Phoenix Housing Market 2015 – Daily Observations

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Daily Residential Market Report Updates for Greater Phoenix

The Cromford® Report provides detailed information to track the history and current status of the Greater Phoenix residential resale market and offers unique insight into its future direction.

Updated daily and usually published online within a few hours, this site is intended for anyone interested in the state of the market and how it affects their investments and livelihood. Our goal is to present data that is timely, informative and easy to understand – data not available anywhere else in this level of detail or immediacy
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For a better understanding of the phrases and terms considered in the data below, visit: knowing your current real estate market

Daily Market News & Observations

October 25 – The Great Recession of 2008 was started by abnormal lending in the US housing market (and other a few countries’ ) from 2003 through 2007. It spread to the rest of the world causing financial chaos that was only just controlled by swift action at the Federal level by Ben Bernanke. Although unpopular at the time, this action averted far worse financial catastrophe for the US than we actually experienced.

The US housing market is now still far from normal but it faces no significant internal threats at the moment. Instead the biggest danger is that global economic problems spread to our domestic economy and in turn disrupt the local housing market in some as yet unexpected way. This is, in a sense, the opposite of what occurred in 2009.

There is certainly plenty of evidence of abnormal goings on in the global markets. These are probably most obvious in the commodities market, where low demand is causing prices to collapse in many of the world’s most important raw materials and food commodities. The media tends to focus on oil prices , but that is just one of the dozens of commodities where pricing has been very weak over the past year.

Compared with a year ago, the IMF commodity index has fallen for all the following:

1. Crude Oil -52%
2. Liquefied Natural Gas -46%
3. Nickel -45%
4. Natural Gas -38%
5. Hides -35%
6. Iron Ore -31%
7. Pork -31%
8. Coffee (Arabica) -30%
9. Wheat -29%
10. Lamb -27%
11. Sugar -27%
12. Tin -27%
13. Beef -26%
14. Palm Oil -26%
15. Zinc -25%
16. Copper -24%
17. Aluminum -20%
18. Lead -20%
19. Rubber -20%
20. Coal -18%
21. Oranges -18%
22. Rice -18%
23. Shrimp -17%
24. Coffee (Robusta) -17%
25. Fish Meal -16%
26. Soy Beans -16%
27. Logs (Hard) -11%
28. Salmon -9%
29. Wool -9%
30. Logs (Soft) -8%
31. Rapeseed Oil -6%
32. Hard Sawn Wood -6%
33. Barley -4%
34. Peanuts -4%

Only a handful of commodities have risen in price substantially over the last year:

1. Tea +59%
2. Olive Oil +35%
3. Uranium +7%
4. Soft Sawn Wood +4%

With this background, general deflation is a very real threat and the US government is probably very glad that most US citizens don’t realize there is such a looming threat, because a panic would be more likely to bring it on. Many people are still more concerned about inflation, which brings to mind the Einstein quote: “The difference between stupidity and genius is that genius has its limits”.

The other implication is that interest rates could still fall further. The base rates in Denmark, Sweden and Switzerland (all very strong economies) have already gone below zero in 2015.

October 24 – We can tell a lot about how the market is doing by studying the weekly active listings chart comparing all of the last 14 years. That chart can be found here: The Cromford Report – Active Listings October 2015.

The first half of 2015 looks good but the past 2 months do not.

The second half of 2002 was weak and we ended the year with far more supply that we started. In 2015 supply fell much faster than in 2002 but has rebounded and looks like it will exceed the January 1 count in the next few weeks. However this does not mean we will definitely end the year higher than we started, as active listings tend to fall every December. The pace of increase is very similar to what we experienced in September and October 2002. It is not clear yet whether that pace will continue through the end of the year.

The shape of the chart in the second half of 2015 is similar to last year, which is not a very healthy sign. On the other hand it is nowhere near as weak as the second half of 2013.

October 23 – Today we look at the opposite of yesterday’s post. Here are the ZIP codes with the highest inventory relative to both their short term and long term averages:

Rank	ZIP Code	Days of Inventory	% Short Term Average	% Long Term Average
1	Chandler 85286	103	116%	166%
2	Phoenix 85085	143	104%	170%
3	Glendale 85305	107	104%	158%
4	Wittmann 85361	183	115%	140%
5	Casa Grande 85194	232	136%	119%
6	Scottsdale 85266	270	136%	119%
7	Mesa 85207	136	107%	141%
8	Laveen 85339	84	110%	137%
9	Phoenix 85048	116	100%	146%
10	Phoenix 85021	111	130%	116%
11	Queen Creek 85142	94	108%	134%
12	Phoenix 85003	176	100%	139%
13	Phoenix 85013	93	119%	119%
14	Gilbert 85234	77	114%	124%
15	Phoenix 85083	98	103%	133%
16	Scottsdale 85262	357	118%	118%
17	Chandler 85249	119	105%	130%
18	Phoenix 85054	183	100%	135%
19	Phoenix 85045	153	86%	148%
20	Chandler 85226	69	109%	125%

These are the areas where buyers are seeing the most favorable trends. North Scottsdale and South Chandler are prominent in this list. High figures in the last column indicate a lot of supply compared with the normal level for the area, while a high number in the fourth column indicates supply has increased recently. In 85045, supply is very high (148% in last column), possibly due to the impact of the freeway project, but the recent trend is for things to improve for sellers (86% in column 4).

October 22 – Based on their current Days of Inventory versus their short and long term average, the following are currently the hottest ZIP codes in the Greater Phoenix area:

Rank	ZIP Code	Days of Inventory	% Short Term Average	% Long Term Average
1	Surprise 85378	41	87%	50%
2	Mesa 85202	32	85%	63%
3	Avondale 85323	38	85%	70%
4	Sun City 85351	46	116%	41%
5	Glendale 85302	36	90%	68%
6	Phoenix 85040	37	97%	66%
7	El Mirage 85335	27	102%	64%
8	Phoenix 85023	54	85%	82%
9	Casa Grande 85193	132	88%	82%
10	Phoenix 85037	38	89%	82%
11	Glendale 85307	35	96%	76%
12	Glendale 85301	47	97%	75%
13	Scottsdale 85257	47	105%	67%
14	Glendale 85304	30	101%	77%
15	Phoenix 85050	60	91%	88%
16	Phoenix 85019	43	104%	77%
17	Scottsdale 85260	86	95%	87%
18	Phoenix 85034	68	88%	95%
19	Mesa 85208	73	114%	69%
20	Surprise 85374	79	118%	67%

These are the locations where selling is easiest and buying is often very tough going.

October 21 – The Ellie Mae Origination Insight Report for September claims to show evidence of some easing in underwriting. The average FICO scores for all closed loans came in at 723, the lowest score since the report started in August 2011.

However closer inspections shows this to be quite misleading. When we look exclusively at purchase loans we find

• FHA average closed FICO = 689 (682 last year)
• Conventional average closed FICO = 755 (754 last year)
• VA average closed FICO = 707 (705 last year)

The looser underwriting was confined to refinancing:

• FHA average closed FICO = 661 (676 last year)
• Conventional average closed FICO = 728 (732 last year)
• VA average closed FICO = 707 (702 last year)

In the case of VA, underwriting looks tighter than in September 2014, for all types of loans. Conventional and FHA refinances looked easier to obtain. however.

We are primarily interested in purchase loans and the average approved FICO score was higher than last year for all types of loans, according to the Ellie Mae report.

October 20 – One of the best journalist reporters on real estate matter is Prashant Gopal who writes for Bloomberg. His piece published today makes interesting reading and reflects the concern we have for the entry level housing market.

Using ARMLS data for non-distressed sales across Greater Phoenix:

• The monthly average sales price per sq. ft. for homes priced below $200,000 has increased by about 7.5% over the past year, from $93 to $100
• The monthly average sales price per sq. ft. for homes priced between $200,000 and $500,000 has increased by just under 4% over the past year, from $130 to $135
• The monthly average sales price per sq. ft. for homes priced between $500,000 and $1 million has increased by less than 1% over the past year, from $196 to $197
• The monthly average sales price per sq. ft. for homes priced over $1 million has fallen by 14% over the past year, from $369 to $317 – note this is quite a volatile number due to the low number of samples each month, but the general pricing trend is clearly negative over the past 12 months, particularly for the highest price ranges..

Clearly prices are moving up much faster at the lowest end of the market, less quickly in the mid range and they are declining at the top end in most areas.

With demand from millennials likely to grow over the next decade while demand from baby boomers declines, these trends appear likely to become stronger. Demand at the low end will continue to outstrip supply, while supply remains relatively plentiful at the high end in all but the most popular areas. Whether the high end recovers from its current lull will probably have a lot to do with the global economy and the fortunes of the stock market.

October 19 – Pricing has been weaker than expected during the third quarter in several areas, one major example being the Biltmore District. Although recorded Biltmore District sales are up 42% compared with the third quarter of 2014, the average sales price is down 16% from a year ago and the quarterly average price per square foot is down 14%. Part of this is due to stronger volumes below $1 million and particularly strong sales among the cheaper condominiums. High end sales volume has been weak. Nevertheless, quarterly average $/SF pricing is down in all price sectors compared to a year ago. 3 completed trustee sales (representing 7% of sales volume) did not help matters. There were none in 3Q 2014.

The annual average price per sq. ft. is back down to $270, the same point as in September 2014, having peaked at $283 as recently as May 2015. The Biltmore District’s luxury neighboring areas, Paradise Valley and Arcadia have fared much better with their long term upward pricing trends intact, if a little weaker than 3 months ago.

October 18 – The new home market was stronger in September than it has been for many years, at least as far as unit volume is concerned. 997 deeds were recorded across Maricopa County for newly constructed single family and condo properties. This is the highest unit total since December 2008, when George Bush was still president. New homes represented 12.2% of the deeds recorded in September. This is not an exceptional percentage. In fact we have seen 8 months with higher percentages since October 2012. Year to date, new home have represented 9.7% of deeds recorded, down from 10.1% during the same nine months of 2014.

The median sales price for new homes across Maricopa County was $301,427. This is down 2.5% from 12 months ago and the lowest median since November 2013.

October 17 – The Cromford® Market Index for all areas & types is currently falling by about 1.5% a week. Most of this (1.4%) is due to increases in supply. Demand has fallen slightly since August but has held up reasonably well and the Cromford® Demand Index fell only 0.2% over the last 7 days. The rate of sales per month is presenting a more positive picture than the number of listings under contract. There are no really negative effects going on here, just an absence of the positive trends we saw from February through August, which is causing a drift back towards the normal zone between 90 and 110.. At 138.9, the index currently remains in seller’s market territory, but it is not as strongly favoring sellers as it was on August 30 when the index stood at 148.4.

October 16 – The consumer price index (CPI) for September 2015 stands at 237.945. In September 2014 it stood at 238.031. Not much change but this counts as another month with negative annual inflation of -0.04%. When seasonally adjusted, the fall was even greater at -0.2%

We have seen negative inflation (CPI unadjusted) in 6 out of the 9 most recent months. Inflation also turned negative in Europe raising expectations of additional Quantitative Easing by the European Central Bank.

Many people look at the core CPI which excludes food and energy prices. This rose 0.2% between September 2014 and September 2015. Some suggested this points to an increase in rates by the Federal Reserve in December. However, inflation rates are so consistently weak that a short term increase in interest rates is probably less likely than it was a month ago.

The greatest price rises over the last 12 months were in motor vehicle insurance, hospital services, tobacco and rental of primary residences.

The greatest price reductions were in oil related items, natural gas, dairy products, motor vehicles and apparel.

The annual change in the average price per sq. ft. across all areas & types stands at 6.0% right now. With the buying power of the US dollar stationary according to the CPI, this is a good rate of return for all types of investors in Greater Phoenix housing, especially those with leverage (like most owner occupiers).

The downside is that continued increases in home prices are likely to have a dampening effect on demand, as the gap between wages & prices continues to grow. Having said that, most people need shelter of some sort and rents are also increasing at a much stronger rate than usual. So members of the general public are faced with the cost of shelter taking up an increasing percentage of their spending, no matter whether they buy or rent. At least those who are able to buy are benefitting from a strong appreciation of the asset they now own. Tenants have no such benefit accruing from the rent they pay.

October 15 – The Cromford® Market Index for the single family markets in the 17 largest cities shows more weakness developing , but a couple of bright spots.

15 out of 17 cities have seen their markets weaken over the last month for sellers, although only one (Buckeye) has fallen below 100 suggesting a slight advantage now exists in Buckeye for buyers. The most significant deterioration occurred in:

1. Paradise Valley -18%
2. Buckeye -13%
3. Tempe -9%
4. Chandler -8%
5. Gilbert -7%
6. Peoria -6%
7. Surprise -6%
8. Avondale -6%
9. Scottsdale -6%

Fountain Hills (+6%) and Cave Creek (+5%) are the 2 bright spots, helped by the recent strength in the $500,000 to $1,000,000 price range. Paradise Valley has been hit by a precipitous fall in demand for high end luxury homes which is probably connected to recent uncertainty in the stock market.

Most areas have been negatively affected by a stronger rise in inventory than in 2014 at this time. There are just 3 of the 41 largest cities where inventory fell over the last 30 days:

• Tolleson – down 8%
• Avondale – down 8%
• El Mirage – down 6%

The market in all 3 of these continues to strongly favor sellers.

Extremely strong growth in supply has occurred in:

1. Gold Canyon +29%
2. Arizona City +28%
3. Sun Lakes +26%
4. Apache Junction +18%
5. Sun City West +16%

October 14 – After 2 full weeks the number of new listings added during the fourth quarter is running 5.9% ahead of last year, but 5.7% below 2013. This is consistent with a slowing market. Back in the fall of 2013 the market was deteriorating at a rapid pace. This year it is cooling but nowhere near as fast as in 2013

October 13 – The annual sales rate has been on a rising trend since October 2014, but this now appears to have run out of steam. We can add this to the list of symptoms of a cooling market.

October 12 – The average price per square foot for pending listings across all areas & types has exceeded $140 for the first time since May 8, 2008. The rising trend in the price of pending listings has yet to be followed by a rise in the average price per sq. ft. for monthly sales. This number has hovered around $132 to $133 for several months. However a 3% rise in the price of pending listings is not something that can be resisted for long. We expect to see some strengthening of recorded sales prices over the next 30 days.

October 11 – There are three options offered by the state of Arizona when a buyer is filing their Affidavit of Value for a home they are purchasing:

1. To be used as a primary residence.
2. To be rented to someone other than a qualified family member.
3. To be used as a non-primary or secondary residence.

One of these is supposed to be selected for single family residences, condos, townhouses, 2-4 plex, mobile home or manufactured home.

The exact wording may differ as there are a large number of variants of this form. Recently we have seen a few forms with options B and C reversed which caused some unnecessary confusion.

The biggest problem for us comes with buyers who are neither intending to occupy nor rent out the home. Typically these are fix and flippers of some kind. “None of the above” would be a handy option, but this has not been available as a choice. Until 2012 option C was not available either and these fix and flippers would almost always choose option B. Increasingly we are seeing a minority of flippers choose option C. Ideally we would have liked to see all investors use option B so we can keep track of investor activity accurately. In 2015 we see investors use option C in about 10% of cases, and the percentage appears to be growing. In the current situation option C is clearly being over-used which therefore over-states the level of purchases of vacation or second homes and under-states the level of investor activity.

Over time, we try to correct for these mis-recorded affidavits as much as we can, but, as is often the case, interpreting real estate data can be a very messy business, and it takes time for us to fix the problems. With over a million documents recorded a year in Maricopa County alone, the challenge is significant.

This month we see light at the end of the tunnel, because we have seen the first affidavit with a fourth option:

D. To be used as an investment property

Assuming this format of document becomes widespread, future analysis of intended use will become easier.

October 10 – As usual the Cromford® Market Index gave us the first major indication of a weakening in the market. It started to decline about a month ago. Several of our favorite market indicators have now started to follow suit and trend in a direction that is unfavorable for sellers.

