:

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

Cities on an improving appreciation trend:

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

Cities with little change in appreciation rates:

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

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

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

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

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

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

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

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

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

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

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

Supply:

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

Demand:

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

Supply versus Demand:

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

Pricing:

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

The changes over the past year have been:

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

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

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

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

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

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

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

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

September 30 - According to the Census Bureau there were 1,954 single-family permits in Maricopa and Pinal Counties during August. This is a 19% increase over August 2016. The annual rate (i.e. for the last 12 months) is up 9.69% from last year. the last 2 months have seen an acceleration in permits which suggests that developers are at least trying to address the long-term shortage of homes for sale. However they are still back to the level of 1996 when there were 2,397.

The top ten sources of permits in 2017 are:

  1. Phoenix - 1891
  2. Mesa - 1763
  3. Buckeye - 1448
  4. Unincorporated Pinal County - 1442
  5. Peoria - 1293
  6. Gilbert - 1155
  7. Queen Creek - 850
  8. Goodyear - 763
  9. Maricopa - 760
  10. Unincorporated Maricopa County - 518

Note that Queen Creek and San Tan Valley, the latter comprising the better part of Unincorporated Pinal County, would overtake Phoenix at the top of the table if we went back and counted them together..... after all hey were just one ZIP code (85242) in 2007. This part of the valley is building at high speed.

Surprise, Scottsdale and Chandler all just failed to make the top ten.

Wickenburg is getting much more active with 117 permits year to date and is almost at the same level as Glendale (121). It is more active than Casa Grande, Litchfield Park, Fountain Hills and Apache Junction.

September 29 - Let us take another look at the single-family markets in the 17 largest cities and see how the Cromford® Market Index has changed over the past month:

We have 11 cities showing improved conditions for sellers and 6 deteriorating. Only Mesa and Cave Creek have deteriorated more than 2%, but this is enough to allow Avondale back into the top spot again.

Gilbert and Maricopa are the most improved after Avondale.

If Buckeye keeps on its current trend we will get all 17 cities in the seller's market zone over 110.

September 28 - I was wondering what size home had recovered pricing best compared with the peak levels of the housing boom. So using the ARMLS Sq. Ft. Ranges and selecting all closed listings in Greater Phoenix, I found the following:

Sq. Ft. RangePeak $/SFDate of PeakTrough $/SFDate of TroughCurrent $/SF% of Peak
Less Than 1,000 $170.80 Jan 2007 $52.88 Sep 2011 $136.77 80.1%
1,000 - 1,200 $174.12 Jan 2007 $59.41 Oct 2011 $145.62 83.6%
1,201 - 1,400 $169.58 Dec 2006 $64.28 Oct 2011 $144.13 85.0%
1,401 - 1,600 $165.42 Aug 2006 $65.50 Nov 2011 $140.43 84.9%
1,601 - 1,800 $166.20 Aug 2006 $69.85 Nov 2011 $140.59 84.6%
1,801 - 2,000 $168.17 Aug 2006 $74.03 Nov 2011 $140.41 83.5%
2,001 - 2,250 $171.63 Aug 2006 $74.45 Nov 2011 $137.79 80.3%
2,251 - 2,500 $180.31 Jul 2006 $77.73 Oct 2011 $138.42 76.8%
2,501 - 2,750 $189.56 Jul 2006 $84.89 Nov 2011 $141.02 74.4%
2,751 - 3,000 $204.60 Aug 2006 $92.90 Oct 2011 $148.19 72.4%
3,001 - 3,500 $206.27 Jun 2006 $90.33 Sep 2011 $148.21 71.9%
3,501 - 4,000 $223.69 Sep 2006 $98.97 Mar 2011 $153.53 68.6%
4,001 - 4,500 $237.28 Jul 2006 $108.17 Dec 2009 $166.34 70.1%
4,501 - 5000 $276.55 May 2006 $130.96 Mar 2011 $197.60 71.5%
5,001+ $392.30 Apr 2008 $202.51 Jul 2011 $279.18 71.2%

The $/SF numbers are annual averages.

