current Phoenix Metropolitan

Real Estate MarkEt, Update 

©2023 Cromford Associat LLC

Sep 23 - There are probably many subscribers who wonder why I am so dismissive of the usefulness of measuring days on market. I have no issue with measuring it for a specific listing, though you should always bear in mind that it may have been manipulated by the listing agent. But for the market as a whole, it is an unusually poor indicator. To see this let us look at the current weekly chart

If you were basing your view on this chart, you would take away the impression that the market is improving for sellers and has been since February. This is not true. The market stopped improving back in June and is getting increasingly difficult as inventory starts to build and demand withers in the face of affordability pressures. Yet the average days on market for closed listings continues to fall.

Over the last 20 years, the average days on market can be seen to respond to market changes, but is is usually 2 to 4 months behind the times. This makes it worse than useless. It is positively misleading. We include the chart because so many people are familiar with the measure and want to know what it is. But we attach no credibility to any signals that it might send out. All the signals are out of date by the time they are received.

©2023 Cromford Associat LLC

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

This week we have only 2 cities that moved in a direction favorable to sellers over the last month, with Paradise Valley reversing and only Cave Creek and Tempe left. If we look at the change over the last week, even Tempe & Cave Creek have deteriorated for sellers.

We can safely conclude that the market is becoming more favorable to buyers at an accelerating rate. The average CMI change in these 17 cities over the last month was -7.8%, more negative than last week when we measured -5.9%.

Most negative again this week is Chandler, down 26%, though it remains comfortably in first place. Goodyear and Gilbert are also much weaker than this time last month.

13 out of 17 cities are sellers markets with Buckeye. Goodyear, Queen Creek and Maricopa in the balanced zone. Three of the cities are now below the 100 mark implying that buyers have a slight edge in negotiations in these three cities.

All these observations apply primarily to the re-sale market. The new home market remains more favorable to sellers - the homebuilders are comfortably in charge.

©2023 Cromford Associat LLC

Sep 18 - Over the last 2 months, the average price per sq. ft. for closed listings has been unusually stable. It started at $282.81 on July 18 and ended at $282.57 on September 18.

The average $/SF for the list price of those same closed listings is even more stable. It started at $288.33 and ended at $288.46. Note that this went up very slightly while the average sale price went down very slightly, confirming that listings are closing for a marginally lower percentage of list than 2 months ago.

Meanwhile the average $/SF for listings under contract has been rising over the last month after falling for the month before that. It now stands at $313.72 after starting at $308.40 and dipping to $304.02. This is a consequence of the luxury market waking up after its sleepy summer season.

The gap between the green line and the brown line in the chart is now too wide, suggesting that closed pricing will probably rise between now and October 18.

©2023 Cromford Associat LLC

Sep 17 - Active listing counts have started to rise significantly over the past 2 weeks, with the counts excluding UCB and CCBS listings moving up 6.1% from September 2 to September 16.

New listings are still scarce, but they are less scarce than a month ago. We have seen the 28-day count rise from the low of 6,486 on July 31 to around 7,100 this week. This is still well below normal (9,500 to 10,500) but demand is so weak that an extra 150 listings per week cannot be absorbed.

The increase in supply is causing the Cromford® Market Index to fall, signaling a weakening market balance for sellers.

This trend is looking like it will probably continue until mid-November, when the usual seasonal decline in active listings is likely to kick in. This is good for buyers since they will have more choice and a little extra negotiation power.

©2023 Cromford Associat LLC

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


This week we again have the only 3 cities that moved in a direction favorable to sellers over the last month, with Buckeye running out of steam.

The other 14 cities all moved in a direction favorable to buyers. The downward trend accelerated since last week. The average CMI change in these 17 cities over the last month was -5.9%, more negative than last week when we measured -3.9%.

There must be something in the waters of Cave Creek, as it is far out of step with the rest of the valley, falling hard earlier in the year but bouncing back now. Paradise Valley is losing momentum and is likely to have turned negative by next week. Tempe retains some momentum, but it is weakening. Overall the situation is deteriorating for sellers, though they still have the advantage in most locations. One exception is Queen Creek, which we would classify as balanced. With a CMI of 97.7, buyers have a slight edge in this large community that includes the poorly-defined and unincorporated San Tan Valley area.

