APPRECIATION - 'you probably ain't seen nuthin' yet'

 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 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 a 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.

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**This is the current appreciation rate in the Monthly Price per Square Foot chart referenced above:

To see how this translates to the Valley-wide Monthly Average Sales Price and it's year-over-year percentage increase we have the following chart:

Monthly Average Sales Price. However, we have to be careful not to confuse the increase in Monthly Average Sales Price with appreciation.

With many variables at play this kind of rapid annual appreciation rate has its challenges for us.

For example, the seller's temptation, a mistake of course, is using the Valley's current appreciation rate as a means to get to the current value of their particular property.

Your carefully crafted CMA remains the best way to parse relevant distinctions to deliver that tight 'trading range' in which a property should be 'competitively positioned' to sell for top dollar, all things considered.

Practical Application: If the question coming from your out-of-state buyer is how do appreciation rates compare across different cities in the Valley, we can break it down to the city level - samples below. 

So now as you scroll the city samples below, notice how Appreciation Rates vary. 

Definitions:

Appreciation Based on Annual Av $/SF: This measurement takes the average price per square foot for sales during the preceding annual period and compares it with the same period one year earlier.

Monthly Av Sales Price: The value measured is the average price for homes sold during the calendar month.

So, even though it's 'apples to oranges' (no direct correlation), I thought it would be interesting to see a side-by-side comparison of both: 

In other words, the current rate of Appreciation based on the Annual Av $/SF chart followed by the current change in Monthly Average Sales Price, together with my calculation of the year-over-year percentage difference. 

Notice, for example, how Scottsdale has a fairly modest current Appreciation Rate of 7.4% (by comparison with other Valley cities), but a whopping current 25% year-over-year increase in the Monthly Average Sale Price - now pushing $1M ($933K to be precise)! Rather stunning.

Perhaps this is what was meant as the Cromford Daily Observation anticipates a powerful surge upward in prices saying 'You probably ain't seen nuthin' yet!

More city comparisons - listed alphabetically:

What a difference a year has made in Cave Creek - the widest gap in our year-over-year Annual Appreciation Rate sample. Some of you are thinking 'how about Carefree'? Cromford doesn't publish these charts for Carefree, probably because of the small size of that market. 

If you're scratching your head for a way to leverage this information, I have an idea for a custom marketing piece I'll share with you tomorrow using a collection of Collateral Analytics Intelligence Reports elements that do much the same compare and contrast that you see in the Cromford Charts above, only down to the subdivision level. Stay tuned...