The days of inventory chart has been trending up since September 12.

The pending listing count chart is giving a neutral signal and is not improving relative to last year as we hoped it would.

The contract ratio has been trending lower since July, but since it is a seasonal measurement we could not tell if the fall was significant until it started to fall more precipitously in the second half of September.

The listing success rate chart has been trending down since September 26.

The monthly sales chart is giving a neutral signal, but it is usually slower to respond that the ones above.

The pending sales $/SF is strongly positive and the monthly sales $/SF is weakly positive.

Because of the latter two charts we expect sales prices to improve in the short term, despite the weakening. After all, the CMI is still well above 100 and although there is no longer any upward price pressure in the high end luxury market, the low end still has room to run.

We will have to wait to see how long the downtrend in the CMI will last. Since it is out earliest leading indicator we have nothing to warn us of an impending change in its direction.

October 9 – During September we saw a massive change in the sales mix compared with one year earlier.

Single family homes with closed sales prices between $500,000 and $1 million were far more in demand than last year, especially those just below the million mark. Between $1 million and $1.5 million interest starts to drop off and by the time we reach $1.5 million demand is lower than last year. Only 1 home sold for more than $3 million in September, which contrasts with 9 homes over $3 million in September 2014, which sold for a combined total of $45 million.

Demand from $150,000 up to $500,000 was up nicely from last year (15% to 32%), but below $150,000 revenue was constrained by the shortage of homes for sale.

October 8 – Most weeks we take a look at the single family markets in the top 17 cities and see how their Cromford® Market Index has moved over the last month. This week we do not see a pretty picture:

16 out of 17 cities have seen their market deteriorate for sellers over the last 30 days. The only exception, Glendale, has seen its market deteriorate too, but only since September 26.

The biggest percentage falls in the CMI were in:

1. Buckeye -13%
2. Tempe -9%
3. Paradise Valley -7%
4. Chandler -7%
5. Surprise -7%
6. Peoria -6%

The general picture is that supply is rising while demand is falling. Neither trend is dramatic, but given how strong the market has been since March, the combined effect has caused many agents to observe a marked cooling down over the past few weeks.

We now have 4 of the 17 cities below 110 in the “balanced zone”, namely:

1. Buckeye
2. Cave Creek
3. Queen Creek
4. Maricopa

Before we get too despondent we should remind ourselves that the remaining 13 cities are still above 110 and therefore “seller’s markets”

There are a few smaller cities where the CMI is still showing a positive trend. These are:

1. Anthem
2. El Mirage
3. Litchfield Park
4. Tolleson

However, these are the only ones.

October 7 – The high end of the market over $1 million had an excellent second quarter, with $742 million in dollar revenue. This was the fourth best year for million dollar home revenue since 2001 (only 2005 through 2007 were higher). Dollar volume increased by 22% over the second quarter of 2014. The market was particularly strong in the northeastern areas inside the 202 loop. The Luxury Home Tour Area, which includes Paradise Valley, Arcadia and the Biltmore District, saw the highest dollar volume since 2001. However demand weakened in the third quarter with a total of $402 million in million dollar home revenue, just a shade higher than the third quarter of 2014 at $401 million.

We are looking again at the latest days of inventory data which compares the number of active listings, excluding UCBs, with the annual sales rate. The strongest areas have from 250 days up to a year of inventory. These include Paradise Valley, Arcadia and most of Scottsdale from the south up to the southern edge of the McDowell Mountains. The top ZIP codes in pink below are seeing the lowest inventory (under 365 days).

Rank	City	ZIP	Active (not UCB)	Annual Sales	Days of Inventory
1	Phoenix	85018	65	94	252
2	Scottsdale	85251	29	40	265
3	Scottsdale	85254	19	26	267
4	Scottsdale	85260	21	28	274
5	Scottsdale	85250	8	10	292
6	Scottsdale	85258	23	28	300
7	Scottsdale	85259	66	73	330
8	Paradise Valley	85253	251	268	342
9	Phoenix	85016	41	38	394
10	Phoenix	85044	11	10	402
11	Tempe	85284	11	10	402
12	Scottsdale	85255	255	230	405
13	Phoenix	85048	9	8	411
14	Gold Canyon	85118	14	11	465
15	Scottsdale	85262	224	159	514
16	Fountain Hills	85268	56	36	568
17	Mesa	85207	27	16	616
18	Scottsdale	85266	70	41	623
17	Phoenix	85012	8	4	730
20	Carefree	85377	39	19	749
21	Gilbert	85298	9	4	821
22	Cave Creek	85331	35	15	852
23	Chandler	85249	13	5	949
24	Peoria	85383	14	5	1,022

We can see the strong market in Arcadia, which includes parts of 85018 and 85251, in first and second place.

The next 8 ZIP codes have between 365 and 600 days of inventory and are well supplied for the demand over the past year. These include the Biltmore District, Ahwatukee, South Tempe, Gold Canyon, Fountain Hills and much of North Scottsdale. These can be considered moderate markets.

The bottom 8 ZIP codes, colored turquoise, have more supply than they need for the relatively low demand they have experienced over the past year. This makes life harder for sellers and the agents who represent them. Within the Northeast Valley these include the northwestern areas – Cave Creek, Carefree and Scottsdale 85266. The luxury areas of Mesa, Gilbert, Chandler and Peoria are also in this group along with the Uptown area of Phoenix. List price cuts are going to be more commonly seen in these areas. However this group is relatively small, representing only 9% of million dollar sales and 16% of million dollar inventory.

56% of million dollar sales are in just 3 ZIP codes – 85253, 85255 and 85262, which have moderate days of inventory at 342, 405 and 514. We again note among these 3 that the closer the area is to the airport, the stronger the market is for sellers.

October 6 – For the first time in a long while we are seeing some states show an increasing loan delinquency trend over the past few months. According to Black Knight Financial Services the following states had a higher percentage of first home loans in some form of non-current status in August compared with March

State	March 2015	August 2015
Mississippi	12.4%	12.9%
Louisiana	9.7%	10.1%
Maine	8.9%	9.0%
Alabama	8.6%	8.8%
West Virginia	7.8%	8.2%
Indiana	7.6%	8.1%
Arkansas	7.8%	8.0%
Pennsylvania	7.6%	7.7%
Tennessee	7.4%	7.6%
Oklahoma	7.0%	7.5%
Georgia	7.1%	7.3%
Ohio	7.1%	7.2%
New Mexico	6.4%	6.6%
Texas	6.0%	6.5%
Kentucky	6.2%	6.3%
Missouri	5.8%	6.0%
Kansas	5.6%	5.8%
Iowa	4.8%	5.1%
Nebraska	4.1%	4.3%
Wyoming	3.9%	4.2%
Montana	3.3%	3.5%
South Dakota	3.2%	3.4%

Arizona’s loan delinquency was stable at 3.9% in both months.

It is striking that several of these states are strongly associated with the oil and gas industry. This slight increase may be an early sign of a weaker job market associated with the energy and raw material industries.

It is also striking that the West Coast (California, Oregon, Washington) saw the opposite trend with lower delinquency rates. So did New Jersey, New York and Florida, some of the states worst affected by loan delinquency, but now seeing an improving trend.

October 5 – For some 9 years we have been using information about pending listings to predict both the volume and price of future sales. This work gives us about 1 months extra notice of impending changes in sales activity. We were interested to see CoreLogic documented something very similar in their blog this month. They confirmed the high correlation between pending sales and closed sales, both for volume and price.

Since the ascent of UCB, discussed yesterday, it has been advisable to include a proportion of UCB listings into the formula in order to accurately reflect the fact that a large percentage of UCB listings would have been pending in earlier times. Our best chart for studying the movement of under contract pricing can be found here. This chart allows you to include or exclude UCB listings from the calculation, as well as filter on dwelling type, county, city, ZIP and transaction type.

As of yesterday the overall Greater Phoenix $/SF for under contract listings has just made a new high of $140.78 (weekly average). The short term upward trend is even more obvious if you exclude UCB listings. It is also more positive for condo properties than it is for single-family.

If we select only the northeastern cities of Carefree, Cave Creek, Fountain Hills, Paradise Valley & Scottsdale, the picture is less positive and there has been very little sustained progress on under-contract $/SF pricing since early 2014. In contrast, doing something similar with the west valley cities illustrates how strong the pricing trend has been in the part of the valley, with under contract $/SF pricing moving from about $96 in January 2014 to $110 today.

October 4 – The use of UCB (Under Contract Accepting Backup Offers) has increased dramatically over the last few years. Back in 2012, UCB was used primarily for short sales (of which there were plenty). Only 13% of normal listings that were under contract would typically be given UCB status and the other 87% would be pending. Today some 34% of normal listings under contract are given UCB status and only 66% are pending. Last year at this time the ratio was 28% to 72% and 12 months before that it would typically be 25% to 75%.

Usage of UCB status is not uniform across the valley. It tends to be used more in higher priced locations. In fact this was true even back in 2012

City	Normal: UCB as % of Under Contract 2012	Normal: UCB as % of Under Contract 2015
Paradise Valley	28%	48%
Cave Creek	20%	48%
Scottsdale	22%	46%
Fountain Hills	25%	43%
Tempe	15%	40%
Phoenix	14%	37%
Chandler	13%	36%
Mesa	14%	33%
Avondale	7%	33%
Glendale	9%	32%
Gilbert	9%	32%
Goodyear	11%	32%
Peoria	7%	30%
Buckeye	9%	28%
Surprise	7%	26%
Queen Creek	6%	26%
Maricopa	8%	22%

UCB is a big problem for market analysts. Officially these UCB listings are part of the supply since they are active and still accumulating days on market. In reality, more than half of the normal UCB listings would traditionally be in pending status and therefore be considered part of the demand.

October 3 – The most striking thing that has happened over the last few days is the sudden surge in new listings being added to ARMLS. Thursday and Friday are always very popular for adding listings and in the last 2 days we have seen 1,155 new entries. The is the largest number for any 2 day period since March 2011. Back then lenders were still adding REOs like they were going out of style (which they were).

If we look at listings with a list date of October 1 or October 2 and segment them by price range we find an obvious bias towards higher priced listings compared with the same dates last year:

• Under $100K – down 49%
• $100K-$200K – down 9%
• $200K-$400K – up 18%
• $400K-$800K – up 31%
• Over $800K – up 35%

The locations with the largest growth in new listings compared with early October 2014 are:

1. Paradise Valley +150%
2. Anthem +133%
3. Laveen +120%
4. Queen Creek +58%
5. Chandler +57%
6. Glendale +48%
7. Buckeye +39%
8. Avondale +33%
9. Tonopah +33%
10. Tempe +27%
11. Surprise +19%
12. Goodyear +18%
13. Gilbert +14%
14. Sun Lakes +13%
15. Apache Junction +6%
16. Scottsdale +6%

In contrast we are not seeing any increase in new listings compared with last year in Sun City, Sun City West, El Mirage, Maricopa, Casa Grande, Arizona City, Eloy, Tolleson, Litchfield Park, Fountain Hills or (very importantly) Phoenix.

It is very early days yet, but this feels like we might have experienced a change in seller sentiment and we will be watching new listing counts closely over the next few weeks.

October 2 – The Cromford Market Index table for the single family markets in the 17 largest cities presents more negative trends than any table we have seen since January:

The good news is that every single number remains above 100, but 12 out of 17 are in decline and only 5 have improved over the last month, none by a large percentage.

The most positive upward trend for sellers was seen in:

1. Glendale +5%
2. Paradise Valley +4%
3. Maricopa +3%
4. Goodyear +2%

The ares with the fastest deteriorating conditions for sellers are:

1. Buckeye -12%
2. Surprise -9%
3. Tempe -9%
4. Cave Creek -8%
5. Fountain Hills -6%
6. Chandler -4%

October 1 – There has been a noticeable increase in the rate of arrival of new listings over the past 3 months. We always try to measure in multiples of 7 days in order to allow for the 7 day new listing cycle. Over the past 28 days we have seen 8,750 new listings added, an increase of 4.5% over the same period last year. The difference for last 7 days was 6.5% higher than last year. We still have a long way to go before supply could be considered normal, but the trend is now in that direction.
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From June 6, 2014 through June 1, 2015 the annual change was negative, but from June 2 onwards most of the weekly comparisons show more listings than last year.

September 2015

September 30 – The maximum reached by the Cromford® Market Index this year was 148.4 on August 30. Since then the market has deteriorated from a seller’s perspective. The Cromford® Demand Index has fallen back from 101.3 to 99.8 while the Cromford® Supply Index has increased from 68.3 to 69.4. These changes are very small, but they are both working against sellers and the trend has been gathering a little momentum over the last few days.

September 29 – The S&P / Case-Shiller® Home Price Index® for the period May through July 2015 is published today.

The ranking table based on the annual change is as follows:

1. San Francisco 10.4%
2. Denver 10.3%
3. Dallas 8.7%
4. Portland 8.5%
5. Seattle 7.3%
6. Miami 7.3%
7. Las Vegas 6.2%
8. Los Angeles 6.1%
9. Atlanta 5.8%
10. Tampa 5.5%
11. San Diego 5.4%
12. Detroit 5.4%
13. Charlotte 4.9%
14. Phoenix 4.6%
15. Boston 4.3%
16. Minneapolis 3.6%
17. Cleveland 3.1%
18. New York 1.9%
19. Chicago 1.8%
20. Washington DC 1.7%

Phoenix has an increase of 4.6% which is very close to the national average of 4.7%. We are not used to being so unremarkable. Our remaining claim to fame is having the longest streak of price increases, largely because Phoenix was the first of the 20 cties to start its recovery.

Homes.com just published a release stating that 55% of the top 300 markets have achieved what they call “full price recovery”, i.e. prices are now higher than the previous peak before the bubble popped. This is certainly not true of Phoenix. We would have to see another 48% increase in our Case-Shiller HPI to get back to the level of July 2006. In fact only 3 of the 20 cities highlighted by Case-Shiller have achieved full price recovery. Here are the percentage increases we would need to see to achieve full price recovery in each city.

1. Las Vegas 62.6%
2. Phoenix 47.6%
3. Miami 39.5%
4. Tampa 39.3%
5. Chicago 26.4%
6. Detroit 22.8%
7. New York 19.6%
8. Washington DC 17.3%
9. San Diego 16.6%
10. Minneapolis 16.3%
11. Los Angeles 15.0%
12. Cleveland 11.8%
13. Atlanta 8.4%
14. Seattle 4.9%
15. San Francisco 1.2%
16. Portland 1.1%
17. Charlotte 1.0%
18. Boston – full price recovery
19. Dallas – full price recovery
20. Denver – full price recovery

Las Vegas is clearly the true “poster child” of the housing boom and bust. Phoenix is its closest “poster sibling” and Miami and Tampa are not far behind.

Boston had a smaller bubble than most cities, enabling it to recover more easily.

Dallas and Denver barely had bubbles at all, and they have been in full price recovery for quite some time. Denver’s HPI is now 22% higher than its previous peak in August 2006. It surpassed that level as long ago as May 2013.

September 28 – Despite a slight weakening in demand over the last month and a mild improvement in supply, the continued shortages at the lower end of the market are expected to cause average and median pricing measures to rise over the next 3 months. The average price per square foot for pending listings across all areas & types has breached $139 for the first time since May 12, 2008. The monthly average sales price per square foot has recovered to $133 following the usual summer slump. The monthly median sales price is back to $212,500 having dipped to $208,000 during early September. We should not expect anything spectacular, but pricing pressure for the overall market is likely to remain positive for the rest of 2015. Once again, this effect will be strongest in the lowest priced areas and weakest in the most expensive areas that are distant from urban centers.

September 27 – Multi-family permits numbered 953 for August across Maricopa and Pinal Counties. The annual average seems to have settled to a range between 7,000 and 8,000 units. This is similar to what we were seeing in 2004.

So far during the second half of 2015, the most popular spots for multi-family permits have been Chandler (712), Phoenix (612) and Tempe (364). Nowhere else has exceeded 36.