Most negative again this week is Chandler, down 20%, though it remains comfortably in first place. Fountain Hills, Goodyear and Gilbert are also much weaker than this time last month.

14 out of 17 cities are sellers markets with Goodyear, Queen Creek and Maricopa in the balanced zone.                    

©2023 Cromford Associat LLC

Sep 10 - The current trends in the market are lessening the negotiation advantage for sellers and probably making them just a little nervous.

The above chart shows us that supply is starting to rise again. The increase was very modest for the first 6 weeks, but last week saw active listings rise over 3.2% to 12,476. This is still a small number (last year we has over 19,000 at this time), but the trend is of psychological importance. Buyers can flex their muscles a little, especially in the areas with the lowest CMI, such as Casa Grande and Queen Creek.

Of course any major change in mortgage interest rates could set a cat among the pigeons. This uncertainty works both ways, but the 7% level seems to have established itself as the borderline between good and bad sentiment. I am tempted to mention that I bought my first home in 1976 with a variable rate mortgage fixed for the first 5 years at 8.25%. Funnily enough this is actually lower than the 8.75% I am currently paying for all 3 of my residential loans. These examples are in the UK so of limited relevance, but they do remind us that home-buyers in the USA are very lucky to have 30-year and 15-year fixed rate mortgage rates available to them. Such things rarely exist abroad. Banks don't usually offer them without a huge amount of government intervention in the real estate lending market. This government intervention is abnormally large in the USA, compared with most foreign countries, and has been so ever since the end of the second world war.

©2023 Cromford Associat LLC

Sep 9 - Like me, you may have been puzzled by the sudden drop in the new home median between July and August. It came in below $500,000 for the first time since April last year.

I had to examine the individual transactions filed in Maricopa County and immediately noticed something unusual. Invitation Homes purchased an entire subdivision of Build-to-Rent 2-story homes in Litchfield Park. The subdivision is called Las Casas at Windrose and each single-family home offers around 1,940 sq. ft. of living space. They are all rentals but there is also a community center and swimming pool. They are renting for $2,500 to $3,000 per month.

The price paid represents less than $400,000 per home, and the transaction involved 133 units. This is 8.3% of all the new homes closed in Maricopa County during August and it dragged the median down from $522,490 to $499,990.

There is always an explanation if you are able to dig deep enough.

©2023 Cromford Associat LLC

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

This week we again have the same 4 cities that moved in a direction favorable to sellers, but the other 13 moved in a direction favorable to buyers. The downward trend accelerated since last week. The average CMI change in these 17 cities over the last month was -3.9%, more negative than last week when we measured -2.9%.

Buckeye is still moving higher but has lost momentum. Cave Creek is bouncing back hard, and is the fastest riser over the past month. Paradise Valley and Tempe are also looking relatively strong.

Most negative this week is Chandler, down 16%, though it remains comfortably ahead of the rest. Fountain Hills and Gilbert are also significantly weaker than this time last month.

15 out of 17 are sellers markets with Queen Creek and Maricopa in the balanced zone.

Among the secondary cities Casa Grande has slipped below 90 and is now classified as a buyer's market. It is the only one so far. Among the rest of the secondary cities, Anthem, Apache Junction, Laveen, Sun Lakes and Tolleson are looking strong with CMI's over 200. Only Laveen and Arizona City have seen an increase in their CMI over the past month, so the general trend is downward among these 12 cities too.

