Welcome 2017!  The headlines these days are full of projections and reflections for the Phoenix Metropolitan Area residential real estate market.  To complement our monthly measures here are some year-end numbers to reflect on.
 
2016 MLS Sales – Up 7.0% overall compared to 2015
·        72.9% of sales were under $300,000 (# of sales up 3.4%)
·        19.6% of sales were between $300,000 and $500,000 (# of sales up 20.2%)
·        6.1% of sales were between $500,000 and $1,000,000 (# of sales up 15.4%)
·        1.4% of sales were over $1,000,000 (# of sales up 8.1%)
 
2016 New Listings – up 4.6% overall compared to 2015
·        65.8% of new listings were under $300,000 (# of new listings up 0.8%)
·        22.0% of new listings were between $300,000 and $500,000 (# of new listings up 13.5%)
·        9.2% of new listings were between $500,000 and $1,000,000 (# of new listings up 13.6%)
·        3.0% of new listings were over $1,000,000 (# of new listings up 5.7%)
 
2016 Appreciation based on Annual Sales Price per Square Foot – up 5.4% from 2015
·        Under $300,000 – up 7.6%
·        $300,000 - $500,000 – up 2.0%
·        $500,000 - $1,000,000 – Less than 1% change
·        Over $1,000,000 – Less than 1% change
 
It’s been a good news/bad news year for sellers over $500,000.  The good news is that more buyers purchased in the higher price ranges in 2016 than in 2015.  The bad news is the neighbors also noticed increased demand and listed their homes too, increasing the number of new listings on the market simultaneously.  This increased supply, combined with builders getting in on the action over $250,000, created a more competitive and balanced market and put price increases in check.
 
It’s been good news/bad news for buyers under $300,000.  The good news is their homes have appreciated nicely over the past year.  The bad news, finding move-in ready homes and winning the bid was more stressful and competitive than many expected, especially for single family homes under $200,000.  (Yes, they do exist.)
 
Looking forward in the short term, the market can expect more buyers emerging with improved credit scores as we move farther away in time from the foreclosure and short sale crisis.  Recent announcements regarding FHA loan limit increases and lower mortgage insurance premium fees signify a loosening up in lending that will contribute to more demand for listings under $300,000. Higher interest rates will cause some buyers to purchase smaller homes than they anticipated, putting even more pressure on the market under $300,000; which is already short of supply for existing demand.  With nearly 73% of all sales in this price point, it’s reasonable to expect appreciation to continue to be positive for the Phoenix Metropolitan Area overall.

I would love to help you with your next home sale or buy.                                                      Please call me anytime.Direct  480-33-2088

October 2016

September 2016

FOR BUYERS: Buyers looking for larger single family homes under $200K may want to consider the Southwest Valley with 50% of all sales occurring under $185K and an average size of 1,929 square feet. Pinal County provides the largest single family home for the money with an average sale at 2,057 square feet and a median sales price of $154K. The Southwest Valley (which includes Southwest Phoenix, Buckeye, Goodyear, Litchfield Park, Avondale, Tolleson and Laveen) has seen the sales price per square foot for single family homes rise 9.4% since this time last year. Pinal County (which includes Apache Junction, Gold Canyon, San Tan Valley, Florence, Casa Grande and Maricopa) has only seen a 2.6% increase due to more competition from new home subdivisions.  Life is easier for buyers who are looking for homes over $200K, but not by that much.  There’s more supply, but demand is still high in relation to it until the budget gets over $500K where the market is more balanced.

FOR SELLERS: For those who own a condominium or townhome, the shortage of single family supply under $200K is good news.  Sales of condos and townhomes are up 6.1% and the median sale price is up 12.5% from $137,750 last year to $155,000 as of September 7th.  The average sale price per square foot is up 5.3% from $131.85 to $138.87 with the average sized unit purchased at 1,267 square feet.

72% of all purchases over the past month have been under $300K, which is why this price point dominates Phoenix Metro overall statistics and projections. Sales between $300K and $500K are up 27.8% over last year, up 8.5% between $500K and $1M and are exactly the same for sales over $1M. Appreciation rates are not as strong in these price points because supply grew alongside demand, keeping the market in a balanced state.

August 2016

July 2016

June 2016

We have 12 cities improving over the last month, with the following most significant:

Fountain Hills - up 19%
Avondale - up 16%
Cave Creek - up 9%
Mesa - up 7%
Paradise Valley - up 6%
Goodyear - up 5%

Only Buckeye saw a significant deterioration for sellers, down 5%, but another 4 cities saw slight moves towards neutrality.

Overall the market is improving for sellers with the high end market helped by a large number of cancellations, as sellers take their homes off the market, probably just for the summer.

June 6 - Looking at the Greater Phoenix super luxury market at $6 million and above we see 5 sales through ARMLS so far this year:

• sold for $7,400,000 (original list $9,495,000) in February - 15,112 sq ft - $490 per sq. ft. - 165 days on market
• sold for $7,200,000 (original list price $8,750,000) in April - 7,181 sq. ft. - $1,003 per sq. ft. - 2,141 days on market
• sold for $6,250,000 (original list price $6,750,000) in February - 10,567 sq. ft. - $591 per sq. ft. - 27 days on market
• sold for $6,175,000 (original list price $8,750,000) in February - 12,929 sq. ft. - $478 per sq. ft. - 386 days on market
• sold for $6,000,000 (original list price $7,195,000) in January - 9,221 sq. ft. - $651 per sq. ft. - 427 days on market

There were another 2 sales between $5 million and $6 million

There were 6 sales of $6 million or more in the same period in 2015 and another 5 between $5 million and $6 million.

