• current Phoenix Metropolitan Real EstatE

    Market Update 

    “©2022 Associates LLC”


©2022 Cromford Associat

Aug 13 - Tina has returned from a short fishing trip to Alaska and is now available and connected to the internet. However, Mike is about to leave the office for a memorial event for his mother who died last year amid the strongest COVID-19 lock-down restrictions. Daily observations will be limited until August 20 and some of the charts will take longer to update than usual, especially the city charts that are updated weekly on Thursdays. Normal service will resume on August 20.

©2022 Cromford Associat

Aug 12 - For reasons that are not clear to me, a handful of brokerages have been cancelling listings in bulk and then re-listing the same information with a new MLS number over the past 6 weeks. This increases the number of cancelled listings, reducing the listing success rate and also makes the number of new listings higher. The practice has added about 8 to 10% to the cancel count and added about 1.5% to the new listings count. Since cancelling and re-listing does not reduce the days on market, I am wondering what the motivation is. Statistically, it makes the market look a bit weaker than it actually is. However the numbers are not large enough to make the distortion too serious for the overall market. However, the specific brokerages involved will have unusually poor listing success rates.

©2022 Cromford Associat

Aug 11 - Here is our latest table of Cromford® Market Index values for the single-family markets in the 17 largest cities

The average monthly change in CMI was -29%. This is another slight improvement on last week when the reading was -31%. Once again it is a large deterioration in a very short time, but there are more signs that the trend is slowing at last. Supply is growing more slowly and in a few areas has stopped growing entirely, at least for a moment. Demand is still very weak, but in a few areas it is stabilizing or even increasing slightly.

In the last week we saw an average change in CMI of -5.7%, and all 17 cities still declined. But if the negative weekly decline continues to reduce, we will eventually find one or more cities showing some improvement.

We have 6 cities in a buyer's market - Surprise, Tempe & Gilbert have joined Buckeye, Queen Creek and Maricopa. The reduced number of buyers now have a strong negotiating advantage with a large number of active listings to select from. However this negotiating power is not yet universally reflected in weaker closed prices. In particular, Queen Creek (which includes San Tan Valley) is maintaining strong closed price numbers, especially considering how unbalanced demand and supply have become. This is unlikely to last.

Above these 6 we have Chandler, Peoria, Glendale, Phoenix, Mesa and Avondale in a balanced market where the buyers and sellers have no particular advantage. This leaves 5 cities that are statistically in the seller's market zone with a CMI over 110. Only one of these is a large market - Scottsdale. One of them (Cave Creek) saw a relatively modest decline in their CMI over the last month of 9%.

The bottom 13 cities saw CMI declines of 24% or more but now there are none worse than -38%. The housing market is still deteriorating for sellers but it is getting worse at a significantly slower rate.

The top four, Fountain Hills, Paradise Valley, Scottsdale and Cave Creek are in a stronger position with supply still less than demand. However, Scottsdale prices have reacted more swiftly than the low-priced areas and averages and medians are weaker than you might expect. This pattern does not apply to Fountain Hills, which is not only still over 200 but is seeing very few signs of price weakness.

©2022 Cromford Associat

Aug 10 - The arrival rate of new listings has subsided over the past month and we are now seeing active listings grow at a slower rate than in July.

There were 10,747 new listings in the last 4 weeks, up 5.6% from the same period in 2021. However in the last 7 days we counted 2,544 new listings, down 5% from the same week in August 2021. Quarter-to-date we have 4% more than last year and 12% more than 2020, but if this slight lull persists, we could see the market move closer to stability rather than a continuing decline.

Active listing counts (excluding UCB and CCBS) are still rising because of weak demand, but the rate of increase has fallen to about 500 per week, instead of the 1,000 per week we were experiencing a month ago. The most recent peak was late June when we almost reached 1,500 per month.

If we were to see a decent recovery in demand, then these 500 per week could get absorbed and the supply situation could stabilize. This would ease the downward pressure on prices.

Of the 500 increase, the bulk (400) are single-family detached homes. About 50 are townhomes, 30 are apartments, 20 are mobile homes, with just a handful of other dwelling types.

©2022 Cromford Associat

Aug 8 - The daily chart showing average list price per sq. ft. is showing massive changes over the past 2 months.

Note that the red line (monthly average sales price per sq. ft.) was 1.26% HIGHER than the monthly average list price per sq. ft. for closed listings on June 7. This has plummeted to 1.48% BELOW list on August 8. Although average sales prices have declined substantially since the beginning of July, the average $/SF for listings under contract (the green line) has not. We are just starting to see the green line display a little weakness, but at the same time the red line and brown line are showing a corresponding resistance to gravity.

The gap between the green and brown lines is much wider than normal, so we would expect this gap to narrow in the coming weeks. Either the green line should fall or the brown line should rise, or maybe a bit of both. This market is certainly not boring.

©2022 Cromford Associat

Aug 7 - Most people are familiar with the idea of "months of supply". One way to explain it is to say it represents how long it would take to sell all the available inventory at the current monthly sales rate if no new listings came onto the market. The longer it takes the cooler the market. Obviously it will tend to increase when the number of available active listings rises. It will also tend to increase when the monthly sales rate falls.

It is important to decide what we are going to include among the active listings. If we include the UCB and CCBS listings (which are technically still active and accumulating days on market), then for a normal everyday location a typical number of months of supply for a balanced market is 4 to 5 months. If we exclude the UCB and CCBS listings (since they are already in escrow with a signed contract), then the typical number is 3 to 4 months.

The numbers tend to be much higher for an expensive market. A normal balanced number for Paradise Valley is 12 to 15 months. For Scottsdale it is 6 to 7 months, for Gold Canyon 7 to 8 months, Cave Creek is 6 to 7 months and Fountain Hills 7 to 8 months. These are excluding UCB and CCBS listings.

Here is where the single-family detached months of supply for major and secondary cities stand at the moment. The numbers in parentheses are the reading for August 2021.:

  1. Paradise Valley - 10.2 (3.5)
  2. Buckeye - 4.4 (1.1)
  3. Scottsdale - 4.4 (1.6)
  4. Queen Creek - 4.3 (1.1)
  5. Litchfield Park - 4.2 (1.3)
  6. Gold Canyon - 4.2 (2.0)
  7. Maricopa - 4.1 (1.2)
  8. Fountain Hills - 4.1 (2.1)
  9. Cave Creek - 3.9 (1.1)
  10. Surprise - 3.9 (1.0)
  11. Apache Junction - 3.5 (1.1)
  12. Sun Lakes - 3.4 (0.9)
  13. Anthem - 3.4 (1.0)
  14. Chandler - 3.3 (1.0)
  15. Gilbert - 3.3 (0.9)
  16. Tolleson - 3.3 (1.1)
  17. Phoenix - 3.2 (1.1)
  18. Mesa - 3.2 (1.0)
  19. Tempe - 3.2 (1.1)
  20. Casa Grande - 3.1 (1.5)
  21. Glendale - 3.0 (1.0)
  22. Goodyear - 3.0 (1.0)
  23. Avondale - 2.9 (0.9)
  24. Peoria - 2.9 (1.0)
  25. Sun City West - 2.8 (0.7)
  26. Laveen - 2.7 (1.0)
  27. Arizona City - 2.6 (1.4)
  28. Sun City - 2.5 (1.0)
  29. El Mirage - 2.0 (0.6)

These figures include the UCB and CCBS active listings. They have clearly moved from extremely low in August 2021 to more normal values in August 2022. However none of them are yet excessive compared with their long-term averages. Buckeye, Queen Creek, Maricopa and Litchfield Park are the coolest cities, which corresponds with their CMI readings. We give a pass to Paradise Valley, Scottsdale, Cave Creek Fountain Hills and Gold Canyon, since their "normal" months of supply are higher than their current readings.

©2022 Cromford Associat

Aug 6 - The closed transaction counts for July were unusually low, but the drop was different for the various categories of sales. Below are the counts compared with July 2021 showing the percentage changes. These numbers are for Maricopa County only, and include single-family and townhouse / condo properties.

Category July 2021 July 2022 Percentage Change Comments
All Sales 10,912 7,368 -32.5%  
Normal Sale Through MLS 6,698 4,252 -36.5%  
FSBO Sale 1,953 1,208 -38.1%  
New Construction Sale 1,312 1,249 -4.8% small decline relative to all sales
Institutional Investor Buys 670 573 -14.5% small decline relative to all sales
Fix and Flipped 529 336 -36.5% same decline as for MLS sales
Wholesaler 136 91 -33.1%  
iBuyer Buys 810 508 -37.3%  
Opendoor Buys 554 406 -26.7%  
OfferPad Buys 107 91 -15.0%  
Zillow Buys 141 0 -100% no longer buying
Redfin Buys 8 11 +37.5% surprising growth
iBuyer Sales 261 160 -38.7%  
Opendoor Sale 143 121 -15.4%  
OfferPad Sale 65 35 -46.2%  
Redfin Sales 6 4 -33.3%  
Zillow Sale 47 0 -100% no longer selling
Pre-foreclosure 18 69 +283% still small but growing
Trustee Sale to Third Party 14 26 +85.7% still small but growing
Bank REO Sale 5 3 -40%  
GSE REO Sale 0 0 n/a  

Between them, iBuyers and institutional investors represented almost 15% of the purchases, but only 2% of the sales.

©2022 Cromford Associat

Aug5 - Here is our latest table of Cromford® Market Index values for the single-family markets in the 17 largest cities

The average monthly change in CMI was -31%. This is a slight improvement on last week when the reading was -32%. Once again it is a very large deterioration in a very short time. New listings have slowed down to a normal level. However a normal quantity of new listings is far more than the market can cope with, when demand is as weak as it is at the moment. Demand is falling at a slower rate and is even rising in a few places. However it is currently so far below normal that in most areas it will take a large increase to get back to the level where it can absorb a normal quantity of new listings.

We have 3 cities in a buyer's market - Buckeye, Queen Creek and Maricopa - the same as last week. In all three, the reduced number of buyers now have a strong negotiating advantage with a large number of active listings to select from.

Above them we have Gilbert, Tempe, Surprise, Chandler, Peoria, Glendale, Phoenix and Mesa in a balanced market where the buyers and sellers have no particular advantage. This leaves only 6 cities that are statistically in the seller's market zone with a CMI over 110. Only one of these is a large market - Scottsdale. Two of them (Fountain Hills and Cave Creek) saw relatively modest declines in their CMI over the last month of 15% or less.

The bottom 13 cities saw CMI declines of 29% or more but at least there are none over 40%. The housing market is still deteriorating for sellers but it is getting worse at a slower rate. This is particularly true of Phoenix itself. The next stage we are looking out for is for one or more of these cities to stop deteriorating and edge higher. This means their arrow circle will turn green and point upward. April 21 is the last time we had one or more cities showing green.

Gilbert, Tempe and Surprise look ready to become buyer's markets within days, while Avondale and Goodyear are likely to move into the balanced zone shortly.

©2022 Cromford Associat

Aug 4 - A useful way of measuring how hot the market is is the contract ratio (see definitions section for how it is calculated).

The overall market for all areas and types has seen its contract ratio decline from a high of 285 as recently as February 23 to 46 as of August 3. We usually consider the range 30 to 60 as being normal, with figures over 60 being unusually hot and those under 30 being unusually cold. The high-end sectors tend to have much lower contract ratios so 15 to 30 can be considered normal for an area like carefree or Paradise Valley.

If we look for ZIP codes where the single-family detached market is unusually cold right now we find a few very small ZIP codes with no contracts at all::

  • Fort McDowell 85264
  • Arlington 85322
  • Black Canyon City 85324

The sales volumes are so small in these ZIP codes that having no contracts is not so unusual, so we exclude them from our analysis.

The following have some contracts, but low contract ratios indicating cold markets where buyers have an advantage over sellers. The contract ratios are shown in parentheses.

These are our top 20 targets for buyers:

  1. Mesa 85215 (20)
  2. Phoenix 85003 (20)
  3. Phoenix 85007 (20)
  4. Superior 85173 (20)
  5. Tempe 85283 (24)
  6. Scottsdale 85257 (25)
  7. Casa Grande 85193 (25)
  8. Casa Grande 85194 (25)
  9. Phoenix 85045 (26)
  10. Scottsdale 85258 (27)
  11. Phoenix 85015 (27)
  12. Litchfield Park 85340 (27)
  13. Phoenix 85020 (27)
  14. Phoenix 85048 (27)
  15. Wittmann 85361 (28)
  16. Scottsdale 85251 (28)
  17. Anthem 85086 (28)
  18. San Tan Valley 85140 (29)
  19. Phoenix 85009 (30)
  20. Phoenix 85044 (31)

We note that Ahwatukee is prominently featured in this list with all 3 of its ZIP codes (85044, 85045 and 85048), so as I buyer I would feel free to flex my negotiating muscles if shopping for homes in Ahwatukee.

At the other end of the scale there remain a few ZIP codes where the contract ratio remains relatively high (60 or more), including:

  1. Arizona City 85123 (156)
  2. Tempe 85284 (96)
  3. Eloy 85131 (94)
  4. Phoenix 85054 (86)
  5. Mesa 85203 (83)
  6. Casa Grande 85122 (72)
  7. Phoenix 85053 (72)
  8. Mesa 85201 (71)
  9. Phoenix 85027 (65)
  10. Coolidge 85128 (60)
  11. Gold Canyon 85118 (60)
  12. Mesa 85204 (60)
  13. that's all folks

Pinal County is strongly featured in this list, especially the areas around Casa Grande, Eloy and Arizona City. I would not expect such an easy time as a buyer in the ZIP codes on this (admittedly short) list.

Segmenting by price, we see that the contract ratio for single-family homes priced below $350,000 is still over 60, so this market retains some strength. However prices have risen so much over the past 2 years that this segment represents only 4.5% of the total market.

The contract ratio for homes priced between $350,000 and $400,000 is 59, so at the top end of normal. But for homes over $400,000 and up to $1.5 million we now see contract ratios between 35 and 41. This is at the colder end of normal and the trend is strongly downward. This price range represents 82.4% of the market with $400,000 to $800,000 dominating with a 55.5% market share. This huge segment is where buyers are starting to gain the upper hand.

Over $1.5 million, contract ratios are in the mid-thirties, which is actually higher than usual. Demand has dropped significantly in this price range but supply remains quite low. The luxury market is very quiet, even for August which is always a very slow month, but the low supply means buyers do not have as much bargaining power as they enjoy below $1.5 million.

©2022 Cromford Associat

Aug 3 - The July affidavits in Maricopa County showed a significant reduction in demand from investors.

Of the 7,175 closed transactions, only 18.9% were marked as intended for renting to a third party. The same percentage in June was 22.1%.

In unit counts, purchases to be used as rentals fell by 35% from 2,094 in June to 1,355 in July.

This is a second wave of demand reduction. The first wave was caused by much higher interest rates discouraging buyers for their own occupation. The buyers leaving in the second wave are less affected by interest rates since they mostly pay cash. They are probably getting discouraged by the new direction the market has taken since April.

©2022 Cromford Associat

Aug 2 - One positive consequence of home sales being so low is that it does not take long to count them. We already have the Maricopa County affidavit numbers for July and they look like this:

  • There were 7,175 closed home sales during July. This compares very unfavorably with July 2021 when we had 10,720. The year-over-year decline in sales is 33%.
  • The median sales price was $475,000, down from $486,824 in June but up from $409,468 in July 2021. The year-over-year increase in median sales price is 16%, down from 22% last month and 25% in May.
  • There were 1,256 closed new home sales during July. This is down from 1,316 in July 2021. New home sales are down less than 5% year-over-year
  • The median sales price for new homes was $516,842, up from $500,454 in June and up 23% from $419,618 in July 2021.
  • There were 5,919 re-sales during July. This is down 37% from 9,404 in July 2021
  • The median sales price for re-sales was $464,000 in July, down from $484,000 in June and the lowest median sales price since February 2022. It is up 15% year-over-year however.

Re-sales react far more quickly to changing market conditions because the time between contract signature and closing is much shorter than for new homes. This is especially true in 2022 because of extended lead times on new homes due to shortage of skilled labor and supply-chain problems with many building products.

The re-sale numbers are worse than anticipated with a huge drop in closed volumes and a large fall in median price of $20,000, over 4% in just one month. The new home numbers are better than expected with a new high being reached in the median sale price and only a small drop in units closed.

An optimist might hope for a bounce back in August, but with listings under contract down 6.5% compared with the beginning of July, this is looking unlikely.

Re-sale home prices are clearly falling which would normally increase demand, but if buyers think they will fall further, their motivation is likely to be low. However falling home prices will ultimately help with getting inflation under control. That is a prerequisite to the Federal Reserve halting their program of regular increases in federal funds interest rates.

©2022 Cromford Associat

Aug 1 - The average sales price per square foot for closed listings dropped sharply between June and July, as shown in the daily chart below:

At $286 we are back down to the level we last saw in early March.

That is a 5% drop in July, much larger and faster than we were expecting. The average price dropped even more, from $592,275 to $546,888, a fall of about 8%.

Unfortunately this means those who purchased in May or June 2022 with very small down-payments could now be experiencing negative equity.

©2022 Cromford Associat

Jul 31 - The good news is that the supply of new listings is starting to fall. 2,589 listings were added to the ARMLS database during the last 7 days, which is up only 5.8% from a year ago. It is also well below the peak of 3,169 that we reached on June 25. While it is still considerably more than the current market needs, at least it is not on an increasing trend anymore.

The bad news is that demand not only remains very poor, it is getting weaker still.

  • We have only 7,887 listings under contract - down 28% from this time last year and the lowest total for the end of July since 2007. Since 2007 was our worst year ever, that is not a good place to be.
  • We are currently seeing a monthly sales rate of only 6,707 - down 25% from this time last year and the lowest for the end of July since 2014.

These figures are for all areas & types in the ARMLS database.

The average list price per sq. ft. of homes under contract is staying remarkably strong, hardly moving over the past 3 months. However sellers are achieving a far lower percentage of list price. In the past three months the closed price per square foot has dropped from 101.76% to 98.74%, down 302 basis points. This by far the fastest decline in achieved price percentage of list that we have ever seen. As a result, the monthly average sales price per square foot is down 5.3% in the last month. This is across all areas & types in the ARMLS database. The average sales price is down an astonishing 9.6% since the end of June, though the median sales price is down a more modest 4.8%. That is still a loss of $23,000 in one month.

©2022 Cromford Associat

Jul 29 - Of all the large cities in Central Arizona, Phoenix is showing the weakest pricing at the moment. Here is the weekly chart showing the average sales price for single-family homes in Phoenix:

The median sales price peaked at $498,000 at the beginning of June and has since fallen by 8% to $460,100.

The average price per square foot chart is a little less negative



Here the peak of $323.83 was reached in late May and the $/SF has declined just over 5% since then.

It is not clear to me why Phoenix should take the lion's share of the price weakness, but as it represents about 25% of the entire market, it has a strong influence on the overall market numbers. Also looking rather weak are Chandler, Glendale, Mesa, Scottsdale, Sun City, Sun City West and Tempe.

Showing little to no sign of average $/SF declines are Arizona City, Avondale, Buckeye, Casa Grande, El Mirage, Fountain Hills, Maricopa, Sun Lakes and Surprise.

©2022 Cromford Associat

Jul 29 - Of all the large cities in Central Arizona, Phoenix is showing the weakest pricing at the moment. Here is the weekly chart showing the average sales price for single-family homes in Phoenix:

Having peaked at $627,135 in mid-June, the average has fallen by over 9% to $569,056. This takes us back to the levels we last saw in February.

It is not an anomaly of the average price, because the median price chart is similar:

The median sales price peaked at $498,000 at the beginning of June and has since fallen by 8% to $460,100.

The average price per square foot chart is a little less negative:

Here the peak of $323.83 was reached in late May and the $/SF has declined just over 5% since then.

It is not clear to me why Phoenix should take the lion's share of the price weakness, but as it represents about 25% of the entire market, it has a strong influence on the overall market numbers. Also looking rather weak are Chandler, Glendale, Mesa, Scottsdale, Sun City, Sun City West and Tempe.

Showing little to no sign of average $/SF declines are Arizona City, Avondale, Buckeye, Casa Grande, El Mirage, Fountain Hills, Maricopa, Sun Lakes and Surprise.

©2022 Cromford Associat

Jul 28 - Here is our latest table of Cromford® Market Index values for the single-family markets in the 17 largest cities

The average monthly change in CMI was -32%. This is an improvement on last week when the reading was -34%. It is still a very large deterioration in a very short time. New listings are still coming at us faster than last year, but not as fast as they were three weeks ago. Demand is still weak and showing only a few modest signs of stabilizing.

We now have 3 cities in a buyer's market - Buckeye, Queen Creek and Maricopa. Here buyers now hold a distinct negotiating advantage and have a total of 2,243 active single-family detached listings to choose from. This compares with 675 just three months ago. Because the majority of these areas cater largely to first-time buyers who are less experienced, it can take a few weeks for these buyers to realize how strong a hand of cards they hold.

Above them we have Gilbert, Tempe, Surprise, Chandler and Peoria in a balanced market where the buyers and sellers have no particular advantage. However astute sellers will realize that the situation is very fluid and slipping away from them. At the current rate of change, Gilbert will become a buyer's market by the end of the first week in August. Tempe is only a day or two behind Gilbert, while Surprise, Chandler and Peoria will probably become buyer's markets by mid-August.

Glendale, Phoenix and Mesa are seller's markets but within a couple of days will enter the balance zone between 90 and 110. At the current rate of change they will become buyer's market before the end of August. Goodyear and Avondale are 2 weeks behind these but unlikely to be still seller's market by the end of next month.

The 4 cities at the top of the table are in a different situation. The luxury market over $1.5 million is seeing far less of a surge in supply and although the market is deteriorating through weakening demand, the deterioration is much slower. However in Scottsdale, the less expensive end of the market is behaving similarly to the rest of the Greater Phoenix area.

Prices have looked wobbly for the last 2 months, but as buyers start to flex their muscles, we should be prepared for more serious consequences. While we cannot forecast accurately several months out, it would be reasonable based on current trends to expect significant declines in average prices, median prices and average $/SF by the end of 2022. Current trends can (and often do) change, so this is not baked in, just a reasonable base case.

We would not be surprised if the growth in supply started to slow down, but what is going to re-start demand? The most obvious answers are that either interest rates have to come down or home prices have to come down. Either or both of these can increase demand so we can get back to a balanced market again.

©2022 Cromford Associat

Jul 27 - We provide monthly counts of Arizona State building permits in the Cromford® Public section of this site. You can filter by County and local jurisdiction (city or town).

To summarize the current situation, single-family permits are now dropping in response to the weak demand but probably not as fast as they should. As of June there have been 17,788 single-family permits issued in Maricopa and Pinal counties year-to-date. This is down slightly from 18,803 last year, but it is otherwise the highest count since 2006. There were only 2,248 single-family permits issued in June, which is the lowest monthly total since May 2020.

Multi-family permits are a different story entirely. These are still in a full-bore gung ho status. There have been 8,640 multi-family permits issued year to date, easily the highest total we have ever seen. Last year there were 6,871 at the same point and that was considered a lot. There were 1,890 issued in June, making it the fourth busiest month ever.

©2022 Cromford Associat

Jul 26 - The latest S&P / Case-Shiller® Home Price Index® numbers were published on July 26.

The new report covers home sales during the period March to May 2022. So they do not reflect sales closed since June 1, 2022, nor the price weakness we have experienced over the past month.

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

  1. Miami +2.88%
  2. Tampa +2.80%
  3. Dallas +2.55%
  4. Phoenix +2.48%
  5. Charlotte +2.29%
  6. Atlanta +2.21%
  7. Las Vegas +2.12%
  8. Boston +1.90%
  9. Cleveland +1.88%
  10. Chicago +1.83%
  11. New York +1.65%
  12. Detroit +1.60%
  13. Minneapolis +1.34%
  14. Washington +1.09%
  15. Denver +1.08%
  16. Los Angeles +1.05%
  17. San Francisco +0.93%
  18. Portland +0.91%
  19. San Diego +0.55%
  20. Seattle +0.55%

Phoenix has moved up from 7th to 4th place and remains well above the national average, which was 1.50%. The national average remains high, but down from 2.08% last month.

There is little obvious bad news in the above numbers, but we can be confident it is coming later in the year. The west coast has weakened significantly since last month.

Comparing year of year, we see the following changes:

  1. Tampa +36.1%
  2. Miami +34.0%
  3. Dallas +30.8%
  4. Phoenix +29.7%
  5. Las Vegas +27.4%
  6. Charlotte +26.4%
  7. Atlanta +26.3%
  8. San Diego +25.6%
  9. Seattle +23.4%
  10. Denver +22.2%
  11. Los Angeles +22.1%
  12. San Francisco +20.9%
  13. Portland +17.4%
  14. Boston +15.7%
  15. Detroit +15.0%
  16. New York +14.5%
  17. Cleveland +14.3%
  18. Chicago +12.9%
  19. Washington +12.2%
  20. Minneapolis +11.5%

The national average was +19.7%. As we predicted last month, Dallas has overtaken Phoenix and pushed it into 4th place.

©2022 Cromford Associat

Jul 25 - An update on the Opendoor listings on ARMLS as of July 24:

With 1,682 active listings without a contract, Opendoor represents 9.6% of available supply, which is far in excess of their 1.7% share of the listings under contract.

We estimate Opendoor's total inventory to be 2,286, which means there are another 461 homes that they own but are unlisted. They have about 7 months of inventory at the June sales rate, but the July sales rate looks rather slow in comparison with June.

We would anticipate that Opendoor's buying will slow down to avoid further build up in excess inventory. This would imply lower offer prices and fewer accepted offers, if we are correct. Demand measurements and pricing will weaken in these circumstances.

©2022 Cromford Associat

Jul 24 - Available supply has grown dramatically in most segments of the market since March 16, this year's low point. We had 4,367 active listings without a contract on March 16 and have 17,509 today. This is an increase of 301% across all areas & types. Within Greater Phoenix the growth has been 318% from 3,884 to 16,235.

By dwelling type we have seen supply grow at the following rates:

  • Single-family Detached - up 344%
  • Townhouse - up 370%
  • Apartment-style - up 288%
  • Gemini / Twin - up 130%
  • Loft-style - up 240%
  • Patio Home - up 257%
  • Mobile Home - up 65%
  • Modular / Manufactured - up 20%

These figures are for Greater Phoenix locations only. Out of area supply has grown 164%. It is very noticeable that mobile and manufactured homes have seen supply grow much more slowly than the rest of the market.

Largely due to a change in the mix of homes available, with low growth at the high end luxury market compared with the mid-ranges, the average advertised price of a home in Greater Phoenix is down from a peak of $1,010,002 on March 24 to just $731,744 today. The average available home size is also down from 2,430 to 2,172 sq. ft.

©2022 Cromford Associat

Jul 21 - Here is our latest table of Cromford® Market Index values for the single-family markets in the 17 largest cities

The average monthly change in CMI was -34%. This is the same as last week and the week before. The week before that it was -35%.

The deterioration in the market for sellers continues with almost as much speed as ever. There has been a slight reduction in the rate of arrival of new listings, but it is still much higher than last year at this time. Demand has not stopped falling and listings under contract are exceptionally low for the time of year. Even our best performing city, Paradise Valley, has slumped 11% over the last month, but it may yet overtake Fountain Hills and grab the top spot, since Fountain Hills fell 18%, the second best result. Cave Creek is third and fell "only" 21%, which looks good by comparison with the other 14 cities which range from -30% (Avondale) to -44% (Glendale).

Buckeye is now a buyer's market by a large margin and Queen Creek is almost as bad for sellers. Maricopa is not quite there yet but it will be a buyer's market in 2 or 3 days. Gilbert, Tempe, Peoria, Chandler and Surprise are all going to be balanced markets within a few days and on their current trajectory they could be buyer's market by mid August. The largest market by far, Phoenix, looks like it will be balanced before the end of July and a buyer's market before the beginning of September. Glendale and Mesa are just a week or so behind.

The high end market is still holding out much better than the mid-range.

Only 3 cities are now over 150. A month ago we had 14. The market has changed dramatically for the worse over the past 4 or 5 weeks.

©2022 Cromford Associat

Jul 19 - An updated chart appears below showing the listing counts for OfferPad in the ARMLS database.

The dramatic change in market conditions has taken their active count from a low of 72 on April 12 to 381 on July 19. This latter number has increased 58% in the last month.

We estimate that OfferPad has 453 homes in inventory, which implies there are only 27 unlisted properties. 45 are under contract which gives OfferPad a contract ratio of less than 12. On April 12, their contract ratio was 204.

Based on their monthly sales rate for June, they have about 6.7 months of homes to sell, even if they stopped buying today.

The rest of us should be grateful that the iBuyers have soaked up so many homes over the last 3 months. Without their activities the market statistics would show a much larger drop in demand than reported. It has not made a lot of different to supply since the homes they have listed would probably still be listed by their former owners if they had not sold them to an iBuyer,

It seems that the iBuyers will need to focus mostly on iSelling during the second half of 2022.

©2022 Cromford Associat

Jul 18 - The long-term rental supply is still growing very quickly - we have 2,916 active listings, up 18% from 2,463 last month and up 113% from 1,367 this time last year.

Most of the supply on ARMLS is single-family detached, with 2,088 listings. This has grown 27% from 1,641 last month and 165% from 795 this time last year. All those people building new homes to rent should take heed that they will have plenty of competition from other landlords to attract a limited pool of prospective tenants.

The average rental asking price on ARMLS is down to $1.57 per square foot per month. This has dropped from $1.63 last month and $1.94 this time last year.

©2022 Cromford Associat

Jul 17 - The listing success rate is one of the simplest yet most revealing of measurement tools for the housing market. Here is the most recent weekly chart for all areas & types.

We can see how 2022 was tracking very close to 2021 until it started losing height in May. The success rate has deteriorated quickly in June and July and now stands at 78.2%. The trend is downward with strong momentum.

We included 2005 for comparison and although the success rate deteriorated during during the second half of the that year, it took quite some time to get back to the long-term average of about 67%.

Based on the current rate of decline we are only 3 or 4 weeks away from hitting that 67% milestone. At that point roughly one in three listings will fail to sell.

©2022 Cromford Associat

Jul 16 - The average list price per square foot for active listings in Greater Phoenix (excluding UCB and CCBS) is $339.56 today

At the same time last year we measured $340.15

This year-over-year decline in the average asking price is mostly caused by the huge growth in the number of mid-range listings. High-end listings have grown by a far smaller percentage. The change in the mix tends to pull the average $/SF lower.

If we confine our analysis to homes priced between $500,000 and $1 million, then the asking price has increased from $266.26 to $286.41 over the last 12 months. The average for this price range peaked $293.08 seven weeks ago and is now trending lower.

But before we draw any big conclusions from that, it also peaked 6 weeks ago in 2021 and trended lower for 3 months before starting to rise again.

©2022 Cromford Associat

Jul 14 - Here is our latest table of Cromford® Market Index values for the single-family markets in the 17 largest cities

The average monthly change in CMI was -34%. This is the same as last week. The rate of decline in the CMI readings over the past two months is easily the fastest we have ever witnessed.

The negative trend remains extremely powerful. Supply is still growing at roughly 1,000 listings a week while demand is still weakening despite some (possibly temporary) relief in the mortgage rates. We now have 1 city (Buckeye) which is a buyer's market and 2 cities (Maricopa and Queen Creek) that are in the balanced zone between 90 and 110. It is just a matter of days before Maricopa and Queen Creek become buyer's markets and their time in the balanced zone will have been very short indeed. Peoria, Tempe, Gilbert, Chandler, Surprise and Phoenix are all just a week or two away from a balanced market as they all dropped close to 40% in the last month. Based on current trends, these 6 cities will probably be buyer's markets before the end of August.

Things are different in Paradise Valley where there has been very little increase in supply and the 7% fall in its CMI is entirely due to a drop in demand. Fountain Hills and Cave Creek are also seeing declines in their CMI, but at roughly half the rate of the average city in the valley.

Only 5 cities are now over 150. A month ago we had 15.

Buyers are much more aware of the dramatic change in the market than are sellers. New sellers will need to take time to understand just how different market conditions are today compared with 3 months ago. They should not expect multiple bids. They should plan to market their property, not just sell it.

With the Federal Reserve considering a 1% rise in the federal funds rate in their July meeting, demand could drop even lower next month if mortgage rates move sharply higher again.

©2022 Cromford Associat

Jul 13 - Rental supply is growing in the ARMLS database, with single-family detached rentals growing fastest. On July 12, there were 2,012 single-family detached homes available for long-term rent with an average price per square foot of $1.57 per month. One year ago we saw 820 homes at $1.90 per square foot per month.

Apartments on offer for long-term rent number 443 at an average rent of $2.08 per square foot per month. Last year at this time we had 332 at an average of $2.13.

There are 33% more apartments and 145% more single-family detached homes on offer to tenants compared with 12 months ago.

The average rent asked has dropped 2% for apartments but 17% for single-family homes. The latter does not mean average rents have fallen 17%. It reflects a mix where far more lower priced rentals are being listed than in 2021.

However it is pretty clear that the era of rapidly rising rents is coming to an end.

©2022 Cromford Associat

Jul 12 - Rental supply is growing in the ARMLS database, with single-family detached rentals growing fastest. On July 12, there were 2,012 single-family detached homes available for long-term rent with an average price per square foot of $1.57 per month. One year ago we saw 820 homes at $1.90 per square foot per month.

Apartments on offer for long-term rent number 443 at an average rent of $2.08 per square foot per month. Last year at this time we had 332 at an average of $2.13.

There are 33% more apartments and 145% more single-family detached homes on offer to tenants compared with 12 months ago.

The average rent asked has dropped 2% for apartments but 17% for single-family homes. The latter does not mean average rents have fallen 17%. It reflects a mix where far more lower priced rentals are being listed than in 2021.

However it is pretty clear that the era of rapidly rising rents is coming to an end.

©2022 Cromford Associat

Jul 10 - We have added a new chart - Average Price per Square Foot for Active Listings by Major City

This allows you to compare prices over the last 3 to 4 months for each of the 17 largest cities.

We can see obvious weakness in asking prices for:

  • Buckeye
  • Cave Creek
  • Fountain Hills
  • Phoenix
  • Scottsdale

The remaining 12 cities have mostly been moving sideways. However Phoenix and Scottsdale account for about one third of the total market, so if these are trending down, the whole market measures will tend to follow suit.

©2022 Cromford Associat

Jul 11 - The average $/SF for closed listing is looking more than a little weak over the past few weeks:


The peak was May 13 at $306 but we also hit $305.99 on June 2. It was not until June 15 that a declining trend started and a drop of 4% from the peak has now taken place.

©2022 Cromford Associat

Jul 9 - Examining how the contract ratio has changed for the 29 largest cities, we get the table bow, which ranks the cities from least to most affected by the downturn in the market:

Rank City Contract Ratio 4/7/22 Contract Ratio 7/7/22 Change %
1 Paradise Valley 82 42 -49%
2 Arizona City 509 188 -63%
3 Fountain Hills 188 59 -69%
4 Casa Grande 315 94 -70%
5 Apache Junction 219 60 -73%
6 Gold Canyon 223 59 -74%
7 Tolleson 359 91 -74%
8 Cave Creek 198 50 -75%
9 Maricopa 261 66 -75%
10 Buckeye 232 57 -75%
11 Sun City 248 59 -76%
12 Scottsdale 182 43 -77%
13 Goodyear 321 74 -77%
14 El Mirage 333 74 -78%
15 Tempe 208 46 -78%
16 Peoria 246 52 -79%
17 Surprise 273 58 -79%
18 Sun City West 286 61 -79%
19 Mesa 294 57 -81%
20 Laveen 356 69 -81%
21 Litchfield Park 231 44 -81%
22 Phoenix 272 48 -82%
23 Glendale 303 50 -84%
24 Chandler 293 48 -84%
25 Avondale 340 54 -84%
26 Queen Creek 334 50 -85%
27 Gilbert 354 51 -86%
28 Anthem 281 39 -86%
29 Sun Lakes 276 35 -87%

All 29 cities have seen their single-family markets cool down, but Paradise Valley has cooled much less than the others.

Casa Grande and Arizona City have also done better than average, perhaps supported by the new industry that has been established in their local area.

The Southeast Valley has fared particularly poorly, as has Phoenix, Glendale and Anthem.

We normally classify readings under 60 as corresponding to a balanced market. By this definition, 19 of the 29 cities are already in a balanced market while Sun Lakes and Anthem are most in danger of slipping into a buyer's market.        

©2022 Cromford Associat

Jul 8 - Here is our latest table of Cromford® Market Index values for the single-family markets in the 17 largest cities

If you are looking for some good news, I have a tiny morsel for you. The average monthly change in CMI was -34%. This is smaller than the -35% we saw for each of the past three weeks. However the difference is really small and the negative trend is still very powerful. We now have 2 cities (Buckeye and Queen Creek) that are in the balanced zone between 90 and 110 and a third (Maricopa) that is only a seller's market by one tenth of a point. We can be confident that Maricopa and Queen Creek will be in a balanced zone next week, but on current trends, Buckeye will be the first city to become a buyer's market during the third week of July. Queen Creek and Maricopa look likely to follow before the end of July.

Paradise Valley is seeing a very stable supply and its CMI is down only 3% for the month. Fountain Hills and Cave Creek are next best with falls of 25% and 26% in their CMI

Much worse are all the other 14 cities with CMI dropping by 32% or more. Glendale is worst this week with a 43% fall.

Because the CMI is based on a formula that uses rolling averages and smoothing techniques, at this time of unprecedented rapid change it understates quite how far the market has deteriorated for sellers. With so many new sellers and so few buyers, prices are looking more wobbly by the day and almost all the price readings look very ready to drop during July.

Almost all the monthly median sales prices are below their recent peak. For example on July 7:

  • Avondale is down from $460,000 to $450,000
  • Buckeye is down from $451,040 to $445,500
  • Chandler is down from $630,000 to $577,450
  • Gilbert is down from $635,000 to $623,950
  • Goodyear is down from $554,700 to $520,800
  • Maricopa is down from $415,000 to $410,000
  • Mesa is down from $520,000 to $500,000
  • Peoria is down from $570,000 to $550,000
  • Phoenix is down from $500,000 to $480,000
  • Queen Creek is down from $515,000 to $510,000
  • Scottsdale is down from $1,115,000 to $1,100,000
  • Surprise is down from $494,495 to $490,000
  • Tempe is down from $585,000 to $555,000

Only Glendale is unchanged at $475,000 but this will probably not last much longer.

We omit Cave Creek, Fountain Hills and Paradise Valley because their monthly medians are far too volatile to be useful, as a result of their very small transaction volumes and wide ranges in home prices.

Unless trends change sharply from their current trajectory, we are likely to see further weakness in median sales prices over the next several months. We are definitely NOT able to forecast 5 months into the future. However it would not be at all surprising if prices in December 2022 were in the same ball-park as those we saw in December 2021. This is just one of many plausible outcomes that would have looked nearly impossible to imagine as recently as March when almost every seller had multiple buyers to chose from.

©2022 Cromford Associat

July 7 - The affidavits from Maricopa County Recorded that were filed in June have now been counted and collated and we have the following preliminary statistics:

  • There were 9,478 closed transactions in June, down 22.4% from June 2021. New homes were down 7.7% to 1,533 while re-sales were down 24.8% to 7,945.
  • The median sales price was $486,824. This is down 0.65% from last month but up 21.7% from June 2021.
  • New home median was $500,454, almost unchanged from last month (down $36) but up 22.8% from June 2021
  • The re-sale median was $484,000, down 0.41% from last month but up 21% from June 2021.

These are for single-family detached and condo / townhouse properties.

In summary, prices have stopped rising but are still much higher than last year while sales volumes are dramatically lower than last year.

The trends in re-sales tend to show more volatile movement than in new homes.

©2022 Cromford Associat

July 6 - As we look at different price ranges, we can see that all of them have cooled significantly in the three months since April. The least affected is the range over $3 million, where the contract ratio has declined 43% from 67 to 38. In expensive locations like Paradise Valley and Carefree, the supply of active listings remains low by long-term standards and the market is relatively resilient.

Below $3 million contract ratios have declined by at least 74%, a colossal drop in just 3 months and easily the fastest and most significant cooling that has been seen in the Greater Phoenix housing market since we started studying it in 2001.

Hardest hit is the single-family detached price range between $500,000 and $600,000 where the contract ratio has dropped 84% from 296 to below 49. This price range is no longer a seller's market and there are plenty of listings for each buyer to choose from. Bidding wars are almost over. There were 2,434 active listings as of July 1, with 358 of these in UCB or CCBS status leaving 2,076 available for buyers. Is this a lot? It certainly is. It is up 236% from April 1 and up 341% from July 1, 2021. It is also the highest total we have recorded for this price range since June 2008. We must consider it in context. Last month 1,079 homes sold in the price range, so in this light, 2,076 does not seem so high. But most of those sales were contracted well before the latest round of interest rate rises, so we would expect sales rates to drop in July, while the active listing count looks like it is headed considerably higher.

If you have a home in the price range $500,000 to $600,000, our advice is to accept that you have a lot of competition from other sellers and the market trend is not moving in your favor. Be realistic in your expectations and you will probably be fine. But price too high and you could be left chasing a falling market with price cuts that may come too late.

©2022 Cromford Associat

July 4 - Now would be a good time to take stock of where prices have been going. The chart below shows:

  1. In blue - the average list price per square foot of listings in active status
  2. In green - the average list price per square foot of listings in pending status or active with UCB or CCBS status
  3. In brown - the average list price per square foot for one month's worth of closed listings
  4. In red - the average sale price per square foot for one month's worth of closed listings

 

This chart tells us quite a few things:

  • Asking prices for homes for-sale have been on a downward trend since peaking just under $365 per square foot on April 27, three days after our first red-flag warning was issued.
  • The average list price per square foot for active listings is down 6.6% over the last 68 days
  • The average list price per square foot for listings under contract has failed to break above $315 and has moved mostly sideways since peaking at $314.06 per square foot on May 14
  • The average list price per square foot for listings under contract is down 0.7% over the last 51 days
  • The average list price per square foot for closed listings has failed to break above $303 and has moved mostly sideways since peaking at $302.38 per square foot on June 14
  • The average list price per square foot for closed listings is down 1.3% over the last 20 days
  • The average sale price per square foot for closed listings peaked on May 13 at $305.99 and has fallen 2.8% since then (52 days)

The blue line is being driven down by 3 main factors

  • more listings are piling up in the ranges from $400,000 to $600,000 than other price ranges. This change in the mix brings the average price per square foot down.
  • new listings are being added at less ambitious prices as sellers start to get more realistic in their expectations
  • large numbers of existing listings have had their asking prices cut as sellers get even more realistic in their expectations

The average price per square foot for active listings remains well above its level in January when the market was still getting hotter. The trend is clearly down however.

The green line needs to fall if the brown line is going to decline significantly. Both are currently moving sideways, but with a bias towards the downside.

The red line has moved from well above the brown line to just below the brown line. This is what we commented on yesterday. The lowering of closed sales prices has been driven down by sellers agreeing to take a lower percentage of their asking price than they were accepting 30 days ago.

The interactive version of the chart can be found here.

Overall, we see a market that is past its top and looking wobbly. To avoid a more serious downward trend in prices, we would need to see supply stop growing and demand stop shrinking. We will be examining the numbers every day for any sign of either of these events occurring. If both happen, then we would expect stabilization. If neither happens then we would expect all price measurements to move lower during the second half of 2022.

©2022 Cromford Associat

July 3 - One of the many indications of a cooling market is the average closed price as a percentage of the final list price. We measure this for closed listings with a close date in the monthly period that just ended.

On July 1 this statistic dropped below 100% for the first time since February 11. The peak reading was 101.85%, which was attained on April 27. It remained over 101% right up until June 13, but has been falling very quickly since then.

After dropping through 100% 2 days ago it has already fallen to 99.73% and looks set on a trend back towards the long term average of 97.35%.

The lowest reading ever was 93.82%, which occurred on February 5, 2009.

This statistic is a bit like taking the temperature of the market. Around 97% to 98% is normal. When it is over 100% the market has a fever. When it is below 95% it is suffering from hypothermia.

©2022 Cromford Associat

July 1 - The Contract Ratio for all areas & types in the ARMLS database has now dropped below 60.



This is in the "Balanced Zone" between 30 and 60, confirming just how far and how fast the market has cooled in the last 3 months.

Four months ago we had the third highest reading (262.6) we had ever recorded. In April this had moved down to 230.1, still very hot.

The collapse between April and June is unprecedented - faster and more violent than we have ever witnessed. This is due to a very rapid decline in demand coupled with an explosive rise in supply.

At 59.8, the contract ratio is the lowest we have seen since March 2019. The trend indicates that it has further to fall.

The contract ratio is a simple and immediate measure, with no averaging or smoothing effect. It is therefore very responsive to violent changes in the market. In contrast the Cromford® Market Index is based on averages over the prior 30 days and is smoothed to avoid reacting to insignificant variations from day to day. It normally gives a more reliable picture of the market than the contract ratio. However in times of dramatic change, it can move a little slower because of the averaging and smoothing. I would take signals from the contract ratio to be more up-to-date by an average of 2 weeks compared to the CMI. At the moment the CMI is clearly telling us that the market is cooling rapidly, but it probably understates by a week or two just how far it has already cooled as of July 1.

The contract ratio is telling us that we are already in a balanced market. If it drops below 30 then it will indicate a cold market with a significant surplus of sellers over buyers. We have not experienced a market like that since April 2009.

©2022 Cromford Associat

Jun 21 - Another look at the plummeting CMI daily chart shows just how far down we have come from the red-hot market of January and February:


There is just a glimmer of positive news from this chart, however. The rate of decline in the CMI has peaked and is now starting to fall very slightly. The highest rate of decline was 9.12% per week during the second week of June. This has now eased a little to 8.94% per week. This is still pretty bad for sellers and the market as a whole, but at least it has stopped getting worse at an accelerating rate. Once this trend consolidates, we would expect the weekly rate of decline to keep dropping.

If the current trend continues, we would see the CMI hit 110 on August 14 and 100 eight days later. We would enter a buyer's market in the first week of September. Of course, this is just one of billions of possible scenarios and we do not pretend to know what will actually happen. Demand could improve or get worse tomorrow and supply is equally unpredictable. You cannot foretell the future, but you can study the present. Most market observations you will see elsewhere are one to three months old. This is why we measure the market every day rather than waiting until the end of the month.

What is looking unlikely at the moment is that closing prices will move significantly higher than they already are. We are at the wrong time of year for that, even if the CMI were not falling. The summer months almost always see a consolidation or fall in average closing prices because the luxury market contributes less to the averages between June and September.

There is still an excess of demand over supply at the lowest end of the market , which include a larger proportion of condos and townhomes. Homes over $2 million remain in low supply compared with a normal market, even though demand is down. It is the middle of the market, between $400,000 and $1 million, that is seeing the largest amount of extra supply and a huge drop in demand. This includes the bulk of new homes, which are now appearing on the MLS in much larger numbers than 3 months ago. If the CMI measured just this mid-range price sector, it would be showing lower numbers than the chart above. The mid-range is likely to become a balanced market before the low-end or the high-end.

©2022 Cromford Associat

Jun 20 - The number of new listings added to the ARMLS database over the past 28 days is 11,845. Why is this significant? It is because it is the highest number added in any 28 period since we started measuring this statistic in 2011.

The long term average is 8,845, so we are currently getting 34% more new supply than average.

If we were just suffering deflating demand, the market would be cooling off gently. But if 34% more new listings are arriving every 4 weeks, supply is increasing just at the wrong time and it just cannot be absorbed. This is why we are seeing the fastest cooling trend that the Greater Phoenix housing market has ever experienced. What we do not know is whether the extra listings will keep coming or if this excess new supply will dry up sooner rather than later.

Also adding to the active listing count are listings under contract that are falling through. The listing success rate chart is a reliable market measurement tool and confirms the messages sent to us by the Cromford® Market Index and the Contract Ratio.




©2022 Cromford Associat

Jul 19 - Zillow still sends me frequent emails about the home in Mesa that I moved out of in 2017 and sold in 2018. It has changed hands twice since I lived there, but that somehow seems to have escaped their notice and they think I might be planning to sell it..

They are now telling me they expect the value to increase by 16% over the next 12 months. Bless them!

If this is the kind of forecast their algorithm produces, it was definitely a wise idea for them to leave the iBuying business.

©2022 Cromford Associat

Jun 18 - High prices and interest rates are keeping a lot of potential home buyers out of action at the moment. In addition, deals in escrow are starting to fall through in larger numbers. Both these trends are causing the count of listings under contract to head downwards. Here is the weekly chart for listings under contract for all areas & types in the ARMLS database.

You can see that in June we are below the level of the third week of January. This is previously unheard of and indicates very poor demand for the time of year. In fact we have to go all the way back to 2008 to find a mid-June reading as low as this.

Some buyers are backing out of contracts they have already made. Others are offering much lower prices than originally agreed, sometimes just as escrow is due to be closed. In England we have a word for this - "gazundering". Google it, if you don't believe me. It has very negative ethical connotations, but it is legal.

These are all signs that our long-term seller's market may be coming to a rapid conclusion. Some iBuyers and institutions, who came to the market's rescue in 2021, are joining the stampede we wrote about yesterday. The larger the herd, the more dangerous the stampede.

©2022 Cromford Associat

Jun 17 - Those who have joined the real estate market in the last 10 years may not have fully realized that the housing market is always cyclical. Every time there is a long term positive cycle, people say "this time it is different" but the cyclical nature of housing is caused by human nature, which can always be relied upon to assert itself eventually. Much harder is trying to forecast exactly when human nature will do its party trick. When times are good, greed gets the upper hand and when times turn hard, fear takes over and wrecks everything. Greed in the housing market was the primary cause of the Great Recession of 2008. Greed caused people in 2004 through 2006 to do all sorts of crazy loans with dodgy lenders and crooked borrowers equally to blame. When prices stopped moving higher (they always do stop at some point) all those loans fell apart, supposedly safe Mortgage-Backed Securities collapsed in value and fear took over the market. This was actually a slow moving train wreck that ran from 2004 through 2011.

The situation in 2022 is very different, yet similar in some important ways. Many people have made a lot of very large paper profits in housing over the past 10 years, without having to resort to loan fraud. Those profits have been especially large in the last 2 years. What is driving the market today is fear of those profits disappearing. If they sell now, those paper profits become hard cash, always useful when the rest of the economy is going a bit wonky. Or they can be converted into different assets using a 1031 exchange. Hard cash profits incur capital gains tax, so the 1031 exchange looks an attractive way to avoid that tax. However, if you exchange into something that is exposed to the same market risks, your profits stay at risk too. Cash can be exchanged for almost anything (not love, though). But cash itself, is still a poor vehicle to store wealth when inflation is running at close to 10%. If we were all logical, it would make some sense for everyone to stay invested in the housing market and sit tight. But we are not all logical. Fear will cause some people to sell and those people can easily spook more people and with the social media environment we now inhabit, a stampede is happening almost as soon as you realize what is going on. The promotion of disaster stories gets a lot of clicks and clicks reward the poster no matter how untrue their content might be. You could say it is logical to be fearful, because fear is highly contagious.

Fear of the market going down can become a self-fulfilling prophecy. If there is a stampede, injuries occur. An orderly exit is almost impossible to engineer. Human nature makes everyone want to do the same thing at almost the same time.

What started as an orderly cool down in March quickly turned into a flight to safety in April and May and now we seem to have a stampede for the exits developing in June. The rise in interest rates was a signal for this to happen. It was not the only cause, because if supply has stayed low, it could have coped with a significant fall in demand. But it is not just lower demand we are facing, but far higher supply because of the rush of home owners wanting to exit the market. New listings are coming from all directions.

Economic forecasters like to claim that when interest rates rise, home prices go down. That assertion can easily be disproved by detailed research into interest rate and home price history. At this stage I like to quote Ezra Solomon "The only function of economic forecasting is to make astrology look respectable." This quote is often wrongly attributed to John Kenneth Galbraith - he did say it in 1988, but he was quoting Ezra Solomon in 1984). Another human trait is to attribute any quote to the most famous person who said it, not the original creator, but I digress. Being correct does not help when a stampede is headed your way.

If people want to believe it, dramatically rising interest rates will cause people to believe that home prices are going to fall, and because they believe it, and act on that belief, home prices can sometimes fall as a result of interest rate rises. Usually they don't, but sometimes they do. The times they do is when they cause a stampede. It is not yet clear whether this stampede is going to become big enough to cause home prices to fall in a significant way. It is clear that they could, but it is not clear that they will. It depends on the size of the herd stampeding.

Of course, if you live in your home as an owner of a primary residence, you are probably not going to join the stampede. But a LOT of people have been tempted to buy second or third homes by the thought of them appreciating. Selling one or two of them might make perfect sense. A LOT of people have become private landlords and have a collection of rentals. Selling the ones they like the least might make perfect sense. A lot of people have started operating short-term rentals and their houses have turned into a business, effectively becoming small hotels. This has driven up values and reduced the stock of ordinary homes. It is possible that fear could spread to these owners and some of there short-term rentals could come back into ordinary home supply just at the wrong time. These are all wealthy people not ordinary people, so the herd is not huge.

The biggest impact could come not from these small real estate owners (investors), but from the bigger players. Large scale institutional buyers of homes to rent, such as Invitation Homes, Progress Residential, RoofStock, American Homes 4 Rent, etc. have gobbled up a lot of ordinary affordable homes across Greater Phoenix, especially in the last 15 months. If these players decided to stop buying, it would create another big hole in demand, just as demand is already sinking. The amplification of the downtrend could be destructive in ways we have never witnessed before.

I just heard today that one of these big players has cancelled every purchase they have in escrow, forfeiting their earnest money in order to not complete their purchases. This is ominous.

©2022 Cromford Associat

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

cathy carter

The Greater Phoenix housing market continues to weaken and the trend is still accelerating, with an average CMI decline of -35% which compares unfavorably with -34% last week. The luxury market is cooling but at a slower rate than the mid-range. Paradise Valley is easily the best performing city in the top 17 but has still seen a decline of 16% in its CMI. Fountain Hills and Scottsdale are tumbling by 33% or more but are the strongest markets in the list.

Maricopa, Queen Creek and Buckeye are much easier places to find new homes and the builders have been far more enthusiastic about putting their homes onto the MLS over the past two months. They are also more generous with buyer broker commissions. This only happens when they are concerned about a shortage of demand. Higher interest rates have taken a lot of buyers out of the market, but at least the ones who remain active will be getting more respect and personal attention. They may even be getting some concessions.

The largest declines are to be found in Avondale, Gilbert, Phoenix, and Chandler, all down 40% or more since this time last month.

At 131.5, Buckeye is getting close to a balanced market. At the current rate of decline, its CMI would fall below 110 by the end of June. Queen Creek and Maricopa are about 10 days behind and are likely to become balanced markets during July.                                  

©2022 Cromford Associat

Jun 15 - As an indication of how far demand has collapsed in the last few months, the number of pending listings of all areas & types in the ARMLS database is 6,873. This is the second lowest number we have ever recorded for mid-June, beaten only by June 15, 2007. June is usually a strong month and we would normally expect counts to fall from June through the rest of the year.

We have been saying for several years that the imbalance in the market was caused by very low supply, not unusually high demand. This is illustrated by the fact that a sudden increase in mortgage interest rates can drop the demand to almost record lows.

©2022 Cromford Associat

Jun 14 - With demand down and supply growing, the upward pressure on pricing is dissipating very quickly. This is best measured by the average price per sq. ft. The readings move at different points in the cycle.

  1. First to change are list prices for active listings, as sellers start to compete with each other by lowering their asking prices.
  2. Second to change are list prices for listings under contract, as the better deals go under contract sooner than over-priced homes.
  3. Last to change are prices for closed listings, since their contract prices were determined a month or two prior to close of escrow.

At the Cromford® Report, we like to measure these things on a daily basis. Hence the chart below, which covers six months. The figures for closed listings use the average for listing that closed in the immediately preceding monthly period. On June 13 this means listings that closed between May 13 and June 12.

This chart has many very clear messages if we take the time to read them:

  1. Asking prices are coming down. They peaked on April 27 at $364.81, then gradually started to ease. They are drifting downward and are currently hovering around $353.
  2. Under contract prices are also coming down. They peaked on May 14 at $314.06 and have now settled back to $311 with a gentle downtrend established.
  3. Closed pricing has moved mostly sideways since the beginning of May, but the high point reached so far was $305.97 on June 10. The is little sign of them going over $306 and as the under-contract prices decline, this will severely limit any upside to closed prices. The red line will always tend to stay below the green line.
  4. The list price for closed listings is still rising a little, because the achieved percentage of list is falling.

In a normal market, the red line is always below the brown line (that is, most buyers pay less than list price), but right now the average closed sale went for about 1% more than the asking price. This situation probably will not last much longer.

If current trends continue, we may very well see the average price of closed listings start to fall, while still staying slightly higher than the average list price of those closed homes. This is something I would have previously believed as rare as a unicorn. It can only happen when the change from hot to cold is as fast and violent as we have seen between mid-April and June 2022. This has not been observed since we started measurements in 2000.

Anyone who is planning to sell their home today needs to understand that their property is no longer likely to appreciate in the months ahead. Be grateful for the incredible surge in its value over the past several years, but all good things come to an end.

©2022 Cromford Associat

Jun 13 - The Cromford® Market Index has plunged by over 50% over the last 3 months without losing any of its downward momentum. Most of that fall took place in the last 9 weeks 


This is a very negative indicator for the housing market and with mortgage interest rates moving sharply higher again, there seems to be little chance of a recovery in demand that would quickly pull the CMI out of its steeply diving trajectory.

If the next 2 months look a bit like the last 2 months then we could hit the balanced zone for the CMI between 90 and 110 during August. Readings below 90 denote a buyer's market.

It is a surprise to no-one that demand should fall after a sudden and large increase in mortgage rates. This would normally cause a slow increase in supply. However we have witnessed a fast increase in supply, due to a significant increase in the arrival rate of new listings. It is not so obvious why the number of new listings would rise at an elevated rate. Clearly people are choosing to exit the market - sell a property without buying a replacement.

Where are all the extra listings coming from?

Those with homes that they do not actually need are likely to be the first to sell. These include:

  • wealthy people with multiple homes who can easily do without their Arizona getaway
  • landlords with multiple properties who would like to reduce their exposure by selling one or more of their investment properties
  • short-term rental owners (Airbnb style) who can quickly cancel their bookings and exit the market if they see risky times ahead

Long-term rental owners take slightly longer to sell up if their properties are occupied by tenants. If they are empty, then it is easy and quick to add the homes into the for-sale inventory.

The new supply is not distressed and owners will be looking to achieve top-dollar. However, they may be feeling an increasing sense of urgency the longer the market cools. So selling for slightly less is better than not selling at all.

©2022 Cromford Associat

Jun 12 - New home inventory is growing even faster than re-sale inventory, at least in percentage terms. Comparing June 12 with March 12, 2022

  • Active listings with date built 2023 are up 222% to 103 - these are homes that will not be available to close until next year and many of them are very expensive. More than 57% of them are priced over $1 million and 5 are over $10 million
  • Active listings with date built 2022 are up 213% to 1,147 - these new builds are either spec homes or build to order (BTO) with delivery by the end of the year
  • Active listings with date built 2021 are up 36% to 242 - new homes that have already been completed last year or are being flipped very early in their life
  • Active listings with date built prior to 2021 are up 128% to 9,985 - not new, but re-sales

Developers are clearly using the MLS more than they did 3 months ago.

New home listings are piling up on the MLS inventory faster than re-sales, but re-sales are still growing very fast even without the new homes.

In percentage terms, homes built in 2021 or later represent 13% of ARMLS listings on June 12, up from 11.6% on March 12.

We expect to see buyer-broker commissions on new homes get more generous as time goes by.

©2022 Cromford Associat

Jun 11 - Inventory continues to build at an astonishing rate. This is easy to see using the weekly active listings chart:

Buyers are now seeing between 800 and 900 more active listings to choose from every week. If the trend continues at this frenetic rate we could reach market balance as soon as mid-August. But will it continue? We do not pretend to know the future, but when a trend is this strong it tends have pretty good staying power.

If we compare today (June 11) with 3 months ago (March 11), we can see that:

  • active listings across all areas and types have grown 138% from 4,820 to 11,471
  • active single-family detached listings have grown the most - 148%, with townhouse / condos up 139% and mobile homes only up 28%
  • active Greater Phoenix listings are up 140% while out-of-area listings are up 121% with Apache County up 312%, Coconino County up 232%, Gila County up 164%, Navajo County up 134% and Yavapai County up 124%
  • homes priced between $400,000 and $1 million are up 183%, while homes between $1 million and $2 million are up 163%
  • homes priced less than $400,000 are up 69% while homes over $2 million are up 59%

In these numbers we have excluded UCB and CCBS active listings.

Due to the increased competition among sellers we are seeing a large jump in the number of list price reductions. Sellers' less lofty ambitions are also reflected in the average price per sq. ft. for active listings which has retreated from a peak of $364 in late April to $353 today. The price per sq. ft. of pending listings is flat-lining around $310 and showing little momentum to break through its peak level of $314 achieved in late May.

In 2005 it took a long time for people to realize that prices would not necessarily go up forever and despite a rapidly deteriorating market, it was not until mid 2006 that sale prices started to fall. The deterioration in 2022 is much faster than in 2005 and people are primed to believe that price declines are likely, if not inevitable. The willingness to believe in price declines may compensate for the absence of homeowner distress - foreclosure notices remain close to record low levels.

It is looking possible that $305 to $310 will be a top in average sales price per sq. ft. and anyone expecting closing prices to continue rising much beyond their current level is likely to be disappointed.

©2022 Cromford Associat

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

Gilbert homes

This table tells us that the cooling market trend is still accelerating, with an average CMI decline of -34% which compares unfavorably with -33% last week. Demand continues to fall in most areas but the dominant effect is now the rise in supply, with new listings arriving at a pace that is well above average. Paradise Valley has seen little change in its supply over the last month, thought demand is still trending lower. At -18% it is the top performing city in the table.

The largest declines are to be found in Avondale, Gilbert, Cave Creek and Chandler, all down more than 40% since this time last month.

We now have 4 cities below 200 and at 143.6, Buckeye is not far from a balanced market between 90 and 110. Maricopa and Queen Creek are racing towards that zone too.

The upper end of the market is slowing, but to a lesser degree than the mid-range between $400,000 and $1 million. This effect is placing Fountain Hills and Scottsdale at the top of table.

Supply below $400,000 remains very low and that segment of the market remains strong.

©2022 Cromford Associat

Jun 8 - The rental market, as represented by ARMLS rental listings, has cooled since this time last year.

During May 2021:

  • 1,473 leases were closed
  • 74.1% leased at asking lease price
  • 18.3% leased below asking lease price
  • 7.6% leased above asking lease price
  • Median closed lease = $1,900/month

During May 2022:

  • 1,954 leases were closed
  • 53.5% of rentals were leased at asking price
  • 41.6% were leased under asking price
  • 4.9% were leased over asking price
  • Median closed lease = $2,200 

The rental listings on ARMLS are not a balanced cross-section of the rental market. They tend to be skewed towards higher-end properties and single-family homes rather than relatively affordable apartments. However we have to work with the data we have, rather than the data we wished we had.

Although the median lease price has increased over the 12 months, far more listings are leasing below the asking price and far more listings are appearing on the ARMLS database. Landlords do not bother to list their properties on the MLS if they expect them to lease up very quickly and easily. So the fact that we are seeing a 40% increase in new rental listings compared with 2021 shows us that landlords are less confident than they were a year ago.

Rental prices has not changed a lot in the last 5 months and the median lease price seems to have hit a stable patch around $2,200.

As of June 5th, 2022, there were 2,385 active vacant rental listings in the Arizona Regional MLS, up 26% since January 1st, 2022 and up 79% since September 1st, 2021.

All these statistics exclude short-term rentals.

©2022 Cromford Associat

Jun 6 - The initial Maricopa County affidavit counts are in for May and they tell us the following:

  • There were 10,268 closed sales - down 11% from May 2021
  • There were 1,615 new homes closed - down 12% from May 2021
  • There were 8,653 re-sale homes closed - down 11% from May 2021
  • The overall median sales price was $490,000 - up 24.8% from May 2021
  • The new home median sales price was $500,490, up 27.8% from May 2021
  • The re-sale median sales price was $486,000, up 23.7% from May 2021

All the numbers include single-family and townhouse/condo properties.

Although sales volume are down substantially, closed prices continue to move substantially higher. The overall monthly median sales price climbed 2.2% between April and May.

©2022 Cromford Associat

Jun 4 - Since the market downturn started we have seen all of the early dominoes fall. If we were in a non-serious situation, then there are several middle-ranking dominoes that would not topple and the early ones would start to stand upright again.

But instead we are starting to see the middle-order start to wobble and fall over. Here is one of them - the number of closed listings per month, measured on a weekly basis.

chandler homes

2022 had been running behind 2021 all year, but not by a large amount. Up until late April, the sales rate was not of concern. Then in May things got worrisome. The 2022 sales rate took a sharp dive and is now 16% below the reading in 2021.

This leads me to conclude that the market is serious about this change of direction and the new trend is likely to continue for some considerable time.

Last year we saw a sales reduction in July, but this is normally when sales rates start to drop for seasonal reasons (Phoenix gets very hot in May). Thanks to large investors and iBuyers, the closing rates recovered during the rest of 2021.

There two things that concern me about the sales decline in 2022

  1. It is taking place in May, which in a healthy market should be one of the busiest months for closing
  2. We are seeing a very steep drop in a short period.

In this environment, selling a home is no longer like falling off a log. Showings will be fewer in number and offers far less easy to get than they were in March. Once buyers realize what is going one, expect them to start flexing their negotiating muscles. They might even ask for the seller to pay for a Home Warranty (shocking I know).

©2022 Cromford Associat

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

Realtor Chandler

This table tells us that the cooling market trend is still accelerating, with an average CMI decline of -33% which compares unfavorably with -28% last week.

The weakening demand and rising supply now applies to almost every market segment, and certainly to all 17 of the largest cities. Paradise Valley saw the smallest decline in its CMI but it is still down 22% compared to a month ago. The worst affected are Avondale, Gilbert, Queen Creek and Cave Creek, all down by 37% or more, while Phoenix is down 35%.

No city is over 400, even though, back in March, 14 of the 17 cities were over 400. March feels like a very long time ago.

Sellers need to be fully aware of how much of their advantage has disappeared. Be nice to buyers.

©2022 Cromford Associat

Jun 1 - We issued a red flag warning on April 24 and in the 5 weeks since then the market has deteriorated at the fastest rate we have ever seen. The Cromford® Market Index is 272.2 today, but it stood at 406.2 on April 24, so it has plummeted by one third in just 5 weeks. On May 1, the CMI stood at 385.2 so it has dropped 113 points over the month. This is by far the largest monthly decline we have ever seen in the CMI.

We admit to being surprised at how quickly the market is cooling. We expected a downward trend but did not anticipate it would be so dramatic. The softening trend is now very well established and momentum is strong. We will shortly be entering the third quarter, usually the weakest time of year for the Greater Phoenix housing market. Even in a good year, prices tend to drift lower during the third quarter. We are not having a good year, despite the incredible strength of the first quarter.

  • Supply is growing fast
  • Demand is weakening
  • Sales volumes are in swift decline
  • More asking prices are being lowered
  • Listing cancellations and expirations are starting to rise

The last time we saw a similar frenzied market cool down very quickly was in April to November 2005. This is a more striking reversal than we experienced that year. 

©2022 Cromford Associat

May 31 - The latest S&P / Case-Shiller® Home Price Index® numbers were published on May 31.

The new report covers home sales during the period January to March 2022. So they do not reflect sale since April 1, 2022, nor the market slowdown we have experienced over the past 2 months.

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

  1. Seattle +5.57%
  2. Denver +4.47%
  3. Dallas +4.30%
  4. San Francisco +4.26%
  5. San Diego +3.74%
  6. Tampa +3.68%
  7. Miami +3.64%
  8. Los Angeles +3.27%
  9. Atlanta +3.15%
  10. Las Vegas +3.10%
  11. Phoenix +2.98%
  12. Charlotte +2.91%
  13. Portland +2.88%
  14. Washington +2.86%
  15. Boston +2.62%
  16. Detroit +2.62%
  17. Cleveland +2.34%
  18. Minneapolis +2.07%
  19. New York +1.60%
  20. Chicago +1.51%

Phoenix has dropped another place to 11th but remains above the national average, which was 2.55%. No sign of a slow down here, but we would not expect any. Sales prices are a trailing indicator and these are all from the first quarter of 2022.