September 26 – An affordable home in a not-very-fashionable part of San Francisco CA looks something like this:

This is currently an active MLS listing with a list price of $388,000, a 996 sq. ft. single-family home built of wood in 1981 within a condominium, with 2 bedrooms & 1 bath. So that is $390 per sq. ft., making it easily one of the cheapest homes in the area. Zillow has a Zestimate of $618,907 for it, so maybe it is a bargain? The Zestimate even went up $81,048 in the last 30 days. Just kidding.

Estimated rent according to Zillow is $3,700 per month.

For $10 less ($387,990) in Peoria AZ you could buy this brand new Taylor Morrison home instead:

This 2 story single-family detached home in Tierra del Rio has 3,958 sq. ft. ($98 per sq ft) with 5 bedrooms and 3.5 bathrooms plus den, granite counter tops, 3 car garage. The lot is 10,203 sq. ft. This would be considered a huge lot anywhere in the San Francisco Bay area.

I do not think Greater Phoenix has an affordability problem.

September 25 – There were 1,542 single-family building permits issued in August for Maricopa & Pinal Counties. This is the lowest total of the last 5 months but is a huge 78% increase over August 2014 when we only saw 867. The 12 month rolling average has increased to 14,820. We have already seen 11,394 year to date, far higher than any year since 2007.

The top locations for permits were:

1. Phoenix – 238
2. Gilbert – 173
3. Mesa – 153
4. Pinal County – 138 (mostly San Tan Valley)
5. Peoria – 132
6. Chandler – 129
7. Goodyear – 113
8. Unincorporated Maricopa County – 95
9. Queen Creek – 89
10. Buckeye – 80

We suspect that labor shortages will limit the speed with which these homes are actually completed.

September 24 – Things are starting to look a little less rosy for sellers when we examine the Cromford® Market Index for the single-family markets in the top 17 cities:

We have 10 cities out of 17 showing some deterioration, although it must be pointed out that almost all are still above the neutral 100 level. Only Cave Creek has come back down to neutrality. Many are still a very long way above 100.

Showing the biggest declines over the last month are:

1. Cave Creek -11%
2. Surprise -10%
3. Buckeye -9%
4. Tempe -8%
5. Fountain Hills -8%

Those showing significant improvement over the last month are:

1. Paradise Valley +15%
2. Maricopa +9%
3. Glendale +7%
4. Goodyear +5%

Having said this, Glendale and Goodyear are the only two that have shown short term improvement over the past week. Mesa is stationary over the past week but the other 14 cities have all some degree of deterioration over the very short term.

We stress that this development does not mean that prices will fall. It means upward price pressure will probably be slightly reduced if the current trend continues. For prices to fall we need the CMI to drop significantly below 100 for a sustained period and we are a long way from that. However a small easing in the supply shortage coupled with slightly lower demand with make things a little less unbalanced and reduce some of the bargaining power that has worked in most sellers’ favor.

September 23 – When we look at the market for homes over $1,000,000 we see stronger sales turnover in the inner parts of the Northeast Valley, mainly inside the 101. We examined the days of inventory which compares the number of active listings, excluding UCBs, with the annual sales rate. The strongest areas have from 200 days up to a year of inventory. These include Paradise Valley, Arcadia and most of Scottsdale from the south up to the southern edge of the McDowell Mountains.

Rank	City	ZIP	Active (not UCB)	Annual Sales	Days of Inventory
1	Scottsdale	85254	16	27	216
2	Scottsdale	85258	19	28	248
3	Phoenix	85018	70	93	275
4	Scottsdale	85260	22	28	287
5	Scottsdale	85259	58	73	290
6	Paradise Valley	85253	241	269	327
7	Scottsdale	85250	9	10	329
8	Scottsdale	85251	34	36	345
9	Phoenix	85044	10	10	365
10	Phoenix	85048	8	8	365
11	Phoenix	85016	39	38	375
12	Scottsdale	85255	234	227	376
13	Tempe	85284	10	9	406
14	Gold Canyon	85118	13	11	431
15	Scottsdale	85262	208	156	487
16	Fountain Hills	85268	49	36	497
17	Phoenix	85012	7	5	511
18	Mesa	85207	27	17	580
19	Scottsdale	85266	68	40	621
20	Carefree	85377	39	19	749
21	Chandler	85249	11	5	803
22	Peoria	85383	12	5	876
23	Cave Creek	85331	37	13	1,039
24	Gilbert	85298	9	3	1,095

There are then a bunch of moderately performing areas with between 365 and 500 days, shown in white above. These include Ahwatukee, the Biltmore District, Fountain Hills, Gold Canyon and much of North Scottsdale. At the bottom with very slow turnover are areas with more than 500 days of inventory. Selling a luxury home in South Gilbert, Cave Creek, North Peoria, South Chandler or Carefree involves a lot of patience right now.

September 22 – Institutional investors Starwood Waypoint and Colony are planning to merge in an all stock deal. This is very unlikely to have much of an immediate impact on the Phoenix housing market. We find that Colony owns about 1,350 rental homes in Maricopa County while Waypoint owns about 200. With approximately 1,550 rental homes owned by the joint operation, this makes them larger than Silver Bay but smaller than Blackstone and American Residential Properties. There has been little buying or selling going on by institutional investors in our market since August 2013. There was a bulk sale from American Residential Properties to American Homes 4 Rent in June, but an average monthly acquisition of 46 properties per month is negligible compared to the average of 679 that occurred between May 2012 and August 2013.

Institutional sales have averaged 25 per month since January 2014. Again, this is negligible in the context of the overall market.

September 21 – Population growth is one of the main drivers of demand for housing. This appears painfully obvious, but what happens if and when the population stops growing? We can see the effects by studying the housing market in Japan. Population decline is a very serious problem in Japan, due to low birth rates and feeble immigration.

More than 8 million homes are already empty across Japan because there are too few people to need shelter and younger generations have shifted to a more urban environment. Economists project that number may reach 21.5 million unwanted homes by 2033. In this kind of situation, millions of the least attractive homes quickly become worthless. This problem is compounded by a tax system that allows people to depreciate their homes to zero in 20 years, causing homes to be built for a short usable life. These homes become worthless for several reasons.

In Japan only 15% of homes sales go through the secondary market. Some older homes just sit there and decay. Some can be converted into cheap rentals. Others quickly become uninhabitable. In Arizona about 10-12% of homes sales are new and the remaining 88%-90% go through the secondary market. We are fortunate to have had a constant inflow of new inhabitants (except for 2009) which sustains a good level of demand.

The population of Japan was 127,650,000 as of March 2012, making it the world’s tenth most populous nation at the time. It has since been overtaken by Mexico and it is believed that the population has been in decline since 2008. The Japanese National Institute of Population and Social Security Research expects the population to decline every year over the near term, reaching 86 million in 2060. This will occur despite Japan having one of the best medical systems in the world which achieves a life expectancy of over 83 years (compared to 78.74 for the USA). The current life expectancy in Arizona is 79.6 years, a little higher than the US average. Interestingly, the life expectancy of a an Asian American in Arizona is a little higher than average at 80.8 years.

All these people living longer does not help population growth because they are past the family-creation stage in life. The number one economic challenge that Japan faces is a shortage of births. Fewer babies are born than the number of people that die each year. Over the past 5 years only 8.4 children were born per 1,000 Japanese inhabitants. Until recently this was the lowest birth rate among any major country. However, Japan has now been outdone by Germany which saw only 8.2 children born per 1,000 inhabitants over the past 5 years.

Germany has a not so secret weapon to try to keep its economy afloat in the coming decades – young immigrants of child-bearing age. These days it is common to hear immigration discussed as if it were an economic problem. There are undoubtedly some negative aspects of immigration. But to an economist, rather than a politician, strong immigration flow is a very helpful factor in growing the economy of the receiving country and avoiding deflation. This is true even when those immigrants are impoverished and desperate refugees from war and political conflicts.

Alarmingly low birth rates have now spread from Japan to much of the developed world. They would be lower in the USA if it were not for the higher than average fertility of first-generation immigrants (of all nationalities and races). From the perspective of a housing analyst, maintaining a strong net flow of new immigrants and especially their babies, could very well be the crucial factor in keeping the market for housing healthy over the next decade or two.

September 20 – By a strange coincidence the number of new listings added year to date is 84,194, exactly the same as on September 20, 2013. It is also barely changed from September 20, 2014 when we saw 84,186. All three years are up about 2% from 2012 at this time.

Clearly there has been no significant change in the number of listings being added to MLS for the past 3 years. However this year has been catching up with that normal trend since it was down as much as 4% in March this year. The increase since March is another reason to expect a slight improvement in the situation for buyers going forward.

September 19 – Supply is increasing again, although this is usual for the time of year. The total number of active listings excluding UCB exceeded 20,000 today for the first time since June 29. The total number including UCB is still down 11.6% from the same time last year, but last month the difference was 14.7%. The demand in today’s market is not strong enough to soak up all the new listings that will arrive over the next 2 months and we should expect the days of inventory and months of supply numbers to increase until Thanksgiving. This will cause the current sellers’ negotiation advantage to weaken a bit, unless demand strengthens. There has been no sign of stronger demand over the past 5 months, so we think this is unlikely.

September 18 – For the first time in many months we have more cities with their Cromford® Market Index falling than rising:

Those with an improving balance over the last month, from a sellers perspective are:

1. Paradise Valley +17%
2. Maricopa +15%
3. Glendale +8%
4. Goodyear +6%
5. Scottsdale +4%
6. Avondale +1%
7. Gilbert +1%
8. Chandler +1%

The situation has deteriorated for sellers in:

1. Surprise -11%
2. Cave Creek -10%
3. Tempe -7%
4. Fountain Hills -6%
5. Buckeye -5%
6. Peoria -3%
7. Mesa -1%
8. Phoenix -1%
9. Queen Creek -1%

The changes are very small for some of the largest cities like Phoenix and Mesa, but it is true that the overall Cromford® Market Index for the is no longer rising. In fact is it barely moving, meaning that sellers still have the advantage in the vast majority of markets but their bargaining power is no longer increasing.

From the table above we can see that Queen Creek and Cave Creek are close to a balanced market (between 90 and 110) with little advantage remaining for sellers.

September 17 – In the hottest markets, the sales price achieved tends to be a very high percentage of the final list price. We can get some idea of the relative strength of the single-family markets in each city by examining and comparing this percentage. Here is a ranking table for the various cities in the valley:

1. Tonopah – 99.92%
2. Apache Junction – 99.44%
3. Tolleson – 99.35%
4. El Mirage – 99.31%
5. Avondale – 99.07%
6. Laveen -98.65%
7. Surprise – 98.48%
8. Glendale – 98.46%
9. Gold Canyon – 98.44%
10. Goodyear – 98.36%
11. Queen Creek – 98.35%
12. Wittmann – 98.31%
13. Waddell – 98.29%
14. Gilbert – 98.29%
15. Mesa – 98.23%
16. Sun City – 98.18%
17. Maricopa – 98.14%
18. Anthem – 98.04%
19. New River – 98.01%
20. Eloy – 97.94%
21. Chandler – 97.93%
22. Buckeye – 97.88%
23. Cave Creek – 97.85%
24. Peoria – 97.79%
25. Coolidge – 97.70%
26. Florence – 97.63%
27. Sun City West – 97.62%
28. Tempe – 97.60%
29. Phoenix – 97.58%
30. Litchfield Park – 97.58%
31. Casa Grande – 97.39%
32. Youngtown – 97.29%
33. Arizona City – 97.23%
34. Fountain Hills – 96.79%
35. Sun Lakes – 96.29%
36. Scottsdale – 96.26%
37. Rio Verde – 96.01%
38. Wickenburg – 94.11%
39. Paradise Valley – 93.91%
40. Carefree – 91.71%

We note that more expensive homes tend to sell for a much lower percentage of their asking price in hot markets or cold. This tends to make the percentages for Paradise Valley and Carefree much lower than other cities at all times, not just right now.

September 16 – With the large change in currency exchange rates over the past year there has been a huge transformation in their activities of Canadians. Based on the address provided in the Affidavits of Value filed up to the end of August each year, here are the comparative numbers for the last 6 years:

Year	Purchased	Sold
2010	2,763	69
2011	3,189	126
2012	2,628	221
2013	1,675	742
2014	994	728
2015	603	1,182

So Canadians have been selling almost twice as many homes as they have been buying so far in 2015.

September 15 – Average rental rates continue to climb in most areas, so after many years in which the charts were too boring to bother, we have finally published a Monthly Average Lease Price per Square Foot based on filtered and corrected ARMLS data. Warning: if you try to do this yourself from the raw ARMLS data you will find it almost impossible. There are thousands of data errors which completely distort the chart. Some agents enter sales prices as lease prices, many enter 0 or 1 for the sq. ft. and some enter the annual lease price instead of the monthly rent.

For prospective tenants, here is one unusual area where rent has not increased very much in the last 3 years: Gilbert 85295.

Gilbert 85298 is similarly unchanged over the past few years. Other areas of Gilbert have seen more significant increases in rental rates. I encourage you to use the filters on the interactive chart to examine the locations you are interested in.

September 14 – In the exercise of the last 2 days examining one measure of average annual appreciation, the median value for appreciation by ZIP code is 5.5%. This is a very healthy rate of appreciation given the most recent annual change in the Consumer Price Index was just 0.17%. Five out of the last seven CPI readings were lower than the year before. Housing (both rental and owned) is moving up in price faster than any other major category of cost. On September 12 we listed the 30 ZIP codes with the highest appreciation rates. Today we list all those with an appreciation rate that is at or above the median, excluding those top 30.

Rank	City	ZIP		% Annual Appreciation at July 2015
31	Phoenix	85012	PHOENIX – Central (uptown)	9.8%
32	Gold Canyon	85118	Northeast Pinal County	9.7%
33	Phoenix	85029	PHOENIX – Northwest	9.6%
34	Phoenix	85015	PHOENIX – Central	9.4%
35	Phoenix	85041	PHOENIX – South	9.2%
36	Scottsdale	85257	Scottsdale	9.0%
37	Phoenix	85008	PHOENIX – Central	8.9%
38	Tempe	85281	Southeast Valley	8.9%
39	Mesa	85201	Southeast Valley	8.8%
40	Sun City	85351	Northwest Valley (55+)	8.8%
41	Buckeye	85326	Southwest Valley	8.8%
42	Mesa	85202	Southeast Valley	8.8%
43	Mesa	85204	Southeast Valley	8.8%
44	Apache Junction	85120	Northeast Pinal County	8.7%
45	Phoenix	85053	PHOENIX – Northwest	8.5%
46	Phoenix	85051	PHOENIX – Northwest	8.3%
47	Peoria	85345	Northwest Valley	8.3%
48	Glendale	85302	Northwest Valley	8.1%
49	Apache Junction	85119	Northeast Pinal County	8.0%
50	Casa Grande	85194	Central Pinal County	7.9%
51	Phoenix	85014	PHOENIX – Central	7.5%
52	Mesa	85208	Southeast Valley	7.5%
53	Goodyear	85338	Southwest Valley	7.5%
54	Mesa	85210	Southeast Valley	7.4%
55	Peoria	85381	Northwest Valley	7.3%
56	Chandler	85225	Southeast Valley	7.3%
57	Glendale	85307	Northwest Valley	7.3%
58	Avondale	85323	Southwest Valley	7.2%
59	Scottsdale	85262	Northeast Valley	7.1%
60	Tempe	85282	Southeast Valley	7.0%
61	Surprise	85378	Northeast Valley	6.9%
62	Phoenix	85027	PHOENIX – Northwest	6.8%
63	El Mirage	85335	Northwest Valley	6.8%
64	Phoenix	85037	PHOENIX – West	6.5%
65	San Tan Valley	85143	Pinal County	6.5%
66	Glendale	85310	Northwest Valley	6.4%
67	Scottsdale	85251	Northeast Valley	6.2%
68	Avondale	85392	Southwest Valley	6.1%
69	Litchfield Park	85340	Southwest Valley	6.1%
70	Palo Verde	85343	Southwest Valley	6.0%
71	Tempe / Guadalupe	85283	Southeast Valley	5.9%
72	Mesa	85206	Southeast Valley	5.9%
73	Phoenix	85040	PHOENIX – South	5.9%
74	Scottsdale	85250	Northeast Valley	5.9%
75	Glendale	85308	Northwest Valley	5.8%
76	Mesa	85205	Southeast Valley	5.7%
77	Glendale	85303	Northwest Valley	5.6%
78	Goodyear	85395	Southwest Valley	5.5%

Goodyear 85395 is the median ZIP code.

