Archive for Market Trends


May’s Market Update

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April 2017 wrapped up with stats and momentum that confirm a continued seller’s market. With only 10,247 new listings entering the market in Metro Phoenix in April 2017, down 16% from the previous month and 7.3% from April 2016, supply is not keeping up with demand. So it’s not surprising that we’ve seen our third consecutive month of unusually high jumps in average sold price, up to a full percent again from last month to just over $292,000. Days on market has dropped to a value of 54, the lowest we’ve seen in years. Lenders are bringing back renovation loans to help buyers who are frustrated with the lack of updated inventory, and new builds continue to accelerate their market share as well. Interest rates have flattened back out around 4.2% for 30-year fixed loans, and summer 2017 may buck some of the typical slow-down trends.

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Phoenix real estate market early July

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Market summary courtesy Michael Orr of The Cromford Report early July 16, with a few points highlighted in blue:

“The market conditions improved a little for sellers during June, with the Cromford® Market Index breaking through the 140 level as we enter July. However there is no dramatic new trend, just a continuation of what we have been seeing for several months now. Sales volume was strong during June but it is clear that July will be much quieter for closings since the number of homes under contract has fallen quite a bit. This is quite normal for the season.

The ranges from $200,000 to $350,000 saw strong growth in closed sales over June last year – up almost 19%. Between $350,000 and $400,000 we saw a little weakness, down 2%, but sales from $400,000 all the way up to $1.5 million were strong – up an impressive 21%. Sales over $1.5 million were very much weaker than last year – down 44%. Sales below $175,000 were also well down, but this was caused by a lack of supply. The segment over $1.5 million cannot use that excuse. There are plenty of homes available, even though a large number have been removed from the market for the summer. Many of these are likely to be relisted at the end of September.

At first sight it looks as though pricing was strong during June, with the median sales price up 2.2% from last month. However this is deceiving because the average home price only rose 0.3% and the average home size jumped 1.3% from 1,978 in May to 2,004 in June. The average price per square foot retreated 1.0% over the month, and we see this as more accurate measure than the median sales price.

We expect overall prices to be flat to slightly lower over the next 3 months as luxury homes make a smaller contribution when the temperatures exceed 100 degrees. Prices are still rising below $200,000 and falling for most homes over $1 million.

Dollar volume in June was a healthy $2.529 billion, up 7% from June 2015, with about half of that coming from higher sales volume and the rest from higher pricing.

The main difference we saw between May and June was an improvement in demand for homes in the lower ranges of the luxury market, between $500,000 and $1.5 million. In particular:

  • $500K-$600K saw an increase of 30% in dollars spent (compared with June 2015)
  • $600K-$800K saw an increase of 20% in dollars spent
  • $800K -$1M saw an increase of 24% in dollars spent
  • $1M-$1.5M saw an increase of 27% in dollars spent

There is a big contrast above $1.5M:

  • $1.5M-$2M saw an increase of 2%
  • $2M-$3M saw a decrease of 41%
  • $3M and over saw a decrease of 61%

Mind you, June 2015 was a very good month for the super-luxury market so the comparison is quite tough for June 2016.”

Please call or email if you want to know how your house or potential purchase fits in with the current market.  Happy 4th!


Differing Conditions within the Market

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The performance in the Greater Phoenix real estate market varies significantly across the pricing spectrum.

If you are listing a nice 3 bed 2 bath home, priced reasonably well, within the $250,000 range, you can expect to sell quickly, with possibly being able to choose among several offers.   This is because there isn’t enough inventory to satisfy the high demand from the  first time buyers, budget buyers, and investors.  The low end of the market ($250,000 and lower) is very much a seller’s market.

If you have a home in the mid ranges ($250 to $500k) demand (buyers wanting to buy) is much higher than this time last year, but supply is also up.  This is the most “balanced” range within the market – lots of choices for buyers, but selling at reasonable rate if you are a seller.