Comparing year of year, we see the following changes:

  1. Tampa +34.8%
  2. Phoenix +32.4%
  3. Miami +32.0%
  4. Dallas +30.7%
  5. San Diego +29.6%
  6. Las Vegas +28.5%
  7. Seattle +27.7%
  8. Charlotte +26.0%
  9. Atlanta +25.7%
  10. San Francisco +24.1%
  11. Denver +23.7%
  12. Los Angeles +23.2%
  13. Portland +19.3%
  14. Detroit +15.4%
  15. Cleveland +14.7%
  16. Boston +14.6%
  17. New York +13.7%
  18. Chicago +13.0%
  19. Washington +12.9%
  20. Minneapolis +12.4%

The national average was 20.6%. Phoenix has finally been toppled from the top spot by Tampa. Phoenix spent a total of 33 consecutive months at number one, establishing a new record.

©2022 Cromford Associat

May 28 - After a surprisingly rapid rise in inventory over the previous 5 weeks, last week's increase was relatively modest. 

Although still a beefy jump from 30 to 32.2, this was noticeably smaller than the prior 2 weeks and could possibly (?) indicate a slowing of momentum in the cooling trend.

There are very uncertain times, so optimists will probably view this chart favorably. However it also shows that inventory has almost doubled from 16.4 to 32.2 days between mid March and late May. Pessimists can rightly claim that is still a faster increase than we saw in 2005, the last year in which we experienced a similar sudden change following a buying frenzy.

If days of inventory returns to the 120 to 140 area then we will have seen the market return to a normal balance, but if it stays well below that (say 50 to 60) then the seller's market will have survived and upward pricing pressure will still persist.

©2022 Cromford Associat

May 26 - Here is our latest table of Cromford® Market Index values for the single-family markets in the 17 largest cities

chandlerhomes

The decline in CMI values is still accelerating with an average monthly change of -28% compared with -24% last week. The pace at which the market is cooling off is both astonishing and widespread. Least affected are the active adult areas such as Sun City, Sun City West and Sun Lakes, none of which are big enough to appear in the above table.

The largest declines over the past month have been seen in Avondale, Gilbert, Queen Creek, Cave Creek and Chandler. The smallest declines can be found in Paradise Valley and Fountain Hills but even here the fall is a massive -21%.

Only 7 cities are still over 300. There were 15 a month ago.

Buckeye is interesting in that demand has actually improved over the past month. However supply continues to build quickly and overwhelms that effect.

In absolute terms 166 to 400 are all seller's market CMI numbers, so we are not yet close to the point where buyer's have an advantage. However buyers' disadvantage in negotiations has dropped dramatically. This is because there is much less competition from other buyers. Many of these have dropped out due to the eye-popping increase in mortgage rates. There are also many more homes to choose from compared with a couple of months ago.

Cash buyers remain active, but these are a much smaller part of the total demand and cannot compensate for the loss of financed buyers.

©2022 Cromford Associat

May 23 - Every leading indicator is pointing to a sharp slowdown in the Greater Phoenix housing market. Supply has increased very quickly over the last 2 months while demand is much weaker than it was in March.

Prices are much slower to react to a change in the market, especially closed sale prices. However prices for homes under contract react 1 to 2 months earlier than closed prices. Even sooner than that we would expect to see weakness in asking prices. This is now starting to appear as sellers gradually lose confidence. Some sellers will be in denial for many months yet, and will risk over-pricing their home in current market conditions. Others will be more reactive and make sure their asking pricing is competitive.

Here is a chart showing daily average price per square foot for 4 measures:

  1. List prices for active listings as of May 23
  2. List prices for listings under contract as of May 23
  3. List prices for closed listings during the last month (Apr 23 - May 22)
  4. Sale prices for closed listings during the last month (Apr 23 - May 22)

The decline in CMI values is still accelerating with an average monthly change of -28% compared with -24% last week. The pace at which the market is cooling off is both astonishing and widespread. Least affected are the active adult areas such as Sun City, Sun City West and Sun Lakes, none of which are big enough to appear in the above table.

The largest declines over the past month have been seen in Avondale, Gilbert, Queen Creek, Cave Creek and Chandler. The smallest declines can be found in Paradise Valley and Fountain Hills but even here the fall is a massive -21%.

Only 7 cities are still over 300. There were 15 a month ago.

Buckeye is interesting in that demand has actually improved over the past month. However supply continues to build quickly and overwhelms that effect.

In absolute terms 166 to 400 are all seller's market CMI numbers, so we are not yet close to the point where buyer's have an advantage. However buyers' disadvantage in negotiations has dropped dramatically. This is because there is much less competition from other buyers. Many of these have dropped out due to the eye-popping increase in mortgage rates. There are also many more homes to choose from compared with a couple of months ago.

Cash buyers remain active, but these are a much smaller part of the total demand and cannot compensate for the loss of financed buyers.

chandler homes

We can see that the average $/SF for active listings (the blue line) has not managed to break through $365 and is now showing signs of retreating below $360. The maximum was $364.81 achieved on April 27. This is probably going to be the top.

The green line is for listings under contract and has not yet shown any weakness. However, it is not showing much willingness to move above the current level of $313 to $314. This is probably close to the top, though we are by no means certain of this.

The closed prices are still blissfully unaware of the change in market conditions. The sale price per sq. ft. remains higher (at around $305) than the list price (around $300). However if the green line starts to drift lower we would expect the red and brown lines to do the same. Eventually the red line will drop below the brown line in a signal that market has returned to normal.

The remarkable speed of the change in the market is reflected in the fact that the Cromford® Market Index has dropped over 100 points in the last month.

©2022 Cromford Associat

May 21 - The Greater Phoenix market continues to provide plenty of reasons to be worried. Another domino is wobbling and looks like it might be getting ready to fall - the listing success rate. Below is the weekly chart for all areas & types. 

At the moment we are just under 90%, a very strong number. However, if we look at the last 5 weeks, a clear weakening trend has started. A similar trend developed in 2005 between June and July. By the end of 2005 we were down to just 63% - meaning that 1 in 3 homes listed failed to sell. We cannot say this will happen in 2022. But if it were going to happen, the first signs of the success rate problem would look like just the chart above.

A similar downward trend started during the summer last year, but frenetic buying by investors, particularly large investors, pulled the nose of the airplane back up and we ended 2021 with a strong success rate of just over 90%. This does not look as likely in 2022. It would be advisable to watch this chart like a hawk. 2005 was a year full of red flags waving. 2006 was a full scale bubble burst. People now talk of the 2008 crash, but that was only when Wall Street woke up and entered a full-on panic. The real estate market was in dire straits as early as the middle of 2006 and 2007 was truly dreadful.

The problem that we faced in 2006 was compounded by all the foreclosures that piled up in 2007. This was largely because so many homeowners had little or no equity in 2006 so by 2007 they had negative equity and no reason to avoid foreclosure. At the moment, we have a more positive situation with a much higher percentage of homeowners having significant equity. They should be motivated to protect rather than abandon that equity. That gives us a reason to be less worried, but extreme vigilance is the order of the day. Those who refinanced and took a little too much cash out over the last 2 years are more exposed than most.

©2022 Cromford Associat

May 19 - Here is our latest table of Cromford® Market Index values for the single-family markets in the 17 largest cities

az homes

Our primary leading indicator, the Cromford® Market Index, is telling that us that the cooling trend is getting even more powerful. Every city has seen its CMI decline by at least 15% and the average for these 17 cities is a fall of 24%, compared with an average of 20.5% last week. At some point we would expect the nose-dive to decelerate and reach an equilibrium, but we seem to be a long way from that point at the moment. The first signal we are waiting for is for the average monthly change (-24%) to be lower than the prior week.

Worst affected are Queen Creek (-36%), Gilbert (-34%), Avondale (-30%) and Cave Creek (-30%).

It remains easy to sell a home at the moment but if this cooling trend stays in place, selling will start to get much more difficult by August.

We note that only one city (Fountain Hills) is still over 400. One month ago there were only 6 cities below 400. What a difference one month can make.

©2022 Cromford Associat

May 17 - Supply continues to increase at a fast rate across most market segments. The effect is most noticeable in the price ranges from $500,000 to $2,000,000.

For Greater Phoenix, single-family detached non-distressed listings without a contract:

  • Active listings priced between $500K and $600K have risen from 477 to 1,049 in the last 2 months (120%)
  • Active listings priced between $600K and $800K have risen from 546 to 1,111 in the last 2 months (103%)
  • Active listings priced between $800K and $1M have risen from 259 to 519 in the last 2 months (100%)
  • Active listings priced between $1M and $1.5M have risen from 209 to 468 in the last 2 months (124%)
  • Active listings priced between $1.5M and $2M have risen from 91 to 194 in the last 2 months (113%)

The rise in supply is quite modest for homes priced over $3 million or under $500,000. It is also hardly showing up in mobile and manufactured homes. It is quite obvious in the condo / townhouse sector.

©2022 Cromford Associat

May 15 - For years buyers have been crying out for more supply. Their wish is finally coming true. In the last 7 days we saw more than 3,000 listings added to the ARMLS residential database for the first time since 2010.

With demand dropping below normal, this torrent of new listings is growing our active inventory at the fastest rate since 2005. If you can afford the new interest rates (or are buying with cash), there are suddenly a lot more homes to choose from.

Look out for a list price cuts as sellers start to realize they have to be more realistic if they wish to compete. Asking for concessions is no longer a joke.

Sales price weakness is still a few months away, but asking prices are starting to look a little wobbly.

©2022 Cromford Associat

May 14 - It is time to look at another of the dominoes that have fallen over - the contract ratio. The contract ratio compares the number of listings under contract with the number of active listings without a contract. It is a classic case of comparing demand with supply. This ratio has plummeted over the past 4 weeks because demand has weakened while supply has increased sharply.

This tells us that the previously crazy hot market has turned into just a hot market. But it also tells us that if the cooling trend continues at a similar rate, we could be in a warm market within a month and a normal market in just 2 months. The former is very likely, the second is more speculative and anyone who tells you they know what the market will be doing in 3 months is kidding themselves.

Here is the contract ratio chart for single-family homes in Phoenix:

real estate chandler

The fall from 250 four weeks ago to 145 this week is even more dramatic than the sudden drop we saw at the start of the COVID-19 pandemic. The drop in 2020 was quickly recovered and within two months we were back higher than we started. The current decline appears to have more staying power and momentum - and we can see that a drop back to 2018 levels is likely by the end of May.

You can check out the other major and secondary cities here. If you want to investigate more complex segments of the market the Tableau chart is here.

2014 was the last time we had a market that was fairly "normal" so use that line for reference

©2022 Cromford Associat

May 12 - Here is our latest table of Cromford® Market Index values for the single-family markets in the 17 largest cities

homes for sale in east valley

From a seller's perspective, this is dismal table. Your negotiation power is dissipating at a rapid rate. All 17 cities are cooling quickly and their CMI is dropping 10% or more over the past month. 9 cities have fallen by 20% or more over the last month and one (Queen Creek) by as much as 30%.

The average change was -20.5% compared with -18.1%.

Supply is growing in almost all areas thanks to a plentiful and growing flow of new listings, while homes are going under contract at a slower rate than we have seen for a long time.

It will take several months of this trend continuing to reach a balanced market, but this no longer looks like such a far-fetched idea.

©2022 Cromford Associat

May 11 - The reported intent of buyers has changed significantly over the past year. In Maricopa County, purchases for owner occupation as a primary residence have declined 19.4% between April 2021 and April 2022. Purchases as a second home have declined by 8.1%. In contrast, purchases to turn into a rental have increased by 8.5%.

Demand from investors for rentals now represents nearly 21% of all home sales. This is sure to be an undercount. Just a cursory inspection shows us that many unscrupulous investors are marking their Affidavits of Value as purchases of a primary residence, no doubt to attract lower taxes. It is perjury to enter incorrect information on an Affidavit of Value and each of these documents are notarized. However we are yet to hear of any government agency taking action to enforce the state laws surrounding Affidavits of Value.

©2022 Cromford Associat

May 9 - The Cromford® Market Index was the first indicator to sound the alarm about the current market direction. However we can now see several other early indicators fall like a sequence of dominoes toppling over.

The first we would like to highlight is days of inventory - 365 times the number of active listings divided by the annual sales rate. Here is the weekly char


  • Homes in southeast valley

    While all the numbers are low in absolute terms, the 2022 line is shooting skywards like a missile. This tells us that supply is increasing very quickly relative to demand.

    At 24 days, inventory remains very low at the moment, but we have seen in the past (specifically in 2005) that 24 in April can grow to 82 by year end and over 200 the following summer. I am NOT saying this is going to happen in 2022 and 2023, but I am saying this trend needs to be watched very closely. A balanced market will have about 120 to 135 days of inventory and if we get more than 150 days we will be in a buyer's market, one where prices will tend to fall rather than rise.

    My advice is to keep watching days of inventory like a hawk and react appropriately.

    ©2022 Cromford Associat

    May 5 - Here is our latest table of Cromford® Market Index values for the single-family markets in the 17 largest cities

    east valley homes

    If you thought last week's table was bad, then this weeks is much worse. All 17 cities are cooling quickly with all except 2 (Glendale and Goodyear) dropping 10% or more over the past month.

    The average change was -18.1% compared with -15.3%. More drastic cooling is observed in Peoria, Queen Creek, Paradise Valley, Buckeye, Tempe and Gilbert.

    Supply is building quickly thanks to plentiful new listings and a major slowdown in homes going under contract.

    The last 6 weeks look like the significant turn in the market than we have been anticipating for several years and there are no obvious upcoming changes expected that would reverse the current trend.

    Because the market was so hot in February, it will take several months for this trend to bring us back to more normal levels. However we note that Buckeye has broken below 200 and only one city (Avondale) is still over 500.

    We anticipate that all of the CMIs in the table will drop sharply over the next 4 weeks. Beyond that, it is anybody's guess.

    ©2022 Cromford Associat

    May 4 - The initial estimates for April in Maricopa based on Affidavits of Value are as follows:

    • Overall sales were down 13% compared to April 2021
    • New home sales were down 15% while re-sales were down 13%
    • The overall median sales price was $479,422, up 27.5% from $376,000 in April 2021
    • The new home median was $496,431, up 25.5% from $395,452 in April 2021
    • The re-sale median was $475,000, up 26.7% from $375,000 in April 2021

    The typical home in Maricopa County rose $100,000 over the last 12 months.

    These figures are for single-family homes and townhouse / condos combined, though the market is still overwhelmingly dominated by single-family detached homes.

    ©2022 Cromford Associat

    May 3 - The supply situation has changed a lot in percentage terms since the beginning of April. Although the number of active listings remains low by long term standards, a few segments of the market have seen buyers suddenly faced with almost twice as many homes to choose from.

    Here is how it varies by price range for single-family detached homes:

    • Homes under $400,000 have increased from 638 to 644 (+1%)
    • Homes between $400,000 and $500,000 have increased from 874 to 1,118 (+28%)
    • Homes between $500,000 and $600,000 have increased from 586 to 878 (+50%)
    • Homes between $600,000 and $800,000 have increased from 632 to 893 (+41%)
    • Homes between $800,000 and $1,000,000 have increased from 312 to 431 (+38%)
    • Homes between $1 million and £1.5 million have increased from 268 to 364 (+36%)
    • Homes between $1.5 million and $2 million have increased from 92 to 171 (+86%)
    • Homes between $2 million and $3 million have increased from 90 to 151 (+68%)
    • Homes over $3 million have increased from 234 to 254 (+9%)

    These numbers are for active listings without a contract. That is, they exclude UCB and CCBS active listings.

    We can see it is the price range from $1.5 million up to $3 million that has experienced the largest increase.

    It is unusual to see such large percentage increases and extremely unusual for them to occur during April.

    ©2022 Cromford Associat

    May 2 - Cromford® Public subscribers who glance at chart TA12 or TA13 will notice that an unusual "city" has knocked Scottsdale into third place for annual average price per square foot. While Paradise Valley remains at number one, Tortilla Flat 85190 makes number two for the first time.

    The average of $545.98 per sq. ft. was achieved in 2021 for a single-family home of 1,566 sq ft. set on 20 acres near Mud Spring Canyon within the Tonto National Forest. And yes this remote spot is within Maricopa County. It was first marketed in 2015 for $1,350,000 and failed to sell after 2 years. It finally changed hands for $550,000 in 2020 which seems like bargain for anyone who likes wonderful desert views, horses, boats and getting away from it all. Apache Lake is only 2 miles away.

    It was resold in 2021 for $855,000, putting it high up our $/SF table. These transaction did not involve ARMLS, so they are not visible in the main Cromford® Report data..

    The strangest thing about its location is that, although it is within Tortilla Flat AZ 85190 from the USPS point of view, you cannot easily visit Tortilla Flat by vehicle along AZ highway 88 because that road has been closed since 2019 due to storm damage following the Woodbury Fire. To get from this home to its local postal counter would take a round trip of 220 miles lasting about 5 hours and 30 minutes. That must be some kind of record I think.

    Parts of the Wild West are still very wild.

    For pictures of the property see 2015 MLS listing 5358916.

    ©2022 Cromford Associat

    May 1 - Supply has been arriving in greater quantities over the past few weeks, This applies to both rental and for-sale listings.

    The most dramatic rises are in rentals. There were 2,550 new rental listings created in the last 4 weeks, which is up 45% from the same 4 weeks of 2021. For 2022 year-to-date we have seen 26% more new listings (10,072 versus 7,995).

    Residential for-sale listings added over the last 28 days number 10,476, up from 10,387 in the same period of 2021, a 0.9% increase. Year to date we have seen 40,198, down from 40,580 last year.

    The problem for the market is that this extra supply is coming just as demand is dropping fast.

    The for-sale active listing count (excluding UCB and CCBS) across all areas & types has jumped 27% in just 4 weeks. This is even faster than we experienced in April 2005. That's a scary percentage, even though the absolute numbers remain small. If this growth rate persists through May and June, the market will be very different by July.

    ©2022 Cromford Associat

    April 30 - Although the market is cooling, prices are still on a strong upward trajectory that will be maintained for several months at least. Supply is increasing while demand is falling, but the gap is so large that it will take a long time for these two elements to achieve balance, even if the current trend continues.

    The price increases over the past 2 years have been extremely large, but should not be surprising to Cromford® Report subscribers, given the very high levels reached by the Cromford® Market Index since mid-2020. They will of course be surprising to followers of the CoreLogic Monthly Home Price Insights reports, who have forecast that price increases would be very weak from mid-2020 onwards. In fact in June 2020 they told us that home prices would fall by 6.6% by June 2021. A year later in June 2021, they projected that prices would rise by 3.2% by June 2022. It is hard to imagine anyone being more consistently inaccurate in forecasting home prices.

    Here is what has actually happened over the past 2 years:

    City Monthly Avg Sales Price Week 17 2020 Monthly Avg Sales Price Week 17 2022 Change
    Phoenix $388,251 $613,994 58%
    Scottsdale $909,236 $1,461,913 61%
    Mesa $353,810 $547,196 55%
    Gilbert $413,047 $696,128 69%
    Queen Creek $358,118 $573,380 60%
    Chandler $418,720 $633,076 51%
    Peoria $381,855 $585,326 53%
    Surprise $315,709 $507,483 61%
    Glendale $313,803 $506,570 61%
    Paradise Valley $2,830,222 $4,347,194 54%
    Buckeye $281,446 $491,918 75%
    Goodyear $337,824 $548,021 62%
    Tempe $406,192 $599,354 48%
    Maricopa $249,216 $415,570 67%
    Cave Creek $579,416 $1,154,612 99%
    Fountain Hills $690,928 $922,843 34%
    Casa Grande $227,798 $393,857 73%
    Sun City $259,994 $380,028 46%
    Litchfield Park $423,303 $637,668 51%
    Avondale $276,273 $457,589 66%

    The averages are for single-family detached homes only. The cities are listed in order by total dollar volume.

    ©2022 Cromford Associat

    April 28 - Here is our latest table of Cromford® Market Index values for the single-family markets in the 17 largest cities

    chandler homes for sale

    Even Glendale has now capitulated and market conditions deteriorated for sellers across all 17 cities during the last month.

    The average decline was -15.3% which compares with -12.6 last week. The largest declines in CMI occurred in Cave Creek, Peoria, Paradise Valley and Buckeye.

    The trend is now well established and accelerating. Demand has weakened considerably and is now well below normal in several important locations. See the Cromford® Demand Index for major cities to see more detail. Supply remains far below normal but is rising. Supply is increasing fastest in what is now the mid range - $500,000 to £1,000,000.

    Cheaper homes that are still in demand from large-scale investors remain hard to find. The luxury market is also under-supplied but supply is creeping higher here too. 

    ©2022 Cromford Associat

    April 27 - The permit counts have been published by the Census Bureau for March 2022. The Maricopa and Pinal county single-family count for March was 3,841. This is a massive total suggesting that supply of new single-family homes will be increased in coming months. It is the largest total since May 2006.

    Ranked the number of dwelling units, here are the top 10 cities:

    1. Phoenix 463
    2. Avondale 417
    3. Unincorporated Maricopa County 392
    4. Unincorporated Pinal County 387
    5. Surprise 349
    6. Buckeye 343
    7. Queen Creek 221
    8. Mesa 211
    9. Goodyear 202
    10. Maricopa 170

    It is interesting to note that almost 800 homes are to be built in areas that are unincorporated.

    It is also fascinating to see how few homes are being built in large established cities that until a few years ago were major centers for home construction. These include Chandler (38), Gilbert (114), Scottsdale (85), Peoria (61), Glendale (35) and Tempe (13).

    ©2022 Cromford Associa

    April 26 - The latest S&P / Case-Shiller® Home Price Index® numbers were published on April 26.

    The new report covers home sales during the period December 2021 to February 2022. So they do not reflect sale since March 1, 2022.

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

    1. San Diego +4.47%
    2. Seattle +4.38%
    3. San Francisco +3.70%
    4. Los Angeles +3.20%
    5. Denver +3.08%
    6. Dallas +2.90%
    7. Tampa +2.65%
    8. Portland +2.53%
    9. Miami +2.30%
    10. Phoenix +2.24%
    11. Boston +2.09%
    12. Las Vegas +2.08%
    13. Atlanta +1.99%
    14. Charlotte +1.91%
    15. Washington +1.68%
    16. Detroit +1.61%
    17. Chicago +1.20%
    18. New York +1.11%
    19. Minneapolis +1.08%
    20. Cleveland +0.87%

    Phoenix has dropped another 2 places to tenth place but remains above the national average, which was 1.73%. The top of this month-to-month table was dominated by the west coast. The north and east are seeing the weakest home price appreciation.

    Comparing year of year, we see the following changes:

    1. Phoenix +32.9%
    2. Tampa +32.6%
    3. Miami +29.7%
    4. San Diego +29.1%
    5. Dallas +28.8%
    6. Las Vegas +27.5%
    7. Seattle +26.6%
    8. Charlotte +25.5%
    9. Atlanta +24.0%
    10. San Francisco +22.9%
    11. Denver +22.3%
    12. Los Angeles +22.1%
    13. Portland +19.0%
    14. Detroit +14.6%
    15. Boston +14.6%
    16. Cleveland +13.6%
    17. Chicago +13.1%
    18. New York +12.9%
    19. Minneapolis +12.0%
    20. Washington +11.9%

    Phoenix is top of the year-over-year table for the 33rd consecutive month.

    The national average was 19.8%, up from 19.2% last month.

    ©2022 Cromford Associat

    April 24 - Red flag warning. The housing market is changing more rapidly with rising supply and falling demand. While it remains far above normal for now, the Cromford® Market Index is dropping fast.

    Here is an image extracted from the weekly CMI chart:

    chandler realtor

    We can clearly see that the CMI is accelerating downwards. Although it remains above 400, representing a very hot market, the downward trend is so powerful it appears possible that it will drop below 300 within a matter a weeks rather than months. It is not possible to predict the CMI, as it is designed to be the very earliest indicator of market changes. We do not know when this decline will bottom out.

    Last year we saw a similar but less intense fall during June. However, investors and iBuyers filled the gap left by the fading owner-occupier demand and kept inventory at low levels. The CMI bottomed out well above 340 and staged a second rally.

    April is supposed to be one of the best months for the market, but new contract signings are significantly lower than last year. This means active listings are staying active longer and inventory is starting to build in most (but not all) segments. At the moment the number of homes for sale remains very far below normal, but we have seen before how it can increase sharply if more sellers emerge just as demand is declining.

    There are a sequence of market indicators that fall like dominoes when a major change occurs in the market. The CMI is specifically designed to be the first of those dominoes. We will be reporting on the state of those confirming indicators over the course of the next few weeks and we advise subscribers to pay close attention. Do not pay attention to prices. They will continue to rise for many months, since they are trailing indicators of market conditions.

    This is probably one of those important times when early action may be required. If you are over-extended in your real estate investments, I advise a large increase in caution right now.

    ©2022 Cromford Associat

    April 23 - During Thursday and Friday we saw the strongest rate of incoming new listings for a very long time. Over the last 4 weeks a total of 10,059 new listings were added to the ARMLS database, the first time we have seen a total over 10,000 since September. With listings going under contract more slowly, we could see inventory start to recover over the next few weeks.

    Cities with more single-family homes available include:

    • Phoenix (highest since January 22)
    • Mesa (highest since January 30)
    • Scottsdale (highest since December 15)
    • Peoria (highest since January 17)
    • Queen Creek (highest since January 9)
    • Maricopa (highest since February 13)
    • Buckeye (highest since December 5)
    • Cave Creek (highest since November 7)
    • Fountain Hills (highest since November 17)

    Avondale continues to struggle with low inventory.

    Since we are in the middle of the spring buying season, this is a positive sign for buyers. More choice and less competition from other buyers.

    ©2022 Cromford Associat

    April 22 - Comparing today with April 22, 2021 for active rental listings on ARMLS:

    • Singe-family detached rentals have grown from 728 to 1,561 - a 114% increase
    • Townhomes are up 45%
    • Apartment-style homes are down 12%

    That is a large shift in the mixture, with apartments harder to find but a dramatic increase in the number of single-family detached homes available to rent - the most since April 2020.

    The average rent being asked for single-family detached homes is down again to $1.63 per sq. ft. per month. It was $2.03 this time last year. So not only do prospective SFD tenants have more than twice as many ARMLS listings to choose from, they are on average being asked to pay 20% less in rent per square foot.

    Yet, almost everybody is saying rents are going up. Not in Phoenix they're not.

    With rents going down and mortgage rates and home purchase prices going up, the argument for buying over renting is starting to look significantly weaker.

    ©2022 Cromford Associat

    April 21 - Here is our latest table of Cromford® Market Index values for the single-family markets in the 17 largest cities

    chandler realtor

    Glendale is now the only holdout where market conditions improved for sellers over the last month. The other 16 cities saw conditions improve for buyers, many dramatically so. Cave Creek, Peoria and Paradise Valley saw their CMI drop by 25% or more, while Fountain Hills and Buckeye fell 19%.

    We have not seen such a precipitous drop in the CMI since the second quarter of last year.

    However, this does not mean the market is cool. In Phoenix, for example, the reading of 435 means there are more than 4 buyers for every home available for sale. Even in Buckeye, the bottom ranked city, there are more than 2 buyers for every home available for sale.

    For prices to go down, we need to have more sellers than buyers. If we had twice the number of homes for sale and half the current demand, conditions would be right for a balanced market. A cursory glance tells us that situation is still a long way away.

    Where would double the supply come from? Not from existing normal owner-occupiers, who would probably need to find a replacement home for the one they are selling and would be unimpressed by the prospect of exchanging their current mortgage for a much more expensive one. Both demand and supply are likely to keep trending down from these normal home-owners.

    The most likely source of more homes for sale would be investors who have lost the desire to hold onto their investments. If they cannot find a tenant, then their asset has significant holding costs (HOA fees, property taxes, maintenance, utilities, etc.) that they could do without. Although finding a landlord with a long-term empty property has been difficult over the past several years, it is not so hard to imagine this at some point in the future.

    This is why we are advising our subscribers to keep an eye on rental supply and rental rates. Look out especially for signs of landlord distress. First month rent-free, rent price cuts and other creative incentives offered to tenants are signs that all is not well in landlord-land.

    If this scenario does NOT come to pass then all we are seeing is the gradually cooling of an overly-hot market with the softest of soft landings. Prices will continue to climb in these conditions, though at rates closer to overall inflation. This is still a pretty high rate because inflation appears to be out of control right now.

    If it does come to pass, it is conceivable that there is a race to exit the market by the financially-weakest landlords and those with the least appetite for risk. In these circumstances we would see a growing inventory of homes to rent, followed by a growing inventory of those same homes for sale.

    ©2022 Cromford Associat

    April 19 - As if responding to yesterday's observation, today we have over 1,000 Coming Soon listings for the first time. Supply is beginning to grow at last and nowhere more than in the single-family detached rental market. Over the past 4 weeks we have seen a 34% increase in the number of new rental listings added to ARMLS compared with the same 4 weeks in 2021.

    There has also been a 20% increase in the number of rental homes available in Phoenix on the Progress Residential web site over the past 4 weeks.

    Renters of single-family detached homes are seeing far more choice than they did last year and we are starting to see homes advertised with "the first month's rent is free". Rental supply is particularly strong in Gilbert.

    This appears to be a significant turnaround in the rental market and it does not seem to have been recognized by the media outlets, who are mostly still referring to rising rents. That is so 2021.

    ©2022 Cromford Associat

    April 18 - The Easter weekend usually sees a slight lull in new listings and we are experiencing the usual short-term effect in 2022. One number that is still increasing is the number of listings "coming soon". The average count this week is 919, up from 805 this time last year. We hit a low of 441 in the third week of December, but have witnessed strong growth since then.

    As supply slowly starts to recover, we anticipate we will see "coming soon" counts increase until the market softens enough to make "coming soon" a less popular option with agents. We are some considerable way from that point at the moment as the increase in supply is still very moderate.

    ©2022 Cromford Associat

    April 14 - Here is our latest table of Cromford® Market Index values for the single-family markets in the 17 largest cities

    homes in chandler

    Over the last month, 2 of the 17 cities have improved for sellers while 15 have deteriorated. The market strongly favors sellers, but the trend is now moving slowly towards a more balanced market. The average change in the CMI over the past month is -9.5% whereas it was -6.4% last week. The cooling of the market continues to accelerate, but it will take several months before reaching normal at the current rate of change.

    ©2022 Cromford Associat

    April 13 - Looking at how the rental inventory has changed over the past year, we see that:

    • single-family detached actives have increased by 99%
    • apartment actives have increased by 69%
    • townhouse actives have increased by 15%

    It is clear that single-family rentals are in much greater supply in 2022 and now comprise 71% of rental listings. At the same point in 2021 they were only 51% of rental listings.

    This goes some way to explaining part of the drop in average rents between 2021 and 2022. The average asking price for a single-family detached rental is currently $1.61 per sq. ft. per month. It was $1,97 this time last year having peaked at $2.09 at the end of March 2021.

    For apartments the current average asking price is $2.16 per sq. ft. per month' having been $2.04 this time last year.

    For all types of condos (townhomes and apartments), the average asking price is currently $2.02 per sq. ft. per month. It was $1.90 this time last year.

    So the drop in rental prices is NOT happening to townhomes, in fact they have been increasing. They also remain in short supply. Apartment rents have also increased but supply is much better than a year ago.

    The big changes are in single-family rentals where supply has doubled over twelve months and the average rent asked has declined by 18%.

    There has always been a price differential - single-family homes are cheaper to rent than attached homes, when allowing for the size of the living space. However the difference is greater now than we have seen for a very long time. The relative cheapness of single-family detached rents should make them more attractive to tenants as long as they need the extra space. This could compensate for the increased supply. However I would say it is obvious that the weakest part of the whole housing market is now single-family detached rentals and investors building out whole subdivisions of these properties, or buying them in large numbers, should bear in mind that the number of prospective tenants is by no means infinite. If you keep adding to your inventory without limit, you will eventually run short of tenants.

    The ARMLS rental numbers are not based on the whole market, but they are a reasonably representative sample. They are flashing a warning signal for single-family rentals.

    ©2022 Cromford Associat

    April 11 - Supply is starting to creep up again. Scottsdale has more than 400 active single-family listings (not counting UCB or CCBS) for the first time this year.

    Buckeye is over 180 for the first time since January

    Chandler is over 160 for the first time January.

    The change is still gradual but the trend is slowly building.

    ©2022 Cromford Associat

    April 10 - March had 23 working days, whereas February only had 19. This means the sale count needed to increase by 21.1% just to stand still. In Maricopa County, closed homes grew by 25.4% so they did better than standing still. However this does not compare favorably with the 28.8% growth we saw between February and March 2021.

    The main geographic area that under-performed was the Central and North Valley which only gave us 20% growth. The Northeast grew 25.9% while the West grew 27.4% and the Southeast grew 28.1%.

    The only area to see sales grow year over year was the West Valley which was up 0.7%

    The Northeast Valley under-performed compared to March 2021 with sales down 20.2%.

    The change in the mix in favor of the west and against the northeast led to a significant decline in the average home size compared to a year ago. It also lowered the average and median price measurements, but they were up so dramatically anyway that almost nobody could notice this effect.

    ©2022 Cromford Associat

    April 9 - The luxury market has been on a frantic run in the last 12 months with remarkable increases in price during that period. For example:

    • The annual average $/SF has increased from $472 to $631 in Paradise Valley - a rise of 34%
    • The annual average $/SF has increased from $459 to $600 in Arcadia - a rise of 31%
    • The annual average $/SF has increased from $361 to $461 in the Biltmore District - a rise of 28%
    • The annual average $/SF has increased from $348 to $452 in North Scottsdale - a rise of 30%

    There still appears to be a great of momentum in the same direction and we expect these annual averages to continue to rise throughout 2022. We say this because the 3-month average $/SF is already much higher than the annual average, at $713 in Paradise Valley, $651 in Arcadia, $504 in the Biltmore District and $506 in North Scottsdale.

    ©2022 Cromford Associat

    April 7 - Here is our latest table of Cromford® Market Index values for the single-family markets in the 17 largest cities

    homes for sale in chandler

    Over the last month, 3 of the 17 cities have improved for sellers while 14 have deteriorated. Although we still have a market that strongly favors sellers, the trend is now towards a more balanced market. The average change in the CMI over the past month is -6.4% whereas it was -3.2% last week. The cooling of the market has accelerated, but it remains extremely hot compared to normal.

    Cave Creek moved lower the most, followed by Fountain Hills, Surprise and Buckeye. Maricopa and Tempe were the only two cities that moved significantly higher.

    ©2022 Cromford Associat

    April 6 - New rental listings are arriving thick and fast now. The count over the past 4 weeks is 31% higher than at this time last year. However they are getting leases signed pretty quickly and the number of active listings is only 0.6% higher than this time last month. What should be more concerning for landlords is:

    • active listings are up 44% from this time last year
    • the average lease price per sq. ft. being asked has dropped from $1.80 to $1.69 over the last month, a fall of 6%
    • the average lease price per sq. ft. being asked was $1.99 this time last year, so it has fallen 15% in 12 months

    These are starting to look like significant changes of direction. The supply of rentals had been falling until August 2021 and the asking rent had been rising for many years until it peaked at $2.03 just over a year ago.

    ©2022 Cromford Associat

    April 5 - The affidavit of value data from Maricopa County has been compiled for March (though not fully validated) and shows us this:

    • There were 11,382 closed sales recorded during March 2022, down 5% from March 2021
    • There were 1,558 new homes closed, down 11% compared to March 2021
    • There were 9,824 re-sale closings, down 4% from March 2021
    • The median sales price was $470,000, up 29% from $365,000 in March 2021
    • The new home median sales price was $497,027, up 27% from $391,640 in March 2021
    • The re-sale median home price was $465,000, up 29% from $360,000 in March 2021

    Supply chain issues are still preventing homebuilders from closing as many homes as they wish and work-in-progress remains very high. New home prices are still rising more slowly than re-sale prices, but the gap has narrowed considerably over the last six months. The new home median has jumped over 20% in the last half-year, while the re-sale median is up "only" 12%.

    The above numbers include single-family and condo/townhouse properties. Many affidavits were missing because Zillow is still claiming an invalid B7 exemption from filing affidavits for homes sold in bulk to investors. Exemption B7 would only apply if the investors were subsidiaries of Zillow and the homes were sold for no or negligible consideration. Opendoor is also lowering the quality of affidavit data by recording many of its sales as cash transactions when they were manifestly financed. The quality of title work done for these 2 iBuyers sometimes leaves a lot to be desired. This limits the accuracy we can achieve in compiling sales statistics, especially regarding sales prices and finance types. We try to get this data corrected, but it takes extra time and means the initial readings are less accurate than we would like.

    ©2022 Cromford Associat

    April 4 - The homes sold through ARMLS in March had an average price of $517,774. The equivalent figure for February was $507,518 while that for March 2021 was $413,957 and for March 2020 was $353,017.

    This means if you owned an average home in the ARMLS area, it gained more than $10,000 in asset value during a single month. When people ask why it is better to own than rent, here is one data point they might consider. And it is not just a single month that pops out. The gain over the last year was $103,817. The average home made more money than the average working family. On top of that, gains in home value are not taxable if it is your sole residence and the gain is less than $500,000 for married taxpayers filing jointly ($250,000 for individuals). The average working family pays a significant amount of income tax, social security and Medicare from their gross income. Investors pay tax on their capital gains, but they also get to deduct 100% of any mortgage interest as well as theoretical annual depreciation (don't laugh).

    Because investors can end up with their assets depreciated to very low levels, even zero, they are usually highly incented NOT to sell their assets. If they did they would have to pay capital gains tax on the entire depreciation as well as the real increase in value. It also explains why 1031 exchanges are so popular with investors. It allows them to sell without paying capital gains tax, but they stay invested in the market.

    Those people who pulled out of a home purchase at the start of the COVID-19 epidemic must be kicking themselves. The average home has increased in value by $164,757 since March 2020, which is an increase of 47%. I did warn buyers in the daily observation of March 18, 2020 that if they pulled out of their purchase they would probably be making a poor decision. In the event it was much worse than that - it was a terrible decision.

    The last 2 years have been atypical for the housing market and we do not expect the next 2 years to deliver the same appreciation. Vastly higher prices combine with a sharp rise in mortgage interest rates to make it impossible for an increasing number of people to qualify for the loan they would need. There is plenty of latent demand for homes, but it does not translate into actual demand if the buyers cannot qualify. We are left with demand from cash buyers, the most significant of these being investors. The general mood among cash investors in residential real estate can be realistically described as euphoric. That is troubling in itself.

    One wonders how euphoric they will feel when their rents start to decline. The ARMLS database suggests rents are already on a declining trend. The average lease list price per sq. ft. was $1.69 yesterday. It was $1.98 this time last year.

    The first natural response from investors will therefore be denial. I would suggest that extreme caution would be a wiser reaction.

    ©2022 Cromford Associat

    April 3 - Although supply remains very low by normal standards, demand has weakened enough to allow inventory to start trending upwards. This has been really noticeable only for the last 3 days and the number of active listings in Greater Phoenix (excluding UCB and CCBS) is 13.4% higher than this time last year. This is the highest year over year increase in supply we have seen for several years.

    We have been focusing on supply for the slightest indication of a break in the market's fever, and this is the most significant sign we have found. As yet it is a minor change that will be barely perceptible in the real world. But the mathematics suggest we are entering a proper cooling phase and I would be surprised if this does not become more significant as the second quarter progresses.

    The trend is most noticeable at the affordable end of the market, where buyers are heavily dependent on interest rates. Below 3,000 sq. ft. inventory is up almost 22% from a year ago. Above 3,000 sq. ft. inventory is down 11% from last year. Above 5,000 sq. ft. inventory is down 43% from last year at this time.

    It is important to stress that we are NOT seeing more incoming new listings; in fact they are currently arriving slower than last year. But active listings are going under contract at a decreasing pace, which means we get more choice for any buyers looking for a home, at least for homes under 3,000 sq. ft..

    This is not the end of bidding wars, but it might be the start of a long drawn-out peace process.

    I recommend Tableau chart AL04 if you would like to examine this phenomenon in detail.

    ©2022 Cromford Associat

    April 2 - As statisticians, we rarely focus on individual houses, but prefer a large sample size so we can be confident our deductions are sound. However, our wise friend Tom Ruff brought our attention to one particular one-story single-family home in Desert Ridge (Phoenix 85050) with a very interesting history.

    Originally built in 1998 by Shea Homes and sold that year for $189,468, it has had 10 owners since that date, its most recent sale being for $707,500 in 2021.

    The most interesting sales were the last 4:

    1. Purchased by Zillow in 2019 for $512,500
    2. Purchased by a new homeowner in 2020 for $453,000
    3. Purchased by Opendoor just 7 months later for $778,400
    4. Purchased by another new homeowner in 2021 for $707,500

    So the first homeowner managed to make a gross profit of $325,400 after owning the home for just 7 months. That's quite some flip.

    In contrast, Zillow managed to lose $59500 (12%) on a home they owned for 10 months, while Opendoor managed to lose $70,900 (9%) on a home they owned for 4 months.

    I will leave you to draw you own conclusions about this story. If you want to check out the history in more detail, search for parcel 212-32-158 in Monsoon®.

    ©2022 Cromford Associat

    April 1 - There are a number of different techniques for measuring how hot the market is right now. All of them report that it is pretty toasty.

    One of our favorites is the average percentage of the sales price compared with final list price. Here is a ranking of many the cities and towns within Maricopa and Pinal according to that measure at the end of the first quarter. The numbers are for single-family detached homes only:

    City % List 2 yrs ago
    Cave Creek 103.52 98.42
    Chandler 103.32 99.30
    El Mirage 102.59 99.72
    Gilbert 102.58 99.34
    Anthem 102.55 98.73
    Avondale 102.55 99.91
    Scottsdale 101.91 96.96
    Phoenix 101.80 98.40
    Fountain Hills 101.79 96.41
    Peoria 101.77 99.06
    Glendale 101.72 99.12
    Mesa 101.71 99.14
    Goodyear 101.61 98.73
    Surprise 101.58 99.00
    Buckeye 101.50 99.23
    Apache Junction 101.44 98.81
    Laveen 101.35 99.86
    Tempe 101.34 98.84
    Sun City West 101.19 98.63
    Queen Creek 101.13 98.90
    Tolleson 101.05 99.62
    Litchfield Park 100.96 98.84
    Arizona City 100.74 98.32
    Sun City 100.58 98.64
    Casa Grande 100.36 98.76
    Sun Lakes 100.35 98.28
    Maricopa 100.27 99.32
    Gold Canyon 98.83 98.24
    Paradise Valley 97.72 94.79

    Cave Creek and Chandler are stand-outs by this measure at the moment. Scottsdale and Fountain Hills are much higher in this table than we normally see, as evidenced by the numbers from 2 years ago, as the COVID-19 pandemic started to dominate proceedings. Only Gold Canyon and Paradise Valley are still seeing their average homes sell for less than list price.

    ©2022 Cromford Associat

    March 31 - Here is our latest table of Cromford® Market Index values for the single-family markets in the 17 largest cities

    chandler homes
  • Over the last month, 5 of the 17 cities have improved for sellers while 12 have deteriorated for sellers. This is a worse picture for sellers than last week, and the average change in the CMI over the past month is -3.2% whereas it was -1.4% last week. The cooling of the market has started to increase, but it remains extremely hot compared to normal.

    Surprise was again the weakest city, down 14% while Tempe was again the strongest, up 10%.

    The maximum declined 9% from 668.1 to 607.6 while the minimum also declined from 265.4 to 263.3

    Despite the cooling, these are all very high CMI readings and they suggest that pricing will continue to move higher over the next several months.

    ©2022 Cromford Associat

    March 30 - The Cromford® Public charts covering single-family and multi-family permits have been updated to include February unit counts.

    The multi-family unit count for February was a relatively modest 1,039 for Maricopa and Pinal counties. This is the lowest count since August, but these monthly counts are pretty volatile and it would be foolish to draw too much of a conclusion from a single month of data. The annual rate of 16,187 remains very high - the third highest we have recorded, exceeded only by December 2021 and January 2022.

    Multi-family permits are some 60% higher than the long-term typical count of 10,000 per year.

    Single-family permits for Maricopa and Pinal counties totaled 3,155 in February. This is the highest total since April 2022. However, it is not higher than the long-term typical rate since 1996. We saw a collapse in permit counts in 2008 which recovered very slowly. The lull lasted until 2020. But typical monthly rates between 1996 and 2007 were around 3,000 and they have resumed at that level since 2020.

    The overall picture is that multi-family permits are well above normal while single-family permits are at a normal level..

    ©2022 Cromford Associat

    March 29 - The latest S&P / Case-Shiller® Home Price Index® numbers were published on February 29.

    The new report covers home sales during the period November 2021 to January 2022.

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

    1. San Diego +2.50%
    2. San Francisco +2.35%
    3. Tampa +2.33%
    4. Seattle +2.02%
    5. Dallas +1.89%
    6. Miami +1.83%
    7. Las Vegas +1.70%
    8. Phoenix +1.69%
    9. Denver +1.61%
    10. Los Angeles +1.59%
    11. Atlanta +1.47%
    12. Charlotte +1.26%
    13. Washington +1.11%
    14. Portland +0.91%
    15. New York +0.86%
    16. Detroit +0.71%
    17. Boston +0.66%
    18. Chicago +0.64%
    19. Minneapolis +0.50%
    20. Cleveland +0.33%

    Phoenix has dropped 2 places to eighth place but remains above the national average, which was 1.41%. No city declined month to month. Given that the market data does not include any of the Spring selling season, these are particularly strong numbers, particularly for the West and South of the country

    Comparing year of year, we see the following changes:

    1. Phoenix +32.6%
    2. Tampa +30.8%
    3. Miami +28.1%
    4. Dallas +27.3%
    5. San Diego +27.1%
    6. Las Vegas +26.2%
    7. Seattle +24.7%
    8. Charlotte +24.4%
    9. Atlanta +22.5%
    10. San Francisco +20.9%
    11. Denver +20.8%
    12. Los Angeles +19.9%
    13. Portland +17.7%
    14. Detroit +14.0%
    15. New York +13.5%
    16. Cleveland +13.3%
    17. Boston +13.3%
    18. Chicago +12.5%
    19. Minneapolis +11.8%
    20. Washington +11.2%

    Phoenix is top of the year-over-year table for the 32nd consecutive month.

    The national average was 19.2%, up from 18.8% last month.

    ©2022 Cromford Associat

    March 24 - Here is our latest table of Cromford® Market Index values for the single-family markets in the 17 largest cities

    East Valley Homes

    Over the last month, 8 of the 17 cities have improved for sellers while 9 have deteriorated for sellers. This is the same split as last week, but the average change in the CMI over the past month is -1.4% whereas it was +0.3% last week. Last week we said we expected today's table to show a negative percentage and we were not wrong.

    The market is continuing to cool, though at a glacial pace which would take many years to reach balance.

    Surprise was the weakest city, down 11% while Tempe was the strongest, up 12%.

    This table confirms that pricing will continue to move higher over the next several months.

    ©2022 Cromford Associat

    March 21 - Despite watching it for over 20 years, it still amazes me that the annual average $/SF chart is so steady and predictable. It is almost as if the market is following pure mathematical principles rather than being controlled by human decisions. Clearly each human decision to buy or sell at a given price is different, yet when we take an average over a large enough sample, each individual decision fades into almost complete irrelevance

    Looking at the weekly chart for example:

    ©2022 Cromford Associat

Chandler homes

The lines look so well defined and predictable, that we can easily estimate how much the average $/SF will increase over coming months. $300 a square foot is clearly in view.

The monthly average is nowhere near so well behaved.

©2022 Cromford Associat

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

Chandler homes

Over the last month, 8 of the 17 cities have improved for sellers while 9 have deteriorated for sellers. The average change in the CMI over the past month is 0.3%, down from 2.0% last week. We can expect next week's table to show a negative percentage.

Although this indicates the market is gradually cooling, it remains extremely hot and the cooling trend is about as weak as it can be without becoming no trend at all. At this pace of change it would take several years for the market to reach normality.

The top performing cities in the last month are Peoria, Tempe, Mesa and Paradise Valley, while the weakest are Goodyear, Avondale and Surprise.

We need to remind ourselves that CMIs over 110 indicate a seller's market where prices will rise faster than general inflation. Between 90 and 110, prices tend to rise in line with inflation. Below 90 home prices tend to fall or at least rise slower than inflation (which has become a significant number over the last year).

Home prices do not fall without a good reason. Few home owners want less than top price for their home. The weakest hands are always homeowners who wish they did not own the homes. In normal markets, these are banks and other lenders. However these organizations have an extremely low inventory of homes, so they are close to irrelevant at the moment.

The idea that home prices will automatically "correct" is a silly one. The housing market is not like a stock market, where the balance between supply and demand can flip several times a day. The housing market moves extremely slowly. The last time the CMI was below 110 was in January 2015 and the last it time it was below 90 was in November 2010. So the last buyer's market was more than 11 years ago. This is normal for the housing market and it is quite possible that the next buyer's market could still be many years away.

To create a situation which will force prices down, we first have to see more sellers than buyers. This is what a CMI below below 100 means. With the lowest CMI in the table above at 270.5, this is not likely for a very long time. If some of these were to drop below 150, then we might be a few quarters away from prices stabilizing. At the moment this is at least 12 months away, even in the most negative scenario we can imagine.

Sun City stands at 235.6 and is the lowest CMI we have at the moment. However the market there is looking pretty stable. With a median sales price of $350,000 it is also one of the most affordable location in central Arizona

©2022 Cromford Associat

March 21 - Despite watching it for over 20 years, it still amazes me that the annual average $/SF chart is so steady and predictable. It is almost as if the market is following pure mathematical principles rather than being controlled by human decisions. Clearly each human decision to buy or sell at a given price is different, yet when we take an average over a large enough sample, each individual decision fades into almost complete irrelevance.

  • Looking at the weekly chart for example:

    March 15 - During February, Maricopa County recorded 13% fewer homes purchased by owner-occupiers than in February 2021. However this was balanced by a 24% increase in homes purchased by landlords to become rentals and a 20% increase in second homes or for flipping (including iBuyer purchases).

    Since owner-occupied homes are still by far the largest segment, overall sales volume dropped 3% compared with February 2021.

    Sales were up 6% in the West Valley, the only area to show an increase year over year. The Northeast Valley fell sharply - down 22% from a year ago, while The Southeast Valley was down 4% and Central Valley down 1% All these numbers are for single-family and condo/townhomes combined.

    ©2022 Cromford Associat

    March 13 - We have just updated the city ranking table showing the annual average $/SF for 40 cities in Central Arizona.

    The order of the cities does not change dramatically from year to year, with Paradise Valley consistently at the top and Coolidge at the bottom. However Paradise Valley is now well over $600 having been well under $500 just 12 months ago. Coolidge has topped $150, having been less than $110 a year ago.

    The fastest appreciation over the last year has been seen in the outlying areas, such as Tonopah, Coolidge, Maricopa, Queen Creek, Arizona City and Anthem. All of these are up more than 35%. The lowest appreciation rates can be observed in Sun Lakes, Tempe and Sun City West, all below 26%, but only just.

    ©2022 Cromford Associat

  • March 12 - Despite so many observers claiming that the housing market is heading for imminent trouble, the rate at which prices are still rising is astonishing, even to seasoned old

    analysts like us.

    The average price per sq. ft. for listings under contract just exceeded $300 for the first time. It was half that just 5 years ago.

    It has risen $40 in the last 6 months - a 15% increase.

    The average price per square foot for listings under contract is a leading indicator. For sales prices to stabilize, the prices for listings under contract have to stabilize first. There is a 1 to 2 month delay between the 2 measures.

    There is currently no sign of price rises halting, never mind reversing.

    ©2022 Cromford Associat

    March 10 - Here is our latest table of Cromford® Market Index values for the single-family markets in the 17 largest cities

    Over the last month, 11 of the 17 cities have improved for sellers. The average change in the CMI over the past month is 2.0%, down from 3.7% last week.

    6 cities have moved in favor of buyers. Fountain Hills and Maricopa have joined that list. but Tempe has left it.

    Mesa and Peoria saw the strongest moves in favor of sellers while Avondale and Goodyear had the strongest moves in favor of buyers.

    The market is still heavily favoring sellers, with the lowest CMI in the table at 265.3. The trend is for demand to fade very slowly while supply is stable and remains extremely low. The rate of change is currently very slow.

    ©2022 Cromford Associat

    March 9 - We have taken a look at total dollar volume for January 2022 and compared it with January 2021, using chart DV13 from Cromford® Public.

    • Dollar volume was up 19% from $4,089M to $4,852M - all thanks to higher prices, since unit volume was almost the same
    • New home dollar volume was up only 3% from $711M to $732M due to lower unit volume
    • Normal MLS dollar volume was up only 7% from $2.668M to $2,854M
    • Normal non-MLS dollar volume was up 40% from $431M to $603M
    • Investor flip dollar volume was up 154% from $250M to $635M
    • Distressed sale dollar volume was flat at $28M

    iBuyers tend to have a normal non-MLS purchase followed by an investor flip, so the rise in these numbers is partially due to the ramp up in transactions from iBuyers.

    There is also clear evidence that more transactions are happening without hitting the MLS. This reflects high levels of investor activity.

    ©2022 Cromford Associat

    March 5 - Although the re-sale and new homes markets continue to show very little sign of weakness, the same cannot be said of the rental market.

    The vast majority of rentals do not hit the MLS, so we have to be careful because of the poor sample size. However the ARMLS rentals database shows us that the market is nowhere near as favorable to landlords as it was this time last year. Here is why we say that:

    • Available supply is up from 1,543 to 2,138 units, a rise of 39%, meaning tenants are getting more choice
    • New rental listings are up 20% year to date compared with 2021, so supply is arriving faster
    • New rental listings are up 26% over the past 4 weeks, compared with 2021, telling us that the increased supply trend is strengthening
    • The average lease list price per sq. ft. is $1.80, down from $1.93 this time last year
    • The average lease list price per sq. ft. peaked at $2.01 on May 22, 2021, fell back then peaked again at $2.00 on Jul 29 before falling again - it is unable to convincingly break the $2 resistance level and has made no attempt to do so in the last 7 months

    These conditions suggest that the era of quickly rising rents in Greater Phoenix may be coming to an end. A large amount of new rental supply is coming on board this year, judging by the number of multi-family permits issued in the last 2 years. Rent looks likely to stay fairly flat, which will change the buy versus rent equation as home prices and mortgage rates continue to increase. In the longer term, this could seriously dampen demand for homes to buy.

    Interestingly, the supply of active listings varies a lot by dwelling type.

    • apartments to rent are down 33%
    • townhouses to rent are up just 1%
    • single-family detached homes to rent are up 99% - there are 1,546 versus only 777 this time last year.

    We are seeing single-family subdivisions under construction intended to be 100% rentals. There are many examples, and not just here in Arizona, but a typical one is Malone Place Parke (MCR 1561-18) in Queen Creek. American Homes 4 Rent has created their own homebuilding subsidiaries. There are 97 single-family homes going up here which will not have affidavits of value since they will be eligible to claim a genuine B7 affidavit exemption. The opportunity to grumble again about Zillow's misuse of the B7 is hereby declined. The investors in these projects should keep in mind that demand is not infinite.

    The most likely source of more supply of single-family homes to buy is if landlords tire of owning them. This could be because they have trouble finding tenants for them or they facing declining rental incomes. A house that has no rent coming in becomes a serious problem for its owner who remains liable for the property taxes, maintenance, HOA dues, etc.. Landlords will then compete with each other for tenants and rents will start to drop. Some landlords will drop out and sell their investments.

    This is likely to be a slow moving trend in the market but it should be easy to detect, as long as you are watching the correct numbers. US birth rates are very low by historic standards and with the baby boomers reaching advanced ages, we can expect natural growth in the population to be small, or even negative. Population growth will be entirely dependent on incoming transfers from other states or foreign countries. Ivy Zelman has been bearish on the housing market for a couple of years, primarily because of these demographic trends. She has been completely wrong about the market so far, but she is right that the demographics are fundamentally unfavorable for housing in the longer term. In Arizona we are atypical in that so many people have been moving here. This hides the weak natural growth in population (births minus deaths) and has driven our prices up faster than almost any other part of the USA. This will not last forever.

    In Arizona, we have a history of building more and more homes until there is a very obvious reason to stop. There will come a time, and nobody knows exactly when it will be, when we have built enough shelter for the population and demand sinks below supply. I seems likely that we will see that in rentals before we see it in homes for purchase.

    ©2022 Cromford Associat

    March 4 - The data from Maricopa County affidavits of value is now available for February, although bulk sales by Zillow are almost completely excluded because of their decision to claim an inappropriate exemption from filing affidavits. So far there does not seem to be any government (county assessor or recorder) effort to challenge that spurious claim. This means our records are much less complete than normal, so this should be borne in mind when reading further.

    • There were 9,073 closed units during February, down 3% from February 2021
    • New build closings numbered 1,269, down 14% from February 2021 - the new home market is closing fewer units than 2020 or 2021, but dollar volume is higher
    • Re-sale closings were 7,804, down 1% from February 2021 - it would have shown growth if Zillow bulk sales had been possible to include
    • The overall median sales price was $455,000, up 27% from $359,100 in February 2021 - it is up 5% in 2 months.
    • The new home median was $477,741 - up 26% over the past 12 months and up 7% in the last 2 months
    • The re-sale median was $450,000, up 28% over February 2021

    The new home unit counts are disappointing those who would like to see more supply, but there continue to be a lot of home construction that is held up because of material shortages or limited access to skilled labor. There is also a shift in favor of Pinal County which is not included in these number because data from Pinal comes to us more slowly than Maricopa.

    Increases in new home prices were lagging behind re-sales for much of 2021 but have been catching up in 2022.

    All the figures above relate to single-family and townhouse/condo properties combined.

    ©2022 Cromford Associat

    March 3 - Here is our latest table of Cromford® Market Index values for the single-family markets in the 17 largest cities

chandler homes
  • chandler homes

    Over the last month, 12 of the 17 cities have improved for sellers. The average change in the CMI over the past month is 3.7%, down from 6.0% last week.

    5 cities have moved in favor of buyers. Fountain Hills and Glendale are no longer in that list, but Surprise and Tempe have replaced them.

    The market remains heavily biased in favor of sellers, since the lowest CMI in the table is 264.6 and a balanced market is represented by 100. The current trend is for strong demand to slacken very slowly while supply is stable and extremely low. The rate of change is currently quite slow, but is not guaranteed to stay that way.

    It is the season for prices to make their biggest moves, and these moves continue to be very big and in an upward direction. The average sales price per square foot is now 1% above the average asking price per square foot, having been slightly lower prior to February 11.

    Although the numbers say the market is cooling, the rate of cooling is so slow that it will be almost undetectable in the real world. Buyers are likely to find a very competitive environment persists throughout the spring and in all market segments. The chances that prices will go into reverse in 2022 are currently close to zero.

    ©2022 Cromford Associat

    March 1 - If rising house prices scare you, then the best place not to look is the average price for active listings. Unless you are made of stern stuff, you should look away now.

    Reviewing the average price for single-family detached homes by ZIP code we see some eye-watering numbers. Here are some examples with UCB and CCBS listings excluded:

    ZIP Code March 2022 March 2019
    85253 $7,224,589 $3,333,710
    85255 $5,819,134 $1,884,989
    85018 $4,530,272 $1,342,115
    85262 $3,076,635 $1,865,870
    85377 $2,821,154 $1,143,791
    85266 $2,408,090 $1,178,565
    85028 $2,268,556 $661,067
    85259 $2,168,659 $1,176,671
    85251 $2,160,629 $1,042,185
    85016 $1,946,604 $787,694
    85331 $1,855,313 $874,324
    85260 $1,794,223 $956,647
    85268 $1,666,914 $964,148
    85258 $1,478,700 $887,512
    85254 $1,390,033 $714,645
    85250 $1,322,500 $633,911
    85310 $1,297,390 $542,139
    85284 $1,261,980 $708,336
    85004 $1,187,500 $425,660
    85297 $1,180,505 $598,296
    85083 $1,179,967 $480,345
    85048 $1,139,210 $575,854
    85215 $1,082,213 $658,118
    85118 $1,071,983 $715,129
    85298 $1,070,874 $563,455
    85390 $1,051,068 $804,743
    85213 $1,039,666 $596,795
    85054 $1,025,000 $615,886

    We now have 28 ZIP codes with an average price of over $1 million for active listings, 20 more than 3 years ago.

    Some caveats are in order:

    • sample sizes are low - ZIP codes are often very small and the number of homes for sale may be minuscule right now
    • average prices are often much higher than median prices - the majority of homes sell for less than the average price, something many people do not realize

    Nevertheless, there are many ZIP codes in the above list where, if you are shopping for a home, you are looking at an average list price more than double what you would have seen 3 years ago. You are also looking at a tiny number of homes for sale compared with 3 years ago.

    ©2022 Cromford Associat

    February 27 - The monthly average sale price of closed listings across the ARMLS database has shown absolutely no sign of deceleration in 2022 so far. The latest reading for February 26 is $558,942. This is not shocking, given the absurdly lop-sided market balance, but impressive for several reasons:

    • It is an increase of $11,246 IN A SINGLE WEEK - a rise of more than 2% in 7 days
    • We burst through the $550,000 barrier just 18 weeks after bursting through the $500,000 barrier
    • The $450,000 barrier was exceeded exactly 1 year ago
    • The $400,000 barrier was exceeded in August 2020
    • The $350,000 barrier was exceeded way back in June 2007, just as everyone realized the bubble had already burst

    There are still many ill-informed observers predicting falling prices in the near term. They are very much mistaken. The fact that there are so many is in itself evidence that we are not in a bubble. When bubble conditions exist, there is almost universal jubilation and euphoria. Doubt only sets in after the peak has been reached and denial goes into overdrive.

    The skeptical reaction to predictions of further price rises is direct evidence that there is plenty of room left for Greater Phoenix home prices to increase. We have not got anything like the absurd over-confidence that characterized early 2005 and led us to call the bursting of the bubble in 2Q 2005. By 3Q 2005 all the key market indicators were headed south, but very few paid any attention. Those that did pay attention kept quiet about it and sold their real estate holdings while it was still easy to do so.

    Please pay attention to the same mathematical signals now. They will not mislead you like human opinions will.

    ©2022 Cromford Associat

    February 26 - The average price per square foot for active listings just hit $350 for the first time, measured across the entire ARMLS database. This includes listings in UCB and CCBS status.

    Two years ago, just before the COVID-19 pandemic really gripped the nation, the same measurement was $251. So the average $/SF for active listings has risen by 40% since then.

    Is there much sign of this upward trend stopping?

    Frankly, no - not for some time yet. Active listing counts remain stubbornly low and although demand is faltering a little, it remains far higher than can be satisfied by the paltry level of supply.

    ©2022 Cromford Associat

    February 25 - For those who like bad news, we can report the first significant rise in Pending Foreclosures since 2009.

    Across Maricopa County we have 737 foreclosures pending, which is up 51% from the low point of 488 in mid January.

    In fairness we should point out that the long term average is 10,786 between 2002 and 2021, so 737 is still extremely low. December 2009 still holds the record with 51,022.

    737 foreclosures are significant for the households affected, but does not amount to a hill of beans compared to the overall Phoenix market. However, we should keep one eye on these numbers to see if they are heading back to a normal level, which would be about 10 times where they currently lie.

    ©2022 Cromford Associat

    February 24 - Here is our latest table of Cromford® Market Index values for the single-family markets in the 17 largest cities


    chandler realtor

    Over the last month, 12 of the 17 cities have improved for sellers, mostly due to falling supply. The average change in the CMI over the past month is 6.0%, down from 9.1% last week.

    5 cities have moved in favor of buyers, though they all remain extremely unbalanced in favor of sellers.

    Demand is falling in most areas, but this is not leading to an increase in supply. The majority of commentators on the housing market tend to assume that the market weakens if interest rates rise, which they certainly have done over the past 2 months. However the housing market is not that simple. An immediate effect of rising rates is that existing homeowners are less inclined to move home. To do so they would have to pay off their cheap mortgage and take a new and more expensive one. They would also have to join the frantic battle that is inherent in trying to buy a re-sale home these days. No fun at all. Even buying a new homes is tricky, because of limited releases and lotteries. Many people choose, quite sensibly, to stay put. This makes supply go down and also makes demand go down. This reduces the amount of work for real estate agents, loan originators and escrow officers..

    Currently we have a battle between supply and demand to see which can go down fastest. In many areas, supply is winning that battle, which means prices are under even more upward pressure, not downward pressure. Only in Goodyear, Fountain Hills, Scottsdale, Avondale and Glendale have we seen the opposite. With all 17 cities showing CMIs above 250, there is no chance of prices weakening in the short to medium term. However volumes are likely to fall away as we move forward.

    None of these changes are yet dramatic, so we should not expect to see a big swing in the market in the near term. However we should always remain vigilant.

    ©2022 Cromford Associat

    February 27 - The monthly average sale price of closed listings across the ARMLS database has shown absolutely no sign of deceleration in 2022 so far. The latest reading for February 26 is $558,942. This is not shocking, given the absurdly lop-sided market balance, but impressive for several reasons:

    • It is an increase of $11,246 IN A SINGLE WEEK - a rise of more than 2% in 7 days
    • We burst through the $550,000 barrier just 18 weeks after bursting through the $500,000 barrier
    • The $450,000 barrier was exceeded exactly 1 year ago
    • The $400,000 barrier was exceeded in August 2020
    • The $350,000 barrier was exceeded way back in June 2007, just as everyone realized the bubble had already burst

    There are still many ill-informed observers predicting falling prices in the near term. They are very much mistaken. The fact that there are so many is in itself evidence that we are not in a bubble. When bubble conditions exist, there is almost universal jubilation and euphoria. Doubt only sets in after the peak has been reached and denial goes into overdrive.

    The skeptical reaction to predictions of further price rises is direct evidence that there is plenty of room left for Greater Phoenix home prices to increase. We have not got anything like the absurd over-confidence that characterized early 2005 and led us to call the bursting of the bubble in 2Q 2005. By 3Q 2005 all the key market indicators were headed south, but very few paid any attention. Those that did pay attention kept quiet about it and sold their real estate holdings while it was still easy to do so.

    Please pay attention to the same mathematical signals now. They will not mislead you like human opinions will.

    ©2022 Cromford Associat

    February 26 - The average price per square foot for active listings just hit $350 for the first time, measured across the entire ARMLS database. This includes listings in UCB and CCBS status.

    Two years ago, just before the COVID-19 pandemic really gripped the nation, the same measurement was $251. So the average $/SF for active listings has risen by 40% since then.

    Is there much sign of this upward trend stopping?

    Frankly, no - not for some time yet. Active listing counts remain stubbornly low and although demand is faltering a little, it remains far higher than can be satisfied by the paltry level of supply.

    ©2022 Cromford Associat

    February 25 - For tho558.942se who like bad news, we can report the first significant rise in Pending Foreclosures since 2009.

    Across Maricopa County we have 737 foreclosures pending, which is up 51% from the low point of 488 in mid January.

    In fairness we should point out that the long term average is 10,786 between 2002 and 2021, so 737 is still extremely low. December 2009 still holds the record with 51,022.

    737 foreclosures are significant for the households affected, but does not amount to a hill of beans compared to the overall Phoenix market. However, we should keep one eye on these numbers to see if they are heading back to a normal level, which would be about 10 times where they currently lie.

    ©2022 Cromford Associat

    February 24 - Here is our latest table of Cromford® Market Index values for the single-family markets in the 17 largest cities

    Over the last month, 12 of the 17 cities have improved for sellers, mostly due to falling supply. The average change in the CMI over the past month is 6.0%, down from 9.1% last week.

    5 cities have moved in favor of buyers, though they all remain extremely unbalanced in favor of sellers.

