Your look at what’s happening in residential real estate throughout Greater Phoenix with a focus on the Northeast Valley cities of Scottsdale, Phoenix, and Cave Creek. This month, prices continue to rise, resale inventory at 5 year lows, and sellers still control the market.
Market Summary | Greater Phoenix | June 2018
Here are the ARMLS numbers as of June 1st, 2018 compared to June 1st, 2017 for Greater Phoenix (all areas and property types).
Active Listings: 16,018 versus 18,476 last year – down 13.3%
Monthly Sales: 10,081 vs 9,858 last year – up 2.3%
Monthly Avg. Sales Price/Square Foot: $164.03 versus $150.51 last year – up 9.0%
Monthly Median Sales Price: $262,900 versus $240,000 last year – up 9.5%
Market Commentary by Michael Orr with The Cromford Report
We can see above that the supply of active listings without a contract dropped again during the month of May but the deficit compared with 2017 narrowed slightly to 13.3%. May was a weaker month for new listings, down about 1% compared to last year. We normally see total supply drop between May and June and we still expect this downward trend to continue until September.
The sales count for May was very strong, topping 10,000 for the first time since 2011. However the number of listings under contract at the beginning of June is much lower than last year – down 6%. Even with this possible sign of wavering demand, supply is so weak that sellers still have a huge advantage in negotiations.
This situation inevitably leads to price increases and the annual rate of change has reached 9% for average $/SF and 9.5% for median sales price. This growth is about 4 times the inflation rate and with interest rates rising, homes are obviously getting less affordable. At some point this trend will impact demand, which is why we are keeping a close watch on the annual sales rate and the number of listings under contract. However we are not at all in the sort of situation we faced in 2005. (During this time homes were appreciating over 10% per month! See the chart below showing the monthly average sale price per square foot and where prices would be with 2-3% annual appreciation since 2000.)
The rise in interest rates does not just tend to lower demand, in the current circumstances it can lower supply too. Home owners with an existing mortgage will be less inclined to move if their next mortgage is going to be at a much higher rate than their existing one. This is more likely to be the case with every passing month. As a result we do not see prices as likely to fall because of interest rate rises, but we do anticipate limited growth in sales volumes.
We started referring to the chronic low inventory over 5 years ago and it is now at the lowest level we have seen during those 5 years. Fluctuations in demand are unlikely to have much impact on the market until we see an increasing trend in listing counts. This was the first sign of a slowdown in April 2005 and will be the first sign of a slowdown if and when we get one in the future. It came suddenly and unexpectedly in April 2005 and it may do the same at any time. However, nobody paid any attention in 2005 and I am assuming we are all older and wiser now.
Shared with permission of The Cromford Report
City Snapshots | June 2018
Here’s a closer look at the numbers for the residential resale market as of May 31st, 2018 compared to May 31st, 2017 in the following cities (single family homes only).
Active Listings: 2,278 versus 2,548 last year – down 10.6%
Monthly Sales: 523 vs 488 last year – up 7.2%
Annual Avg. Sales Price/Square Foot: $249.18 versus $236.55 last year – up 5.3%
Annual Median Sales Price: $545,000 versus $505,000 last year – up 7.9%
Days on Market (monthly sales): 112 versus 108 last year – up 3.7%
Active Listings: 3,543 versus 3,893 last year – down 9.0%
Monthly Sales: 1,590 vs 1,640 last year – down 3.1%
Annual Avg. Sales Price/Square Foot: $161.47 versus $151.23 last year – up 6.8%
Annual Median Sales Price: $250,378 versus $235,000 last year – up 6.5%
Days on Market (monthly sales): 58 versus 64 last year – down 9.4%
Active Listings: 299 versus 325 last year – down 8.0%
Monthly Sales: 88 versus 82 last year – up 7.3%
Annual Avg. Sales Price/Square Foot: $195.07 versus $184.77 last year – up 5.6%
Annual Median Sales Price: $450,000 versus $435,000 – up 3.5%
Days on Market (monthly sales): 77 versus 125 last year – down 38.4%
Active Listings: 703 versus 868 last year – down 19.0%
Monthly Sales: 387 versus 408 last year – down 5.2%
Annual Avg. Sales Price/Square Foot: $158.87 versus $149.75 last year – up 6.1%
Annual Median Sales Price: $316,500 versus $290,000 – up 9.1%
Days on Market (monthly sales): 43 versus 56 last year – down 23.2%
Active Listings: 802 versus 1,017 last year – down 21.1%
Monthly Sales: 487 versus 492 last year – down 1.0%
Annual Avg. Sales Price/Square Foot: $149.39 versus $140.19 last year – up 6.6%
Annual Median Sales Price: $350,000 versus $290,000 – up 8.6%
Days on Market (monthly sales): 49 versus 58 last year – down 15.5%
Active Listings: 235 versus 353 last year – down 33.4%
Monthly Sales: 137 vs 128 last year – up 7.0%
Annual Avg. Sales Price/Square Foot: $167.83 versus $158.68 last year – up 5.8%
Annual Median Sales Price: $298,000 versus $275,000 last year – up 8.4%
Days on Market (monthly sales): 40 versus 59 last year – down 32.2%
Active Listings: 225 versus 281 last year – down 19.9%
Monthly Sales: 64 vs 56 last year – up 14.3%
Annual Avg. Sales Price/Square Foot: $211.78 versus $198.32 last year – up 6.8%
Annual Median Sales Price: $470,000 versus $436,00 last year – up 7.8%
Days on Market (monthly sales): 138 versus 100 last year – up 38%
Active Listings: 350 versus 379 last year – down 7.7%
Monthly Sales: 42 versus 55 last year – down 23.6%
Annual Avg. Sales Price/Square Foot: $367.56 versus $354.80 last year – up 3.6%
Annual Sales Price: $1,684,475 versus $1,412,500 – up 19.3%
Days on Market (monthly sales): 156 versus 175 last year – down 10.9%
Active Listings: 690 versus 652 last year – up 5.8%
Monthly Sales: 331 versus 348 last year – down 4.9%
Annual Avg. Sales Price Per Square Foot: $135.85 versus $126.20 last year – up 7.7%
Annual Sales Price: $237,000 versus $220,000 – up 7.7%
Days on Market (monthly sales): 49 versus 54 last year – down 9.3%
Data and commentary shared with permission by The Cromford Report®
For more information on market conditions in your area and how they may impact your goals to buy or sell, contact us at Info@CarmelleAZHomes.com or call/ text us at 480-648-9253. We’ll discuss your goals, share our proven strategies, and help you come up with a plan of action.