A large part of the inner West Valley is in this segment above the median. We also see the innermost areas of the Southeast Valley such as Tempe and West Mesa. South and Central Scottsdale are here, as well as 85262.

September 13 – Here are the ZIP codes with the lowest appreciation over the last 12 months (measured by the change in the annual average closed $ per sq. ft.):

Rank	City	ZIP		% Annual Appreciation at July 2015
154	Morristown	85342	unincorporated rural area in northwest Maricopa County	-30.0%
153	Carefree	85377	luxury town in Northeast Valley	-5.0%
152	Peoria	85383	more expensive area in Northwest Valley	-3.7%
151	Wickenburg	85390	rural town in northwest Maricopa County	-3.4%
150	Eloy	85131	small city in southern Pinal County	-1.5%
149	Casa Grande	85193	city in Pinal County	-1.3%
148	Wittmann	85361	unincorporated rural area in northwest Maricopa County	-1.1%
147	Phoenix	85003	PHOENIX – central	-0.4%
146	Phoenix	85048	Ahwatukee Foothills	-0.1%
145	Fountain Hills	85268	luxury town in Northeast Valley	0.0%
144	Tucson	85739	Saddlebrooke in south Pinal County	0.1%
143	Chandler	85249	Southeast Valley	0.3%
142	Sun Lakes	85248	Southeast Valley (mainly 55+)	0.4%
141	Gilbert	85295	Southeast Valley	0.7%
140	Surprise	85387	outer Northwest Valley	0.7%
139	Gilbert	85298	Southeast Valley	0.8%
138	New River	85087	North Valley	0.8%
137	Phoenix	85050	PHOENIX – Northeast	0.9%
136	Scottsdale	85258	Northeast Valley	1.0%
135	Coolidge	85128	city in central Pinal County	1.1%
134	Mesa	85207	Southeast Valley	1.2%
133	Gilbert	85297	Southeast Valley	1.3%
132	Scottsdale	85259	Northeast Valley	1.3%
131	Scottsdale	85260	Northeast Valley	1.4%
130	Scottsdale	85266	Northeast Valley	1.4%
129	Red Rock	85145	unincorporated rural area of south Pinal County	1.6%
128	Maricopa	85138	city in Northwest Pinal County	1.6%
127	Scottsdale	85254	Northeast Valley	1.7%
126	Chandler	85226	Southeast Valley	1.8%
125	Phoenix	85045	Ahwatukee Foothills	1.8%

Again we see a lot of consistent patterns here. The far off parts of the Northwest Valley are much less favored than the areas closer to the center. The southeast and northeast valleys have many areas of low appreciation, as do many (but not all) parts of Pinal County.

Some areas with strong supplies of new homes tend to show lower than average appreciation, such as 85383, 85295,, 85297 and 85298. Several of the remoter more expensive areas are not currently showing much appreciation, such Las Sendas, Fountain Hills and Carefree. Ahwatukee is in the same situation.

September 12 – There are many different ways to measure appreciation. First you have to decide what sort of price you will use:

• average sales price
• median sales price
• average sales price per sq ft
• median sales price per sq ft

Average sales price tends to give too much weight to luxury home sales while median sales price does the opposite, giving too much weight to the cheapest homes. Our favorite is average sales price per sq ft. Though not perfect by any means, it is usually the best compromise solution.

You then need to determine what period of time you will take your measurements over: 1 month, 3 months, 6 months , 12 months, etc. Short periods tend to give you very large variations from month to month, especially if you are examining a small market segment (by location or price for example).

To avoid the volatility, we tend to prefer a long time period such as a year. Our preference when we are looking at areas as small as a single ZIP code is to use annual average price per sq ft. and compare today’s value with that from 12 months earlier. We can use the ARMLS sales data for this, but as we are using a very slow moving measurement, we might as well use the slow-to-arrive public recordings. This has the advantage of being much more complete a record than just the MLS closings. Right now July is the most recent month for which we have verified and corrected sales data from the recorded deeds.

Here are the top 30 ZIP codes for fastest appreciation across Maricopa and Pinal Counties between July 2014 and July 2015. There are a lot of unusual entries in this list:

City	ZIP		% Annual Appreciation at July 2015
Mammoth	85618	small Pinal mining town	66.1%
Winkelman	85192	small Pinal mining town (partly in Gila County)	64.9%
Valley Farms	85191	small Pinal unincorporated area	41.0%
Stanfield	85172	small Pinal unincorporated area	30.5%
San Manuel	85631	small Pinal mining town	30.4%
Tonopah	85354	small Maricopa unincorporated area (far west)	28.1%
Phoenix	85017	PHOENIX – inner west side	26.7%
Phoenix	85006	PHOENIX – central	24.4%
Arlington	85322	small Maricopa unincorporated area (far west)	23.9%
Phoenix	85007	PHOENIX – central	22.8%
Superior	85173	small Pinal mining town	22.6%
Aguila	85320	small Maricopa unincorporated area (far west)	19.7%
Phoenix	85019	PHOENIX – inner west side	19.3%
El Mirage	85337	city in northwest valley	19.1%
Phoenix	85034	PHOENIX – inner east side	19.1%
Phoenix	85009	PHOENIX – inner west side	19.1%
Phoenix	85018	Arcadia – luxury area – close to center	18.0%
Phoenix	85031	Maryvale	15.8%
Phoenix	85033	Maryvale	14.6%
Kearny	85137	small Pinal mining town	13.4%
Phoenix	85016	Biltmore – luxury area – close to center	13.4%
Phoenix	85021	PHOENIX – north	12.0%
Glendale	85306	city in northwest valley	11.4%
Phoenix	85004	PHOENIX – central	11.3%
Phoenix	85035	Maryvale	10.6%
Youngtown	85363	town in north west valley	10.1%
Phoenix	85043	PHOENIX – southwest	10.1%
Phoenix	85013	PHOENIX – central	10.1%
Glendale	85301	city in northwest valley	10.0%
Paradise Valley	85253	luxury area – close to center	9.9%

There are clearly several consistent patterns here. Pricing has been most positive for the following:

• small mining towns or unincorporated areas in Pinal County
• small unincorporated areas in the west of Maricopa County
• central Phoenix
• west Phoenix including Maryvale
• northwest valley
• luxury areas close to the center of the valley

It is satisfying when the data confirms trends that have been observed in many other ways.

• areas which did not bounce back from the recession in 2012 and 2013 are bouncing back now instead
• central Phoenix is getting trendy
• many parts of the west and northwest valley are desperately short of supply and prices are rising fast in response
• the most sought after luxury markets are those close to the city centers of Phoenix and Scottsdale

There are many major cities that are completely unrepresented in this top 30 list: Mesa, Scottsdale, Tempe, Chandler, Gilbert, Surprise, Goodyear, Buckeye, Avondale, Queen Creek, Maricopa, Sun City, etc.

It is also worth noting that there is very little new construction taking place in any of these ZIP codes.

Later we will look at the other side of this coin – the areas with the worst appreciation over the past year.

September 11 – I seem to be getting a lot of questions about Canadians and how the weakness of their currency versus the US dollar has affected the housing market.

To help with this I have put together a new version of the long term sales price per square foot chart that expresses prices in foreign currency. This allows you to see what prices have done from the perspective of a foreign buyer.

The new chart is available here

As an example here is a chart comparing pricing in US and Canadian dollars:

We can see that from a Canadian’s perspective, average single family homes are now costing them almost $180 per sq ft , having been only $140 per sq ft as recently as 12 months ago. No wonder they are no longer very active as buyers.

You can also see why they were very inactive between 2002 and 2007 but very actively buying in 2010 through 2013.

Of course if they already own homes here, they are going to be very pleased with the appreciation when they convert them back to Canadian dollars. Whether they choose to sell now may depend on their view of the future direction of the exchange rate.

September 10 – More changes in the market are demonstrated by the Cromford® Market Index for the single-family market in the 17 largest cities:

This week we see 10 cities showing at least some improvement and 7 showing deteriorating conditions for sellers.

Avondale is again out in front though it has moved backwards. Second place Surprise is now falling the fastest among the 17 cities.

The largest improvement is for Maricopa which has lifted itself off the bottom of the table for the first time in many months. Cave Creek has seen the second largest deterioration and is now in last place. Paradise Valley is strengthening quickly and is seeing unusually strong demand for the time of year.

September 9 – The market seems to have reached an unusual stability with the Cromford® Market Index confined to a very narrow range between 147.6 and 148.0 since August 22. Both supply and demand are changing very little. However the picture is very different at different price points.

Sales under $200K represented 46% of all MLS sales in August so the impact of strong price appreciation in this area is significant in overall market measurements. Another 29% of purchases made in August were between $200K and $300K.  The good news for buyers is that the supply of homes for sale in this range has risen 5.4% over the past 6 weeks.  The market is still hot, but not a frenzy like the lower-end.  As a result, prices are not rising as rapidly. Only 25% of August purchases were over $300K.  The market in this area is more balanced in supply and demand, creating a more stable price trend and equal negotiating power for both buyers and sellers. Above $500K price direction depends on the current fashion for of the various luxury locations. For example, Arcadia is definitely “in” while distant areas like Gold Canyon, Cave Creek and Desert Mountain are more neglected than usual, possibly because of the weakened demand from foreign buyers.

September 8 – The Black Knight Financial Services Mortgage Monitor report for July 2015 is now available here. In it we see that Arizona now has just 3.8% of all first homes loans that are 30 days late or more. 0.5% are in foreclosure while 3.3% are delinquent but not yet in foreclosure. There are only two states (Alaska & Colorado) with a lower percentage of homes in foreclosure. This time last year there were 4.5% of Arizona loans 30 days late of more and 0.6% in foreclosure.

In what may be the first small sign of trouble ahead, Texas has 5.7% of loans delinquent but not yet in foreclosure, up from 5.3% in March. This is a number we should watch to see the knock-on effects of lower oil prices.

Pessimists sometimes ask a follow on question: but what about those dreaded HELOCs? Well Black Knight provide that data too. Second lien HELOC delinquency rates are currently at 1.9 percent, the lowest level seen since April 2007. Delinquency rates on second lien HELOCs have declined by over 11 percent so far in 2015, slightly behind the 16 percent reduction on first lien mortgage delinquencies.

September 7 – Turning our attention to the single-family market in the Northeast Valley, we again see a lot of different trends when it comes to year over year changes in the average median sales price:

Rank	ZIP Code	% Change in 1 Year	Median
1	85263	+12.7%	$450,000
2	85253	+5.9%	$1,425,000
3	85257	+5.2%	$255,000
4	85268	+5.1%	$415,000
5	85258	+5.0%	$525,000
6	85251	+4.4%	$321,500
7	85255	+4.0%	$810,000
8	85254	+3.4%	$529,900
9	85250	+2.5%	$346,500
10	85266	+1.2%	$893,000
11	85377	+0.8%	$750,000
12	85259	-0.3%	$595,000
13	85331	-0.6%	$400,000
14	85262	-2.4%	$760,000
15	85260	-2.8%	$427,500

Rio Verde, Fountain Hills and Paradise Valley have been surprisingly strong while Scottsdale has been mixed. Generally we have seen stronger pricing for southern areas of Scottsdale while the far north and Shea corridor have been relatively weak.

September 6 – According to the Affidavits of Value filed in Maricopa County during August, cash-only purchases dropped to their lowest percentage since October 2008. 19.6% of transactions were all-cash while 80.4% had some form of financing. 81.4% of the total dollars spent was financed, which compares with 79.8% in August 2014.. Prior to 2008, the typical percentage was about 90%, but it is questionable if we will ever return to the lending patterns of the 1999-2007 era.

September 5 – We are taking a closer look at how appreciation varies by location across the central valley (mostly the City of Phoenix). Here are the Phoenix ZIP codes ranked by the change in the Annual Median Sales Price for single-family homes:

Rank	ZIP Code	% Change in 1 Year	Median
1	85034	+100.0%	$90,000
2	85009	+31.7%	$84,950
3	85006	+29.3%	$179.950
4	85021	+22.0%	$275,000
5	85016	+21.3%	$295,705
6	85018	+20.6%	$524,800
7	85019	+20.2%	$124,450
8	85020	+20.0%	$108,000
9	85035	+19.8%	$115,000
10	85004	+18.1%	$319,000
11	85051	+16.7%	$147,000
12	85031	+15.8%	$110,000
13	85008	+15.4%	$165,000
14	85007	+14.6%	$214,900
15	85033	+12.9%	$118,556
16	85015	+12.0%	$168,000
17	85043	+10.6%	$146,000
18	85012	+10.3%	$505,000
19	85014	+10.3%	$255,000
20	85042	+10.3%	$182,000
21	85037	+10.0%	$140,000
22	85087	+9.9%	$310,000
23	85040	+9.1%	$120,000
24	85027	+8.9%	$172,000
25	85003	+8.8%	$369,500
26	85029	+8.4%	$155,000
27	85022	+7.5%	$245,000
28	85032	+7.3%	$220,000
29	85013	+7.0%	$262,250
30	85023	+7.0%	$207,250
31	85053	+6.5%	$165,000
32	85024	+6.4%	$250,000
33	85041	+6.3%	$153,000
34	85086	+6.0%	$293,000
35	85054	+5.9%	$458,000
36	85044	+5.0%	$255,000
37	85028	+4.0%	$315,000
38	85083	+3.4%	$302,000
39	85048	+0.8%	$312,000
40	85050	-1.0%	$292,000
41	85085	-2.6%	$314,990
42	85020	-5.0%	$270,000
43	85045	-5.0%	$325,000

We note that extremely strong appreciation was experienced in the lowest priced areas of 85009 and 85034. Many other central, western and eastern areas did well too, but many of the southern and northern areas were noticeably weaker. One of the three Ahwatukee ZIP codes (85045) depreciated, while the other two were not very strong. Other depreciating areas were 85050, 85020 and 85085. It seems possible that 85045 may have been negatively affected by concerns about the 202 freeway extension.

September 4 – Every February Maricopa County holds an auction to sell off unpaid property tax debts to the bidder who will accept the lowest interest rate. The maximum interest allowed by law is 16% and the average interest each year gives us some idea of the willingness of investors to pay off the property tax debt on behalf of the delinquent property owner. The County Treasurer publishes statistics about the annual state of affairs in the world of tax liens. Here is the current table:

Sale Year	Tax Year	Parcels Advertised	$ Value	Not Auctioned	Liens Sold	$ Value	Avg Interest Rate	Struck to State
2015	2013	18,888	$41,606,189	4,630	11,637	$17,832,166	3.84%	2,621
2014	2012	21,342	$33,970,380	6,206	12,710	$18,354,687	5.01%	2,426
2013	2011	27,057	$46,532,327	7,964	16,535	$31,745,917	7.48%	2,558
2012	2010	34,550	$86,424,452	8,072	19,949	$55,659,726	9.93%	6,529
2011	2009	39,037	$80,478,533	9,429	22,510	$63,529,394	10.79%	12,543
2010	2008	41,859	$69,946,978	9,317	25,660	$57,093,614	8.62%	11,040
2009	2007	34,694	$47,521,202	4,233	22,354	$39,884,087	8.66%	8,107
2008	2006	28,047	$32,713,999	5,995	20,401	$27,558,290	7.64%	1,651
2007	2005	23,949	$29,564,319	6,173	15,972	$21,080,184	7.96%	1,804
2006	2004	21,388	$26,337,120	5,762	13,479	$17,284,492	6.03%	2,147
2005	2003	23,003	$26,458,224	6,241	12,515	$16,941,595	5.80%	4,247
2004	2002	25,309	$31,649,838	5,986	14,065	$17,505,778	6.09%	5,258
2003	2001	28,438	$27,879,375	7,238	14,156	$15,779,144	7.88%	7,044
2002	2000	27,612	$26,443,065	6,542	11,771	$13,195,438	10.91%	9,299
2001	1999	26,377	$23,752,233	6,354	11,363	$13,578,760	10.95%	8,660
2000	1998	24,306	$19,428,476	6,365	11,002	$11,200,642	10.12%	6,939
1999	1997	25,597	$20,913,038	7,062	10,766	$10,967,212	9.93%	7,769
1998	1996	21,990	$15,198,627	5,339	8,456	$8,967,966	10.04%	8,195

If a tax lien auction fails to generate a bid, the parcel is “struck to state” and become a state owned lien. When the 4 year time period expires and the Certificate of Purchase has not been redeemed, a treasurers deed is generated which transfers ownership to the State of Arizona. The state does not actually pay the back taxes but they are abated instead.