    Demand is falling in most areas, but this is not leading to an increase in supply. The majority of commentators on the housing market tend to assume that the market weakens if interest rates rise, which they certainly have done over the past 2 months. However the housing market is not that simple. An immediate effect of rising rates is that existing homeowners are less inclined to move home. To do so they would have to pay off their cheap mortgage and take a new and more expensive one. They would also have to join the frantic battle that is inherent in trying to buy a re-sale home these days. No fun at all. Even buying a new homes is tricky, because of limited releases and lotteries. Many people choose, quite sensibly, to stay put. This makes supply go down and also makes demand go down. This reduces the amount of work for real estate agents, loan originators and escrow officers..

    Currently we have a battle between supply and demand to see which can go down fastest. In many areas, supply is winning that battle, which means prices are under even more upward pressure, not downward pressure. Only in Goodyear, Fountain Hills, Scottsdale, Avondale and Glendale have we seen the opposite. With all 17 cities showing CMIs above 250, there is no chance of prices weakening in the short to medium term. However volumes are likely to fall away as we move forward.

    None of these changes are yet dramatic, so we should not expect to see a big swing in the market in the near term. However we should always remain vigilant.

    ©2022 Cromford Associat

    February  22- The latest S&P / Case-Shiller® Home Price Index® numbers were published on January 22.

    The new report covers home sales during the period October 2021 to December 2021.

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

    1. San Diego +1.82%
    2. Miami +1.79%
    3. Dallas +1.66%
    4. Tampa +1.57%
    5. Seattle +1.46%
    6. Phoenix +1.35%
    7. Charlotte +1.34%
    8. Atlanta +1.21%
    9. Denver +1.11%
    10. New York +1.11%
    11. Los Angeles +1.00%
    12. Las Vegas +0.97%
    13. Detroit +0.89%
    14. San Francisco +0.85%
    15. Portland +0.84%
    16. Boston +0.71%
    17. Cleveland +0.61%
    18. Chicago +0.58%
    19. Minneapolis +0.40%
    20. Washington +0.38%

    Phoenix has risen 2 places to sixth place and remains well above the national average, which was 0.92%. No city declined month to month.

    Comparing year of year, we see the following changes:

    1. Phoenix +32.5%
    2. Tampa +29.4%
    3. Miami +27.3%
    4. Dallas +26.0%
    5. San Diego +25.9%
    6. Las Vegas +25.5%
    7. Seattle +23.9%
    8. Charlotte +23.8%
    9. Atlanta +21.9%
    10. Denver +20.2%
    11. Los Angeles +19.3%
    12. San Francisco +18.8%
    13. Portland +17.9%
    14. Detroit +14.5%
    15. New York +13.7%
    16. Boston +13.4%
    17. Cleveland +13.3%
    18. Chicago +12.2%
    19. Minneapolis +11.4%
    20. Washington +10.5%

    Phoenix is top of the year-over-year table for the 31st consecutive month. This means that buying a home in Phoenix has become more expensive at a far higher rate than any of the other 19 cities.

    The national average was 18.8%

    ©2022 Cromford Associat

    February 19 - The weekly chart showing days of inventory (excluding UCB and CCBS) across all areas & types has just moved higher than 12 months ago. This is the first time we have seen a year over year increase since June 2019.

    Another small indicator that the market has reached a peak and may possibly start a cooling phase. This came after a relatively strong week for new listings at last.

    ©2022 Cromford Associat

    February 18 - Here is our latest table of Cromford® Market Index values for the single-family markets in the 17 largest cities

    chandler real estate

    Over the last month, 16 of the 17 cities have improved for sellers, mostly due to falling supply. The average change in the CMI over the past month is 9.1%, down from 12.1% last week.

    However the picture is not quite as positive for sellers as it looks at first sight. If we look at how the CMIs have moved over the past week, then there is far more evidence of a change of direction. The CMI is lower now than last week in Avondale, Goodyear, Maricopa, Scottsdale, Surprise and Tempe. Among the secondary cities we see lower CMIs in Apache Junction, Arizona City, Casa Grande, Gold Canyon, Sun City, Sun City West and Tolleson. So we have a more mixed picture moving forward.

    Supply continues to drop, so the new trend is not due to a growth in active listings, and buyers have as difficult a time getting an offer accepted as ever. However the demand signals are starting to fall, with closed listings counts a little unimpressive compared with what we regard as typical for the season. Optimists can argue that closings are limited by the lack of supply. While there is some truth to this, there was just as severe a supply shortage last year, but more homes were going under contract. Listings in pending status remain healthy, so the problem does not lie there. It is listings in UCB and CCBS status that are most underwhelming. In Phoenix for example we had 750 UCB and CCBS single-family listings on February 17, 2021 and we only have 558 on the same date this year. This is a decline of 26%. The average drop in UCB & CCBS listings across all areas & types in the ARMLS database is 22% for the same dates.

    While demand from investors, particular large scale buy to rent investors, remains strong, demand from owner occupiers is in a clear falling trend. No doubt, fewer people are able to afford the monthly payments when purchase prices continue to rise and interest rates are increasing. According to Freddie Mac, the average interest rate on a 25 year fixed rate loan rose from 2.96% in December to 3.45% in January. That is a 17% increase in just one month. Ouch.

    I assume that investors reckon that if people cannot afford to buy a home, then will become prospective tenants for them. However these large scale investors are going to be facing increased competition over the next few years. The number of multi-family building permits is at record highs (see the Cromford Public chart), and we are likely to see a large number of newly constructed rental apartments coming available. The number of people needing a home is not inexhaustible and eventually construction will re-balance with the needs for shelter.

    Because of the large amount of money being invested in the multi-family sector, our expectation is that the supply of multi-family units will eventually balance with demand much earlier than for single-family units. This means that the market for single-family homes, our primary focus, is likely to stay healthy for longer than the overall market. Single-family homes are being removed from circulation for many reasons, such as:

    1. more of them are being converted to use as long-term rentals
    2. more of them are being converted to holiday rentals (Airbnb, etc.)
    3. fewer sellers want to give up their cheap mortgage rates, which they would have to if they moved
    4. large numbers of baby boomers are aging in place and not excited about moving home at this stage in their lives

    These factors mean we are likely to see shortages of single-family homes to buy for a long time yet. However the demand for them will start to fade when rents stop rising. This will happen when developers have trouble filling all the apartments they have just built. The first sign will be when you see big signs next to the freeway about incentives for new tenants.

    ©2022 Cromford Associat

    February 17 - The number of single-family active listings (excluding UCB and CCBS) continues to fall. At the same time, the average price of these listings is reaching new heights.

    A few examples:

    • Phoenix has dropped below 600 listings. It was over 1,200 as recently as mid November. The average price of an active listing in Phoenix is over $900,000.
    • Scottsdale has dropped below 300 listings. There were about 400 this time last year. The average price of an active listing in Scottsdale is now over $3 million
    • Peoria has dropped below 100 listings. There were more than 200 as recently as mid November
    • ©2022 Cromford Associat©2022 Cromford Associat

    February 16 - We just published our monthly days inventory chart for all areas & types and note that it shows a new record low of 28 days.

    The lowest inventory recorded during the bubble of 2005 was 31 days, in March 2005. By March 2006 this had more than quadrupled to 128.

    I wonder what we shall see in March 2023.

    ©2022 Cromford Associat

    February 15 - It looks like a gentle cooling trend has developed over the last week:


    The Cromford® Market Index hit a peak of 474.7 last week and has since faded back to 470.8.

    This is not due to supply, since that is still falling, but due to a weakening of demand. Closed sales counts are lower than last year and not increasing as strongly as we would expect at this time of the year. This is enough to stop the market getting even hotter, but does not change the fact that we are still in an extreme seller's market. Demand would need to collapse to get back to balance with supply.

    New listing counts have been low over the past few weeks and there is still no sign of the supply situation improving. Dramatic increases in supply is what is needed to correct the imbalance in the market. If demand were to drop to the level that supply started to build again, this would take us towards balance. But this would likely occur at a slow pace that could take a very long time to reach anything close to normality.

    ©2022 Cromford Associat

    February 14 - It is unusually tough to be a home buyer in Youngtown. There are NO active listings available today. There are not even any Coming Soon.

    There are 13 listings in UCB status, if you fancy your chances with a backup offer. I wouldn't get too hopeful.

    There are another 17 listings in pending status, so we have none available and 30 under contract, which makes the contract ratio infinity and the inventory 0 days.

    Since the contract ratio cannot go higher than infinity and the inventory cannot go lower than zero, this is as bad as it gets for buyers.

    Now I know Youngtown is not a big town. There are just 2,364 parcels showing up on Monsoon and Wikipedia says it has a population of 7,056, but I have never seen it completely sold out before. This is not just sold out of single-family homes, this is sold out of all homes. The assessor says there are 1,946 single-family homes in Youngtown, and 140 condos.

    Youngtown was founded as a retirement community in 1954, the name of the town being intentionally ironic. The age ordnance was deemed unenforceable by the state attorney general and all age restrictions were lifted in 1999.

    ©2022 Cromford Associat

    February 13 - The average price for annual closed sales across all areas and types is a slow-moving and non-volatile measure, thanks to its large sample size. It takes a lot of change in the market to drive this number in any particular direction and the trends are long-lasting. It is therefore a number that can be relied upon, unaffected by short-term or even seasonal trends. You can see the long term picture is this chart.

    Today we measured a figure over $500,000 for the month of January, the first time it has broken through the half-million barrier for a calendar month.

    The same month last year, we measured under $400,000. The magnitude of the rise in prices over the last 2 years is staggering.

    During the bubble years, the maximum value attained was $339,029 and this was for the month of August 2007. What is important to realize is that the bubble started to deflate in April 2005. This was the month that the CMI changed direction. It crashed hard and fast, probably the fastest and most violent deflation of a housing market in history. Yet it took 2 years and 4 months before the annual average peaked. It started to drop in the 29th month following the first detected sign of the bursting of the bubble. The annual average rose another 41% during those 28 months. But 2007 was a desperately bad year for home sellers of any kind and 2008 saw prices collapse.

    The monthly average closed sales price, a much more volatile and unreliable indicator, still increased continuously between April 2005 and June 2006, giving us 15 months for optimists to cling to hope, but by June 2006 the disaster was inevitable. In fact it had been crystal clear from August 2005 onwards, as all the market indicators turned sour. But remember that severe price drops did not really take off until 2008, 3 years after the first signs of a problem. This is how the housing market works in extremis. It still changes direction very, very slowly like a giant oil tanker at sea.

    We are not in a bubble in 2022, but for the sake of illustration, just suppose we were and the CMI had started to turn down, as it has in fact this week. If we were to experience a crash as violent as 2005-2008 then it would still be roughly 30 months before the annual average hit its peak. That puts us in July of 2024. In this thought experiment, 2022 would still be a very good year for sellers, but 2024 would be very bad. Severe price collapses would not occur until 2025. I should emphasize that I am not expecting this scenario. The CMI moving down is not an indication of a crash, but it is a necessary pre-condition for one. The are dozens of other pre-conditions, and almost all of them have not occurred. If they started to fall like dominoes, then we would be sounding the alarm bells. We are not.

    We can safely conclude that anyone anticipating home prices falling in 2022 is kidding themselves. They have not understood how slowly the market changes direction, even at its maximum rate of change.

    ©2022 Cromford Associat

    February 12 - A problem I see all too much these days is that anyone can set themselves up online and pretend to be an expert on the real estate market. There is no peer-review process to confirm they know what they are talking about. In sites such as Facebook, Twitter, YouTube, etc. success it not judged by how accurate and rigorous their analysis is, but by how many views they can attract. This is what creates advertising revenue which is what the site's owners are really after.

    So you often see eye-popping headlines and wild claims, all primarily designed to attract eyeballs. Unfortunately, judging by the comments, a large percentage of the people viewing these "experts" are completely taken in by the false deductions. They seem to lack the reasoning skills to see through the logical sleight of hand and actually believe the silly stuff.

    I thank John Wake for bringing one such example to my attention -

    https://www.youtube.com/watch?v=rSOz8cI8yZ8

    This video claims that home builders are going crazy (worse than 2008). There are several fundamental flaws in the argument presented, which mean the conclusions drawn do not follow at all.

    The primary statistic quoted is that 1.5 million homes are currently under construction across America, as counted by the Census Bureau. This is the highest level ever in the US housing market. As with all silly arguments, there is always a grain of truth, and in this case the previous 2 statements are absolutely true.

    But here are a few important facts to bear in mind:

    • home construction is taking far longer than normal, because COVID means developers have been short of key materials and skilled labor is constrained
    • the census bureau is counting all housing units, and the under-construction growth is currently dominated by apartment blocks, not single-family homes
    • apartments can take longer to build because you often have to use steel frames and deep foundations, not wood framing
    • apartment blocks are mostly operated as rentals, the units are not often purchased individually
    • apartment blocks and single-family homes are largely unrelated markets, as far as pricing is concerned, so you should not co-mingle their statistics
    • the census bureau counts 4 regions of the US separately - Northeast, Midwest, South and West - they do not look similar to each other

    The YouTube video shows dozens of pictures of single-family homes and almost no pictures of apartment blocks, giving the viewer a very false impression.

    For the nation as whole, 50% of the housing units under construction are 1-unit structures, 1% are 2-4 unit structures and 49% are structures with 5 or more units. The number of units under construction in buildings with 5 or more units is 730,000. Now this IS a huge number, though it is not a record. 1972 and 1973 were higher. However it is very much larger than the 391,800 units being built in 2005. But in 2005, single-family units under construction numbered 929,100, far in excess of the single-family under construction in 2021.

    So if single-family homes are what you are primarily interested in, fewer of them are currently under construction than in 2005 - the opposite of what the YouTube video claims. In fact the 2021 number is less than 2003, 2004, 2005 and 2006. The long term average for single-family homes under-construction is 530 and the census-reported count was under this average for the whole of the period between 2008 and 2019. Yes 2021 is above average, but it still has only been over-average for 2 years after a period of 12 years of being under-average.

    If you do want to worry about single-family homes under-construction, then I recommend the South region is where you should be focused. In the South, single-family homes are 57% of the units and at 391,900 they are at the second highest on record after 2005. In the West region only 46% of its units under construction are single-family. Furthermore, the total of 188,000 units under construction is far less than 2003 through 2006. 2005 was the peak year with 250,200.

    Fundamentally, however, we are looking at the wrong numbers here. They are being used because the producer of the video has an agenda and these numbers appear at first sight to support that agenda. What is important is not how many homes are under construction, but how many are started and how many are completed. This eliminates all the distortion caused by the current delays in the building process.

    Homes completed contribute to supply. Normal home buyers do not purchase half-built homes and it is not legal to live in one. Fortunately, the census bureau counts home starts and completions too, so those who want to form a balanced and factual opinion about new home supply do not have to look at the the silly, misleading under-construction numbers. I wonder why the video producer did not look at home completions or home starts? Because they do not make for eye-catching headlines, that's why.

    Here is what the completed homes numbers tell us:

    • In the USA, 2021 saw 1,337,800 completed homes of all types. This is BELOW the long term average, which is 1,396,000
    • In the USA, 2021 saw 966,900 completed single-family homes. This is BELOW the long term average, which is 1,002,100
    • In the West region, 2021 saw 319,500 completed homes of all types. This is BELOW the long term average, which is 341,100
    • In the West region, 2021 saw 237,500 completed single-family homes. This is slightly BELOW the long term average, which is 238,300

    Housing units (of all types) completed in the West region in 2021 were:

    • less than in 2019 and 2020
    • less than in 1971-1974, 1976-1980, 1984-1990, 1994, and 1996-2007

    Single-family new home construction in Maricopa and Pinal counties has declined over the past 12 months, and permit counts are in a downward trend.

    Multi-family permits on the other hand are having a boom, which you can confirm for yourself with the census-derived charts in the Cromford® Public section of this web-site. If you want to develop a theory about over-building, then I recommend you focus on the multi-family sector which is growing faster than it ever has.

    I hope you know that the Cromford Report only gets subscribers because we report what is factual. We do not form opinions and then select the statistics to support them. We let the numbers tell us what is happening and our observations change when the numbers change.

    Right now, we still have a huge supply problem in the single-family housing market, for both existing and new homes. We are very unlikely to get a deluge of new single-family homes to solve that problem in the near term (i.e. next 2 years). Permits are going in the wrong direction for that to occur. But if they pop upwards again, we will let you know.

    ©2022 Cromford Associat

    February 11 - Here is our latest table of Cromford® Market Index values for the single-family markets in the 17 largest cities


    chandler homes for sale

    Fountain Hills is still losing a little ground and has been joined by Chandler as the only 2 cities that moved in favor of buyers in the last month. The other 15 all improved for sellers. The situation remains dire for buyers with even number 17 - Maricopa - scoring 268 on the CMI scale, which indicates a market hugely favoring sellers.

    The average change in the CMI over the past month is 12.1%, down from 15.4% last week.

    The momentum is dropping but there is still no confirmed signal showing a turn-round. Supply remains very tight and there are some spots where it is reaching record lows. One of these is Paradise Valley, with only 78 active listings without a contract. The long term average is 306.

    Among the secondary cities, Anthem is looking exceptional. Only 7 active listings without a contract. The long term average for Anthem is 196.

    ©2022 Cromford Associat

    February 10 - It is revealing how much the market has changed over the past 12 months. Purchasers of homes as primary residences are down 15% compared to January 2021, while homes to rent out are up 26% and second homes are up 25%. This data is for Maricopa only and is based on the intended use stated on Affidavits of Value filed during January 2022.

    ©2022 Cromford Associat

    February 9 - During the early part of the price explosion that has occurred over the past 2 years, the high end of the market lagged behind the low end and mid-range segments.

    Now the high end market is making up for lost time and prices have been surging over the past 6 months.

    As an example, the 3-month average price per square foot for single-family homes sold in Paradise Valley exceeded $700 for the first time in January, coming in at $707.64. The same measure 12 months ago was $515.75. This is an astonishing annual increase of 37%. During the 12 months that ended January 2021, the increase was "only" 17%.

    The most expensive parts of the valley are still hitting new record lows for supply, so we do not anticipate a halt in price increases in this segment for a long time. If there is a market slowdown, it is likely to be felt in the low-end first. However, when we say the low-end, we used to mean below $250,000. Now there is very little available below $250,000 and the low-end covers the range up to $500,000, while the mid-range has been redefined as $500,000 to $1 million.

    Yes a million dollar home is now considered mid-range.

    ©2022 Cromford Associat

    February 8 - So far in 2022 there have been 18% more rental listings added to the ARMLS database than in the same period of 2021. Supply remains low by absolute standards, but it is starting to improve. We had 2,146 rental listings active yesterday compared with 1,708 on the same day in 2021. The long term average is 4,657.

    The lowest number of active rentals we have ever seen was 1,283 on July 29, 2021, so supply has improved by 67% over the 6 months since then.

    This is the process we suggested might cool the market. With more rental supply, rents will stop rising so fast. This will gradually diminish demand for homes from investors wanting to rent out their properties long term. In turn this will ease the upward pressure on home prices. However, this is likely to happen over an extended period, not quickly.

    Short-term holiday rentals are not included in our numbers and these homes are another reason why home supply is chronically low in Greater Phoenix. Far more homes are used in this way than 20 years ago.

    ©2022 Cromford Associat

    February 6 - The total number of active listings without a contract is now higher than a year ago. This is the first time this has happened since June 2019.

    This is a tiny sign that a new cooling trend might be developing. Watch carefully to see if it is confirmed by other signals.

    ©2022 Cromford Associat

    February 5 - We have preliminary data for January in Maricopa County, based on affidavits of value. However a serious concern about the completeness of this data has arisen. Zillow has claimed an exemption from filing Affidavits of Value when it sells homes in bulk to investors such as Progress Residential. They are claiming Exemption under clause B7 in ARS 11-1134.

    Are they really doing intra-company transfers for no or nominal consideration. I very much doubt that is the case. This appears to be deceptive recording.

    Nobody i have spoken with thinks B7 applies in this case, since Zillow and Progress are separate and independent companies. Also it is hard to believe Zillow is selling these homes for nothing, or practically nothing. The claim of a B7 exemption is recorded by Selene Title of Florida. Despite the exemption claim seeming to have little to no validity, there appears to be no mechanism for enforcing ARS 11-1134 in a case like this. The result is we have no prices for any of this sales and we never will have, unless someone finds a way to force the title company to re-record with the data they withheld. We are not talking a handful of homes here. We are already well over 130 and it could run into the several hundred over the first quarter of 2022.

    It could get worse, since if Zillow is seen to get away with this action, it may encourage many more people to claim exemption from filing affidavits of value and the system we rely on for keeping track of prices in Arizona could start to get very shaky. A title company employee has informed me that title companies have no obligation to ensure that a claim of exemption is valid. If the State of Arizona does nothing to enforce its statutes, we could end up with very poor data compared with what we have had available over the past 20 years.

    Another negative effect is that the comps in the affected subdivisions are going to be based on the inflated prices paid by Zillow, not the lower ones paid by Progress. In the current market, this is likely to be a short-term problem that is quickly resolved by more prices being recorded over the coming months.

    I do not know the motivation of Zillow in doing this. Why do they want secrecy? It could possibly be to prevent the embarrassment of showing the large losses they are making on the homes they purchased for inflated values during 2021. It certainly takes ingenuity to make a gross loss on reselling homes in this market environment. Making a gross profit is just a matter of waiting a few months when home prices are appreciating at 26% to 28% per year. Making a net profit is something else entirely, of course.

    Anyway, for what they are worth here are the numbers for single-family detached and condo / townhouse properties during January in Maricopa County:

    • There were 8.080 closed sales, down 4% from January 2021
    • There were only 1,036 new home closings, down 16% from January 2021
    • Re-sales were down less than 2% at 7,044 - with the Zillow sales included, there would have been a small increase
    • The median sales price was $441,100, up 26% from $350,000 in January 2021
    • The median sales price for new homes was $459,948, a rise of 20% from 12 months ago
    • The median re-sale price was $439,000, up more than 28% from January 2021.
    • ©2022 Cromford Associat

    February 3 - Here is our latest table of Cromford® Market Index values for the single-family markets in the 17 largest cities

    Gilbert homes

    At first glance this is a similar picture to last week, with front-runner Fountain Hills losing ground but the other 16 moving in favor of sellers.

    However the average change in the CMI over the past month is 15.4%, down from 18.5% last week. The acceleration phase of this hot market is now over and it is starting to approach its maximum level. Indeed, some cities have even shown a slight decline in their CMI over the last few days. These are Chandler, Gilbert, Glendale and Goodyear

    What we are seeing in these 4 cities is a fall off in demand, probably caused by affordability concerns as prices continue to rocket higher. We should not be surprised - this is how markets are supposed to work. Higher prices weaken demand which in turn causes supply to recover. However the change we are seeing is very small and does not amount to a turnround. Not yet anyway.

    The high end of the market is largely unaffected by this new trend at the moment and continues to set new records for low supply.                  

    ©2022 Cromford Associat

  • January 29 - I hope you are ready for another big increase in home prices over the next few months. The first quarter of 2022 is shaping up to look very similar to the first quarter of 2021.

    In most big steps higher we see the average $/SF for active listings as the first to move. What are they doing?



    We expect the average $/SF for listings under contract to follow suit shortly and then the average $/SF for closed listings should rise about 6 to 8 weeks later.

    The second quarter is still too far away to make reliable forecasts, but the first quarter is pretty much known already based on the incoming data points

    ©2022 Cromford Associat

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




    All 17 cities stayed on the same page for just one week, with Fountain Hills unable to sustain a CMI over 700. All the other 16 cities improved in favor of sellers over the last month. The market is gaining in

    strength in those 16 cities with all but Chandler increasing their CMI by 10% or more, Outstanding improvement for sellers took place in Tempe, Avondale, Goodyear, Surprise, Paradise Valley, Phoenix, Queen Creek, Peoria and Scottsdale, all growing their CMI by 19% or more.

    The average change in the CMI over the last month is +18.6%, down just 0.1% from last week. So the momentum in favor of sellers is no longer accelerating, but growing at a steady rte.

  • ©2022 Cromford Associat
    January 25 - The latest S&P / Case-Shiller® Home Price Index® numbers were published on January 25.

    The new report covers home sales during the period September 2021 to November 2021.

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

    1. Tampa +2.07%
    2. Miami +1.99%
    3. Seattle +1.41%
    4. Charlotte +1.40%
    5. Atlanta +1.36%
    6. Los Angeles +1.22%
    7. Dallas +1.20%
    8. Phoenix +1.17%
    9. San Diego +1.05%
    10. New York +1.03%
    11. Las Vegas +0.93%
    12. Denver +0.83%
    13. Detroit +0.65%
    14. Cleveland +0.65%
    15. San Francisco +0.63%
    16. Washington +0.49%
    17. Chicago +0.49%
    18. Portland +0.46%
    19. Minneapolis +.029%
    20. Boston -0.01%

    Phoenix has slipped 1 more rung to eighth place but remains well above the national average, which was 0.90%. We see one more month to month decrease - in Boston.

    Comparing year of year, we see the following changes:

    1. Phoenix +32.2%
    2. Tampa +29.0%
    3. Miami +26.6%
    4. Las Vegas +25.7%
    5. Dallas +25.1%
    6. San Diego +24.4%
    7. Seattle +23.3%
    8. Charlotte +22.9%
    9. Atlanta +21.6%
    10. Denver +20.1%
    11. Los Angeles +19.0%
    12. San Francisco +18.2%
    13. Portland +17.5%
    14. Detroit +14.4%
    15. Cleveland +14.0%
    16. New York +13.8%
    17. Boston +13.5%
    18. Chicago +11.6%
    19. Minneapolis +11.2%
    20. Washington +11.1%

    Phoenix is top for the 30th consecutive month. The national average was 18.8%.

    ©2022 Cromford Associat

    January 24 -The market is cooler than this time last year, but only by a fraction. This makes it the second most frenzied seller's market we have ever seen in January. Here is what the Cromford® Market Index for all areas & types is telling us:

    real estate chandler

    The Greater Phoenix housing market was already very unbalanced in favor of sellers in October, with 100 (not shown on Y axis) representing a balanced market. But over the past 3 months the trend has moved in favor of sellers even more as supply collapsed and demand remained strong, especially from investors and second home purchasers. The upward slope has continued throughout January, although there is a slight reduction in the rate of increase in the last week.

    464 is an extremely high reading, surpassed only between Jan 16 and May 9 last year. The record high is 514.9, reached on March 3, 2021.

    Even if the market turned around very suddenly, as it did in 2005, we would anticipate a long delay before prices stabilized, probably at least 12 months and more likely 15. This means anyone waiting for a drop in prices is likely to be waiting until the second half of next year (2023) at the earliest. And this is a worst case scenario, which is by no means likely.

    ©2022 Cromford Associat

    January 21 - Here is our latest table of Cromford® Market Index values for the single-family markets in the 17 largest cities

  • chandler real estate

  • All 17 cities are now on the same page, having improved in favor of sellers over the last month. The market is gaining in strength with all but 2 cities increasing their CMI by 10% or more, Outstanding improvement for sellers took place in Tempe, Avondale, Goodyear, Surprise, Paradise Valley, Phoenix, Queen Creek and Scottsdale, all growing their CMI by over 20%

    The average change in the CMI over the last month is +18.7%, up from +16.8% last week. So the momentum in favor of sellers is still growing.

    Any CMI over 110 is a signal for prices to increase, so with CMI readings between 233 and 704, prices are set to rise significantly over the next 6 months.

    ©2022 Cromford Associate

    January 20 - Some areas are hitting their record lows for supply right now.

    For example, in Scottsdale there are only 317 single-family detached homes available for sale without an existing contract in place. This can be compared with a long term average of 2,156 and a maximum of 4,362. It even looks small compared with this time last year when we had 533.

    Paradise Valley is also experiencing an extreme shortage. There are just 85 single-family detached homes for sale without a contract, while the long term average is 307 and the maximum is 579

    The upscale areas of the valley are experiencing the worst of the supply shortage at the moment. The most affordable areas are comfortably above the extreme lows we saw last year, but are still far below normal.

    It is hard to imagine how prices can do anything but rise with supply at such a low level.

    ©2022 Cromford Associate

    January 19 - Based on affidavits of value filed during November we have collected the following statistics on iBuyer activity:

      Opendoor OfferPad Zillow Redfin All iBuyers Combined
    Homes Purchased in December 2021 323 123 63 7 516
    Homes Purchased in December 2020 120 92 51 0 263
    Annual Change in Purchases 169% 34% 24% N/A 96%
    Homes Sold in December 2021 449 139 216 7 811
    Homes Sold in December 2020 75 100 34 0 209
    Annual Change in Sales 499% 39% 535% N/A 288%
    Median Purchase Price in December 2021 $409,600 $387,750 $449,016 $332,000 $406,703
    Median Purchase Price in December 2020 $299,200 $297,500 $317,350 N/A $305,600
    Median Sale Price in December 2021 $435,000 $435,000 $430,000 $465,000 $435,000
    Median Sale Price in December 2020 $316,500 $301,000 $283,250 N/A $303,000
    Homes in Inventory at the End of December 2021 2,038 499 785 13 3,335
    Homes in Inventory at the End of December 2020 328 153 94 0 575
    Annual Change in Inventory 521% 226% 735% N/A 480%

    The iBuyers as a group bought far fewer homes in December than they had at their peak in August. August saw 1,145 purchases and December was down to 516, a reduction of 55%.

    This drop was not just due to Zillow stopping all new offers in early November. Opendoor also reduced its buying volume by more than 50% compared to the summer peak.

    Both Zillow and Opendoor overpaid for homes during the late spring and summer, while OfferPad continued to operate pretty much as it done before. Opendoor appears to have gained control over its offers and is now buying less, largely because its offers are now no longer over-generous. Zillow overpaid by a far larger margin, sometimes reaching ridiculous pricing. It appear that senior Zillow management reacted by killing the entire iBuying operation almost as suddenly as it could. As in most things in housing, as suddenly as it could is still pretty slow. There were many signed offers already in place that have continued to close and purchases that were recorded in December were still up 24% from the previous year. They should drop off very quickly in 2022 however, with no new deals in the pipeline.

    For those with a subscription to Cromford® Public, you can see from chart FF1 that the homes sold by Zillow in November had a negative median gross margin. Opendoor showed a median gross margin close to zero, while OfferPad continues much as they have done with a positive median gross margin but a much lower market share because their offers are not as aggressive.

    The iBuyers still hold a large inventory of 3,335 homes (for sale and under contract) but this is down from last month and we we can expect Zillow to try to drive their inventory to zero as soon as possible by selling many of them in bulk to investment companies,.These will become part of the rental stock and reduce further the supply of homes for sale.

    Opendoor and OfferPad also sell to investors when it suits them and in the current market new investors keep arriving.

    ©2022 Cromford Associate

    January 17 - During December in Maricopa County we saw sales intended to be primary residences fall almost 19% from a year earlier. This was counter-balanced by large increases in sales intended to become rentals (up almost 30%) or secondary residences (up almost 24%). Note that Arizona's affidavit document is unsatisfactory in that it only allows for these 3 reasons for purchase. In the real world there is an important fourth reason for buying a house - in order to sell it to someone else, usually either as a fix and flip or as part of an iBuyer's tidy up and flip. In most cases, iBuyers choose option 3 - use as a secondary residence, since neither of the other 2 options apply. I wonder if the State of Arizona will ever fix this problem with the affidavit. Given that it is a legal document subject to perjury law, it seems odd that they force people to sign something in which all three options are inapplicable and therefore untrue.

    ©2022 Cromford Associate

    January 15 - in our latest ranking of cities by average sales price per sq. ft. we can see that, in general, the least expensive cities have out-performed the rest.

    The top spot for annual appreciation is held by Coolidge at 40.5%, helped by it still being the most affordable on our list of 40 at $146.94 per sq. ft. Other high appreciation areas include Tonopah at 39.0%, Arizona City at 36.1%, Maricopa at 34.9% and Queen Creek at 34.8%. The latter included the ill-defined but large area of San Tan Valley, parts of which are gradually being incorporated into the towns of Queen Creek or Florence.

    The lowest appreciation rate belongs to Eloy at 19.2%, followed by Carefree and Sun City West with a 22.8% increase.

    Generally, the areas with a high median age increased at a slower rate than areas with a low median age.

    However, more expensive areas have historically moved later than cheaper areas when following house price trends. Supply in Paradise Valley and Carefree has dropped much more than other ears in the last 12 months, so it would not be a surprise if their appreciation catches up over the next 12 months.

    ©2022 Cromford Associate

    January 13 - Here is our latest table of Cromford® Market Index values for the single-family markets in the 17 largest cities

     

    The market is showing almost no sign of turning in favor of buyers. We have 16 of the 17 cities improving for sellers over the past month and only one (Buckeye) showing a move in favor of buyers. Even in Buckeye, there is a strong seller's market, and the CMI has moved upwards over the past 2 weeks.

    The average change in the CMI over the last month is +16.8%, up from 14.4% last week. So the momentum in favor of sellers is growing.

    Top movers in favor of sellers over the past month were Tempe, Goodyear, Surprise, Phoenix, Gilbert, Avondale and Scottsdale, all of which saw their CMI increase by 20% or more.

    This market desperately needs more homes to buy.

    We are starting to see some increase in the number of homes available to rent. However much of that rental supply is being converted by investors from the stock of homes to buy. Many brand new homes are being purchased to either convert into a rental of to immediately flip for a profit.

    Without a significant increase in the number of homes for sale, any hope of halting the brisk rate of price increases is likely to be crushed. This remains true even in a higher interest rate environment, because demand is not the controlling factor.

    ©2022 Cromford Associate

    January 12 - There is no way to break it to you gently. The bad supply situation is getting worse. Or at least worse from a buyer's perspective.

    In January we should be seeing a lot of new listings piling up ready for the surge of buyers arriving after the Super-bowl is done. But we are not getting more supply, it is already going lower than at the start of the year.

    This is quite a shock, but not exactly unprecedented. It happened in January 2021, but that was a precursor to a spring of absolute madness and frenzy.

    This is telling us that the bull market in housing has a lot of legs in it yet.

    Examples:

    • Paradise Valley is down to an all time low of just 93 single-family homes for sale (excluding CCBS and UCB). We had 160 this time last year.
    • Scottsdale is down to 344 single-family homes for sale. There were 569 this time last year.
    • Mesa is down to 314 single-family homes for sale There were 483 as recently as October 3.
    • Phoenix is down to 777 single-family homes for sale. There were 1,095 just one month ago.

    By the way,  

    I sold my home in Mesa in 2018, but I am still getting frequent nuisance phone calls in the UK from people wanting to know if I am interested in selling it. It has already changed hands again since I sold it. Where do these people get their home ownership information? I hope it's cheap because it is apparently worthless.

    ©2020 Cromford Associate

    January 10 - We still see a large number of analysts commenting on what they interpret as very high demand in housing. This is a serious mistake. For most of the market, demand is nothing special, at least when measured mathematically by the number of closed transactions and the number of listings under contract. While demand is above average, it is not unusually high.

    What is unusual about the current housing market is the chronic and extreme shortage of supply. When buying a house, it feels like "high demand" because there are far too many buyers for every house. The fact is this is due to there being so few houses available to buy. The number of buyers is only somewhat above average.

    Dollar volume is growing sharply, but this has much more to do with increases in unit prices than increases in unit volumes. Indeed new home sales were down in 2021 compared with 2020 across Maricopa County. This was caused by builders' inability to build enough homes. Supply chain issues!

    The problem is that many housing analysts pay only scant attention to the numbers and rely too heavily on hearsay and perceptions. There is a tendency for things to believed to be true just because a lot of people say them. This is recognized as a common human trait. We tend to regard as true those things that are familiar to us through repetition. Understanding the numbers properly is hard and makes your head hurt. And trying to get people to understand the truth often just makes you unpopular.

    There are some segments where demand is unusually high. The Cromford® Demand Index (CDI) measures demand in a market segment relative to its history. A number over 120 suggest higher demand than normal for that segment.

    Casa Grande currently has a CDI of 182.5. That is extremely high and probably represents a large influx of people into Casa Grande to work for the employers newly located there (e.g. Lucid, Attessa, PhoenixMart) . Maricopa is also well above normal at 161.7 and Queen Creek is at 138.1. Arizona City is at 238.9, where homes are relatively cheap and Casa Grande is an easy commute. Demand is generally high in Pinal County, but luckily supply is a bit higher there too, so it balances out. Supply is still very low, but not as low as in Maricopa County.

    The CDI is actually below 100 in many of the valley's cities. Anthem, Apache Junction, Avondale, Cave Creek, Chandler, El Mirage, Gilbert. and Sun Lakes are all currently below 100. However, this demand is more than enough to overwhelm the paltry supply of homes in all these locations. So buying a home in these cities is just as hard as in Casa Grande.

    So you can tell people the numbers say that demand is generally not especially high, but don't expect these people to agree with you. They will take perceived wisdom over real wisdom any day.

    ©2022 Cromford Associate

    January 7 - Here is our latest table of Cromford® Market Index values for the single-family markets in the 17 largest cities

    chandler homes

    The market continues to strengthen in favor of sellers with extremely low supply and demand well above normal.

    We now have 16 of the 17 cities improving for sellers over the past month and only one (Buckeye) showing a move in favor of buyers. Even in Buckeye, there is a strong seller's market, and the CMI has moved upwards over the past week.

    The average change in the CMI over the last month is +14.4%, up from 11.4% last week.

    Even if higher interest rates suppress demand, the situation is unlikely to change dramatically unless supply starts to build much higher than it is now. There is no signal from the first week of January that such an event is likely. Perhaps the next few weeks will show some new trend, but right now we are looking for more price rises over the coming months

    ©2022 Cromford Associate

    January 6 - We have preliminary data from affidavits of value filed with the Maricopa County Recorder during December:

    • There were 10,568 closed transactions involving single-family homes, condos and townhouses, of which 1,788 were newly built and 8,780 were resales.
    • New build closings were down 7.6% compared with December 2020.
    • The resale count was down 7.4% compared to a year ago.
    • The overall median sales price was $433,074. This is up 25.5% from December 2020
    • The new build median sales price was $445,518. This is up 17.1% from December 2020.
    • The resale median sales price was $430,000. This is up 28.4% from December 2020.

    It appears that new home prices have risen more slowly than resales over the past year. This is probably because the prices at completion are established much earlier in the cycle than for resale, which often close within a few weeks of contract signatures.

    Closings are down between 7% and 8%, compared to a year ago. Since the number of homes under contract has been down year over year since May 2021, this is not surprising.

    ©2022 Cromford Associate

    January 4 - CoreLogic reports monthly home price appreciation rates for the USA based on the Case-Shiller index. They are respected for their ability to record historical data, but their ability to forecast what will happen during the following twelve months is nothing short of dreadful. Forecasting prices a year out is a difficult task, and we do not attempt it ourselves, but the numbers we do collect allow us to be almost certain that their current forecast will be very wide of the mark, just as their earlier ones have proven to be.

    The CoreLogic forecast for annual home price appreciation as of November 2021 was 2.5%. The actual change they have just reported was 18.1%. They do not seem to be learning anything from their past mistakes because they are currently forecasting 2.8% appreciation between November 2021 and November 2022.

    In our opinion this is plain silly. especially as their own President and CEO, Frank Martell, is quoted in the same report as saying: "Over the past year, we have seen one of the most robust seller’s markets in a generation. While increased interest rates may help cool down home buying activity, we expect 2022 to be another strong year with continuing upward price growth".

    Perhaps Frank should tell his forecasting team to get a grip on reality and stop relying on a model that has lost all credibility..

    ©2022 Cromford Associate

    January 1 - 2022 starts with lower supply than 2021 did.

    5,776 active listings excluding UCB and CCBS, across all areas and types. On January 1, 2021 we counted 6,055, so we are down by 5%

    If we count UCB and CCBS listings as well, the 2022 total is 8,630, down 12% from 9,788 last year.

    Not a good start from a buyer's point of view - the lowest supply level for Jan 1 since we started recording in 2001.

    ©2022 Cromford Associate

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

    Gilbert real estate

    The old year goes out with a move in favor of sellers. Only 2 cities moved in favor of buyers over the last month and the average change in the CMI for all 17 cities is +11.4%

    We will be starting 2022 with a massive imbalance in the market. Supply remains very low and wholly inadequate to meet existing demand.

    ©2020 Cromford Associate

    December 29 - The latest S&P / Case-Shiller® Home Price Index® numbers were published on December 28.

    The new report covers home sales during the period August 2020 to October 2021.

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

    1. Tampa +1.90%
    2. Miami +1.83%
    3. Charlotte +1.51%
    4. Las Vegas +1.46%
    5. Los Angeles +1.35%
    6. Atlanta +1.29%
    7. Phoenix +1.14%
    8. Dallas +1.11%
    9. San Diego +1.09%
    10. New York +0.67%
    11. Seattle +0.61%
    12. Cleveland +0.60%
    13. Chicago +0.56%
    14. Detroit +0.37%
    15. Portland +0.33%
    16. Washington +0.23%
    17. Denver +0.20%
    18. Boston +0.07%
    19. San Francisco +0.01%
    20. Minneapolis -0.06%

    Phoenix has slipped 3 more rungs to seventh place but remains well above the national average, which was 0.84%. We see the first month to month decrease for some time - in Minneapolis.

    Comparing year of year, we see the following changes:

    1. Phoenix +32.4%
    2. Tampa +28.1%
    3. Miami +25.7%
    4. Las Vegas +25.5%
    5. Dallas +24.6%
    6. San Diego +24.2%
    7. Seattle +22.8%
    8. Charlotte +22.5%
    9. Atlanta +21.4%
    10. Denver +20.3%
    11. Los Angeles +18.5%
    12. San Francisco +18.5%
    13. Portland +17.8%
    14. Boston +15.1%
    15. Detroit +14.7%
    16. New York +14.6%
    17. Cleveland +13.3%
    18. Washington +12.0%
    19. Minneapolis +11.5%
    20. Chicago +11.5%

    Phoenix is top for the 29th consecutive month. The national average was 19.1%.

    ©2020 Cromford Associate

    December 28 - Closing prices have drifted sideways to down over the past month. Does this mean the era of price increases is already over?

    Probably not!

    Take a look at where the price of listings under contract is going. This is the best forecasting tool for future closing $/SF:

  •  chandler realtors

    The average price per sq. ft. for listings under contract has risen from the $270 mark to comfortably over $280 in just 2 months. We can reasonably expect the closing $/SF to be well north of $270 before too long. When the green and red lines on this chart diverge, they always close the gap later. With the CMI still rising, it is most unlikely (but not completely impossible) that the green line will head downwards. Much more likely is that the red and brown lines (which are almost on top of each other these days) will start following the green line upwards.

    ©2020 Cromford Associate

    December 27 - One of the most popular sections within Cromford® Public is the one which shows the history of building permits, for both single and multi-family units.

    Building permits are issued well before a home becomes available for sale or rent, so these charts give us some idea about where future supply is coming from. At the moment new multi-family supply looks as though it is going to be hitting new all-time highs in 2022, but new single-family supply will remain quite limited.

    At the end of November 2021, we had recorded 32,185 single-family permits for Maricopa and Pinal counties, up from 28,204 in 2020. However this does not exceed the counts we recorded in 1998,1999, or 2002 through 2006. 51,900 was the peak for November YTD counts, achieved in 2004. If we were seeing this kind of number then I think we could expect to see real progress in correcting the current supply shortage.

    For multi-family permits, we are definitely in record territory right now, with 13,985 as of November 2021 year-to-date. The previous record was 2020 with 12,224. Before 2020, only 2019 exceeded 10,000 as of November year-to-date.

    It is also looks very likely that Q4 2021 will be the strongest quarter ever for multi-family permits.

    ©2020 Cromford Associate

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

    Cathy Carter 

    Once again, we have 14 cities where the market moved in favor of sellers over the last month and only 3 where the market moved in favor of buyers. The average change over the past month was +8.7%, having been +7.2% last week.

    This trend is primarily due to the reduction in supply over the past 6 weeks.

    We see the Northeast Valley in complete domination of this table. Fountain Hills is number 1 and a long way above Scottsdale, thanks to having just 32 active listings (excluding UCB and CCBS). The long term average is 234.

    Maricopa and Buckeye are at the bottom of the table. This is partly because they have more new development than most, making the supply problems a little less severe.

    ©2020 Cromford Associate

    Paradise Valley has the lowest number of active listings we have ever recorded, at 105 excluding UCB and CCBS. However this is balanced by a reduction in demand after the huge price rises that have taken place in the last year.

    December 20 - The daily Cromford® Market Index chart shows that the market has strengthened for sellers since late October.


    Chandler real estate

    Supply has been heading lower again, though not quite at the speed it did this time last year.

    There is little support in the data for the popular theory that the market is cooling and heading back to normal. The normal balanced reading for the CMI is 100 and we are currently at 382.5 and heading northeast.

    House price appreciation is a very long way from normal, with the monthly average $/SF up 26% from this time last year. Yes this is down from the freakish 40% we saw on May 25, but the pressure on prices is still upward.

    If we are to see the market return to normal at some point, a reduction in demand is not sufficient. We would need to see a huge rise in supply too.December 16 - Here is our latest table of Cromford® Market Index values for the single-family markets in the 17 largest cities

    ©2020 Cromford Associate

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

    gilbert real estate

    Once again, we have 14 cities where the market moved in favor of sellers over the last month and only 3 where the market moved in favor of buyers. The average change over the past month was +7.2%, having been +6.2% last week.

    As expected, the trend continues to strengthen in favor of sellers although not as quickly as it moved this time last year.

    The lower end of the market (e.g. Avondale, Buckeye, Maricopa) is still looking strong, but not as strong as the mid-range (e.g. Chandler, Gilbert, Mesa, Goodyear). The higher end (e.g. Scottsdale, Fountain Hills, Cave Creek), is extremely strong, although Paradise Valley is seeing falling demand over the past month, matching its falling supply.

    ©2020 Cromford Associate

    December 15 - Based on affidavits of value filed during November we have collected the following statistics on iBuyer activity:

      Opendoor OfferPad Zillow Redfin All iBuyers Combined
    Homes Purchased in November 2021 409 146 221 4 780
    Homes Purchased in November 2020 107 84 40 0 231
    Annual Change in Purchases 282% 74% 453% N/A 238%
    Homes Sold in November 2021 373 117 210 5 705
    Homes Sold in November 2020 74 75 22 0 171
    Annual Change in Sales 404% 56% 855% N/A 312%
    Median Purchase Price in November 2021 $418,700 $388,500 $442,400 $687,500 $424,494
    Median Purchase Price in November 2020 $311,300 $297,650 $287,000 N/A $302,000
    Median Sale Price in November 2021 $430,000 $395,000 $415,000 $367,000 $419,500
    Median Sale Price in November 2020 $289,250 $285,000 $290,750 N/A $290,000
    Homes in Inventory at the End of November 2021 2,152 526 944 13 3,635
    Homes in Inventory at the End of November 2020 280 163 76 0 519
    Annual Change in Inventory 669% 223% 1142% N/A 600%

    The iBuyers as a group continued to purchase a very large number of 780 homes in November, though down 32% from the record total of 1,145 in August.

    Although Zillow has pulled out of the iBuying market, it still had a lot of signed contracts to close on and purchased more homes than it sold in November. Embarrassing mismanagement of a ill-considered strategy.

    For those with a subscription to Cromford® Public, you can see from chart FF1 that the homes sold by Zillow in October had a significant negative gross margin. The median purchase price was $435,294 and the median sale price was $411,000. This helps explain why Zillow left this business. For Opendoor, the picture was a little brighter with the median acquisition price being $414,700 and median sale price $412,500. A small loss, but this does not include the fee the seller pays to Opendoor. OfferPad did not chase volume the same way and showed a median sale price of $400,000 and a median acquisition price of $380,000, meaning they continued to generate positive gross margins on the vast majority of homes sold. Although they are much smaller, they appear to be closer to a profitable business model.

    The iBuyers hold a large inventory of 3,635 homes (for sale and under contract) but we can expect Zillow to want to drive their inventory to zero as soon as possible by selling many of them in bulk to investment companies,.These will become part of the rental stock and reduce further the supply of homes for sale.

    ©2020 Cromford Associate

    December 10 - The latest S&P / Case-Shiller® Home Price Index® numbers were published on November 30, while we were in the middle of our Storm Arwen crisis. We thought a commentary would be better late than never

    The new report covers home sales during the period July 2020 to September 2021. As such they reflect the slower appreciation that we experienced during the summer and not the accelerated we have seen since September..

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

    1. Tampa +2.74%
    2. Miami +2.16%
    3. Atlanta +1.89%
    4. Phoenix +1.69%
    5. Los Angeles +1.09%
    6. Boston +0.78%
    7. San Diego +0.74%
    8. Charlotte +1.80%
    9. Las Vegas +1.54%
    10. Dallas +1.20%
    11. Chicago +0.64%
    12. New York +0.49%
    13. Portland +0.42%
    14. Denver +0.41%
    15. Seattle +0.40%
    16. Detroit +0.37%
    17. Washington +0.23%
    18. San Francisco +0.13%
    19. Minneapolis +0.06%
    20. Cleveland 0%

    Phoenix has slipped one more rung to fourth place but remains well above the national average, which was 0.99%

    Comparing year of year, we see the following changes:

    1. Phoenix +33.1%
    2. Tampa +27.7%
    3. Miami +25.2%
    4. Dallas +25.0%
    5. San Diego +25.0%
    6. Las Vegas +24.7%
    7. Seattle +23.3%
    8. Charlotte +22.4%
    9. Atlanta +21.2%
    10. Denver +21.2%
    11. San Francisco +19.8%
    12. Los Angeles +18.3%
    13. Portland +18.2%
    14. Boston +16.8%
    15. New York +15.8%
    16. Detroit +15.2%
    17. Cleveland +14.1%
    18. Washington +13.7%
    19. Minneapolis +12.8%
    20. Chicago +11.8%

    Phoenix is top of this table for the 28th consecutive month. Phoenix is by no means the leader since the indexes were arbitrarily set at 100 for the year 2000.

    Here are the cities which have appreciated the most since 2000:

    1. Los Angeles
    2. San Diego
    3. Seattle
    4. San Francisco
    5. Miami
    6. Portland
    7. Tampa
    8. Phoenix
    9. Denver
    10. Washington
    11. Boston
    12. Las Vegas
    13. Dallas
    14. New York
    15. Charlotte
    16. Minneapolis
    17. Atlanta
    18. Chicago
    19. Detroit
    20. Cleveland

    It seems that relatively few people have taken Frank Zappa's advice - "Let's Move to Cleveland!"

    ©2020 Cromford Associate

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

    Chandler

    We have 14 cities where the market moved in favor of sellers over the last month and only 3 where the market moved in favor of buyers. The average change over the past month was +6.2%, having been +4.4% two weeks ago. We were unable to publish a table on December 2 due to the power cut.

    The trend continues to strengthen in favor of sellers and this is unlikely to change until January at the earliest.

    Supply is desperately scarce in Fountain Hills, which has nearly always seen the highest percentage of out of state buyers. Cave Creek and Scottsdale have joined Fountain Hills at the top of the table and this is the first time we ever recorded the top 3 spots being dominated by the Northeast Valley like this.

    Most improved for sellers is Gilbert, with Mesa and Gilbert not too far behind.

    ©2020 Cromford Associate

    December 8 - With the low and mid-range markets heavily influenced by iBuyers and investors, it is interesting that some of the fastest appreciation is being experienced by markets where these players are inactive.

    The Paradise Valley area has experienced astonishing appreciation rates over the last 12 months. This is partly due to the fact that the very top end of the market is extremely active while supply at the low end is very poor indeed, limiting its contribution to the averages. If we look at the 3-month average price per square foot for single-family homes in Paradise Valley for November 2020 we measure a figure of $459. In November 2021 this had increased by $200 to $659. That is an annual appreciation rate of almost 44%.

    Looking at the 6-month average smooths the chart out a bit, but still gives us a 40% increase from $447 to $625.

    The 12-month average is much less volatile but still displays a 29% increase from $448 to $578.

    These seem like huge numbers to us, but we have to remember that many of these buyers are out-of-state. $600 per square foot probably seems quite a bargain if you are coming from the west coast.

    ©2020 Cromford Associate

    December 5 - The big positive news for us is that after 7 days we finally got electric power restored to our office, home and the Cromford® Report database. The electricity company (a Berkshire Hathaway subsidiary) has installed generators up and down the valley because the electricity infrastructure was so badly damaged that

    We have 14 cities where the market moved in favor of sellers over the last month and only 3 where the market moved in favor of buyers. The average change over the past month was +6.2%, having been +4.4% two weeks ago. We were unable to publish a table on December 2 due to the power cut.

    The trend continues to strengthen in favor of sellers and this is unlikely to change until January at the earliest.

    Supply is desperately scarce in Fountain Hills, which has nearly always seen the highest percentage of out of state buyers. Cave Creek and Scottsdale have joined Fountain Hills at the top of the table and this is the first time we ever recorded the top 3 spots being dominated by the Northeast Valley like this.

    Most improved for sellers is Gilbert, with Mesa and Gilbert not too far behind.

    There is nothing whatsoever in our data to support a theory that prices might come down any time soon. Supply is currently getting scarcer every week.

    ©2020 Cromford Associate

    November 30 - Sorry for the delay in getting updates to this site over the last several days. On Friday November 26, the UK was hit by Storm Arwen. The strong northerly winds and freezing snow brought down thousands of power lines and trees. The electricity supply, internet and mobile phone networks were badly damaged and Mike Orr and his family have had almost none of these services over the past 5 days. This has made checking e-mail and updating the web site impossible.

    Mike has temporarily relocated to Walworth Castle (built in 1189) which now has both electricity and internet and only 2 of the cellular providers are down. He will be working to bring the site up to date again over the next several days.

    Thanks for your patience and understanding. We now know that 100 hours without electricity is a sobering experience.

    ©2020 Cromford Associate

    November 25 - Here is our latest table of Cromford® Market Index values for the single-family markets in the 17 largest cities

    real estate chandler

    We have 14 cities where the market moved in favor of sellers over the last month and only 3 where the market moved in favor of buyers. The average change over the past month was +4.4%, having been +2.7% last week. The trend continues to strengthen in favor of sellers and after Thanksgiving comes 5 weeks of declining supply so the trend is very likely to continue until January at the very least.

    ©2020 Cromford Associate

    November 23 - On November 11, the average closed price per square foot across all areas & types slipped below 100% of the average list price per square foot for the first time since March 18. We waited a while to report in order to ensure this was not a blip. The percentage on November 11 was 99.99% and it has now dropped to 99.92%. Not a blip.

    This signals that the market is cooling slightly. However the long term average is 97.25% and prices still tend to rise when the percentage is above 97%. So this should not be taken as a sign that sales prices may reverse direction any time soon. If it were to drop below the long term average then we would have good reason to become more pessimistic about prices.

    ©2020 Cromford Associate

    November 21 - Based on affidavits of value filed during October we have collected the following statistics on iBuyer activity:

      Opendoor OfferPad Zillow Redfin All iBuyers Combined
    Homes Purchased in October 2021 403 178 356 7 944
    Homes Purchased in October 2020 98 89 31 0 218
    Annual Change in Purchases 311% 100% 1048% N/A 333%
    Homes Sold in October 2021 395 104 132 11 642
    Homes Sold in October 2020 56 77 33 0 166
    Annual Change in Sales 605% 35% 300% N/A 287%
    Median Purchase Price in October 2021 $415,500 $395,000 $455,400 $450,000 $428,250
    Median Purchase Price in October 2020 $287,700 $276,500 $280,000 N/A $283,700
    Median Sale Price in October 2021 $415,000 $400,000 $409,678 $418,000 $412,000
    Median Sale Price in October 2020 $289,250 $285,000 $290,750 N/A $287,250
    Homes in Inventory at the End of October 2021 2,116 497 933 14 3,560
    Homes in Inventory at the End of October 2020 247 155 58 0 460
    Annual Change in Inventory 757% 221% 1509% N/A 674%

    The iBuyers as a group continued to purchase a very large number of homes in October, though down 18% from the record total of 1,145 in August.

    It might be surprising to some that Zillow bought more homes during the month in which they decided to exit the business than in any prior month. However these are contracts which had been signed many weeks earlier which they were legally obligated to complete. We had been puzzled for the last 4 or 5 months why Zillow was willing to pay so much over market value. Perhaps they had some business strategy we were too stupid to understand? It turns out that they were every bit as daft as they looked. Having paid altogether too much for a large number of homes, they made a second big mistake by deciding to sell them in bulk to investors, solidifying their losses. With the current rapid rises in price in full swing again, they could have saved a lot of money by being more patient. It also seems odd that Zillow would blame their 'algorithm' for their many blunders, since they clearly deliberately tweaked that algorithm to over-estimate how home prices would rise during the second and third quarters. Algorithms don't make decisions like that without management input.

    Opendoor was also paying too much for many homes over the late spring and summer, but is not cutting many prices and appears to have the necessary patience to eventually sell at a profit, even if it is less than we would normally have expected.

    More homes were purchased than sold, yet again, so iBuyer inventory has hit another record high of 3,560.

    Going forward, buyers will not be competing with Zillow, but they still have to contend with Opendoor and OfferPad, while buy-to-rent investors are extremely persistent in their acquisition plans and more than make up for the absence of Zillow offers. The big winners over the last several months are the sellers who received freakishly high offers from Zillow and accepted them. That craziness looks to be all over now.

    ©2020 Cromford Associate

    November 21 - Based on affidavits of value filed during October we have collected the following statistics on iBuyer activity:

      Opendoor OfferPad Zillow Redfin All iBuyers Combined
    Homes Purchased in October 2021 403 178 356 7 944
    Homes Purchased in October 2020 98 89 31 0 218
    Annual Change in Purchases 311% 100% 1048% N/A 333%
    Homes Sold in October 2021 395 104 132 11 642
    Homes Sold in October 2020 56 77 33 0 166
    Annual Change in Sales 605% 35% 300% N/A 287%
    Median Purchase Price in October 2021 $415,500 $395,000 $455,400 $450,000 $428,250
    Median Purchase Price in October 2020 $287,700 $276,500 $280,000 N/A $283,700
    Median Sale Price in October 2021 $415,000 $400,000 $409,678 $418,000 $412,000
    Median Sale Price in October 2020 $289,250 $285,000 $290,750 N/A $287,250
    Homes in Inventory at the End of October 2021 2,116 497 933 14 3,560
    Homes in Inventory at the End of October 2020 247 155 58 0 460
    Annual Change in Inventory 757% 221% 1509% N/A 674%

    The iBuyers as a group continued to purchase a very large number of homes in October, though down 18% from the record total of 1,145 in August.

    It might be surprising to some that Zillow bought more homes during the month in which they decided to exit the business than in any prior month. However these are contracts which had been signed many weeks earlier which they were legally obligated to complete. We had been puzzled for the last 4 or 5 months why Zillow was willing to pay so much over market value. Perhaps they had some business strategy we were too stupid to understand? It turns out that they were every bit as daft as they looked. Having paid altogether too much for a large number of homes, they made a second big mistake by deciding to sell them in bulk to investors, solidifying their losses. With the current rapid rises in price in full swing again, they could have saved a lot of money by being more patient. It also seems odd that Zillow would blame their 'algorithm' for their many blunders, since they clearly deliberately tweaked that algorithm to over-estimate how home prices would rise during the second and third quarters. Algorithms don't make decisions like that without management input.

    Opendoor was also paying too much for many homes over the late spring and summer, but is not cutting many prices and appears to have the necessary patience to eventually sell at a profit, even if it is less than we would normally have expected.

    More homes were purchased than sold, yet again, so iBuyer inventory has hit another record high of 3,560.

    Going forward, buyers will not be competing with Zillow, but they still have to contend with Opendoor and OfferPad, while buy-to-rent investors are extremely persistent in their acquisition plans and more than make up for the absence of Zillow offers. The big winners over the last several months are the sellers who received freakishly high offers from Zillow and accepted them. That craziness looks to be all over now.

    ©2020 Cromford Associate

    November 19 - John Burns publishes a Rent Index BSFRI™, which measures the prices for new single-family leases in 63 markets across the USA, including Phoenix.

    Their latest numbers are for September 2021 and they find that the effective rent across the USA rose 6% year over year. However Phoenix showed the highest rental rate increase of all 63 markets, coming in at 14% higher year over year.

    This shows why investors are extremely interested in purchasing single-family homes in Phoenix. The receipts from rents are rising faster than anywhere else in the country. Rents are rising because there are more people wanting to rent than there are rental properties. Many families are starting to see single-family rentals as preferable to apartments or condo-style rentals. This effect is probably supported by living conditions during a pandemic.

    While this continues, we can expect investor demand to remain robust, which in turn prevents the market cooling down as it would if ordinary home buyers were the only source of demand.

    ©2020 Cromford Associate

    November 18 - Here is our latest table of Cromford® Market Index values for the single-family markets in the 17 largest cities

    chandler homes

    We have 7 cities where the market moved in favor of sellers over the last month and 10 where the market moved in favor of buyers. However, the average change over the past month was +1.2%, so the recent trend continues to favor sellers. Over the last week, the majority of cities saw their CMI move higher.

    The short term outlook is for prices to move higher into record territory.

    ©2020 Cromford Associate

    November 10 - We have now got preliminary data collated from the Maricopa County affidavits from October and it shows the following:

    • There were 10,346 closed sales, which is 8,5% below the count for October 2020
    • New home closings totaled 1,350, down 22% from a year ago
    • Re-sales totaled 8,996, up 6.6% from October last year

    New home sales are down dramatically because of the inability of the builders to complete home construction (shortage of components, supply chain delays, labor shortages), not because of lack of demand.

    • The overall median was $422,500, up 24% from $342.000 in October 2020.
    • The new home median was $447,352, up 18% from $379,132 a year ago
    • The re-sale median was $420,000, up 25% from $335,000 a year ago

    ©2020 Cromford Associate

    November 8 - Despite some observers speculating that a market top has taken place, the data emphatically suggests otherwise. Here is the average $/SF daily chart for all areas & types within the ARMLS database:

    We can see that the average $/SF for listings under contract (the green series) is up more than $10 over the past 2 months and set a new all-time record yesterday. The red series shows the monthly average sales price per square foot for closed listings and this is also up around $10 over the past 2 months, with a record high on Monday last week. This should not be surprising since the green series acts as a leading indicator for the red series.

    The brown series is the monthly average list price per square foot for closed listings. This tells us that the market is still hot, since the red series is higher than the brown series. In historical terms, the red series is almost always lower than the brown series except when the market is very unbalanced with strong demand and extremely low supply. However the gap between these series is smaller now that is has been for several months. This means the peak of the frenzy is past and we are just in a very strong seller's market.

    It should be obvious, I hope, that passing a peak in the frenzy is not the same as a market top. A market top occurs when demand is weaker than supply. This condition is not even on the horizon, never mind behind us.

    ©2020 Cromford Associate

    November 6 - The use of Coming Soon listings peaked in September and has since dropped sharply. Today the number of coming soon listings is 31% lower than it was in September and the trend is still heading down.

    I am not sure what this indicates, but the change is so substantial that I thought I should put it out there. No doubt some of our subscribers have a good explanation. If so I shall share it here.

    ©2020 Cromford Associate

    November 4 - Here is our latest table of Cromford® Market Index values for the single-family markets in the 17 largest cities

    gilbert real estate

    Like last week, we have 5 cities where the market moved in favor of sellers over the last month and 12 where the market moved in favor of buyers. The average change over the past month was -0.4%. One week earlier the average change was -2.2% so the trend is starting to favor sellers. This can be verified when we look at the changes over the last week. The CMIs for most cities have started to move higher.

    We note that the higher priced areas of the Northeast Valley are doing much better than usual, occupying 3 out of the top 4 spots. Paradise Valley was the strongest mover, gaining 15% over the past month. Fountain Hills has cooled down, but is still hot enough to occupy the number one spot.

    With temperatures back down to pleasant levels it looks like we are going to see a lot of buying interest from out of state, especially from those states that make Arizona home prices look very cheap.

    ©2020 Cromford Associate

    November 3 - It turns out that buying houses at a high price and selling them for less money is not such a great business model.

    Zillow has announced that it is winding down its Zillow Offers iBuying business.

    See here for the official announcement. About 25% of Zillow's workforce will be terminated as a result.

    Our view is that this does not prove the iBuyer business model is unsustainable. Just that Zillow was incapable of determining accurate market values of homes.

    ©2020 Cromford Associate

    November 1 - The Census Bureau has provided the single-family permit counts for September and they are showing a new downward trend. Only 2,325 permits were issued in Maricopa and Pinal counties during September, which is the lowest monthly total since May 2020.

    It is also down 25% from September last year.

    It would appear that the home builders are unable to meet demand because of shortages of component products and labor. This partly explains why they have been so reluctant to take orders. If they take orders for homes they are unable to build they are in danger of setting prices far too low as well as disappointing their customers.

    ©2020 Cromford Associate

    October 28 - Here is our latest table of Cromford® Market Index values for the single-family markets in the 17 largest cities

     chandler real estate

    We have 5 cities where the market moved in favor of sellers over the last month and 12 where the market moved in favor of buyers. The average change over the past month was -2.2%. CMIs are still very high by normal standards and falling only slowly.

    With all cities over 200, prices are all but certain to rise during the fourth quarter.

    ©2020 Cromford Associate

    October 27 - The latest S&P / Case-Shiller® Home Price Index® numbers were published yesterday. They cover home sales during the period June 2020 to August 2021. As such they reflect the somewhat slower appreciation that we experienced during the summer.

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

    1. Tampa +2.46%
    2. Miami +2.26%
    3. Phoenix +2.24%
    4. Las Vegas +2.23%
    5. Atlanta +1.92%
    6. Charlotte +1.53%
    7. Chicago +0.99%
    8. Denver +0.87%
    9. Los Angeles +0.86%
    10. Portland +0.83%
    11. Cleveland +0.79%
    12. Detroit +0.71%
    13. Washington +0.56%
    14. San Diego +0.53%
    15. Boston +0.53%
    16. New York +0.49
    17. San Francisco +0.41%
    18. Minneapolis +0.33%
    19. Dallas +0.18%
    20. Seattle +0.15%

    Phoenix has slipped to third place but remains well above the national average, which was 1.2%

    Comparing year of year, we see the following changes:

    1. Phoenix +33.3%
    2. San Diego +26.2%
    3. Tampa +25.9%
    4. Dallas +24.6%
    5. Seattle +24.3%
    6. Miami +23.8%
    7. Las Vegas +23.8%
    8. Charlotte +21.7%
    9. Denver +21.5%
    10. San Francisco +21.2%
    11. Atlanta +20.2%
    12. Portland +19.2%
    13. Los Angeles +18.4%
    14. Boston +17.7%
    15. New York +17.2%
    16. Detroit +15.7%
    17. Cleveland +15.5%
    18. Washington +15.1%
    19. Minneapolis +14.0%
    20. Chicago +12.7%

    Phoenix is top of the table for the 27th consecutive month.

    ©2020 Cromford Associate

    October 25 - As we predicted, the average price per square foot is resuming its upward trajectory now that the third quarter is over.

    chandler realtor

    The $/SF for closed listings has reached the new record level of $256 having been stuck around $251 for some time. It has further to go, given how much higher the under contract $/SF is (at the $270 level).

    It is also very clear that the gap between asking price and contract price has closed significantly over the past 2 months, a sign of a cooling market.

    ©2020 Cromford Associate

    October 21 - Here is our latest table of Cromford® Market Index values for the single-family markets in the 17 largest cities

    chandler real estate

    We have 6 cities where the market moved in favor of sellers over the last month and 11 where the market moved in favor of buyers. The average change over the past month was -2.5%. CMIs are still very high by normal standards.

    The market is cooling but very slowly. Prices are still on a long term upward trend and now that the third quarter is over we can expect a resumption of home price appreciation.

    You would not deduce this by looking at Zillow listings, because so many of them are showing large list price cuts. However this is due to them being purchased at more than market value, for reasons we cannot explain. Opendoor also paid more than market value for many of the homes they purchased during the third quarter. However they appear to be more reluctant to make price cuts on their listings. Their strategy appears to be to wait for the market value to catch up. Eventually the price they paid will probably seem cheap. You need more patience for this strategy and it ties up a lot of capital, but given the CMI table above, it will probably be successful in avoiding having to sell homes at a loss.

    At the current rate of decline, it will take a very long time for CMI numbers to drop to where they would indicate balance between buyers and sellers (a number in the region of 100).

