As a follow up to our observation about appreciation rates on October 13 (see below), we are taking a look at the trends for the cities.
Cities showing a declining trend in appreciation rate:
- Arizona City peaked at 17.9% in May but has retreated to 12.0% now.
- Avondale peaked at 10.7% in July but has retreated to 9.2% now
- Buckeye peaked at 9.9% in February but has retreated to 7.4% now
- Fountain Hills was at 3.3% in January but has fallen to 0.7% now
- Laveen has dropped from 10.4% in January to 7.4% now
- Maricopa has declined steadily all year from 11.6% in January to 6.4% now
- Phoenix has dropped from 7.4% in January to 5.2% now
- Sun City West has dropped from 9.2% in January to 6.0% now
- Tempe has dropped from 6.2% in January to 4.8% now
- Tolleson has dropped from 11.2% in January to 7.3% now
Cities on an improving appreciation trend:
- Anthem, relatively slow, has started to catch up, increasing from 1.6% in January to 3.9% now
- Apache Junction has increased from 5.7% in January to 8.9% now
- Casa Grande has increased from 6.1% in January to 9.7% now
- Gold Canyon was at -0.7% in January and has increased dramatically to 7.1% now
- Litchfield Park was at a low of 5.5% in May and has improved to 8.8% now
- Mesa was at 5.8% in January and has advanced to 7.3% now
- Paradise Valley has improved from -1.4% in January to 4.6% now
- Peoria has increased from 5.2% in January to 7.1% now
- Queen Creek has increased steadily from 7.0% in January to 8.2% now
- Scottsdale has seen modest improvement from 2.7% in January to 3.6% now
- Sun Lakes has increased from 3.7% to 5.9% now
- Surprise has increased slowly but steadily from 6.7% in January to 7.7% now
Cities with little change in appreciation rates:
- Cave Creek was at 4.6% in January and is at 5.2% now
- Chandler was at 6.2% in January and is at 5.6% now
- El Mirage was at 13.8% in January and is at 12.8% now
- Gilbert was at 5.3% in January and is at 5.6% now
- Glendale was at 6.9% in January and is at 7.0% now
- Goodyear was at 6.3% in January and is at 6.9% now
- Sun City was at 10.1% in January and is at 9.7% now
This is a pretty mixed picture with fortunes changing in many different directions. All the appreciation rates are now positive (two were negative in January) which is a good sign. However the slowdown in our largest city of Phoenix (about 25% of the total market) means the overall trend is very slightly lower at the moment.
October 13 - Changes in the annual appreciation rate (measured using the annual average $/SF) give us a good indication of whether the market has been heating up or cooling down. This is using closed sales prices so it is a trailing indicator rather than a leading indicator. By using the annual average we get a fairly non-volatile reading. The trends tend to stay in place for quite some time. By looking at the weekly chart for annual appreciation we can detect when those trends change direction.
**Here is what we have seen so far:
- Appreciation was below 2% and weakening in early 2002, but the trend turned around in the second quarter and reached 4% by the end of the year.
- The appreciation continued to increase slowly during 2003 reaching 5.6% by the end of the year.
- Appreciation started to go crazy as the market heated up during 2004 thanks to the widespread availability of easy credit. It exceeded 12% in December 2004.
- The bubble was in full expansion mode during 2005 with appreciation exceeding 36% at the end of 2005.
- Appreciation peaked at 37.2% in March 2006 and then collapsed down to 11% by the end of the year, as the bubble burst.
- The bubble continued to deflate reaching -5% in December 2007.
- The foreclosure wave took depreciation to new depths reaching -28% in December 2008.
- The appreciation rate hit a historic low in the summer of 2009 at -36.5% but then started rising again.
- During 2010, the appreciation rate climbed by to slightly positive at 0.6% but this trend ran out of steam during the fourth quarter of 2010.
- 2011 saw appreciation slide back down to -9% by 3Q but signs of new life emerged at the end of the year.
- In 2012 appreciation charged from -9% all the way up to 20%
- Appreciation peaked at 25% during the spring of 2013 and started to drift slowly down again.
- 2014 saw appreciation drop from over 20% to less than 9%.
- In 2015 the downward trend stopped in September at 4.1% and started rising slowly again, reaching 4.4% by the end of the year.
- During 2016 the appreciation rate improved to 5.4% by the end of the year, though all of that improvement occurred during the first 3 months of the year.
- In 2017 appreciation hit a maximum of 6.5% in September and has drifted slightly lower since then, currently at 6.3%
The second and third quarters of 2017 gave us a fairly strong positive direction but so far the fourth quarter has seen a change of trend to a slight downward drift. Since this is a trailing indicator it suggests the market has cooled a little since the spring. By examining the appreciation chart by city (select cities charts shown below) we can see where the cooling trend has occurred, and where it has not.
We should emphasize that when the rate of appreciation falls, prices are still rising, they are just not rising with quite so much speed. Only when the rate of appreciation goes negative are prices actually falling compared with the previous year. At the current 6.3% we are a long way above that point.