The ranges 1,000 to 2,000 have recovered closest to the peak (83% to 85%) while homes over 2,750 still have a long way to go (68% to 73% of peak). Although prices did not fall as far for larger homes, they have not bounced back as much either. Though homes generally get more expensive on a $/SF basis as they get larger, the above table shows that this does not hold true under 2,500 sq. ft. at the moment.

Two data points stand out. Homes of 4,001-4,500 sq. ft. hit bottom much earlier in 2009 than the other ranges in 2011. Homes over 5,001 sq. ft. peaked much later than other homes size in 2008 rather than 2006.

September 27 - The new S&P/Case-Shiller® Home Price Index® report was published yesterday giving us numbers for the sales period May through July 2017. The 20 conurbations that are reported in detail are ranked below by the change in price index over the last month:

  1. Los Angeles 1.12%
  2. Boston 1.11%
  3. New York 0.82%
  4. Detroit 0.80%
  5. Las Vegas 0.78%
  6. Cleveland 0.76%
  7. Chicago 0.74%
  8. Minneapolis 0.72%
  9. Seattle 0.65%
  10. Tampa 0.63%
  11. San Diego 0.62%
  12. Charlotte 0.61%
  13. Portland 0.59%
  14. Phoenix 0.59%
  15. Miami 0.58%
  16. San Francisco 0.56%
  17. Denver 0.55%
  18. Dallas 0.37%
  19. Washington 0.35%
  20. Atlanta 0.32%

Phoenix was in 10th place last month and has slipped to 14th this month. Not at all bubbly, I would say. Given the shortage of supply and the seller`s market in Phoenix, this percentage increase is very modest. This is even more true when we consider the national average of 0.73%. You can view the long term indexes here.

Looking at the year over year change we see:

  1. Seattle 13.5%
  2. Portland 7.6%
  3. Las Vegas 7.4%
  4. Dallas 7.3%
  5. Detroit 7.3%
  6. Denver 7.2%
  7. San Diego 7.1%
  8. Tampa 7.0%
  9. Boston 6.8%
  10. San Francisco 6.7%
  11. Charlotte 6.4%
  12. Los Angeles 6.1%
  13. Minneapolis 5.8%
  14. Phoenix 5.6%
  15. Atlanta 5.3%
  16. Miami 5.2%
  17. New York 3.9%
  18. Cleveland 3.8%
  19. Washington 3.3%
  20. Chicago 3.3%

Phoenix is again in 14th place, this time down from 12th place last month. In the context of the national average (5.9%), Phoenix`s 5.6% annual rise is thoroughly unexceptional.

Among the 20 cities that Case-Shiller reports, the following 8 have exceeded their price index levels during the housing boom:

  • Atlanta
  • Boston
  • Charlotte
  • Dallas
  • Denver
  • Portland
  • San Francisco
  • Seattle

The remaining 12 cities, including Phoenix, have yet to recover their peak price index levels from the housing boom.

September 26 - Although sales are generally stronger in 2017 than in 2016, there are a few places where that is not true. Surprisingly those few places include Gilbert and Chandler.

Here are the cities (with Phoenix broken into smaller regions) ranked by home sales growth (year-to-date) based on county recordings. The numbers include single family homes, condos and townhomes and are correct up to the end of August in each year:

RankCityYTD Sales 2015YTD Sales 2016YTD Sales 2017Growth 2016-2017
1 Phoenix - Downtown 203 167 309 85.0%
2 Waddell 218 201 265 31.8%
3 Paradise Valley 370 350 453 29.4%
4 Carefree 141 101 130 28.7%
5 Wickenburg 117 119 151 26.9%
6 Rio Verde 98 120 151 25.8%
7 Gold Canyon 356 354 439 24.0%
8 Youngtown 100 108 133 23.1%
9 Coolidge 161 182 223 22.5%
10 San Tan Valley 2246 2622 3188 21.6%
11 Buckeye 1817 2143 2554 19.2%
12 Maricopa 1334 1424 1661 16.6%
13 Phoenix - West 3844 3942 4595 16.6%
14 New River 209 144 166 15.3%
15 Arizona City 173 207 236 14.0%
16 Queen Creek 965 1293 1473 13.9%
17 Glendale 3485 3511 3980 13.4%
18 Peoria 3263 3708 4197 13.2%
19 Apache Junction 556 581 655 12.7%
20 Mesa 7069 8105 9098 12.3%
21 Tempe 1810 1876 2107 12.3%
22 Phoenix - Northeast 1148 1158 1294 11.7%
23 Florence 474 574 636 10.8%
24 Wittmann 69 74 82 10.8%
25 Phoenix - Far North 1262 1448 1597 10.3%
26 Surprise 2848 3045 3350 10.0%
27 Sun City 1703 1793 1965 9.6%
28 Scottsdale 6180 6415 6995 9.0%
29 Avondale 1101 1206 1306 8.3%
30 Casa Grande 807 845 914 8.2%
31 Phoenix - Biltmore & Arcadia 1442 1477 1594 7.9%
32 Cave Creek 655 669 720 7.6%
33 Phoenix - Northwest 2685 2952 3154 6.8%
34 Phoenix - East 682 778 830 6.7%
35 Litchfield Park 585 600 636 6.0%
36 Sun City West 1097 1105 1169 5.8%
37 Phoenix - North 2586 2715 2845 4.8%
38 El Mirage 541 487 510 4.7%
39 Goodyear 1801 1991 2048 2.9%
40 Phoenix - Ahwatukee 1346 1361 1385 1.8%
41 Phoenix - Uptown 867 940 957 1.8%
42 Fountain Hills 632 659 668 1.4%
43 Laveen 763 879 887 0.9%
44 Gilbert 4896 5225 5215 -0.2%
45 Chandler 3844 4703 4659 -0.9%
46 Anthem 363 384 379 -1.3%
47 Sun Lakes 446 458 432 -5.7%
48 Tolleson 553 612 568 -7.2%
49 Eloy 116 161 148 -8.1%

I imagine the top 10 is a surprise to many people. With all the downtown development and the fashion for urban living, Downtown Phoenix is no surprise at number 1. But Waddell, Paradise Valley, Carefree, Wickenburg, Rio Verde and Gold Canyon have not generally been regarded as hot-spots. What they do have is plenty of supply. Lack of supply is a boon for sellers but is not necessarily good for agents and brokers because poor supply can easily lead to poor sales growth.

Who would have expected a decline in sales in Chandler or Gilbert? In the Southeast Valley, it is Queen Creek, Apache Junction, Mesa and Tempe that have been growing fastest.

Given the large inflow of retirees, the lack of growth in Sun Lakes is a bit of surprise. New developments focused on the 55+ sector of the market have contributed to the rapid growth in places like Wickenburg, Rio Verde and San Tan Valley.

September 25 - One simple way of measuring the level of distress in the housing market is to count the number of HUD homes sold per month. In August 2017 there were 4 such sales, the lowest we have ever seen, and implying a very low level of distress among home-owners. Of course renters may be experiencing financial distress, but we know home owners with FHA loans are doing much better than usual in avoiding losing their homes to foreclosure.

To put the August 2017 total of 4 sales into context, remember that in August 2011 we saw 458 such sales.

September 24 - The overall Greater Phoenix market is starting to look even more favorable to sellers than it did last month, despite a slight decline in the Cromford® Market Index. Here are the reasons we say that:

  • the listing success rate stands at 80.5%, the highest since 2005 for this time of year
  • growth in active listings is very small, and normally we see significant increases at this time of year
  • new listing counts are weakening relative to last year
  • the weekly pending listing chart has started to look stronger relative to 2016

The average price chart has looked quite weak for the last 3 months, but that is partly a result of seasonal effects and partly because of a decline in the average home size of homes that sold. We now expect the average price chart to look stronger for the next couple of months.