We can see that investors were not excited to buy the glut of tax liens being sold off in 2011, since the winning interest rate bid hit a high point of 10.79% and a record number of parcels were struck to state. These parcels are now being transferred to state ownership in record numbers and we are seeing a lot Treasurer’s Deeds recorded in recent months. In contrast the February 2015 auction was very popular with the average interest rate the lowest ever at 3.84%.

September 3 – Here is another chance to look at the Cromford© Market Index for the single-family markets in the 17 largest cities:

We still see more cities improving for sellers (10) than for buyers (7). The changes are relatively modest but still favorable for sellers on balance.

Two cities showed major improvement over the last month – Maricopa and Scottsdale. In the case of Maricopa, supply continued to fall during August while sales volumes have stayed higher than usual for the season. Demand in Scottsdale is close to normal, but the supply of active listings has been declining.

Least impressive for sellers has been Cave Creek, where demand has been declining while supply has started to rise.

September 2 – Using the public record Affidavit of Value data for Maricopa County we see that the monthly median sales price has been flat at $220,000 (or thereabouts) for four months now. This includes both single family and condo / townhouse properties but excludes mobile homes. Last year at this time the median was $209,490, so once again a 5% appreciation rate seems to be what we are measuring.

There are several differences between the ARMLS sales record and the public deed recordings:

• all new homes are included, whereas ARMLS contains only a small percentage of new homes
• FSBOs
• pocket listings
• trades between investors and other parties that didn’t bother to market their homes through the MLS

The new home median sales price has declined by 3% between August 2014 and August 2015, while the re-sale median increased by 6%. In fact the median sales price for new homes, at $302,267, has barely budged since October 2013 when it was $300,522.

Because so few new homes are included in the ARMLS median, it is usually quite a bit lower than the public record Affidavit of Value median.

These numbers don’t match exactly with the prices that I publish for ASU, because the ASU statistics include genuine arms-length sales that did not create an Affidavit of Value. Some deeds are filed that claim an invalid exemption from an affidavit. These are usually REO sales filed by out of state title companies that have an incorrect understanding of Arizona law, such as Quality Escrow and ServiceLink. Other transactions have valid exemptions, such as trustee sales and HUD sales. These transactions tend to pull the median lower again, so we end up closer to the ARMLS median price.

September 1 – As of week 35, we are seeing a 90-day average of 23 new Notices of Trustee Sale per day across Maricopa County. This is the lowest number seen for week 35 during any year since 2000, even below the previous low point of 25 set in 2005. The highest number seen was 325 in April 2009. The current trend is for this number to fall further and it looks likely that we will soon take out the all time low for this millennium of 22, set in November 2005.

August 31 – I recommend reading the Freddie Mac Insight and Outlook report which is available here. One of the more interesting conclusions in this report is:

• “There is no single statistic that reliably identifies when a housing market is overvalued or when house prices are likely to fall. Sadly, the only reliable method for identifying these situations is in retrospect. The best minds and most sophisticated statistical techniques all have fallen short of the mark.”

My response is that Freddie Mac looked only at techniques that compare prices with incomes, i.e. measures of affordability. I would agree with Freddie Mac that prices and incomes are of very little use in determining the future direction of prices. But you can detect when home prices are likely to fall by ignoring prices and looking exclusively at supply and demand. Since Freddie Mac has very little input data on supply and only a limited view of demand, they did not consider these techniques. To examine supply, you need good access to current and historical MLS data (and other non-MLS sources such as new home construction data and pending foreclosures). Comparing supply with demand in a historical and seasonal context is a reliable and relatively easy technique to identify when house prices are likely to rise or fall. This is the idea behind the Cromford® Market Index. It is also the reason we measure Days of Inventory and the Contract Ratio. All these are trusted indicators of whether the pressure on prices is up or down. Since 2005 they have been consistent in predicting the direction of Greater Phoenix prices. In the second half of 2005 they clearly predicted the collapse in 2007-2008.

August 30 – In the Northeast Valley, active listing counts for single family homes are down about 6% in total compared with last year. However this is quite misleading. Active listings of $500,000 and above are actually 1% higher than last year, while the number of active listings under $500,000 has collapsed by 20%.

Closed sales over the last 3 months were up 13% in total compared with the same time last year, with the biggest increase for homes between $500,000 and $1 million, which increased by 19%. Sales over $1 million were only up by 4%. Here is a little chart to illustrate this:

Although sales of homes over $1 million only increase by 4%, their 3 month average price per square foot increased by 9%, much better than the 4% increase for the area as a whole.

August 29 – There are one or two charts on this site that are probably not seen by many people but are definitely worth a look. One of these is the Weekly Major City Appreciation Chart Based on the Annual Average Price per Square Foot. The great advantage of using the annual average is that it cuts out almost all of the volatility except in cases of very low volume and large price ranges, such as in Paradise Valley and Fountain Hills.

Using this chart it is possible to see clearly which of the 17 largest cities have seen the strongest price trends over the past 2 years, and which are falling behind.

As of August 27, the ranking is as follows:

1. Paradise Valley 9.2% – up trend
2. Glendale 7.1% – up trend
3. Phoenix 6.5% – down trend
4. Avondale 6.2% – flat trend
5. Buckeye 4.9% – flat trend
6. Tempe 4.8% – up trend
7. Mesa 4.8% – up trend
8. Queen Creek 4.2% – down trend
9. Goodyear 4.0% – down trend
10. Surprise 3.4% – flat trend
11. Scottsdale 2.6% – down trend
12. Chandler 2.4% – up trend
13. Peoria 2.4% – flat trend
14. Maricopa 2.4% – down trend
15. Gilbert 1.7% – down trend
16. Cave Creek 1.2% – down trend
17. Fountain Hills 0.6% – up trend

Despite the slow moving nature of this chart, fortunes can change quite rapidly. For example, Paradise Valley was at the bottom of the table as recently as April. The opposite has happened to Fountain Hills, which was in number one position as recently as April. The relatively slow appreciation in Gilbert, Maricopa and Peoria may be partly due to the abundance of competition from new homes which keeps overall supply buoyant. In contrast. Glendale, Tempe and Avondale have had a very weak supply of new homes, as has Phoenix in relation to its overall size. Considering the competition from new homes, Buckeye, Mesa and Queen Creek have been relatively strong for appreciation.

August 28 – Multi-family permits appear to have stabilized around 7,400 per year for Maricopa County with 777 reported for the month of July. This compares with 648 in July 2014 and makes the current 12 month rolling total 7,409, which is just a shade higher than the 7,320 last year at this time.

There were only 16 in Pinal County during July 2015. There has been no resurgence of multi-family permits in Pinal County. Back in 2005 we saw as many as 449 a month at the peak.

August 27 – The Cromford® Market Index for the single-family market in the largest 17 cities continues to paint a positive picture in more cases than not:

We see 11 cities with improved conditions for sellers while 6 see some improvement for buyers.

Although it stays lies at the bottom of the table, Maricopa is by far the most improved market over the past month. Scottsdale is also much improved while Tempe & Buckeye have also moved noticeably in favor of sellers in the last 31 days.

Cave Creek has weakened for sellers as have several other cities, though none by very much.

Stability is the order of the day with the chronic supply shortage most visible in the entry level market.

August 26 – The S&P/Case-Shiller® Home Price Index® for June (covering sales between April and June) was released yesterday and once again the majority of the media misinterpreted it as indicating that price growth has flattened out. This is because they tend to focus almost entirely on the annual change in the index instead of the short term movements. In the last 12 months the vast majority of price increases occurred in the last 6 months and price growth was much weaker in the second half of 2014. than the first half of 2015. This is obvious when you look at thedetailed chart.

If we examine how much of the annual increase in the HPI occurred in the most recent six months we find the following:

• National index – 96%
• 20 city composite index – 93%
• 10 city composite index – 95%
• Phoenix – 82%

In several cities prices actually went backwards in the second half of 2014 but forwards in the first half of 2015. Examples are:

• Seattle – down 0.1% then up 7.5%
• Washington DC – down 1.7% then up 3.3%
• Chicago – down 2.4% then up 3.8%
• Boston – down 0.7%, then up 4.1%
• Detroit – down 0.4% then up 6.2%
• Minneapolis – down 0.6% then up 4.0%
• New York – down 0.1% then up 2.9%
• Cleveland – down 0.7% then up 3.6%

Local conditions were not as negative in the second half of 2014, but the most recent six months were much stronger.

• Phoenix – up 0.7% then up 3.4%

The media seems to be unimpressed by the recent appreciation rate of between 4% and 6%, but this must be compared with what is happening to the price of everything else. As the FHFA put it in their recent release: “The seasonally adjusted, purchase-only HPI rose 5.4 percent from the second quarter of 2014 to the second quarter of 2015, while prices of other goods and services fell 1.4 percent. The inflation-adjusted price of homes thus rose approximately 6.9 percent over the latest year.

August 25 – The Federal Housing Finance Agency (FHFA) publishes a home price index that is much less well known than the Case-Shiller Index. In fact it now publishes a range of different indexes depending on which sales you wish to include:

• “standard index” – prices based on mortgages bought or guaranteed by Fannie Mae or Freddie Mac
• “distress free” – as above but with bank-owned properties and short sales excluded
• “expanded data” – adds sales gleaned from FHA loans and county recorders’ offices
• “all transactions” – adds appraisal values from refinance loans

I would treat the last with some suspicion, because there was no change of hands at an agreed price, but the others indexes are interesting. One of the advantages of the FHFA data is that it publishes data state by state. However it only reports quarterly which is too infrequent for many of us.

One interesting view is the long term appreciation by state. Here are the top home price index changes since 1Q 1991 to 2Q 2015:

1. DC 366.87%
2. Colorado 252.60%
3. Montana 236.80%
4. Oregon 230.19%
5. Wyoming 218.67%
6. Utah 211.84%
7. North Dakota 201.24%
8. Washington 169.14%
9. Louisiana 155.59%
10. South Dakota 155.51%
11. Arizona 151.49%

Dominance by the Mountain and Pacific regions is extreme, with only Louisiana and DC appearing from elsewhere. California was surprisingly not in the top 10 with 127.73%.

Here are the bottom performers:

1. Connecticut 67.90%
2. Ohio 71.34%
3. Indiana 76.68%
4. Illinois 85.6%
5. Nevada 86.67%
6. Michigan 87.27%
7. Mississippi 87.67%
8. Delaware 89.19%
9. Rhode Island 94.00%
10. Arkansas 96.10%
11. Alabama 96.99%
12. Georgia 97.54%
13. Pennsylvania 99.58%

August 24 – The plummeting stock markets have stoked up a lot of fear and sucked all the oxygen out of the room when it comes to real estate. A falling stock market is certainly a bad omen for the high end of the luxury market, but the consequences of the current chaos may actually be positive for the rest of the housing market, especially in the Greater Phoenix area, where population growth is positive..

Rising interest rates are used to control inflation, but the really serious problem facing the world at the most is deflation. Governments are more likely to lower interest rates than raise them in this situation. This might stimulate more housing demand, although if a general air of fear starts to take hold, many people may put big decisions on hold for a while.

Much of the American population has been worrying about exactly the wrong thing for the past 6 years or so – runaway inflation, which is extremely unlikely to occur in the near or medium term. The real and present threat is deflation. Last February, twenty of the forty largest economies had already experienced negative CPI rates for 12 months, yet almost no one was mentioning it (and since its now August these CPI rates have been declining now for eighteen months).

Deflation and slow growth are affecting Europe more than us so the ECB are very concerned about this problem, causing them to recently introduce a Quantitative Easing program. If this broad deflationary trend continues for another six months, most of the world will have been deflating for two years.  That is significant. Then the current economic problems in China and Europe, which are partial spillover effects of deflation, just might move the global economy into recession mode within a year. Since both central banks have stated they would aggressively fight a deflationary recession if it appeared, that would probably be the signal to act. Interest rates could possibly reach historic lows over the next 18 months.

For a wide range of commodities, we have weak worldwide consumption and a serious over-supply. This is getting very problematic when it comes to oil and gas, and is likely to get worse since Iran is poised to join the supply bandwagon. Several energy companies are probably going to be in trouble in the coming months and it is fortunate for Arizona that few jobs here depend on that industry.

In Central Arizona we have a chronic under-supply problem with housing which is likely to cushion the real estate market from negative side-effects for quite some time. Even if fear causes demand to be subdued again like it was in 2014, it is not likely to drop low enough to create a lot of downward pricing pressure. If the prices of many other items start falling, housing is likely to increasingly look like a sound place to park your money, at least for those who correctly analyze what is going on.

August 23 – The number of active listings (excluding UCB) topped 19,500 yesterday for the first time since July 27, so we feel safe in confirming that the seasonal turn in supply has arrived as we discussed in our post of August 17. Of course supply is not rising everywhere, The cities with the largest percentage growth in single-family active listings over the last month are:

1. Tolleson 18.9%
2. Apache Junction 15.3%
3. Tempe 7.6%
4. El Mirage 4.4%
5. Surprise 4.0%
6. Laveen 2.6%
7. Sun City West 1.9%
8. Cave Creek 1.6%
9. Peoria 1.5%
10. Paradise Valley 1.1%

The cities with the weakest trends in active listings are:

1. Arizona City -17.7%
2. Avondale -9.2%
3. Gold Canyon -8.2%
4. Maricopa -7.8%
5. Casa Grande -6.4%
6. Gilbert -6.2%
7. Glendale -6.0%
8. Scottsdale -5.8%
9. Litchfield Park -3.8%
10. Sun Lakes -3.0%

Pinal County is represented strongly at the top of the latter list, which is encouraging for sellers in that county.

August 22 – The rate of increase in average rent per month per sq. ft. across Greater Phoenix has been much faster over the past 2 years than at any time since 2000. Here is a chart showing the average $/SF for all rentals closed within ARMLS together with the corresponding 12 month moving average.

Rent now seems to be the one item in the American economy that is rising faster than anything else.

At some point this is likely to lead to increased demand for homes to purchase, but it is difficult to predict exactly when.

August 21 – There seems to be only a little upward momentum left in the Cromford® Market Index at the moment. Yesterday’s reading for all areas & types was 147.4, up from 146.7 last week. The is a slower rate of increase than we have seen for some time. The Cromford® Demand Index has been extremely flat between 100 and 102.5 from April 2nd onwards so we have had no real sign of strengthening demand overall. It is certainly back to normal, which is a lot better than last year. It is also predominantly coming from local owner occupiers, rather than investors or out of state buyers. All the increase in the Market Index has been caused by weakening supply and the Cromford® Supply Index now appears to be stabilizing around 68.