    However, the picture could change if investors became less enthusiastic. At the moment, residential real estate is seen as a relatively safe place to park excess capital, so funds are flowing towards the purchase of homes as investment. Demand from traditional buyers is relatively light due to growing affordability issues. This does not apply as much to luxury home buyers who have fewer concerns about affordability and are likely to be more active during the fourth quarter than they were during the third.

    ©2020 Cromford Associate

    October 20 - Of 252 Zillow-owned listings in Phoenix, 182 have had at least one price reduction with the average drop $41,000.

    Of the listings shown active on Zillow's website, the average current listing price is 6% less than the average price they paid, according to the affidavit of value filed with the county. Of course they charged the seller a fee, but this 6% represents an average gross loss of $28,000 per home.

    This is a very strange business model. Buy high, sell low.

    The price cuts are being made very swiftly on homes that do not sell. They do not seem to be waiting for the market to catch up with their initial pricing.

    ©2020 Cromford Associate

    October 19 - Some of you may be wondering why the average price per square foot was so unimpressive in September. Compared with September 2020, closings in the Northeast Valley were down 16%. The Southeast Valley was flat while the Central and North Valley was up 13% and the West Valley up 10%.

    We all know that the most expensive part of the Greater Phoenix market is the Northeast Valley. So if closings there were down 16% while other areas grew, this is going to have a negative affect on average price, median price and average $/SF.

    This is something we see almost every year. Buyers in the Northeast Valley tend to be far more sensitive to the summer heat than buyers elsewhere. Third quarter pricing is therefore weak almost every year.

    We are expecting to see much stronger pricing in the fourth quarter, despite the cooling trend in the overall market.

    ©2020 Cromford Associate

    October 17 - An article in Bloomberg News states that Zillow has paused new acquisitions and is now handing leads over to local real estate agents. The claim is that the volume of recent acquisitions has overwhelmed its ability to turn homes round and list them for sale. It is stated that labor for the repainting and refitting of carpets is in short supply. We can see that many homes that have been purchased recently have not been listed on ARMLS yet, but we can also see that some of those that have been listed are seeing quite a high volume of price cuts. Some of the asking prices are now below the price paid by Zillow just a few weeks earlier.

    There is no sign of this in the flow of deeds being recorded in Maricopa and Pinal counties, but that is to be expected. If Zillow has paused its purchasing there are probably several week's worth of transactions still going through the process of closing and we would not expect to see much of a drop off in deed numbers until next month.

    There would be a more immediate impact in demand measurements. We will be on the lookout for a corresponding change in active listings and listings under contract.

    ©2020 Cromford Associate

    October 14 - All our computer equipment is being moved to a new location today, so the usual table of CMI numbers for the largest 17 cities will not appear this week. Weekly updates of the Squirrel charts are also affected. Tableau charts are not affected and will continue to be updated daily. Normal service will be resumed from our new location in County Durham next week.

    ©2020 Cromford Associate

    October 12 - Based on affidavits of value filed during September we have collected the following statistics on iBuyer activity:

      Opendoor OfferPad Zillow Redfin Knock All iBuyers Combined
    Homes Purchased in September 2021 585 152 321 4 0 1,062
    Homes Purchased in September 2020 73 86 27 0 0 186
    Annual Change in Purchases 701% 77% 1089% N/A 0% 471%
    Homes Sold in September 2021 394 103 100 8 0 605
    Homes Sold in September 2020 61 50 36 0 3 150
    Annual Change in Sales 546% 106% 178% N/A -100% 303%
    Median Purchase Price in September 2021 $419,900 $397,750 $473,718 $375,000 N/A $435,396
    Median Purchase Price in September 2020 $279,050 $270,750 $261,000 N/A N/A $276,000
    Median Sale Price in September 2021 $425,000 $400,000 $392,500 $347,450 N/A $412,000
    Median Sale Price in September 2020 $285,000 $290,000 $285,500 N/A $363,003 $287,250
    Homes in Inventory at the End of September 2021 2,108 423 709 18 0 3,258
    Homes in Inventory at the End of September 2020 204 142 60 0 0 406
    Annual Change in Inventory 933% 198% 1082% N/A N/A 702%

    The iBuyers as a group continued to purchase a very large number of homes in September, though down 7% from the record total of 1,145 in August. Opendoor has eased up after peaking in late July and the first half of August. Zillow continues to expand and during the first week of October has exceeded Opendoor in weekly purchases for the first time. OfferPad remains steady at about 150 per month.

    The median price for homes purchased continued to rise for Zillow, reaching a new record of $473,718. This an increase of 83% over September 2020. The other iBuyers saw their median purchase price fall compared with August. However, they are up 50% for Opendoor and 47% for OfferPad, both much higher than the increase in the median price for the market as a whole (25%).

    We note that Zillow is showing many price drops among their active listings and has sold several homes for less than the price they paid for them.

    Sales counts are up substantially from their very low numbers last year, reaching 605, but they still lag a long way behind purchase counts. We therefore see another increase in inventory levels. The iBuyers held 3,258 homes at the end of September across Maricopa and Pinal counties. This is a very substantial number when compared with the total number of active listings on ARMLS (6,828). 

    ©2020 Cromford Associate

    October 9 - The number of active listings (excluding UCB and CCBS) across all areas & types in the ARMLS database has just risen above 8,000 for the first time since late 2020. Given that the rate of incoming new listings is not high, this is a sign of a cooling market. Admittedly, 8,000 is still a very low number by historic standards, but it must offer some relief to buyers, given that as recently as March the number was 4,673. The cooling trend is very weak compared with the second quarter, but it is there.

    Sellers may take some persuading to curb their enthusiasm, but for the month ending October 9, the average closing price was only 0.26% above list price. On June 23 this average was 1.82%, and the current trend suggests we could be below 100% of list by the end of the year. There is no guarantee that the current trend will hold, of course.

    ©2020 Cromford Associate

    October 7 - Here is our latest table of Cromford® Market Index values for the single-family markets in the 17 largest cities

    chandler realtor

    We have 8 cities where the market moved in favor of sellers over the last month and 9 where the market moved in favor of buyers. The average change over the past month was -2.2%.

    This is a less positive picture than we saw a week ago. Although we remain is strong seller's market, there are more weakening signs than last week and it looks more likely that the CMI will start falling again after its period of stability over the past several weeks.

    Only 1 city remains over 500 and only 2 over 400, while Maricopa is flirting with a drop below 200. Maricopa was the canary in the coal mine in 2006, with appreciation going negative as early as June 2006, long before the housing market was generally perceived to be heading for disaster. The situation now is very different from 2006, but if the weakening trend starts to set in again, the City of Maricopa is a good one to watch. To balance the case, Queen Creek (including San Tan valley) was also an early mover in 2006, but at the moment its CMI is increasing by a monthly rate of 8%, the highest of any city in the top 17. Room for optimists as well as pessimists.

    If it were not for investors and iBuyers the market would be cooling much more quickly that it is. However the high end in Fountain Hills and Scottsdale, as well as Cave Creek and Paradise Valley, is little affected by these buyers and all of these cities remain woefully short of supply compared with normal.

    ©2020 Cromford Associate

    October 5 - We have preliminary affidavit counts for Maricopa County in September and they show the following:

    • Re-sales totaled 9,589 which is up 8% from September 2020. New sales came in at 1,668 which is DOWN 7% from September 2020. The poor showing from new homes is due to the inability to build fast enough rather than a lack of demand. Supply chain problems and chronic labor shortages are limiting the developer's ability to capitalize on the market strength.
    • The re-sale median was $415,000 up 26% from September 2020. The new home median was $412,686, up only 11%.

    The fact that developer prices are usually fixed at contract signing is limiting their ability to sell at market price. We are seeing many examples of brand new homes being re-sold at much higher prices shortly after their initial purchase. One specialist investor has resold a dozen new homes for a profit of more than $600,000. We can expect more developers imposing contract terms to try to prevent this in future.

    ©2020 Cromford Associate

    October 4 - The number of homes purchased last month to be used as rental properties by investors in Maricopa County is up 77% from September 2020.

    Homes purchased by owner occupiers as their first or second home are down 4% over the same time frame.

    The nature of demand has changed dramatically over the past 12 months.

    ©2020 Cromford Associate

    October 1 - Here is our latest table of Cromford® Market Index values for the single-family markets in the 17 largest cities

     gilbert real estate

    We have 9 cities where the market moved in favor of sellers over the last month and 8 where the market moved in favor of buyers. The average change over the past month was -0.8%

    Although several cities moved sharply in one direction (Fountain Hills) or another (Cave Creek, Maricopa), the overall situation saw only a small change. We are still uncertain whether the next major trend will be higher or lower.

    New listings have been arriving at a slower pace, although the iBuyers have amassed a large inventory which could come to market over a short period of time. Demand is looking strong and continues to head higher. However a large part of that demand is coming from investors and iBuyers rather than traditional home buyers.

    Developers are finding it tough to increase supply, with major problems in the supply chains for building materials and ongoing labor shortages. We are not expecting a huge up-tick in supply from new homes in the near term.

    We remain in a market heavily tilted in the seller's favor.

    ©2020 Cromford Associate

    September 28 - The latest S&P / Case-Shiller® Home Price Index® numbers were published today. They cover home sales during the period May 2020 to July 2021. As such they reflect the extremely high rates of appreciation that we experienced during the second quarter of 2021. However July 2021 onward has seen a marked slow down in pricing movement which is not yet reflected in the Case-Shiller HPI.

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

    1. Phoenix +3.32%
    2. Tampa +2.94%
    3. Las Vegas +2.77%
    4. Dallas +2.35%
    5. Atlanta +2.21%
    6. Miami +2.17%
    7. Charlotte +2.17%
    8. Denver +1.78%
    9. San Diego +1.62%
    10. Portland +1.53%
    11. Los Angeles +1.43%
    12. Chicago +1.24%
    13. Minneapolis +1.24%
    14. Detroit +1.17%
    15. San Francisco +1.16%
    16. Boston +1.15%
    17. Cleveland +1.12%
    18. New York +1.08%
    19. Seattle +0.89%
    20. Washington +0.81%

    The National index gained 1.62%, quite a bit lower than last month. Phoenix once again rose by more than twice the national percentage and retained its position at the top of this table.

    The year over year comparisons look like this:

    1. Phoenix +32.4%
    2. San Diego +27.8%
    3. Seattle +25.5%
    4. Tampa +24.4%
    5. Dallas +23.7%
    6. Las Vegas +22.4%
    7. Miami +22.2%
    8. San Francisco +22.0%
    9. Denver +21.3%
    10. Charlotte +20.9%
    11. Portland +19.5%
    12. Los Angeles +19.1%
    13. Boston +18.7%
    14. Atlanta +18.5%
    15. New York +17.8%
    16. Cleveland +16.2%
    17. Detroit +16.1%
    18. Washington +15.8%
    19. Minneapolis +14.5%
    20. Chicago +13.3%

    The National Index gained 19.7%, half way up this table. Phoenix has remained at the top of the table for 26 consecutive months, a new all-time record.

    ©2020 Cromford Associate

    September 27 - Looking at the average price and median price charts over the last few months, you might get the impression that house prices are flat. This seems odd given that so many homes are going for more than the asking price. The secret to solving this riddle is to look at the average square foot chart:

    homes in chandler for sale

    Here we see the average size of a closed home dropping from 2,046 to 1,952 between mid-May and late September. Not only is this going to cause a 5% headwind to average prices, it also signifies a change in the mix away from high-end and towards the low and mid-range. This will push the average and median for closed homes downwards.

    We do not expect the drop in average home size to be maintained. After all, homes are not shrinking in size. Average and median prices are likely to bounce back once the high end buyers return, when temperatures drop below 100 degrees.

    ©2020 Cromford Associate

    September 25 - iBuyers selling homes to investors is not a new thing. It has been happening for many years. However, just as investors are buying more homes in general, they are also buying more homes from iBuyers. iBuyers have been recruiting specialized staff to focus on serving their investor customers.

    If we simplify things, by examining whether the buyer is an individual or couple (which we will call private), or a company of some sort, then we see the following counts of iBuyer sales by year across Maricopa and Pinal Counties:

      2018 2019 2020 2021
    Company 273 592 341 617
    Private 2509 5561 2896 1790
    % Company 10% 10% 11% 26%

    We can see that the iBuyers have traditionally sold about 1 in 10 of their inventory to a company rather than a private buyer. In 2021 this has grown to almost in 3

    Look at how the trend has accelerated during 2021:

    2021 Q1 Q2 Q3
    Company 163 208 246
    Private 680 570 540
    % Company 19% 27% 31%

    It will be interesting to see how far this trend will run.

    ©2020 Cromford Associate

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

    chandler real estate

    We have 4 more cities where the market moved in favor of sellers over the last month. These cities now include Scottsdale, Gilbert, Phoenix and Queen Creek.

    However some of the cities moving in favor of buyers have moved to a larger extent than last week, including Cave Creek, Paradise Valley, Mesa and Tempe.

    The average change over the past month is +0.4%, a smaller rise than we reported a week ago. So we do not have much of a reversal of the downward trend, just a plateau where the future direction is uncertain.

    We must remember that all cities are very much in a seller's market with supply unable to get even close to meeting demand, but the important thing to watch for is the trend. Right now there is not much of a trend, just uncertainty. If history is any guide, then a new trend will emerge pretty soon. Watch this space for early news of its direction.

    ©2020 Cromford Associate

    September 20 - The Cromford® Market Index has stabilized over the past few weeks and failed to follow through on its threat to drop below 240.

    realtor in chandler

    We can see a slight upward trend over the past 3 weeks confirming that demand has grown faster than supply. The rate of arrival of new listings has fallen back after a busy August. Demand is improving but a lot of this is coming from investors and iBuyers so could die away quickly. Demand from ordinary home-buyers is subdued, no matter what the media might be telling you.

    If the iBuyers stop their spending spree then demand could fall quickly and the CMI would probably resume a downward trend.

    ©2020 Cromford Associate

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

    Like last week, we have 6 cities where the market moved in favor of sellers over the last month. These cities now exclude Cave Creek, but Chandler has taken its place.

    Three more cities (Gilbert, Scottsdale and Phoenix) moved lower by less than 1% over the last month and two of these (Phoenix and Scottsdale) have moved in favor of sellers over the last week.

    The average change over the past month is +0.7%, the same as we reported a week ago.

    ©2020 Cromford Associate

    September 15 - We have mentioned several times that demand has shifted away from owner-occupiers of primary residences towards landlords, investors, fix-and-flips and second homes.

    We can see this from the intended use stated in the affidavits of value and comparing August 2021 with August 2020 in Maricopa County we see:

    1. Sales of homes intended to be primary residences are down 14% to 6,906
    2. Sales of homes intended to be rented are up 97% to 2,176
    3. Sales of home intended to be secondary residences are up 98% to 2,01
    4. ©2020 Cromford Associate

    September 12 - Based on affidavits of value filed during July we have collected the following statistics on iBuyer activity:

      Opendoor OfferPad Zillow Redfin Knock All iBuyers Combined
    Homes Purchased in August 2021 728 152 255 10 0 1,145
    Homes Purchased in August 2020 66 81 34 0 0 181
    Annual Change in Purchases 1003% 88% 650% N/A 0% 533%
    Homes Sold in August 2021 255 87 36 6 0 384
    Homes Sold in August 2020 54 48 25 0 2 129
    Annual Change in Sales 372% 81% 44% N/A -100% 198%
    Median Purchase Price in August 2021 $445,100 $400,000 $448,300 $412,500 N/A $439,800
    Median Purchase Price in August 2020 $254,000 $261,500 $281,000 N/A N/A $260,100
    Median Sale Price in August 2021 $431,000 $397,798 $369,500 $532,500 N/A $420,000
    Median Sale Price in August 2020 $284,750 $272,950 $263,000 N/A $394,005 $280,000
    Homes in Inventory at the End of August 2021 1,917 374 488 22 0 2,801
    Homes in Inventory at the End of August 2020 191 106 69 0 5 371
    Annual Change in Inventory 904% 253% 607% N/A -100% 655%

    The unprecedented buying spree accelerated during August, with Opendoor and Zillow in particular paying extremely high prices in order to grow their inventory. OfferPad has been somewhat less aggressive in its offers but still grew acquisitions by 88% compared to this time last year.

    As a group, the iBuyers acquired 1,145 homes in August, by far their highest monthly total ever. In the last 3 months they have bought 2,869 homes and sold only 983. Buying three times as many homes as they sell means they have grown inventory to a record of 2,801. We need to consider that the active listing count on ARMLS for Maricopa and Pinal was around 6,800 at the end of August, excluding UCB and CCBS listings. Some but not all of the inventory is listed on ARMLS, but either way, the iBuyers now hold a substantial percentage of the overall available stock of homes for sale.

    As of September 1, Opendoor had 331 listings in active status (not UCB or CCBS) while Zillow had 202 and OfferPad 162. This represents over 10% of the active listings excluding UCB and CCBS.

    We note that all the iBuyers are paying more for the homes they are buying then the homes they sell during the same month. The majority of the homes do not sell in the same month they are purchased, though this is becoming more common as an increasing number are sold to institutional investors. We should remember that the buy price is gross and includes the service charge that the iBuyer makes to the seller.

    The median price paid by Opendoor has increased by 75% over the past year. For Zillow the number is 60% and for OfferPad, 53%.

    The median price of homes sold in the overall market has increased by only 26%.

    ©2020 Cromford Associate

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

    chandler real estate

    Up from 4 last week, we have 6 cities where the market moved in favor of sellers over the last month. These cities now include Glendale and Peoria, so we can see the West Valley market is strengthening

    We have 11 cities which moved in favor of buyers, with Maricopa, Paradise Valley, Buckeye and Goodyear the most prominent among them.

    The average change for the 17 cities is +0.7%. This is the first time we have seen a positive average change since early March.

    Some of the cities that are showing a negative move over the last month, are showing a positive move over the last week. These are Phoenix, Chandler and Queen Creek, all 3 very substantial markets.

    The overall CMI has stabilized for now around 345 to 350. Given that normal balance is between 90 and 110, this remains a market that is very skewed in favor of sellers. However the demand is being heavily driven by investors and iBuyers, very different from this time last year.

    ©2020 Cromford Associate

    September 8 - The average rental price per square foot, based on ARMLS listings, has increased from $1.00 in September 2019 to $1.36 this month. That is a 36% increase in just two years and must be a budget problem for tens of thousands of tenants. The 19 year period from September 2000 to September 2019 saw only a 28% rise, so the cost of renting has escalated over a very short period. The housing bubble of 2004-2008 saw little to no rise in rents and in fact the low point was 64 cents in February 2005, just as the for sale market was reaching its highest frenzy. This time is very different - showing that the rapid appreciation in home values is due to real shortage of housing rather than speculative activity based on easy money.

    Although the cost of renting has jumped 36% over 2 years, the average home price per square foot has increased by far more - from $169.26 to $262.21 (September month to date), a jump of 55%.

    ©2020 Cromford Associate

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

     chandler realtor

    Like last week, we have 4 cities where the market moved in favor of sellers over the last month. These cities now include Surprise but Scottsdale lost its place in this short list.

    We have 13 cities which moved in favor of buyers, with Maricopa and Goodyear the most prominent among them

    Fountain Hills jumped into first place and is in a class of its own with falling supply and rapidly rising demand. More than any other location, Fountain Hills appeals to out of state buyers.

    We still have no city under 200, but 5 are now under 300, up from 3 last month.

    ©2020 Cromford Associate 

    August 31 - The latest S&P / Case-Shiller® Home Price Index® numbers were published today. They cover home sales during the period April 2020 to June 2021. As such they reflect f the extremely high rates of appreciation that we experienced during the second quarter of 2021. These have not occurred during the third quarter which saw little change over the last 2 months.

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

    1. Phoenix +3.58%
    2. Las Vegas +3.35%
    3. Tampa +3.04%
    4. Dallas +3.02%
    5. Miami +2.97%
    6. San Francisco +2.65%
    7. San Diego +2.56%
    8. Charlotte +2.56%
    9. Atlanta +2.47%
    10. Denver +2.35%
    11. Detroit +2.25%
    12. Portland +2.18%
    13. Los Angeles +1.93%
    14. Chicago +1.93%
    15. Minneapolis +1.84%
    16. Washington +1.72%
    17. Cleveland +1.68%
    18. Seattle +1.54%
    19. Boston +1.28%
    20. New York +0.82%

    The National index gained 2.18%, so Phoenix once again rose by far more than the average and retained its position at the top of this table.

    The year over year comparisons look like this:

    1. Phoenix +29.3%
    2. San Diego +27.1%
    3. Seattle +25.0%
    4. San Francisco +21.9%
    5. Tampa +21.5%
    6. Dallas +21.3%
    7. Miami +20.1%
    8. Las Vegas +19.8%
    9. Denver +19.6%
    10. Portland +19.2%
    11. Charlotte +19.0%
    12. Los Angeles +18.7%
    13. Boston +18.6%
    14. New York +16.7%
    15. Atlanta +16.5%
    16. Detroit +16.3%
    17. Washington +16.1%
    18. Cleveland +15.4%
    19. Minneapolis +13.8%
    20. Chicago +13.3%

    The national index increased by 18.6%. Phoenix has now been at the top of this table for 25 consecutive months, a new record.

    ©2020 Cromford Associate

    August 30 - We are leaving August with the average closed sale $/SF lower than we entered July, as can be seen from the red line in in the chart below:

    chandler real estate

    The red line is 2021, the green is 2020 and yellow is 2019. The date is in DD/MM/YYY format because I captured it from my screen in the UK and Tableau automatically adjusts dates for the user's location.

    This situation is similar for $500K to $800K but not quite so striking.

    Outside the price range $300K to $800K there is no increase and the red line is far below the green one.

    I believe the primary cause is the buying spree that the iBuyers are indulging in, but they are not the only buyers competing for homes in this price range, which now dominates the market.

    ©2020 Cromford Associate

    August 26 - Here is our latest table of Cromford® Market Index values for the single-family markets in the 17 largest cities

    chandler real estate

    More signs of the market stabilizing appear in this chart. We now have 4 cities showing improving conditions for sellers and they are all at the top of the table. We also have 3 cities with CMIs over 500 in contrast to zero last week.

    There are still 13 cities showing declines in their CMI over the last month, but 4 of these have seen an INCREASE in their CMI over the last week. These are:

    • Glendale
    • Peoria
    • Surprise
    • Tempe

    Gilbert has seen little change over the last 2 weeks with its CMI stuck at a high level around 320.

    The current CMI numbers indicate a strong seller's market with the only good news for buyers being that it is not as insane as during the first and second quarters.

    Among the secondary cities we see Anthem, Apache Junction, El Mirage, Litchfield Park, Sun Lakes and Tolleson all with CMIs that have moved higher over the last week. There is no city under 200.

    The total number of active listings without a contract is still rising, but only very slightly. Only 44 net listings were added over the past week across all areas and types and just 15 in the prior week. It would take many years to get back to a balanced market at this rate. We have just under 7,000 active listings without a contract and a balanced market would need between 25,000 and 30,000.

    August 24 - The active listing counts (excluding UCB and CCBS) have almost stabilized over the last 2 weeks and are now showing very little upward momentum. This is bad news for buyers because they are stabilizing at a very low level, although not as low as they were during the early spring. Several cities are seeing declines in supply over the last week, for example:

    • Scottsdale - 523 listings (529 last week, 545 two weeks ago) - long term average is 2,202
    • Mesa - 374 listings (378 last week) - long term average is 1,521
    • Avondale - 36 listings (39 last week, 40 two weeks ago) - long term average 333

    The situation is vastly different from that in 2005 when supply exploded and caused the market to crash starting in 2006. We still have a severe shortage of homes for sale, and although affordability problems are reducing normal owner-occupier demand, the demand from investors and iBuyers is taking their place.


    ©2020 Cromford Associate

    August 19 - Here is our latest table of Cromford® Market Index values for the single-family markets in the 17 largest cities

     chandler homes for sale

    The cooling trend is definitely slowing down and we now have another town showing a positive change in CMI over the past month - Fountain Hills. The Northeast Valley is clearly out-performing the rest of the valley with inventory staying lower and improving demand trends. Paradise Valley also has stable low inventory but demand there has weakened over the past month.

    We are also seeing CMI increases over the past week in two other major cities: Surprise and Tempe. Among the secondary cities we see Apache Junction, El Mirage, Laveen, Sun City West, Sun Lakes and Tolleson all moving higher in the last week. Several more major cities have their CMI move down by very little in the past 7 days: Gilbert, Glendale, Peoria and Phoenix are in that category. They look ripe for a possible turnaround.

    Because it is the most leading of leading indicators, there is nothing we can use to forecast the CMI. It is telling us that increases in demand are helping to balance the rise in supply, but supply is still nowhere near enough to meet the demand. Much of that increased demand is coming from iBuyers and buy-to-rent investors. These buyers do not have to worry about the affordability of their monthly mortgage payments. However their demand can be switched off in seconds by a simple business decision, as happened in 2Q 2020. We therefore need to treat their demand as less sustainable than that from regular owner-occupiers. These owner-occupiers are struggling with affordability concerns right now, despite interest rates that remain low.

    If the overall CMI stabilizes above 300, it means prices still have upward momentum that will probably manifest during the fourth quarter after a relatively quiet third quarter.

    ©2020 Cromford Associate

    August 18 - Based on affidavits of value filed during July we have collected the following statistics on iBuyer activity: 

      Opendoor OfferPad Zillow Redfin Knock All iBuyers Combined
    Homes Purchased in July 2021 657 143 156 6 0 962
    Homes Purchased in July 2020 59 40 44 0 0 143
    Annual Change in Purchases 1014% 258% 255% N/A 0% 573%
    Homes Sold in July 2021 171 84 50 7 0 312
    Homes Sold in July 2020 90 53 15 0 4 162
    Annual Change in Sales 90% 58% 233% N/A -100% 93%
    Median Purchase Price in July 2021 $427,800 $387,500 $424,794 $380,000 N/A $422,900
    Median Purchase Price in July 2020 $259,750 $240,000 $260,000 N/A N/A $259,200
    Median Sale Price in July 2021 $408,000 $397,800 $389,000 $357,601 N/A $400,000
    Median Sale Price in July 2020 $272,000 $289,000 $256,000 N/A $351,617 $274,000
    Homes in Inventory at the End of July 2021 1,444 309 269 18 0 2,040
    Homes in Inventory at the End of July 2020 181 71 60 0 5 317
    Annual Change in Inventory 698% 335% 348% N/A -100% 544%

    The numbers may be slightly higher than real life, because we have been unable to remove all the duplicate recordings, of which there are quite a few. Duplicate deeds are a common occurrence, and a constant problem for data analysts. We take the time to eliminate them in our Cromford® Public charts. However in the interest of timeliness, we use the uncorrected counts in the table above.

    The iBuyers have been on an unprecedented buying spree over the summer, with Opendoor and Zillow in particular paying extremely high prices in order to do so. We have seen reports of them paying $30,000, $50,000 and in one case $75,000 more than the next highest offer. OfferPad has been less aggressive in its offers and as a result, slipped into third place for purchase volumes in July. 

    • Opendoor made 657 purchases, by far their busiest month ever. Their previous record was 366 in September 2019, except for last month's 489.
    • OfferPad purchased 143 homes, less than in June, but still close to their high point.
    • Zillow purchased 156, a record total since their previous high was 132 in February 2019.
    • Redfin are still an insignificant player as far as their iBuying volumes are concerned and do not appear to be interested in building a big inventory of homes to sell. 

    Sales are ramping up, but currently lag far behind the purchases, with a large increase in inventory over the last months for all the current players except Redfin.

    We have frequently seen a few homes going to investors, but in the last 3 months more iBuyer homes are being resold to large scale landlords, including RS, AH4R and Progress. Since June 1, Opendoor has resold 37 homes to RS, 21 to AH4R and 8 homes to Progress. Smaller investors have also obtained a few homes from Opendoor, including Pagaya, FKH, Mile High and Olympus. Of 398 Opendoor sales since June 1, 91 have gone to companies rather than individuals, which is a 23% share pf their sales.

    Zillow disposed of 19% of its sales to companies, with Progress (10) the largest single buyer.

    OfferPad was not quite so active in selling to investors, with 11% of its sales going to 4 companies.

    Compared to 12 months ago, when owner-occupiers were driving the market, we are seeing much more demand being driven by investors and iBuyers. It is not all large scale investors - much of the current demand is from small-scale investors too.

    ©2020 Cromford Associate

    August 14 - The listing success rate for all areas & types has dropped to 88.9% and for the first time in 15 months is lower than a year earlier.

    However demand has picked up over the last couple of weeks and is starting to slow the cooling trend that started in March. This can be seen in the number of listings under contract which has jumped higher for 2 weeks now.

    ©2020 Cromford Associate

    August 12 - Here is our latest table of Cromford® Market Index values for the single-family markets in the 17 largest cities

    chandler homes for sale

    This table is gradually starting to show a deceleration in the cooling of the market. Scottsdale has joined Cave Creek in showing a positive change in CMI over the past month.

    Although the other 15 cities have all seen their CMI decline over the last month, two are reporting increases over the last week. These are Fountain Hills and Avondale.

    Supply is still growing in the vast majority of locations, but demand is also starting to increase in many of them

    ©2020 Cromford Associate

    August 11 - Over the past 3 or 4 months, the percentage of single-family homes purchased to rent to a third party has increased from around 14% to around 18% in Maricopa County. We have seen much higher percentages in the past, particularly between 2009 and 2014, but the current level is the highest level of investor buying since 2014. The peak buying month for investors was July 2012 with more than 33%, and the percentages always seem to hit a high point during the third quarter, mainly because investors are not put off by the high temperatures of summer, like owner occupiers often are.

    Rapidly escalating rental prices and appreciating asset values are encouraging more investors to build up their inventory of homes to rent. This means they are willing to offer higher prices and compete more aggressively with other buyers. Normal home buyers appear to have lost some of their enthusiasm for paying 30% more than last year, but investors and iBuyers appear to be OK with that situation.

    Institutional investors have increased their buying along with "mom & pop" investors. Because they use such a large variety of legal entity names, it can be tricky to identify quite how many different institutional players there are. However if we focus on the mailing address, we can group buyers together into clusters with the same address.

    In the last 3 months, the buyers with more than 200 properties added are:

    • 410 N Scottsdale Rd #1600 - 1,034 properties - this is Opendoor - an iBuyer
    • PO Box 4090 - 660 properties - this is Progress Residential - a large scale rental operator with headquarters in Scottsdale AZ
    • 717 N Harwood #2800 - 385 properties - this is RS - very active in rental ownership and headquartered in Dallas TX
    • 2150 E Germann Rd #1 - 262 properties - this is OfferPad - an iBuyer
    • 4343 N Scottsdale Rd #390 - 224 properties - this is Zillow - an iBuyer

    The larger scale institutional buyers attract a lot of attention but we can see that the iBuyers as a group are acquiring more homes. Of course they usually re-market those homes within a month or two, whereas the homes purchased to become rentals are removed from the re-sale inventory for a much longer term. We also note that small scale investors are still more significant as a whole than the large scale ones. Roughly 3 out of every 4 homes purchased as a rental are acquired by small scale investors. However 15 years ago, the small scale investors had 100% market share and large scale investors did not play in the single-family detached home space at all. The trend towards consolidation is also accelerated by many mergers between the large players.

    ©2020 Cromford Associate

    August 8 - The appreciation rate is tumbling quickly now that inventory is growing. The appreciation can be measured in many different ways, but based on the monthly average $/SF, the appreciation rate for all areas & types within the ARMLS database is now below 30%, having peaked at over 39% at the end of May. Obviously the rate based on the annual average $/SF is slower to react and is now leveling off near its peak at 24.4%.

    Both measures of appreciation are likely to fall further over the rest of 2021, though they are unlikely get back down to what we could consider normal during the next 4 months. Normal would be something less than 5%. We last saw that in 2016

    ©2020 Cromford Associate

    August 7 - The affidavit counts for Maricopa County in July give us the following key numbers:

    • overall units closed dropped 4.3% compared with a year earlier, from 11,205 to 10,720
    • the median sales price increased by 26.0% from $325,000 to $409,468
    • new homes closed fell 20.8% from 1,662 to 1,316
    • the new home median sales price rose 15.4% from $363,511 to $419,618
    • re-sale units closed fell 1.5% from 9,543 to 9,404
    • the re-sale home median sales price rose 27.9% from $317,000 to $405450

    New production has suffered from a number of problems with supply of essential materials. There is no shortage of demand, but they cannot complete homes quickly enough. For this reason many builders are not accepting orders until much later in the production cycle. That way prices realized will tend to be higher. The median price of a new homes is once again higher than a re-sale, but re-sales are still more expensive at the moment based on average price per square foot.

    There is more re-sale supply than there was a year ago in the high volume price range from $400,000 to $800,000. However supply below $400,000 is down sharply and supply over $1 million is lower than this time last year.

    ©2020 Cromford Associate

    August 5 - Here is our latest table of Cromford® Market Index values for the single-family markets in the 17 largest cities

    chandler homes for sale

    A similar table to last week but with a handful of developments that look positive for sellers. Cave Creek has consolidated its position at the top of the table and its CMI has increased for 7 consecutive weeks. This is primarily because its supply has been declining for 7 weeks, but during the last 3 weeks its demand has also increased.

    Cave Creek looks lonely at the top right now, but Scottsdale is making a serious attempt to join it. Scottsdale's CMI has increased for 2 weeks with lower supply and higher demand over that short period.

    Fountain Hills has also seen demand increase over the last 3 weeks, while supply has stabilized after a 14 week period of continuous increases.

    Our conclusion is that the Northeast Valley is behaving differently from the rest of Greater Phoenix. Across the whole market, supply is growing fastest between $400,000 and $800,000 while there is very little increase in supply over $1,500,000.

    Among the secondary cities, Anthem, Apache Junction, Laveen, Litchfield Park, Sun City West and Sun Lakes have improved for sellers over the past week. Casa Grande has seen a very sharp increase in active listings and now has more homes available than this time last year.

    ©2020 Cromford Associate

    August 3 - CoreLogic has just issued their Home Price Insights report for June 2021.

    This reports the highest ever annual appreciation rate in the USA of +17.2%

    One year ago their forecast for appreciation was -6.6%.This must go down as the most inaccurate home price forecast ever. Missed by 23.8 points.

    Their current forecast for June 2022 is +3.2%. We will see how that turns out next year.

    ©2020 Cromford Associate

    August 1 - Although inventory levels remain very low by normal market standards, the rise in the active listing counts over the past 4 months has been very noticeable. Here are a few examples, using the single-family detached segment and excluding UCB and CCBS listings:

    • Buckeye - up from 60 on April 1 to 155 on August 1
    • Casa Grande - up from 39 on April 1 to 125 on August 1
    • El Mirage - up from 6 on April 1 to 18 on August 1
    • Fountain Hills - up from 27 on April 1 to 70 on August 1
    • Laveen - up from 20 on April 1 to 51 on August 1
    • Maricopa - up from 46 on April 1 to 143 on August 1
    • Waddell - up from 9 on April 1 to 28 on August 1
    • Wittmann - up from 9 on April 1 to 27 on August 1

    However the active-adult and luxury segments have not experienced the same rise in supply, for example:

    • Paradise Valley - up from 117 to 120 between April1 and August 1
    • Rio Verde - down from 18 to 13 between April 1 and August 1
    • Sun City - unchanged between April 1 and August 1 at 65
    • Sun City West - unchanged between April 1 and August 1 at 36

    ©2020 Cromford Associate

    July 29 - Here is our latest table of Cromford® Market Index values for the single-family markets in the 17 largest cities

    chandler homes for sale

    A similar table to last week with all but one city seeing their CMI drop quickly over the last month. Cave Creek is still the exception thanks to a fall in supply and has now reached the number one spot for the first time ever.

    Scottsdale is making an attempt to join Cave Creek. It's CMI has risen during the last week from 390.6 to 394.1 thanks to improving demand and a slight fall in supply. We do not know yet if this is an anomaly or a new trend.

    All the other 15 cities are moving in favor of buyers.

    ©2020 Cromford Associate

    July 27 - The latest S&P / Case-Shiller® Home Price Index® numbers were published today. They cover home sales during the period March 2020 to May 2021. As such they reflect more of the extremely high rates of appreciation that we experienced during the second quarter of 2021.

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

    1. Phoenix +3.75%
    2. Las Vegas +2.92%
    3. San Diego +2.86%
    4. Dallas +2.77%
    5. Seattle +2.76%
    6. San Francisco +2.56%
    7. Tampa +2.50%
    8. Charlotte +2.43%
    9. Portland +2.41%
    10. Miami +2.37%
    11. Denver +2.24%
    12. Atlanta +2.19%
    13. Los Angeles +2.14%
    14. Minneapolis +2.14%
    15. Chicago +1.77%
    16. Detroit +1.74%
    17. Washington +1.71%
    18. Cleveland +1.52%
    19. Boston +1.42%
    20. New York +1.08%

    Phoenix is on top of this table once again, comfortably ahead of the national average, which was 2.14%

    The year over year comparisons look like this:

    1. Phoenix +25.9%
    2. San Diego +24.7%
    3. Seattle +23.4%
    4. Dallas +18.5%
    5. San Francisco +18.2%
    6. Tampa +18.0%
    7. Portland +17.5%
    8. Denver +17.4%
    9. Boston +17.4%
    10. Los Angeles +17.0%
    11. Charlotte +16.9%
    12. Miami +16.6%
    13. Las Vegas +15.5%
    14. New York +15.2%
    15. Detroit +15.2%
    16. Washington +14.8%
    17. Atlanta +14.3%
    18. Cleveland +13.6%
    19. Minneapolis +12.8%
    20. Chicago +11.1%

    The national figure was +16.6%, the highest appreciation rate ever recorded by Case-Shiller for the country as a whole.

    Phoenix has been in the top spot in the annual table for the last 24 months, breaking a record of 23 set in 1992 by Portland.

    ©2020 Cromford Associate

    July 24 - The weakening in demand that we have been reporting for several months is now showing up in the monthly sales numbers:


    chandler homes for sale

    The monthly sales rate is now just over 9,000, well below last year when it was over 10,000.

    Although the monthly sales rate has only declined for the last 5 weeks, our Cromford® Demand Index has been anticipating this since the end of the first quarter. This is because the CDI uses data from listings under contract to compute demand, not just closed listings.

    Currently demand appears to be stable and still above normal, but nowhere near as impressive as it was during the second half of 2020. If demand had stayed as strong as last year, I have little doubt that supply would not be rising as it is now. Having said that, supply is only rising at a modest rate and nothing like as fast as it did back in the summer of 2005.

    The summer of 2005 looked exactly like a bubble bursting with prices continuing to rise even as demand plummeted and supply soared. In those days the bubble was primed by rampant, mindless speculation and the widespread belief that prices only ever went up. In 2021 we have a very different situation with widespread caution, largely because so many people vividly remember the lessons of 2005. This caution will keep the rate of price increases lower than 2005 and we are already seeing a significant slowdown in appreciation. This is a healthy sign and a per-requisite to avoiding a painful period of declining prices. The latter still looks unlikely based on the current market readings.

    ©2020 Cromford Associate

    July 22 - Here is our latest table of Cromford® Market Index values for the single-family markets in the 17 largest citie

     chandler real estate

    A similar table to last week with all but one city seeing their CMI drop quickly over the last month. Cave Creek is still the exception thanks to a fall in supply.

    All cities are now below 500 for the first time since July 2020.

    ©2020 Cromford Associate

    June 21 - Based on affidavits of value filed during June we have collected the following statistics on iBuyer activity:

      Opendoor OfferPad Zillow Redfin Knock All iBuyers Combined
    Homes Purchased in June 2021 489 153 112 10 0 764
    Homes Purchased in June 2020 28 47 18 0 1 94
    Annual Change in Purchases 1646% 226% 522% N/A -100% 713%
    Homes Sold in June 2021 145 94 42 7 0 288
    Homes Sold in June 2020 136 76 33 0 7 252
    Annual Change in Sales 7% 24% 27% N/A -100% 14%
    Median Purchase Price in June 2021 $421,900 $385,000 $372,200 $319,250 N/A $402,600
    Median Purchase Price in June 2020 $264,500 $250,000 $280,750 N/A $385,000 $255,500
    Median Sale Price in June 2021 $377,500 $371,124 $416,450 $446,000 N/A $377,750
    Median Sale Price in June 2020 $270,000 $305,000 $290,000 N/A $333,881 $278,950
    Homes in Inventory at the End of June 2021 958 250 163 19 0 1,390
    Homes in Inventory at the End of June 2020 214 84 31 0 9 338
    Annual Change in Inventory 348% 198% 426% N/A -100% 311%

    All the iBuyers grew their purchases in June, clearly driving to recover from the slump in their volumes that started in 4Q 2019. In this most were very successful:

    • Opendoor made 489 purchases, easily their busiest month ever. Their previous record was 366 in September 2019.
    • OfferPad purchased 153 homes, also setting a new record for themselves. The previous high point was October 2018 when they bought 134.
    • Zillow purchased 112, not a record since they bought 132 in February 2019, but a large increase compared with any month in the last 2 years and back to the level of June 2019.
    • Redfin are a recent new-entrant, but 10 is their highest monthly total to date.

    Sales were much less noteworthy, with only 14% growth compared to June 2020 for the iBuyers as a group. However, sales are now growing after many months with sales decline due to lack of inventory.

    With purchases exceeding sales by a very large margin, iBuyer inventory has increased sharply during the month of June. Inventory is up 311% from a year ago with Opendoor holding the lion's share - 69%. OfferPad is second with 18% while Zillow has 12% and Redfin just 1%.

    764 purchases represent a much higher share of the market than we have seen for the last 18 months. The iBuyers have bought themselves back into the game.

    ©2020 Cromford Associate

    July 17 - One of our favorite ways to measure the state of the market is the Contract Ratio. Please see the Definitions section if you are not familiar with it.

    It compares available listings with the number of homes under contract and a high number means we have a hot market.

    In every sector, the contract ratio is down from March, and in some it is now lower than this time last year.

    Lower than July 2020:

    • Avondale
    • Buckeye
    • El Mirage
    • Gilbert
    • Glendale
    • Mesa
    • Phoenix
    • Queen Creek
    • Surprise
    • Tempe
    • Tolleson

    Same as July 2020

    • Anthem
    • Chandler
    • Laveen
    • Litchfield Park
    • Maricopa

    Higher than July 2020

    • Apache Junction
    • Arizona City
    • Casa Grande
    • Cave Creek
    • Fountain Hills
    • Gold Canyon
    • Goodyear
    • Paradise Valley
    • Peoria
    • Scottsdale
    • Sun City
    • Sun City West
    • Sun Lakes

    The locations that are hotter than last year are mostly either adult-oriented or luxury home areas.

    The largest cities (Phoenix, Mesa) are mostly cooler than they were 12 months ago.

    ©2020 Cromford Associate

    July 15 - Here is our latest table of Cromford® Market Index values for the single-family markets in the 17 largest cities

    chandler realtor

    Most cities are seeing their CMI drop quickly now as inventory rises. Because supply has been so low recently, the increases are large in percentage terms. For example Chandler has 150 active single-family listings (excluding UCB and CCBS) which is double the 75 it had at the beginning of April. However, the long term average count for Chandler is 940 and the maximum we have measured was 2,481. So 150 would seem very low if we had not seen 75 three months earlier.

    Paradise Valley is not seeing much of an increase in supply so far, but its demand has been falling from unusually high levels.

    Cave Creek is unusual in that its supply is at a similar level to April. It has been zooming up the chart and looks likely to reach the number two spot soon.

    With more supply to choose from, and list prices increasing more slowly, some buyers are being attracted back into the market. We are seeing a slight rise in demand in several cities. These include Glendale, Maricopa and Queen Creek. When supply increases and demand falls, the CMI heads down very quickly, but if demand starts to rise at the same time as supply increases, the CMI's rate of decline could well moderate.

    An interesting time to be watching the market.

    ©2020 Cromford Associate

    July 11 - A quick glance at the chart showing the average $/SF for active listings shows us that it is now declining from the peak of $361.32 reached during week 22 (early June)

     chandler homes for sale

    This is for all dwelling types across Greater Phoenix and excludes listings in UCB or CCBS status.

    However, you would be mistaken if you think most sellers are asking less for their homes. The primary reason for the decline is the unbalanced increase in the number of active listings since early June. Most of the extra listings have been in the price range between $250,000 and $1.000,000. The number of active listings over $1,000,000 has not changed much. This means the mix has moved away from luxury homes and this has caused most of the decline in the average price per square foot. Here is the chart for homes between $250,000 and $1,000,000:

    chandler real estate

    chandler real estate

    We can see signs of stabilization in the luxury market, which appears to be range-bound between $549 and $558 per square foot.

    I recommend that you experiment with the filters on this chart to determine which segments remain strong and which are weakening. The Condo segment looks to be the weakest of the 3 dwelling types.

    ©2020 Cromford Associate

    July 8 - Here is our latest table of Cromford® Market Index values for the single-family markets in the 17 largest cities

    chandler homes for sale

    Cave Creek has taken over from Goodyear as the only city to have improved for sellers over the past month. The other 16 cities are moving in a direction that is favorable for buyers. The average change in the CMI over the past month is -14.5%, which is an acceleration of the downward trend from -13.2% last week.

    We now have only 6 cities with a CMI over 400. They are all still far above normal, but the trend is clearly downwards.

    ©2020 Cromford Associate

    June 7 - The affidavits of value have been counted for Maricopa County and although the prices have not all been double-checked, we have preliminary pricing statistics for June 2021.

    For single-family and condo / townhouse properties:

    • total units closed were 12,220 which is up 19% from June 2020
    • newly built units closed were 1,661, up 2% while re-sale units were 10,559, up 23%
    • the monthly median sales price was $400,000 which is up 24.2% from June 2020
    • the new build median was $407,047 which is up only 9.3% from June 2020
    • the re-sale median was $400,000, which is up 28.2% from June 2020

    The new build median is back above the re-sale median, unlike last month. However, the rate of increase of re-sale prices continues to out-perform new home prices by a wide margin.

    ©2020 Cromford Associate

    July 5 - Although the market is starting to cool, it remains very hot and favorable to sellers, so we should be looking for indicators that help us determine how far it is below the peak and how far it has to go before it becomes normal. Today I will look at one measurement that is very poor for doing this and another that is very good. Surprisingly, the one that is very poor is widely measured and discussed while the one that is very good is hardly used at all.

    The poor indicator is average days on market. This is something we have found to be a trailing indicator, often 6 months behind the current state of the market. It is also unreliable and plagued by accuracy difficulties. It is currently on a declining trend and has not yet recognized the cooling that started in mid-March. It will probably start increasing by October. My advice is to ignore it.

    The useful indicator is the listing success rate. This is currently reading 91.1% for all areas & types in ARMLS. This is down from the peak of 93.3% that was reached around the end of May. We can see that it is a little slower to react than the Cromford® Market Index, but when it does react, it provides a nice reliable signal. It is now in a clear declining trend. However it has only fallen by 2.2 points. A normal reading would be around 66.5% - the long term average. So we would need to see another 24.6 point fall before it suggested we were back to a normal balanced market.

    Below is the weekly chart showing the listing success rate measured weekly during 2021 and 2015, the last year where it fell below 66.5%. Go here to see the interactive version.

     Gilbert real estate

    Clearly we have a long way to go before we get down to 66.5% and it is not within striking distance in the near term.

    The chart also illustrates the one drawback of the listing success rate - it takes a dive every year in January due to the large number of listings that expire on December 31.

    ©2020 Cromford Associate

    July 1 - Here is our latest table of Cromford® Market Index values for the single-family markets in the 17 largest cities

    Chandler homes for sale

    Goodyear stands out as the only city to have improved for sellers over the past month. However the other 16 cities are moving quickly in a direction that is favorable for buyers. The average change in the CMI over the past month is -13.2%, which is an acceleration of the downward trend from -9.7% last week.

    Active listings are still at low levels but they are growing fast. Several cities, such as Avondale, El Mirage, Gilbert, Maricopa and Queen Creek, have an active count (excluding UCB and CCBS) that is at least double what it was in March. This is still a low number, but the additional choice for buyers must be welcome.

    Buyers have lost some of their motivation, faced with vastly higher prices and bidding wars that make them feel under-valued. We have been saying that demand is much weaker than the second half of last year for some time and many people have questioned how we can believe that. It is just mathematics. When supply is very low, weak demand looks and feels like strong demand. It is only when the supply grows that you realize how weak the demand really was. New listings are getting fewer showings and fewer offers, but still enough to sell quickly at a nice percentage of the asking price (often more than 100%). Demand still exceeds supply by a long way, but the gap is narrowing fast.

    ©2020 Cromford Associate

    June 30 - A couple of weeks ago we commented that the rate of decline for the Cromford® Market Index was less than the rate of increase during the first quarter.

    This is no longer the case, as can be seen from the daily chart below:

    chandler real estate

    The CMI is now dropping quickly. The number of active listings is increasing by roughly 300 per week. The number of showings is in decline and the number of contracts getting signed is getting smaller as each week goes by.

    All this makes sense. When prices leap by over 35%, demand is suppressed and supply stimulated.

    The obvious question is how far this trend will go before it levels out. The honest answer is that no-one knows. Buyers are more cautious now than they were in 2005. Sellers' normal first reaction will be denial. Some will blame their agent. These sellers will probably be complaining that they are not getting the viewings and offers their house deserves. This is because they have so quickly become accustomed to a frenzied market. They will now need to get re-adjusted. The market still favors sellers, but buyers will start to gain a little more respect.

    400 is still a very high CMI, but the change in the market that we first detected and reported in mid-March is now very palpable.

    ©2020 Cromford Associate

    June 29 - The latest S&P / Case-Shiller® Home Price Index® numbers were published today. They cover home sales during the period February 2020 to April 2021. As such they do not include all of the extremely high rates of appreciation that we experienced during the second quarter of 2021, but they are starting to show rapid price gains..

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

    1. Phoenix +3.29%
    2. San Diego +3.17%
    3. San Francisco +3.14%
    4. Seattle +3.08%
    5. Dallas +2.90%
    6. Denver +2.71%
    7. Las Vegas +2.52%
    8. Boston +2.49%
    9. Charlotte +2.42%
    10. Miami +2.36%
    11. Tampa +2.33%
    12. Washington +2.30%
    13. Minneapolis +2.17%
    14. Detroit +2.16%
    15. Portland +2.11%
    16. Chicago +1.93%
    17. Cleveland +1.89%
    18. Los Angeles 1.78%
    19. Atlanta +1.75%
    20. New York +0.85%

    Phoenix is back on top of this table again, comfortably ahead of the national average, which was 2.09%

    The year over year comparisons look like this:

    1. Phoenix +22.3%
    2. San Diego +21.6%
    3. Seattle +20.2%
    4. Boston +16.2%
    5. Dallas +15.9%
    6. Denver +15.4%
    7. Tampa +15.4%
    8. Portland +15.4%
    9. San Francisco +15.1%
    10. Charlotte +15.0%
    11. Los Angeles +14.7%
    12. Miami +14.2%
    13. Washington +13.6%
    14. New York +13.5%
    15. Detroit +13.3%
    16. Cleveland +13.3%
    17. Las Vegas +12.5%
    18. Atlanta +12.3%
    19. Minneapolis +11.3%
    20. Chicago +9.9%

    Phoenix was top of this table for the 23rd consecutive month. The national average was 14.6%

    ©2020 Cromford Associate

    June 26 - Back in 2008 everybody was focused on forclosures,, but in 2021 I have yet to get a single question about them.

    We still maintain the foreclosure database and the REO inventory, but there is precious little going on. Despite speculation that the COVID-19 pandemic would lead to increasing numbers of homes going into foreclosure, all that has happened so far is that the number of pending foreclosures in Maricopa County has dropped from 1,238 a year ago to just 611 today. This is close to an all-time low since we started measuring in 2002.

    For comparison, the number of pending forclosures for this week in June was:

    • 2002 - 7,241
    • 2005 - 3,385
    • 2009 - 45,365

    The current count of 611 is so low that even if we saw a ten-fold increase in foreclosures, it would still be considered normal, not excessive.

    If there is anyone still interested, the pending foreclosure chart is here.

    ©2020 Cromford Associate

    June 24 - Here is our latest table of Cromford® Market Index values for the single-family markets in the 17 largest cities

    chandler homes for sale

    For the third week running, we have all 17 cities moving in the same direction over the last month - favorable to buyers. The average change for the month is -10.7%, which compares with -9.7% last week.

    The flow of new listings has been strong with just over 10,000 being added per 28 day period across all areas & types. This excludes Coming Soon listings. In the same period in 2020 and 2019 we saw between 8,500 and 9,000 new listings every 28 days. The extra 250 to 400 listings per week are helping to grow inventory back towards normality, but there is a very long way to go still. The bottom city, Tempe, is the first to see its CMI fall below 300 during this phase. Our top 2 cities, Avondale and Fountain Hills both saw declines of 19% over the last month and we no longer have any city over 700. Normality is bo longer such a far-fetched idea. Normality corresponds to a CMI between 90 and 100.

    Contrary to the overall trend, some cities are starting to see an increase in their CMI over the past week. These include Goodyear and Cave Creek in the above list of 17. Among the secondary cities we find Arizona City, Gold Canyon, Litchfield Park, Sun City, Sun City West and Sun Lakes where the same is true.

    It is still very hard work buying a home, but it should by now be obvious that this is not really due to strong demand; it is almost entirely due to the weakness of supply. This means it is crucial to keep a close watch on how long the new listings trend lasts and how much inventory starts to build. 

    ©2020 Cromford Associate

    June 22 - The pricing action has been very interesting over the past couple of month. Below is the chart showing the last 6 months with daily readings of

    • the average $/SF list price forn active listings
    • the average $/SF list price for listings under contract
    • the average $/SF list price for listings that closed in the last month
    • the average $/SF sale price for the same closed listings

     Chandler real estate

    The average $/SF for active listings has become range bound between $310 and $320 and is just bouncing between these levels, though this is much higher than the $280 we measured in mid December. The new listing flow is favoring the mid range rather than the top end of the market, so although sellers have not lost any of their optimism, the mix is less biased towards very expensive homes than it was a few months ago. On April 28, the average sq. ft. for an active listing was 2,659 with a price of $1,011,267. This has now fallen to 2,516 and $887,159 reflecting far more mid range homes offered for sale.

    This same change in the mix is likely to keep the closed pricing flatter during the summer months, usually a quiet time for luxury market.

    We can see that the gap between the asking price and the selling price has widened. A premium of 1.79% over list price is now the average, up from 1.27% last month.

    Do not be misled into thinking prices have lost their underlying momentum. Although supply is now increasing, it remains a very long way below the quantity necessary to keep prices flat.

    ©2020 Cromford Associate

    June 21 - Based on affidavits of value filed during April we have collected the following statistics on iBuyer activity:

      Opendoor OfferPad Zillow Redfin Knock All iBuyers Combined
    Homes Purchased in May 2021 347 93 56 7 0 503
    Homes Purchased in May 2020 23 27 1 0 2 53
    Annual Change in Purchases 1409% 244% 5500% N/A -100% 849%
    Homes Sold in May 2021 142 76 31 0 0 249
    Homes Sold in May 2020 147 84 28 0 6 265
    Annual Change in Sales -3% -10% 11% N/A -100% -6%
    Median Purchase Price in May 2021 $400,200 $363,200 $351,650 $550,000 N/A $390,300
    Median Purchase Price in May 2020 $283,800 $263,500 $336,600 N/A $343,400 $278,700
    Median Sale Price in May 2021 $385,750 $344,000 $355,000 N/A N/A $346,000
    Median Sale Price in May 2020 $265,000 $270,050 $269.950 N/A $399,668 $273,950
    Homes in Inventory at the End of May 2021 614 191 93 16 0 914
    Homes in Inventory at the End of May 2020 318 115 71 0 15 519
    Annual Change in Inventory 93% 66% 31% N/A -100% 76%

    Opendoor went on a spending spree in May, buying 347 homes, up from 200 in April and their biggest month since September 2019. In order to do so they increased their offers to a median of $400,200. This is up 41% compared with a year ago, more than the market as a whole.

    All iBuyers were very quiet in May 2020, and in particular, buying was very subdued (probably a strategic mistake). As a result the purchase counts are up by outrageous percentages, and 849% as a group.

    All the iBuyers (except Knock who has left the market) are increasing their purchase volumes faster than sales, so inventory is up sharply from last month and up 76% compared to a year ago.

    It is a sign of the times that iBuyers are mostly paying higher prices to buy homes than they are achieving for homes they are selling. Most of the homes they sell were purchased in prior months, so this does not mean they make negative margins, but it does mean replenishing inventory gets increasingly expensive.

    ©2020 Cromford Associate

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

    chandler real estate



    For the second week running, we have all 17 cities moving in the same direction over the last month - favorable to buyers. The cooling trend is becoming more apparent as inventory levels start to recover from the extreme lows reached 3 or 4 months ago. Sales counts remain very healthy but the number of listings under contract is in a falling trend meaning that demand is in decline, albeit a very mild decline.

    Most areas are seeing higher active counts due to the fast arrival of new listings. Although many of these go under contract in a matter of days, if not hours, the number of listings available has grown by quite large percentages since February. Examples include:

    • Phoenix - minimum was 530 on Feb 24 - now we have 809 - up 53%
    • Mesa - minimum was 124 on Feb 17 - now we have 255 - up 106%
    • Scottsdale - minimum was 377 on Mar 3 - now we have 499 - up 32%

    To put these into context, the long term averages are:

    • Phoenix - 4,327
    • Mesa - 1,536
    • Scottsdale - 2,222

    Normal levels of supply are still a long way over the horizon.

    All 17 cities still have CMI readings over 300 which indicate there are plenty of price increases still to come. However, the pace of appreciation should start to fall off if the CMI continues to show in a strong declining trend.

    ©2020 Cromford Associate

    June 14 - Looking at the daily chart for the Cromford Market Index, we can see that the downward trend is weaker than the prior upward trend.

    chandler real estate

    It has taken 95 days to fall from the peak of 515 to 436. It took only 67 days to rise by the same amount.

    In 2005, the CMI lost 23.6% of its value during the first 95 days following the peak in April that year. In 2021 we have seen a fall of only 15.3%, a significantly slower cool down.

    ©2020 Cromford Associate

    June 12 - New listings continue to arrive at a strong pace and supply is growing at the fastest rate we have seen since April 2020. Those who did not believe us when we said the market had started to cool in the second half of March must surely believe us now. This is cooling akin to an Arizona Summer when 110 degrees feels quite a bit less toasty than 117 degrees. But still hot.

    Here is the weekly chart showing active listings excluding actives listings in UCB and CCBS status.

     Chandler real estate

    Active counts are leading indicators and it is tricky to predict where they will go, but the last 2 weeks suggest that more people are getting tempted by the high prices.

    If you go to the interactive version of this chart you can check out 2005 and see how active listings grew massively from around 9,000 to almost 24,000 between June and December. The key question is whether our counts in 2021 will follow a similar trajectory or increase at a more moderate pace. It looks unlikely that the current upward trend will be reversed, but you never know for sure.

    Nobody can accuse this market of being boring.

    ©2020 Cromford Associate

    June 10 - Here is our latest table of Cromford® Market Index values for the single-family markets in the 17 largest cities

    ” chandler homes for sale

    We have all 17 cities moving in the same direction over the last month - favorable to buyers. Given how unfavorable to buyers the market has been for the last 12 months, this is not a surprising development.

    The market is working pretty much as any economics student would expect. Higher prices reduce demand and tend to encourage more supply. Although sales volumes remain well above normal, the number of listings under contract is unimpressive and demand is once again slowly dissipating.

    Supply is still very low by any standard, but it is clearly rising, largely thanks to a healthy dose of new listings. The pace at which it is rising is still slow, but it is enough to cause all of the CMIs to retreat from the highs established in March.

    However, we should still remember that any CMI over 300 is extraordinary and predictive of yet more price increases. Only when it drops below 110 do we have a balanced market where buyers and sellers are equally matched in negotiation power. At this point prices would be expected to rise in line with general inflation.

    ©2020 Cromford Associate

    June 8 - Interesting chart activity for the average list price per sq. ft. - see below

    Chandler homes for sale

    The under contract line (green) had moved far higher than the closed line (brown) at the start of April, which is a signal that sales prices will move sharply higher. The green line then went sideways for an extended time until late May. The closed line caught up with the under contract line in mid-May and inevitably it now has to wait for the green line to move before it can move higher. The green line has moved higher over the past 2 weeks but it will take time for the brown line to follow suit. In the meantime we see the closed price line move sideways and even lower, reflecting the earlier flat patch for the green line.

    There may be some who see the weakness in the closed pricing and think this is the start of a downward trend. Nope. Two things tell us this is not the case. The green line is moving up again and the gap between the brown and red lines is widening, showing us that buyers are paying increasing premiums over list price. This is not an environment where closing prices can drop for long, though a brief pause is quite normal and has already occurred a couple of times over the past year. November to December 2020 was the most recent example. A brief pause may last several weeks or even a couple of months. Based on the green line above, this pause is expected to last about 6 weeks.

    ©2020 Cromford Associate

    June 5 - The monthly median sales price in May 2021 was $390,000.

    This means the median has doubled since January 2015. Half of that increase occurred in the most recent 12 months.

    The owner of the median house has seen their home equity increase by $97,500 during the last year.

    Turning to the average sale price, this exceeded half a million dollars in May 2021 for the first time ever, coming in at $506,226.

    This means the average has doubled since February 2015. Half of that increase took place during the last 11 months.

    The owner of the average house has seen their home equity increase by $126,557

    If you are not sure what the difference is between median and average you can find plenty of examples and definitions using Google, so I won't repeat the information here.

    However, in housing, a median price can be thought of as a "typical house price" where half the homes are more expensive and half are cheaper.

    The average is usually quite a bit higher because high end homes distort the distribution pattern. It sounds weird to say it, but most houses are cheaper than average.

    ©2020 Cromford Associate

    June 4 - The affidavits of value have been counted for Maricopa County and although the prices have not all been double-checked, we have preliminary pricing statistics for May 2021.

    For single-family and condo / townhouse properties:

    • total units closed were 11,535 which is up 47% from May 2021 (which was heavily retarded by the COVID-19 restrictions in spring last year)
    • newly built units closed were 1,832, up 18% while re-sale units were 9,703, up 55%
    • the monthly median sales price was $392,500 which is up 24.6% from May 2020
    • the new build median was $391,475 which is up only 5.3% from May 2020
    • the re-sale median was $393,000, which is up 31.4% from May 2020

    We have never seen the re-sale median over-take the new build median like this before. A fascinating example of the negotiation power of sellers in a supply-constrained market.

    We can clearly see why home builders are motivated to get away from a list price policy towards a more auction-based pricing mechanism. Not good news for buyers but probably good news for the builders' shareholders.

    ©2020 Cromford Associate

    June 3 - Here is our latest table of Cromford® Market Index values for the single-family markets in the 17 largest cities

    Buckeye again stands out as the only city showing an improving situation for sellers. However all 17 cities are still well over 300 indicating a very strong imbalance in the entire market which puts buyers at a huge disadvantage.

    Although some cities like Glendale, Goodyear and Maricopa have seen their CMI decline significantly over the past month, we are seeing others including Tempe, Avondale, Scottsdale and Phoenix where the CMI has stabilized. Unlike the situation in 2005, this is no rout. The declining trend in demand has almost run out of steam and is rising again in a few crucial places including Phoenix and Queen Creek.

    The downward trend in the CMI is being caused by a stronger flow of new listings. This increased flow of new listings and whether it continues is key to the direction of the market. If it falls off we could see another increase in the CMI, but if it continues at the current rate we can expect the CMI to continue to fall at a gradual pace. If the flow increases still further then this will give buyers more flexibility and allow the CMI to drop back towards more normal levels.

    My advice is watch the flow of new listings very carefully.

    ©2020 Cromford Associate

    May 31 - The latest building permit numbers have been added to the Tableau charts in the Cromford® Public section of this site.

    Year-to-date (at the end of April) we have seen 40% more single family permits than in 2020. The total of 12,815 across Maricopa and Pinal counties is the sixth highest we have seen, but lower than 1999, 2003, 2004, 2005 and 2006.

    We are finally back to a "normal level" of single-family permits after 13 consecutive years of low growth.

    ©2020 Cromford Associate

    May 30 - Major changes are happening in new construction as developers adjust to the market conditions. Some builders are now moving away from price lists to auction-style sales. They realize that the re-sale market has been operating that way and achieving higher prices than similar new homes. They are also becoming increasingly reluctant to spend money on buyer's agent commissions, as selling new homes has become more of an exercise in fending off the excess potential buyers. This happened in 2005 too and we see this trend getting stronger. Many have reduced commission from 3% to 2.5% or 2% and most are paying based on the base price without lot premiums and upgrades.

    County recordings are showing new homes purchased from builders immediately resold for much higher sums of money, the profit for the first buyer sometimes running into 6 figures.

    ©2020 Cromford Associate

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

    Chandler Realtor

    The picture is similar to last week except that Buckeye has taken over from Surprise as the only city that is improving for sellers.

    All the other 16 cities are improving for buyers, in almost all cases thanks to having a few more active listings than this time last month. However supply remains extremely low compared with normal. The market has been cooling for about 10 weeks now but remains extremely lop-sided with sellers having a strong advantage everywhere because of the scarce supply.

    We still hear many people (including several who should know better) referring to very strong demand. This is almost completely wrong. Not completely because demand is pretty high at the top end of the market. But lower priced areas like Avondale are showing demand that is below normal. I know this is hard to believe but the fact is that 99 people out of a 100 cannot tell the difference between a market that is hot because of strong demand and a market that is hot because of weak supply. If you want to be able to tell the difference you have to do the mathematics and measure supply and demand independently, as we do.

    It is true that demand was unusually strong in the second half of 2020, but that is long gone now and the sharp upward trajectory of prices is doing what it is supposed to do according to Economics 101 - reducing demand. Listings under contract look weaker than in 2019 and similar to 2018. The difference is that in 2018 and 2018 supply was only very low, not excruciatingly, eye-wateringly low as it has been throughout 2021.

    Most buyers don't care either way, they just know that the market is crazy. But it is useful to know that each week that passes is seeing it get less crazy rather than more crazy.

    We are seeing the CMI fall more slowly than it rose, which confirms we are not in a bubble bursting situation. It also means there is almost no chance of prices falling in the short or medium term. Worst case would probably be 2023 and that would take most things to deteriorate much more than we currently expect. We would describe a fall in prices as very unlikely but not impossible by 2024. We would need the CMIs to fall well below 100 and the lowest one in the table above is 321.                    

    ©2020 Cromford Associate

    May 25 - The latest S&P / Case-Shiller® Home Price Index® numbers were published today. They cover home sales during the period January 2020 to March 2021. As such they do NOT include the extremely high rates of appreciation that we are experiencing during the second quarter of 2021.

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

    1. Seattle +4.68%
    2. Phoenix +3.30%
    3. Denver +3.30%
    4. San Diego +3.22%
    5. San Francisco +3.16%
    6. Dallas +2.81%
    7. Boston +2.61%
    8. Charlotte +2.55%
    9. Portland +2.55%
    10. Washington +2.35%
    11. Los Angeles +2.29%
    12. Las Vegas +2.29%
    13. Cleveland +2.02%
    14. Tampa +1.93%
    15. Chicago +1.88%
    16. Miami +1.84%
    17. Atlanta +1.80%
    18. Minneapolis +1.72%
    19. Detroit +1.15%
    20. New York +0.58%

    Despite coming in with 3.3% appreciation in one month, Phoenix was beaten by Seattle and equalled by Denver.

    The national average increase was 1.95% over the prior month, a very large number, but 13 of the 20 cities above came in higher than this.

    New York stands out as this month's laggard.

    Comparing with this time last year we see the following changes in the indexes:

    1. Phoenix +20.0%
    2. San Diego +19.1%
    3. Seattle +18.3%
    4. Boston +14.9%
    5. Tampa +13.7%
    6. Charlotte +13.5%
    7. Portland +13.5%
    8. Dallas +13.4%
    9. Denver +13.4%
    10. Los Angeles +13.4%
    11. Cleveland +12.9%
    12. New York +12.3%
    13. San Francisco +12.2%
    14. Washington +12.2%
    15. Miami 12.2%
    16. Detroit +12.1%
    17. Atlanta +11.2%
    18. Minneapolis +11.0%
    19. Las Vegas +10.6%
    20. Chicago +9.0%

    Phoenix remains in the number one spot for the 22nd consecutive month. The national average was 13.2%, the highest reported since 2005.

