Thursday, January 29, 2015

National Real Estate Update by City

The S&P/Case-Shiller® Home Price Index® report for September through November was published today and we can therefore rank the 20 cities by the change in index over the last month:
  1. Tampa +0.84%
  2. Miami +0.59%
  3. Las Vegas +0.35%
  4. San Diego +0.29%
  5. Los Angeles +0.28%
  6. Phoenix +0.16%
  7. Atlanta +0.15%
  8. Dallas +0.11%
  9. Denver +0.09%
  10. San Francisco +0.08%
  11. Portland +0.06%
  12. Boston -0.22%
  13. Charlotte -0.30%
  14. Cleveland -0.35%
  15. Seattle -0.38%
  16. Washington DC -0.51%
  17. Minneapolis -0.73%
  18. New York -0.79%
  19. Detroit -0.87%
  20. Chicago -1.06%
Although 11 of the cities saw an increase over the last month the composite 20-city index fell 0.22%. Although we only saw a small 0.16% gain, this was enough to put Phoenix into 6th place
Examining the 12-month percentage changes we find:
  1. San Francisco +8.91%
  2. Miami +8.58%
  3. Las Vegas +7.70%
  4. Dallas +7.67%
  5. Denver +7.48%
  6. Tampa +6.77%
  7. Portland +6.58%
  8. Seattle +6.01%
  9. Los Angeles +5.11%
  10. Atlanta +4.92%
  11. San Diego +4.90%
  12. Boston +3.95%
  13. Charlotte +3.29%
  14. Detroit +2.58%
  15. Chicago +1.99%
  16. Phoenix +1.94%
  17. Washington DC +1.85%
  18. New York +1.51%
  19. Minneapolis +1.47%
  20. Cleveland +0.61%
For annual appreciation Phoenix is well below the 20-city average of +4.31% in 16th place. We saw our appreciation rate slow down earlier than other cities, just as we saw our initial recovery start earlier than the rest of the country in 2011.
The whole country now looks to be in the process of stabilizing at close to the general inflation rate. We don't expect to see any major shifts over the next 12 months.

Saturday, January 17, 2015

What December Slowdown!

Cromford Daily Observation:
December was a huge month for luxury homes sales - the best December since 2006 with 109 closed transactions across Greater Phoenix for homes priced at $1 million and above. This was an increase of 10% over December 2013. Only 2 of the closed sales were distressed and these were short sales.
By price range, comparing December sales for single family homes across Greater Phoenix:
  • $500,000 to $600,000 - highest number of units sold through ARMLS since 2006
  • $600,000 to $800,000 - highest since 2006
  • $800,000 to $1,000,000 - highest since 2006
  • $1 to $1.5 million - same as 2012
  • $1.5 to $2 million - equaled the previous record set in 2006
  • $2 to $3 million - highest since 2007
  • Over $3 million - 1 fewer than last year
The ultra-high end was not quite as impressive as recently, but 2014 was the best full year since 2008 with 84 closings for homes priced over $3 million.
Once again we did not see any resales over $10 million, the highest price paid being $9,750,000 for a home listed at $10,995,000
There are 11 optimists listing homes over $12,500,000, which is the highest price ever paid for a resale home in Greater Phoenix. There are 4 homes listed over $20 million. Finding a buyer for a re-sale over $12.5 million is a huge challenge. Buyers with this sort of money to spend usually build new. Such a new sale doesn't in the records appear because the recorded transaction transferring ownership of the parcel to the buyer usually occurs while it is an empty lot. Payment for the construction of the home is not a recordable event as no transfer of real estate takes place, only improvements on the existing lot. This makes new ultra-high-end custom home sales very difficult to track for price, completion date and sq ft. The assessor's data on sq. ft., is usually wildly different from the builders plans submitted.
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Of the month of December 2014 luxury single family sales over 1 million mentioned above, here's how the market share breaks out by dollar volume, by broker.

Monday, January 5, 2015

Market Update - For My Numbers Guru's...

Market Summary for the Beginning of 2015
The average person will assume that November was a fairly normal month and that December was full of holidays. Not true. Instead there were only 17 working days in November and 22 in December. That is a 29% increase in the number of days in which title companies could close sales and county recorders could file deeds. As a result November's numbers looked terrible at first sight while December's looked amazingly good. But the primary reason sales were up 29% in December over November is that days to record sales were up 29%.
When we adjust for the differently sized months we still find there was some real improvement in the market for sellers. December's sales were slightly stronger than expected, as we forecast in last month's summary. But by far the biggest factor that changed was that supply fell much faster than normal during the month.
Whatever the cause, sellers have a few sound reasons to feel hopeful as we head towards the spring selling season which, like the warm weather, starts very early in Phoenix.
Here are the basic ARMLS numbers for January 1, 2015 relative to January 1, 2014 for all areas & types:
  • Active Listings (excluding UCB): 22,604 versus 23,091 last year - down 2.1% - and down 8.1% from 24,593 last month 
  • Active Listings (including UCB): 24,918 versus 25,319 last year - down 1.6% - and down 9.1% compared with 27,427 last month 
  • Pending Listings: 4,410 versus 4,667 last year - down 5.5% - and down 19.8% from 5,497 last month
  • Under Contract Listings (including Pending & UCB): 6,724 versus 6,895 last year - down 2.5% - and down 19.3% from 8,331 last month
  • Monthly Sales: 6,496 versus 5,837 last year - up 11.3% - and up 29.9% from 5,000 last month
  • Monthly Average Sales Price per Sq. Ft.: $131.62 versus $123.48 last year - up 3.2% - and up 1.8% from $129.30 last month 
  • Monthly Median Sales Price: $197,000 versus $185,500 last year - up 6.2% - and up 2.6% from $192,000 last month
Pricing was surprisingly strong in December with the median up over 6% from the prior year and $/SF up over 3%. However these gains are very small compared with the previous 2 years. Much of the advance is due to continuing improvements in the mix in favor of higher priced homes. We must also remember that seller concessions do not get reflected in the prices recorded.
There was little to dislike in the December numbers and that fact that sales volume exceeded December 2013 by more than 11% is definitely encouraging. 2014 was a lackluster year with low supply and even lower demand and it looks like demand is starting to show a few mild signs of life. Even so, we are starting the year with a very low number of homes under contract by normal standards. The big question is what will happen to supply. If it arrives in bulk over the next 3 months then buyers will retain the advantage they enjoyed during 2014. If, as seems more likely based on what we saw in the last 4 weeks, supply grows relatively slowly, then sellers will regain their advantage and prices could start to see some upward pressure building again.
On the second day of the month it is too early to make the call on supply, but by the middle of January we should have some real data to indicate how the year is likely to develop.
Supply is already well below normal and if demand returned quickly to normal we could see a replay similar to conditions in 2012, except that ordinary owner-occupiers would be dominant instead of investors.