When we look at the 17 largest cities by dollar sales volume we see the following changes in the CMI for their single-family markets:

Improving cities are only slightly more numerous than the deteriorating cities, which is less positive than we have seen for some time. It is not that the market is turning bad, just that it is no longer improving much for sellers. The biggest percentage improvements over the last month were for:

1. Maricopa 13%
2. Scottsdale 12%
3. Tempe 12%
4. Buckeye 7%

The biggest declines were in:

1. Cave Creek -8%
2. Gilbert -4%
3. Peoria -4%

August 20 – There still appears to be a widespread perception among first time home buyers that they need a 20% down payment to buy a home. However reality is very different. If we examine the latest Ellie Mae Origination Insight Report, we see the following average loan to values for the main purchase loan types:

• Conventional – 80%
• VA – 98%
• FHA – 96%

So yes, a 20% down payment is typical for a conventional loan, but it is not at all typical for FHA or VA loans. VA loans see 2% down on average while FHA loans see 4% on average (probably nearer the FHA minimum of 3.5% but Ellie Mae does not provide the decimal place).

Market share in July 2015 was as follows:

• Conventional 62%
• VA 10%
• FHA 24%
• Other 4%

So over a third of purchase loans are being approved with less than 4% down payments. These programs are particularly suited to first time home buyers. Obviously not everyone qualifies for the very attractive VA loans, but everyone considering buying their first home really should check out the FHA program. Last November the market share for FHA loans was only 17%, so July’s 24% represents very strong growth.

August 19 – The inflation situation has been very interesting over the past year. The Consumer Price Index for July 2015 was 238.654 and that for July 2014 was 238.250. This means that the all item index only changed by 0.17% over the past 12 months. Inflation is rarely this low. In addition it was negative for the period January through May 2015.

The extremely low inflation numbers are partly caused by the drastic fall in oil and gas prices since last year. Gasoline is down 22.3%, while fuel oil for household heating is down 24.0%. Used cars and trucks are also down, as are most transportation costs. Most apparel is less expensive now than last year too, which is probably due to the strength of the dollar versus the currencies of the countries which make most of the apparel for sale in the USA. Communication costs fell sharply, down 3.1%

Of course medical costs continue to rise, hospital charges up 3.2% for example, and education costs are still rising too, particularly books and supplies.

One of the largest rises was for rental shelter – up 3.1%. We are seeing even steeper rises in rental costs in Phoenix than the nation as a whole, 7% when we last checked.

If we take energy costs out of the equation, then inflation becomes 1.8%. This is pretty close to the Federal Reserve’s ideal of 2%.

August 18 – Every quarter, Wells Fargo Bank and the National Association of Home Builders publish data about home affordability for each metro area in the USA. Their key measurement is the Home Opportunity Index (HOI) which represents the percentage of homes that sold in the previous quarter that would be affordable to a family making the median household income for the area. The key inputs for this exercise are:

• median home price for the quarter
• mortgage interest rates (to calculate monthly payments)
• median family incomes

The HOI for “Phoenix-Mesa-Glendale” has dropped from 70.2 to 61.8 between the first and the second quarter. This is a big fall suggesting that Central Arizona has become suddenly less affordable. Looking at the detail we can see the the median sales price is reported as moving from $205,000 to $236,000 between the two quarters. This is a far larger increase in price than we are seeing – 15% in just 3 months. It is also far larger than is reported by any other source. We think it is faulty data.

The data using all deeds recorded in Maricopa and Pinal County for single family homes gives us the following medians:

• Q1 2015 = $210,000
• Q2 2015 = $219,900

This is an increase of slightly less than 5%.

Unfortunately we conclude that the sales price data being used by Wells Fargo Bank and the National Association of Home Builders has some serious problems (at least for the Phoenix area) and we no longer recommend using the HOI until these problems have been addressed.

August 17 – It looks like we may be at last reaching the point in the year where the supply of active listings stops falling. This usually happens during the third quarter but the third week of August is later than most years. Last year the lowest point was week 35 (early September). In 2013 it occurred in week 22 (early June) and the same happened in 2012.

From now on, it would be reasonable to expect about 1,500 to 2,000 active listings to be added to the active count (including UCBs) between now and the end of November. This number will probably disappear again during December and so we are likely to start next year with a number similar to today.

August 16 – Average sales price per sq. ft. has shown a lot of weakness over the past 2 months. Since peaking on May 23 at $136.49 the average for all areas & types has fallen a total of 3.5% to $131.64 today. At first sight this looks surprisingly weak.

If we look at how that decline has been shared by seven of the most important cities we see the following (single family only):

City	$/SF May 23	$/SF Aug 16	Change
Phoenix	$138.82	$137.71	-0.8%
Mesa	$123.84	$123.44	-0.3%
Scottsdale	$238.54	$219.29	-8.1%
Chandler	$138.03	$140.14	+1.5%
Glendale	$118.45	$118.84	+0.3%
Gilbert	$130.95	$132,82	+1.4%
Paradise Valley	$352.19	$318.72	-9.5%

The fall in overall pricing is clearly being caused by the Scottsdale and Paradise Valley markets. Neither of these is in trouble, in fact both have swung in favor of sellers over this period, However the mix of sales has changed between May and August.

In Paradise Valley the average sq. ft. has dropped 16% from 5,022 to 4,234 and the average price has fallen 28% from $1,879,369 to $1,349,480. This is a huge shift away from the large super-luxury homes towards smaller more moderately priced properties (by Paradise Valley standards anyway).

In Scottsdale, the average sq. ft. has fallen 2% from 2,834 to 2,771 and the average price has tumbled 10% from $676,029 to $607,651. Again a swing away from the very expensive to the more moderately priced homes.

So the apparent drop in pricing in the overall market is an illusion. The real cause is a big shift in the luxury market with strong sales of homes under $1 million compensating for weaker sales over $2 million. This is a normal pattern every year, but this summer the effect is particularly strong because the super-luxury homes had such a successful spring season.

August 15 – Trustee Deeds for Maricopa County are down to an average of 12 per day, 84 per week and 360 per month. This is the lowest level since March 2007. The average per working day is now 16, but in the past 3 months it has varied from as few as 5 to as many as 46. The trend is for this volume to gradually drop lower still.

August 14 – The household formation numbers for Q2 2015 published by the US Census Bureau were as follows:

April = 2.331M

May = 1.901M

June = 2.246M

There are all exceptionally strong numbers, considering the long term average is 1.153M

Of course many of these new households may be renting rather than buying, but it has usually proven to be a positive indicator for housing when Household Formation is on an up trend.

Here is a chart showing the rolling 12 month average for this measure since 2003:

August 13 – The market continues to gently improve for sellers in most areas. The Cromford Market Index for the largest 17 cities is shown in the table below:

Here we see 11 cities improving and only 6 deteriorating from a seller’s perspective. The cities showing the strongest trends that favor sellers are:

1. Scottsdale (up 12% in the last month)
2. Tempe (up 11%)
3. Surprise (up 10%)
4. Maricopa (up 10%)

At the other end, the weakest trends for sellers were in:

1. Cave Creek (down 6%)
2. Peoria (down 6%)
3. Chandler (down 4%)
4. Gilbert (down 4%)

Surprise has taken over from Avondale at the top of the table.

August 12 – Real estate is always so location dependent and the market can be quite different in one end of town from another. As an example to prove this point, let’s take Peoria and two of its four ZIP codes: 85345 and 85383. We use the numbers from the August 1 snapshot for single family homes:

Measure	85345	85383
Active Listings (excluding UCB)	61	405
Homes	14,529	16,791
Listed Homes for Sale	1 in 238	1 in 41
Months of Supply	1.4	3.9
Annual Growth in Sales per Month	-8%	27%
Contract Ratio	124.6	36.8
Appreciation ($/SF)	10%	1%
Appreciation (Median)	12%	-3%
Listing Success Rate	86%	76%
Monthly Average Sales $/SF	$103	$126

85345 is woefully short of supply, so much so that sales are down from last year for lack of homes to buy. Prices however have moved a long way higher over the last 12 months and the success rate is very high at 86%.

85383 is where most of the new building is going on in Peoria, second only to South Gilbert, and it is considerably more expensive than 85345. Supply is relatively plentiful (though not excessive) and so prices are flat to slightly lower over the last year. However sales volume is up by a strong 27%

August 11 – Although the rental supply on ARMLS has stopped declining, things are getting worse for tenants (and better for landlords) when we look at average rents per sq ft. The overall average (excluding seasonal and vacation rentals) increased by 7% between July 1, 2014 and July 1, 2015. Rents increased by 11% for condos and apartments but only by 6% for single family homes. This despite the fact that that there were only 29 days of supply for single family homes and 53 days for condos and apartments, as of July 1.

August 10 – During July, Canadians accounted for only 0.55% of home sales – just 50 units – within Maricopa County. This is the lowest percentage since July 2007. At their peak Canadians snapped up 519 homes in Maricopa in April 2011, more than 10 times as many.

It is easy to see why Canadians are finding the Central Arizona housing market so unattractive. The median home cost $208,000 in July 2014, equivalent to $223,420 in Canadian dollars at the time. Now the median has risen to $220,000, but in Canadian dollars that is now equivalent to $286,100. So homes have gone up 28% over the last 12 months when expressed in Canadian dollars.

Similar numbers apply to most foreign currencies, pretty much every one apart from the Swiss Franc. So interest in US real estate from foreign buyers is being suppressed by much higher prices in their local currency.

The inverse is that foreign real estate is a lot cheaper to Americans than it was 12 months ago. This applies to most of Europe, Australia, New Zealand, the rest of North America (Mexico and Canada) and much of Central and South America. So if you have thoughts of buying a foreign vacation or retirement home, 2015 is a much better year to buy than 2014 was because your US dollar is going to go a lot further.

• The Australia dollar has dropped over 21% in the last 12 months,
• The Fijian dollar has dropped 14%
• The Euro has dropped 19%
• The Mexican Peso had dropped over 20%
• The Brazilian Real has dropped almost 36%

You get the picture?

The main places where this effect is absent are those countries where the local currency is pegged to the US dollar, such as Bermuda or Belize, or that actually use the US dollar as their local currency, such as Ecuador, the British Virgin Islands, the Caribbean Netherlands, East Timor and El Salvador.

August 9 – The Black Knight Financial Services Mortgage Monitor report for June 2015 is now available here.

In it we see that 3.9% of Arizona first home loans are delinquent by 30 days or more or already in foreclosure. The long term average is 5%, so we have less delinquency than normal. We also have less delinquency than the nation as a whole (the US stands at 6.3%).

Arizona now ranks 44 out of 51 (with DC counted separately), and has fallen below Wyoming in the past month. Colorado is doing exceptionally well and has fallen to 50th place, but North Dakota remains bottom with just 2.2%.

The worst states for delinquency in June were:

1. Mississippi 12.7%
2. New Jersey 10.6%
3. Louisiana 9.9%
4. Maine 9.1%
5. New York 9.1%
6. Alabama 8.8%
7. Rhode Island 8.8%
8. West Virginia 8.1%
9. Arkansas 8.0%
10. Florida 8.0%

Most delinquency problems are concentrated in the southeast and the northeast. The southwest has been improving fast over the past few years. Even Nevada is now ranked only 24th with 6.5%

August 8 – Luxury single-family home sales in the Northeast Valley remained surprisingly strong during July 2015. There were 354 closed transactions over $500,000 in the Northeast Valley though ARMLS, up 25% from last year. Almost all the strength was concentrated in ranges below $1 million. Over $1 million, sales were up only 2% while between $800,000 and $1 million sales rose an astonishing 69%. The top end went suddenly quiet with only 5 closed sales over $3 million, down from 16 in June. Unit sales over $500,000 were the second highest we have seen for any July since 2000 with July 2005 still holding the record at 479.

The swing away from the very top end to the ranges between $500,000 and $1 million is one factor that negatively affected the overall average $/SF during July.

August 7 – For the single-family market in the top 17 cities the Cromford® Market Index looks like this:

This is a positive picture with 11 cities improving over the last month for sellers. However 6 cities deteriorated, most notable Peoria and Chandler, along with small declines in Cave Creek, Mesa, Glendale and Gilbert.

The biggest improvements were in Surprise and Scottsdale, with Tempe, Maricopa and Fountain Hills all seeing balance swing further in favor of sellers.

Overall demand is nothing special, but it is still much stronger than last year. Supply remains weak overall and although new listings are arriving at about a 5% higher pace than last year, this is well below long term average levels.

August 6 – The monthly average and median prices have all taken quite a dive between June and July, but this is not unusual. The summer slump comes along almost every year. We need to keep an eye of the longer term averages and medians to eliminate the volatility and seasonality.

Let us examine the percentage change in the annual median sales price for the single family market in the 29 most significant cities:

Rank	City	Annual Median Week 31, 2014	Annual Median Week 31, 2015	Percent Change
1	Phoenix	$184,000	$204,400	11.1%
2	El Mirage	$125,000	$136,250	9.0%
3	Glendale	$172,000	$186,000	8.1%
4	Mesa	$188,075	$203,000	7.9%
5	Casa Grande	$139,000	$149,900	7.8%
6	Avondale	$158,000	$170,000	7.6%
7	Sun City West	$177,000	$189,000	6.8%
8	Peoria	$225,000	$240,250	6.8%
9	Tolleson	$150,125	$160,000	6.6%
10	Chandler	$250,000	$265,000	6.0%
11	Apache Junction	$141,640	$150,000	5.9%
12	Sun City	$137,000	$145,000	5.8%
13	Paradise Valley	$1,350,000	$1,425,000	5.6%
14	Queen Creek	$172,500	$182,000	5.5%
15	Gilbert	$250,000	$263,000	5.2%
16	Buckeye	$155,000	$162,000	4.5%
17	Surprise	$185,000	$192,064	3.8%
18	Sun Lakes	$243,000	$252,000	3.7%
19	Arizona City	$82,000	$85,000	3.7%
20	Laveen	$169,000	$175,000	3.6%
21	Fountain Hills	$392,250	$405,000	3.3%
22	Maricopa	$145,500	$150,000	3.1%
23	Anthem	$255,000	$262,500	2.9%
24	Litchfield Park	$245,000	$251,738	2.8%
25	Tempe	$235,000	$241,000	2.6%
26	Goodyear	$225,000	$230,000	2.2%
27	Cave Creek	$397,000	$405,000	2.0%
28	Scottsdale	$473,000	$470,000	-0.6%
29	Gold Canyon	$266,250	$250,000	-6.1%

The clear winners here are Phoenix, Mesa and the Northwest Valley, with Casa Grande also showing surprisingly well. Note that 8 of the top 10 started with medians below $200,000. The much more expensive Northeast Valley has done much less well over the last 12 months, with Paradise Valley its top performer. Only Gold Canyon showed a significant decline in median pricing.

August 5 – The top ZIP codes for dollar volume in single-family sales through ARMLS over the last year (August 2014 to July 2015) are as follows:

1. Scottsdale 85255 – $818M
2. Paradise Valley 85253 – $617M
3. Scottsdale 85262 – $440M
4. Peoria 85383 – $426M
5. Phoenix 85018 – $381M
6. Queen Creek 85142 – $366M
7. Scottsdale 85254 – $353M
8. Chandler 85249 – $350M
9. Phoenix 85086 – $320M
10. Cave Creek 85331 – $312M
11. Scottsdale 85259 – $308M
12. Gilbert 85298 – $295M
13. Glendale 85308 – $277M
14. Scottsdale 85260 – $274M
15. Sun Lakes 85248 – $263M
16. Gilbert 85234 – $257M
17. Mesa 85207 – $252M
18. Fountain Hills – $246M
19. Goodyear 85338 – $243M
20. Gilbert 85295 – $239M
21. Gilbert 85297 – $237M
22. Gilbert 85296 – $234M
23. Sun City West 85375 – $231M
24. Scottsdale 85266 – $225M
25. Surprise 85374 – $223M
26. Chandler 85286 – $218M
27. Scottsdale 85258 – $215M
28. Phoenix 85048 – $211M
29. Phoenix 85032 – $207M
30. Surprise 85379 – $206M
31. Phoenix 85050 – $206M
32. Goodyear 85395 – $205M
33. Peoria 85382 – $193M
34. Chandler 85225 – $193M
35. Buckeye 85326 – $179M
36. Maricopa 85138 – $174M
37. Phoenix 85016 – $174M
38. San Tan Valley 85143 – $172M
39. Gilbert 85233 – $170M
40. Mesa 85212 – $166M
41. Phoenix 85044 – $165M
42. Litchfield Park 85340 – $157M
43. Phoenix 85022 – $157M
44. Laveen 85339 – $156M
45. San Tan Valley 85140 – $154M
46. Phoenix 85028 – $152M
47. Mesa 85209 – $151M
48. Scottsdale 85251 – $144M
49. Buckeye 85396 – $143M
50. Avondale 85392 – $142M

The remaining ZIP codes have less than $140M in annual single-family sales through ARMLS.