While there are segments within this range (a $2.5m property has significantly different market conditions than a $700k home), the market for properties priced above $500,000 is swimming in vastly different waters than the low end market.  Supply is high, and higher than a year ago. Sales have climbed, but not enough to soak up the increased inventory.  Price reductions are common, and conditions are tipped toward strength in buyer negotiations.  In fact, appreciation in the highest ranges is in negative territory compared to this time last year.  In simple terms:  for most areas,  the upper range is a buyer’s market.

How does your home stack up in light of this market backdrop?  How can you make the most of these conditions? Call or email and we can discuss!



To Sell or Not to Sell?

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Looking at The Cromford dashboard on my homepage, you see 4 key measures pointing up.  Monthly average square price is up, annual average square foot price is up, measured across the Metro area annual appreciation is 6.8%, and so far this year – up 4% is sale prices.

Is anything down?  Yes, inventory is down.  The number of homes available for sale in our MLS (multiple listing service) is at the moment riding just over 20,000 properties (20,179 at the moment) .   At this point last year, that number was 20% higher, at just over 25,000 properties.

What does this mean for buyers?   Lower inventory- or the number of potential homes in your price range and area is likely going to affect your experience compared to a year ago.  The lower the price range, the more buyers seeking to purchase, the more competitive experience, and the higher likelihood you will encounter losing the house to another buyer. Real estate is local! So, depending on where your price range falls, your experience may not be as extreme.   Homes in higher price ranges (let’s say $300,000 and up for this discussion) tend to move a little more slowly than those sub-$300k or even more so, sub-$200k.

And…. what if you want to sell?  If you are a seller contemplating selling your home, what does this mean to you?   First and foremost, Real Estate is Local!  So,  you need a good update on recent sales and the number of active listings your home may compete with; homes similar to yours in size, levels,  amenities, and area/community.  With this information, you are armed to deal with what may be a multi -offer market reception, or whether your home exists in a price range or area/community that means you need to be well prepared and well priced to effect a reasonably fast sale.

And what if your particular home or neighborhood presents a unique challenge to aggressive pricing and fast sale? Despite challenges your home or location present to the sale, overall, we have a seller’s market.  That means the trade winds are blowing your way, and with wise and prudent market preparation of the home and realistic pricing, you are probably better situated to sale your home in the current market than you will be when the demand/supply ratio reverses to a buyer’s market.

Call or email with questions =-]

Yesterday’s Wall Street Journal reported on the latest Case-Shiller housing index, which published their monthly update on  housing pricing movements for the month of September.   According to Case-Shiller, Phoenix area pricing dropped 1.5% from the previous month (August), but 1.9% from August, 2009.  Scary stuff?  If you only read the headlines it can make you groan; but perhaps the larger picture is slightly more nuanced.  Rather than signaling additional large scale pricing drops, the sense among many is  “The housing market is stuck at the bottom, and we’ve been stuck there for months,” said Patrick Newport, an economist at IHS Global Insight.

Zeroing  in on our corner of the map, yesterday’s Arizona Republic’s Phoenix-area Housing Double Dip Looms   summarizes the current picture, with dampening resulting from  first time buyer numbers evaporating  as well as the nation-wide   slow down in recent escrow closings coming from the review of banking foreclosure practices.  But the headline screams disaster, while the article’s cited expert (Karl Guntermann of ASU) says “comparing it with the market’s initial plunge it would be like looking at a pothole next to a sinkhole.”

As we have discussed before,  the residential market in Arizona and the Phoenix/Scottsdale metro area will gain traction when general economic conditions in the state and city make significant improvement.  In cheerful news, also in yesterday’s Arizona Republic, we are told that the Brookings Institute considers Phoenix “on the road to full recovery”, one of  24 metro centers worldwide labeled so.   We may be bouncing along the bottom, but that is road we have to travel to our recovery.  The indications are that we are on that road.  I predict that this good news will beget even better news.

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Gilbert, AZ 85297


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