Your City Appreciation Update 5.5.2016

As appreciation rates have declined from the huge numbers (both negative and positive) during the disruptive period of 2003-2013, it has become more obvious that our usual method for calculating appreciation is less useful for smaller segments of the market. Our method has been to take the monthly average price per square foot and compare it with the same measurement one year earlier. This works quite well for the entire market but as you break the market into smaller segments, the volatility in their monthly average $/SF become excessive. Therefore we are changing our method to use the annual average $/SF instead of the monthly average to measure appreciation for all segments of the market. We will still use our original method for measuring the entire market (all areas & types).

Using the new method here is a ranking of the cities by appreciation rate, based on the 12 month change in their annual average $/SF for single family detached homes.

1. Tonopah 27.0%
2. Wittmann 19.7%
3. Youngtown 16.3%
4. Tolleson 10.8%
5. Eloy 10.7%
6. Sun City 10.5%
7. El Mirage 9.8%
8. Glendale 9.8%
9. Avondale 8.7%
10. Waddell 8.2%
11. Laveen 8.1%
12. Florence 7.8%
13. Tempe 7.8%
14. Buckeye 7.5%
15. Arizona City 7.4%
16. New River 7.4%
17. Phoenix 7.3%
18. Maricopa 7.2%
19. Coolidge 7.1%
20. Queen Creek 7.0%
21. Mesa 6.6%
22. Sun City West 6.4%
23. Surprise 6.4%
24. Apache Junction 6.3%
25. Anthem 5.7%
26. Chandler 5.5%
27. Peoria 4.8%
28. Gilbert 4.7%
29. Desert Hills 4.7%
30. Goodyear 4.4%
31. Wickenburg 4.4%
32. Litchfield Park 3.4%
33. Sun Lakes 2.9%
34. Casa Grande 1.6%
35. Scottsdale 1.4%
36. Carefree 1.3%
37. Fountain Hills 0.5%
38. Cave Creek -0.5%
39. Rio Verde -0.5%
40. Paradise Valley -0.7%
41. Gold Canyon -3.9%

We note that 10 out of the top 11 cities are in the West Valley. The lone exception is Eloy, where prices are being helped a lot by new home sales in the Active Adult community Robson Ranch. Prices in Robson Ranch are much higher than the average home with a postal address in Eloy

6 out of the bottom 7 cities are in the Northeast Valley. In fact all of the northeastern cities are in the bottom 7. This underscores how badly the luxury market has been affected by excessive supply. If you were to remove all sales over $500,000 you would get a different picture of the Northeast Valley:

1. Paradise Valley 26.1% (but only 3 sales a year were under $500,000)
2. Carefree 8.5%
3. Scottsdale 5.5%
4. Fountain Hills 4.6%
5. Cave Creek 1.0%
6. Rio Verde 0.0%

We can disregard the Paradise Valley number since there is almost no market in PV under $500,000. The appreciation numbers for Carefree, Scottsdale and Fountain Hills are perfectly respectable for the market under $500,000. However Cave Creek & Rio Verde seem to be stuck in neutral even for the lower price ranges. Gold Canyon is also neutral at 0.3% if we exclude homes over $500,000, but as with Cave Creek & Rio Verde, neutral is better than the negative appreciation we see when we include all homes.

All the above numbers are based on ARMLS closings, not total recorded deeds.