©2023 Cromford Associat LLC

Sep 5 - The Maricopa County affidavits of value filed during August have been analyzed and we found:

  • there were 6,556 closed transactions, down 12% from August 2022 but up 8% from July 2023
  • new home closings totaled 1,607, down 1.7% from August 2022 but up 19% from July 2023
  • re-sale closings came in at 4,949, down 14% from August 2022 but up 4.7% from July 2023
  • the median sales price was $459,076, down 1.6% from August 2022 and down 1.3% from July 2023
  • the median sales price for new homes was $499,990, down 2.4% from August 2022 and down 6.3% from July 2023
  • the median sales price for re-sale homes was $445,000, down 1.1% from August 2022 and unchanged from July 2023

Closings bounced back a little from July, but remain a long way below 2022 levels. The new home market continues to show more strength than the re-sale market, particularly in volume. However the new home sales mix moved sharply toward cheaper homes between July and August causing the median to drop dramatically by more than 6%, This was not caused by home builders lowering prices. It reflects smaller homes closing during August and fewer large luxury homes closing escrow. This is not an unusual occurrence for August but the scale of the change is larger than we usually see.

©2023 Cromford Associat LLC

Sep 4 - After failing to breach 165, the Cromford® Market Index has drifted slowly lower during July and August.

However, the downward momentum has increase since mid-August and the advantage that sellers have had over buyers is beginning to disintegrate.

When the 30-year fixed mortgage rate stays above 7%, demand for re-sale homes is so feeble that it is not even enough to eat up the small number of new listings that appear each week. Available supply is starting to grow.

At 155, the CMI still has a long way to fall before we arrive at a balanced market around 110. However each day it moves lower strengthens the bargaining power of active buyers who are in a position to afford a home.

©2023 Cromford Associat LLC

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

This week we have 4 cities that moved in a direction favorable to sellers, up from 2 last week. Paradise Valley and Tempe are the new members of the green team.

Even so, the trend downwards is slightly stronger than last week. The average CMI change in these 17 cities over the last month was -2.9%, more negative than last week when we measured -2.7%.

Buckeye is moving higher and has Surprise in its sights. Cave Creek is bouncing back hard, having been one of the earliest to decline several months ago.

Most negative again is Fountain Hills, a former number one. However it remains a seller's market with a CMI over 190. 16 out of 17 are sellers markets with Queen Creek in the balanced zone.

Chandler is also declining fast although it remains out in front by a long way.

©2023 Cromford Associat LLC

Aug 26 - When buyers are actively looking for homes their main source of information about home prices are the list prices for homes they see listed for sale. All the other data is historic, based on what someone agreed to pay weeks or even months ago. Here is what they see when they look at the ARMLS active listings:

First of all, they notice that the average price per square foot is higher in week 34 of 2023 than in week 34 of all the years back to 2015. They can also see that every year has been higher than the one before for week 34. The weak pricing triggered in 2Q 2022 by a sudden jump in mortgage rates has had only a temporary effect and now looks to be of only minor lasting significance.

The current average $/SF for all active listings is $350.27. This an average across all areas within the ARMLS database and all dwelling types. Because this is a very large sample, the chart is very well-behaved and shows us that:

  1. The long-term trend has been higher for the last 8 years, with 2023 some 91% higher than 2015.
  2. The summer is is a seasonally weak period, each year showing a decline from May to August, except for 2020 which was bouncing back from the severe COVID scare that occurred in March and April that year. The weakness in 3Q 2023 is similar to 3Q 2015 through 2018, relatively normal and uneventful years.
  3. Today we see active list pricing 8.7%.higher than we did this time last year. This is a larger increase than the 6.0% we measured at the same time last year.
  4. There was an unusually large and rapid fall between May and August last year on top of the seasonal weakness. This was heavily influenced by the pricing actions of the iBuyers who realized too late that they had continued buying even while the market was cooling, resulting in them having far too much inventory by June 2022. They had a fire-sale of this inventory in the second half of 2022 in order to rid themselves of that exposure.

One key problem is that the reality represented above is completely unlike the false narratives peddled by several sensationalist and misguided pundits on YouTube and other social networks and even those more sober and serious analysts that were working for Goldman Sachs in January. If buyers have been reading or watching this stuff, they may enter the market with preconceived notions that are very wide of the mark..

