Current Phoenix Metropolitan Real Estate

Market Update

 

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©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.

©2020 Cromford Associate

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

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

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

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

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

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

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

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

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

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

Chandler homes for sale

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

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

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

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

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

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

The bad news:

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

The good news:

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Chandler real estate

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

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

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

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

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

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

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

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

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

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

The year over year comparisons are below:

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

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

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

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

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

 

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

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

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

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

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

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

As if things weren't bad enough.

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

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

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

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

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

We see the following:

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

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

Here are the under contract listings:

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

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

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

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

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

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

Now for the comparisons.

A. Confirmed Cases

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

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

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

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

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

B. Deaths

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

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

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

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

The hardest hit by mortality rate are:

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

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

C. Growth of Infections

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

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

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

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

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

D. The USA as a whole

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

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

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

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

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

 Chandler homes for sale

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Here is what we see so far related to supply:

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

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

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

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

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

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

NOTE:

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

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

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

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

chandler real estate 

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

More Supply

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

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

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

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

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

Why are we seeing more active listings so quickly?

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

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

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

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

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

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

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

We will look more closely at the demand side tomorrow.

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

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

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

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

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

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

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

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

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

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

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

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

chandler homes for sale 

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

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

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

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

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

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