Earlier this month, the Scottsdale Independent ran a story about current trends in the Metropolitan Phoenix housing market. Here are some of our favorite takeaways from the report, which you can read here.
- The laws of supply and demand continue to swing the economic pendulum to those looking to sell both single-family and multifamily residential dwellings throughout the Phoenix metropolitan housing market. Data shows the Phoenix housing market is on good footing with all economic indicators — inventory levels, foreclose rates and both median sale prices and listings — illustrating a healthy housing market dominated by single-digit appreciation levels and fewer and fewer distressed homes.
- “We are seeing everything that is typical of a true sellers market,” Ms. Tamboer said. “We have a job market that is really good right now and it’s not based on the real estate like it was back in ‘07. That is more stable and cyclical so we have a lot of good things happening.” In all housing sectors of the Phoenix metropolitan area, Ms. Tamboer says she is comfortable calling the market stable but did point out luxury multifamily housing investment has been staunch over the last few years.
- “The one area I would be concerned about is the luxury multifamily housing,” she said of condominium products seeking $350,000 price points attached to, in some cases, a $500 monthly management fee. “We need the units, we have the demand for the units, but do you want to pay $350,000 and a $500 HOA fee for a condo? Demand may be over for that product. I don’t think we are seeing one — a luxury condo bubble — but perhaps some risky decisions in certain areas, but that’s how it always is.”
- The Scottsdale Area Association of Realtors President and CEO Rebecca Grossman says while positive economic activity dominates the local housing market dwindling inventory is stoking both appreciation valuations and seller wallets. “Housing statistics are looking very good, but we still have a lack of inventory,” she said in a July 25 phone interview.
- Another trend that continues to emerge in the local housing market is the pursuit of affluent clients looking to downsize in lock-and-leave properties in Scottsdale and throughout the Phoenix metropolitan area.But Ms. Grossman points out Scottsdale is responding well to the need for new housing options as Baby Boomers begin to find a new style of dwelling for the golden years in loom.
“We are seeing people who are looking for downsizing options — there is going to be a point that we are not producing enough of those housing options,” she said. “I do see some good things happening like in Cave Creek and Carefree as they are getting new homes built that are attainable.”
For a detailed breakdown on the market conditions in your area and how they may impact your goals to buy or sell, contact Carmelle AZ Homes at Info@CarmelleAZHomes.com or call 480-648-9253.
*The Cromford Market Index is a value that provides a short term forecast for the balance of the market. It is derived from trends in pending, active and sold listings compared with historical data over the previous four years. Values below 100 indicate a buyers market, while values above 100 indicate a seller’s market. A value of 100 indicates a balanced market.
Average Time on Market
August 8 – Average time on market for monthly sales across all areas & types is down to 66 days. This is the lowest level since 2013 and confirms the current market strength. Days on market is useless as a predictive tool but it is a reliable trailing indicator. It also allows us to compare different sectors:
- Northeast Valley – 122 (129 last year)
- Phoenix – 59 (61 last year)
- Southeast Valley 56 (65 last year)
- West Valley 60 (63 last year)
The above numbers are for single-family detached homes only. All areas have improved but the Southeast Valley has improved the most.
August 9 – Delving further into average time on market for monthly sales, we can see the following ZIP codes have the lowest average time on market for single-family homes:
- Phoenix 85004 – 19 (no sales in July 2016)
- Phoenix 85006 – 26 (down from 63 in July 2016)
- Phoenix 85009 – 28 (down from 50)
- Surprise 85378 – 29 (down from 40)
- Chandler 85224 – 30 (down from 52)
- Glendale 85307 – 31 (up from 28)
- El Mirage 85335 – 32 (down from 34)
- Mesa 85202 – 32 (down from 49)
- Mesa 85204 – 34 (down from 44)
- Avondale 85323 – 34 (down from 47)
At the other end of the scale we find:
- Rio Verde 85263 – 305 (up from 152)
- Scottsdale 85262 – 199 (down from 298)
- Paradise Valley 85253 – 190 (up from 143)
- Scottsdale 85266 – 179 (down from 226)
- Fountain Hills 85268 – 154 (up from 126)
- Casa Grande 85194 – 152 (up from 129)
- Wickenburg 85390 – 151 (up from 94)
- Phoenix 85003 – 150 (up from 88)
- Scottsdale 85255 – 138 (up from 128)
- Wittmann 85361 – 132 (up from 108)
Contract Ratio By Price Range
August 11 – Although it is subject to seasonal effects, the contract ratio is a useful tool for examining the state of a segment of the market. If the contract ratio is rising then the market is heating up and if it is falling the market is cooling. It is quite normal for the market to cool during the third quarter since the second quarter is when the peak buying takes place. So anywhere where the contract ratio is higher in August than it was at the beginning of June is bucking the trend and doing well. Here are how the price ranges compare (August 10 versus July 1, all property types):
|Price Range||Contract Ratio Jul 1, 2017||Contract Ratio Aug 10, 2017||% Change||Comments|
|Under $100K||69.3||67.7||-2.3%||cooling off as normal|
|$125K-$150K||145.2||130.6||-10.0%||cooling off more than normal|
|$150K-$175K||140.4||122.4||-12.8%||cooling off more than normal|
|$225K-$250K||82.9||103.3||+24.6||heating up much more than normal|
|$275K-$300K||71.4||68.4||-4.2%||cooling off as normal|
|$500K-$600K||33.0||36.5||+10.6%||heating up much more than normal|
|$800K-$1M||22.3||25.5||+14.1%||heating up much more than normal|
|$1.5M-$2M||14.8||13.5||-9.0%||cooling off as normal|
|Over $3M||8.2||7.6||-8.2%||cooling off as normal|
Overall this table is unusually positive with the exception of the market over $1 million and between $125K and $175K.
City Ranking – Long Term Price Trends
We have good news for first-time homebuyers! A 10% rise in active single family homes between $150K-$200K over the last 4 weeks caught our eye. Seasonally we expect supply to begin rising in late September, so a turn this early in the year is unusual. This price point has been decreasing nearly every week since November 2016 and is highly competitive amongst buyers and investors alike.
Listings appear to be growing the strongest in Pinal County and the West Valley, particularly noted within the freeway loop of I-17, I-10 and the 101. This provides some slight relief for buyers, but put it in perspective. Today we counted 1,361 single family homes listed for sale between $150K-$200K and there were 1,311 sold last July. Listings under $200K make up 17% of inventory and 35% of sales so far this year. The market is still very tight.
The 10% rise in competition for the single family market between $150K-$200K equates to an extra 137 listings for buyers to view. Glendale, Peoria, Avondale and West Phoenix accounted for 60% of the increase while the City of Maricopa and San Tan Valley accounted for another 38%. Weekly price reductions in this price range have risen 60% in the month of July and 40% of the sales over the last 4 weeks have involved seller-assisted closing costs. Supply in this segment is still 23% below where it was last year, providing sellers a large negotiating advantage. However, the gap between 2016 and 2017 supply has closed 8% in 4 weeks, indicating a slight softening.
Commentary written by Tina Tamboer, Senior Real Estate Analyst with The Cromford Report
Shared with permission of Cromford Associates LLC and Tamboer Consulting LLC ©2017.