S&P 500 \ Case-Schiller Home Price Index
“June 1 – The most recent S&P / Case-Shiller® Home Price Index® report was released earlier this week and shows a lot of upward movement in pricing. It is based on sales that closed during the first quarter of 2018 and does not include sales from April or May.
The 20 featured cities are ranked as follows for month-to-month change in their index:
- Seattle +2.84%
- San Francisco +2.15%
- Minneapolis +1.65%
- Las Vegas +1.45%
- Denver +1.43%
- Boston +1.18%
- Washington +1.14%
- Detroit +1.11%
- Chicago +1.10%
- Portland +1.01%
- San Diego +1.02%
- Charlotte +1.01%
- Phoenix +0.95%
- Los Angeles +0.94%
- Atlanta +0.78%
- Dallas +0.71%
- Miami +0.66%
- Tampa +0.61%
- Cleveland +0.35%
- New York +0.08%
Despite a strong increase of almost 1%, Phoenix is only ranked in 13% place. It did beat the national index which rose 0.84%.
The year-over-year-changes were as follows:
- Seattle +13.0%
- Las Vegas +12.4%
- San Francisco +11.3%
- Denver +8.6%
- Los Angeles +8.1%
- Detroit +7.9%
- San Diego +7.7%
- Tampa +7.5%
- Phoenix +6.8%
- Portland 6.7%
- Charlotte +6.2%
- Atlanta +6.2%
- Minneapolis +6.1%
- Dallas +5.8%
- Boston +5.7%
- New York +5.2%
- Miami +5.0%
- Cleveland +4.6%
- Washington +3.0%
- Chicago +2.8%
In this table, Phoenix managed to appear in the top half, but its increase was only slightly higher than the national index which rose 6.5%.
So we conclude that although Phoenix is experiencing strong home price appreciation, it is not out of line with the rest of the USA.
Commentary shared with permission of the Cromford Report®
Cromford Market Index – Early Warning For Shifts in Price Trends
May 29 – Despite reports of Greater Phoenix’s housing market being “over-valued” (e.g. CoreLogic), we expect prices to continue rising while the Cromford® Market Index remains over 110. The CMI compares demand with supply and throughout its existence has always given us at least 3 to 6 months warning of any shift in pricing trends. Despite many fears, the housing market always gives plenty of warning before major changes occur, as long as your are paying attention and do not believe “it’s different this time”.
In the chart below you can see the CMI collapsed in 2005 long before prices started falling. The CMI exceeded 100 in early 2009 showing that it was safe to enter the market again. The sharp drop in the CMI in late 2013 warned us that appreciation rates would fall, but because it did not drop far below 100 they never became negative.
The CMI is currently well over 150 and would need to see another collapse below 100 before prices have any significant chance of declining. * Values above 100 indicate a sellers market. Values below 100 indicate a buyers market.
New Construction – Single-Family Permit COunts
May 23 – The US Census Bureau has just released permit counts for the month of April.
In Maricopa and Pinal counties, we see a total of 2,185 single-family permits. This is the highest monthly total since June 2007 and a 19% increase over April 2017. Clearly the builders are planning to compensate for the shortage of re-sale inventory.
The annual rate for single-family permits has risen to 21,163, up 12% from 18,893 this time last year. the year-to-date total in 2018 is 7,334, up 11% over 2017 but still 35% below 2007, which was a year when the market was in the process of collapsing.
Although permit levels are increasing, the rate of change is insufficient to have a big impact on the overall shortage of homes for sale. It is however swinging the balance of supply between new and re-sale in favor of new.
Commentary shared with permission of the Cromford Report®
For more information on market conditions in your area and how they may impact your goals to buy or sell, contact us at Info@CarmelleAZHomes.com or call/ text us at 480-648-9253.