Tuesday, April 19, 2016

Southeast Valley Appreciation. Some great, some flat. Where are you?

Cromford Daily Observation - In the Southeast Valley we see the following high appreciation areas comparing 1Q 2016 with 1Q 2015:
  1. Tempe 85281 - 16%
  2. Tempe 85283 - 16%
  3. Mesa 85201 - 15%
  4. Mesa 85204 - 13%
  5. Mesa 85205 - 12%
  6. Mesa 85208 - 12%
  7. Chandler 85224 - 12%
  8. Chandler 85225 - 10%
  9. Mesa 85210 - 10%
  10. Mesa 85202 - 10%
While these are not quite as impressive as the West Valley areas we looked at yesterday, they are well above the valley average. Notice that these are mostly the older parts of Mesa, Chandler and Tempe with relatively little new construction.
The worst performing ZIP codes for appreciation in the Southeast Valley are among the more expensive areas:
  1. Mesa 85207 - down 5%
  2. Phoenix 85045 - down 2%
  3. Tempe 85284 - down 1%
  4. Phoenix 85048 - flat
  5. Mesa 85215 - flat

Wednesday, April 6, 2016

Quick Year Over Year Update - Very Positive

The basic March 2016 numbers are in for Maricopa County recordings with Affidavits of Value and they are looking very positive. We count a total of 9.639 closed transactions for single family and condo properties which represents a 12% increase over March 2015. Since March 2015 was 17% higher than March 2014, this is a big 31% increase over 2 years. The year over year unit volume increase was even more impressive for new homes, up a startling 50%, making the re-sale market's gain of 8% look paltry in comparison. New home market share has risen from 9.7% in March 2015 to 12.7% in March 2016. Before getting too excited we should remember that this is nowhere the peak of the market, when new homes represented 40.6% of December 2006 transactions.
The median sales price is up 8.4% from $211,320 in March 2015 to $229,000 in March 2016. The median sales price for new homes actually fell by 2% from $321,085 to $315,229, as there are now larger numbers of less expensive new homes below $300,000 entering the new home mix. Median sales prices are close to useless for measuring new homes. You have to use average price per sq ft to compensate adequately for the changes in the mix.
The median sales price for resale homes rose from $200,000 in March 2015 to $217,00 in March 2016, an annual rise of 8.5%.
Note that transactions without affidavits are excluded from all the above numbers. This includes HUD sales, trustee sales, and REO sales processed by the out of state title companies Quality Escrow and Servicelink. Both of these title companies continue to completely misunderstand Arizona law regarding exemptions from affidavits. If the county assessors ever notice, the title companies could be in legal trouble for claiming false exemptions for their lender clients.

Monday, April 4, 2016

Market Update 4.4.2016 - Bidding Wars Around $200k

When we examine the number of active single family listings by price range, we can clearly see the long term shortage of affordable homesthe adequate supply in the mid-range and the glut of luxury homes for sale.
Price RangeActive (excluding UCB & CCBS) April 1, 2016Year Ago% ChangeCommentDays of Inventory
Under $100K181308-41% 46
$100K-$125K183313-42% 39
$125K-$150K441793-44%lowest level since 200540
$150K-$175K7601,060-28% 52
$175K-$200K1,1341,188-5% 73
$200K-$225K987917+8% 80
$225K-$250K1,1441,084+6% 87
$250K-$275K912812+12% 96
$275K-$300K1,1441,031+11% 115
$300K-$350K1,6331,555+5% 130
$350K-$400K1,4381,4390% 151
$400K-$500K1,9031,601+19%highest active count since Mar 2009191
$500K-$600K1,2291,036+19%highest active count since Apr 2009253
$600K-$800K1,3371,065+26%highest active count since Jun 2009293
$800K-$1M760683+11%highest active count since Aug 2009384
$1M-$1.5M808677+19%highest active count since Nov 2009480
$1.5M-$2M465408+14%highest active count since Mar 2010684
$2M-$3M407382+7%highest active count since Mar 2010798
Over $3M327300+9%highest active count since Dec 20091,219

From $400,000 upwards we have more active listings than we have seen in the last 6 years, so buyers have plenty of choice and therefore negotiating power.
Below $200,000 we have a chronic shortage of homes available for purchase, and there is precious little to rent too. Here sellers have most of the negotiating power.
The median sales price for single family homes is at $230,000.
While above we looked at
 the supply by price range
​, below​
 we look at the 
demand for single family homes, by examining the number of listings under contract:


Price RangeUnder Contract (including UCB & CCBS) April 1, 2016Year Ago% ChangeCommentContract Ratio April 1, 2016Contract Ratio March 1, 2016Contract Ratio April 1, 2015
Under $100K155360-57%large decline85.696.6116.9
$100K-$125K214513-58%large decline116.9135.0163.9
$125K-$150K7381,116-34%large decline167.3137.2140.7
$150K-$175K1,1631,186-2% 153.0127.2111.9
$175K-$200K1,2541,115+12% 110.697.293.9
$200K-$225K886795+11% 89.892.386.7
$225K-$250K1,046835+25%strong growth91.473.577.0
$250K-$275K725598+21%strong growth79.572.573.6
$275K-$300K709577+23%strong growth62.062.656.0
$300K-$350K899723+24%strong growth55.152.246.5
$350K-$400K670552+21%strong growth46.639.838.4
$400K-$500K723600+21%strong growth38.035.937.5
$500K-$600K361285+27%strong growth29.425.027.5
$600K-$800K309297+4% 23.121.627.9
$800K-$1M170115+48%strong growth22.421.116.8
$1M-$1.5M103111-7% 12.712.816.4
$1.5M-$2M6356+13% 13.512.413.7
$2M-$3M3339-15% 8.18.110.2
Over $3M1629-45%large decline4.96.09.7

From $225,000 to $600,000 we have far more listings under contract that at this time last year. We also see very strong growth for the sector from $800,000 to $1 million.
From $175,000 to $225,000 and from $1.5 million to $2 million we have moderate increases in listings under contract of between 10% and 15%. For the sector from $1.5 to $2 million this goes a little way to mitigating the increase in supply.
The shortage of supply means the market under $175,000 is much smaller than last year, though the contract ratios are much higher between $125,000 and $175,000 showing there is no lack of buyer interest. Below $125,000 there is not much for sale and buyer interest is lower than last year too.
There are significant problems for sellers between $1 million and $1.5 million as well as for those over $2 million. This is because the number of listings under contract is down from last year at the same time that supply is much higher.The contract ratios have slipped compared with April 2015 and this signifies a large shift of negotiation power away from sellers and towards buyers. We should not be surprised to see weaker pricing trends in these price ranges as a result.

Quick Update 4.4.2016

Today we take another look at the single family markets in the largest 17 cities and examine how the Cromford® Market Index has changed over the past month:


Overall, the market continues the recent improving trend for sellers with 11 out 17 cities seeing an increase in their CMI. Many of them are up 5% or more, including Maricopa, Surprise, Avondale, Goodyear, Buckeye, Peoria, Mesa, and Chandler.
Fountain Hills, Paradise Valley and Tempe are the main weakening spots for sellers, though Tempe is still in the seller's market zone over 100. Paradise Valley and Fountain Hills are firmly in buyer's market territory now.
Once again, Maricopa is the faster improving market and managed to rise from 17th to 16th place.
_____________________
Decoding the above. The green button arrow trend is good for sellers; the red button trend is good for buyers.
An Index of 100 is a balanced market in terms of supply and demand. Over 100 means the market favors sellers (more demand than inventory); under 100 means the market favors buyers (more inventory than demand).
The Cromford Market Index or CMI tends to be a good short term predictor of the market.
The above graph and commentary once again reinforces the story so far this season, which is an improving market generally; relatively balanced; but with the low end on fire and the high end a bit sluggish as new listings outpace new sales.
To be sure, it's not that we don't have higher-end market sales, it's just that there are disproportionately more new listings than sales - a trend, that, as it continues, has to mean softer prices for all but the most desirable properties. 
These graphs tell the tale in the higher-end ($800K plus).
Bottom line for the higher end buyer: You have great choices right now, albeit keep in mind there's always competition for the best.
Bottom line for the higher end sellers: You need to really take an objective look at the properties your competing against and position yourself as the next best one to get top dollar. Time is not on your side (competitive positioning).
Bottom line for the mid-to-lower end market: In most of the rest of the market, as evidenced in the city CMI graph above, we see demand generally increasing relative to supply - especially right now as the pace of new listings is slowing down. And of course as the average price point lowers, particularly below $400K, the demand heats up accordingly.
For your general conversations about market conditions those are the key talking points.