    The housing market is not complicated. Yet the headline in Bloomberg reads "U.S. Home Prices Surge Most Since 2005, Fueled by Low Rates". Wrong reason again. Why is it that everything in housing is attributed to interest rates? This is intellectual laziness. The surge in home prices has almost nothing to do with the interest rate environment. It has everything to do with the longest period of underbuilding that the USA has experienced since the 1930s. The number of homes built since 2007 has stayed extraordinarily low by any standard - 14 years of low output. We would need to see roughly 10 years of home construction at 2 million homes a year to escape from the under built situation.

    Raising interest rates does not create new supply. In fact it encourages people to make do with the homes they already own, since would risk paying a higher rate for their home loan if they moved. So fewer homes come to market. Rasing interest rates would certainly reduce demand, but high demand is NOT the problem that is driving up prices.

    Sounding like a broken record: we have too little supply, not too much demand. It is not complicated but it is not amenable to a quick fix. The Case-Shiller numbers will go a lot higher from today before they start to lose momentum.

    Meanwhile home builders are deliberately slowing down their sales due to global supply constraints. This will not bother them too much, since they will achieve higher prices the longer they wait. Their waiting lists are just going to grow longer.

    For home builders this is a wonderful opportunity that comes perhaps once or twice a century. Compensation perhaps for the misery they endured between 2007 and 2012.

    ©2020 Cromford Associate

    May 24 - We have added a new Tableau chart (FT21) to the Cromford® Public section which shows recorded sales in Maricopa and Pinal counties, broken down by finance type. This allows us to track the percentage of all-cash purchases.

    I have heard many incorrect things stated about cash purchases, so I hope this chart will enable subscribers to Cromford® Public to see for themselves what is really going on. Being based on recorded documents, Cromford® Public is much less timely than the main section of the Cromford® Report (which is based on daily ARMLS data). It takes many weeks to get the images of the deeds and affidavits converted into database form and to find and correct the majority of the data errors, of which there are many hundreds every month.

    However the data in the Cromford® Public tends to be more accurate and is certainly more complete than the ARMLS data, so it is a good source when time is not of the essence.

    We can see that cash purchases hit a very low point of 14.1% in May 2020 but they have been recovering to a more normal level of 23.1% in March 2020. The trend favors cash over finance because sellers prefer the certainty of a cash offer compared with a financed offer which the lender might not approve. In a very competitive market, the percentage of cash sales tends to increase, but as of March 2021, the 23.1% level is similar to March 2018 and March 2019 not unusually high. In April 2021 and May 2021 we would not be surprised to see higher than normal percentages as many investors compete with each other for the very limited number of homes on offer.

    The percentage of cash purchases is much higher for homes over $2 million. In March 2021, 55.7% of buys over $2 million were all-cash.

    The percentage of cash purchases is much lower for new homes. In March 2021, only 8.6% of new homes were all-cash.

    The percentage of cash purchases is higher in Age-Restricted or Age-Targeted communities, 33.5% in March 2021. Here the buyers are mostly over 55 and tend to borrow less than younger home buyers.

    Cash purchases are also more common in non-MLS re-sales. Here we see 35% cash in March 2021, though this is well down from 2018 and 2019 levels when it was common to see 50% cash or more. A big swing towards financed non-MLS transactions occurred in April 2020, which may be because government measures to combat COVID-19 made borrowing money easier and more attractive.

    ©2020 Cromford Associate

    May 22 - I am surprised to see the story "Mega Landlord Are Snapping Up Zillow Homes Before the Public Can See Them" was the number one most-read article on Bloomberg News today.

    Surprised because

    1. This is old news - the large corporate investors have been buying homes from the iBuyers for several years now.
    2. The volume of homes involved is so tiny (a handful per month) that it has almost no measurable effect on the overall market.
    3. The story is written as if there is some reason why both parties should not be doing this.
    4. Anyone relying on Zillow-owned property as their source of homes is in for some big disappointment. Their inventory is very small. Opendoor is still the big player, with OfferPad providing serious competition and Zillow trailing a very long way behind these two. Redfin is also operating in this space but their volumes are still tiny.

    The article quotes "more than 200 homes during the first quarter", but that is for the entire country. Central Arizona is less than 2% of the country, so our share would be 3 or 4 homes over 3 months. Not even a rounding error given we see about 120,000 closed sales a year,

    I am not quite sure why there is such a negative attitude to large corporate landlords. They are not doing much different from your regular mom-and-pop landlords. They buy single-family homes and perhaps a few condos to rent to people who need to rent a home. It's not like we have a glut of homes to rent. In fact tenants probably regret the shortage of rentals just as much as buyers decry the lack of homes for sale. The vast majority of homes to rent are owned by small scale landlords. The large scale ones (such as Invitation Homes, Cerberus and Progress) have about 15,000 homes between them, which in a conurbation like Greater Phoenix, is less than 5% of the rental homes and less than 1% of the total number of homes in the valley.

    Really nothing to see here, so we will stop writing about it.

    ©2020 Cromford Associate

    May 21 - Here is our latest table of Cromford® Market Index values for the single-family markets in the 17 largest cities

    chandler real estate

    Only Surprise is showing improvement for sellers over the past month. All the other 16 cities are improving for buyers, in almost all cases thanks to having a few more active listings than this time last month. Demand is mostly stable and growing slightly in a handful of cities. The improvement in supply is quite modest, but when you had only 50 listings, moving to 75 is a 50% growth, a spectacular percentage. The growth in supply is due to a stronger flow of new listings, rather than a shortage of eager buyers. New listing numbers are now higher than 2020 and comparable with 2019.

    We are still in a totally lop-sided situation given that a CMI of 100 represents a balanced market and anything over 200 is abnormal situation that strongly favors sellers.

    ©2020 Cromford Associate

    May 20 - Barry Habib made some very good points in a recent podcast. You can find it in Episode 50 here: https://soundcloud.com/realestateconsulting

    One of them is that many people look at home price appreciation and assume that if home prices rise by 20% and median earnings only rise by 5%, we have a big drop in affordability. However, this is an illusion. If your monthly mortgage payment is $1,000 then a 20% increase in home prices will push that payment up by $200. If your monthly income was $4,000, then a 5% increase in earnings is also $200. So your 5% increase in earnings is enough to cover the extra $200 mortgage payment.

    Admittedly your mortgage payment used to be 25% of your budget and it is now 28.6%, but to most people, this will not put them off buying a home, especially when they foresee their home equity increasing, making them wealthier over time. In fact many home owners in Greater Phoenix have been earning more from their home ownership than from their employment over the last 12 months.

    There will be an impact on the down payment too, which may be more of a disincentive. However we are seeing a proposal for a $15,000 tax credit for first time home buyers, which could offset this. In fact we are concerned that a $15,000 tax credit could increase demand when the market already has more demand than it can handle. There are no obvious plans to increase supply, so market balance still seems to be a distant spot well over the horizon.

    ©2020 Cromford Associate

    May 19 - Based on affidavits of value filed during April we have collected the following statistics on iBuyer activity:

      Opendoor OfferPad Zillow Redfin Knock All iBuyers Combined
    Homes Purchased in April 2021 200 116 52 5 0 373
    Homes Purchased in April 2020 56 30 0 0 1 87
    Annual Change in Purchases +257% 287% N/A N/A -100% 329%
    Homes Sold in April 2021 129 86 26 0 0 241
    Homes Sold in April 2020 153 67 45 0 4 269
    Annual Change in Sales -16% 28% -42% N/A -100% -10%
    Median Purchase Price in April 2021 $375,350 $325,750 $333,900 $328,500 N/A $358,000
    Median Purchase Price in April 2020 $257,000 $263,750 N/A N/A $332,000 $258,350
    Median Sale Price in April 2021 $343,000 $346,250 $358,000 N/A N/A $346,000
    Median Sale Price in April 2020 $274,000 $264,900 $281.000 N/A $271,284 $273,950
    Homes in Inventory at the End of April 2021 409 174 68 11 0 662
    Homes in Inventory at the End of April 2020 440 174 71 0 19 704
    Annual Change in Inventory -7% 0% -4% N/A -100% -6%

    We are seeing extremely high percentage growth in purchases compared with this time last year. However this is not due to huge volumes in April 2021, but the tiny numbers reported in April 2020 as the iBuyers shut down most of their operations in the face of COVID-19. This turned out to be a unfortunate business decision, although understandable at the time. April 2021 was a fantastic opportunity to buy homes at cheap prices when many other buyers were absent. Unfortunately for the iBuyers, they were even more absent than most during April and May last year.

    We are now recording Redfin Now purchases, though we have not seen any sales recorded before the end of April.

    iBuyer sales were weak in April 2021, down 10% from a year ago. Only OfferPad was able to show a year on year growth, up 28%. Zillow's sales numbers were particularly weak at just 26, but then their inventory had declined to just 42 at the start of the month, so this is not too surprising. The additional purchases made during April should allow all iBuyers more room to grow during May because of larger inventories. These have come as a result of making far higher offer prices to secure the sellers' agreement, necessary at a time of rapid appreciation. However this rapid appreciation also makes it easier for an iBuyer to show a gross margin, as the home will appreciate significantly during the short time it is owned by them.

    To illustrate the latter point, we note that the median purchase price has jumped from $258,350 to $358,000 over the last 12 months - a rise of 39%. This is considerably more than the rise in the median sales price, which was 26%.

    The downside is that home sold from inventory have to be replaced by homes purchased at higher prices. Note that the purchase median was $358,000 in April, when the sales median was only $346,000. The latter is for homes that were almost all purchased prior to April when the market was lower.

    The aggressive offers mean the iBuyers have increased their inventory to 662. This is still down 6% from a year ago, but when you consider how far the overall supply is down from last year (67%), this is quite an impressive achievement.

    ©2020 Cromford Associate

    May 16 - All this rampant appreciation has led to some interesting changes in the city ranking table based on annual average closed $/SF. Paradise Valley is still top at $490.07 per sq. ft. (up 11.8%) while Coolidge is still bottom at $116.06 (up 18.1%).

    However, I am a little surprised to see Apache Junction (up 20.6%) overtake Mesa (up 16.4%) and Arizona City (up 22.8%) overtake Casa Grande (up18.1%). For most of the last 20 years, the greater proximity to the center of Phoenix has favored Mesa over Apache Junction and Casa Grande over Arizona City.

    Perhaps the wider-open spaces of Pinal have become more popular over the last pandemic-focused year. AJ does tend to have a mixed reputation, but also offers some of the best mountain views in the valley, under the crags of the majestic Superstitions. But then Northeast Mesa also has excellent mountain landscapes that some think rival those of North Scottsdale (but at half the price).

    ©2020 Cromford Associate

    May 14 - For the first time in history the monthly average price of a single-family home in Phoenix (the city - as defined by the USPS) has exceeded $509,000.

    One year ago, the average was just over $390,000

    The difference between these 2 numbers is over 30%.

    To see how the other cities are doing by the same measurements click here.

    ©2020 Cromford Associate

    May 13 - Here is our latest table of Cromford® Market Index values for the single-family markets in the 17 largest cities

    Chandler real estate

    Glendale and Paradise Valley have started trending lower, leaving only 3 cities moving in favor of sellers. The average change for the 17 cities is -7.5%, a somewhat greater decline than last week's -6.6%.

    The downward trend is primarily caused by an increase in supply. Demand remains stable and is even strengthening in a few areas. However new listings have been arriving at a higher rate than we have seen for many months. Patience is rewarded with slightly more choice for buyers, but waiting comes at a steep cost. Prices continue to rise at a very high rate. Any CMI over 110 indicates prices will rise, so with the lowest CMI at 325, we can expect much higher prices over the next several months.                    

    chandler real estate

    First - the gap is growing between the list price per sq. ft. for homes that closed in the last month and their actual sales price per sq ft. It is rare for the latter to exceed the former and ever rarer for the gap to grow as fast as it has over the last 30 days. This indicates that contract prices set during March and April were agreed with extremely motivated buyers, prepared to go beyond what the seller was asking in order to clinch the deal.

    Secondly - an opposite indicator - the average price per sq. ft. for listings under contract has drifted sideways for a whole month and is now LESS than the average $/SF for homes that have closed. I don't remember ever seeing this latter phenomenon before. It implies that the very fast rise in the brown line above must come to a temporary halt soon. It is pretty hard for the average $/SF of closed listings to exceed the average $/SF of listings under contract during the prior month. We therefore expect the brown and red lines to start moving sideways for several weeks. If we are wrong, it means the market has become more unpredictable than normal. That is not a good thing. We must watch this chart with more than the usual amount of attention.

    ©2020 Cromford Associate

    May 8 - The weekly appreciation chart, based on the monthly average price per square foot, is looking pretty interesting today:

    Chandler realtor

    Last year (on September 5) we made the comment that as far as home price appreciation goes, you ain't see nuthin' yet.

    Now we are really seeing something as we head over 35% and beyond.

    Anyone care to forecast the highest percentage we will see?

    “©2020 Cromford Associate

    May 7 - Here is our latest table of Cromford® Market Index values for the single-family markets in the 17 largest cities

     Chandler real estate

    Goodyear, Glendale, Fountain Hills and Paradise Valley are still moving in favor of sellers. Surprise has joined them too. However, the other 12 cities are moving in favor of buyers though they remain very much seller's markets. We see declines of 10% or more in Avondale, Cave Creek, Phoenix, Tempe, Gilbert, Queen Creek, Peoria and Maricopa over the last month. The average change for the 17 cities is -6.6%, a somewhat greater decline than last week's -5.8%.

    The downward trend is caused mainly by an increase in supply. The decline in demand that we reported for the last 7 weeks is petering out in most areas and some are seeing a slight rebound. When supply is extremely low, as is the case in 2021, a small increase in active listings is a large change in percentage terms and can make a big difference to the CMI.

    Among the secondary cities, we see many with their CMI rising over the last month. These are: Anthem, Apache Junction, Arizona City, Casa Grande, Gold Canyon, Sun City West and Sun Lakes, so 7 out of 12 cities are moving in a direction that is favorable to sellers.

    The overall, CMI stands at 467, which is the same level we measured in mid-January. The difference is that in January it was on a rising trend, while in May it is falling.

    “©2020 Cromford Associate

    May 6 - The affidavits of value recorded in April for Maricopa County have now been processed and we have the following statistics:

    • There were 11,984 homes closed comprising 1,516 new builds and 10,468 re-sales
    • Closings were up 48.0% from the COVID-depressed level of April 2020 with new builds up only 6.4% and re-sales up a massive 56.9%.
    • The overall median sales price was $376,000, with $395,452 for new builds and $375,000 for re-sales
    • The overall median was up 19.4% from a year ago with new builds up only 8.9% and re-sales up 24.6%

    These numbers include single-family homes and townhouse / condominiums. Pinal County affidavits are not yet fully processed.

    We note that re-sale prices are still accelerating much faster than new build prices. Despite some evidence of buyer fatigue, there are so few active listings that every re-sale is effectively an emotion-packed auction process resulting in a majority of sales closing for more than the asking price. New homes usually do not sell for more than the list price. They sell at the list price and builders get to charge premiums for nicer lots and optional extras. Despite these opportunities, the home builders still seem unable to raise their prices fast enough to match the upward speed of the re-sale market. Luckily for new home buyers, once they have a signed contract their price is fixed, even though it will probably sell for more by the time it closes. Although they are leaving money on the table, home builders' profitability has rarely been higher than it is today. This is despite huge increases in many of their costs, especially lumber.

    “©2020 Cromford Associate

    May 5 - With the imbalance between buyers and sellers reaching its peak in mid-March, April saw many closings at record high percentages of list price.

    Here are the percentages of list achieved for single-family homes in the largest cities:

    City % List During April 2021 Long Term Average % List 2005 Peak
    Gilbert 103.5% 98.3% 100.5%
    Avondale 103.4% 98.9% 101.2%
    Cave Creek 103.2% 96.8% 99.5%
    Chandler 103.1% 98.0% 100.6%
    Queen Creek 102.6% 98.5% 100.2%
    Peoria 102.2% 98.1% 100.1%
    Surprise 102.2% 98.2% 100.1%
    Glendale 102.2% 98.3% 100.8%
    Mesa 102.1% 98,0% 100.4%
    Goodyear 102.0% 97.9% 100.4%
    Tempe 101.5% 97.5% 101.1%
    Maricopa 101.4% 98.3% 100.8%
    Buckeye 101.4% 98.3% 100.5%
    Phoenix 101.4% 97.6% 100.3%
    Fountain Hills 100.5% 95.7% 98.7%
    Scottsdale 99.1% 95.5% 98.3%
    Paradise Valley 97.8% 92.4% 96.8%

    We can see that almost all the cities are seeing between 4% and 5% higher prices achieved than average. Cave Creek is the highest over-achiever being up by more than 6% compared with its long term average..

    These cities did not over-achieve to the same extent during the 2005 peak. Peak percentage of list occurred between 2 and 5 months later than the peak Cromford® Market Index.

    “©2020 Cromford Associate

    May 2 - The Cromford® Market Index hit its recent peak for all areas & types on March 11. This peak value was 514.9, the highest ever recorded. Since then it has fallen back to 474. The CMI is mathematically designed to be a leading indicator of changes in the market balance between buyers and sellers. It is doing exactly what it was designed to do, calling out a cooling in the market before it is detectable by any other means. It informed us that that it could detect a slight reduction in demand, so slight that it was invisible to nearly 100% of active agents, buyers and sellers. As time passes this reduction has become more obvious, but it is also levelling out. Demand is definitely lower than it was in mid March, but the downward trend has lost momentum. However, the CMI is still moving lower because supply has recently started to creep higher. This effect is also pretty small, almost too small for many people to notice, but it is definitely visible if you study the numbers carefully enough.

    I have received several emails questioning whether there could be something wrong with the mathematics, because many agents believe the market is still getting hotter. There is nothing wrong with the math. The market is indeed on a cooling trend and when the CMI changes direction, we wait for other market measurements to confirm that trend. In fact the current situation is very instructive because it shows us which measures are the most sensitive to change.

    Obviously the most useful measurements are those that report news the earliest. However, we also need to see corroborating evidence before we pay too much attention to a single measurement. The Cromford® Market Index has now been joined by the Contract Ratio confirming that the balance between buyers and sellers is moving in the buyer's favor. On April 1, the contract ratio for all areas and types was 307.6 - a high we have never even approached at the start of any prior month. However, on May 1, the contract ratio is down to 239.9. This is still a market in a buying frenzy, but it is significantly lower than the April 1 reading and confirm what the CMI has been telling us since mid March. The frenzy is not as crazy as it once was.

    If this still seems unclear, imagine that a shop sells candy bars that are very popular. It only has 5 candy bars but 50 people come to the store to buy them. They are sold out almost at once. The shop keeper describes the demand as insatiable, but he is wrong - he should have ordered more candy bars. If he had stocked up with 100, he would still have plenty to sell. He has a supply problem. Next week he gets another 6 candy bars and marks them at a price 50% higher than the week before. 30 people come to buy them so he is still quickly sold out and everyone in the shop thinks there is overwhelming demand. Nope. There is underwhelming supply. However we do know the market has cooled since the first week. We used to have a 10 to 1 ratio between demand and supply, but now we only have a 5 to 1 ratio. Perhaps the price rise put some buyers off. Only if we do the math can we be sure the market has cooled. The shopkeeper still thinks demand is insatiable and most of the buyers are still unable to get what they want.

    We have a similar situation in the Greater Phoenix housing market. Demand is slightly down and supply is slightly up, compared with March. It is probably extremely difficult to detect with the usual human senses, surrounded by listings selling well above list and many buyers frustrated by the number of offers they have made without success. But the numbers do not lie. Mathematics is a useful tool when used correctly.

    It is unfortunate for home buyers that more homes cannot be ordered as easily as candy bars. Developers have many constraints which push lead times well into the future. But supply will improve gradually over time and demand will fall as prices rise, as long a buyers behave logically. Most home buyers have not taken leave of their senses and will pull out of the market once it becomes unaffordable for them. I cannot say the same of some stock market or cryptocurrency speculators.

    The current market signals are the same ones that called a top in April 2005. If we follow the same pattern as May to December 2005 we could be in for big trouble. However I do not think that is very likely. Between May and December 2005, the supply exploded from 30 days to around 90 days of inventory, a massive increase in supply. It is theoretically possible for that to occur in 2021, but looks unlikely given the tiny increase we have seen in supply so far.

    The key issue is what happens to supply over the next 6 months - I recommend you keep a close watch on the Cromford® Supply Index here and here, and to all our active listing and inventory charts.

    We must remember that math is fairly easy and we usually get the right answer. Forecasting is very difficult and we all get it wrong more often than not.

    “©2020 Cromford Associates

    August 31 - The building permit interest is not confined to the single-family segment. The multi-family permits have also been generating excitement over the past few months.

    The last 2 months (June & July) have recorded building permits for a total of 3,499 multi-family units. This is a colossal total given that the annual permit count has rarely exceed 10,000 across Maricopa and Pinal counties.

    We are at 9,008 year-to-date units at the end of July, so with 5 months still to go, we have already exceeded the full year totals for 14 of the last 18 years.

    There is no doubt that 2020 will generate the largest number of multi-family building permits that Maricopa and Pinal counties have ever seen.

    We know that there is a housing shortage in the valley, but the building permit counts suggest that developers have noticed and are planning to do something about it.

    “©2020 Cromford Associates

    August 29 - Lots of action in building permits during July.

    The single-family permit count for Maricopa and Pinal Counties was 3,003. This is first time we have seen permits over 3,000 for a single month since March 2007.

    The largest contributions to new permits during July 2020 were:

    1. Phoenix - 460
    2. Surprise - 354
    3. Buckeye - 291
    4. Unincorporated Maricopa County - 282
    5. Mesa - 240
    6. Unincorporated Pinal County - 205
    7. Goodyear - 196
    8. Queen Creek - 164
    9. Casa Grande - 160
    10. Peoria - 146

    Conspicuous by its absence is Gilbert, which used to feature prominently in the top 10 but has been overtaken over the past few years.

    “©2020 Cromford Associates

    April 27 - The latest S&P / Case-Shiller® Home Price Index® numbers were published today. They cover home sales during the period December 2020 to February 2021.

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

    1. San Diego +2.87%
    2. Seattle +2.39%
    3. San Francisco +2.05%
    4. Phoenix +2.03%
    5. Denver +1.77%
    6. Dallas +1.68%
    7. Los Angeles +1.32%
    8. Tampa +1.30%
    9. Portland +1.29%
    10. New York +0.55%
    11. Washington +1.04%
    12. Las Vegas +1.03%
    13. Miami +1.02%
    14. Detroit +0.98%
    15. Charlotte +0.96%
    16. Minneapolis +0.95%
    17. Atlanta +0.87%
    18. Boston +0.87%
    19. Cleveland +0.79%
    20. Chicago +0.30%

    Phoenix surrendered the number one spot to San Diego, Seattle and San Francisco. Earthquake zones are back in fashion.The national average increase was 1.05% over the prior month, another very strong number, but Phoenix increased at almost twice the national average.

    Chicago is running well behind at the back at less than one third of the national average.

    Comparing with this time last year we see the following changes in the indexes:

    1. Phoenix +17.4%
    2. San Diego +17.0%
    3. Seattle +15.4%
    4. Boston +13.7%
    5. Tampa +12.7%
    6. Cleveland +12.5%
    7. Los Angeles +11.9%
    8. Charlotte +11.7%
    9. Detroit +11.7%
    10. New York +11.6%
    11. Portland +11.4%
    12. Denver +11.2%
    13. Washington +11.1%
    14. San Francisco +11.0%
    15. Miami +11.0%
    16. Dallas +10.9%
    17. Minneapolis +10.4%
    18. Atlanta +10.0%
    19. Las Vegas +9.1%
    20. Chicago +8.6%

    The national average was +11.9%, so once again Phoenix stayed well ahead of the national average. For the 21st consecutive month, Phoenix was top of the annual appreciation table, but San Diego is now close behind.

    We note that Chicago is bottom of both tables.

    To see a chart of the 20 cities and their home price indexes over the long term, please visit here

    “©2020 Cromford Associates

    April 25 - Many commentators continue to ascribe the current rapid appreciation rates to high demand. As regular readers of the Cromford® Report will know, this is not exactly accurate. Demand is higher than average, but not dramatically so. What is much more important is the extremely low level of supply. In the last 20 years, I have noticed that the majority of market commentators are obsessed with demand, which is why they always overstate the impact of interest rates and also why they are surprised when the market does not conform with their predictions based on affordability.

    Supply has almost always been the more important factor. Over the long term, it varies much more than demand and is the number one thing to watch. Most of the numbers people measure are either trailing indicators like sales prices (or even more trailing the Case-Shiller® Home Price Index®), or measurements of demand like new home sales (meaning contracts signed) or affordability.

    I did read one article last week that got the phrase right - it referred to "insatiable demand for homes". Now I admit that most people wrongly interpret that to mean the same as strong demand, but more careful interpretation is that the demand for homes is incapable of being satisfied. Demand can be very weak and still be insatiable, if supply is sufficiently hard to find.

    We currently have several market segments where demand is actually below normal, but it is still insatiable. In fact, it could drop by 50% and still be insatiable, unless supply rose at the same time.

    If you are talking with the majority of people who will refuse to change the subject from demand, you can tell them demand is insatiable and still be 100% accurate. They will no doubt agree with you.

    However, between you and me, we need to keep an eye on the supply and we can ignore what demand is doing - it is irrelevant until supply rises to more normal levels and the majority of homes are no longer getting multiple offers.“©2020 Cromford Associates

    April 22 - Here is our latest table of Cromford® Market Index values for the single-family markets in the 17 largest cities

    Chandler real estate

    Goodyear joins Glendale, Maricopa, Fountain Hills and Paradise Valley in moving in a direction favorable to sellers. The other 12 cities are moving in favor of buyers but remain very much seller's markets. Some of these have cooled more than others - Tempe, Gilbert, Peoria and Avondale have all seen their CMI decline 13% or more.

    The overall situation is that demand is moderating slightly while supply has seen a minor increase. The number of new listings has risen over the past 10 days and is now at or slightly above what we would consider normal. So the reason the active listing counts remains so low is not due to the lack of new listings. However, It would take many months if not years to build inventory back to normal at the current rate of new listings. We would need to see new supply coming in far higher than normal for an extended period to achieve an adequate supply level of 25,000 to 30,000 active listings. Hence prices will continue to rise throughout the short and medium term.

    The current slight cooling of the market is barely perceptible on the ground and is a healthy phenomenon. What we don't want to see is a sudden sharp retreat from the all time high. Apart from the CMI, almost all of the other market indicators are still showing positive trends, so we have a gentle and orderly process.

    “©2020 Cromford Associates

    April 21 - Based on affidavits of value filed during March we have collected the following statistics on iBuyer activity:

      Opendoor OfferPad Zillow Knock All iBuyers Combined
    Homes Purchased in March 2021 186 88 31 0 305
    Homes Purchased in March 2020 163 114 55 8 340
    Annual Change in Purchases +14% -23% -44% -100% -10%
    Homes Sold in March 2021 187 88 58 0 333
    Homes Sold in March 2020 256 102 66 1 425
    Annual Change in Sales -27% -14% -12% -100% -22%
    Median Purchase Price in March 2021 $331,400 $296,250 $333,900 N/A $322,500
    Median Purchase Price in March 2020 $248,500 $277,300 $269,750 $407,745 $263,300
    Median Sale Price in March 2021 $336,500 $341,000 $329,000 N/A $322,500
    Median Sale Price in March 2020 $270,000 $279,900 $300.000 $304,925 $263,300
    Homes in Inventory at the End of March 2021 338 144 42 0 524
    Homes in Inventory at the End of March 2020 537 211 116 22 886
    Annual Change in Inventory -37% -32% -64% -100% -42%

    As a group, the iBuyers are still showing negative growth year over year, both in terms of purchases and sales. This is comparing March 2021 with March 2020. The annual comparison should look brighter in April because April 2020 was such a weak month for them. There has been a noticeable shift in market share away from Zillow and towards Opendoor, with the latter making some very competitive offer price quotes during the last 2 months. We note that the median purchase price for Opendoor has increase from $248,500 to $331,400, a rise of over 33%.

    As a result Opendoor has shown an annual increase in purchase volumes for the first time since November 2019, and now has inventory that represents a roughly 65% market share. OfferPad retains 27% market share while Zillow is fading to just 8%.                    

    “©2020 Cromford Associates

    April 18 - For the first time, our weekly chart measuring Monthly Dollar Volume is showing more than 5 billion dollars was closed in the ARMLS database during the past month.

    “©2020 Cromford Associates

    April 17 - Annual appreciation (measured using the monthly average price per sq. ft.) has exceeded 27% today and is clearly going higher still. If we compare 2021 with 2005 we see the following chart:

    chandler real estate

    Both years started around 17%. In 2021 we are almost but not quite keeping pace with 2005, which had reached 30.2% by week 16. We have reached 27.9% at the same point.

    “©2020 Cromford Associates

    April 15 - Here is our latest table of Cromford® Market Index values for the single-family markets in the 17 largest cities

     Gilbert Real Estate

    Glendale and Maricopa continue to move in sellers' favor, along with Fountain Hills and Paradise Valley. However Cave Creek has joined the majority and is moving in favor of buyers. So we have 13 cities moving in a trend favorable for buyers and 4 for sellers. However even the lowest CMI (in Tempe) is extremely unbalance in favor of sellers at 348.1. Remember than the normal balanced level is 100.

    We are seeing a small increase in supply in many areas (but not Glendale or Maricopa). The recent downward trend in demand appears to be losing some momentum. The market remains extremely difficult for buyers while most sellers are inundated with multiple offers, some involving imaginative techniques to make them stand out from the crowd.

    “©2020 Cromford Associates

    April 14 - A recent article published in Inman suggested that the high cost of building materials is making homes more expensive. This is wrong.

    While many building supplies are selling at unusually high prices, this is NOT a reason why home prices are rising. New home developers do not set home prices based on the cost of building a home. They price it based on the competitive alternatives available to home buyers. The most important one is the price of a similar re-sale home. Obviously the price of building materials has absolutely no relevance to the market price of a re-sale. The laws of supply versus demand control re-sale pricing. It therefore follows that the laws of supply and demand also drive new home pricing. The cost of building materials is inconsequential.

    Developers are having difficulty keeping their price lists in line. The costs of re-sale homes are rising so fast that new home prices appear too cheap a few weeks after they are published. They need to be repeatedly raised to avoid selling homes too cheaply. Builders also have to pay more for their supplies, but this presents little problem when their headline prices are rising even faster.

    If homes were easy to find, the high cost of building supplies would squeeze gross margins for builders and their profitability would suffer. However homes are so hard to find we are starting to see lottery arrangements when new tranches of lots are released to buyers. This is what we saw in 2004. At that time we also so buying agent commissions cut or disappear.

    Supply chains are inadequate for many types of building products, so lead times for home completions are stretching out. This makes the supply of homes to buy even worse, so driving greater imbalance between supply and demand. Thus the poor availability of building supplies will help to drive up home prices, but the cost of building supplies will not.

    And of course, when the cost of building supplies comes down again, will house prices go down as a result? Don't be silly.

    “©2020 Cromford Associates

    April 12 - Over the last 4 days we have seen the first signs of a noticeable increase in supply since the start of the year. This is not going to make much difference immediately, but if the trend continues for several months (which is a big if), then we could see some reduction in the levels of craziness that have been found all over Greater Phoenix.

    I would like to thank subscribers Ben Graham, Scott Gaertner and Vladimar Rabinovich for the following examples of the current levels of craziness:

    • 20568 N 93rd Pl was purchased for $825,000 in August 2013 and then re-sold for $1,287,500 in December 2019 for $37,500 over the asking price. It was listed a couple of weeks ago for $1,500,000 and closed for $1,700,000 (all cash) last Friday. So it rose by $412,500 in just 16 months, or almost $26,000 a month. It also went under contract after just 3 days.
    • 26071 N 74th Dr was purchased 12 months ago for $520,000 and was listed 3 weeks ago at $675,000. It has gone under contract for $810,000. Inspection period reduced to 5 days and $30,000 earnest money becomes non-refundable after inspection. The home was built by Taylor Morrison for $379,275 in 2014.
    • A property "coming soon" at $565,000 went under contract within 24 hours at $620,000 with a fully waived appraisal

    These things would have been unbelievable just 6 months ago, but are becoming commonplace today.

    Many people immediately conclude that demand is extremely strong. They are wrong. Demand is nothing special, only 10% above normal and falling. It is the supply situation that is extraordinary. This is significant because demand can dry up quite quickly. However increasing supply can take a long time unless huge numbers of homes are already vacant, as was the case in 2005. Homes lying vacant in Greater Phoenix are unusual today, so any increases in supply are likely to be gradual.

    “©2020 Cromford Associates

    April 11 - There was a change in the nature of the demand during March. We can see this by examining the intended use recorded on the affidavits of value. For Maricopa County single-family and townhouse / condo sales:

    • unit sales were 29.3% higher than in March 2020
    • sales for owner occupancy as a primary residence were up 12.7%
    • sales for use as a rental property were up 52.1%
    • sales for use as a second or vacation home were up 36.2%

    March 2021 had 4,5% more closing days than March 2020, so all of these high numbers should be shaded by that fact.

    It is clear that compared to last year, far more sales are going to investors and those buying second homes. The primary residence buyer seems to be the segment that is losing out. Perhaps the rising prices and interest rates are having a greater impact on these buyers (who probably have less financial resources than investors and people buying their second or third home).

    By itself, this is not a huge development, but it is a new sign that the market may be starting to get a little frothy. Primary residence purchases are the backbone of the market and we do not want to see a market dominated by other buyers when we are looking for signs of good health. In other words, we do not want enthusiasm to morph into euphoria.

    “©2020 Cromford Associates

    April 10 - The affidavits of value recorded in March for Maricopa County have now been processed and we have the following statistics:

    • There were 12,032 homes closed comprising 1,753 new builds and 10,279 re-sales
    • Closings were up 20.5% from March 2020 with new builds up 13.7% and re-sales up 21.7%.
    • The overall median sales price was $365,000, with $391,640 for new builds and $360,000 for re-sales
    • The overall median was up 15.9% from a year ago with new builds up 8.5% and re-sales up 18.8%

    These numbers include single-family homes and townhouse / condominiums. Pinal County affidavits are not yet fully processed.

    We note that re-sale prices are still accelerating much faster than new build prices. Every re-sale is effectively an auction with fervent bidding by desperate buyers. The home builders are unable to raise their list prices fast enough to match the effervescence of the re-sale market, and once they have a signed contract the price is fixed, even though it will seem very cheap by the time it closes.

    This is why we are not surprised to see Fulton Homes allowing buyers a window to cancel their contracts in April. Completion dates have become very uncertain in the face of supply-chain disruption and the last thing a builder needs is signed fixed price contracts. They will be able to sell all the homes they can build over the next year and they might as well let prices rise with the general market. If you are one of those buyers thinking about cancelling, my advice would be to stick with the deal you have agreed.

    Meanwhile all sorts of unusual things are happening in the re-sale market:

    • to increase their chances of being accepted, some potential buyers are included a signed BINSR with their offer, forgoing the fight to withdraw if anything unexpected is found during the inspection period
    • a 1,965 sq. ft. home built just 5 years ago in Peoria for $264,256 just closed for $589,000. That's a rise of 123% in just 5 years and a price of $299.75 per sq. ft.

    We would like to thank our subscribers Nate Brill and Sara Waide for contacting us to let us know about some of the more unusual things occurring. To other subscribers, please feel free to email us with anything crazy you come across.

    We are living through an unusual period in housing history and first hand accounts are worth recording.

    “©2020 Cromford Associates

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

    chandler real estate

    Since last week, 2 more cities have turned positive for sellers, though the overall CMI trend is down, with an average monthly change of -5.8%

    The two cities joining the rising list are Glendale and Maricopa. Leading the way lower are Tempe, Mesa, Peoria and Surprise.

    There is still almost no sign of supply increasing. Incoming new listings are down compared with 2020, both for the year to date and for the quarter to date. The slight decline in demand that has caused the CMIs to fall from their all-time peaks is not going to be enough to take them a lot lower unless supply cooperates by trending higher.

    “©2020 Cromford Associates

    April 8 - The activity in the luxury market is unlike anything we have seen before. During March, there were 411 closed single family listings over $1 million in the Northeast Valley alone. This is almost double the number in March 2020, which was previously the highest March number we had ever seen. If look at all dwelling types across Greater Phoenix, the total closed listing count is 557. The total in March 2020 was just 265. The latter was the prior March record. In the supposedly boom year of 2005, there were only 202 homes closed over $1 million.

    To see the amazing numbers for yourself go to the Sales per Month Tableau chart and filter out the price ranges below $1 million.

    It is no wonder that the agents who specialize in luxury sales are dominating the year-to-date production table.

    “©2020 Cromford Associates

    April 5 - Over the last few weeks the Cromford® Market Index has fallen back slightly from its peak of 514.9 and is now dipping below 500. We want to make sure people do not over-react to this development. A level around 500 is extremely high and represents a huge imbalance between supply and demand which will force prices much higher than they currently are. The CMI is specifically designed to be the earliest of leading indicators and therefore gives us a signal of a change in the market before any of the other indicators is ready to do so. The CMI is telling us that demand is slightly weaker and supply has stopped falling. However a drop in the CMI from 515 to 500 represents an almost imperceptible change in the real world. Trying to feel a 3% cooling of a market that is on fire is an exercise in mathematics not something that will be obvious to many buyers or sellers. Currently there is no sign of a rapid fall from the top as supply remains extremely weak while demand is weakening only slightly with very strong sales counts. It is only the listings under contract that are less than impressive and it can be argued that listings can only go under contract if they exist in the first place. Low supply imposes an upper limit on the number of listings under contract.

    Almost all of the other key indicators are still at extremes. The listing success rate stands at a level around 92.5%, close to a record high. We have never achieved anything over 90% in previous periods. In the 2005 bubble year we maxed out at 86%.

    At the peak of the bubble the CMI hit 313, far below the currently measured 499. So until the CMI drops below 313, this 2020-2021 housing boom remains stronger than the peak of the 2004-2005 boom.

    Pricing is of course a trailing indicator, especially closed sales prices. Here is the chart showing the average $/SF for under contract and closed listings.

    “©2020 Cromford Associates

    chandler realtor

    The under contract line has been rising at a strong pace and if sales prices were going to enter a declining trend, this green line would have to show a significant falling trend first. We can also see that the average closed sales price is now higher than the average list price for these same listings and the gap is increasing. This did not occur in 2005. We have never seen this phenomenon before, where the average house is selling above list price.

    “©2020 Cromford Associates

    April 3 - You may have already seen this article about the Arizona housing market.

    https://azbigmedia.com/real-estate/residential-real-estate/is-a-housing-market-crash-on-the-way-in-2021/

    While I would agree with much of the content of this article there are a few statements that interest me:

    1. "Today’s mini-boom cannot be sustained"

    Calling the current market conditions a "mini-boom" is ridiculous. If this is not a full scale boom, then I don't know what would qualify. This is a more significant and long-lived increase in price than any of the booms we have witnessed since the 1950s. We have over a decade of sustained under-building in the face of population growth to work off. This is not some market aberration that will quickly resolve itself. The annual appreciation rate has already exceeded 24% (measured by monthly average $/SF) and there are higher numbers to come. Also what does "cannot be sustained" mean. If it means that prices will one day be lower than today, that we would consider an unlikely prospect. At some stage the boom will fade but we expect prices to stabilize at a much higher level than 2Q 2021. In the words of Stephen Kim of Evercore ISI, we are entering housing's "Golden Age".

    2. "Few people foresaw the housing market crash 15 years ago that ignited a worldwide recession"

    This is true, but we were one of those people. We forecast the crash in June 2005 and sold our investment property holding for $940,000 that we purchased for $521,336 3 years earlier. In 2005 many people were reluctant to believe a crash was coming, but in 2021 there are far too many people willing to believe that a crash is coming, despite all the evidence to the contrary. This widespread belief is one of the factors that prevents it becoming a bubble. In a bubble, almost everyone believes the price rises will be sustained and fear of missing out is far higher than the fear of a crash. We see evidence of such bubbles in many places today, but housing in Phoenix is not one of them.

    3. "Fueled by low interest rates, loose mortgage lending standards, and the nation’s unshakable faith in home ownership, home values rose at record rates year after year".

    This is actually referring to a brief period of massive price rises in 2004 through 2006. This was not really "year after year" but a fairly short period compared with what we are currently experiencing. It was also not fueled by low interest rates, unless you consider 6% low. This would be considered a high rate today. It was certainly fuelled by loose lending standards, driven by Wall Street's insatiable appetite for mortgage backed securities. You can't sell mortgage backed securities unless you have mortgages to build them with, so mortgage brokers were incented to sell mortgages to almost anybody. Many of the borrowers went along with the scam and didn't even make the first repayment. Having secured a 100% loan, they lived rent-free for quite some time before they were eventually foreclosed and had to move out. Not every foreclosed homeowner was an innocent party at that time. Many home buyers fraudulently exploited the situation. The lenders take much of the blame but I know many borrows who were complicit. This is very different to today's lending industry and today's borrowers. Today's USA has a fairly shaky faith in home ownership thanks to the 2005 boom and 2007 bust, which is another reason why we are probably not in a bubble today. The fact that so many people think we are in a bubble is itself a reason to doubt we are in a bubble.

    “©2020 Cromford Associates

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

    chandler real estate

    Once again, all but 3 cities see their CMI falling with Fountain Hills joining Paradise Valley and Cave Creek as the 3 notable exceptions. Tempe has joined the declining list and replaced Paradise Valley at the bottom of the table. Mesa, Goodyear and Surprise top the list of declining CMIs.

    The average monthly fall in 5.1% and we think this is a sign of a healthy market. When a market is behaving properly, demand should decline when affordability drops. Affordability is certainly falling because all measures of pricing have been on a rapid upward run over the last month. Interest rates are also up - the typical rate for 30 year fixed loan at 3.08% according to Freddie Mac. A month earlier this number was 2.81%. However a year ago we were looking at 3.45% so interest rates can hardly be called expensive.

    In an unhealthy market, euphoria takes over and demand increases as prices rise, To avoid a disastrous bubble like we experienced in 2004 and 2005, buyers need to keep a grip on reality and realize when they cannot afford the house they want. Throughout most of history, lenders have been only too willing to inform borrowers that they cannot afford the loan they want. This factor was almost entirely absent in 2003 through 2005, which led to the out of control price inflation followed by a rapid bust that started in 2006. As long as lenders remain suitably cautious, the market should continue to stay healthy.

    In the real world, demand falling is of little consequence when supply remains close to all-time lows. Prices must continue to rise for a long time yet - until supply and demand get back in balance. Once balanced then prices should rise at the same rate as inflation. In 2006, supply rocketed past demand and prices started to decline from mid-2006 onwards. The price declines sparked the foreclosure wave (not the other way round).

    Demand varies a lot less than supply, and it is inconceivable that demand should fall far enough to match the current level of supply. So instead, we should look for signs that supply is increasing if the market is to return to anything approaching normal balance. At the moment we see few signs of that happening, but the supply situation can change quickly and monitoring active listing and new listing counts is top priority.                  

    “©2020 Cromford Associates

    March 30 - The latest S&P / Case-Shiller® Home Price Index® numbers were published today. They cover home sales during the period November 2020 to January 2021.

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

    1. Phoenix +1.54%
    2. Seattle +1.45%
    3. San Diego +1.40%
    4. Miami +1.20%
    5. Tampa +1.09%
    6. Portland +1.06%
    7. Denver +1.01%
    8. Los Angeles +0.98%
    9. Las Vegas +0.92%
    10. New York +0.87%
    11. Washington +0.85%
    12. Dallas +0.83%
    13. Atlanta +0.79%
    14. Boston +0.77%
    15. Charlotte +0.70%
    16. Detroit +0.65%
    17. Chicago +0.45%
    18. San Francisco +0.19%
    19. Minneapolis +0.06%
    20. Cleveland -0.06%

    For the second month, Phoenix's Case-Shiller index exceeded that measured at the height of the housing bubble in June 2006

    The national average increase was 0.76% over the prior months, another very strong number. Phoenix jumped from fifth to first place. San Francisco, Minneapolis and Cleveland stand out as the weakest of the 20 cities, but otherwise the price gains are quite broad based.

    Comparing with this time last year we see the following changes in the indexes:

    1. Phoenix +15.6%
    2. Seattle +14.3%
    3. San Diego +14.2%
    4. Boston +12.7%
    5. Tampa +11.9%
    6. Cleveland +11.7%
    7. New York +11.3%
    8. Charlotte +11.0%
    9. Detroit +11.0%
    10. Los Angeles +10.8%
    11. Washington +10.7%
    12. Minneapolis +10.7%
    13. Portland +10.6%
    14. Miami +10.4%
    15. Denver +10.0%
    16. Atlanta +9.6%
    17. San Francisco +9.5%
    18. Dallas +9.2%
    19. Chicago +8.9%
    20. Las Vegas +8.5%

    The national average was +11.2%, so once again Phoenix stayed well ahead of the national average. For the 20th consecutive month, Phoenix was top of the annual appreciation table.

    To see a chart of the 20 cities and their home price indexes over the long term, please visit here

    “©2020 Cromford Associates

    March 26 - Here is our latest table of Cromford® Market Index values for the single-family markets in the 17 largest cities

    chandler homes for sale

    All but 3 cities now see their CMI falling with Paradise Valley and Cave Creek notable exceptions and Tempe just squeaking out a gain over the last 4 weeks.

    The reason for the decline is a significant drop in our demand readings. Many cities now have a Cromford® Demand Index below 100, meaning demand is below normal. Tell that to a buyer facing multiple competing offers and they will not believe you, but it is still true. The vast majority of people are unable to distinguish between a hot market because demand is high and a hot market because supply is low. The Greater Phoenix market is hot because of extremely low supply. So low in fact that fluctuations in demand is almost irrelevant. The heat is generated by the difference between supply and demand. Demand could drop in half and it would still vastly exceed the available supply.

    If local people are deciding not to move, then this reduces demand and supply at the same time, because they do not list their home for sale. However incoming people from out of the area generate demand without adding to the supply. The top end of the market is still heating up because so many buyers are from out of state.

    It is quite understandable for some buyers to drop out of the market because prices are rising beyond their reach. This is one way rising prices re-balance the market. However with all 17 cities over 395, we still have some very large price increases ahead of us. A lot more buyers will have to drop out before prices start to stabilize. By the time prices stop rising, they will be at a yet more unaffordable level. Unless supply starts to recover dramatically, this could be many years away.

    A sharp rise in active listings would be the main signal to watch for over the next 12 months.

    “©2020 Cromford Associates

    March 25 - The recent decline in new listings is causing the number of active listings to drop to extreme lows in some areas. Examples of the number of single-family homes available (excluding UCB and CCBS listings) are:

    • Buckeye - a low of 56 listings - down from 68 last month and 282 last year. The long term average is 477 and the record high is 1,279
    • Fountain Hills - a record low of 27 listings - down from 45 last month and 159 last year. The long term average is 245 and the record high is 531.
    • Maricopa - a record low of 41 listings - down from 52 last month and 185 last year. The long term average is 406 and the record high is 1,092.

    In the case of Buckeye, 56 is not quite a record low, since we hit 55 in early March and then rebounded to 85 by the 14th.

    In the case of Maricopa, 14 of the homes listed are new builds, so the number of re-sales is just 27

    “©2020 Cromford Associates

    March 24 - Based on affidavits of value filed during February we have collected the following statistics on iBuyer activity:

      Opendoor OfferPad Zillow Knock All iBuyers Combined
    Homes Purchased in February 2021 130 93 28 0 251
    Homes Purchased in February 2020 177 89 49 6 321
    Annual Change in Purchases -27% +4% -43% -100% -22%
    Homes Sold in February 2021 138 96 48 0 282
    Homes Sold in February 2020 345 123 85 6 559
    Annual Change in Sales -60% -22% -44% -100% -50%
    Median Purchase Price in February 2021 $324,800 $314,000 $309,936 N/A $318,400
    Median Purchase Price in February 2020 $260,200 $248,148 $254,300 $351,544 $256,600
    Median Sale Price in February 2021 $330,000 $336,325 $357,600 N/A $335,825
    Median Sale Price in February 2020 $257,000 $257,900 $275.000 $288,425 $260,000
    Homes in Inventory at the End of February 2021 339 144 69 0 552
    Homes in Inventory at the End of February 2020 630 199 128 15 972
    Annual Change in Inventory -46% -28% -46% -100% -43%

    Opendoor maintained their lead over OfferPad in February on both purchase and sales volumes. However the entire iBuyer sector has contracted sharply over the last 12 months. From March onwards the comparisons will get much easier, because these companies slowed down the operations dramatically with the onset of the COVID-19 pandemic.

    “©2020 Cromford Associates

    March 23 - During early to mid March we saw an increase in the rate of arrival of new listings. This encouraged us to think perhaps the listings drought had seen its lowest point. The last 7 days have dashed those hopes with a return to poor inflows, well below normal. Active counts are going south again.

    The situation with rental listings is no better. Year to date we have seen 15% fewer new rental listings (excluding short term rentals) compared with 2020. Over the last 4 weeks, the comparison with 2020 reveals a decline of 24%, an unusually large deterioration in new supply. As a result, the number of active rental listings is down to just 1,492. We had 2,297 on March 23 last year, so we are down 35% in the last year. The long term average is 4,864 and the shortage explains why rents are rising so rapidly with no sign of relief for tenants.

    “©2020 Cromford Associates

    March 20 - They may a few people who are skeptical that the rate of home price appreciation may reach 40% in 2021. For these, I have the average list price per sq. ft. chart for listings under contract.

    From the chart, updated weekly, you can that the reading has increased from $220.63 at the beginning of January, to $242.20 in the middle of March. That is an increase of 9.8% in just 11 weeks.

    This is entirely consistent with an annual rate of over 40% (in fact it suggests over 45%).

    We know that the rate may change and we continue to monitor carefully, but charts like this suggest that appreciation rates over 40% are more likely than not.

    “©2020 Cromford Associates

    March 18 - Here is our latest table of Cromford® Market Index values for the single-family markets in the 17 largest cities

    chandler real estate

    Although the minimum CMI in the table is extremely high at 383.7 the majority of cities (10 out of 17) are now seeing a decline. Paradise Valley and Cave Creek are holding out with increases over 19%, but these are two of the smallest among the larger cities.

    Demand is trending down and supply is no longer falling in most cities. This means the market is starting to move back in the direction of "not crazy". However the pace of change is still slow and the average CMI fell by only 1.6% over the past month. Upward pressure on prices remains very strong.                    

    “©2020 Cromford Associates

    March 17 - Despite the Cromford® Market Index topping out, the level of competitive bidding for the few available homes is pushing other measures into record territory. The average percentage of list price achieved across all areas & types is 99.98% as of today, the highest we have ever recorded and up from 99.00% this time last month.

    This measure would be higher still if agents did not artificially change their list price after the contract it accepted. Presumably because they are worried about appraisal, some agents increase the list price to match the contract price after the offer has been accepted. This is unlikely to fool even the most inexperienced appraiser. Most appraisers are members of ARMLS and therefore have access to the listing history. This shows all the changes made to the list price.

    Unfortunately this practice makes it hard to count accurately all the listings that sold for more than list price.

    “©2020 Cromford Associates

    March 15 - The monthly average sales price per sq. ft. has not moved much for 2 weeks now, so we are expecting a sudden large move upward.

     chandler

    The chart above is interesting because it shows a widening gap between under contract listings closed listings. This is a signal that the latter will move upwards to close the gap.

    It is also interesting because the average sales price is almost the same as the average list price over the last several days, something we very rarely see. Another sign of a very strong market.

    “©2020 Cromford Associates

    March 11 - Here is our latest table of Cromford® Market Index values for the single-family markets in the 17 largest cities

     chandler realtor

    This is a different picture than we have seen for some time.

    We have 7 cities moving in favor of sellers and 10 moving in favor of buyers. However the average change in CMI over the past month is still slightly positive at +0.4%, down from +2.15% last week.

    The Cromford® Market Index looks like it has reached a maximum and is unlikely to go much higher.

    • demand readings have declined, especially listings under contract, with unit sales likely to follow in due course
    • demand levels are moving back to normal,or even lower in a few areas
    • supply remains excruciatingly low, but is not showing much inclination to go lower still
    • as long as new listings keep coming, the lower demand should allow supply to stabilize and even start to recover, though this could take a very long time

    The higher end of the market, especially Paradise Valley, Scottsdale, Fountain Hills and Cave Creek, has not stopped moving in sellers' favor, but elsewhere we are seeing a turning point in the CMI at last.

    Of course, this does NOT mean that prices will fall. It means that no more fuel is being added to the rocket that is taking price higher over the coming months. It still has a massive amount of fuel already on board. But as prices rise, demand should fall and gradually bring us back to some semblance of normality.

    The lowest CMI in the table is 370.5. Prices will not fall until CMI values drop below 90. We are a very long way from that point. The market will stay crazy for quite some time, but the craziness may be hitting its peak this week.

    “©2020 Cromford Associates

    March 8 - The listing success rate across all areas & types has just set a new record high at 92.1%. If you want an early warning of a weakening in the market, watch this statistic. The long term average is 66%, so 92% represents an extremely strong market. It is unlikely that the market can sustain levels over 90% for a long time, but a drop below 80% would be a signal of weakness.

    “©2020 Cromford Associates

    March 7 - For anybody who thinks homes are getting too expensive to buy, I would ask - what are the alternatives? Rents in Greater Phoenix have risen from an average of $1.01 per sq. ft. per month to $1.22 per sq. ft. per month over the last year. That is a 21% rise - the highest we have ever recorded. The third option of being homeless is not very attractive. So I think we are going to see a large increase in the number of people taking the fourth option - sharing with friends or relatives. This seems to be the only practical solution to keep the cost of shelter down. This will build up latent demand for the longer term, as many of these people will have ambitions to create their own independent household when they can afford to.

    For those who are drawing parallels with 2005, I would point out that rents FELL 6% between March 2004 and March 2005. This is because there were huge quantities of vacant homes that had been bought by speculators with nobody available to live in them. In those days, the pace of home building had exceeded the rate of population increase, the opposite of the situation today.

    It should always be a red flag when rents and purchase prices move in opposite directions. Something is wrong in a market that does that.

    “©2020 Cromford Associates

    March 6 - The affidavits of value have been compiled for Maricopa County and give us the following statistics for February 2021:

    • There were 9,342 homes closed comprising 1,479 new builds and 7,863 re-sales
    • Closings were up 6.9% from February 2020 with new builds up 6.9% and re-sales also up 6.9%. It is rare we see both new and re-sale match like that
    • The overall median sales price was $359,100, with $379,900 for new builds and $352,000 for re-sales
    • The overall median was up 17% from a year ago with new builds up 4.9% and re-sales up19.5%

    These numbers include single-family homes and townhouse / condominiums.

    We note that re-sale prices are accelerating much faster than new build prices.

    “©2020 Cromford Associates

    March 4 - Here is our latest table of Cromford® Market Index values for the single-family markets in the 17 largest cities

     chandler realtor

    We have 9 cities moving in favor of sellers and 8 moving in favor of buyers. The average change in CMI over the past month is +2.1%, down from +3.5% last week.

    Although this is closest we have been to balance in the CMI direction for quite some time, the market remains enormously out of balance in favor of sellers. The lowest CMI in the table is 345.5, which is unprecedented.

    For the low and mid-range markets, demand is being crimped by higher interest rates and affordability concerns. Even so demand is far higher than the truly miserable level of supply, which means prices are going to rise sharply over the next several months. This is the way markets are supposed to work - prices have to rise until buyers lose enough enthusiasm so balancing demand with the supply. This can take a very long time. Supply is so weak that demand will need to collapse to get a balanced situation in less than 3 years. Demand is not collapsing, but it is in a declining trend, particularly for cities like Gilbert, Chandler, Glendale, Maricopa, Buckeye and Queen Creek.

    The higher end of the market is going from crazy to ludicrous. We have never experienced such low supply of luxury homes alongside exceptional demand, fueled in part by well-funded migration from other states. In the table above, Paradise Valley, Cave Creek, Scottsdale and Fountain Hills are all moving strongly in favor of sellers and finding a home is tough even if you have more than $2 million to spend. New luxury homes have a long lead time, so it is very hard to image how supply can be increased to meet this enormous boom in demand for high end homes. This demand level is far higher than we have ever seen before in Greater Phoenix.

    “©2020 Cromford Associates

    March 2 - CoreLogic publishes a monthly report called US Home Price Insights. It is a worthwhile read, although it illustrates just how amazingly wrong a large organization can be in its forecasting of home prices.

    For example in the June 2020 report, it forecast that US home prices would fall by 6.6% over the following 12 months. Since then it has reported that prices have actually risen by 7.7% over just 7 months. It has modified its forecast since then and but continues to predict a sharp turn-round and is now projection a tiny 3.3% rise by January 2022. We believe this will prove to be as hopelessly wrong as every forecast it has provided over the last 12 months. All its forecast have been far lower than reality, yet it has not changed its forecasting method and stubbornly clings to the idea that demand will weaken enough to reverse the current price trends. We could not disagree more.

    Like many (if not most) mathematical models of the market, CoreLogic's model fails to take proper account of extreme supply shortages.March 1 - For the first time we have zero active listings for single-family homes in ZIP codes 85012 and 85378.

    “©2020 Cromford Associates

    February 28 - The listing success rate is a solid indicator for the state of any market and the reading yesterday was 91.8% for all areas & types. This is the highest we have ever recorded.

    If you want to see prices start to fall, you will have to wait until the listing success rate drops below 60% for that to become a possibility.

    That is an awful long way down from the current levels. Massive changes would have to take place for listings to fail at a 40% rate,

    “©2020 Cromford Associates

    February 27 - There is a slight glimmer of hope for dejected buyers in today's new listing counts. We have been lagging behind the last 3 years in terms of year-to-date new listings. By yesterday 2021 was 2.4% below 2020, 11.7% below 2019 and 12.3% below 2018. However the last 7 days have seen an up-tick in new listings and the year to date count is now only 210, or 1.2% below last year. That was brought about by last week's load, which was up 5.6% compared with the same 7 days in 2020.

    These numbers are for all areas & types of residential listings in ARMLS. A few more weeks like this and the supply situation could perhaps stop getting worse.

    “©2020 Cromford Associates

    February 25 - Here is our latest table of Cromford® Market Index values for the single-family markets in the 17 largest cities

    chandler real estate

    We have 11 cities moving in favor of sellers and 6 moving in favor of buyers. The average change in CMI over the past month is +3.5%, down from +5.7% last week.

    Avondale is the first large city to exceed 1,000, although El Mirage was the first among all the cities we measure.

    Buying a home is not only desperately stressful, it is getting a lot more expensive. So we should expect demand to come down, and it has started to decline in many areas. It is hard to notice any decline in demand when supply continues to fall. Most sellers cannot tell much practical difference between receiving 30 offers and receiving 25 offers. It is still more than enough demand to keep prices rising quickly.

    Eventually prices will rise so much that demand starts to drop below normal. This may possibly give supply a chance to expand from the extreme lows it keeps hitting week after week. We will have to wait and see - there is very little sign of that in any of the current numbers.

    Every single large city is over 330. This is well over the CMI for the entire market that we saw in April 2005 at the peak of the housing bubble. That high was 312.9, which now looks rather modest compared with the 504.6 we are measuring today. In April 2005, we observed the first signs that the bubble was about to go pop as increasing numbers of mostly vacant homes hit the market from May 2005 onwards, the result of canny speculators timing their exit from the market well before pricing peaked the following year. No such pressure relief is looking likely in 2021. But it pays to watch the numbers every day for any change in conditions.

    “©2020 Cromford Associates

    February 24 - January was a good month for new single-family building permits with a total of 2,656 reported by the Census Bureau for Maricopa and Pinal counties.

    This makes it the best January since 2006, when we saw 3,593.

    We are now seeing single-family home construction at the same sort of rate that we had in 1996 through 2002, but less than during the over-building of 2003 through 2006.

    Charts giving detailed counts from 1996 onwards with filters for city and county are available in the optional Cromford Public section of this site.

    “©2020 Cromford Associates

    February 23 - The latest S&P / Case-Shiller® Home Price Index® numbers were published today. They cover home sales during the period October to December 2020.

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

    1. Miami +1.24%
    2. Tampa +1.22%
    3. Washington +1.22%
    4. New York +1.22%
    5. Phoenix +1.14%
    6. Las Vegas +1.11%
    7. Seattle +0.94%
    8. Denver +0.92%
    9. Dallas +0.91%
    10. Cleveland +0.87%
    11. Atlanta +0.84%
    12. Boston +0.81%
    13. Los Angeles +0.74%
    14. Charlotte +0.66%
    15. San Diego +0.64%
    16. Portland +0.48%
    17. Minneapolis +0.35%
    18. Chicago +0.29%
    19. San Francisco +0.03%

    For the first time, Phoenix's Case-Shiller index exceeded that measured at the height of the housing bubble in June 2006

    The national average increase was 0.86% over the prior months, another very strong number. Phoenix was comfortably ahead of the national average but slipped to fifth place. San Francisco stands out as the weakest of the 19 cities, but still managed a positive number.

    Comparing with this time last year we see the following changes in the indexes:

    1. Phoenix +14.4%
    2. Seattle +13.6%
    3. San Diego +13.0%
    4. Cleveland +11.5%
    5. Boston +11.4%
    6. Tampa +10.7%
    7. Washington +10.3%
    8. Minneapolis +10.2%
    9. Charlotte +10.2%
    10. Los Angeles +9.9%
    11. New York +9.9%
    12. Denver +9.2%
    13. Miami +9.2%
    14. Atlanta +8.9%
    15. San Francisco +8.7%
    16. Dallas +8.4%
    17. Las Vegas +7.9%
    18. Chicago +7.7%

    The national average was +10.4%, so once again Phoenix stayed ahead of the national average. For the 19th consecutive month, Phoenix was top of the annual appreciation table.

    To see a chart of the 20 cities and their home price indexes over the long term, please visit here.

    “©2020 Cromford Associates

    February 20 - It can be hard to explain to people just how bad the supply of re-sale homes has become in Greater Phoenix. The reality is quite difficult to grasp unless you are trying to buy one. Many people mistakenly think demand must be exceptionally high, but that is not really the issue. It is above average but not unusual.

    Not only is the supply extraordinarily low, it has dropped by a large percentage since the beginning of the year.

    In a normal year we would expect to have more available supply in mid-February than we had at the start of the year. For example in 2015 active listings rose from 22,879 in week one to 24,041 by week 8. This excludes listings in UCB or CCBS status but includes all areas & types found in ARMLS. This is a 5% increase.

    In 2021 we started the year at 6,113 and by week 8 we have dropped to 4,731, a decline of 23%. This is unprecedented.

    You can compare the years easily using the chart here.

    If active listings were a species of animal, they would have to go on the critically endangered list.

    “©2020 Cromford Associates

    February 18 - Here is our latest table of Cromford® Market Index values for the single-family markets in the 17 largest cities

    gilbert real estate

    We have 12 cities moving in favor of sellers and 5 moving in favor of buyers. The average change in CMI over the past month is +5.7%, down from +9.2% last week.

    The more expensive areas like Scottsdale, Paradise Valley and Fountain Hills are tending to show the largest percentage increases. However Avondale is in a class of its own with supply at an excruciatingly low level.

    The minimum CMI of 322.9 in the above table is easily the highest we have ever seen. It means there is nowhere where a buyer can expect any quarter in their battle to secure a home for purchase.

    “©2020 Cromford Associates

    February 17 - For those who are interested in iBuyers and their business model, I can recommend the research analyst Mike DelPrete. You can find his most recent report on profitability here.

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

      Opendoor OfferPad Zillow Knock All iBuyers Combined
    Homes Purchased in January 2021 136 73 39 0 248
    Homes Purchased in January 2020 207 89 66 2 364
    Annual Change in Purchases -34% -18% -41% -100% -32%
    Homes Sold in January 2021 108 79 40 0 227
    Homes Sold in January 2019 306 103 61 4 474
    Annual Change in Sales -65% -23% -34% -100% -52%
    Median Purchase Price in January 2021 $310,450 $314,000 $335,000 N/A $318,150
    Median Purchase Price in January 2020 $245,700 $266,000 $259,200 $447,980 $251,900
    Median Sale Price in January 2021 $315,100 $310,000 $321,500 N/A $315,000
    Median Sale Price in January 2020 $260,000 $274,900 $293.950 $476,347 $264,950
    Homes in Inventory at the End of January 2021 347 147 89 0 583
    Homes in Inventory at the End of January 2020 798 234 162 16 1,210
    Annual Change in Inventory -57% -37% -45% -100% -52%

    Opendoor overtook OfferPad in January on both purchase and sales volumes, but remains a much smaller business than it was this time last year with sales down 65%.

    Despite its name recognition, Zillow has been unable to capture much market share from the other iBuyers in Phoenix and appears to be stuck at little more than one sale per day. Zillow represents 16% of the iBuyer market, which itself was under 3% of the total market by unit count. In hindsight the peak iBuyer penetration was in August 2019, when they acquired 560 homes between them. Based on current trends, it looks very doubtful that they could return to that level of activity in the near to medium term.

    Estimated current market share based on unit counts:

    1. Opendoor - 1.5%
    2. OfferPad - 1%
    3. Zillow - 0.5%

    “©2020 Cromford Associates

    February 14 - For many years the record monthly average sales price per sq. ft. across the entire ARMLS database was $190.61, set on May 5, 2006, almost 15 years ago.

    We exceeded that level for the first time on August 1, 2020.

    It only took until October 2, 2020 to exceed $200 and then $210 was passed on November 23, 2020.

    February 9 saw us break over $220, so in the space of just over 6 months we have seen $30 added to the average price per sq. ft. This is a rise of almost 16% in half a year.

    Maybe you think this is unusual and will not last long. I would disagree with that opinion. With the Cromford® Market Index about to exceed 500 for the first time in the next few days, the speed of appreciation is about to step higher, not lower.

    It will not take much for appreciation rates to exceed 30% and possibly 40% over the next few months. If appreciation is to slow down we need to see a clear sign of something that could cause that to occur. At the moment there is no such sign. We will let you know when we see such a sign, but right now, the market is primed for an explosive rise in house prices.

    “©2020 Cromford Associates

    February 12 - Here is our latest table of Cromford® Market Index values for the single-family markets in the 17 largest cities

     chandler real estate

    We are now starting to see more divergence between the cities, ranging from -6% for Queen Creek and Cave Creek up to +32% for Avondale. All 17 cities are extremely unbalanced in favor of sellers, but when supply is as low as it is now, small changes can have a big impact on the CMI.

    The average change is +9.2% so despite a fall in demand, supply has weakened to a greater extent.

    If you are wondering why Avondale is so far out in front, it has only 11 active single-family listings without a contract. In a normal market we would expect to see between 300 and 400. Back in 2007, Avondale has over 1,100, so it is down 99% from that level. Incredible, but true.

    The above table is based on monthly changes. If we look at the trend over the past week then several more cities have seen a downward trend in their CMI: Buckeye, Chandler, Gilbert, Maricopa, Mesa and Peoria.

    The level of imbalance between supply and demand may hit a record peak during February.

    “©2020 Cromford Associates

    February 11 - When we segment the market by broad geographic regions, it is clear than the Northeast Valley is having the best time at the moment.

    Closed sales in the Northeast Valley during January (measured by affidavits recorded) were up 24% compared to a year earlier. This is by far the best performance in Maricopa County, with the West Valley up 10%. the Central & North Valley up 5% and the Southeast Valley up only 4%.

    It is is similar story looking at median sales prices. The Northeast valley is up 25% in 12 months from $490,000 to $610,000. The Central & North Valley is at 19% the West Valley at 18% and the Southeast Valley lagging behind at 13%.

    All these numbers are for single-family and townhouse / condo properties within Maricopa County.

    “©2020 Cromford Associates

    February 10- Let us take a deep dive into the active listings to see exactly how dire the supply situation is on February 10, 2021.