Buyers expecting lower prices are going to be sorely disappointed, especially when the real prices are coupled with the latest 30-year mortgage rates around 7.4%. This is another reason why demand is so persistently weak this year. Simplistic observers believe weak demand translates to weaker prices. Nope. It translates to weak sales. But for prices, supply is just as important and remains drastically below normal, even though it has risen slightly over the past few weeks. Rising slightly will make little difference. We would need supply to almost double for the market to achieve balance.

©2023 Cromford Associat LLC

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

We have only 2 cities that moved in a direction favorable to sellers, down from 3 last week. Gilbert defected to the red camp again.

Even so, the trend downwards is slowing down. The average CMI change in these 17 cities over the last month was -2.7%, less negative than last week when we measured -3.3%.

Buckeye is still bucking the trend and has overtaken Goodyear as predicted. Cave Creek is also bouncing back hard, having been one the earliest to decline several months ago.

Again most negative is Fountain Hills, a former superstar and number one. However it remains a seller's market with a CMI over 190. 16 out of 17 are sellers markets with Queen Creek in the balanced zone.

©2023 Cromford Associat LLC

Aug 21 - You may remember our observation from Jan 25, when we accused Goldman Sachs of making "all kinds of weird and unlikely forecasts." This included a prediction that Phoenix home prices would decline by 25% in 2023.

Well it appears they have now admitted their forecasts were way off and have changed their outlook. They no longer expect US home prices to decline in 2023. They are predicting a small increase of 1.8% for the year.

Here is the chart from Tina which rubs it in a bit

To be brutally frank, there is little evidence that Goldman Sachs has any idea what it is talking about when it comes to the US housing market. Maybe this is why they are considering selling their investment-advisory business.

©2023 Cromford Associat LLC

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

After two and a half months of a deteriorating trend, this table is starting to move in the opposite direction again. We have 3 cities that moved in a direction favorable to sellers, up from 2 last week.

Gilbert is the latest recruit to the green camp.

The average CMI change in these 17 cities over the last month was -3.3%, less negative than last week when we measured -5.0%.

Buckeye is bucking the trend and has overtaken Goodyear as predicted. Cave Creek is bouncing back having been one the earliest to decline several months ago.

Most negative is Fountain Hills, a former superstar and number one. However it remains a strong seller's market with a CMI over 200. 15 out of 17 are sellers markets with Maricopa and Queen Creek in the balanced zone.

©2023 Cromford Associat LLC

Aug 15 - The Mortgage Bankers Association (MBA) has just reported that the mortgage delinquency rate has fallen to its lowest level since they started tracking this metric in 1980. The seasonally-adjusted delinquency rate for 1 to 4 unit residential properties stood at 3.37% in the second quarter of 2023, down from 3.64% one year earlier. It was also down from 3.56% in 1Q 2023. Delinquencies fell from 1Q 2023 across all mortgage types, conventional, VA and FHA. However FHA loan delinquencies were up 10 basis points from the second quarter of 2022.

Holders of FHA loans tends to be the first to weaken when the economic going gets rough.

Delinquencies are moving up in other loan types however - particularly credit card debt and car loans.

©2023 Cromford Associat LLC

Aug 14 - When publishing the latest table ranking the top 40 cities by annual average price per sq. ft. it struck me how differently the top tier has behaved compared with the bottom tier. This is probably because the luxury market is unaffected by the activities of iBuyers and large scale institutional investors in residential property. Since they were not active over $1 million, the collapse in their buying has had no effect on the high-end market.

Here are the top 5 cities based on annual inflation, measured using the annual average $/SF:

  1. Paradise Valley +13.7%
  2. Carefree +8.4%
  3. Coolidge +6.2%
  4. New River +4.8%
  5. Fountain Hills +4.5%

While at the other end we find:

  1. Arizona City -5.3%
  2. Florence -3.8%
  3. Litchfield Park -3.8%
  4. Sun City West -3.6%
  5. El Mirage -3.5%

The outer fringes have been very mixed with Arizona City and Florence doing poorly while Coolidge has caught up with the rest of the pack while remaining the least expensive place to buy a home in Central Arizona. New River is also a star performer.