Not all ZIP codes are created equal. In some ways it is surprising that the USPS has left the colossus 85255 intact as it is by far the largest ZIP code, instead of splitting it up as it did with 85262 in 2007. 85255 is bigger than 85262 and its offspring 85266 combined. In fact, Scottsdale 85255 does more business than all 41 of the smallest ZIP codes combined. It is no wonder that it is so popular with REALTORS®.

The top 30 in this list comprise 50% of the total market in Greater Phoenix. The average ZIP code has $125M in annual sales across 448 transactions. The median ZIP code has $93M in annual sales. The smallest by sales volume – Valley Farms 85191 – had just one single-family sale at $50,000.

August 4 – Developers filed 658 multi-family permits in Maricopa and Pinal counties during June 2015 according to the US Census Bureau. These monthly counts are very volatile, so we prefer to look at the 12 month number which now stands at 7,280, up from 6,940 in May and also up from June 2014 when it was 7,202. This is similar to the levels of 2002 through early 2005, so we conclude that multi-family construction has recovered completely from the recession, unlike single-family construction which is still well under half of pre-recession levels.

The locations for multi-family permits in the first half of 2015 were:

1. Phoenix 907 units
2. Mesa 891
3. Tempe 752
4. Scottsdale 366
5. Glendale 286
6. Chandler 136
7. Surprise 72
8. Goodyear 14
9. Unincorporated Pinal County 2

Note that the Census Bureau definition of multi-family is a little different from ours. They include all units built on top of one another and those built side-by-side if they do not have have a ground-to-roof wall and/or have common facilities (e.g. attic, basement, heating, cooling, plumbing, etc.). We include these units in townhouse/condo (attached) properties if they are primarily intended for sale as individual units rather than as a complete building designed for ownership by a single landlord for rental purposes.

August 3 – Developers filed 1,663 single-family permits in Maricopa and Pinal counties during June 2015 according to the US Census Bureau. This is the highest number we have recorded since August 2007. This brings up the 12 month rolling average to 1,135 per month, the highest since July 2008. Clearly home construction is on the rise again, though limited by labor shortages in several of the key trades. Jim Belfiore reports that many developers are concerned about the current shortage of skilled house framing labor and probable rises in construction costs.

The top locations for single-family permits in the first half of 2015 were:

1. Phoenix 1,027
2. Gilbert 1,018
3. Peoria 768
4. Mesa 732
5. Unincorporated Pinal County 704 (mostly San Tan Valley)
6. Goodyear 693
7. Buckeye 509
8. Queen Creek 494
9. Chandler 478
10. Scottsdale 441
11. Unincorporated Maricopa County 359
12. Surprise 318
13. Maricopa 168
14. Florence 94
15. Casa Grande 63
16. Tempe 55
17. Avondale 53
18. Glendale 47
19. Wickenburg 46
20. Paradise Valley 32

Note that the Census Bureau definition of single-family is a little different from ours. They include fully detached, semi-detached (gemini / twin), row houses and townhouses as “single-family”. Many of these would be classed as townhouse/condo (attached) properties by the Cromford Report when they have a common wall with another unit.

August 2 – The recent release of the S&P/Case-Shiller® Home Price Index® covered sales between March 1 and May 31, 2015 and showed the following changes from the prior period (Feb-Apr):

1. Las Vegas 1.5%
2. Cleveland 1.5%
3. Boston 1.5%
4. Atlanta 1.4%
5. Portland 1.4%
6. Seattle 1.4%
7. San Francisco 1.3%
8. Chicago 1.3%
9. Los Angeles 1.1%
10. Minneapolis 1.1%
11. Denver 1.1%
12. Washington DC 1.0%
13. New York 1.0%
14. Dallas 0.9%
15. San Diego 0.9%
16. Detroit 0.8%
17. Miami 0.8%
18. Phoenix 0.8%
19. Tampa 0.7%
20. Charlotte 0.7%

The annual rise in the Consumer Price Index (CPI) was 0% in May, so these monthly numbers are far in excess of the rise in the prices of most other products. They are also far in excess of increases in wages. After slowing down in 2014, home prices have begun to accelerate again in many locations, although this fact was omitted from most media commentaries. It is noticeable that the national HPI rose 1.1% in the last month which is very strong compared to its annual increase of 4.4%. It rose 3.1% in the last 3 months and only 1.3% in the previous 9 months.

Here are the annual changes in HPI:

1. Denver 10.0%
2. San Francisco 9.7%
3. Dallas 8.4%
4. Miami 8.0%
5. Seattle 7.4%
6. Portland 7.4%
7. Las Vegas 6.7%
8. Tampa 6.4%
9. Los Angeles 6.1%
10. Atlanta 5.1%
11. Charlotte 4.9%
12. San Diego 4.8%
13. Detroit 3.9%
14. Phoenix 3.8%
15. Minneapolis 3.0%
16. New York 3.0%
17. Boston 2.2%
18. Chicago 2.2%
19. Cleveland 1.6%
20. Washington DC 1.3%

We note that Phoenix ranks only 18 out of 20 for the most recent monthly increase and 14 out of 20 for the annual change. However our rate of increase is growing with a 2.2% rise in the last 3 months and only 1.6% in the previous 9 months.

August 1 – Based on Affidavits of Value recorded by the Maricopa County Assessor, the monthly median sales price for July 2015 was $220,000. For re-sales the median was $210,000 while for new builds it was $315,065. This represents an increase of 5.8% for the overall median sales price, with re-sales up 7.7% while new homes were up by only 4.1%.

Affidavits are not required for trustee sales and HUD sales so these are excluded from the above.

Total sales volume was 9,024 which is up a striking 21.2% from July 2014 when it was 7,443. Re-sales accounted for the majority of the increase. They were up from 6,661 to 8,183 (22.8%) while new home closings were up a less impressive 7.5%

July 30 – On the flip side, just because an area is appreciating, does not mean that it’s growing in sales volume. For example, quite a few zip codes with very high appreciation rates are seeing a drop in their number of sales per year, which is not uncommon in areas where there is not much for sale.

July 29 – Just because an area doesn’t show considerable appreciation, doesn’t mean that it’s not selling in volume. For instance, Carefree (85377) prices have remained stagnant all year while their sales volume grew 24.8%.

Below are the top 10 zip codes in sales growth measured by annual sales volume:

Zip Code	July 2014	July 2015	% Increase
85137	14	20	42.9%
85087	158	222	40.5%
85173	29	39	34.5%
85383	995	1,282	28.8%
85298	665	856	28.7%
85377	105	131	24.8%
85028	383	475	24.0%
85131	83	102	22.9%
85118	368	445	20.9%
85297	685	827	20.7%

 

July 28 – When we look at the Valley as a whole, we see that most zip codes have a positive appreciation rate (those in varying shades of green). Light orange shades indicate a flat appreciation rate, while dark orange indicates a negative annual return. The West Side, South Phoenix and Camelback Corridor stand out as the areas with the most zip codes in dark shades of green. Areas that have been stagnant over the last year in terms of price appreciation are Carefree, Fountain Hills, North Peoria, South Gilbert and 85254 in Scottsdale.

July 27 – While overall annual appreciation for the Phoenix Metro Area has been hovering around 5%, Central Phoenix and a few outlying areas are experiencing the highest percentages over 10%. Not surprisingly, they started from a very low point making it easier to obtain double-digit appreciation.

Here are the current top 20 zip codes based on annual sales price per square foot measures:

Zip Code	July 2014	July 2015	Appreciation
85034	$81.00	$112.19	38.5%
85354	$46.62	$60.90	30.6%
85006	$117.65	$145.33	23.5%
85035	$68.15	$83.21	22.1%
85009	$59.23	$71.61	20.9%
85019	$63.42	$76.01	19.8%
85017	$58.41	$69.92	19.7%
85033	$67.19	$78.14	16.3%
85173	$39.76	$45.82	15.2%
85015	$86.93	$99.18	14.1%
85031	$58.43	$66.17	13.3%
85013	$138.78	$156.52	12.8%
85194	$94.73	$106.55	12.5%
85021	$119.96	$134.18	11.9%
85040	$68.33	$76.25	11.6%
85016	$165.57	$184.42	11.4%
85007	$136.59	$151.66	11.0%
85043	$78.27	$86.47	10.5%
85008	$100.95	$111.51	10.5%
85193	$60.22	$66.35	10.2%

 

July 26 – Earlier this month we ranked zip codes by the highest percentage of annual turnover. Today we take that a step further and add average sales price. When real estate industry professionals and support services choose a marketing area, finding the best combination of transactional volume and dollar volume can be difficult. The table below highlights those zip codes with 7% or more annual turnover and average sale prices over $200,000.

Area	Zip Code	Total Res. Units	Annual Sales	Average Sold Price (Annual)	Turnover Ratio
Gilbert	85298	11,053	856	$345,892	7.7%
Peoria	85383	16,795	1,280	$335,025	7.6%
Desert Ridge	85050	9,479	696	$325,284	7.3%
N. Phoenix	85085	6,285	447	$323,839	7.1%
Anthem / Desert Hills	85086	14,538	1,047	$313,469	7.2%
Queen Creek	85142	11,701	895	$305,838	7.6%
New River	85087	2,790	222	$297,598	8.0%
Gilbert	85297	9,981	827	$292,862	8.3%
Gilbert	85295	12,710	899	$271,587	7.1%
Downtown Phoenix	85004	1,240	109	$267,761	8.8%
Waddell	85355	3,576	271	$257,911	7.6%
Mesa	85212	8,913	654	$257,864	7.3%
Buckeye	85396	7,029	625	$239,476	8.9%
Goodyear	85338	15,834	1,143	$216,277	7.2%
Surprise	85388	8,926	687	$204,668	7.7%
Surprise	85379	14,192	1,034	$202,945	7.3%

 

July 25 – While the number of listings under contract is lower than 2011-2013, when we look at the same measure by price range it’s a different story. 2015 has hit a 5-year high for listings under contract over $200,000 and a 5-year low for listings under contract under $200,000. The lack of inventory under $200,000 for consumers to buy is allowing the upper price ranges to gain market share. Since these properties are still in escrow waiting to close, it gives us a peek at what overall sales price trends will do going forward. At this rate, we can expect annual appreciation to stay positive over the next few months.

Week 30 Listings Under Contract	2011	2012	2013	2014	2015	5-Year Ranking
Under $100K	9,361	5,935	2,016	955	679	Lowest
$100K – $200K	6,758	7,279	5,135	3,961	4,027	2nd Lowest
$200K – $300K	1,959	2,426	2,454	2,299	2,869	Highest
$300K – $500K	1,179	1,498	1,555	1,484	1,834	Highest
$500K – $1M	466	497	545	511	689	Highest
$1M – $2M	116	90	134	115	133	2nd Highest
$2M and Over	23	19	31	40	48	Highest

July 24 – Right about now, real estate professionals start to feel the seasonal slowdown. After the bulk of sales have closed escrow and people return from summer vacation, it’s as if the industry looks up from their activities and wonders what happened to the pipeline. Questions start to emerge about whether or not the slowdown is normal or something to worry about as in years past. Weekly Listings Under Contract is a measure that is good to follow. It compares how many properties are still in escrow this week vs. previous years and allows us a view into what will *hopefully* be closing in the next 6 weeks give or take. It also gives us a head start in identifying a potential shift.

2013 saw a shift from a seller’s market to a buyer’s market in July and August. One red flag that something wasn’t going well was the number of listings under contract in week 30 was below where it was in week 1. That is atypical as week 1 is traditionally the lowest point of the year for listings under contract. 2014 was balanced for most of the year, and thus followed the typical seasonal trend. 2015 so far has seen a shift from a balanced market to a seller’s market. While there has been a downturn in the last 2.5 months, it is seasonally expected. The count is higher than it was in week 1 and the trajectory downward is not as steep as it was in 2013, therefore it’s not an alarming development at this time. Tomorrow we will look at this measure by price range.

 

 

July 23 – 2015 has been the best in 8 years for sales $2,000,000 and over thus far. In the last 15 years, only 3 years have performed better in the first 30 weeks than 2015 in this price range. Not surprisingly, those years are 2005, 2006 and 2007. Normally the peak month for sales is April or May, but this year June was the winning month with 41 sales. When we look at monthly sales, it’s not so obvious how the year compares. By looking at year-to-date sales, it becomes clearer how well the market is recovering. 2015 sales are only 6% lower than 2005 for this market, but would have to increase 45% to reach the peak level of 2007.

 

 

 

July 22 – Sales volume year-to-date so far in 2015 is 47,661 closings, up 8.8% from this week in 2014 but still 8.7% below 2013. 2006 and 2014 saw similar annual sales volume. 2015 has had 57% more closings than 2008, which was the infamous year prices crashed due to increasing foreclosure supply and decreased demand due to tightened lending standards.

 

July 21 – 63,810 new listings have hit the market thus far in 2015. This is only 3.8% below the new listing count in 2014 at this time. The “bubble” of 2006-2008 was precipitated by an influx of excess inventory for the demand. By this week in 2006, there had already been 108,835 new listings added to inventory. In 2008, that number was 91,191 new listings. So far, 2015 is 41% below 2006 and 30% below 2008.

July 20 – Expired listings have a notable spike every 3 to 4 weeks. Of all the listings to expire in a month’s time, the majority of them will expire during the first week and every year there is an extreme spike just before the new year begins. Not surprisingly, 2015 is experiencing fewer expired listings than 2014. However, that is primarily due to the lack of inventory under $300,000. Expirations for listings between $300,000 and $1,000,000 are in line with 2014, and there have been more expired listings over the list price of $1,000,000 this year.

July 19 – Listing cancellations remain very low in 2015 thus far at 11,248 year-to-date; 19% down from this time last year.  Only 3 years in the last 15 years have had a lower number of cumulative cancellations in week 30.  Those years are 2005, 2013 and 2012.  2008 was the worst year by week 30 at 32,628, which is nearly triple today’s level.

July 18 – Cumulative Days on Market is currently 78 days.  Homes are on the market 6 fewer days on average than they were in 2014 and 19 more days than 2013.

July 17 – The 2015 summer is expected to be strong for buyer demand this year.  One major influencer is the boomerang buyer.  There are two waves of boomerang buyers, those who had a foreclosure recorded in 2008 and those who had a short sale in 2011.  With a 7-year maximum wait after foreclosure and a 4-year maximum wait after short sale, the previous owners of 17,876 properties will have their credit scores improve in the 3rd quarter of 2015.

Boomerang buyers are not restricted to lower cost properties.  Just because someone cannot qualify for a mortgage, does not mean that they cannot afford a mortgage payment.  Over the next 2 years, a good number of consumers will have their credit scores improve significantly enough to qualify for financing.  They will add to demand across most price points, which is good for sellers.  Whether or not sales volume increases depends on how many new listings come on the market to accommodate them.

July 16 – The Arizona’s Workforce Employment Report was released by the Arizona Department of Administration today (read it HERE).  The state unemployment rate bumped up 0.1% from 5.8% to 5.9% with the biggest drop in the Government sector.  The report states, “The majority of losses in Government were from Local Education (-39,100 jobs).”  This is seasonally typical as public schools shut down for the summer.  Not only do teachers get “released”, but so do the support services such as cafeteria and janitorial workers and suppliers.  Expect the rate to drop back down as they return for the beginning of the school season in conjunction with an increase in retail hiring for the holidays.