    Across the ARMLS residential sales database there are a total of 9,440 active listings. Among these we have 365 (4%) that have a contract contingent on buyer's sale (CCBS). We also have 4,515 that in UCB status. This means they have a contract agreed and signed, but are (in theory) open to back-up offers. In most cases this is a ruse to allow the listing to stay on external web sites like Zillow. If it changed to the more realistic pending status then it is no longer being marketed so it will disappear from external sites, reducing the agents exposure. A small percentage is actively welcoming buyers to make an offer, but it is hard to tell how small that percentage really is.

    What we can see is that 48% of active listings are in UCB status and if we add the CCBS listings, more than half (52%) already have a contract agreed and signed. Whether you consider them part of the active inventory is up to you. This why we have some charts that include them and other charts that do not.

    We are left with 4,560 listings that have no signed contract - 48% of the total).

    How do these 4,560 listings break down by segment:

    Segment Count Percentage Days Inventory
    Out of Area 533 12% 40.3
    Within Greater Phoenix 4,027 88% 14.4
    For Homes Within Greater Phoenix:      
    Greater Phoenix - New Build 576 14% 46.0
    Greater Phoenix - Built Before 2020 3,451 86% 13.0
    For Homes Built Before 2020 Within Greater Phoenix:      
    List Price Under $300,000 1,113 32% 9.5
    List Price Between $300,000 and $500,000 926 27% 9.2
    List Price Between $500,000 and $1,000,000 709 21% 18.1
    List Price over $1,000,000 703 20% 74.9

    We can conclude:

    • out of area listings are 12% of what is available (normally this is less than 2 or 3%)
    • new home listings are 14% of what is available in Greater Phoenix (normally less than 5%)
    • Below $500,000 there is less than 10 days of inventory. Normal inventory is 120 to 150 days.
    • Over $1 million there is over 2 months of inventory, but we would expect to see 10 to 12 months in a normal market

    The re-sale supply is not only the scarcest we have ever seen, it is a lot worse than it looks at first sight. On top of that, the trend is currently headed further down.

    “©2020 Cromford Associates

    ebruary 9 - Core Logic published their Loan Performance Insights report for November 2020 today. 5.9% of mortgages were delinquent by 30 or more days in November, which is up from 3.9% in November 2019, before the COVID-19 pandemic hit. Serious delinquent loans plus loans in foreclosure are at 3.9%, which is the lowest rate reported since June 2020.

    The declining level of delinquency suggests increasing stabilization and reinforces our view that we are unlikely to see a large amount of distressed inventory coming to market over the next 12 months.

    “©2020 Cromford Associates

    February 6 - The appreciation rate for all areas & types, measured by the annual change in the monthly average closing price per square foot, exceeded 20% this week. The last time appreciation was over 20% was in August 2013.

    “©2020 Cromford Associates

    February 5 - Here is our latest table of Cromford® Market Index values for the single-family markets in the 17 largest cities

    chandler real estate

    16 out of 17 cities are still moving in a direction that is favorable to sellers, despite demand falling in most areas. This is because supply has declined more than demand over the past month.

    We are starting to see some cities reach a peak and fall back. Cave Creek is the only one that is clearly visible from the above table, but over the last week a few more have seen a downward trend develop. This includes Chandler, Glendale, Peoria and Queen Creek. In all these cases, demand has weakened enough to pull the CMI back from the peak. This is going to be hard to detect on the ground, because each home that is newly listed will still have dozens of potential buyers eager to view and/or submit offers. Even if the CMI fell to half the current level, the market would still favor sellers and prices would still rise.

    Remember that when the CMI falls below 90, prices will experience downward pressure. That level is a long, long way down from where we are now.                    

    “©2020 Cromford Associates

    February 4 - The January affidavit of value data for Maricopa County is now complete and shows the following:

    • Unit sales were up 8% from 2020 with new homes and re-sales up by the same percentage. The total sold units was 8,395.
    • The median sales price was $350,000, up 18% from January 2020, with re-sales up 20% to $342,000 and new homes up only 5% to $382,170

    These number are for single-family and townhouse / condo properties.

    “©2020 Cromford Associates

    February 3 - Despite very tight supply, January 2021 managed to break the all-time record for closed listings on ARMLS during any January. The total across all areas & types was 7,330. The nearest rival was January 2005 with 6,586.

    For those who have forgotten what a housing slump feels like, January 2008 managed to give us just 2,863 closed listings.

    A good chart to examine closed listing counts from 2001 onwards is here. This puts current numbers into their historical perspective.

    “©2020 Cromford Associates

    February 2 - Dollar volume was colossal last month for a January. The previous record January was $2.3 billion, set in 2020. In 2021 the number is $3.1 billion, an increase of 35%.

    If January 2021 can exceed $3 billion for the first time, imagine what is possible for February through June. The main constraint is the lack of supply, but this will be compensated for by the large increase in average price per transaction.

    For homes over $1 million, dollar volume doubled compared with January 2020, even though January 2020 held the previous record for the busiest January ever in the luxury market.

    “©2020 Cromford Associates

    February 1 -.It is difficult to describe the state of the housing market in Greater Phoenix these days. Just quoting the raw facts makes many people feel you are exaggerating wildly. There are those who seem to believe it cannot really be true when so many people are struggling with their daily lives, battling the worst pandemic we have seen for many decades. However we can only continue to present the facts. The housing market is experiencing moderately strong demand, but this is not the important matter. Variations in demand are almost insignificant. This is because the supply of re-sale homes is so poor it crashes below all time record lows almost every week.

    One method for looking at this is to use the Contract Ratio, which compares the number of homes under contract with the number of homes available for sale (without a contract). In a normal market the Contract Ratio tends to lie between 30 and 60. Higher for a low-priced segment and lower for a high-priced segment. The Contact Ratio for Greater Phoenix (all dwelling types) on February 1, 2021 stands at 239. Last year we saw 89. The previous record high was 174, set in December 2020.

    The Contract Ratio tells us how hot the market is, and how hard it is to find a home to buy. Over 60 represents a hot market and over 100 a feeding frenzy. We have never before had to invent a description for when it goes over 200, because it has never done this before. For the market below $500,000, the Contract Ratio is over 300.

    The implication is that home price appreciation will go much higher in 2021 than it did in 2020. Be warned. Don't be in denial.

    “©2020 Cromford Associates

    January 31 - The Census Bureau has now published its building permit counts for December so we have a complete picture for 2020.

    As the re-sale supply dries up, new homes comprise a growing segment of the market, so it makes sense to pay more attention to what is happening in the new-build market even though it is very poorly represented within the MLS.

    If you want to see details about single-family permit counts by city over the last 25 years, then the Cromford Public section of this web-site id designed to meet your needs. There are also multi-family permit counts from 2002 onwards.

    Across Maricopa and Pinal counties, we saw 31,475 single-family permits in 2020. These 2 counties saw over 76% of the single-family permits issued in Arizona, so the other 13 counties only provided less than 24%. These ranged from 4,240 in Pima to zero in Greenlee.

    The 2019 total was 24,674, so the new total represents growth of almost 28%. We can expect even higher numbers in 2021, but we are still not back to the peaks of 1998 through 2006. All these years saw permits exceed 33,000 and reach almost 56,000 in 2004, the peak of the house building boom. Building permit numbers collapsed in 2008 and we have seen 13 consecutive years with permits under 30,000. Now ask me again why we have a supply problem in 2021.

    The table below shows total single-family permits issued by city or place name:

    1. Phoenix - 4,562
    2. Buckeye - 3,341
    3. Mesa - 2,826
    4. Unincorporated Maricopa County - 2,544
    5. Surprise - 2,468
    6. Unincorporated Pinal County - 2,376
    7. Queen Creek - 1,986
    8. Goodyear - 1,928
    9. Maricopa - 1,512
    10. Peoria - 1,474

    Our leader 8 years ago (Gilbert) does not even make the top 10 in 2020. Also missing from the top 10 are Chandler, Glendale, Scottsdale. These cities are now growing by a slower rate than they have historically

    Significant increases can be seen in Casa Grande (1,045), Florence (399) and Coolidge (367). The large cities of Tempe, Fountain Hills, Cave Creek and Paradise Valley are now running behind Wickenburg, Eloy and Apache junction for new home permit numbers. Litchfield Park and Tolleson have also gone very quiet.

    “©2020 Cromford Associates

    January 28 - Here is our latest table of Cromford® Market Index values for the single-family markets in the 17 largest citie


    chandler real estate

    Demand is still on a downward trend, but this has had almost no benefit for buyers as supply is dropping to unprecedented lows across large parts of the valley.

    Demand would have to collapse for some semblance of normality to return to this market. We have all 17 cities showing a rise in their CMI with the average increase now at 18% over the past month. This is all due to worsening supply.

    Avondale has overtaken Chandler and reclaimed the number 1 position - largely because there are only 20 single-family homes for sale (excluding UCB and CCBS listings). This is a city of about 85,000 people which, in a normal market, would expect to have about 340 single-family homes for sale. There were 1,100 single-family homes listed in Avondale during 2007. Supply has dropped in half since January 8. 20 homes represents just 5.7 days of inventory. So if there were no new listings, the current stock would sell out completely in less than 6 days. I am starting to wonder if inventory could go to zero in places like Avondale. Dividing by zero is not something a mathematician likes to do.

    Outside of the large cities, we see critical low inventory in places like Anthem, Arizona City, Carefree, El Mirage, Florence, Litchfield Park, Sun Lakes, Tolleson, Tonopah and Youngtown.

    Maricopa is another city with a very strong 35% increase in its CMI over the last month. There are 62 single-family homes for sale in Maricopa (excluding UCB and CCBS). Normally we would expect over 400. Demand has remained strong in Maricopa with over 2,200 single-family closings a year. There are 10 days of inventory, down from 13 last month.

    These are strange times indeed.

    “©2020 Cromford Associates

    January 26 - The latest S&P / Case-Shiller® Home Price Index® numbers were published today. They cover home sales during the period September to November 2020.

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

    1. New York +1.79%
    2. Boston +1.42%
    3. Tampa +1.38%
    4. Phoenix +1.28%
    5. Miami +1.26%
    6. Atlanta +1.19%
    7. Charlotte +1.14%
    8. Washington +1.10%
    9. Denver +1.01%
    10. Los Angeles +0.94%
    11. San Diego +0.94%
    12. Seattle +0.91%
    13. Dallas +0.82%
    14. Minneapolis 0.73%
    15. Las Vegas +0.72%
    16. Portland +0.70%
    17. San Francisco +0.58%
    18. Chicago +0.35%
    19. Cleveland +0.06%

    The national average increase was 1.07% over the prior months, a very strong number. However, Phoenix was comfortably ahead of that curve and remained in third place. The northeast cities of New York and Boston are doing unusually well at the moment.

    Comparing with this time last year we see the following changes in the indexes:

    1. Phoenix +13.8%
    2. Seattle +12.7%
    3. San Diego +12.3%
    4. Boston +10.4%
    5. Cleveland +9.8%
    6. Portland +9.5%
    7. Tampa +9.5%
    8. Charlotte +9.4%
    9. Minneapolis +9.4%
    10. Los Angeles +9.1%
    11. Washington +9.1%
    12. San Francisco +8.3%
    13. New York +8.2%
    14. Denver +8.1%
    15. Miami +7.9%
    16. Atlanta +7.9%
    17. Chicago +7.5%
    18. Dallas +7.2%
    19. Las Vegas +6.8%

    The national average was +9.5%, so once again Phoenix is well above average and retains its position as the fastest appreciating city of the 19 that Case-Shiller focuses on.

    “©2020 Cromford Associates

    January 24 - The average price per sq. ft. of active listings is a leading indicator of sales price movement. It is not based on supply and demand but on seller's perceptions of their prospects. It can also be somewhat skewed by the mix of what is available for sale, in that more expensive homes tend to stay on the market longer.

    However, despite those caveats, we are currently recording an average of $330.64 per sq. ft. across Greater Phoenix, using active listings that are not in UCB or CCBS status. This is up from $260.52 at this time last year. This means asking prices have inflated by 27% in the last 12 months.

    If we confine our research to listings under $500,000, then the average price has risen from $161.56 to $187.50 per sq. ft., an increase of only 16%. The opposite segment, listings over $500,000, has moved from $341.11 to $412.08, a rise of 21%.

    This shows us that prices have risen very quickly over the past year (and mostly since June). However, they have not moved quite as much as the headline figure of 27% would suggest. Part of that increase is because homes under $500,000 have lost some of their share of the total available homes while those over $500,000 have gained share. All price ranges have much lower supply than last year, but the lower price ranges have declined the most.

    “©2020 Cromford Associates

    January 22 - Here is our latest table of Cromford® Market Index values for the single-family markets in the 17 largest cities

    chandler real estate

    Demand is fading a little, but supply has faded much more, moving the balance even further in favor of sellers in all 17 cities. The table above is quite extraordinary and represents the largest imbalance between supply and demand we have ever witnessed.

    Avondale has overtaken Gilbert in number 2 position and 7 cities are over 600 (only 1 last month).

    The extent to which supply has collapsed just in the last 2 months can be seen from the following declines in single-family detached active listings without a contract:

    • El Mirage - down 70% to 6
    • Chandler - down 55% to 78
    • Anthem - down 52% to 13
    • Maricopa - down 48% to 61
    • Avondale - down 48% to 26
    • Gilbert - down 48% to 83
    • Peoria - down 47% to 120
    • Mesa - down 46% to 201
    • Litchfield Park - down 46% to 31
    • Arizona City - down 45% to 11

    The smallest declines were in Apache Junction, Sun Lakes and Tolleson. There are no cities where supply has increased in the last 2 months.

    At times like this, we see many homes never making it to active status, being sold before they are listed, or sold while they are still in "Coming Soon" status.

    There is still no sign of more supply arriving. In fact this looks less likely than it did last month as new listings drop off relative to last year.

    “©2020 Cromford Associates

    January 21 - At the start of 2021 we have a very low number of pending foreclosures in Maricopa County - just 580 as of January 14. This compares with 1,789 at the same time last year and 50,001 in January 2010. At the moment there is no sign of significant inventory arriving through the foreclosure process. If you are concerned about this changing in the future I suggest you keep your eye on the pending foreclosure chart which can be found here.

    “©2020 Cromford Associates

    January 20 - We have seen a modest rise in interest rates over the past few weeks. May observers over-rate the importance of interest rates when it comes to the effect on the housing market. A rise will tend to make homes less affordable and therefore soften demand. However we have far more demand than we know what to do with, so a bit less would be a good thing. In addition, people moving home is the primary source of re-sale supply, so if demand falls it can often result in a corresponding drop in supply. Since we have a ridiculous shortage of re-sales already, further reductions in new listings would be most unhelpful.

    So far in 2021, rental new listings are down 13% compared with 2020, while for-sale new listings are also down 13%

    This is an unexpectedly slow start to the year for new listings. Unexpected, because the fourth quarter of 2020 had seen new listings arrive at a slightly higher pace than a year earlier.

    If the current trend in interest rates persists, I would expect to see re-sale unit volumes decline a little but prices continue to rise strongly as the imbalance between supply and demand continues. New home sales counts will probably increase too, since permits issued in 2020 were substantially above 2019 giving us more supply relative to the paltry re-sale numbers. The opportunity for builders to increase their asking prices is large.

    “©2020 Cromford Associates

    January 18 - Based on affidavits of value filed during December we have collected the following statistics on iBuyer activity:

      Opendoor OfferPad Zillow Knock All iBuyers Combined
    Homes Purchased in December 2020 113 87 46 0 246
    Homes Purchased in December 2019 253 96 68 6 422
    Annual Change in Purchases -55% -9% -32% -100% -42%
    Homes Sold in December 2020 74 97 32 0 203
    Homes Sold in December 2019 298 104 79 4 485
    Annual Change in Sales -75% -7% -59% -100% -58%
    Median Purchase Price in December 2020 $299,200 $297,500 $317,350 N/A $305,000
    Median Purchase Price in December 2019 $252,300 $256,400 $271,200 $263,940 $256,900
    Median Sale Price in December 2020 $316,500 $301,000 $283,250 N/A $303,000
    Median Sale Price in December 2019 $256,000 $259,950 $290.000 $398,580 $263,000
    Homes in Inventory at the End of December 2020 319 153 90 0 562
    Homes in Inventory at the End of December 2019 897 248 157 16 1,318
    Annual Change in Inventory -64% -38% -43% -100% -57%

    The iBuyers as a group purchased 246 homes in Maricopa & Pinal counties during December. That represents a small improvement over November's low number of 229 but reflects how hard it is to find properties to buy at the moment.

    They purchased 422 in December 2019, when the market was less competitive. The annual percentage decline in business volume is moderating slowly now as the 4Q of 2019 saw business decline for the iBuyers and so makes for an easier comparison a year later. However, the idea that iBuying is a fast growing part of the housing market has been largely dispelled.

    To avoid further decline in market share the iBuyers have significantly increased what they are prepared to pay for a home. The median purchase price is up 19% from a year ago. In contrast the median sales price is up 15% from December 2019.

    Strangely, Zillow's median sales price was lower in December 2020 than it was a year earlier. However, Zillow is just an also-ran in this race. Opendoor is in the lead based on purchases but OfferPad is now leading when it comes to sales counts.

    “©2020 Cromford Associates

    January 16 - There are currently 5,422 active listings on ARMLS located in Greater Phoenix and not in UCB or CCBS status.

    There are 5,556 broker's offices in the ARMLS database.

    So we have reached a rather strange milestone - there is on average less than 1 active listing per office.

    For every active listing there are 8 ARMLS members. Presumably 1 of them has the listing and 7 of them are writing offers on it.

    “©2020 Cromford Associates

    January 14 - Here is our latest table of Cromford® Market Index values for the single-family markets in the 17 largest cities

    chandler real estate

    If you were expecting the craziness to stop in 2021 you were badly mistaken. Supply is still collapsing, driving the CMIs higher at a rapid pace in 16 of the 17 cities. Paradise Valley is the exception, where demand has declined a little over the past 2 months. At 275.2, the PV CMI is still close to its record high.

    Chandler has overtaken Gilbert at the top of the table and 12 cities are over 500 (only 4 last month).

    It does not make the list of 17 largest cities but El Mirage has already broken through the 800 level and is closing in on 900.

    When will this wild ride run out of steam?

    “©2020 Cromford Associates

    January 12 - Since the turn of the year we have been closely watching to see if the arrival rate of new listings would improve and make the supply situation somewhat easier.

    After 12 days we can report that new listings have instead arrived at a feeble rate, lower than the January of the last 3 years and well below what we had been expecting based on December's patterns.

    As a result the overall supply situation has got worse. not better.

    The following large cities now have fewer than 100 single-family active listings without a contract:

    1. Maricopa 67
    2. Fountain Hills 70
    3. Tempe 73
    4. Goodyear 75
    5. Chandler 86
    6. Cave Creek 87
    7. Buckeye 90
    8. Gilbert 95
    9. Glendale 98

    These numbers are pathetic, just a fraction of what we would normally see . Tiny Wickenburg has 75 so is enjoying a relatively abundant supply.

    The situation for buyers is getting even more desperate and since January is usually the BEST month for new listings the outlook for 2021 is already dire from a buyer's point of view. Buyers are likely to outnumber sellers by at least 5 to 1 for the foreseeable future. This is the most extreme example of a seller's market we have ever witnessed.

    Basic economic theory should tell us what this will do to pricing. It is likely to rise even faster than it has done over the last 6 months.

    “©2020 Cromford Associates

    January 10 - We used the weekly active listings Tableau chart to create the custom chart below:

    Chandler real estate

    This is for single-family detached homes across Greater Phoenix, priced at $500,000 or less. There are just 1,943 of them for sale compared with 10,253 in December 2018. At the time we thought 10,254 was low compared with normal, and it still is. 1,943 is a crazy number for a metropolitan area of nearly 5 million people.

    We also note:

    • there are hardly any distressed homes for sale
    • the first week of January has seen the number stabilize, but not increase
    • last year the count also stabilized for a couple of weeks but then started falling away rapidly between mid January and mid March
    • The jump in April and May 2020 was caused by lock down and looks unlikely to re-occur in 2021.

    Prices are likely to increase massively over the next 6 months in these current circumstances. This applies even if demand cools considerably.

    “©2020 Cromford Associates

    January 7 - Here is our latest table of Cromford® Market Index values for the single-family markets in the 17 largest cities

    chandler realtor

    Most of the market indexes (15 out of 17) are shooting upwards from the already stratospheric heights, Tempe's increase of 5% looks tame by comparison and Paradise Valley is taking a slight breather.

    Has the first week of 2021 given us any signals that the supply situation is about to improve? That's easy to answer - no. New listings are weak and inventory levels are lower now than on December 31.

    We are moving ever deeper into uncharted territory as evidenced by 11 cities with a CMI over 500.                    

    “©2020 Cromford Associates

    January 6 - The December affidavits have been counted for Maricopa County and show us the following statistics:

    • total closings numbered 11,413 of which 1,936 were new builds and 9,477 were re-sales
    • unit counts were up 20% from December 2019 with new builds up 7% and re-sales up 23%
    • the monthly median sales price was $345,000 with new builds at $380,390 and re-sales at $335,000
    • the median sales price was 14% higher than a year ago with new builds up 4% and re-sales up 18%

    These numbers are for single-family and condo / townhouse properties.

    Out of state buyers are increasing, reaching 20% in December after hitting a low of 15.6% in May 2020 This is the first time we have exceeded 20% out-of-state since July 2019. Given that more out of state buyers seem to be using in-state LLCs to purchase their homes, these percentages are probably lower than real life.

    “©2020 Cromford Associates LLC”.              

    January 5 - December is often under-rated as a month for closed sales, because it does tend to go a little quiet after Christmas Day. However December 2020 is in fact the record holder for ARMLS dollar volume as you can see from the long-term chart below:

     cathy carter

    The top 3 spots all go to months in 2020. For the original chart please click here.

    We do not expect any big numbers for January. January tends to be the slowest month for closed listings in every year. However if ranked against all other Januaries, 2021 could possibly be another record breaker. The listings under contract are there to support that and prices are certainly much higher than in any past year.

    “©2020 Cromford Associates LLC”.              

    January 4 - Repeating a similar analysis to that of January 2, but this time segmenting by price range rather than dwelling type. The numbers below refer to single-family detached listings in Greater Phoenix that are in active status but have no contract:

    Price Range Jan 1 , 2020 Jan 1, 2021 Change
    Under $250K 1,486 300 -80%
    $250K to $300K 1,159 387 -67%
    $300K to $350K 957 347 -64%
    $350K to $400K 826 374 -55%
    $400K to $500K 1,183 484 -59%
    $500K to $600K 724 352 -51%
    $600K to $800K 817 455 -44%
    $800K to $1M 491 225 -54%
    $1M to $1.5M 537 268 -50%
    $1.5M to $2M 339 173 -49%
    $2M to $3M 310 247 -20%
    Over $3M 309 246 -20%

    Unlike previous collapses in supply, this one has affected all price ranges, even that over $3 million, which had seemed immune until June 2020.

    We have a supply decline of at least 50% almost all the way up to $2 million. And this is starting from a weak supply situation at the start of last year.

    Below $300,000 the single-family detached supply is rapidly headed for extinction.

    “©2020 Cromford Associates LLC”.              

    January 2 - It is interesting to compare the supply at the start of 2021 with that at the start of 2020.

    The numbers below are for Greater Phoenix and show the number of active listings without a contract:

    Dwelling Type Jan 1 , 2020 Jan 1, 2021 Change
    Single-Family Detached 9,138 3,858 -58%
    Townhouse / Condo 641 434 -32%
    Apartment Style 651 598 -8%
    Patio Home 155 75 -52%
    Gemini / Twin 81 57 -30%
    Mfg / Mobile Housing 436 444 +2%
    Loft Style 12 12 0%
    Modular / Pre-Fab 16 4 -75%

    We can see that there has been a collapse in the supply of single-family detached homes, with patio homes not far behind. Clearly the popularity of apartment style homes has taken a knock from the pandemic, though supply of these is still down 8%. What might be surprising is that we actually have MORE mobile homes listed than we did a year ago. Not many more (just 8), but that is in stark contrast to the rest of the market.

    The last 2 dwelling types give us such low numbers that they are not statistically usable.

    “©2020 Cromford Associates LLC”.               

    December 31 - Here is our latest table of Cromford® Market Index values for the single-family markets in the 17 largest cities

    chandler real estate

    We are exiting 2020 with supply at an extreme low and demand still well above normal. The result is an unbalanced market in pretty much all segments. The feeble number of active listings is reaching a level of absurdity in some areas and the increases you can see in the CMIs above are a result.

    All cities have moved in favor of sellers over the last month, with all but 3 cities increasing their CMI by double digit percentages. Stand outs include Cave Creek , Chandler, Peoria and Queen Creek.

    We have 8 cities with CMI above 500 - an unprecedented state of affairs.

    All we can do now is wonder what the New Year will bring.

    “©2020 Cromford Associates LLC”.               

    December 29 - The latest S&P / Case-Shiller® Home Price Index® numbers were published today. They cover home sales during the period August to October 2020.

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

    1. New York 1,89%
    2. San Diego 1.70%
    3. Phoenix 1.68%
    4. Tampa 1.65%
    5. Boston 1.53%
    6. Miami 1.45%
    7. Dallas 1.45%
    8. Charlotte 1.33%
    9. Washington 1.27%
    10. Cleveland 1.23%
    11. Atlanta 1.20%
    12. Los Angeles 1.10%
    13. Seattle 1.06%
    14. Minneapolis 1.05%
    15. Chicago 1.02%
    16. Denver 0.94%
    17. San Francisco 0.91%
    18. Las Vegas 0.83%
    19. Portland 0.70%

    The national average was +1.37% so Phoenix home prices increased at a much higher rate than the national average, but fell to 3rd from 1st place compared with last month, displaced by New York and San Diego. All cities saw accelerating prices, marking a strengthening of the housing market across the entire nation.

    The year over year comparisons are below:

    1. Phoenix 12.7%
    2. San Diego 11.6%
    3. Cleveland 9.5%
    4. Boston 9.4%
    5. Portland 8.9%
    6. Tampa 8.6%
    7. Charlotte 8.6%
    8. Los Angeles 8.4%
    9. Washington 8.2%
    10. Minneapolis 7.8%
    11. San Francisco 7.7%
    12. Denver 7.0%
    13. Miami 6.8%
    14. Atlanta 6.8%
    15. Dallas 6.5%
    16. Las Vegas 6.4%
    17. Chicago 6.3%
    18. New York 6.0%

    The national index increased by 8.4% over the 12 months.

    “©2020 Cromford Associates LLC”.               

    December 27 - We are converting the last few Adobe Flash charts to Squirrel technology this week, and one of the last ones rebuilt is the Extremes table.

    This has been an interesting table in 2020 as a large number of new records have been set. Examples include:

    • Highest ever active listings $/SF
    • Highest ever pending listings $/SF
    • Highest ever monthly sales $/SF
    • Highest ever annual sales $/SF
    • Highest ever listing success rate
    • Highest ever average price for monthly sales
    • Highest ever average price for annual sales
    • Highest ever median price for monthly sales
    • Highest ever average sq. ft. for monthly sales
    • Highest ever average sq. ft. for annual sales
    • Highest ever Cromford® Market Index
    • Lowest ever Cromford® Supply Index
    • “©2020 Cromford Associates LLC”.  

    December 26 - The highest contract ratio we have ever recorded for all areas & types within the ARMLS database was 180.5, which occurred on December 15, 2020. Yesterday it had fallen back to 171.6 but this is still a freakish number for the last week of December. Last year on this date the reading was just 63.0. This was a strong score at the time, well up from 39.8 in 2018, which is close to what can be considered normal.

    For smaller market segments, the contract ratio has become outlandish, confirming just how unbalanced this market is. Selling a home is easier than falling off a log, but buying one can be a very difficult and discouraging task.

    We have added a new weekly chart - Contract Ratio by City, so you can investigate further. The contract ratio is a good way to compare segments of the market to see which are hottest. You can see the new chart here.

    We note that it is the higher end locations that peaked during the fourth quarter, whereas many of the mid-range locations peaked earlier in 2020. However the Southeast Valley cities have also been hitting highs during the fourth quarter. Higher priced locations tend to have consistently lower contract ratios, so a very hot reading for Paradise Valley would be anything over 25. For Scottsdale anything over 50 would be considered very hot, while for most of the market, values over 100 would indicate similar strength.

    Some noteworthy readings for the single-family detached sector:

    • Anthem at 300
    • Avondale at 300
    • Casa Grande at 388
    • Chandler at 345
    • El Mirage at 589
    • Gilbert at 326
    • Glendale at 355
    • Maricopa at 364
    • Queen Creek & San Tan Valley at 338
    • Tolleson at 450

    The areas that are primarily focused on the 55+ market are relatively cool. Sun Lakes is at 112 while Sun City is at 116 and Sun City West is reporting 106. Normally these would be considered hot readings, as normal would be between 40 and 40, but relative to the rest of the market right now, they are rather unimpressive.

    “©2020 Cromford Associates LLC”.               

    December 24 - Here is our latest table of Cromford® Market Index values for the single-family markets in the 17 largest cities

    chandler realtors

    All 17 cities are now showing the green up arrow, indicating that this extreme seller's market is getting even more favorable for sellers. This is hardly surprising given how few homes are available to purchase.

    Every new seller is now a hero.

    The increases in the CMI are getting outlandish again, with Cave Creek up 37% and many other cities topping 20% - Glendale, Chandler, Queen Creek, Fountain Hills and Peoria.

    “©2020 Cromford Associates LLC”.               

    December 23 - It is only 6 days since the CMI passed 400 and we are already over 410 and headed higher. This is because supply is collapsing in so many areas. Not only do we have fewer homes for sale, the ones that remain available are at a very high average price. Just in the last 2 weeks, the supply of single-family homes in the city of Phoenix has dropped 12% while the average list price has risen 2.2%

    Compared with this time last year, the supply of single-family homes in Phoenix is down 54% while the average price is up 22%. And Phoenix is not even an extreme example. For that we recommend Gilbert where supply is down 66% since last year and the average price is up 27%. We should also remember that supply was 53% below normal in December 2019, so we thought that was a very tight supply at the time.

    “©2020 Cromford Associates LLC”.               

    December 21 - The rental market in Greater Phoenix is just as crazy as the re-sale market. You can study it for yourself using the Tableau chart here.

    We see that the average lease price per sq. ft. per month is up 15% from this time last year, rising from $1.01 to $1.16. This is across all dwelling types. If we focus exclusively on single-family rentals then the average lease price per sq ft per month has risen from 94 cents to $1,11. This is an 18% increase, so it seems clear that the rent for single-family homes is rising faster than for attached properties.

    Townhomes are up from $1,20 to $1.30, a rise of 8%, while apartments are down from $1.43 to $1.42. However the latter is an extremely volatile monthly measure as the number of apartments listed on ARMLS is quite small. The annual average smooths out the volatility and has risen from $1.24 to $1.29. With a rise of only 4%, apartments appear to be much less sought-after thanks to the pandemic.

    This is a pattern that is being repeated around the world. Working from home increases the desire for more space and a yard.

    “©2020 Cromford Associates LLC”.               

    December 18 - Here is our latest table of Cromford® Market Index values for the single-family markets in the 17 largest cities

    chandler real estate

    Instead of topping out, the CMI numbers are gaining even more momentum with an average increase of 12.6% over the last month, compared with 9.7% last week. Despite a seasonal slackening in demand, most cities are seeing supply drop alarmingly as we approach the holiday season.

    We now only have 2 cities moving a little in favor of buyers and the movement is trivial. Many of the remaining 15 cities are moving dramatically in favor of sellers. We highlight Cave Creek, Queen Creek, Peoria, Gilbert, Glendale, Chandler, Scottsdale, Buckeye and Mesa.

    13 cities with a CMI over 400 is a completely novel situation. It has never been this easy to sell a home.

    It is now almost certain that 1Q 2021 will see substantial price rises as demand grows once more after the holidays.

    “©2020 Cromford Associates LLC”.               

    December 17 - Yes it has happened - the Cromford® Market Index has risen over 400 for the first time.

    That it should do this while demand is falling is astonishing. However, supply is collapsing at a draw-dropping rate across large areas of the valley, especially those mid-price suburbs.

    Supply has been a problem for many years and we sound like a broken record when we talk about it. However the tiny number of listings available right now is even lower than almost anyone imagined possible just a few months ago.

    The only areas where supply does not look crazy low are the 55+ areas such as Sun City and Sun City West. Supply is low here too but not so out of touch with normality as in neighboring Surprise, Peoria or Glendale.

    “©2020 Cromford Associates LLC”.               

    December 14 - The number of active listings is getting to the point where things we usually ignore are starting to have an effect on the total.

    One of these things is out of area listings. Active listings without a contract total 7,159 this morning, but 602 of these are outside of Greater Phoenix. These out of area listings are usually a small percentage of the total, often around 2%. However the total is so small these days that 602 represents over 8% of the available supply.

    Another factor is new builds. The majority of new builds are not listed in the MLS, but at the moment the few that are listed are starting to look like a large number relative to the total number of active listings. There are 970 active listings with a build date of 2019 or later. This represents nearly 14% of the total, so the number of re-sales is actually a lot less than might appear at first sight.

    New builds are also concentrated by geography. There are none listed in several locations: Sun City, El Mirage, Carefree, Anthem, Sun City West or Sun Lakes. However there are also locations where new builds are a large percentage of what is available. Focusing on single-family homes, the following locations are extreme examples:

    1. Coolidge - 72% of active listings are new homes
    2. Wittmann - 59%
    3. Laveen - 55%
    4. Arizona City - 54%
    5. Litchfield Park - 49%
    6. Gold Canyon - 47%
    7. Waddell - 46%
    8. Maricopa - 35%
    9. Casa Grande - 33%
    10. Tonopah - 33%
    11. Queen Creek / San Tan valley - 29%

    If you are looking for a re-sale single family home in Greater Phoenix you don't have 7,159 to choose from, you have 3,964. That is fewer than we had listed just in Scottsdale in 2009.

    And next week there will be fewer still.

    Maybe you have a price limit. Suppose you cannot spend more than $400,000 on your re-sale single-family home. Then you do not have 3,964 to choose from, you only have 1,554. The list of where there 1,554 homes are makes interesting reading:

    1. Phoenix - 455
    2. Mesa - 132
    3. Sun City -112
    4. Surprise - 94
    5. Sun City West - 74
    6. Glendale - 71
    7. Maricopa - 63
    8. Buckeye - 54
    9. Peoria - 53
    10. Queen Creek & San Tan Valley - 42
    11. Casa Grande - 40
    12. Goodyear - 37
    13. Gilbert - 33
    14. Avondale - 33
    15. Chandler - 33
    16. Tempe - 31
    17. Sun Lakes - 20
    18. Tolleson - 17
    19. Wickenburg - 16
    20. Florence - 15

    No surprise that Phoenix and Mesa top the list, but who would guess that Sun City would be third?

    There are major cities with disappearing supply of re-sale single-family homes at $400,000 or less. Scottsdale has 7. Gilbert and Chandler have less than 67 between them. The huge suburban sprawl that is Queen Creek and San Tan Valley has only 42 re-sale single-family homes at $400,000 or less. Not so long ago there were a couple of thousand under $200,000 to choose from.

    In March 2009 the average asking price in Queen Creek and San Tan Valley was under $207,000. Today it is over $613,000.

    Most people are not trying to buy a house or involved in the real-estate business. They have not yet realized the extreme nature of what is going on.

    “©2020 Cromford Associates LLC”.               

    December 13 - Based on affidavits of value filed during November we have collected the following statistics on iBuyer activity:

      Opendoor OfferPad Zillow Knock All iBuyers Combined
    Homes Purchased in November 2020 107 82 40 0 229
    Homes Purchased in November 2019 273 96 45 6 420
    Annual Change in Purchases -61% -15% -11% -100% -45%
    Homes Sold in November 2020 74 74 22 0 170
    Homes Sold in November 2019 272 64 63 4 403
    Annual Change in Sales -73% +16% -65% -100% -58%
    Median Purchase Price in November 2020 $311,300 $297,650 $287,000 N/A $302,000
    Median Purchase Price in November 2019 $248,500 $232,850 $251,300 $336,500 $246,300
    Median Sale Price in November 2020 $292,500 $282,500 $279,000 N/A $290,000
    Median Sale Price in November 2019 $250,000 $248,000 $297.000 $341,320 $254,000
    Homes in Inventory at the End of November 2020 280 163 76 0 519
    Homes in Inventory at the End of November 2019 942 256 168 17 1,383
    Annual Change in Inventory -70% -36% -55% -100% -62%

    The iBuyers as a group purchased 229 homes in Maricopa & Pinal counties during November. That represents an improvement over October's low number of 221 especially since November was a very short month for working days. However they purchased 420 this time last year, when the market was less active than it was in 4Q 2020. The annual percentage decline in business volume is moderating now as the 4Q of 2019 saw slowing business activity for the iBuyers and so makes for an easier comparison a year later. As a result Zillow is down only 11% and OfferPad 15%. Opendoor has shrunk the most with a 61% decline in purchase volume.

    To avoid further decline in market share the iBuyers have significantly increased what they are prepared to pay for a home. The median purchase price is up 23% from a year ago. In contrast the median sales price is up 14% from November 2019.

    Overall sales are down 58% for November 2019, but OfferPad can celebrate an increase of 16% thanks to November 2019 being an unusually slow month. Opendoor and OfferPad are neck and neck with 74 sales apiece while Zillow has failed to establish a significant share of the Phoenix market and is trailing a long way behind the leading two at just 22 sales in November.

    We calculate inventory by subtracting the number of sales from the number of purchases recorded. Total inventory is up slightly from last month which is something of an achievement in this market. However if is down 62% from a year ago with Opendoor down the largest percentage (excluding Knock) and OfferPad down the least.

    Between November 10 and December 10, Opendoor stopped adding listings on ARMLS. We understand they did the something similar in several other territories. The reason for this is unknown to the Cromford Report, but whatever the reason, they have added a lot of listings since December and it seems to been a temporary suspension.

    Some of the iBuyers have reduced the commission percentage they offer to the buyer's broker over the past year. Opendoor is at 2.25%, while Zillow is now also at 2.25%, both having tried 2.5% for a while. OfferPad appears to be sticking with 3% commission for now. Since it has consistently achieved higher average gross margins than the others, OfferPad has a little more room to do this. Could this be one of the reasons it has increased its share of the iBuyer transactions compared with 2019?

    “©2020 Cromford Associates LLC”.               

    December 11 - Here is our latest table of Cromford® Market Index values for the single-family markets in the 17 largest cities

     chandler realtor

    The CMI numbers are gaining momentum with an average increase of 9.7% over the last month, compared with 7.5% last week. Most cities are seeing supply drop sharply as we approach the holiday season.

    We still have 4 cities moving a little in the opposite direction, but only by small percentages Huge increases are to be seen in Queen Creek, Gilbert, Fountain Hills, Cave Creek, Scottsdale, Glendale, Chandler, Peoria, Tempe, Buckeye and Mesa, all 10% or more over the last month. Phoenix only just missed that mark at 9%.

    Still no sign of weakening demand and supply will only get lower over the next 3 weeks.

    “©2020 Cromford Associates LLC”.               

    December 10 - CoreLogic reports that home owners with mortgages in the USA gained over £1 trillion in home equity during the twelve months ending September 2020.. This is an average of $17,000 per homeowner, a rise of 10.8%. Note that this does not include home owners who own their homes outright, some 37% of the total home owners.

    During the same period, homes with negative equity fell 18.3% from 2 million to 1.6 million, and from 3.7% to 3.0% of all mortgaged properties.

    If you want a good reason to buy rather than rent, this is a pretty good one.

    December 9 - Looking at the affidavits recorded in Maricopa County during November we see strong growth in unit sales compared with November 2019. However it is not evenly spread by geography. The central and north valley, dominated by the City of Phoenix, grew the slowest at 8.2%. Next came the West Valley at more than twice the rate - 17.5%. The Southeast Valley did even better, growing unit sales by 20.8%. However, the standout performance came from the Northeast Valley which added 25.8%.

    The higher end of the market is the strongest it has been in more than a decade and this particularly favors the Northeast Valley. Across Maricopa County, the price range between $500,000 and $1,000,000 saw unit sales of 1,791 in November 2020, up 79% from November 2019. The low end of the market is crippled by ever diminishing supply problems and sales under $250,000 dropped 35% from 2,909 to 1,895.

    “©2020 Cromford Associates LLC”.               

    December 8 - We did suggest last month that supply would fall as the year drew to its close. However the speed of the decline is even faster than we expected.

    If we count ALL the listings on ARMLS that are active but not under contract, we had 7,150 this morning. This is down 18% from this time last month. This number also includes out of area listings. If we restrict our count to Greater Phoenix we arrive at 6,544, down 19% from November 8.

    Several cities are now at lower supply levels for single-family homes than we have ever recorded before.

    • Chandler -140
    • Gilbert -116
    • Mesa - 285
    • Phoenix - 1031
    • Scottsdale - 725

    We are in uncharted territory once again.

    “©2020 Cromford Associates LLC”.               

    December 6 - The affidavit counts for Maricopa County are now complete for November and show the following:

    There were 10,075 completed sales recorded for single-family and townhouse / condo properties. This is up 15% from November 2019. It is down 10.9% from October, but this is due to the large difference in the number of working days. October 2020 had 22 working days while November had only 18. The difference is over 18%, so November actually saw more closings per working day.

    Re-sales were up 17% from a year earlier, while new home sales only rose by 5.5%

    The median sales price drifted down to $340,940 from $342,000 in October, but is still up 15.4% from this time last year. Looking exclusively at re-sales, the median sales price was flat between October and November at $335,000. However it was up almost 20% from $280,000 in November 2019.

    The new home median dropped 1.2% to $374,490 but was up 5.5% from $354,990 in November 2019.

    “©2020 Cromford Associates LLC”.               

    December 3 - Here is our latest table of Cromford® Market Index values for the single-family markets in the 17 largest cities

    chandler real estate

    The CMI is gaining ground with an average increase of 7.5% over the last month, mostly due to supply declining still further. We have 4 cities moving a little in the opposite direction, including Avondale who has relinquished the top spot to Gilbert. We note that 3 of the cheapest cities (Maricopa, Surprise & Avondale) and the most expensive by far (Paradise Valley) were the ones that saw a slight decline. The mid range and the lower end of the luxury market are seeing rampant demand which quickly soaks up any supply that manages to squeeze itself onto the market.

    Gilbert moved up 20% and Queen Creek, Scottsdale, Tempe, Chandler and Fountain Hills all saw supply drop sharply over the last month.

    With 16 cities over 300, this market is the most favorable to sellers that we have ever seen.

    “©2020 Cromford Associates LLC”.               

    December 1 - CoreLogic has just published their latest US Home Price Insights report for October. Over the last 4 months this has been extremely pessimistic about home prices in the near and medium term. Despite a team of hard-core housing economists, it has also been extremely inaccurate. Here are the last 3 month-to-month price change forecasts along with the actual results:

    Month to Month Change for Core-Logic Forecast Actual Result Reported by Core-Logic
    October 2020 +0.2% +1.1%
    September 2020 +0.1% +1.1%
    August 2020 +0.01% +1.22%

    In summary, Core-Logic predicted that US home prices would increase by 0.31%, but they actually increased by 3.4%. How wrong can you get?

    The actual average increase was just over 11 times the forecast increase.

    They seem to have some half-baked theory that the shortage of supply is caused by sellers being reluctant to put their homes on the market during the COVID-19 pandemic. In Phoenix at least, this is completely unsupported by the numbers. Since May we have had a much larger number of new listings coming to the market than we had in 2018 or 2019. However this extra supply is nowhere near enough to satisfy the level of demand experienced since May 2020.

    CoreLogic also produces 12 month forecasts. As you know, prediction can be very difficult, especially about the future. Actually, you should be able to predict accurately one month out, because you should know what is going to close within the next month based on the listings under contract. 12 months out is a completely different animal, and we do not even attempt to do this. The reason for this is that we are mathematicians, not economists. Mathematicians are, by their nature, averse to being wrong, whereas economists have got used to it because it happens to them all the time.

    .Here are Core Logic's 12 year forecast the average home price in the US over the last 4 months:

    Year over Year Change for Core-Logic Forecast
    October 2021 +1.9%
    September 2021 +0.2%
    August 2021 +0.6%
    July 2021 -1.0%
    June 2021 -6.6%

    We can see that, Core-Logic originally predicted that US home prices would fall by 6.6% between June 2020 and June 2021. With prices having already increased by well over 4% since June, this price collapse is now looking unachievable. Their current (and rather more optimistic) outlook is that prices will rise by 1.9% between October 2020 and October 2021. To our minds this still looks drastically low when the Cromford® Market Index is hitting new heights. However, we do admire their bravery in making such a forecast.                  

    “©2020 Cromford Associates LLC”. 

    November 29 - We now have just 27.8 days of inventory across all ARMLS areas & types. That is less than 4 weeks. A normal balanced market would be expected to have between 120 and 150 days of inventory. For buyers this means most decently priced and affordable listings will be under contract within days if not hours of hitting the market.

    It also means what is still available on the MLS is mostly unaffordable to the majority of potential buyers. This is obvious from the average list price, which is way above what most people would expect to pay for a home in the area. Here are some examples for single-family detached homes:

    1. Paradise Valley - $4,269,814
    2. Scottsdale - $1,986,268
    3. Fountain Hills = $1,191,397
    4. Cave Creek - $1,141,853
    5. Gold Canyon - $823,082
    6. Chandler - $720,865
    7. Anthem - $676,483
    8. Phoenix - $673,757
    9. Gilbert - $665,072
    10. Mesa - $613,602
    11. Litchfield Park - $570,702
    12. Queen Creek - $566,637
    13. Peoria - $553,516
    14. Tempe - $551,160
    15. Buckeye - $477,365
    16. Apache Junction - $453,180
    17. Glendale - $445,598
    18. Surprise - $439,235
    19. Goodyear - $433,937
    20. Sun Lakes - $421,418
    21. Laveen - $395,686
    22. Avondale - $356,111
    23. Tolleson - $348,987
    24. Sun City West - $341,342
    25. Casa Grande - $318,329
    26. Maricopa - $316,943
    27. Sun City - $303,936
    28. El Mirage - $280,075
    29. Arizona City - $224,721

    These are all much higher than they were a year ago and it it is not because high-end homes are piling up - the top end of the market is seeing unprecedented demand.

    We have been short of supply since 2015 and the situation has become steadily more severe. There are just not enough homes to buy for the people who want them. Millennials who continued to rent long after earlier generations are now anxious to get their foot on the ladder. Investors are back in volume having taken a pause during the second quarter. However unlike 2004, investors remain a relatively small part of the demand. Most of the people buying homes are doing so because they want a primary residence. During October the intended use for single-family and condo/townhouse properties in Maricopa and Pinal counties was as follows:

    1. Owner-occupied primary residence - 77.3%
    2. Investment - 12.2%
    3. Owner-occupied secondary residence - 8.6%
    4. iBuyer for re-sale - 1.6%
    5. Unknown - 0.3%

    People who are worrying about mortgage delinquency rates should remember that foreclosures did NOT create the huge excess supply of 2006. The excess supply arrived 2 years before the foreclosures started in earnest. When the bank owned homes hit the market, it was already dreadfully over-supplied, so their prices dropped sharply. If we saw a new wave of distressed homes right now, they would be soaked up very quickly by eager buyers and prices would continue to rise. It would help move the market back to a more normal balance, so prices would rise at a more moderate pace. Most distressed homes would be unlikely to get to foreclosure because almost all of them have substantial owner equity and can be marketed as normal sales, or at worst pre-foreclosures, not short sales (which can often be tricky to close).

    The current situation is very different from 2004 or 2005. Then a large number of newly built homes had been purchased by investors with 100% loans and were lying unoccupied with no tenants interested in renting them, despite record low rental rates. Many other homes had been purchased by owner-occupiers on fraudulent loan applications, who never even made the first monthly loan payment, living in their new home for free with minimal money down. Loan fraud was rampant in 2005 and 2006, largely driven by the mortgage industry itself rather than the borrowers. Wall Street firms (like Lehman Brothers) demanded mortgages to chop up and sell as securities and mortgage brokers could not supply enough without resorting to abnormal practices focused mainly on sub-prime loans. Remember Countrywide and Washington Mutual? Stated income loans? No documentation loans?

    I repeat - 2020 is nothing like 2005. The 2020 housing market is not abnormally pumped with artificial credit, just starved of supply. Forecasting the future is extremely difficult, but drawing parallels with 2005-2008 is not helpful, nor is it logically appropriate.

    “©2020 Cromford Associates LLC”. 

    November 28 - Not to be outdone by the closed listings, active single-family detached listings in Scottsdale have chosen yesterday to be the first time they have an average price of over $2,000,000. Last year at this time the average asking price was $1,615,694.

    “©2020 Cromford Associates LLC”. 

    November 27 - We note that the monthly average closing price for single-family homes in Scottsdale exceeded $1,000,000 for the first time this week, Last year it was less than $870,000 and during the bubble years (2005-2007) it never exceeded $882,000

    “©2020 Cromford Associates LLC”. 

    November 26 - Here is our latest table of Cromford® Market Index values for the single-family markets in the 17 largest cities

    chandler real estate 

    The number of cities showing a CMI decline (favorable to buyers) rose from 4 last week to 5 today. But do not be fooled - the market is swinging even further in favor of sellers. The average percentage change in CMI is 5.5%, up from 4.3% last week.

    Maricopa is down 11%, but we have a more impressive list of cities that are moving strongly higher - Gilbert, Scottsdale, Chandler, Queen Creek, Tempe & Fountain Hills.

    Almost every day we see a new all-time high in the CMI for all ARMLS areas & types. The market is celebrating Thanksgiving by moving over 370 for the very first time.

    Demand is fading a little as we approach the holiday season, as it usually does, but supply is falling fast again. We have so little supply it is hard to imagine the effect of another reduction. However we won't have to imagine it for very long, because active listing counts are sure to drop significantly over the next 5 weeks. This is a normal seasonal effect.

    Equally certain is that they will start to rise once January begins, but whether they can rise enough to meet the buyers' demand is an open question. The first 2 weeks of January will see a rise, but how long the rising trend is sustained after that will be a key signal for 2021.

    “©2020 Cromford Associates LLC”. 

    November 24 - The latest S&P / Case-Shiller® Home Price Index® numbers were published today. They cover home sales during the period July to September 2020.

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

    1. Phoenix 1.86%
    2. San Diego 1.78%
    3. Boston 1.51%
    4. New York 1.38%
    5. Tampa 1.37%
    6. Portland 1.31%
    7. Los Angeles 1.30%
    8. Cleveland 1.25%
    9. Chicago 1.21%
    10. Seattle 1.19%
    11. Charlotte 1.18%
    12. Miami 1.07%
    13. Washington 1.03%
    14. San Francisco 1.01%
    15. Minneapolis 0.99%
    16. Atlanta 0.96%
    17. Dallas 0.90%
    18. Las Vegas 0.83%
    19. Denver 0.63%

    The national average was +1.15% so Phoenix home prices increased at a much higher rate than the national average, and rose from 3rd to 1st place compared with last month. All cities saw accelerating prices, marking a strengthening of the housing market across the nation.

    The year over year comparisons are below:

    1. Phoenix 11.4%
    2. Seattle 10.1%
    3. San Diego 9.5%
    4. Boston 7.7%
    5. Los Angeles 7.7%
    6. Cleveland 7.7%
    7. Portland 7.6%
    8. Charlotte 7.6%
    9. Tampa 7.5%
    10. Washington 7.0%
    11. Minneapolis 6.6%
    12. Denver 6.0%
    13. San Francisco 6.0%
    14. Atlanta 6.0%
    15. Miami 5.6%
    16. Las Vegas 5.4%
    17. Dallas 4.9%
    18. Chicago 4.7%
    19. New York 4.3%

    The national average was 7.0%. Phoenix remains on top for the 16th consecutive month.

    “©2020 Cromford Associates LLC”. 

    November 23 - New supply tends to be thin on the ground between mid November and the end of December, though we are seeing a higher rate of arrival than we did in 2019 and 2018. This increased rate is not enough to compensate for the elevated demand and the number of homes available for sale is declining in the vast majority of areas.

    We have had so little supply for so long, it is easy to forget what normal is like. Here are a few examples of what is available compared with the long term average:

    Market Segment Active excluding UCB & CCBS Long Term Average Difference
    All Areas & Types 8,257 27,009 -69%
    Greater Phoenix 7,616 21,678 -65%
    Greater Phoenix Single-Family Detached 5,564 16,850 -67%
    Greater Phoenix Townhomes 643 1.385 -54%
    Greater Phoenix Apartment Style 752 1,298 -42%
    Greater Phoenix Twin / Duplex 62 127 -51%
    Greater Phoenix Patio Home 109 286 -62%
    Greater Phoenix Mobile Home 464 679 -32%
    Greater Phoenix Loft Style 17 39 -56%
    Greater Phoenix Modular / Manufactured 5 16 -69%
    Single-Family Detached Homes in:      
    Phoenix 1,193 4.469 -73%
    Mesa 390 1,587 -75%
    Scottsdale 809 2,290 -65%
    Peoria 245 886 -72%
    Queen Creek / San Tan Valley 196 958 -80%
    Avondale 56 349 -84%
    Paradise Valley 195 325 -40%
    Fountain Hills 83 250 -67%
    Cave Creek 105 259 -59%
    Buckeye 151 487 -69%
    Maricopa 115 415 -72%
    Chandler 196 977 -80%
    Glendale 168 908 -81%
    Gilbert 179 1,109 -84%
    Surprise 243 907 -73%
    Goodyear 133 552 -76%
    Tempe 99 293 -66%
    Gold Canyon 79 209 -62%
    Sun Lakes 36 150 -76%
    Arizona City 20 107 -81%
    Tolleson 11 170 -94%
    Litchfield Park 57 198 -71%
    Sun City West 82 292 -72%
    Laveen 45 232 -81%
    Anthem 27 211 -87%
    Apache Junction 40 195 -79%
    Casa Grande 81 330 -75%
    El Mirage 20 150 -87%
    Sun City 115 301 -62%
    Florence 43 160 -73%
    Coolidge 34 98 -65%

    The housing market is short of everything, everywhere.

    The dwelling types that are least scarce are mobile homes & apartment-style condos. Geographically, the most expensive areas are down less but are still massively short of supply compared with average. This is exacerbated by the unusually high demand for high-end homes

    Tolleson wins the prize for the lowest supply compared with its long term average. Anthem and El Mirage are runners-up..

    “©2020 Cromford Associates LLC”.

    November 19 - Here is our latest table of Cromford® Market Index values for the single-family markets in the 17 largest cities

     Gilbert homes for sale

    The Cromford® Market Indexes continue to accelerate higher. Supply is falling again in the majority of areas and demand remains extremely strong for the time of year. .

    Maricopa, Cave Creek, Surprise and Paradise Valley are all a little lower than last month but in all four cases are still in the grip of a strong seller's market.

    We see growing strength in many cities which are moving even further in favor of sellers. These include Chandler, Scottsdale, Gilbert, Goodyear and Tempe.

    The average change in CMI over the last month is +4.3%, up from 2.7% last week.

    Between now and year end we are likely to see further reductions in the number of active listings, as relatively few people list their homes between Thanksgiving and New Year. The chances are good that the CMI will continue to move higher at least until January. That strongly suggests prices will continue to rise quickly through the middle of 2021.

    “©2020 Cromford Associates LLC”.

    November 18 - As if to underscore just how wild the luxury market has become in the last few months, we observed our first ever MLS sale over $20 million in October.

    In fact there were 2 sales in October over $20 million!

    The previous record was $19,250,000 which was set in November 2019.

    There have now been 8 sales through ARMLS over $15,000,000 and all of them occurred since December 2017. Prior to 2017, the record was $12,500,000, set in the year 2000.

    The 2 new top sales were:

    • 10696 E Wingspan Way in DC Ranch (Scottsdale) - 15,534 sq. ft. on 17 acres of land - originally listed in 2016 at $32,000,000
    • 5710 N Yucca Road in Jokake Camelback Properties (Paradise Valley) - 28,043 sq. ft. on 5 acres - originally listed in 2019 at $25,000,000

    These sales certainly push the average price per sq. ft. limits. They make the average percent of list price look bad though.

    “©2020 Cromford Associates LLC”.

    November 17 - We hear that many Californians are buying homes in the Phoenix area, which would explain why the top end of the market is so strong. Unfortunately it is not easy to confirm this fact from the Affidavits of Value. So many out of state buyers are not putting their former address on the Affidavits as they used to.

    We are not sure if this is a deliberate ploy to hide the fact that are from California, but they often

    • enter the new address instead of the old one
    • create an Arizona LLC to be the legal owner and enter that as the buyer's address
    • rent prior to buying and put their local rental address as their old address

    When a similar exodus occurred in 2001 to 2004 we saw a massive increase in California addresses, but this is not visible today.

    However we can look to other indicators. The average cost of a U-Haul one-way rental to San Francisco from Phoenix is only $311. Coming in the other direction the cost is $2,500. U-Haul prices based on demand and supply and they have an acute shortage of moving trucks in San Francisco and a glut in Phoenix, left by the people who recently moved here.

    Reports from California suggest that 2 people are leaving the state for everty one that arrives. They also report that it is the comparatively wealthy who are more likely to move out.

    “©2020 Cromford Associates LLC”. 

    November 16 - Based on affidavits of value filed during October we have collected the following statistics on iBuyer activity:

      Opendoor OfferPad Zillow Knock All iBuyers Combined
    Homes Purchased in October 2020 99 90 32 0 221
    Homes Purchased in October 2019 287 112 65 2 466
    Annual Change in Purchases -66% -20% -51% -100% -53%
    Homes Sold in October 2020 56 77 34 0 167
    Homes Sold in October 2019 357 82 86 2 527
    Annual Change in Sales -84% -6% -60% -100% -68%
    Median Purchase Price in October 2020 $288,900 $276,500 $278,000 N/A $283,700
    Median Purchase Price in October 2019 $248,300 $250,000 $269,750 $276,000 $250,300
    Median Sale Price in October 2020 $289,250 $285,000 $290,750 N/A $289,000
    Median Sale Price in October 2019 $250,000 $249,900 $333.000 $293,381 $260,100
    Homes in Inventory at the End of October 2020 247 155 58 0 460
    Homes in Inventory at the End of October 2019 941 224 186 15 1,366
    Annual Change in Inventory -74% -31% -69% -100% -66%

    The iBuyers as a group purchased 221 homes in Maricopa & Pinal counties during October. That represents only 1.8% of the total market. A year ago they purchased 466 homes, about 4.2% of the total market. This decline in market share started in 4Q 2019, well before the COVID-19 virus had been discovered, but accelerated during the first half of 2020 as iBuyer operations were severely curtailed. Trying to buy homes under $300,000 is a tough job in current market conditions and it looks nearly impossible for the iBuyers to regain the market presence they held between 2018 and 2019 during what now looks in hindsight to be their glory years. Inventory has fallen 66% over the last 12 months. Our inventory counts are probably on the high side, especially for Opendoor.

    OfferPad has become the largest iBuyer by property sales but Opendoor slightly surpassed them in terms of properties purchased in October. Zillow is looking like a minor player with both sales and purchases a tiny fraction of what they were achieving prior to 4Q 2019.

    “©2020 Cromford Associates LLC”. 

    November 15 - During the first 2 complete weeks of November, 771 listings over $500,000 were closed across Greater Phoenix. This is an increase of 90% compared with the same 2 weeks last year. In 2018 there were only 272, The higher end of the market is having its best season ever, despite it being in the traditionally quiet fourth quarter.

    November 14 - The market keeps setting new records for dollar volume. The monthly figure for all areas & types is $4,518 million as of November 14. This is up an astonishing 54% from the same time last year.

    To put this in context, the dollar volume at the peak of the bubble in 2005 was $3,339 million which occurred during June that year. By June 2005 peak demand had already been detected and the market was sliding towards disaster as a slew of supply came onto the market from wise speculators getting out early. The current situation has market dynamics that bear little resemblance to 2005.

    “©2020 Cromford Associates LLC”. 

    November 12 - Here is our latest table of Cromford® Market Index values for the single-family markets in the 17 largest cities

    chandler real estate

    The trend has reversed this week and in a gravity-defying move, the Cromford® Market Indexes have started to accelerate higher again. Given that many of them already stand at a record high level, this is astonishing and tells us a lot about the strength of the current market. After a gentle rise in October, supply is now trending down in most but not all areas. Demand keeps creeping higher despite all the (apparently incorrect) theories as to why it should not.

    Cave Creek is the one city that has moved significantly in favor of buyers over the last month, thanks to an increase in active listings and a drop in the monthly sales rate. Maricopa also has more supply than last month but its CMI is only down by 4% because demand continues to increase. The CMIs for Phoenix and Fountain Hills are slightly lower than last month but are now on a climbing trend.

    The standouts for sellers are Chandler, Gilbert, Goodyear and Scottsdale. These areas are a nightmare for buyers who are facing even stiffer competition from their fellow buyers.

    The overall average increase over the month was 2.7%, up from 1.6% last week.

    The lowest CMI is still over 280 and moving higher. This situation means there is still a lot of price appreciation baked in to the future. We do not like to speculate but we would would not be at all surprised to see the average price per square foot rise another 20% to 25% from its current level.

    The overall average CMI rose by 1.6%, down from 2.2% last week. Despite continued expectations for the market to cool, it keeps getting hotter, although at a slower pace.

    November has started with fewer new listings than expected, while demand has shown no sign of easing. Although the CMI is at the highest level we have ever recorded, our expectation is that it will continue to rise in the short term. 

    “©2020 Cromford Associates LLC”. 

    November 11 - In the third quarter of 2020 we have seen a massive change in the mix of homes sold through the MLS in Greater Phoenix, compared to the same quarter last year:

    Dollar Volume for Closed Listings 3Q 2019 3Q 2020 Change
    Under $250,000 $1,937M $1,363M -30%
    $250,000 to $500,000 $4,304M $5,460M +27%
    $500,000 to $1 million $1,651M $2,719M +65%
    Over $1 million $759M $1,635M +115%

    The range between $250,000 and $500,000 is still the largest, but "only" grew 27%. The growth rate increases as we move up-market.

    This pattern continues into the fourth quarter and the luxury market is seeing the highest sales volumes it has ever experienced.

    Who would have predicted this during a recession?

    “©2020 Cromford Associates LLC”. 

    November 9 - Using the affidavits filed in Maricopa County during October, we can derive the following statistics:

    • Closed sales totalled 11,303, up 17% from October 2019
    • New home closings came in at 1,740, up 20% from October 2019
    • Re-sales totalled 9,563, up 16% from October 2019
    • The overall median sales price in September was $342,000, up 16% from $295,000 in October 2019
    • The new home median sales price was $379,132, up 3%
    • The re-sale median sales price was $335,000, up 20% from $280,000

    As we saw last month, volume is increasing faster for new homes than re-sales but prices are increasing faster for re-sales.

    New home prices are low relative to re-sales because they are determined at contract signature. This often pre-dates completion by several months which means the homes eventually close at prices that are below current market value. Many developers are taking steps to remedy that shortfall which will increase builder gross margins but make new homes more expensive.

    All the numbers above include single-family and townhouse / condo properties.

    “©2020 Cromford Associates LLC”. 

    November 8 - The explosion in demand for luxury homes continues to amaze. During October there were 101 closed listings across Greater Phoenix with prices over $2 million. This is a truly colossal total, given that the previous record for October was 38. In fact it is quite rare for the over $2M count to exceed 50 during any month. Since January 2000 it has happened only 13 times, all but 2 of these occurring since 2018.

    The monthly total has exceeded 66 only 3 times. All 3 of those time have been during the last 4 months.

    There have been 627 closed listings over $2 million in 2020, Last year we counted 445. The annual increase is therefore 41%.

    Is it going to continue in November? Probably, given that there have been 25 closings during the first 5 working days alone.

    “©2020 Cromford Associates LLC”. 

    November 5 - Here is our latest table of Cromford® Market Index values for the single-family markets in the 17 largest cities

    chandler real estate agents

    Compared with last week, we have 1 fewer cities improving for sellers. Extra supply has take Surprise into the red zone.

    The overall average CMI rose by 1.6%, down from 2.2% last week. Despite continued expectations for the market to cool, it keeps getting hotter, although at a slower pace.

    November has started with fewer new listings than expected, while demand has shown no sign of easing. Although the CMI is at the highest level we have ever recorded, our expectation is that it will continue to rise in the short term.

    “©2020 Cromford Associates LLC”. 

    November 3 - Like King Canute (Cnut) ineffectively commanding the ocean tide to recede, CoreLogic continues to command home prices to stop rising, and with similar effect.

    Last month they forecast that month-over-month prices for September would increase by 0.1% over August. Today they report that the actual increase was 1.1%, 11 times greater than their forecast. One month is not difficult to forecast, especially as they are forecasting for a month that has already ended. However they still manage to get it wildly wrong again and again. They are forecasting a month over month increase for October of 0.2%. In Greater Phoenix we have already measured 4.8%, for October. I am going to go out on a limb here are predict that their forecast fro October will be extremely low again.

    Their longer term forecast is for US home prices to rise by 0.2% between September 2020 and September 2021. This is likely to prove even more incorrect than their short-term forecast, but I do admit that long term forecasting is a fool's game in which the Cromford® Report does not participate.

    We make no price forecast at all for September 2021, but we do know a silly forecast when we see one.

    “©2020 Cromford Associates LLC”. 

    November 1 - We are taking a look at the active listings on November 1 and comparing them with last month. We shall ignore those in UCB or CCBS status.

    Overall across the entire ARMLS database, we see 8,682 active listings available on November 1, with an average list price of $734,416. From the latter figure you can immediately tell that the majority of the supply is at the higher end of the market. This is not unusual, but if you ask the average person what is the average price of a house for sale in our area, I am willing to bet they guess lower than $734,416.

    Last month on October 1, we counted 8,101 and the average price was $753,722. So we might jump to the conclusion that supply has gone up by 7% and prices have gone down. From a strictly mathematical point of view this is correct, but it would not be a realistic reflection of the market. This is because Oct 1 was a Thursday while Nov 1 was a Sunday. Every week there is a surge of listings added between Thursday and Saturday and relatively few coming between Sunday and Wednesday. On the other hand, a lot of contracts get written and accepted between Saturday and Wednesday. This means that the supply tends to reach a peak on Saturday and a trough around Wednesday. The difference between the peak and trough is usually around 5 to 6% in today's supply-starved market. In normal times it is usually around 1% and not so noticeable.

    So to make a fair comparison you really need to compare the same day of the week, not the first of each month. A better comparison for Nov 1 would be either Sep 27 or Oct 4, both Sundays. These had 8,625 and 8,733 actives respectively, and the average list price was $733,754 and $733,652.

    So after this adaptation to the weekly cycle, we see that the count of active listings has barely changed at all, either in total number or in average list price.

    Does this mean list prices have stopped increasing? No - if you check the average price per square foot, they changed from $287.86 to $292.95 over the last 5 weeks. That is equivalent to an annual rate of 18%.

    See how misleading statistics can be if they are not done correctly?

    What has happened is that the mix of homes for sale has changed in favor of smaller homes. 1.6% smaller does not sound like a lot, but in fact we are witnessing quite an interesting set of changes that are revealed when we start looking at specific ZIP codes:

    There are more single-family listings than last month in many cheaper locations in the inner West Valley:

    • Phoenix 85009 up 50%
    • Phoenix 85019 up 33%
    • Phoenix 85031 up 114%
    • Phoenix 85033 up 50%
    • Phoenix 85035 up 92%
    • Phoenix 85053 up 200%
    • Glendale 85307 up 200%
    • Avondale 85323 up 36%
    • El Mirage 85335 up 57%
    • Peoria 85345 up 90%

    The least expensive parts of the Southeast Valley are also seeing more listings:

    • Mesa 85201 up 100%
    • Mesa 85204 up 73%

    These percentages are large but they are from a very low base.

    However, many of the more expensive locations are seeing further falls in supply at a time of year when they usually report increases:

    • Phoenix 85018 down 15%
    • Scottsdale 85250 down 25%
    • Scottsdale 85251 down 28%
    • Scottsdale 85255 down 5%
    • Scottsdale 85262 down 11%
    • Carefree 85377 down 7%

    In addition, certain less expensive remote locations in Pinal county are seeing falls in supply too:

    • Coolidge 85128 down 38%
    • Florence 85132 down 6%

    These are balanced by increases in Maricopa 85138 and 85139.