The high-end has been more consistent, with Scottsdale just missing out on a top 5 finish with +3.1%, while Carefree and Paradise Valley are way ahead of the rest of the valley.

©2023 Cromford Associat LLC

Aug 12 - I wonder how many people twelve months ago were expecting the average sales price per square foot to be essentially unchanged a year later. Most observers, and especially the iBuyers, were in abject despair after the quick price decline that occurred between June and August 2022.

To be pedantic, we are actually 20 cents lower today than a year ago, but in the last 12 months the average $/SF dropped as low as $264.17 in the second week of 2023, only to recover by almost 8% in the 7 months since then.

An 8% rise when demand is far below normal reminds us of the important effect of the chronic lack of supply in our housing market.

The average $/SF is up almost 48% from the same point in 2020. It is not a bubble, so it is not bursting.

©2023 Cromford Associat LLC

Aug 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 the market has moved slowly and slightly in a direction favorable to buyers, but this has made precious little difference. We are still in a seller's market in 15 of 17 cities and in a balanced market in Maricopa and Queen Creek.

The average CMI change in these 17 cities over the last month was -5.0%, less negative than last week when we measured -6.0%.

Only 2 cities continue to show a positive change from this time last month, Buckeye and Cave Creek. Buckeye continues to improve for sellers and has overtaken Maricopa. Now it is taking aim at Goodyear.

©2023 Cromford Associat LLC

Aug 8 - The residential re-sale market has changed very little over the past 2 months, but other parts of the real estate market are seeing more significant changes.

The office sector within commercial real-estate is severely challenged by declining demand. People seem to like working-from-home. The supply of office space exceeds supply by a clear margin and so asset values are dropping. This is a worldwide phenomena and is especially true of offices in less than perfect condition or in less than ideal locations. The market conditions mean lenders are becoming increasingly reluctant to take them as security for loans and owners with the need to refinance in the next 2 years are going to have a hard time. One obvious casualty is WeWork, which was once valued at $47 billion and now says there is substantial doubt that it can continue as a going concern.

The short-term rental market appears to have peaked in a number of over-supplied locations. This is leading to ludicrous prophecies by a few deranged real estate gurus that a huge flood of former short-term rental homes will hit the market in the near future. So many owners joined the Airbnb party that there are sometimes far more short-term rental properties than there are people wanting to rent them. This means lower occupancy and price competition, making ownership of a short-term rental much less attractive than it was a couple of years ago. Over the last 2 years average occupancy is reported to have dropped from 60% to 56%. This is a negative trend but hardly of catastrophic proportions.

Some owners are considering converting to long-term rentals instead. The theoretical advantages are higher occupancy and greater peace of mind but the main disadvantage is a relatively low gross income compared with the owner's original expectations. We are seeing plenty of new higher-priced rental listings in the Northeast Valley, some being furnished and probably former short-term rentals. The number of potential tenants for these is limited, because of the relatively high rent.

There is currently no great shortage of potential tenants at the affordable end below $2,000 a month. However if people can afford a rent over $4000 a month, then they are usually of a mind to buy a home. The exceptions would be those who expect to be renting for only a year or two. This includes students sharing a home and recent graduate who expect to move soon for their career advancement. Settled families with children in school are unlikely to want a high-price rental unless they are in a secure high-paying job. And in those circumstances, a mortgage should be easy to obtain.

As a result we have already seen weakness in the rental rate per square foot for homes over $2,500 per month in Scottsdale. $1.89 was the July average, The peak was $2.16 in February 2022.

We currently have 49.8% more active rental listings than we did 12 months ago. About 800 of them are in Scottsdale and their average asking rent is $4,380. This time last year there were only 517 with an average rent of $4,290. The average is going up because those with a higher rent are staying active longer, not because rents are increasing.