September 23 - The number of parcels in Maricopa County that are pending foreclosure just hit a new low point of 1,929. This is the smallest pre-foreclosure inventory we have ever recorded (from 2002 onwards). To put the current number in context we were at 5,880 in the last week of 2002 and 2,225 was the low point before the housing bubble burst. The high point during the foreclosure wave was 51,022.

We read earlier this week that Ed Delgado, President and CEO of Five Star, presented at the Federation of Certified REO Experts ("FORCE"). He claimed that REOs are going to increase in 2018. He believes micro bubbles are going to burst in Denver, Dallas, San Antonio, Las Vegas, Phoenix, Los Angeles and San Francisco. He predicts that delinquencies will rise and foreclosures will increase. You have to feel a little sorry for REO experts since the subject matter they specialize in is getting rarer and rarer. It is not surprising that they believe REOs will rise. People tend to believe what they want to believe.

The Cromford® Report is neutral on the REO subject. We just count them. But I would point out that a pre-requisite for REOs rising is for pre-foreclosures to rise significantly first. So if you are an REO expert (certified or not) the latest foreclosure pending numbers will be a big disappointment..

September 22 - Here is the table showing the Cromford® Market Index for the 17 largest single-family markets by dollar volume:

This is still looking favorable for sellers with 11 cities improving and 6 deteriorating for them.

Avondale is staging a a recovery and threatening to take back the number 1 spot it held for so long. A recent increase in supply is threatening to unseat Mesa from its present position at the head of the table.

Overall there is little for sellers to grumble about in this table, particularly those in the Northeast Valley. Buyers have our permission to complain, but we have little to no good news for them at the moment.

September 21 - People often focus on monthly median sales prices but these can be very volatile from month to month, especially for small or very diverse areas. For example, the monthly median sales price for Paradise Valley single-family detached homes has varied between $1,177,500 and $1,840,000 over the past 12 months which tells us little more than what we already know - Paradise Valley is rather expensive.

In contrast the annual median sales price is based on a much larger sample and tends to be a slow moving and reliable indicator. The same Paradise Valley has an annual median sales price that has only varied between $1,400,000 and $1,450,000 during the last 12 months and this tells us that prices are stable and changing very little.

Let us have a look at the annual median sales prices for single-family detached homes in the cities around the valley. They are ranked by percentage change from a year ago.

RankCityAnnual Median Sales Price September 2016Annual Median Sales Price September 2017ChangePeak 2005-2008Current Median % of Peak
1 Eloy $145,000 $208,000 +43.4% $210,000 99.1%
2 Wickenburg $227,000 $257,000 +13.2% $340,500 75.5%
3 El Mirage $155,000 $175,000 +12.9% $223,000 78.5%
4 Arizona City $103,000 $115,000 +11.7% $160,000 71.9%
5 Tolleson $180,000 $197,638 +9.8% $257,000 76.9%
6 Apache Junction $169,900 $185,450 +9.2% $216,500 85.7%
7 Sun City $165,000 $180,000 +9.1% $210,000 85.7%
8 Waddell $263,000 $287,000 +9.1% $529,000 54.3%
9 Maricopa $165,000 $179,900 +9.0% $258,650 69.6%
10 Wittmann $263,250 $287,000 +9.0% $355,000 80.9%
11 Avondale $192,000 $209,000 +8.9% $264,950 78.9%
12 Tonopah $159,995 $174,000 +8.8% $244,000 71.3%
13 Coolidge $113,000 $123,000 +8.8% $149,995 82.0%
14 Laveen $195,000 $212,000 +8.7% $299,900 70.7%
15 Sun City West $210,000 $227,500 +8.3% $262,950 86.5%
16 Buckeye $184,896 $199,950 +8.2% $255,000 78.4%
17 Florence $150,520 $162,500 +8.0% $203,900 79.7%
18 Mesa $225,000 $242,500 +7.8% $249,998 95.1%
19 Queen Creek $200,000 $214,900 +7.5% $259,900 82.7%
20 Glendale $212,000 $227,000 +7.1% $257,000 88.3%
21 Chandler $279,900 $299,652 +7.1% $315,000 95.1%