    The luxury and high mid-range markets are very active and gobbling up supply quickly. At the other end we still have incredibly low supply, but the turnaround in active counts in some ZIP codes is quite noticeable are worth watching..

    I am not sure whether to put it down to evidence of a K-shaped recovery (distressed owners) or certain landlords getting tired of not collecting rents. However it is something new, so I felt we should report it.

    “©2020 Cromford Associates LLC”. 

    October 31 - It has been quite a while since we made any observations on the COVID-19 pandemic itself. Last month on September 18 we observed that the statistics were looking ominous and that things could be heading in the wrong direction after more promising numbers in August. Unfortunately, things have become even worse than we expected and not just in the USA. The pandemic is coming back with a vengeance and many countries are facing severe restrictions on normal activities.

    For the USA, yesterday was the first day with over 100,000 new cases reported and almost all states are reporting significant growth. The only exceptions where we can report a declining weekly trend in new infections are Guam, Hawaii, Louisiana, Northern Mariana Islands, Oklahoma and the US Virgin Islands. This represents only 10.3 million in population so the remaining 321 million are living in states where the virus is accelerating. Of these an increasing number are hitting new record highs of weekly new cases:

    • Alaska
    • Arkansas
    • Colorado
    • Iowa
    • Idaho
    • Illinois
    • Indiana
    • Kansas
    • Kentucky
    • Michigan
    • Minnesota
    • Missouri
    • Montana
    • North Carolina
    • North Dakota
    • Nebraska
    • New Mexico
    • Ohio
    • Oregon
    • Pennsylvania
    • Puerto Rico
    • Rhode Island
    • South Dakota
    • Tennessee
    • Utah
    • Virginia
    • Wisconsin
    • West Virginia
    • Wyoming

    We see a similar surge in cases in most parts of Europe where attempts to resume normal activity, especially students going to university, have been met with an alarming increase in new infection rates.

    It helps to be an island, as proven by New Zealand and Taiwan. South East Asia and Africa have been relatively mildly affected so far.

    What does this mean for the housing market? Well we have seen some trends emerge across the whole world, most of which are positive for the housing market:

    • Work-from-home and social distancing increase the importance of suitable housing in people's priorities
    • More people are re-considering the place they live and making plans to change it
    • Rural villages and less crowded cities are becoming far more popular
    • Densely populated cities are becoming far less popular
    • Single-family detached homes are becoming more popular than apartments
    • Apartments with little outside space are less popular than those with plenty of outside space
    • Widespread and misplaced fear of house price falls creates more fuel for house price increases
    • National economic problems cause interest rates to be kept low, improving affordability

    Central Arizona looks increasing attractive in this environment with very few crowded streets and plenty of wild open spaces nearby to roam freely. Although prices are rising faster than in most parts of the country, they remain very low relative to California. Associated taxes are also a positive. We have no tax on the transfer of ownership (which is fairly common elsewhere) and real estate taxes are not excessive, compared with some other states. The processes involved in building, buying and selling homes are adaptable to social distancing and with a little planning can be considered relatively safe.

    Although the pandemic will have real and lasting negative effects on many parts of the economy and on millions of individuals and their families, home ownership still looks very attractive and will probably continue that way for the foreseeable future. Predictions of housing market crashes in 2021 are almost certainly mistaken and would take a surprise event that has so far not occurred. I would make an exception for central urban markets such as Manhattan or the City of London. These are extremely expensive locations and even a big drop in demand will merely bring them back to very expensive instead of insanely expensive.

    “©2020 Cromford Associates LLC”. 

    October 29 - Here is our latest table of Cromford® Market Index values for the single-family markets in the 17 largest cities

    Chandler homes for sale

    Compared with last week, we have 13 cities improving for sellers instead of 12. Scottsdale turned around and now has its supply dropping fast, so it is likely to see its CMI rise over the next few weeks.

    The overall average CMI rose by 2.2%, down from 2.8% last week. Despite all expectations for the market to cool, it keeps getting hotter, although at a slower pace.

    October has brought us a healthy flow of new listings, but the demand has strengthened so much these have done almost nothing to affect the chronic shortage of homes for sale.

    With the CMI for every one of the 17 cities over 275, prices are certain to rise from their current level. It will take a massive increase in supply for prices to change direction and there is currently no sign of this happening. In fact we would expect supply to deteriorate between now and year end.

    October 28 - We have just witnessed the largest annual increase in monthly dollar volume ever recorded across all areas & types in the ARMLS database - up 66.5% compared with October 28, 2019.

    “©2020 Cromford Associates LLC”. 

    October 27 - The latest S&P / Case-Shiller® Home Price Index® numbers were published today. They cover home sales during the period June to August 2020.

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

    1. San Diego +1.90%
    2. Cleveland +1.64%
    3. Phoenix +1.54%
    4. Los Angeles +1.36%
    5. Boston 1.33%
    6. Tampa +1.27%
    7. Washington +1.15%
    8. Seattle 1.14%
    9. Las Vegas +1.13%
    10. Portland +1.10%
    11. Miami +1.08%
    12. Dallas +0.98%
    13. New York +0.95%
    14. Charlotte +0.87%
    15. San Francisco +0.83%
    16. Denver +0.72%
    17. Minneapolis +0.68%
    18. Atlanta +0.50%
    19. Chicago +0.41%

    The national average was +1.06% so Phoenix home prices increased at a much higher rate than the national average, and rose from 36th to 3rd place compared with last month.

    These are very strong price rises for a single month and show the earlier CoreLogic home price forecasts to be wildly inaccurate. These forecasts will have to be revised upwards substantially over the next few months.

    The year over year comparisons are below:

    1. Phoenix 9.0%
    2. Seattle 7.8%
    3. San Diego 7.1%
    4. Cleveland 6.4%
    5. Tampa 6.4%
    6. Los Angeles 6.4%
    7. Charlotte 6.3%
    8. Portland 5.8%
    9. Minneapolis 5.4%
    10. Washington 5.4%
    11. Boston 5.4%
    12. Denver 5.0%
    13. Atlanta 4.9%
    14. Miami 4.6%
    15. Las Vegas 4.4%
    16. Dallas 4.0%
    17. San Francisco 4.0%
    18. New York 2.7%
    19. Chicago 1.2%

    The national average was 5.4%, up from 4.8% and showing a rapidly rising trend.. Phoenix remains well out in front on the annual measurement.

    “©2020 Cromford Associates LLC”. 

    October 26 - The Census Bureau has just published the single-family building permit counts for September. The good news for buyers is that the rate of construction is increasing which will provide a little more supply over the months to come. There have been 22,378 permits issued in Maricopa and Pinal Counties during the first 9 months of 2020. This is up over 21% from the 18,469 we saw by the end of September in 2019 and represents the highest year to date total since 2006. It is almost the same as the 2007 figure which was a year in which the builders were hitting the brakes.. Now their collective feet are firmly on the gas pedal as they try to respond to the very strong demand for single family housing in Central Arizona.

    The third quarter of 2020 has seen a dramatic acceleration in permits with 8,920 issued between July and September. This is the largest 3Q total since 2005, though 1998, 1999, 2002, 2003 and 2004 were also higher.

    The top 10 locations for 3Q 2020 were:

    1. Phoenix - 1,330
    2. Buckeye - 926
    3. Surprise - 811
    4. Unincorporated Maricopa County - 718
    5. Mesa - 634
    6. Goodyear - 615
    7. Unincorporated Pinal County - 585
    8. Queen Creek - 523
    9. Maricopa - 506
    10. Casa Grande - 478

    It is remarkable that only 3 cities in Maricopa County produced more than the unincorporated county areas, while in Pinal no city beat the unincorporated county, which mostly comprise the areas known collectively as San Tan Valley. The town of Queen Creek has been incorporating parts of San Tan Valley (not without controversy) and continues to do so. Thus what counts as Queen Creek and what counts as San Tan Valley is continually changing. However, even though Queen Creek has a great deal of new home construction, the San Tan Valley areas outside its boundaries provide even more new housing.

    Further down the list, we see that Florence is almost as active as Chandler and Coolidge is almost as active as Scottsdale. Pinal is rising in significance and growing faster than Maricopa.

    “©2020 Cromford Associates LLC”. 

    October 24 - Highlights from the Black Knight Mortgage Monitor's first look at September's mortgage data:

    • The number of seriously delinquent mortgages (90+ days overdue) fell by 43,000 - the first fall since the start of the pandemic
    • More than 2.3 million homeowners are seriously delinquent, but not in foreclosure
    • The national delinquency rate fell from 6.88% to 6.66% during September
    • Early stage delinquencies show strong improvement with many measures returning to pre-pandemic levels
    • Loan pre-payment rose above 3% in September, the first time in 16 years. This high rate is partly driven by the very low interest rates causing a lot of refinance activity. In addition, the strong out-of-season home buying is causing buyers to pay off the loans on their former homes
    • The states with the highest percentages of non-current first loans are
      • Mississippi 11.54%
      • Louisiana 11.15%
      • Hawaii 9.15%
      • New York 8.92%
      • Texas 8.76%
    • Home equity is at a record high and 45 million homeowners have positive (tappable) equity in their homes. This the largest number ever.
    • Average tappable equity stands at nearly $125,000, up $3,200 from this time last year

    Of borrowers who are in forbearance, just 9% have less than 10% equity in their homes. This offers both the borrowers and lenders multiple options in lieu of foreclosure.

    “©2020 Cromford Associates LLC”. 

    October 22 - Here is our latest table of Cromford® Market Index values for the single-family markets in the 17 largest cities

     chandler homes for sale

    Compared with last week, we have the same 12 cities improving for sellers and the same 5 deteriorating. The overall average CMI rose by 2.8%, down from 3.9% last week.

    I am surprised to see the movement still favoring sellers. October is almost always a strong month for new listings and this October is no exception. What I expected to see was a mild fall in the CMI because of the slight increase in supply. However demand has continued to grow from its already very high level, despite the upward charge in prices. By the time we get to Thanksgiving, the flow of new listings is likely to slacken and we will probably see supply fall away even further as listings get removed for the holiday season. Whether this still holds true during a pandemic we will have to see.

    There is still no sign of any weakness developing in the market with buyers having to fight for every scrap of housing that comes available.

    As they were last week, Maricopa and Paradise Valley are the star performers at this moment. This is intriguing because they represent the two extremes in pricing among the 17 cities.

    “©2020 Cromford Associates LLC”. 

    October 20 - A reliable indicator of market strength is the listing success rate. This is currently reading around 89%, and has been at this level since July. Here is the daily chart for all areas & types:

    chandler realtor

    89.6% is as high as this indicator has ever been. The long term average (since 2002) is 66.8%. The maximum reached during the bubble years was 87% in May 2005. By the end of 2005 the listing success rate has plunged back to 63%, an early warning of the impending collapse.

    We can conclude that this is the strongest that the Greater Phoenix market has been since 2002. If you want to look out for future sings of weakness, we advise you to look at this chart on a weekly basis. It is updated every Tuesday morning.

    “©2020 Cromford Associates LLC”. 

    October 19 - For those who need to track pricing closely we recommend the chart in this link

    Here is what it looks like today:

    chandler real estate

    We can see that the monthly average sales price per square foot has increased from $193.29 on August 18 to $203.73 on October 19.

    That is a 5.4% increase in 2 months. This is equivalent to an annual rate of 37%.

    The under contract list price has flattened out during October so there may be less upward movement on sales pricing for 2 or 3 weeks. The green line in the chart is a leading indicator for the brown and red lines. The delay is typically 4 to 6 weeks. However the Cromford® Market Index remains above 350 so upward pressure on pricing is still in full force.

    “©2020 Cromford Associates LLC”. 

    October 17 - The current monthly dollar volume across all areas & types in the ARMLS database is $4,267 million.

    This is a truly colossal number for the middle of October. Last year at this time we measured $2,882 million, so this year has last year beaten by an astonishing 48%. And last year's number was the previous record high for the same period.

    Obviously dollar volume has a direct bearing on commissions earned by agents. In times like these the number of licensed agents tends to increase. However the increase compared with this time last year is about 4%. So 4% more agents are sharing 48% more commission. That sounds like a nice situation. As news gets out, we can expect more people to choose a career in residential real estate, especially if they had been working in one of the sectors that is badly hit by the pandemic.

    “©2020 Cromford Associates LLC”. 

    October 15 - Here is our latest table of Cromford® Market Index values for the single-family markets in the 17 largest cities

    chandler real estate

    The number of cities improving for sellers fell from 13 to 12 compared with last week. Surprise turned positive, while Cave Creek and Fountain Hills went into the red.

    The overall picture has not changed much from last week - the average increase in the CMI was 3.9%, down from 4.6% last week. We are seeing more supply, as is normal for October, but demand continues to strengthen in most areas. The flow of new listings remains well ahead of this time last year.

    As they were last week, Maricopa and Paradise Valley are the star performers at this moment.

    “©2020 Cromford Associates LLC”. 

    October 14 - Based on affidavits of value filed during August we have collected the following statistics on iBuyer activity:

      Opendoor OfferPad Zillow Knock All iBuyers Combined
    Homes Purchased in September 2020 74 86 27 0 181
    Homes Purchased in September 2019 366 82 51 2 501
    Annual Change in Purchases -80% 5% -59% -100% -64%
    Homes Sold in September 2020 61 50 36 3 150
    Homes Sold in September 2019 342 97 124 2 565
    Annual Change in Sales -82% -48% -71% +50% -73%
    Median Purchase Price in September 2020 $279,050 $270,750 $261,000 N/A $276,000
    Median Purchase Price in September 2019 $243,300 $224,865 $259,700 $354,773 $242,850
    Median Sale Price in September 2020 $285,000 $290,000 $285,500 $363,003 $287,250
    Median Sale Price in September 2019 $247,000 $260,000 $300.500 $292,388 $262,000
    Homes in Inventory at the End of September 2020 204 142 60 0 406
    Homes in Inventory at the End of September 2019 1,011 194 207 18 1,430
    Annual Change in Inventory -80% -27% -71% -100% -72%

    The iBuyers as a group purchased just 181 homes in Maricopa & Pinal counties during September. That represents only 1.5% of the market. A year ago they purchased 501 homes, about 4.5% of the total market. This decline in market share started in 4Q 2019, before the COVID-19 virus had been discovered, but accelerated during the first half of 2020 as iBuyer operations were severely curtailed. Trying to buy homes under $300,000 is a tough job in current market conditions and it will a very long time before the iBuyers can regain the market presence they held between 2018 and 2019. Inventory has fallen 72% with Opendoor down 80% (or more). Our inventory counts are probably on the high side.

    OfferPad has become the largest iBuyer by properties purchased but has not overtaken Opendoor in terms of properties sold. It is currently growing inventory at the fastest rate, while Zillow's inventory is still declining. Buying fewer than one home a day, Zillow is not really a major player in the Phoenix market any more - it bought fewer homes during September than it did during its third month in operation (July 2018). Its peak was 132 in February 2019.

    Knock has exited the iBuying business and has bought nothing for 3 months. They have no homes left in inventory and we will not be monitoring them from next month.

    “©2020 Cromford Associates LLC”. 

    October 13 - As a follow-up to yesterday's observations, here are the 10 ZIP codes with the slowest appreciation rates in the 12 months that ended on September 30, 2020:

    1. Phoenix 85054 (3.0%)
    2. Carefree 85377 (4.4%)
    3. Scottsdale 85259 (4.4%)
    4. Glendale 85305 (4.5%)
    5. Mesa 85213 (5.0%)
    6. Scottsdale 85262 (5.0%)
    7. Phoenix 85083 (5.0%)
    8. Wickenburg 85390 (5.3%)
    9. Goodyear 85395 (5.6%)

    “©2020 Cromford Associates LLC”. 

    October 12 - Most ZIP Codes are not very big, so it can be problematic extracting reliable statistics on sales prices. The sample size has to be large enough to ensure we are getting an accurate signal instead of just noise.

    The easiest way to get more samples is to lengthen the period over which we measure. An annual average is going to be far less volatile than a monthly average for this reason. However, including samples from 6 to 12 months ago will usually make the average price much lower than using just the last 6 months. There is no single best solution, so when I was asked recently to rank the ZIP codes for appreciation, I had to decide what would be the fairest way to do it.

    I took 12 months of sales, used single-family detached homes only, then measured the average price per square foot. I excluded any ZIP code which had fewer than 100 sales in 12 months.

    The top ZIP codes for the year ending September 30, 2020 were as follows:

    1. Phoenix 85009 (17.6%)
    2. Scottsdale 85251 (15.5%)
    3. Mesa 85201 (15.1%)
    4. Wittmann 85361 (14.9%)
    5. Phoenix 85015 (14.3%
    6. Waddell 85355 (14.2%)
    7. Phoenix 85021 (13.8%0
    8. Tempe 85283 (13.5%)
    9. Apache Junction 85119 (13.2%)
    10. Phoenix 85041 (13.2%)

    “©2020 Cromford Associates LLC”. 

    October 10 - The COVID-19 pandemic is not letting up any time soon and this morning over 92% of the US population lives in states where the weekly count of new cases is rising. The only exceptions are Alabama, Arkansas, Hawaii, Maine, Nebraska, North Carolina, Puerto Rico and the US Virgin Islands. Record numbers of new confirmed cases are being reported by the health authorities in Alaska, Indiana, Kansas, Kentucky, Minneapolis, Missouri, Montana, North Dakota, South Dakota, Utah, Wisconsin and Wyoming.

    While the pandemic is wreaking havoc in parts of the real estate market, especially, the retail, office and hospitality sectors, single detached housing is more popular than ever. In a trend seen around the world, buyers are seeking some open space with privacy, so larger yards are at a premium but flats in tower blocks are out of favor. Big expensive cities with crowded downtown areas are seeing an exodus to the suburbs, especially for people who can effectively work from home.

    Because Phoenix does not have much dense downtown housing (none at all that is comparable to New York, Paris, Tokyo or London), its residential sector is looking very strong even for the central areas. To get some idea how much of a shock the pandemic has caused elsewhere, look to the exclusive area of Kensington and Chelsea in London. This is unaffordable to most people, but it is getting cheaper. Residential rents have fallen by a staggering 25% in the past 12 months. Landlords are in despair as their property values fall and they fail to collect an unusually large percentage of rents, especially if they include retail units. New listings are flooding onto the market, bringing prices down.

    One of those landlords is the Queen. Forbes estimates that her real property portfolio has fallen by $700 million since March this year.

    However, the remote parts of the UK, such as Scotland, Wales and the North of England are experiencing the highest rates of appreciation they have witnessed since 2009. Suddenly a rural location is seen as an advantage not an inconvenience.

    Similar effects can be found in Arizona with small villages in Gila, Yavapai and Coconino counties being overwhelmed with buyers from outside the area and often outside the state.

    “©2020 Cromford Associates LLC”. 

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

    chandler realtor

    The number of cities improving for sellers rose from 11 to 13 compared with last week. Chandler, Avondale and Glendale turned positive, while Scottsdale went into the red.

    The overall picture has not changed much from last week - the average increase in the CMI was 4.6%, rising from 4.2% last week.

    Maricopa and Paradise Valley are the star performers at this moment, both with supply that is unusually low for the time of year.

    It is surprising that the CMI continues to rise having already set a record high many weeks ago. However October is traditionally a strong month for new listings so it will be a big challenge for the CMI to keep moving higher in the weeks ahead. Can the strong demand soak up everything the sellers throw at it?

    If we look at the individual cities and compare this week with last week we find the following have moved lower:

    • Anthem
    • Buckeye
    • Casa Grande
    • Cave Creek
    • Gold Canyon
    • Litchfield park
    • Phoenix
    • Scottsdale
    • Sun City
    • Tolleson

    That is 10 cities out of 29 which leaves 19 that saw their CMI move higher.

    “©2020 Cromford Associates LLC”. 

    October 8 - With low supply and high demand we see the unusual situation where the average selling price exceeds the average list price becoming more commonplace. Here is a list of all the ZIP codes where this happened in September for single-family detached homes:

    1. Casa Grande 85193 - average sales price 102.29% of average list price
    2. Phoenix 85031 - 101.49%
    3. El Mirage 85335 - 101.37%
    4. Mesa 85210 - 101.28%
    5. Tolleson 85353 - 101.17%
    6. Phoenix 85051 - 101.15%
    7. Chandler 85226 - 100.92%
    8. San Tan valley 85143 - 100.91%
    9. Mesa 85204 - 100.86%
    10. Arizona City 85123 - 100.84%
    11. Glendale 85302 - 100.84%
    12. Avondale 85392 - 100.83%
    13. Mesa 85208 - 100.78%
    14. Chandler 85225 - 100.78%
    15. Gilbert 85233 - 100.74%
    16. Mesa 85203 - 100.72%
    17. Glendale 85308 - 100.67%
    18. Phoenix 85017 - 100.65%
    19. Avondale 85323 - 100.62%
    20. Glendale 85304 - 100.61%
    21. Chandler 85224 - 100.60%
    22. Phoenix 85037 - 100.59%
    23. Surprise 85388 - 100.54%
    24. Gilbert 85295 - 100.53%
    25. Surprise 85379 - 100.52%
    26. Phoenix 85043 - 100.50%
    27. Phoenix 85033 - 100.49%
    28. Phoenix 85029 - 100.46%
    29. Maricopa 85138 - 100.44%
    30. Phoenix 85027 - 100.44%
    31. San Tan Valley 85140 - 100.30%
    32. Gilbert 85234 - 100.29%
    33. Peoria 85345 0 100.27%
    34. Goodyear 85338 - 100.26%
    35. Mesa 85209 - 100.21%
    36. Peoria 85381 - 100.21%
    37. Phoenix 85053 - 100.19%
    38. Gilbert 85296 - 100.19%
    39. Buckeye 85326 - 100.19%
    40. Mesa 85212 - 100.16%
    41. Glendale 85306 - 100.16%
    42. Phoenix 85008 - 100.13%
    43. Surprise 85378 - 100.10%
    44. Maricopa 85139 - 100.04%
    45. Phoenix 85044 - 100.03%
    46. Phoenix 85083 - 100.02%
    47. Glendale 85301 - 100.00%

    That is almost one third of all the ZIP codes in Greater Phoenix.

    “©2020 Cromford Associates LLC”. 

    October 7 - The September numbers for Maricopa County affidavits are in and show the following:

    • Closed sales totalled 10,667, up 11% from September 2019
    • New home closings came in at 1,802, up 18% from September 2019 and the highest monthly total since 2007
    • Re-sales totalled 8,865, up 10% from last year
    • The overall median sales price in September was $338,000, up 17% from $290,000 in September 2019
    • The new home median sales price was $370,397, up 5%
    • The re-sale median sales price was $330,000, up 19% from $277,000

    Clearly volume is increasing faster for new homes than re-sales but prices are increasing faster for re-sales.

    New home prices are low relative to re-sales because they are determined at contract signature. This often pre-dates completion by several months which means the homes eventually close at prices that are below current market value. Many developers are taking steps to remedy that shortfall which will increase builder gross margins but make new homes more expensive.

    “©2020 Cromford Associates LLC”. 

    October 6 - Despite having a huge database of historical data and a large team of analysts, CoreLogic has an surprisingly poor record when it comes to forecasting home prices. They completely failed to foresee the turnaround in the market between 2011 and 2012 and in my opinion their forecasts for 2021 are probably going to end up looking just as wildly off the mark.

    In May 2020, they forecast that home prices across the USA would fall by 6.6% between May 2021 and by May 2021. One month later they revised their 12 month outlook for June 2021 to a drop of 1%. Their latest projections for July 2021 is that it will be up 0.6% from July 2020. That is a huge shift in opinion - up 7.2% in just 2 months, but they have still not got their long-term projection in the right ball park.

    Even their short-term forecasts have been very inaccurate in 2020. For July they predicted a month to month change of 0.01%. The actual result was a gain of 1.22% - more than a hundred times larger than their projection.

    For August they are forecasting a month to month change of 0.10%. We will have to wait a month to see how badly off the forecast is, but I have no doubt that the real world number will be dramatically higher than the CoreLogic forecast.

    Frankly, their model seems to needs serious redesign, though this is unlikely to happen. It drastically over-estimates the impact of unemployment and underestimates the impact of low supply.

    Since they do not make it easy to find old copies of their reports, I recommend that you keep a written record of their forecasts, so you can compare the actual results down the line. This is just in case you come across a client who takes their forecast seriously. Comparing their monthly and annual forecasts with the actual market behavior will soon dispel that opinion.

    October 5 - Many people are worrying about what happens when COVID-related forbearance plans expire. However the Black Knight Mortgage Monitor report released today suggest that the problem is likely to be less severe than might be expected.

    I refer you to the original release, but some highlights are worth picking out:

    • Of the 6.1 million homeowners who have been in COVID-19-related forbearance plans, 41% (2.4M) have since exited, with the vast majority of those borrowers currently performing; of those who remain past due, 267,000 are in active loss mitigation with their lenders
    • Just 54,000 loans are past due and not in active loss mitigation, and 70% of these were already past due in February before the pandemic began to impact mortgage performance
    • Record levels of equity continue to help mitigate foreclosure risk, with only 9% of homeowners in forbearance having less than 10% equity in their homes
    • The average homeowner now has nearly $125,000 in tappable equity; an increase of more than $3200 from last year – also a record. These strong equity positions help to provide a backstop to elevated delinquency levels and slow recovery from COVID-19-related impacts. 

    The state of Arizona has 5.7% of first position loans that are delinquent by 30 days or more. Only 0.1% are in foreclosure and the remaining 5.6% are non-current. This is around double what we saw in August 2019. Arizona ranks 38th among the states, with Mississippi worst (11.7% noncurrent) and Idaho best (3.8% non-current).

    “©2020 Cromford Associates LLC”. 

    October 3 - Although single-family building permit counts are rising, they are still short of the numbers we saw between 1996 and 2007.

    For Maricopa and Pinal counties, we have a 12-month rolling average of 2,283 permits per month as of August 2020. Although this is the highest number since October 2007, from February 1996 to October 2007 we consistently saw numbers higher than this, peaking at 4,754 (more than twice the current volume) in February 2005.

    The current increase in new home building is a good thing for the market, but it is unlikely to solve our chronic under-supply problem for many years.

    In contrast, the rate of new building from 2003 through 2007 was far too high and led to an over-supply situation which was one of the contributing reasons for the housing crash in 2007-2009. It was not the primary cause; that honor belongs to the lax lending. This made it too easy for so-called investors with almost no money of their own to buy many houses for speculative purposes. The developers built house for them, having to ration them out because demand was so high. But this demand was unreal. The buyers were not interested in living in the homes, or even renting them out as landlords. They just wanted to trade in houses like people trade in technology stocks in 2020. They paid no heed to the underlying value (in terms of rental income or construction cost).

    The numbers of single-family permits since 2017 are distributed as follows:

    1. Phoenix - 12,810
    2. Mesa - 9,045
    3. Buckeye - 8,882
    4. Unincorporated Pinal County - 8,856
    5. Unincorporated Maricopa County - 6,200
    6. Surprise - 5,514
    7. Peoria - 5,258
    8. Goodyear - 5,184
    9. Queen Creek - 5,117
    10. Gilbert - 4,878
    11. Maricopa - 3,815
    12. Scottsdale - 2,231
    13. Chandler - 2,160
    14. Casa Grande - 1,595
    15. Florence - 1,093
    16. Glendale - 882
    17. Avondale - 861
    18. Wickenburg - 599
    19. Eloy - 466
    20. Tempe - 376

    “©2020 Cromford Associates LLC”. 

    October 1 - Here is our table of Cromford® Market Index values for the single-family markets in the 17 largest cities

    chandler homes for sale

    The number of cities improving for sellers rose from 10 to 11 compared with last week. Queen Creek was the town that turned positive.

    The average improvement across all 17 cities went up from 3.9% to 4.2% and additional momentum in favor of sellers was again detected over the past 7 days. This is not due to supply, which is slowly increasing, but because demand continued to grow despite higher pricing.

    Paradise Valley and Maricopa are now the fastest improving cities for sellers, with Cave Creek losing a little steam.

    All 17 cities are over 260, something we have not seen before. The market is still showing no sign of weakness.

    “©2020 Cromford Associates LLC”. 

    September 29 - The latest S&P / Case-Shiller® Home Price Index® numbers were published today. They cover home sales during the period May to July 2020.

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

    1. Portland +1.32%
    2. Cleveland +1.27%
    3. Los Angeles +1.14%
    4. San Diego +1.07%
    5. Boston +1.02%
    6. Phoenix +0.88%
    7. San Francisco +0.87%
    8. Washington +0.82%
    9. Charlotte +0.59%
    10. Seattle +0.59%
    11. Las Vegas +0.58%
    12. Tampa +0.56%
    13. Chicago +0.53%
    14. Minneapolis +0.53%
    15. Atlanta +0.51%
    16. Miami +0.45%
    17. Denver +0.38%
    18. Dallas +0.36%
    19. New York -0.14%

    The national average was +0.78% so Phoenix home prices increased at a higher rate than the national average, but slipped from 3rd to 6th place compared with last month..

    The year over year comparisons are below:

    1. Phoenix 9.2%
    2. Seattle 7.0%
    3. Charlotte 6.0%
    4. Tampa 5.9%
    5. San Diego 5.5%
    6. Cleveland 5.5%
    7. Los Angeles 5.3%
    8. Minneapolis 5.2%
    9. Portland 5.0%
    10. Atlanta 4.8%
    11. Denver 4.4%
    12. Washington 4.4%
    13. Boston 4.4%
    14. Miami 4.1%
    15. Las Vegas 3.3%
    16. Dallas 3.2%
    17. San Francisco 2.5%
    18. New York 1.3%
    19. Chicago 0.8%

    The national average was 4.8%. Phoenix remains well out in front on the annual measurement.

    “©2020 Cromford Associates LLC”. 

    September 28 - The latest version of the chart comparing annual appreciation with the Cromford® Market Index looks like this:

    chandler real estate

    The full size original can be found here

    We can see why many people will be thinking 2020 looks a lot like 2004/2005 with the CMI suddenly rising to over 300. We certainly agree that annual appreciation is likely to rise sharply over the next 6 months reaching well over 20%.

    However there is no sign at the moment that the CMI will crash back to below 100, as it did in 2005/2006. It is currently struggling to inch higher but while supply remains tight and demand strong, the status quo will likely continue.

    There are dozens of things that are different now compared with 2005, but the most significant include:

    1. In 2005, thousands of homes were being purchased and left vacant as they were snapped up by speculators
    2. In 2005, rents were low and headed lower because there were more homes than people who wanted to live in them
    3. In 2005, almost anyone could get a 100% loan with minimal documentation, and thus had no skin in the game if prices were to fall (as they did)
    4. In 2005, few people thought the market could decline
    5. Mortgage fraud was rampant creating artificial demand
    6. The developers had built (an would continue to build through 2007) more homes than were demanded by the population growth

    For all 6 of these, the opposite condition exists today.

    1. Vacancies are very low
    2. Rents are high and rising sharply
    3. Qualifying for a mortgage requires financial resources (for example, a job) and must be supported by documentation, and almost all home owners have equity
    4. Many people think the market could go down, supported by articles claiming this is likely (although it is not)
    5. Mortgage fraud is at a relatively low level
    6. The developers have built fewer homes than demanded by population growth between 2008 and 2020.

    It is not normal for the CMI to be above 200, never mind 300, so it will certainly come down form its current level eventually. However this is more likely to be as a result of much higher prices damping down demand, rather than a flood of supply entering the market. We would need to see almost three times the current level of supply to get back to normal.

    September 26 - The Cromford® market Index continues to edge higher into record territory. To help people understand why we have published 2 new charts

    1. Cromford® Demand Index by Major City - weekly chart
    2. Cromford® Supply Index by Major City - weekly chart

    The Market Index is combination of the demand and the supply, so these charts go one level deeper. They cover the 17 largest cities individually. but you can compare cities with each other using these charts.

    “©2020 Cromford Associates LLC”. 

    September 25 - How best to measure house price appreciation? There are so many choices:

    • average sales price
    • median sales price
    • average price per square foot
    • median price per square foot
    • index based on sales of the same property

    Case-Shiller's approach is the last of these and tries to eliminate the distortion that occurs when the mix of homes changes. However it still does not account for huge improvements in the property that may account for some of the sales price appreciation. During the housing crash of 2007 to 2011 it failed to account for huge deteriorations in the properties that occurred when owners abandoned their foreclosed homes. In addition, using an index tends to make the data very old by the time it is published. With Case-Shiller we are always 2 to 3 months behind the current market.

    The other question is what period to measure

    • monthly sales
    • quarterly sales
    • annual sales

    The longer the period measured the higher the number of measurements and therefore a much steadier picture emerges. However when prices are moving quickly, the long measurement period tends to obscure the recent price movements.

    We therefore like to use a wide variety of measurements of appreciation, rather than just one.

    At the moment we have extremely fast upward movement in home prices and they are accelerating. This pushes us in favor of using a short measurement period like a month. However we need to make sure the sample size remains adequate. Most ZIP codes are too small to qualify, but the major and secondary cities are big enough.

    As predicted by the huge rise in the Cromford® Market Index that started back in May, we are now getting high rates of appreciation and they are rapidly moving higher still. Here are yesterday's numbers for annual appreciation based on the average price per square foot for single-family sales that closed between August 24 and September 23, 2020, compared with the same period in 2019.

    1. Cave Creek - 23.6%
    2. Sun Lakes - 23.1%
    3. Arizona City - 19.4%
    4. Scottsdale - 19.4%
    5. El Mirage - 19.0%
    6. Avondale - 18.6%
    7. Gold Canyon - 18.2%
    8. Phoenix - 18.1%
    9. Litchfield Park - 18.0%
    10. Peoria - 17.3%
    11. Queen Creek - 16.9%
    12. Casa Grande - 15.7%
    13. Gilbert - 15.6%
    14. Fountain Hills - 15.5%
    15. Tolleson 15.0%
    16. Tempe - 14.9%
    17. Apache Junction - 14.7%
    18. Sun City West - 14.6%
    19. Maricopa - 14.1%
    20. Paradise Valley - 13.6%
    21. Surprise - 13.1%
    22. Laveen - 12.9%
    23. Sun City - 12.6%
    24. Goodyear - 12.0%
    25. Mesa - 11.9%
    26. Glendale - 11.9%
    27. Anthem - 10.6%
    28. Chandler - 9.6%
    29. Buckeye - 9.0%

    The greater part of those price rises happened in the last 4 months and the next 4 months will also see rapid escalation of pricing. This will continue until the prices have risen enough to cure buyers of their enthusiasm.

    “©2020 Cromford Associates LLC”. 

    September 24 - Here is our table of Cromford® Market Index values for the single-family markets in the 17 largest cities

    Chandler real estate

    The number of cities improving for sellers fell from 12 to 10 compared with last week. Buckeye and Surprise joined the list of cities that are lower than last month.

    However the average improvement across all 17 cities went up from 3.5% to 3.9% and additional momentum in favor of sellers is detected over the past 7 days.

    Cave Creek is still the fastest improving city for sellers but Maricopa, Tempe and Paradise valley are all showing double figure percentages.

    All 17 cities are now over 250, something we have not seen before. No sign of a weakening market here.

    “©2020 Cromford Associates LLC”. 

    September 22 - It is not just homes for sale that are scarce. Judging by active rental listings on ARMLS, homes to rent are just as hard to find. Now we know most rentals are not listed on the MLS, but the MLS counts do give us a reasonable guide to how hard it is to find a home to rent. The long term average number of active rental listings since mid 2006 is 4,986. We currently have just 1,740 available. We had 2,659 this time last year. This is a drop of 35%.

    Part of the reason is that we are getting a low number of new rental listings. So far this year we are down 4% compared with 2019. But after a strong first quarter, the new listings dropped away and at the moment we are seeing a monthly rate which is down 20% compared to a year ago.

    The inability to evict a tenant who is not paying rent means there are fewer landlords looking for new tenants, so this is one obvious reason why rentals are hard to find.

    You would expect such a shortage of supply in the face of strong demand to result in a healthy increase in rents (or unhealthy if you a prospective tenant). You would be correct, as the average rental rate per square foot for leases closed so far in September is $1.15. This is up 15% from the same time last year, the fastest rate of rent increases that we have ever recorded. Note that this does not mean that the average rent in the real world went up by 15%, it means the average lease closed through the MLS increased by 15%. The MLS tends to have a higher concentration of high-cost rental homes which take longer to market.

    If you want to study the rental market we have a very useful Tableau chart package here. You will find:

    • average lease price per sq. ft. per month since 2000
    • median lease price per quarter since 2000
    • median sq. ft. by quarter for rentals leased since 2000
    • ZIP codes ranked by average lease price per sq. ft. over the last 3 months
    • ZIP codes ranked by median lease price over the last 3 months
    • a map of leased rentals over the past 3 months, color coded by their lease price per sq. ft.

    The fast rate of increase in rents is a very important reason why 2020 is so very different from the bubble year of 2005. Rents did not increase at all between 2000 and 2005, in fact they went down on a rent per square foot basis, reaching a low point of 65 cents just as the purchase market reached its most extreme Cromford® Market Index. When home prices go up very fast but rents go down, this is a very strong signal that you in a real estate bubble. Houses are being purchased that no-one wants to live in, merely for speculation. This was rampant in 2004 and 2005, a sign of a very unhealthy situation which would end in disaster. Few people paid attention in those years, but they did when the damage spread to Wall Street in 2008.

    The situation in 2020 is the opposite. We have too few homes for the people who wish to live in them, whether they wish to rent or purchase. We also have people who remember the housing crash and are far too fearful that it will happen again, even though this is most unlikely in the present circumstances. People still need homes to live in and the pandemic would need to have a much higher mortality rate for it to impact the overall demand for homes. A damaged economy does not imply a damaged housing market. However the housing market is so large that a severely damaged housing market can bring down the whole economy, as it did between 2005 and 2009.

    We are not currently in a housing bubble even though prices are accelerating. People who think we are experiencing bubble conditions and that prices will shortly start falling have misinterpreted the situation.

    “©2020 Cromford Associates LLC”.  

    September 21 - I have to admit I was not expecting the daily CMI chart to look like this:


    chandler real estate agents 

    Having reached a plateau at 342 and facing a large percentage rise in new listings compared with September 2019, I was expecting to see a decline starting in early September. But even if you have been tracking the market closely for 16 years, it can still surprise you. Demand has continued to increase despite its already high level. This has not only soaked up the new supply it has prevented the active listings without a contract from growing except in a few small areas.

    As a consequence, the CMI keeps making new record highs, today's being 346.1. This comfortably exceeds the highest point in 2005 (312.9). In April 2005, the CMI started a long and continuous descent to eventually reach its nadir at 26.5 in October 2007. Today's situation is unlike 2005 in many significant ways, but I would still expect a little steam to come out of the boiler to relieve the pressure. In most years we see a noticeable increase in active listing counts between September and the beginning of December. 2020 has been different from normal in so many ways, so we do not know if this pattern will repeat. In theory, the rapid rise in prices which is now taking place, should make homes less affordable and damp down some of the buyer enthusiasm. On the other hand, many buyers may see the price increases and decide that if they wait it will only get harder to get the home they want.

    So we do not know if the CMI will keep hanging up there like Wile E. Coyote running off the edge of a cliff, continue another leg upwards or start to obey the natural laws of economic gravity. The only thing we do know is that a CMI of over 200 means home prices must rise a great deal from where they are in the immediate future.

    “©2020 Cromford Associates LLC”.  

    September 19 - Today the average price per square foot for pending listing across all areas & types stands at $200.67. This is the first time the reading has broken above $200 since 2006. As recently as May 2020 we were recording figures below $184. Although most people understand that the market is hot, I am not sure the typical buyer is prepared for quite how rapidly prices are rising right now. I am sure sellers are far more easily persuaded.

    The use of UCB and CCBS is more popular with higher priced homes, so when we look at the average price per square foot for all listings under contract (again across all areas & types) we find $207.61. This is up from $186.79 in May.

    This an increase of over 11% in just 4 months, so over 33% on an annualized basis.

    September 18 - A week ago on September 11, only 9.4% of the US population lived in states that were seeing a weekly rise in new COVID-19 cases. That number is now 64.3%. It looks as though we are going to see a worsening situation for the next few weeks, but we do not expect that to have much of an impact on the housing market. It has shown a great deal of resilience and the pandemic has only increased demand for space and facilities at home. The land sector is also having a bumper time because home builders are ramping up their production. Not all real estate is doing well however. Hotels and other properties that cater to tourists are struggling, while the retail and office sectors are also facing major challenges. Warehouse space and distribution centres are hot as more people turn to online shopping. The DIY sector is also extremely busy as more people improve the homes they already own.

    The pandemic has up-ended the market in many ways we did not anticipate in February, but there are winners as well as losers. With the mortgage forbearance program in place, we are seeing very few signs of weakness in housing so far. Home prices have a long way to go up before we see any chance of them coming down. The Cromford® Market Index stands at over 345. It would have to drop to below 90 for any downward movement in sale prices to be in our forecast. We know that sort of thing can happen - it happened in 2005. But the current situation is nothing like 2005.

    “©2020 Cromford Associates LLC”.  

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

     chandler real estate

    The number of cities improving for sellers increased from 11 to 12 compared with last week. Mesa went positive. However the average improvement across all 17 cities is down to 3.5%.

    Cave Creek is now the only city showing an outlandish percentage improvement for sellers, while Paradise Valley, Fountain Hills and Tempe are still over 10%. Glendale and Avondale are improving the most for buyers, though both are still extreme seller's markets.

    At the moment we have a strong supply of new listings but a very weak inventory of active listings. Demand is much stronger than normal and is able to soak up the new listings. Inventory has increased a little in a few areas (e.g. Surprise, Avondale), but this has been balanced by declines in other areas (e.g. Goodyear, Gilbert).

    Not included in our largest 17 cities, Casa Grande is notable for its unusually low active count of 98 (excluding UCB and CCBS). This time last year the count was 263.

    “©2020 Cromford Associates LLC”.  

    September 16 - Having established that the number of single-family homes owned by institutional investors is just under 13,000, the question arises: how many are owned by other smaller-scale investors. The answer will depend on how accurately the affidavit of value was completed when the property was purchased and whether the intended use stated is still the current use. However, based on the stated intent to rent the property to a third party, the total number of single-family rentals in Maricopa County is 92,523. If we subtract the homes owned by the large institutions (12,883) then we find 83,778, which represents about 7.6% of the single-family homes in Maricopa County. This seems extremely low and suggests that perhaps the affidavits of value are not as truthful as they could be, despite being a declaration subject to the perjury laws.

    To check this, we can look at how the Maricopa County Assessor classifies the homes for tax purposes. A home which is a primary residence is class 3, while a home that is not a primary residence is class 4. Note that this class 4 will include not only rentals, but second and vacation homes. The number of single-family parcels that are class 4 in Maricopa County is currently 339,388. We can subtract the homes that were declared as second homes on their affidavit of value (45,914) to arrive at a total of 293,474. When we subtract the homes owned by institutions, we get a number of 280,641. This is probably a bit high, since the assessor tends to be motivated to place properties in class 4 unless the owner can clearly prove they are using it as their primary residence (class 3). Remember that holiday rentals will be class 4 too.

    You can see the problem. We have somewhere between 83,778 and 280,641 homes that are rentals owned by smaller-scale investors. Where the real number lies is a matter of opinion, because homes change usage all the time, and some landlords do not notify the city or county, perhaps because they prefer not to pay sales tax or a higher rate of property tax.

    Our best estimate is that around 225,000 to 250,000 single-family homes are being used as rentals (long-term or short-term). This resulted from the foreclosure wave of 2008 through 2013 when many home owners became tenants and their homes became rentals instead of owner-occupied. Usually they did not rent the same house they formerly owned, but the effect was a massive shift from ownership to tenancy. It is not uncommon for small-scale investors to own a significant number of properties and make a decent income from them. Until now that is. Rents are probably harder to collect than they have ever been and evictions are prohibited until 2021. There is great uncertainty about how this will play out over the next 12 months.

    “©2020 Cromford Associates LLC”.  

    September 15 - The topic of homes owned by institutional investors raises its head from time to time. The owners of property in Arizona are a matter of public record, so it is not too hard to determine the facts. For Maricopa County, we currently see just under 13,000 single-family homes owned by large scale operators of rentals. This is not very different from the total 6 years ago. Some operators have merged, some have sold properties and some have added to their inventory. If

    If you ask the average person what proportion of single-family homes are owed by institutional investors, I suspect they will estimate much higher than the real number, which is 1.2%

    The major rental owners are:

    • Invitation Homes - 5,209 single-family homes - 40% market share - https://www.invitationhomes.com/
    • Progress - 2,928 single-family homes - 23% market share - https://rentprogress.com/
    • Cerberus - 1,080 single-family homes - 8% market share
    • American Residential - 1,001 single-family homes - 8% market share
    • American Homes 4 Rent - 960 single-family homes - 7% market share

    The remaining companies account for 2,665 single-family homes or 21% market share.

    The current situation is a mixed bag for these companies:

    • far more tenants than normal are late with their payments
    • they cannot evict tenants for non-payment of rent
    • their properties are appreciating in re-sale value at a fast pace
    • rents are increasing because there are very few vacancies (partly because of no evictions)

    When the temporary hold on evictions is lifted, then it is very doubtful that most tenants will be in a position to catch up with their missed rental payments. A flood of eviction is likely. 

    “©2020 Cromford Associates LLC”.  

    September 12 - Based on affidavits of value filed during August we have collected the following statistics on iBuyer activity:

      Opendoor OfferPad Zillow Knock All iBuyers Combined
    Homes Purchased in August 2020 66 83 34 0 183
    Homes Purchased in August 2019 357 107 69 8 541
    Annual Change in Purchases -82% -22% -51% -100% -66%
    Homes Sold in August 2020 56 48 25 2 131
    Homes Sold in August 2019 358 104 134 2 598
    Annual Change in Sales -71% -56% -87% +0% -78%
    Median Purchase Price in August 2020 $254,000 $259,000 $281,000 N/A $259,200
    Median Purchase Price in August 2019 $243,150 $259,581 $270,700 $388,500 $253,635
    Median Sale Price in August 2020 $284,750 $272,950 $263,000 $394,005 $274,000
    Median Sale Price in August 2019 $250,000 $239,900 $299.900 $479,998 $255,000
    Homes in Inventory at the End of August 2020 191 106 69 3 369
    Homes in Inventory at the End of August 2019 987 209 280 18 1,494
    Annual Change in Inventory -81% -49% -75% -83% -75%


    During the summer of 2020, the iBuyers as a group have become far less significant participants in the Greater Phoenix market.. August sales were down 78% compared with 2019 while purchases were down 66%. Of the group, OfferPad seems to be most committed to staying in the game, becoming the largest purchaser with 83 homes, but this is still lower than the 107 they purchased in August 2019.

    Knock has exited the iBuying business and has bought nothing for 2 months. They have 3 homes left in inventory and presumably will dispose of them shortly.

    Opendoor and Zillow are both running at volumes which are a fraction of what they used to achieve in 2018 and 2019.

    Despite a small increase in buying compared with August, iBuyer inventories remain very low, down 75% compared with this time last year. Our estimates for inventory are on the high side if anything, so they will be unable to recover volumes to their former heights without a steep increase in their buying. This looks like a very difficult challenge given current market conditions for the price range that iBuyers prefer to focus on.

    Diversification into the title business, mortgage lending and even traditional brokerage activities seem to be the order of the day for iBuyers. Buying and selling homes online no longer appears to be able to fuel the revenue growth that investors crave..

    “©2020 Cromford Associates LLC”. 

    September 11 - Looking at the August affidavit data for Maricopa County shows us a big change in the mix by geographic area compared with August 2019

    • Central and North Valley - unit sales down 5.8%
    • West Valley - unit sales down 5.8%
    • Southeast Valley - unit sales down 3.9%
    • Northeast Valley - unit sales up 15.5%

    Now August 2019 had one more working day that August 2020, so a 5% drop in unit sales would be normal. What is not normal is the 15.5% increase in unit sales in the Northeast Valley.

    There is talk of Californians moving in larger numbers to the Northeast Valley, but we are unable to confirm these based on the affidavits. There are actually fewer buyers giving their former address as California of the affidavits than last year. This may be because they are buying in the name of an LLC registered in Arizona. We are seeing more people buying in the name of an LLC instead of their personal names. The problem for us is that we can no longer track out-of-state buyers accurately. We also see out-of-country buyers buying in the name of an Arizona registered LLC. There is nothing to stop the owner of an Arizona based LLC providing an address outside Arizona to the AZ Corporation Commission. In fact Cromford Associates is an Arizona LLC with an owner address in Loughborough UK. However, most Arizona LLCs owned by people outside Arizona seem to provide just provide a local address and we are therefore unable to determine their real origin.

    Whatever the case, the Northeast Valley was unusually dominant during August, just as it was unusually under-represented in April and May.

    “©2020 Cromford Associates LLC”. 

    September 10 - Here is our table of Cromford® Market Index values for the single-family markets in the 17 largest cities

     chandler real estate

    We see only 6 cities showing deterioration in conditions for sellers over the past month, one more than last week. Queen Creek and Phoenix joined the list, but Maricopa dropped out. 4 of the 6 are only deteriorating a small amount, -1% to -1%. Avondale and Glendale are cooling to a greater extent but remain extreme examples of a seller's market.

    The biggest gains for sellers are in the Northeast Valley - Cave Creek, Fountain Hills, Scottsdale and Paradise Valley all up by 12% or more. Overall the CMIs in the table above increased by 3.9% over the last month, weaker than the 6% we saw last week.

    Chris Bennett has pointed out that the Contract Ratio for all areas and types hit 174.9 yesterday, an all-time record high. This confirms that the balance between supply and demand is even more extreme than it was during the heights of the 2005 bubble.

    September 9 - We have published the new Squirrel version of the Annual Appreciation by ZIP Code chart, meaning Adobe Flash is no longer required to view it. The remaining monthly ZIP code charts will be converted over the next several days.

    It is almost meaningless to measure the appreciation rate for small areas like ZIP codes, unless you use a larger sample than one month of sales to measure pricing. This is true whether you use a median price, average price or average price per square foot. The sample size is just too small to give satisfactory results. You need to measure the prices over a much longer period. We use a 12 month period in the ZIP code chart above, which gives us more reliable readings except for the smallest ZIP codes. There are still several of these (e.g. 85004, 85034, etc.) which have so few sales in a year that the appreciation rate is still extremely hard to interpret with any confidence.

    We are going to look at areas of the valley and rank ZIP codes by their appreciation rate measured using the annual average price per square foot for single-family homes. Starting with the Northeast Valley we find the following appreciation rates at the end of August 2020:

    1. Fort McDowell 85264 - 17.8%
    2. Scottsdale 85251 - 13.7%
    3. Rio Verde 85263 - 11.6%
    4. Phoenix 85018 - 11.6%
    5. Scottsdale 85257 - 10.3%
    6. Scottsdale 85250 - 9.5%
    7. Scottsdale 85260 - 9.5%
    8. Scottsdale 85254 - 8.6%
    9. Phoenix 85050 - 8.4%
    10. Scottsdale 85266 - 7.7%
    11. Paradise Valley 85253 - 7.0%
    12. Fountain Hills 85268 - 6.8%
    13. Scottsdale 85255 - 6.0%
    14. Carefree 95377 - 4.5%
    15. Scottsdale 85258 - 4.4%
    16. Scottsdale 85262 - 4.3%
    17. Scottsdale 85259 - 4.0%
    18. Phoenix 85054 - 1.7%

    Although sparsely populated Fort McDowell rarely appears on our radar, it is enjoying the fastest appreciation rate. This is something we are seeing for many remote spots. The COVID-19 pandemic has increased demand for far-flung, rural locations with plenty of land and open space. If you are working from home and rarely need to commute, then it is easier to make the move to a rural location, It does not take very much extra demand to completely overwhelm places with tiny inventories of residential properties. Even outside Maricopa and Pinal counties, locations like Pine, Strawberry, Pinetop, etc. have a long list of cash buyers waiting for any property that comes onto the market. This effect is not unique to Arizona but can be detected in many other states and internationally too.

    We can probably count Rio Verde as remote too, but there is still strong demand for central locations like 85251, 85018, 85257 and 85250, all of which can found in the upper half of the table.

    “©2020 Cromford Associates LLC”. 

    September 8 - We are keeping such a close watch on active listing counts that it is giving us eye strain, but it is still difficult to determine an overall direction. Excluding active listings in UCB or CCBS status, here are the changes for single-family homes over the past week:

    • Cave Creek - up from 83 to 90
    • Chandler - up from 202 to 214
    • Goodyear - up from 138 to 152
    • Maricopa - up from 84 to 87
    • Peoria - up from 259 to 260
    • Phoenix - up from 1,053 to 1,107
    • Fountain Hills - unchanged at 92
    • Avondale - down from 41 to 39
    • Buckeye - down from 154 to 151
    • Gilbert - down from 193 to 183
    • Glendale - down from 168 to 155
    • Mesa - down from 364 to 353
    • Paradise Valley - down from 213 to 205
    • Queen Creek - down from 260 to 229
    • Scottsdale - down from 855 to 850
    • Surprise - down from 217 to 213
    • Tempe - down from 111 to 105

    We see more cities (10) with lower supply than last week, but the list of 6 with more supply includes Phoenix, which represents about a quarter of the market..

    We call it a tie, which is consistent with the CMI chart we published yesterday. The conclusion is that supply remains extremely low but it is not getting worse. Queen Creek, including the unincorporated San Tan Valley area, is currently the worst affected with supply down 12% in just one week.

    “©2020 Cromford Associates LLC”.  

    September 7 - An interesting situation now exists where the faster rate of incoming new listings is being balanced by an above-normal demand, resulting in the Cromford Market Index stabilizing at the highest ever reading.

    chandler realtor

    I was half-expecting the increased rate of arrival of new listings, up 24% in the last week compared to the same week in 2019, to start to bring the CMI down by increasing the available supply. However, listings continue to go under contract even faster and the CMI has managed to inch up to 342.8, yet another record high, but not much higher than it was last week.

    This means no respite yet for buyers and the bidding wars continue in full fury.

    “©2020 Cromford Associates LLC”.  

    September 5 - The monthly appreciation chart is complete and shows, based on comparing the average $/SF for August 2020 with August 2019, that the current appreciation rate is 15.2% across all areas & types.

    This does not mean that any specific house has risen in value by this much, because the mix of homes that sold in August 2019 is not necessarily the the same as the mix that sold in August 2020. This summer, luxury homes are selling in much stronger numbers than they did in the summer of 2019. The age of the home is crucially important because a home that is updated and modern is going to sell for whole lot more than one that is tired and out-dated. This is why fix and flip works, even when the size of the home is unchanged.

    It does mean that prices are now beginning the powerful surge upward that was predicted when the Cromford® Market Index started to rocket skywards in June.

    The CMI is now at the highest level ever recorded, which indicates:

    You probably ain't seen nuthin' yet.

    “©2020 Cromford Associates LLC”.  

    September 4 - The month-end charts will take a little longer than usual to be completely published this September. This is because we are not just updating them to include the August data, we are completely rebuilding them to remove Adobe Flash. This is because Adobe Flash will be disabled on January 1, 2021 and we have a LOT of charts to convert. A few conversions will be held over until next month and November, but we plan to be Flash-free by December 1, 2020.

    Please be patient with us, but if you urgently need an updated chart, please email Mike Orr (mike@cromfordreport.com) and he can adjust the priority list.

    The new charts use a product called Squirrel, by a company called Infosol. They should work in any modern browser without requiring any downloads. They also have more interactivity than the older charts, especially if you move your mouse cursor over the chart area. The first time you use a Squirrel chart it may take a little while to appear because a lot of data and functionality has to be downloaded. However your browser will cache most of this and it will be a lot faster the second and subsequent times you use it.

    We will continue to develop new charts in Tableau and Squirrel technology as appropriate. Squirrel is best for simple summary charts that are easy to understand. Tableau works best with large amounts of data and combinations of filters and other controls. Tableau is very powerful but it can be dauntingly complex for the novice user.

    “©2020 Cromford Associates LLC”.  

    September3 - Once again, here is our table of Cromford® Market Index values for the single-family markets in the 17 largest cities

    chandler real estate

    The market is peaking quite gently now, with only 5 cities moving in favor of buyers. This is one more than last week with Tempe moving back in favor of sellers while Chandler and Mesa are just a fraction kinder to buyers than they were last month. That is not very kind at all.

    The outrageously out-of-balance situations in Avondale and Glendale are coming back into the stratosphere from outer space.

    The expensive parts of town are still moving strongly in favor of sellers while Surprise and Buckeye are still headed the same way.

    When the lowest CMI reading is 229 while normal is 100, you know you are living though unusual times.

    “©2020 Cromford Associates LLC”.  

    September 1 - The Cromford® Market Index has reached a plateau - equivalent to the high Andes, where the air is so thin it is hard to breathe.

     chandler real estate

    It looks like it is not going to surpass 345, bur 341.7 is still the highest market index reading we have ever seen.

    New listings are appearing at a faster rate now, up some 15 to 18% from this time last year. But demand is also very strong and is soaking up most of the new supply within a few days of its arrival. The market is still very difficult for buyers, but if the seasonal pattern conforms to the norm, we should see a few more listings to choose from during October and November.

    Having said that, 2020 has so far failed to conform to any of the usual seasonal patterns.

     

    “©2020 Cromford Associates LLC”.  

    August 31 - The building permit interest is not confined to the single-family segment. The multi-family permits have also been generating excitement over the past few months.

    The last 2 months (June & July) have recorded building permits for a total of 3,499 multi-family units. This is a colossal total given that the annual permit count has rarely exceed 10,000 across Maricopa and Pinal counties.

    We are at 9,008 year-to-date units at the end of July, so with 5 months still to go, we have already exceeded the full year totals for 14 of the last 18 years.

    There is no doubt that 2020 will generate the largest number of multi-family building permits that Maricopa and Pinal counties have ever seen.

    We know that there is a housing shortage in the valley, but the building permit counts suggest that developers have noticed and are planning to do something about it.

    “©2020 Cromford Associates LLC”.  

    August 29 - Lots of action in building permits during July.

    The single-family permit count for Maricopa and Pinal Counties was 3,003. This is first time we have seen permits over 3,000 for a single month since March 2007.

    The largest contributions to new permits during July 2020 were:

    1. Phoenix - 460
    2. Surprise - 354
    3. Buckeye - 291
    4. Unincorporated Maricopa County - 282
    5. Mesa - 240
    6. Unincorporated Pinal County - 205
    7. Goodyear - 196
    8. Queen Creek - 164
    9. Casa Grande - 160
    10. Peoria - 146

    Conspicuous by its absence is Gilbert, which used to feature prominently in the top 10 but has been overtaken over the past few years.

    “©2020 Cromford Associates LLC”.  

    August 27 - Once again, here is our table of Cromford® Market Index values for the single-family markets in the 17 largest cities

    chandler real estate

    The number of red dots has doubled again since last week with Avondale and Glendale joining Tempe and Maricopa as locations where the seller's advantage is getting slightly lower. Not that you would notice much - with every one of the 17 cities well over 200, we have one of the strongest seller's market we have ever seen.

    Meanwhile, the average increase in the CMI is still 10.2% over the last month, which would be considered remarkable if we had not just seen much higher percentages over the past 2 months.

    We can see Fountain Hills, Scottsdale, Cave Cree and Paradise Valley all moving strongly in a direction favorable to sellers. Fountain Hills and Cave Creek have unusually low numbers of active listings at the moment, which must be very frustrating buy buyers who want homes in these towns.

    Surprise, Buckeye, Peoria and Goodyear are the top performers among the more affordable areas of the valley.

    “©2020 Cromford Associates LLC”.  

    August 26 - The latest S&P Case-Shiller Home Price Index numbers were published yesterday. They cover home sales during the period April to June 2020.

    For most of the 20 metropolitan areas prices lost steam compared with the previous month. However this is because the weaker months of April and May are included but the stronger and more recent months of June and July are excluded.

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

    1. Minneapolis 0.97%
    2. Charlotte 0.91%
    3. Phoenix 0.82%
    4. Washington 0.69%
    5. Dallas 0.68%
    6. Portland 0.66%
    7. San Diego 0.59%
    8. Cleveland 0.58%
    9. Denver 0.54%
    10. Atlanta 0.48%
    11. Los Angeles 0.44%
    12. New York 0.32%
    13. Boston 0.27%
    14. Seattle 0.24%
    15. Tampa 0.20%
    16. Miami 0.13%
    17. Chicago 0.05%
    18. Las Vegas -0.43%
    19. San Francisco -0.58%
    20. Detroit - data not available

    The national average was +0.56% so Phoenix home prices increased at a higher rate than the national average, but slipped from 2nd to 3rd place compared with last month..

    The year over year comparisons are below:

    1. Phoenix 9.0%
    2. Seattle 6.5%
    3. Tampa 5.9%
    4. Charlotte 5.7%
    5. Minneapolis 5.4%
    6. Cleveland 5.4%
    7. San Diego 5.0%
    8. Atlanta 4.2%
    9. Portland 4.2%
    10. Denver 4.0%
    11. Miami 4.0%
    12. Los Angeles 3.9%
    13. Washington 3.5%
    14. Boston 3.5%
    15. Las Vegas 3.3%
    16. Dallas 3.1%
    17. New York 1.6%
    18. San Francisco 1.4%
    19. Chicago 0.6%
    20. Detroit - data not available

    The national average was 4.29%, down from 4.46% last month. Phoenix remained in the top spot yet again and now has opened up a bigger gap of 2.5% over the number 2 city - Seattle.

    “©2020 Cromford Associates LLC”.  

    August 24 - Over the last 6 weeks the COVID-19 pandemic has swung away from the sun belt, leaving Arizona with far fewer new cases that it suffered at its worst during June and early July. Arizona is currently reporting 5,457 new cases per week, a far cry from the 24,902 per week reported by the Arizona Department of Health Services on July 10. The trends are moving in the right direction. COVID-19 is accelerating in some states but these represent less than 20% of the country's population, in contrast to 92% of the population as recently as July 21.

    The current problem spots where the weekly rate of new cases is increasing are:

    1. Guam +16.7%
    2. South Dakota +6.1%
    3. Connecticut +4.7%
    4. North Dakota +4.2%
    5. Maine +2.6%
    6. Mississippi +2.5%
    7. North Carolina +2.5%
    8. Rhode Island +2.5%
    9. Illinois +1.9%
    10. US Virgin Islands +1.5%
    11. Wyoming +1.5%
    12. Indiana +1.1%
    13. Iowa +1.1%
    14. Alabama +1.1%
    15. Minnesota +0.9%
    16. Kansas +0.7%
    17. Oklahoma +0.1%
    18. Hawaii +0.1%

    Although the list is quite long, it is dominated by lightly populated states and territories. Arizona's rate is -4.8% per week.

    “©2020 Cromford Associates LLC”.  

    August 22 - We have published a new Tableau chart that allows you to analyze the percentage of closed listings that sold for more than list price. You can find it here.

    At the moment an abnormally high percentage of active listings are being sold for more than the asking price. It can be hard for a buyer to understand this and they may need a lot of evidence to persuade them that will need to pay more than list price if they want to have a good chance of being a successful buyer. This new chart provides that evidence, at least for the sectors of the market where it is true.

    Since you can filter by location, dwelling type and price range, you can establish the percentage for the subset you are considering. You can also see the median amount by which the closing price exceeds the list price.

    The closings over list price are concentrated in price ranges between $100,000 and $600,000 and sales over list price remain rare over $2 million.

    The price range where sales over list price are the strongest is that between $200,000 and $250,000. Here supply is extremely low and there are dozens of buyers chasing every half-decent listing that comes onto the market. The median sales price is $5,000 higher than the asking price in these cases.

    August 20 - Once again, here is our table of Cromford® Market Index values for the single-family markets in the 17 largest cities

    chandler real estate

    The number of red dots has doubled since last week with Tempe joining Maricopa as a cooling market. They remain extremely hot, so the cooling is barely perceptible on the ground.

    We expect the number of red dots to increase to 4 by next week, with Avondale and Glendale adding to the cooling markets.

    Meanwhile, the average increase in the CMI is still a strong 15.4% over the last month and the more expensive areas are having their turn in the spotlight. We can see Fountain Hills, Scottsdale, Cave Cree and Paradise Valley all moving strongly in a direction favorable to sellers. The Southwest valley (Buckeye & Goodyear) is also doing well along with the Northwest in the shape of Surprise & Peoria.

    With new listings coming quite fast over the last month, Phoenix and the Southeast Valley are seeing their CMI readings rise at a slower pace. However they remain extraordinarily high by any historic standard.

    August 17 - We have started to phase out our Adobe Flash charts. Although we have cherished and maintained them over the last 13 years, the days of Adobe Flash are coming to an end on December 31, 2020.

    To replace the Flash-based charts we are using software called Squirrel. We have started with the CMI charts and you can now see new versions for the weekly and daily charts.

    Here is working version of the daily CMI chart:


    We hope you like them.

    August 16 - We usually focus most of our attention on the ARMLS home territory - what we refer to as Greater Phoenix. This comprises all of Maricopa County, most of Pinal County (except a few small villages near Tucson) and a few small communities in Yavapai. However the listings on ARMLS do include out-of-area properties and in 2020 they have been doing some interesting things from a statistical perspective.

    In July there were 602 out of area listings that closed. This is up a colossal 125% from July 2019 and by far the highest number of closings we have ever seen in a single month for out of area listings. It also surpassed June 2020 which had set the record of 494 a month earlier. June was up 105% from the year before.

    This appears that this new trend represents an "Escape to the Country" where people crave locations far away from the big cities of Arizona and California. Many have a desire for larger lots that are more affordable in rural locations. A similar effect is taking place in the UK, where London is falling in popularity and the far-flung areas of the country are seeing a surge of demand for homes. A highly infectious pandemic can have such effects. Certainly there was no sign of this trend before March.

    The most popular locations for these closings in July are as follows:

    1. Sierra Vista 145 (2)
    2. Prescott 56 (40)
    3. Flagstaff 56 (31)
    4. Payson 49 (45)
    5. Overgaard 25 (22)
    6. Show Low 23 (11)
    7. Hereford 23 (0)
    8. Prescott Valley 19 (20)
    9. Douglas 16 (10)
    10. Pinetop 14 (6)

    The numbers in parentheses are the closings in July 2019. We can immediately see that Sierra Vista is responsible for the largest part of the increase. Until March 2020, Sierra Vista closed listings rarely exceeded 1 or 2 per month on ARMLS. We have already seen 45 so far in August and there are plenty more to come. Neighboring Hereford has also burst onto the 2020 ARMLS scene from nowhere.

    Among the more traditional out of area spots for second homes, Flagstaff, Pinetop and Show Low have increased the most in popularity.

    August 15 - The monthly average price per sq. ft. has accelerated dramatically over the past 4 weeks, as can be seen from the chart below:

    chandler real estate

    We can see clearly that a gap has opened up compared with last year that is far larger than between any previous 2 years since 2013.

    Seasonality is suddenly out the window. We usually see luxury home sales peak during the second quarter and fall sharply during the heat of the third quarter. In 2020, the opposite has been true, The COVID-19 pandemic caused luxury sales to plummet during the second quarter only to recover stronger than ever during the second quarter.

    There is an underlying upward trend in pricing for all price ranges, but the strength or weakness of the luxury market causes the short term seasonal effects.

    August 14 - In Maricopa County we currently have the lowest number of pending foreclosures we have ever recorded - just 981 trustee sales are scheduled. The previous cycle low was 2,253 set in May 2006, after which numbers rose to reach a peak of 51,022 at the end of 2009.

    August 13 - Once again, here is our table of Cromford® Market Index values for the single-family markets in the 17 largest cities


    chandler real estate

    For the first time since June 4, we have a red dot in the table. Maricopa's CMI has faded slightly over the last month, despite being close to a record high.

    The average monthly increase in the CMI remains very high at 23%, but this is down significantly from 32% last week.

    It is the turn of the more expensive areas to power ahead for sellers, with Fountain Hills up 41% and Scottsdale up 36%. The Southwest Valley is also looking strong with Buckeye up 37% and Goodyear up 33%

    We see the more expensive areas heating up, including Scottsdale, Fountain Hills and Paradise Valley, all of which are seeing further falls in supply over the past week.