Not surprisingly, Maricopa County has the lowest unemployment rate at 5.3% and has dropped 1.1% since this time last year.  Yuma has the highest at 22.6%, while that’s extremely high it’s 4.3% lower than it was last year.  The biggest drop by percentage was Santa Cruz County with a 4.7% improvement from 15.3% to 10.6%.  The only county to have their unemployment rate increase year-over-year was Greenlee County, which worsened from 7.0% to 7.5%.

Unemployment Rates	June 2015	June 2014	Difference
Maricopa	5.3%	6.4%	-1.1%
Yavapai	5.7%	7.1%	-1.4%
Pima	5.9%	6.9%	-1.0%
Pinal	6.5%	8.1%	-1.6%
Coconino	6.5%	7.6%	-1.1%
Graham	7.4%	7.5%	-0.1%
Greenlee	7.5%	7.0%	+0.5%
Cochise	7.6%	8.9%	-1.3%
La Paz	7.6%	9.8%	-2.2%
Gila	7.8%	8.6%	-0.8%
Mohave	8.1%	8.6%	-0.5%
Navajo	9.6%	13.10%	-3.5%
Santa Cruz	10.6%	15.3%	-4.7%
Apache	13.6%	17.8%	-4.2%
Yuma	22.6%	26.9%	-4.3%
ARIZONA	5.9%	6.9%	-1.0%

 

July 15 – Target Marketing and Turnover Continued… continuing the theme from yesterday, the overall annual turnover rate for Maricopa County is 5.8%.  That means out of every 100 existing resale units, 5.8 of them turned over in the last 12 months.  That’s the benchmark, and most zip codes fall within close range of this measure so it’s not unreasonable to use it as a rule-of-thumb when considering a new marketing area.  Understand that past sales activity is not a predictor of future sales, but you can check out the annual sales chart HERE to see if sales trends have been moving up, down or stable.
Top 10 Highest Turnover Rates (7.5 or more annual sales per 100 units):

Area	Zip Code	Total Residential Units	Annual MLS Sales	Annual Turnover Rate
Tonopah	85354	643	102	15.86%
Downtown Phoenix	85004	1,240	110	8.87%
West Mesa	85208	9,294	816	8.78%
Arlington/Congress	85322	105	9	8.57%
Buckeye	85396	7,029	597	8.49%
Gilbert	85297	9,981	796	7.98%
Gilbert	85298	11,053	861	7.79%
Wittmann	85361	1,417	110	7.76%
Surprise	85388	8,926	677	7.58%
Peoria	85383	16,795	1,260	7.50%
MARICOPA COUNTY		1,245,268	72,239	5.80%

Bottom 10 Lowest Turnover Rates (4.3 or fewer annual sales per 100 units):

Area	Zip Code	Total Residiential Units	Annual MLS Sales	Annual Turnover Rate
MARICOPA COUNTY		1,245,268	72,239	5.8%
West Phoenix	85017	7,137	307	4.30%
South Phoenix	85040	7,284	305	4.19%
Central Phoenix	85008	9,427	394	4.18%
Central Phoenix	85006	5,248	210	4.00%
West Phoenix/Maryvale	85031	6,265	246	3.93%
West Phoenix/Maryvale	85033	12,658	496	3.92%
Gila Bend	85337	488	18	3.69%
West Phoenix/Maryvale	85035	9,150	322	3.52%
Downtown Phoenix	85009	8,704	248	2.85%
Downtown Phoenix	85034	879	19	2.16%

It’s interesting to note that there are quite a few zip codes in the lowest turnover areas that are still appreciating markets. The issue in these areas is a distinct lack of incentive for sellers to sell at this point. It could be that prices haven’t risen enough yet for them to break even, or they’re investors who are profiting from their rentals. Either way, if you’re going to spend your money marketing to sellers in these areas, we recommend you cast a wider net to compensate for the low turnover.

July 14 – Target Marketing and Turnover – We are regularly asked about turnover rates and what areas are the best for investing marketing dollars.  Typically we’re asked to rank either zip codes or subdivisions by number of sales within a time frame.  This type of measure can be misleading, however, as the largest areas will land at the top of the list while the smallest ones will never make it.  For example, it’s hardly fair to compare a large zip code like 85018 (Arcadia) to a smaller one like 85012 (Central Corridor) in terms of sales volume.  85018 will win every time because it’s geographically larger.  To make the ranking fairer there should be an equalizing measure, such as total number of housing units, in the mix.  The appropriate measure is not the highest number of sales overall, but the highest number of sales per 100 existing resale units.  By this formula, 85018 and 85012 are much closer.
If someone were to invest their efforts into 100 random homes for 1 year in 85012, statistically speaking they should expect to compete for 5.8 sales within those 100 units during that time.  This formula can be applied across subdivisions and street boundaries as well.  The annual sales count is a better measure than monthly sales because it doesn’t fluctuate seasonally and there’s less risk of having zero sales within the time frame.

Zip Code	Annual MLS Sales	Total Resale Units	Annual Turnover Rate
85018	793	13,212	6.0%	6 MLS sales per year out of every 100 resale units
85012	136	2,330	5.8%	5.8 MLS sales per year out of every 100 resale units

 

July 13 – The Average Cumulative Days on Market (CDOM) for all areas and types as of last Saturday, July 11th was 76 days, or approximately 2.5 months.  Zip codes with the fastest selling times are consistently those with an average sales price around $250,000 or less and convenient to the freeway networks.  This roughly includes the west side zip codes surrounded by the I-17/Loop 101/I-10 network and the Southeast Valley zip codes surrounded by the I-10/Loop 202/US-60 network.

July 12 – 85255 has had a good 12 months for sales over $2M. Annual sales are up 87% from 2013 and almost as high as 2006.

July 11 – Yesterday we looked at the annual median, which is a very slow moving and non-volatile measurement. Changes in the annual median are not due to random patterns but signify a real change in the market. However the annual median does not adequately reflect price changes that took place in the very recent past. Prices have increased over the last few months in most areas, and to see this effect we have to look at a short range median. The monthly median is volatile and can jump up and down from month to month, especially when we are looking at an area with a low number of monthly sales and a wide range in home values. For example the monthly median for Paradise Valley can be very frustrating because it jumps up and down seemingly at random.

To try and arrive at a balance between the annual and monthly medians we can use a time period somewhere between the two. Three months is not bad, although most people are not used to looking at a quarterly median. Here is a table comparing the quarterly median for cities for the second quarter of 2015 with the fourth quarter of 2014. This gives us a reasonable picture of what has happened to pricing over the course of the last 6 months. The pricing is for single family detached homes only.

Rank	City	Quarterly Median 4Q 2014	Quarterly Median 2Q 2015	6 Month Change
1	Florence	$131,000	$148,500	13.4%
2	Tempe	$230,000	$254,950	10.8%
3	Casa Grande	$139,500	$153,000	9.7%
4	Avondale	$159,900	$175,000	9.4%
5	Glendale	$180,000	$197,000	9.4%
6	Mesa	$194,900	$213,000	9.3%
7	Waddell	$235,000	$255,000	8.5%
8	Fountain Hills	$382,000	$413,500	8.2%
9	Phoenix	$195,000	$210,400	7.9%
10	Anthem	$255,000	$275,000	7.8%
11	Tolleson	$153,500	$165,000	7.5%
12	Gilbert	$254,950	$271,000	6.3%
13	Gold Canyon	$255,000	$269,000	5.5%
14	Sun City West	$185,000	$195,000	5.4%
15	Surprise	$187,000	$197,000	5.3%
16	El Mirage	$133,000	$140,000	5.3%
17	Chandler	$260,000	$272,900	5.0%
18	Maricopa	$147,700	$155,000	4.9%
19	Goodyear	$225,000	$235,000	4.4%
20	Apache Junction	$149,900	$155,000	3.4%
21	Sun City	$145,000	$150,000	3.4%
22	Peoria	$238,000	$245,500	3.2%
23	Queen Creek	$180,863	$184,900	2.2%
24	Buckeye	$160,000	$165,000	3.1%
25	Scottsdale	$469,750	$483,000	2.8%
26	Laveen	$173,500	$176,750	1.9%
27	Coolidge	$100,000	$101,500	1.5%
28	Sun Lakes	$255,000	$255,000	0.0%
29	Arizona City	$85,900	$85,000	-1.0%
30	Paradise Valley	$1,470,000	$1,450,000	-1.4%
31	Cave Creek	$429,950	$400,000	-7.0%
32	Litchfield Park	$279,000	$245,000	-12.2%

The recent improvements in pricing in Florence and Casa Grande in Pinal County are very obvious in this table. It is not such a pretty picture for Litchfield Park and Cave Creek, but these numbers are not indicative of a collapse, just examples of how much quarterly volatility exists in relatively small markets with a wide range of home prices.

The overall number for all of ARMLS single family changed from $210,000 to $225,000, an increase of 7.1%. This is pretty impressive for just 6 months. We must remember this is as much driven by lack of supply in the low price ranges as increases in home values.

July 10 – With the low end of the market constrained by supply, the median sales price is increasing faster than home values overall. This is the opposite of what happened when the low end was inundated with supply during the years 2008 through 2010 when the median price collapsed. The monthly median is starting to race ahead of the annual median in several locations.

Ranking the cities by the change in the annual median sales price for single family homes over the last 12 months gives us the following table:

Rank	City	Annual Median July 9, 2014	Annual Median July 9, 2015	Change
1	Phoenix	$182,500	$200,000	9.6%
2	El Mirage	$125,000	$135,000	8.0%
3	Mesa	$187,500	$201,000	7.2%
4	Apache Junction	$140,000	$150,000	7.1%
5	Sun City	$135,500	$145,000	7.0%
6	Peoria	$225,000	$240,000	6.7%
7	Casa Grande	$138,000	$147,750	6.6%
8	Avondale	$157,703	$167,794	6.4%
9	Litchfield Park	$244,250	$255,000	6.2%
10	Chandler	$250,000	$264,900	6.0%
11	Queen Creek	$171,900	$181,000	5.5%
12	Paradise Valley	$1,350,000	$1,420,250	5.2%
13	Tolleson	$150,000	$160,000	4.7%
14	Arizona City	$81,200	$85,000	4.7%
15	Buckeye	$154,900	$162,000	4.6%
16	Sun City West	$176,100	$186,000	4.5%
17	Maricopa	$145,000	$150,000	4.3%
18	Cave Creek	$395,000	$412,000	4.3%
19	Gilbert	$250,000	$260,450	4.2%
20	Glendale	$172,000	$184,900	4.2%
21	Laveen	$168,000	$175,000	4.2%
22	Fountain Hills	$392,250	$405,000	3.3%
23	Surprise	$184,500	$190,000	3.0%
24	Anthem	$255,000	$259,700	2.7%
25	Tempe	$234,000	$240,000	2.6%
26	Sun Lakes	$242,500	$250,000	2.2%
27	Goodyear	$225,000	$230,000	2.2%
28	Scottsdale	$470,000	$467,500	-0.5%
29	Gold Canyon	$260,000	$250,000	-3.8%

 

July 9 – Taking another look at how the Cromford® Market Index is behaving for the single family markets in the 17 largest cities by dollar volume:

This is the first time for a while that we have had 6 of the 17 cities deteriorating over the previous month. However the picture is still very positive for sellers with all cities except Maricopa over 100.

Tempe, Goodyear and Glendale are cooling a little, while things are improving quite a bit in Surprise, Fountain Hills, Scottsdale, Buckeye and Maricopa.

Some cities which have experienced very low supply are starting to see a few more listings. For example, Avondale has almost 15% more active listings than last month. Not in the top 17, but showing a similar effect are El Mirage, up over 17% and Tolleson, up 10%.

July 8 – The Black Knight Financial Service Mortgage Monitor report has just been released for May 2015. Delinquencies increased by nearly 4% from April. This might seem troubling except for the fact that the month of May ended on a Sunday. Delinquencies always look bad for months that end on a Sunday. In fact 5 of the the top months for rises in delinquencies in the last 7 years have occurred in months that end on a Sunday. We need to look at the longer term trend not noise generated by the calendar. The overall delinquency rate is down 12% from May 2014. 49 out of 50 states have seen a fall in non-current rates over the past 6 months. The only exception is Alaska, where the non-current rate is pretty low to begin with – 3.7% versus the national average of 6.5%

Florida has seen the largest improvement over the last 6 months with a reduction of 22% in non-current loans. Idaho, Michigan, Minnesota and Illinois also saw large reductions.

Arizona remains in 43rd place for non-current loans with 4.0%. It looks possible that we might drop to 44th soon because Wyoming is improving much less quickly than Arizona. We seem to be stuck between 3.5% and 4% at the moment, which is quite a bit better than our long term average of 5%.

July 7 – As much as we talk about the chronic supply shortage under $200,000, some may be surprised to see so many sales under $200,000 that were on the market for 6 months or longer. This is not unusual when the market shifts from a buyer’s market to a seller’s market. As inventory declines sharply, properties that were once continually rejected due to price or condition are found attractive again in the absence of choice. When they sell, their Days on Market count pushes the overall average up.

Flash sales are not just for the lower-priced listings. While the majority were indeed under $200,000, even the luxury market had a number of sales that went pending within 24 hours over the last 90 days. The chart below is interactive. See how your city or zip code has fared over the past 90 days.

July 6 – Sales during June were substantially higher than in June last year, but the gains were almost entirely in the price ranges over $200,000. Under $200,000 there just is not enough supply to generate any growth in sales.

Here is a chart to illustrate the situation:

July 5 – Active listing counts are still falling – excluding UCB they are down 2.7% from last month. However the average pricing is falling (down 2.2%) as there are now fewer high end homes in the mix. The average sq .ft. has dropped from 2,522 to 2,493 and the average price from $500,636 to $481,216.

A lot of high end listings expired or were cancelled at during June. This is something we see in most years, but 2015 was especially noticeable. Here are the numbers for high end single family homes in Greater Phoenix:

Price Range	Cancelled in June	Expired in June	Active July 1 excl. UCB	Active June 1 excl. UCB	Listing Success Rate June 1015
$800K to $1M	32	35	556	619	53.5%
$1M to $1.5M	45	45	533	645	39.6%
$1.5M to $2M	38	18	303	356	33.3%
$2M to $3M	56	19	306	361	26.5%
Over $3M	30	26	204	260	22.2%

 

July 4 – Today we look at those listings that were listed and went pending in 1 day or less. It is interesting that these “flash sales” are well distributed throughout the Valley and cover all price ranges. They are not concentrated primarily on the West Side, South Phoenix or Southeast Valley as one might expect. You can adjust this map by price, days on market and dwelling type. Hover over each mark for original list price, sale price and date sold.

July 3 – So June looks like it will be the best month for closed sales in 2015. Here are the best months for each of the last 15 years:

• March – 2007, 2012
• April – 2014
• May – 2001, 2002, 2006, 2013
• June – 2004, 2005, 2009, 2010, 2011, 2015
• July – 2003
• September – 2008

We can see that June is the most likely month to set the sales record for the year with 6 out of 15 showings. May is in second place well ahead of all the others.

Meanwhile June 2015 also gave us an excellent total for dollar volume – $2,369 million. This is the highest since June 2006 and higher than any month before March 2005.

July 2 – Looking at the Cromford® Market Index for the single family market in the 17 largest cities, we see the following changes over the last month:

Although this is a positive picture we are starting to read signs of a slowdown. We have 5 cities that have deteriorated, although only by small percentages.

The biggest advances for sellers can be found in Fountain Hills, Surprise, Scottsdale and Maricopa

July 1 – Single family permits totalled 1,591 in May for Maricopa and Pinal Counties. This was down slightly from the April total of 1,642, but was otherwise the highest number since August 2007.

The rolling 12 month total is up to 13,272, the highest level since September 2

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