©2023 Cromford Associat LLC

Aug 6 - The annual sales rate is a useful tool to measure the amount of activity in the market. The monthly sales rate is not so good for a number of reasons:

  • it is subject to significant seasonal variation - April is much busier than January, for example
  • it is subject to having anywhere from 18 to 23 working days, which means a long month will have far higher sales than a short month, even if the market is unchanged.
  • it is subject to large fluctuations month to month just because of the small sample size

The annual sales rate avoids all three of these problems

  • it uses data from all days of the year, so there is no seasonal effect at all
  • it uses data from 365 days, a constant number except for a leap year, when the variation is just 1 day in 366.
  • it is a steady reliable number with minimal meaningless fluctuations in the count reported, thanks to the large sample size

The annual sales rate for all areas and types is currently 73,800. This is a low number, down from 102,822 a year ago. It is also still showing a slow decline, having been 74,148 this time last month. However the decline month to month is now very small (0.5%) and there is no longer much downward momentum.

In these circumstances, we can expect a few sub-markets to be showing some annual sales growth on a month to month basis. Looking at the single-family market by ZIP code, we find the following:

  • 60 out of 148 ZIP codes are showing higher annual sales compared with a month ago.
  • The best growth is in:
    • Fort McDowell 85264
    • Carefree 85377
    • Scottsdale 85250
    • Surprise 85387
    • Glendale 85305
    • Waddell 85355
    • Rio Verde 85263
    • Glendale 85307
    • Chandler 85224
    • Scottsdale 85262
  • The following are showing the worst declines month to month:
    • Stanfield 85172
    • Gila Bend 85337
    • Morristown 85342
    • Phoenix 85009
    • Casa Grande 85193
    • Arlington 85322
    • Peoria 85381
    • Phoenix 85035
    • Tempe 85284
    • Phoenix 85043

©2023 Cromford Associat LLC

Aug 4 - Here is our latest table of Cromford® Market Index values for the single-family markets in the 17 largest cities

The market continues to slowly lose steam and the average CMI change in these 17 cities over the last month was -6.0%, just a shade more negative than last week when we measured -5.9%

Only 4 cities continue to show a positive change from this time last month, while 1 is unchanged and 12 show a negative trend for sellers, particularly Tempe, Fountain Hills, Avondale, Glendale and Peoria.

Buckeye is the only city improving a lot for sellers and has overtaken Maricopa which slips into 16th.

Queen Creek has dropped into the balanced zone below 110, while the other 16 are seller's markets.

©2023 Cromford Associat LLC

Aug 3 - The Maricopa County affidavits of value have been counted and show us the following numbers for July 2023:

  • There were 6,081 closed transactions with a median sales price of $464,990
  • Closings were down 15% from July 2022, and down 20% from June 2023
  • The median sales price was down 2.1% from a year ago and down 1.3% from last month
  • The median sales price has fallen for the first time since January and is now up 5.7% from the low point of January 2023.
  • New home closings totaled 1,352 with a median sales price of $533,592, an all-time record high price
  • The new home closed sales count was up 7.6% from July 2022 but down 18.4% from June 2023.
  • The new home median sales price is up 3.2% from a year ago, and up 2.8% from last month
  • The re-sale transaction count was 4,729 with a median sales price of $445,000.
  • The re-sale count was down 20% from July 2022 and down 21% from June 2023.
  • The re-sale median sales price was down 4.1% from last year and down 0.5% from last month

Closed transaction counts remain very weak for re-sales, with both supply and demand in poor shape. Closing counts were much stronger in the new home market, up almost 8% from this time last year. Pricing was also higher for new builds than a year ago. Resale pricing paused in July but still looks likely to overtake last year's pricing during the next three months.

©2023 Cromford Associat LLC

Aug 1 - The chart below is extracted from the Cromford® Public section of the site and includes all recorded deeds in Maricopa and Pinal counties for single-family and condo / townhouse properties up to the end of June 2023



What jumps out at you is that the average price recorded at closing is now higher at $580,373 than at any time in the past. The correction over the last 12 months is now complete.

At the same time the average size of homes closed has increased, so the same chart for average $/SF has not accomplished a complete recovery of the ground lost since mid-2022.

We should also point out that new homes made a big contribution to the health of this chart. If we only count re-sale transactions, then the full recovery is not yet achieved.

©2023 Cromford Associat LLC