    August 12 - The recovery of the luxury market in July was nothing short of amazing.

    chandler real estate

    The chart above is for homes with list price over $500,000. You can see:

    • an increase of 30% compared with the previous month (June 2020)
    • an increase of 66% compared with July 2019

    In fact July 2020 was by far the biggest month for sales over $500,000 that we have ever witnessed. Its closest rival was June 2020. During the bubble years we saw a high of 1,174 closings in June 2005. This now seems paltry by comparison.

    August 10 - The Cromford® Market Index is in record territory at 329 now, exceeding the high point (312.9) of the 2005 bubble. However the pace is slowing as we can see from the daily chart below:

    chandler real estate

    August 9 - The affidavit data for Maricopa County is now available and shows us the following:

    The total number closed transactions was 11,205. This is up 4.7% from July 2019 and the highest monthly total since May 2018. The median sales price was $325,000, up 13.6% from $286,000 a year ago.

    For new homes, the transaction count was 1,662. This is up 22.9% from July 2019. The median sales price was $363,511, up 2.1% from $356,001 a year ago.

    For re-sale transactions, the count was 9,543. This is up 2.1% from July 2019. The median sales price was $317,000, up 14.4% from $277,000 a year ago.

    The sales volume went some way towards compensating for the lack of sales during April and May.

    Sales prices look very strong, partly because the luxury market came roaring back after taking a big break during April and May.

    All these numbers are for Maricopa County only, and include single-family and condo / townhouse properties.

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

      Opendoor OfferPad Zillow Knock All iBuyers Combined
    Homes Purchased in July 2020 60 43 45 0 148
    Homes Purchased in July 2019 359 86 78 4 527
    Annual Change in Purchases -83% -50% -42% -100% -72%
    Homes Sold in July 2020 101 53 15 4 173
    Homes Sold in July 2019 344 120 113 2 579
    Annual Change in Sales -71% -56% -87% +100% -70%
    Median Purchase Price in July 2020 $259,750 $240,000 $260,000 N/A $259,350
    Median Purchase Price in July 2019 $234,950 $244,024 $275,700 $244,000 $242,350
    Median Sale Price in July 2020 $272,000 $289,000 $256,000 $351,617 $274,000
    Median Sale Price in July 2019 $250,000 $250,000 $298.875 $461,672 $255,000
    Homes in Inventory at the End of July 2020 204 78 52 5 339
    Homes in Inventory at the End of July 2019 1004 206 345 12 1,567
    Annual Change in Inventory -80% -62% -85% -58% -78%

    In July the market as a whole had very strong transaction volumes, but the iBuyers failed to participate in this recovery to any great extent. Sales were down 70% compared with July 2019 while purchases were down 72%.

    iBuyer inventories remain very low, down 78% compared with this time last year, so they will be unable to recover volumes to their former heights without a steep increase in their buying. Only Zillow added to inventory during July, but their had sunk to an extremely low level compared with their normal capacity.

    Having reached a peak of almost 7% of the market in late 2018, iBuyers now represent less than 2% of the market in Greater Phoenix.

    August 6 - Once again, here is our table of Cromford® Market Index values for the single-family markets in the 17 largest cities


    Sun Lakes AZ REALTOR

    The average increase in the CMI over the past month is 32%, down from 39% last week. It is still very favorable to sellers, but the trend has now been slowing over the past 3 weeks

    We also have two cities (Maricopa and Tempe) where the CMI has declined over the past 2 weeks, despite them rising 7% and 8% respectively over the past month.

    We see the more expensive areas heating up, including Scottsdale, Fountain Hills and Paradise Valley, all of which are seeing further falls in supply over the past week.

    Paradise Valley is now over 200. This is not something we have seen before, since the highest point reach during the 2005 bubble was 194.2.

    We have never seen all 17 cities over 200 before this week.


    August 5 - One month ago, CoreLogic released their US Home Price Insights Report for May 2020. In this report they forecast a 6.6% decline in the national home price index by May 2021. I was shocked and thought it very misguided. They too seem to have had a change of heart. They recently published a new report for June 2020 and the forecast for 12 months out is now a decline of just 1%. That is quite a large change in just over 4 weeks. Even so, I would be very surprised if their home price index managed to decline at all by June 2021.

    CoreLogic forecast a significant home price decline in 2011 which was followed by an increase in 2012 instead, so they have been very wrong before.

    We will have to wait until June 2021 to see who is right this time.

    August 4 - We have already reported that the number of closed listings hit a record high in July, along with average sales prices. It should therefore come as no surprise that dollar volume was also at a record high level in July. In fact July 2020 was the first month in history where dollar volume exceeded $4 billion.

    chandler realtor

    We can deduce that more agent commission was earned in July 2020 than in any previous month.

    August 3 - The monthly average sales price hit a new all-time record in July 2020 - $393,778. This easily surpasses the previous record set in March 2020 ($378,307). The chart below shows a comparison between 2020, 2019 and 2007, the other contenders for highest average price.

    chandler real estate agents

    For the interactive version of this chart please click here.

    August 2 - July 2020 saw more closed listings in a single month than we have ever seen before. This total is not absolutely fixed because modifications are made all the time to ARMLS closing dates and listing status, but at the time of writing there were 10,544 closed listings with a close of escrow date in July 2020.

    chandler real estate

    The previous record was set in May 2019 with 10,525. With 10,544 and 10,525 being so close, it is not certain than this record will stand after all the changes have been processed. However, it is still a remarkable total because July is normally a rather quiet month. Peak months are usually March through June.

    The capacity for the housing industry to keep going during pandemic is no longer in question.

    August 1 - We are at a point in the Greater Phoenix housing market where many all-time records are being broken. These are significant enough that we will devote an observation to each one rather then group them all together.

    First let us look at the monthly average sale price per square foot for all areas & types. This stands at $190.87 today, This is significant because it breaks the record of $190.61 set as long ago as May 5, 2006. The difference is that May 2006 represented the dying peak of a bubble which would see prices fall dramatically from June 2006 through March 2009.

    The current reading does not look like a peak at all:

    chandler real estate

    Not only is the latest reading a record, it has opened up a large gap compared with this time last year.

    July 31 - We would argue that the COVID-19 pandemic hit a peak in the USA around mid July. On July 15, 97% of the population of the USA lived in states where the weekly rate of new cases was accelerating. The good news is that by the end of July that number had fallen to just 40% of the population. Many of the hardest hit states are now reporting a deceleration in the weekly rate new cases. This list includes:

    1. Utah -3.2%
    2. Louisiana - 2.3%
    3. South Carolina -2.3%
    4. New York -1.8%
    5. California -1.7%
    6. Texas -1.5%
    7. Nevada -1.4%
    8. Florida -1.0%
    9. Arizona -0.4%
    10. Georgia -0.2%

    The states with the highest acceleration rate include several smaller states that escaped the worst initially, but where the virus is now spreading more quickly. These include:

    1. Hawaii +15.0%
    2. Alaska +4.9%
    3. Montana +4.0%
    4. Maine +1.5%

    The rate of new cases peaking 2 weeks ago means that deaths will increase for some time yet, as death counts are very much a lagging indicator. The weekly death rate stands at 8,257, which is up 28% from last week and up 128% from its low point of 3,621 on July 6. Deaths are not a useful indicator for forecasting purposes, as shown by the low reading on July 6 just 9 days before the peak of weekly new cases was reached..

    It is becoming clear that the virus SARS-COV-2 is now firmly established and is unlikely to be eradicated. We are going to have to learn how best to live with it for the several decades.

    Luckily for the housing market, the sort of safety precautions we need to take do not severely disrupt the construction, purchase, selling, lending, appraisal, inspection or warranty businesses. This has been demonstrated clearly by the speed and power of the recovery in both transaction volume and pricing.

    Of course, there are other industries which are dramatically impacted:

    • accommodation (hotels, B&Bs...)
    • travel (airlines, trains, cruise lines, car rental...)
    • food service (bars, restaurants...)
    • entertainment (live music, theater, movies...)
    • arts
    • sport
    • education
    • recreation
    • healthcare
    • office & retail real estate

    I visited Cambridge, England on Thursday, normally a popular spot for international tourists. On a sunny day like Thursday the town center should be packed with tourists and traffic would be locked solid. There were just a few nervous people on the streets and traffic was negligible. The hundreds of retailers and dozens of pubs and restaurants there must be in desperate shape. Similar scenes are to be found around the world

    Those that can adapt quickly to the new environment will prosper, but it is inevitable that some livelihoods will be severely impacted. This creates a potential demand problem, but it is related more to affordability than to the need for shelter. People need a place to live even more after COVID-19 than before, particularly as working from home becomes more widespread.

    Unlike 2005-2008 when the housing market dragged the economy to its knees, in this recession I expect the housing market to be one of the strongest survivors and be one of the sectors that helps the economy to recover.

    In Maricopa County between 2007 and 2020, the population grew 18% according to the Arizona Office of Economic Opportunity. If we examine the county assessor's database we can see that there was only 12% growth in the single-family, condo, townhouse and mobile home inventory in the county during that same period. Even if we see significant rises in foreclosures and evictions, there are still not enough homes to match the population growth numbers. So although some weakness in demand is to be anticipated at some point in the future, the shortage of supply is unlikely to be completely turned around into the sort of glut we witnessed in 2006 and 2007.

    Speculation about the future is always highly uncertain, but even if the situation becomes worse than currently expected, the housing market is a slow moving beast and we will have plenty of warning signs in the numbers we publish. This will allow those who are watching carefully adequate time to take appropriate action.

    July 30 - Once again, here is our table of Cromford® Market Index values for the single-family markets in the 17 largest cities

    Scottsdale real estate

    The average increase in the CMI over the past month is 39%, down from 47% last week. It is still enormously favorable to sellers, but the trend has been slowing over the past 2 weeks

    We even have two cities (Maricopa and Tempe) where the CMI has reversed course in the last few days and started to decline. The reason is, of course, that active listings have started to show a distinct increase in these 2 cities.

    Even so, the increases in CMI over the past month ranges from 18% (high) to 55% (extremely high), so there is not very much for buyers to celebrate at the moment.

    Paradise Valley is still moving higher and it is possible we might see all 17 cities exceed 200 for the first time.

    July 29 - We saw very weak new listings numbers in the first half of 2020, down 5% from 2019 for the first quarter and down 14% for the second quarter, across all areas & types. However the third quarter has got off to a blazing start and new listings are up 11% compared to the same 4 weeks in 2019. This extra supply will certainly help dollar volume and sales counts, but so far it has not done very much to raise the level of active listings. This is because active listings are getting acceptable offers even faster than before, meaning the higher arrival rate of new listings is balanced by listings going under contract faster and being removed from active inventory.

    This stronger trend in new listings is accelerating and over the last week we have seen 17% more new listings than during the same period in 2019. If this trend continues then we should see inventory start to grow. We normally expect to see inventory grow between August and November every year, so this would not be very surprising.

    Today we see slightly more inventory (without a contract) for single-family homes than we did a week ago in the following major cities:

    • Avondale
    • Cave Creek
    • Chandler
    • Gilbert
    • Maricopa
    • Mesa,
    • Phoenix
    • Queen Creek
    • Tempe

    However single-family inventory without a contract is still falling in:

    • Buckeye
    • Fountain Hills
    • Glendale
    • Goodyear
    • Paradise Valley
    • Peoria
    • Scottsdale
    • Surprise

    These trends suggest that the Cromford® Market Index will continue to rise, but at a slowing pace over the next few weeks.

    Long-term rental listings are arriving at a slow pace - 2,181 for the last 4 weeks across all areas & types. This is down 11% compared to the same time last year.

    July 28 - The latest S&P Case-Shiller Home Price Index numbers were published today. They cover home sales during the period March to May 2020.

    For most of the 20 metropolitan areas prices lost steam compared with the previous month. However this is because the weaker months of April and May are included but the stronger and more recent months of June and July are excluded.

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

    1. Cleveland 1.18%
    2. Phoenix 0.90%
    3. Portland 0.89%
    4. Minneapolis 0.81%
    5. Charlotte 0.79%
    6. Chicago 0.73%
    7. Washington 0.60%
    8. Seattle 0.59%
    9. Dallas 0.52%
    10. Denver 0.50%
    11. Atlanta 0.50%
    12. San Diego 0.43%
    13. Boston 0.41%
    14. Los Angeles 0.38%
    15. Tampa 0.35%
    16. Las Vegas 0.27%
    17. Miami 0.25%
    18. New York -0.03%
    19. San Francisco -0.16%
    20. Detroit - data not available

    The national average was +0.65% so Phoenix home prices increased at a higher rate than the national average, and rose from 4th to 2nd place compared with last month..

    The year over year comparisons are below:

    1. Phoenix 9.0%
    2. Seattle 6.8%
    3. Minneapolis 5.5%
    4. Cleveland 5.7%
    5. San Diego 5.2%
    6. Tampa 6.0%
    7. Charlotte 5.4%
    8. Las Vegas 4.2%
    9. Atlanta 4.2%
    10. Portland 4.2%
    11. Boston 4.3%
    12. Los Angeles 3.7%
    13. Denver 3.9%
    14. Miami 4.0%
    15. Washington 3.5%
    16. San Francisco 2.2%
    17. Dallas 2.8%
    18. New York 2.1%
    19. Chicago 1.3%
    20. Detroit - data not available

    The national average was 4.46%, down from 4.73% last month. Phoenix remained in the top spot yet again and now has opened up a gap of 2.2% over the number 2 city - Seattle.

    July 27 - Using the Intended Use (IU11) chart from Cromford® Public we can see that there was a dramatic change in the mix of transactions during the second quarter of 2020, compared with any previous quarter.

    Comparing specifically with the second quarter of 2019:

    • Purchases for owner-occupied primary residences increased from 74.6% to 82.7% of all sales across Maricopa and Pinal County
    • Purchases of second homes decreased from 10.1% to 8.3% of all sales
    • Purchases by investors dropped from 10.7% to 8.1% of all sales
    • Purchases by iBuyers fell from 3.7% to 0.7% of all sales

    The dramatic collapse of iBuyer purchases means they are starting the third quarter of 2020 with much lower inventories than they started the second quarter..

    Investors were less active during the second quarter of 2020 and cash purchases were lower than normal too - they fell from 21% to 15% of all sales between Q2 2019 and Q2 2020.

    July 26 - The market just hit a new all time record for dollar volume.

    At $4.126 billion, the amount closed over the last month exceeds the previous record of $4.085 billion set in June 2019.

    Ahwatukee Arizona Real Estate

    It may seem counter-intuitive to some that the record should be set during the midst of a pandemic, but the numbers don't lie. In fact the low levels of sales during April, May and June mean there is now a backlog of pent-up closings which far exceeds the norm for the third quarter. On top of a jump in closings, there is also a surge in pricing making this third quarter unlike any we have seen before.

    If it is like this for re-sales across all areas and types, imagine what the third quarter closings look like for new homes in Central Arizona.

    This helps explain why the share price of Scottsdale-based Meritage Homes have risen from a low of $25.24 to $91.38 in the last 4 months. That is an increase of 262%, which beats the performance of shares in Facebook, Amazon, Apple, Netflix and Alphabet (Google). The other Scottsdale-based home builder Taylor Morrison saw their stock price rise from $6.39 to $24, an increase of 276%.

    July 25 - The single-family permit counts have been collated by the Census Bureau for June 2020 and they show a significant upswing after weak numbers in April and May.

    The June total for Maricopa and Pinal Counties was 2,542. This is the second highest monthly total since June 2007. The highest total occurred in March 2020 and was just a shade higher at 2,550.

    The total in June 2019 was 2,088, so we are looking at an annual growth rate of almost 22%. The new home builders are attempting to boost supply but even this growth is unlikely to have much impact on the shortage which has intensified over the past 12 months.

    Those with a subscription to Cromford Public can examine the detailed number here.

    Top locations for year to date single-family permits are:

    1. Phoenix - 1,640
    2. Mesa - 1,492
    3. Buckeye - 1,402
    4. Unincorporated Pinal County - 1,218
    5. Maricopa - 1,153
    6. Surprise - 1,106
    7. Queen Creek - 924
    8. Goodyear - 826
    9. Peoria - 679
    10. Gilbert - 499

    July 23 - Once again, here is our table of Cromford® Market Index values for the single-family markets in the 17 largest cities

    chandler real estate

    The average increase in the CMI over the past month is 47%, down from 54% last week. It is still enormously favorable to sellers, but the trend is slowing down a little

    The increase ranges from 31% (very high) to 66% (extremely high).

    We have only one city below 200, when normal is 100. 10 cities are over 300.

    The market is punishing buyers. In many cases their offer will be one of dozens and the winning offer is likely to be well over the asking price, possibly with an escalation clause. It is may also to include an inspection waiver, an appraisal waiver and/or accept that the earnest money is non-refundable if the buyer does not close.

    Anyone imagining that short-term home prices will fall in this environment is living on a different planet. In the real world, housing market trends are determined by supply and demand, not by secondary factors such as unemployment, recessions and the like.

    Of course, the medium or long term future may deliver more supply or lower demand, but the housing market will always give us plenty of warning about this as long as we are listening and watching. Right now there is no sign of a significant change in favor of buyers.

    July 22 - It is obvious that the home builders have been big winners from the pandemic so far, surprising the pessimists who drove their share prices down to extreme lows in late March.

    New suburban homes are selling like hot cakes and because the home builders are able to create new supply, their sales volume has grown much faster than re-sale homes. The volume of re-sale transactions has been constrained by very low inventory all year.

    The home builders would sell even more if they had additional homes in the construction pipeline, but there are many physical, labor and financial constraints on their volume. However a shortage of homes drives up prices, reduces concessions and help the homes builders achieve strong gross margins and excellent cash flow.

    Why have sales of new suburban single-family homes been so strong:

    1. Work-at-home trends are making home life more important than office life - creating a nesting effect
    2. Increased desire for more space - home office, exercise room, spare bedrooms, etc.
    3. Less commuting means distant locations become more viable, especially for working at home
    4. Mortgage rates below 3%. Each 25 basis points drop in interest rates adds 3% to the home price than can be purchased for the same monthly payment. We have seen a fall of 100 basis points meaning the average buyer can afford a 12% higher price
    5. New homes are less stressful to buy, because there is rarely a multiple bid situation that we currently see with most re-sales
    6. New home buying is mostly a socially distanced activity with no need to encounter crowds of people. Sales of an occupied home can be stressful for both buyers and sellers in a pandemic
    7. New home construction is an outdoor activity, and the corona virus prefers the indoors
    8. It is easier to keep your distance from other people in a single-family home in the outer suburbs than a downtown condo or townhouse
    9. Student debt forbearance has made down payments easier to accumulate, putting an average of $2,360 in the pockets of a borrower with federal student debt. This could be $4,720 for a couple who both have student debt.
    10. Stimulus checks ($2400 for a couple) add to the potential down payment

    There are many more reasons, but all of these together are creating a tsunami of demand for new single-family suburban homes, with sales volume now far exceeding the home builders own projections at the start of the year.

    Another consequence of the shortage of re-sales is that new homes are increasing their market share - new homes represented 17.6% of all home sales in Maricopa County during 2Q 2020, up from 12.3% during 2Q 2019.

    July 21 - Since the beginning of July, new listings have been arriving at a faster rate than during the second quarter. However demand remains well above normal and the number of active listings without a contract is still extremely low. The good news for buyers is that the supply is no longer dropping quickly, but instead it is approaching a stable level. This stable level is dramatically below normal, but it has stopped dropping far further each week, at least for now.

    Some cities are even seeing slightly higher single-family active listing counts (excluding UCB and CCBS) than this time last week. Among them are:

    • Goodyear
    • Paradise Valley
    • Surprise
    • Tempe

    We are watching closely to see of this trend spreads to other cities or dies away again.

    July 20 - There has been talk of increased inward migration to Central Arizona but as we mentioned on July 18, there is no evidence of that from affidavits of value recorded during the second quarter. If there is a surge of interest from out of state buyers, those homes are still under contract or closed after June 30. Of course, we have no data about out-of-state renters, since leases are not recorded.

    Based on the last 12 months to June 30, the following states provided the most in-bound purchasers of homes in Maricopa and Pinal. I have excluded company purchases and those buying properties to rent to a third party. I only included individuals and couples who bough a primary or secondary residence for their own occupation.

    1. California 4,762
    2. Washington 1,722
    3. Colorado 1,292
    4. Illinois 1,167
    5. Minnesota 774
    6. Oregon 616
    7. Texas 591
    8. Wisconsin 443
    9. Utah 388
    10. Michigan 366

    July 19 - At times like these, appraisers have a tough job. Prices have risen fast over the past few weeks but the comps that appraisers are looking at stretch much further back in time, including April, May and June, when pricing was much weaker. The result is we are seeing many more agreed sales where the appraisal comes in lower than the contract price. This can be frustrating for the buyers and sellers, causing some sales to fall through.

    Gilbert Real Estate Listings

    Using comparisons over the last 3 months will give us an average of about $182 per sq. ft. But closings in July have averaged over $191 per sq. ft. The rate of price increases for listings under contract suggest the $200 level is not far away. Appraisals act as a natural brake on the fast movement of prices since they assess new deals on the basis of older ones. However, when supply is very low, there is usually an offer on the table that does not require an appraisal. So despite the braking effect, the market pressures still move prices higher.

    We expect offers with a waiver of appraisal to become especially attractive to sellers over the next several weeks. However, many buyers will not have that option since their lender will probably be much more cautious than the buyer. This is one thing that is very different from 2004, when many lenders were willing to throw caution to the wind. Those lenders went out of business by 2010 so it is not surprising that lenders insist that appraisers continue to do their job very carefully.

    July 18 - In Maricopa County, recorded sales for the second quarter of 2020 were down 23% compared with 2019. Out-of-state purchases were affected more severely and were down 39%. California buyers were notable by their absence, being down 50% from 2,380 to 1,183. However Canadian buyers were down a massive 74% from 139 to 33.

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

    Most of the declines occurred in April and May, with June showing a recovery. However, in-state buyers have recovered much faster than the out-of-state buyers.

    July 17 - The contract ratio for all areas & types stands at 156.4 on July 17. Because of the weekly listing cycle, the contract ratio tends to be highest on Tuesday or Wednesday and lowest on Saturday. This is because most agents like to activate their listings on Thursday through Saturday, creating extra supply, while contracts tend to be accepted most often between Sunday and Wednesday. So for example in the last week we saw a peak of 166.9 on Tuesday and a trough of 146.9 on Saturday. It therefore makes most sense to compare numbers from the same day of the week.

    The highest reading we have measured is 174.3. This was set during the second quarter of 2005. We are not very far from that all time high.

    The long term average is 54,6, so compared with that reading our current market is extremely under-supplied and experiencing higher than normal demand. Anyone expecting prices to fall in such an environment is misreading the situation.

    However situations can and do change. In the second half of 2005 supply started growing very quickly while demand lost steam. This was the one of the first indications that the bubble of 2005 was bursting. Most of Wall Street did not figure that out for several years (watch The Big Short movie) , but by the time we reached the end of 2005, the contract ratio was already down to a feeble 30 and reached an all time low of 6.6 on Jan 1, 2008.

    This should be a lesson to us - we need to keep a close watch on the contract ratio.

    New listings are becoming more plentiful now and for the third quarter of 2020 they are up around 8% compared with 2019 and 2018. This is an important development, but as yet it has had little effect on active listing counts because demand has become even stronger thanks to buyer enthusiasm and the fall in loan interest rates.

    Prices are rising fast and, over the long term, this tends to incent owners to sell, particularly those who do not live in their properties. Many landlords currently feel hard done by, since the governor's freeze on evictions until October 31 means they may not be receiving rent from many of their tenants, yet are still paying their property expenses. Many landlords, especially those who have mortgages on their properties, tend to operate on fairly slim profit margins, with long term compensation in the form of gains in their asset values over time. Right now their assets are gaining a lot of value, but in some cases their cash flows from rent are looking dismal. It would not be surprising if at least some of these landlords decide to cash out while the going is good, rather than hang on to properties that fail to cash flow for many months. In today's market those homes will sell very quickly at strong prices.

    July 16 - Once again, here is our table of Cromford® Market Index values for the single-family markets in the 17 largest cities

     chandler real estate

    The average increase in the CMI over the past month is 54%, down from 56% last week. It is barely noticeable.

    The increase ranges from 43% (very high) to 81% (ludicrous).

    How long can this continue? We don't know, but not only is supply still falling far below normal, supply is strengthening due to record low interest rates. We are living with an extremely imbalanced situation and the market is abnormal and therefore potentially unstable.

    July 15 - On the COVID-19 front we have a little good news today. As of midnight on July 14, Arizona is one of the very few locations in the USA where new cases have not accelerated over the past week. A decline of 0.7% may not be very large, but it is still a decline and a positive signal. Total cases in Arizona are still growing at 22% per week, but this is down from 33% one week ago and 36% two weeks ago. The highest growth rate (49%) occurred on June 23. The places with declines in the daily growth of weekly new cases are:

    1. Guam (-14.8%)
    2. Delaware (-5.7%)
    3. Maine (-6.4%)
    4. Connecticut (-2.6%)
    5. Navajo Nation (-1.3%)
    6. Arizona (-0.7%)
    7. New Jersey (-0.3%)

    All other states and territories are witnessing accelerating COVID-19 infections. In fact over 93% of the population lives in a state or territory with accelerating new infections.

    The following just set new record highs on July 14 in the weekly growth of new confirmed cases:

    1. Florida - 77,835
    2. Texas - 66,352
    3. Arkansas - 29,733
    4. Louisiana - 13,788
    5. Tennessee - 13,274
    6. North Carolina - 13,061
    7. South Carolina - 13,037
    8. Alabama - 11,470
    9. Ohio - 9,086
    10. Nevada - 5,834
    11. Wisconsin - 5,350
    12. Washington - 5,213
    13. Oklahoma - 4,518
    14. Oregon -2,200
    15. New Mexico - 1,787
    16. Federal Prisons - 1,331
    17. Montana - 625
    18. North Dakota - 595
    19. Alaska - 395
    20. Wyoming - 240

    Note: these are NOT positive tests, they are unique individuals with newly confirmed cases in the past week. Positive test numbers are much higher since many people are tested more than once. States are responsible for removing duplicate cases from their reported numbers..

    The weekly deaths in the USA from COVID-19 reached a low point a week ago on July 7 at 3,850. They have since risen 34% to 5,171 and are now showing a rising trend. Deaths are a lagging indicator so this rising trend reflects the sharp increase in new cases that occurred about 4 weeks ago.

    July 12 - Mike is househunting in Wales for a couple of days. Normal service will be resumed shortly.

    Mesa AZ Real Estate Listings

    July 11 - As you probably know, we scour the new listings every day for signs of a change in the market. Today we can report what looks like a significant change over the past week. A total of 2,103 of new listings have been added to the ARMLS database in the last 7 days, This is up over 19% compared with the same period in 2019 and up over 8% compared with the same 7 days in 2018. New listing counts have been exceptionally weak since April, but just as we saw a surge in new listings between March 19 and April 3, we are now seeing something similar. The first surge in March occurred at the same time as the initial rise in COVID-19 cases began to seriously impact the housing market.

    The underlying reason for the current surge in new listings is not entirely clear, just yet. It could be due to a number of reasons, including the sharp increase in COVID-19 infections since the low of May 25. It could also signal some lack of enthusiasm by landlords given their exposure to inadequate rent collections. Certainly purchases by investors have been unusually low in the last 3 months and restrictions imposed on evictions and high unemployment are not good market conditions for landlords. The percentage of homes purchased by investors in June 2020 was the lowest since 2004. Some landlords may decide to sell while the market is frothy. We will need to do further digging to determine the owners of these new listings. This requires a cross-reference between the ARMLS database and the assessor's database, since the owner data is frequently omitted from the MLS listings.

    July 9 - Once again, here is our table of Cromford® Market Index values for the single-family markets in the 17 largest cities

    Mesa AZ Real Estate Listings

    We described last week's table as approaching absurdity. Well this week we got closer still. The average increase in the CMI over the past month is 56%, up from 54% last week.

    All the cities are running with the bulls, now that the luxury market is performing again. Paradise Valley is the only one of the 17 with a CMI less than 200 and even here we saw a movement in favor of sellers of 65%.

    The inner west valley leads the table with Glendale and Avondale. How do you achieve a CMI of 572.7? You allow your single-family active listings without a contract to fall to less than 30, when the long term average is 357 and 126 homes are closing a month. Glendale has just 136 single-family homes available, compared the long term average of 928 and a monthly sales rate of 422.

    The CMI is at an all-time record high in Avondale and Glendale, meaning they are in a more extreme situation than during the real estate bubble of 2005. The remaining 15 cities have not reached that point yet.

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

      Opendoor OfferPad Zillow Knock All iBuyers Combined
    Homes Purchased in June 2020 28 47 18 1 94
    Homes Purchased in June 2019 304 83 112 8 507
    Annual Change in Purchases -91% -43% -84% -88% -81%
    Homes Sold in June 2020 136 76 33 7 251
    Homes Sold in June 2019 274 124 112 3 513
    Annual Change in Sales -51% -39% -71% +133% -51%
    Median Purchase Price in June 2020 $264,500 $250,000 $280,750 $385,000 $255,500
    Median Purchase Price in June 2019 $244,800 $219,174 $305,000 $285,614 $248,800
    Median Sale Price in June 2020 $270,000 $305,000 $290,000 $333,881 $278,950
    Median Sale Price in June 2019 $250,000 $244,900 $309.900 $380,554 $257,600
    Homes in Inventory at the End of June 2020 245 88 22 9 364
    Homes in Inventory at the End of June 2019 990 240 380 10 1,620
    Annual Change in Inventory -75% -63% -94% -10% -78%

    The COVID-19 pandemic has had a much larger impact on iBuyer operations than the rest of the market. While overall re-sales during June dropped 7% compared with 2019, and new home closings increased 30%, iBuyer purchases plunged 81% while sales declined 51%.

    Total iBuyer inventory has fallen 78% since this time last year, with Zillow down hardest at 94% and OfferPad down the least at 63% (excluding recent new entrant Knock). We note that in terms of purchase transactions, OfferPad was the market leader in May and June 2020. However it is off to a slow start in July and we expect Opendoor to regain that title during July.


    July 6 - Here is the Cromford® Market Index chart for all areas & types covering the last 6 months:

    chandler homes for sale

    To be honest, I find this rather scary. This is not the behavior of a normal well-behaved market and it feels to me a little bit like the upward climb of an even bigger roller coaster than the one we rode in March and April.

    I could be wrong. Nobody knows even vaguely where this is headed, but I do know for sure than markets that go to these extremes do not stay there forever. There will be a down phase and I wonder when it will start and whether it will be sweet and gentle or severe.

    We need to hang on tight and stay calm. If you go back to 2005, the change between the up of 1Q 2005 and the down of 2Q 2005 was extremely quick, even though few people observed it at the time. The whole market was euphoric in 1Q 2005 but there were a few wise people who exited between April and December, long before the hangover started. It is quite possible that the market will continue to move in the same direction (in favor of sellers) for a very long time yet. But no market does that forever. Rising prices will eventually suppress demand and bring new sellers into play. My advice is do not give in to euphoria and stay alert for signs of change.

    We will be following our own advice. It is probably time to bring out our trusty real estate market cycle chart and blow away the cobwebs.

    chandler real estate

    July 5 - Listings under contract far outnumber listings available for sale. This is easily demonstrated by the Contract Ratio which is defined as:

    • 100 x listings under contract / active listings without a contract

    We regard this as one of the key measures of a hot market. Values over 100 represent a hot market and those over 200 extremely hot. Here are the hottest ZIP codes as of July 1, 2020:

    1. El Mirage 85335 - 1600
    2. Chandler 85224 - 1525
    3. Glendale 85306 - 925
    4. Surprise 85378 - 900
    5. Phoenix 85043 - 875
    6. Glendale 85307 - 867
    7. Avondale 85392 - 867
    8. Phoenix 85035 - 783
    9. Phoenix 85031 - 750
    10. Phoenix 85027 - 714
    11. Phoenix 85019 - 675
    12. Mesa 85204 - 611
    13. Phoenix 85004 - 600
    14. Avondale 85323 - 541
    15. Mesa 85208 - 508
    16. Laveen 85339 - 505
    17. Gilbert 85296 - 492
    18. Mesa 85209 - 478
    19. Chandler 85225 - 476
    20. Youngtown 85363 - 475

    These are truly bizarre times.

    July 4 - We all know that supply is tight right now, but some ZIP codes have it worse than others. If we compare the number of active listings for single-family homes without a contract with this time last year, the following are the ZIP codes with the largest percentage decline in homes for sale:

    1. Chandler 85224 - down 91%
    2. Glendale 85306 - down 88%
    3. El Mirage 85335 - down 87%
    4. Avondale 85392 - down 86%
    5. Glendale 85307 - down 81%
    6. Phoenix 85027 - down 81%
    7. Mesa 85204 - down 79%
    8. Surprise 85378 - down 79%
    9. Maricopa 85138 - down 78%
    10. Phoenix 85003 - down 76%
    11. Phoenix 85022 - down 76%
    12. Glendale 85304 - down 75%
    13. Phoenix 85031 - down 75%
    14. Phoenix 85035 - down 75%
    15. Tolleson 85353 - down 74%
    16. Glendale 85308 - down 74%
    17. Phoenix 85083 - down 73%
    18. Laveen 85339 - down 73%
    19. Phoenix 85054 - down 73%
    20. Phoenix 85029 - down 73%

    These reductions in supply are far in excess of anything seen since the bubble years of 2004 and 2005. The list of ZIP codes which have more supply than last year is very short:

    1. Phoenix 85034
    2. Fort McDowell 85264
    3. Tempe 85281
    4. Rio Verde 85263
    5. Mesa 85210
    6. Gila Bend 86337

    July 3 - Once again, here is our table of Cromford® Market Index values for the single-family markets in the 17 largest cities

    chandler real estate

    The market is becoming so lop-sided it is approaching absurdity. Demand has recovered and is now close to normal in most areas. For example the Demand Index in Phoenix is 99.0, Scottsdale is 96.5 and Mesa 103.2. The bizarre situation is all to do with supply. New listings remain stubbornly low, especially in the price ranges that are most popular with buyers. The Supply Index is down to 18.3 in Avondale, 25.0 in Glendale, 30.2 in Chandler, 30.9 in Gilbert and Maricopa, and 33.1 in Mesa. Only during a brief period in 2005 at the height of the housing bubble have we seen the supply indexes this low.

    There is currently little sign of a change in direction, but the lack of supply is driving many buyers towards new homes instead of re-sales. New homes are selling faster than last year and faster than they can be built, so supply will shortly become a major problem for the developers too.

    Those buyers who cancelled their contracts in March are likely to be regretting that decision, as we predicted at that time [in our March 18 observation].

    July 2 - The Affidavits of Value are now all in for June in Maricopa County, so we can report the following statistics for single-family and townhouse / condo closings:

    • There were 10,246 closed sales, which is down 4.7% from June 2019, but up a massive 31% from May 2020
    • New home sales totaled 1,623, which is up over 30% from last year, while re-sales were down 9.3%
    • The re-sale median sales price was $312,000, up 11.9% from June 2019
    • The new home median sales price was $372,306, up 4.6% from June 2019
    • The overall median sales price rose by 12.2% over the last 12 months to reach $321,995 - a new record high for Maricopa County, helped by the large swing in favor of new homes over re-sales

    July 1 - Although the Greater Phoenix housing market has mostly recovered from the shutdown actions taken in April, it is becoming clear that the worst of the COVID-19 pandemic is yet to come. How the market will react is very difficult to predict. We try to stick to the facts as we know them and avoid too much speculation.

    What we know from the data collated by the various counties and states is that Arizona, and Maricopa County in particular, is in a stage where the novel corona virus SARS-CoV-2 is spreading rapidly throughout the population and that efforts to contain it have been largely ineffective. As the end of June, 1 person in every 92 in Arizona has been confirmed as a COVID-19 case. Official estimates from CDC suggest that asymptomatic and undetected infections are also widespread and as many as 1 in 9 people in Arizona may be carrying the virus or have developed antibodies to it. This means that in a group of 10 people the odds are strong that one of them has already been infected. Whether they are still contagious is another question. Whether they have immunity to a second infection and how long that immunity might last is another unknown. At this stage there is still much unknown about this disease.

    What we can do with some certainty is compare Arizona to other states. Here is a table showing the top 20 states by number of confirmed cases of COVID-19 relative to overall population:

    1. New York 1 in 47
    2. New Jersey 1 in 50
    3. Rhode Island 1 in 63
    4. Massachusetts 1 in 64
    5. Washington DC 1 in 68
    6. Connecticut 1 in 77
    7. Louisiana 1 in 80
    8. Delaware 1 in 85
    9. Illinois 1 in 88
    10. Maryland 1 in 89
    11. Arizona 1 in 92
    12. Nebraska 1 in 101
    13. Iowa 1 in 109
    14. Mississippi 1 in 109
    15. Alabama 1 in 129
    16. Georgia 1 in 131
    17. South Dakota 1 in 131
    18. Virginia 1 in 136
    19. Pennsylvania 1 in 140
    20. Florida 1 in 141

    The average for the USA as a whole is 1 in every 121 people. Arizona has moved up this table quickly because the number of confirmed cases has doubled since June 16, just 2 weeks ago. Despite this, we are a long way from herd immunity, where the virus dies away because it runs out of new people to infect. This would probably require 2 out of every 3 people to have achieved immunity protection. Among the above states, the top 5 have seen a slow down in new cases. Maryland and Nebraska are currently seeing little to no growth. However the number of states setting new records in weekly new cases is growing and 86% of the US population lives in states with accelerating new cases. Those setting record new highs are:

    1. Florida 48,931 - up 47%
    2. Texas 42,254 - up 34%
    3. California 40,293 - up 21%
    4. Arizona 21, 036 - up 36%
    5. Arkansas 20,777 - up 25%
    6. Georgia 13,613 - up 20%
    7. North Carolina 10,826 - up 20%
    8. South Carolina 1,786 - up 37%
    9. Tennessee 7,206 - up 20%
    10. Alabama 6,948 - up 22%
    11. Nevada 4,459 - up 32%
    12. Utah 3,917 - up 21%
    13. Washington 3,663 - up 12%
    14. Mississippi 3,149 - up 19%
    15. Missouri 3,109 - up 16%
    16. Oklahoma 2,729 - up 25%
    17. Oregon 1,382 - up 19%
    18. Idaho 1,313 - up 33%
    19. Puerto Rico 780 - up 12%
    20. Wyoming 233 - up 19%
    21. Montana 224 - up 30%
    22. Alaska 162 - up 21%

    Most of the states not included in this list are also seeing accelerating new cases, but have not yet surpassed their earlier peak. The only exception we have not already mentioned is New Hampshire which is currently seeing little to no growth like Maryland and Nebraska.

    June 30 - The latest S&P Case-Shiller Home Price Index numbers were published today. They cover home sales during the period February to April 2020.

    For most of the 20 metropolitan areas prices accelerated compared with previous month.

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

    1. Minneapolis +1.90%
    2. Cleveland +1.60%
    3. Seattle +1.44%
    4. Phoenix +1.39%
    5. Boston +1.32%
    6. San Diego +1.19%
    7. Charlotte +1/16%
    8. Chicago +1.11%
    9. Denver +1.03%
    10. Tampa +0.95%
    11. Washington +0.92%
    12. Las Vegas +0.85%
    13. Atlanta +0.82%
    14. Los Angeles +0.73%
    15. Dallas +0.67%
    16. San Francisco +0.66%
    17. Miami +0.62%
    18. Portland +0.59%
    19. New York +0.40%
    20. Detroit - data not available

    The national average was +1.10% so Phoenix increased at higher than the national average, and jumped from 13th to 4th place compared with last month..

    The year over year comparisons are below:

    1. Phoenix 8.8%
    2. Seattle 7.3%
    3. Minneapolis 6.4%
    4. Cleveland 6.0%
    5. San Diego 5.8%
    6. Tampa 5.8%
    7. Charlotte 5.6%
    8. Las Vegas 4.7%
    9. Atlanta 4.5%
    10. Portland 4.3%
    11. Boston 4.3%
    12. Los Angeles 4.1%
    13. Denver 4.0%
    14. Miami 3.9%
    15. Washington 3.8%
    16. San Francisco 2.8%
    17. Dallas 2.8%
    18. New York 2.5%
    19. Chicago 1.4%
    20. Detroit - data not available

    The national average was 4.73%, up from 4.35% last month. Phoenix remained in the top spot yet again and now has a gap of 1.5% over the number 2 city - Seattle. Minneapolis is showing strength too.

    June 29 - The Cromford® Market Index continues to hurtle skywards, accelerating over the last 7 days:

    Scottsdale real estate

    It has risen 10% in the last week alone, from 205.3 to 226.4 and looks very likely to surpass the March 19 peak of 241.1. However, nothing is guaranteed in such a volatile market.

    Active listings without a contract are still falling, but the pace of decline has eased a little from 8% to 4% a week over the last 2 weeks.

    Listings under contract are still rising, but the rate of increase is falling, from 7% to 2% a week over the last 2 weeks. The number of closed sales is rising, but this is a trailing indicator compared with the under contract counts.

    The above trends should start to slow the rise of the CMI somewhat over the next month, but how much we will have to wait and see.

    Sales pricing is experiencing strong upward pressure, especially now that the luxury market is building volume again after a sudden collapse in April.

    June 28 - According to the Census Bureau there were 1,757 single-family permits issued in Maricopa and Pinal counties during May. There were 2,179 in May 2019, so this represents a drop of 19%. Year to date at the end of May we have seen 10,916 single-family permits, up from 9,940 last year, so the recent slow down has not eliminated this year's advantage gained during the first quarter.

    There were also permits for 583 multi-family units, which compares with 1,228 in May 2019, giving us a larger 53% decline. However multi-family permits were very strong during the first quarter of 2020, so the year to date number still looks healthy at 5,609. This is up from 4,118 at the end of May 2019.

    June 27 - Real estate agents make most of their revenue from commissions, based off the closing sales price. This makes dollar volume one of the most important indicators of how agents are doing. It is also crucial for title companies and mortgage lenders.

    However, it is a trailing indicator, telling us how the market has done, not where it is going. Here is the weekly chart for the last 2 years.

    chandler real estate

    We can see a big hole in revenues between April and June 2020, but that hole is now closed. We can expect dollar volume to exceed 2019 levels for a while as listings under contract are 14.6% higher than last year and average contract prices are up 4.5% and getting stronger.

    So although revenues took a hit during the second quarter, the third quarter could see them recover to go as much as 20% higher than last year. This is independent of how bad the situation gets with COVID-19 since these short-term home closings are already contracted and we are unlikely to see cancellations any higher than in 2019.

    The longer term effects of the pandemic are not likely to be seen until forbearance programs are over and evictions and foreclosures are restarted in volume. Any impact from these are likely to be felt in 2021 and beyond. In the short term, there is plenty of additional business happening between July and September and it might be advisable to add to our rainy day funds during these months to give us more financial security during the next downturn.

    June 26 - We have added another popular chart that compares the Cromford® Demand Index with the Cromford® Supply Index. You can find the latest version here.

    Single-family Homes for Sale in Gilbert, AZ

    When the green line is higher than the brown line, demand exceeds supply. The size of the gap gives you a good impression of the imbalance.

    The opposite situation is a buyer's market where supply exceeds demand. This was seen between 2006 and 2009 and briefly in 2010 and 2014.

    The light gray line at 100 represents the normal level of both supply and demand. You can see that we have suffered from a lack of supply ever since 2011.

    June 25 - Once again, here is our table of Cromford® Market Index values for the single-family markets in the 17 largest cities

    Scottsdale real estate

    We are running out of adjectives to describe the current state of the market and the speed with which it is changing. Calling it a feeding frenzy does not do it justice.

    Buyers outnumber sellers by a colossal margin across the majority of the market. The main exception is the luxury market, though that is now moving quickly in the seller's direction. The 55+ markets are also less skewed in favor of sellers, though Sun Lakes is an exception to that rule.

    The lowest percentage increase in CMI was 25% in Cave Creek, the highest low we have ever seen. The average was a rise of 48.7%, higher than the already astounding 36.6% we recorded last week. Avondale's CMI increased 86% in one month, another all time record.

    In many cities the supply of active listings without a contract is dwindling to levels not seen since the bubble year of 2005. For example:

    • Avondale - 35
    • El Mirage - 8
    • Glendale - 147
    • Maricopa - 71
    • Sun Lakes - 32
    • Tolleson - 20

    How long before one of these cities actually runs out of homes for sale on the MLS? Some of the tiny towns have already reached that point (e.g. Aguila, Cordes Junction, Gila Bend, Mobile, Palo Verde, Spring Valley, Toltec and Valley Farms). Gila Bend, Stanfield, Cordes Lakes and Guadalupe have just one active listing each.

    June 24 - The COVID-19 situation continues to deteriorate in the USA and the world as a whole, though many countries that were hit hard in March are now seeing significant reductions in active cases.

    Globally, new cases are increasing at a rate of 13% per week, reaching 1,125,386 per week as of June 24, a record high. A month ago the rate was 14% per week and the total was 695,189 per week. The global daily increase in the number of weekly new cases is 2.3%, the highest percentage since April 10. When this number is positive, the situation is deteriorating. It went negative for a short period between April 15 and April 23 and also briefly between May 2 and May 4. Over the last week the global daily rate has deteriorated from 1.1% to 2.3%, indicating renewed acceleration.

    Most of the deterioration globally is due to worsening rates of new infection in the Americas and the Indian sub-continent. These areas currently account for 74% of the daily new infections in the world. The USA alone accounts for 22%, an alarming number given that only 4.3% of the world population lives in the USA. Brazil is an even more obvious hot spot with 24% of the daily new cases and only 2.7% of the world's population.

    Within the USA, 81% of the population lives in states where COVID-19 infection rates are accelerating. This was only 46% as recently as June 13, so the situation has deteriorated quickly over the last 11 days.

    The fastest growth in weekly new cases (over 5% increase per day) are currently in the following:

    1. Idaho 15.3% per day
    2. Montana 9.5% per day
    3. Oklahoma 8.7% per day
    4. Texas 8.3% per day
    5. Florida 7.9% per day
    6. Washington 7.5% per day
    7. Arizona 7.1% per day
    8. Kansas 6.6% per day
    9. Georgia 6.5% per day
    10. Michigan 6.3% per day
    11. Ohio 6.3% per day
    12. Missouri 6.1% per day
    13. South Carolina 5.8% per day
    14. Nevada 5.8% per day
    15. Hawaii 5.5% per day
    16. West Virginia 5.2% per day
    17. California 5.1% per day

    There are still a few states that are seeing significant daily reductions. Those falling more than 3% per day are:

    1. Connecticut -10.3% per day
    2. Maryland -4.9% per day
    3. Massachusetts -4.0% per day
    4. New Hampshire -3.8% per day
    5. Indiana -3.1% per day

    This list has been getting shorter over the last 2 weeks. New York has gone from -6.1% last week to +3.7% today, a troubling development.

    The USA as a whole is seeing weekly new cases increase at 4.4% per day, the worst reading since April 9.

    We are probably no more than a third of the way through the pandemic and all forecasts of the future of the housing market should bear that in mind. We are now in inning 3.

    June 23 - The chart below plots average price per sq. ft. for the last 2 months across all areas and types.

    chandler real estate

    We can see how the average drifted lower until late May but has reversed course and is now headed higher again.

    The green line - pending list price per sq. ft. is the leading indicator. The other 2 lines tend to follow a similar trend to the green line, but about 30 days later. The chart above is therefore showing a strong signal about higher sales pricing during July.

    Why are prices rising:

    • the high end luxury market is recovering so that properties with very high average $/SF are starting to appear after a 2 month gap in April and May
    • the few sellers who panicked at the start of the pandemic and sold without regard to getting the highest prices are now cleared from the market
    • supply continues to fall, reaching unusually low levels, although new listings are showing signs of recovery over the last week.
    • demand is rising with new buyers arriving in volume

    June 22 - Our good friend Butch Leiber has created a YouTube channel and a series of videos that help explain some of the basics of the Cromford® Report. You can find this channel here:

    https://www.youtube.com/channel/UCDYrjBbw4GnEeYRlHdbMMtQ

    At the moment there are 3 useful videos here:

    1. What Is the Cromford® Report?
    2. Sharing Charts and Watermarking
    3. Sharing Charts with the Snipping Tool

    These will be particularly useful for new subscribers who are just starting with Cromford® Report for the first time. However if you use the Cromford® Report but don't use watermarking, then I can recommend video on that subject.

    If we get a good response to this channel we hope to see more videos added over time.

    June 21 - Listings under contract continue to accumulate as buyers sign up for the diminishing supply of homes for sale:

    Mesa AZ Real Estate Listings

    Note how 2020 followed a very similar track to 2018 until mid-March. Contract activity fell sharply but stabilized during April and then recovered all the lost ground and more over May and June.

    It is very unusual for us to see almost 14,000 listings under contract at this point in the year. It did happened between 2009 and 2013 but that was caused by the large number of short sales that stayed under contract for many months awaiting lender approval.

    June 20 - The COVID-19 pandemic is worsening in Arizona and in the USA as a whole. A week ago we wrote that 46% of the population of the USA lived in states where the number of new cases was accelerating. That percentage reached 57% by June 17, 60% on June 18 and was 63% on June 19. This is not an encouraging trend. The number of new cases is still falling in the states that were hit hardest back in March and April (such as New York, New Jersey, Massachusetts, Pennsylvania, Illinois, Michigan). However most of the West and South of the country is experiencing exponential growth in new cases. The worst affected states are:

    1. Texas - 4,497 new cases per day, weekly growth in total cases 25%
    2. Florida - 3,822 new cases per day, weekly growth in total cases 26%
    3. California - 3,608 new cases per day, weekly growth in total cases 16%
    4. Arizona - 3,246 new cases per day, weekly growth rate in total cases 42%

    Since Arizona's population (7 million) is so much smaller than the other 3 states in this list (90 million between them), the daily new case count is a serious concern. This is not just a result of higher testing volume; this surge in new infections is reflected in an increase in serious cases requiring hospitalization and the occupation of ICU beds which are starting to approach maximum capacity. The weekly total case growth of 42% is the highest in the country with South Carolina at 32% standing at number two. Arizona's most encouraging day in retrospect was May 26 when the growth rate was only 15%. Unfortunately, the growth rate has been worsening steadily since May 27.

    The other states that are experiencing accelerating new cases are: Alabama, Arkansas, Colorado, Delaware, Georgia, Hawaii, Idaho, Kansas, Kentucky, Louisiana, Mississippi, Missouri, Montana, Nebraska, Nevada, North Carolina, Ohio, Oklahoma, Oregon, South Carolina, Tennessee, Utah, Washington, West Virginia and Wyoming.

    The numbers say this is not really a second wave, it is the first wave continuing to spread geographically.

    Our conclusion is that getting back to normal housing activity is probably still many quarters away.

    June 19 - Once again, here is our table of Cromford® Market Index values for the single-family markets in the 17 largest cities

    chandler real estate

    Like last week, all 17 cities have moved in favor of sellers over the prior month, but this time they are moving at the fastest rate we have ever witnessed.

    A surge in demand coupled with an unusually weak supply of new listings is creating an almost surreal market. In many segments, buyers outnumber sellers many times over. In this environment things can get very frenetic and stressful, decision time is often very short and mistakes can result. Buying a home is one of the biggest decisions a buyer will make so I hope they will take time out to think carefully and not get caught up in the frenzy.

    As recently as May 21, all 17 cities were moving in favor of buyers, so the change in direction has been sudden and violent. This is not normal.

    The higher end of the market was lagging behind significantly, but is now joining in too. Paradise Valley's CMI is up 26% and Scottsdale's up 25% over the last month.

    June 18 - I apologize for making the same point as on June 16, but the situation with supply is extraordinary and they say a picture is worth a thousand words.

    Mesa AZ Real Estate Listings

    Here we plotted single-family detached listings under $500,000. UCB and CCBS listings are excluded.

    In the last 2 months the count has dropped from 6,653 to 3,496 with pace accelerating during that last 4 weeks. That is a decline of over 47% and so far no end is in sight for this trend.

    June 16 - At the moment the supply of homes for sale is collapsing, making things extraordinarily tough for buyers who must compete with each other for the few homes offered for sale. At the start of the pandemic, we saw a moderate bump in supply as a few investors sold in a panic, particularly those who owned vacation rentals who suddenly lost almost all their bookings. But now we are seeing a chronic shortage of entry-level and mid-range homes turn into a feeding frenzy for the few properties that remain on sale. Things are much more normal at the upper reaches of the market where few investors operate and iBuyers are not interested, but even here supply is below normal levels.

    The situation has led to new record lows being set for the number of single-family homes for sale without an existing contract. For example the city of Maricopa has only 93 active listings compared with an average over the last 12 years of 428. In contrast it has 289 listings under contract (Pending, Active-UCB, Active-CCBS). The contract ratio is 311, consistent with an extremely unbalanced market where demand far exceeds supply. Normal contract ratio readings rarely exceed 150.

    Other locations where extreme supply shortages prevail are shown below:

    Location Active (excluding UCB and CCBS) Historical Average Contract Ratio
    Phoenix 1,285 4,573 183
    Mesa 421 1,625 230
    Avondale 43 359 426
    Queen Creek 354 980 209
    Surprise 305 929 184
    Gilbert 255 1,137 286
    Glendale 176 932 311
    Chandler 237 1,001 235
    El Mirage 12 67 775
    Laveen 19 147 553
    Youngtown 7 13 343
    Florence 59 143 298
    Tolleson 30 95 270
    Waddell 30 66 237
    Coolidge 30 57 230
    Arizona City 14 64 207
    Casa Grande 126 258 199
    Buckeye 240 428 190

    The above list of places accounts for a large proportion of the Greater Phoenix area and all have unusually high contract ratios. The only areas with moderate contract ratios are those that are far outside the center (e.g. Morristown, Wickenburg, Tonopah, Eloy, Congress and Superior), or have a predominance of more expensive homes (Paradise Valley, Carefree, Scottsdale, Fountain Hills, Rio Verde and Cave Creek). Paradise Valley has a contract ratio of 31, Scottsdale 67 and Wickenburg has 33.

    June 14 - Dramatic things are going on in the lending world:

    • April 2020 saw the highest monthly pre-payment rate in 16 year - up 23% from March and up 136% over April 2019 - largely due to the very low interest rates
    • April 2020 saw the largest ever single-month jump in delinquency - up over 90% - largely due to borrowers requesting forbearance
    • 1.6 million homes loans became past due during April 2020
    • Foreclosure moratoriums brought foreclosure starts to a new low of 7,400 - down 80% from April 2019
    • During April 2020 Arizona home loans that are non-current (delinquent or already in foreclosure) jumped 91% to 5.2% of all loans (compared with April 2019)

    June 13 - New cases of COVID-19 are accelerating in the following states:

    State New Cases This Week New Cases Last Week Change Population Infected
    Alabama 4,558 2,394 +90% 1 in 199
    Alaska 118 102 +16% 1 in 1,119
    Arkansas 2,994 2,088 +43% 1 in 250
    Arizona 9,007 6,196 +45% 1 in 211
    California 21,320 19,064 +12% 1 in 263
    Florida 10,838 7,334 +48% 1 in 292
    Georgia 5,442 5,028 +8% 1 in 187
    Hawaii 50 22 +127% 1 in 1,958
    Louisiana 3,797 2,905 +31% 1 in 100
    Mississippi 2,314 1,805 +28% 1 in 154
    North Carolina 8,127 6,924 +17% 1 in 245
    Nevada 1,486 965 +54% 1 in 281
    Oklahoma 1,014 641 +58% 1 in 490
    Oregon 873 477 +83% 1 in 762
    South Carolina 4,039 2,522 +60% 1 in 287
    South Dakota 466 407 +14% 1 in 152
    Texas 13,074 11,413 +15% 1 in 330
    Vermont 79 69 +14% 1 in 555
    Wyoming 111 41 +171% 1 in 551

    This is a relatively short list (19 states) but contains over 46% of the population of the USA largely because California, Texas and Florida are among them. This should concern us because it shows that the pandemic is far from over and "getting back to normal" is not likely in the short term.

    June 11 - Once again, here is our table of Cromford® Market Index values for the single-family markets in the 17 largest cities

    real estate chandler

    The speed and scale of the turnaround in the market is unprecedented. All 17 cities are now moving in favor of sellers over the prior month, when as recently as May 21, all 17 cities were moving in favor of buyers. In addition, the majority of cities are moving violently in favor of sellers with 12 of them increasing their CMI by more than 20%. Gilbert is almost in that group while Buckeye lags behind because it has far more supply than most parts of the valley.

    The higher end of the market lags behind significantly, but is now starting to catch up. Paradise Valley flirted with a buyer's market for a week or two, but is now above 100 and in a balanced market and accelerating higher. Cave Creek, Fountain Hills and especially Scottsdale have started stronger moves in favor of sellers after a weak couple of months.

    The average monthly increase in the CMI is 22.4%, up from 8.1% last week.

    Anyone who thinks home values are likely to fall in this environment has got hold of the wrong end of the stick.

    However we have already seen how suddenly things can change in either direction, and volatility in sentiment means we need to watch the crucial indicators even more closely than normal.

    June 10 - Based on affidavits of value filed during May we have collected the following statistics on iBuyer activity:

      Opendoor OfferPad Zillow Knock All iBuyers Combined
    Homes Purchased in May 2020 23 27 1 2 53
    Homes Purchased in May 2019 326 99 101 8 534
    Annual Change in Purchases -93% -73% -99% -75% -90%
    Homes Sold in May 2020 147 84 28 6 265
    Homes Sold in May 2019 322 124 119 0 565
    Annual Change in Sales -54% -32% -76%   -53%
    Median Purchase Price in May 2020 $283,800 $263,500 $336,600 $343,400 $278,700
    Median Purchase Price in May 2019 $242,650 $233,356 $290,000 $326,000 $246,014
    Median Sale Price in May 2020 $265,000 $270,050 $269,950 $399,668 $269,900
    Median Sale Price in May 2019 $249,000 $241,500 $300.000   $255,000
    Homes in Inventory at the End of May 2020 353 117 37 15 522
    Homes in Inventory at the End of May 2019 961 281 380 10 1,649
    Annual Change in Inventory -63% -58% -90% +50% -68%

    The COVID-19 pandemic has had a much larger impact on the iBuyer operations than the rest of the market. While overall re-sales during May dropped 40% compared with 2019, and new home closings increased 1%, iBuyer purchases fell 90% while sales declined 53%.

    Total iBuyer inventory has fallen 68% since this time last year, with Zillow down 90% and OfferPad down the least at 58%. We note that in terms of purchase transactions, OfferPad was the market leader in May 2020, although we expect Opendoor to regain that title during June.

    In the current frenzied market, it is not uncommon for a home in the iBuyers' target price range to receive more than 20 offers within a few days of listing. Thus the iBuyers are finding it much harder to make new purchases than sell what they already have. This lack of inventory means their market share is down substantially from last year and their turnover is also lower than a year ago. This seller's market should make it easier to achieve a good gross margin, but as an example of how things can sometimes go wrong, I refer you to ARMLS listing 5923382. Purchased by Zillow in April 2019 for $490,000 and listed for $502,900, it took 13 price reductions before it eventually sold in February 2090 for $421,000. Ouch.

    The iBuyers are off to a fairly slow start to June but not as slow as May, and we would expect to see some recovery in volumes during this month. We can already see that they are having to target higher price ranges in order to grow their business, as homes below $250,000 become increasingly hard to find.

    June 9 - We have added the long term chart that shows how the Cromford Market Index is a reliable indicator of future appreciation.

    chandler homes for sale

    You will be able to retrieve the latest version of this chart from the menu at the right: Cromford Market Index - Versus Appreciation

    June 8 - After a deep slump during March and April, listings under contract are surging back and have now reach a record high for the year:

    chandler real estate

    The speed of the recovery in demand is quite astonishing and is not currently reflected in sales counts or sales prices, but the sheer volume of homes going under contract will inevitably push the sales rates and sales prices higher over the next 4 to 6 weeks.

    June 6 - Today we are sharing a couple of charts created by Tina Tamboer to compare the monthly payment for a typical 1,500 to 2,00 sq. ft. home over time.

    gilbert homes for sale

    We see that the ideal time to buy a home was between March 2009 and late 2012. Because of the current low interest rates the typical house is no more expensive to own than it was 15 years ago in 2005. It is a lot cheaper than in mid 2006.

    Focusing on the more recent years:

    gilbert real estate

    Although home prices have increased, monthly payments have gone down over the last 18 months.

    June 5 - We have never seen supply so low in the City of Maricopa. There are just 113 active listings without a contract. This time last year there were 364. The count has dropped 42% in the past 4 weeks. Amazing.

    chandler real estate market

    June 4 - Once again, here is our table of Cromford® Market Index values for the single-family markets in the 17 largest cities

    chandler homes for sale

    The turnaround in the direction of the market is enough to make your head spin. We now have 13 out of 17 cities improving for sellers, most of them at a very fast rate.

    We note that the 4 cities that have not improved for sellers over the past month are all higher priced parts of the valley. All four of them have started improving for sellers over the past week or two. Paradise Valley remains in a balanced market but all the others are seller's markets.

    Among the smaller cities we do have one example of a mild buyer's market - Sun City. The age restricted market has been hardest hit as a large percentage of their population is vulnerable to COVID-19 and many are probably sheltering in place.

    The general market below $600,000 is now booming and supply is dropping very fast.

    June 3 - We have the affidavit counts for Maricopa County for the month of May. Pinal will take a few more days to complete.

    The total number of closed transactions dropped 35% from 12,041 in May 2019 to 7,823 in May 2020. This includes single family, condos and townhouses. All the pain was felt in the re-sale sector with closings down 40%. The new home sector actually rose 1% to 1,552. Typically, contracts for new homes take much longer to close than for re-sales. If there has been a lull in signed contracts or a rise in cancellations for new homes, that will usually not show up in closed transaction counts until several months later.

    The overall median sales price was $315,000, the same as last month and up 9.8% from a year ago. The new home median was up only 0.9% to $368,310, while the re-sale median was up 8.7% to $299,000.

    With new homes rising to a market share of almost 20%, the highest since 2008. This change in the mix supports a higher median sale price. New homes sell for higher prices than re-sales, but they are also quite a bit larger than re-sales too. The overall average price per sq. ft. is quite similar at the moment for both re-sale and new homes. This is because most new homes are being constructed on the outer fringes of the valley where prices are lower. If you compare new homes with resales in the same small geographic area you usually find a clear price premium for new homes. This increases with price until the premium reaches 25% to 35% at the high end of the market.

    June 2 - The housing market in Greater Phoenix is swinging strongly in favor of sellers again as illustrated in the six month Cromford® Market Index chart below:

    chandler real estate

    Not only have listings being going under contract more quickly, the supply of new listings is much weaker than normal and many segments of the market are looking extremely short of homes for sale. This puts buyers into competition with each other leading to bidding wars.

    Here are a few examples of ZIP codes with very low numbers of active single-family listings, excluding UCB and CCBS, compared to last month:

    1. Aguila 85320 - nothing for sale (normally we see an average of 10 listings)
    2. Arlington 85322 - 1 listing (normally we see an average of 4 to 5 listings)
    3. Peoria 85381 - down 57% since last month to 18 (50 is typical)
    4. El Mirage 85335 - down 56% since last month to 25
    5. Youngtown 85363 - down 56% to 4
    6. Phoenix 85035 - down 50%
    7. Mesa 85215 - down 49%
    8. Phoenix 85045 - down 49%
    9. Phoenix 85027 - down 48%
    10. Mesa 85202 - down 48%
    11. Avondale 85392 - down 47%
    12. Mesa 85204 - down 46%
    13. Glendale 85303 - down 45%
    14. San Tan Valley 85143 - down 44%
    15. Phoenix 85003 - down 43%
    16. Peoria 85345 - down 42%
    17. Gilbert 85233 -down 42%
    18. Mesa 85203 - down 41%
    19. Phoenix 85033 - down 38%
    20. Tempe 85282 - down 38%

    June 1 - In the Cromford® Public section of this site we have a Tableau chart that analyses the intended use stated on the affidavit of value filed alongside the deed. For April 2020, this shows the most significant changes we have seen since we created the chart

    Buyers intending to use their purchase as a primary residence rose from 72% in Q1 to 82% of purchases in April. Every other type of intended use fall sharply:

    • Investor purchases dropped from 11% to 9%
    • Second home purchases dropped from 13% to 8%
    • iBuyer purchases dropped from 3% to less than 1%

    The last time we saw such a low percentage of purchases going to iBuyers was in Q1 2016. Their peak was Q1 2019 when they hit 4.6% of transactions. iBuyers were making few offers (none in some cases) during April, so the closed purchases transactions by iBuyers will be very low when we update this chart to include May as well. We do not have all the affidavits counted yet for May, but the combined count is currently 42 acquisitions, which is down 92% compared with the 549 purchased in May 2019. So we conclude that the sub- market most affected by COVID-19 is the iBuyer segment.

    New home closings have not been significantly impacted by the pandemic. In fact the April 2020 closings totalled 1,821, up 4% from April 2019. Investor flips were down 37% while distressed sales were down 64%. Normal MLS closings were down 28%. The overall number of closed transactions in April 2020 was 9,236 which is down 25% from April 2019. Dollar volume was down only 18%, thanks to the out-sized contribution from newly constructed homes. The age-restricted segment suffered more than average with dollar volume dropping 30% to the lowest level since April 2015.

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

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

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

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

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

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

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

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

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

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

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

    real estate in chandler

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

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

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

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

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

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

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

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

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

    chandler real estate

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

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

    Homes for Sale Near Me in Chandler

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

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

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

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

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

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

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

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

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

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

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

    The year over year comparisons are below:

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

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

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

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

    Ahwatukee Arizona Real Estate

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

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

    Real estate in Ahwatukee AZ

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

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

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

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

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

    NEW LISTINGS FOR HOMES IN AHWATUKEE FOOTHILLS PHOENIX

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

    Scottsdale real estate

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

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

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

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

    MESA AZ REAL ESTATE LISTINGS

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

     chandler real estate agents

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

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

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

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

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

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

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

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

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

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

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

    chandler real estate

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

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

    Homes for Sale Near Me in Chandler

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

    gilbert homes for sale

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

    gilbert real estate

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

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

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

    realtor in gilbert

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

    realtor in chandler 

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

    chandler realtors

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

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

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

    homes for sale in chandler

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

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

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

    real estate in chandler

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

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

    chandler realtors

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

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

    chandler homes for sale

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

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

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

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

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

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

    chandler real estate

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

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

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

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

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

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

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

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

    real estate chandler

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

    homes for sale in chandler

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

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

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

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

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

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

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

    Chandler realtor

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

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

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

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

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

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

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

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

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

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

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

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

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

    chandler real estate

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

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

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

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

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

    Chandler homes for sale

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

    Chandler homes for sale

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

    The year over year comparisons are below:

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

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

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

    Chandler real estate agent

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

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

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

    You can find the Market Conditions Dashboard here

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

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

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

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

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

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

     

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

    chandler real estate agentts

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

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

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

    chandler real estate

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

    Chandler real estate

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

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

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

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

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

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

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

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

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

    Scottsdale real estate

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

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

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

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

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

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

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

    Homes for Sale Near Me in Chandler

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

    • Maine
    • Minnesota
    • New Hampshire
    • Ohio
    • Wyoming

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

    Growth in new cases per week is seen in the following

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

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

    The highest reported mortality rates are in:

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

    chandler real estate

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

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

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

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

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

    Gilbert Homes

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

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

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

    You can find it here.

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

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

    REAL ESTATE IN Chandler

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

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

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

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

    chandler real estate agents

    First, let’s talk about price:

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

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

    Now, let’s talk about sales volume:

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

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

    IN SUMMARY:

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

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

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

    chandler realtor

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

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

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

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

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

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

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

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

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

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

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

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

    Least infected are:

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

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

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

    A. Weekly Rate of Increase in Confirmed Cases

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

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

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

    The slowest rates of new infection are here:

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

    The USA as a whole is increasing by 91%.

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

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

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

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

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

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

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

    Real estate in chandler

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

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

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

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

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

      Opendoor OfferPa