The dollar volume for homes over $5 million has declined 38% year over year from $71.6 million to $44.1 million.

We are not the only location that is seeing a drop in buying activity for the highest price sector of the market. Reports from other locations suggest that big mansions in the rest of the USA and in part of the UK are seeing much lower activity.

May 2016

FOR BUYERS:

May is often the last month of “buyer season” before the summer slowdown.  In anticipation of hotter temperatures, graduations and upcoming summer vacations, many home buyers would prefer to get their contracts into escrow and closed before the end of June.  As a result, there are many areas of the valley where there are currently more properties in escrow than active for sale.   Not surprisingly, those areas are concentrated where the average sale price is under $250,000 in parts of the Southeast Valley (such as North Tempe, West Mesa, North Chandler and North Gilbert), South Phoenix, and most of the West Valley.  This is temporary. Buyers can expect relief from competing offers in the summer months if they choose to brave the higher temperatures.

FOR SELLERS:

Overall sales have been following 2015 pretty closely thus far.  April was down less than 1% from April last year, but year-to-date sales are up 2.5% as of week 19.  The main difference is in the activity by price range.  Sales under $175,000 have been declining year-over-year for the past 9 months with April 2016 down 18.4% from April 2015.  This is not due to low demand, but low supply of homes available for sale.  April sales between $175,000 and $600,000 are up 15% year-over-year and down 9.3% over $600,000.  The big difference between these price points is the level of supply.  It’s chronically low in the bottom price ranges and too high at the top, causing vastly different experiences for sellers.  Properties selling under $175,000 are experiencing annual appreciation around 10% since the beginning of 2016.  Middle range properties are seeing around 3-5% annual appreciation, and the high end properties over $500,000 are experiencing flat appreciation rates at best with some price ranges at the very top seeing negative annual appreciation.

April 2016

Sales Up 7% Over 2015

Median Sales Price Up 6.4%

Active Listings Up 1%

FOR BUYERS:

For the first time since November 2014, supply is higher than it was the previous year.  This is generally good news for buyers, as it means there are more listings competing for their attention.  However, buyers looking for homes under $200,000 will find this is not true.  The Phoenix Metropolitan area is still nearly 19% below normal in supply, with the lower price ranges in the shortest supply.  Sales under $200,000 have made up 45.5% of all sales in the last 12 months, so this is a significant market to be in short supply.  Buyers looking over $300,000 are experiencing an 11% increase in supply valley wide.  The increased competition is resulting in a 19% increase in weekly price reductions compared to this time last year, especially among listings over $500,000.

FOR SELLERS:

The good news for sellers is that contracts in escrow are up 5% and sales are also up 7% over last year.  Demand has been rising over the past month and seasonally is close to its highest level for buyer activity.  Sellers who wish to list their home at the “peak” of buyer activity should not wait too much longer.  April and May are typically the highest months for buyer activity before slowing down in the summer months.  This is especially true in the luxury market over $500,000.  It’s not uncommon for buyer contract activity to drop anywhere from 25%-40% between May and August as seasonal buyers head towards cooler climates.

March 2016

FOR BUYERS:

We are in the heat of buyer season in the Phoenix Metro area.  If you are one of many looking for a home under $200,000, bear in mind that this price range currently makes up 24% of active listings and 40% of sales in the Arizona Regional MLS.  This reflects the high level of buyer competition for these listings, especially those in good condition.  While inventory under $200,000 is down 24% from March of last year, the good news for buyers is that the overall inventory level has stopped declining for the time being after 2 years of consistent depletion.  Buyers over $500,000 have lots of inventory to look through.  This market currently makes up 26% of inventory and 9% of sales in the MLS.  Annual sales are increasing in this price range, so there is still decent competition for exceptional properties in popular central locations.

FOR SELLERS:

If you are a seller with a listing under $200,000, demand is very high for your price point.  However, the buyer pool has changed significantly over the past few years; reaching too high in price initially could prove detrimental to your time on market.  There are 3 types of buyers out there today:

1.  Investors – These buyers are generally not interested in purchasing a property at market value, so listing too high will kill their interest.

2. First-time Homebuyers – These buyers are generally reliant on financing, thus the need for an appraisal.  Many of them will not have the cash to bridge the gap between appraisal and contract price.  If there’s any concern that a property will not appraise close to asking price, then they will not submit an offer and tie up their earnest money for weeks in escrow.

3. Boomerang Buyers – These buyers may have the cash to cover the gap between appraisal and contract price, but they are very nervous to do so.  They have already gone through a foreclosure or short sale and have just gotten a clean bill of health on their credit report after 4-7 years.  Having already paid over appraisal in 2005-2006, then suffering a foreclosure in 2008 or 2009, the memories of the consequences are fresh in their mind and they are wary of “paying too much”.

Because appraisals have become more important to a successful sale compared to 2009-2013, the market is seeing an increase in weekly price reductions along ALL price points, even on the lower end.  Appreciation is still very good for properties selling below $300,000, but don’t expect annual appreciation similar to 2013 where it reached up to 20% in some areas.  A more reasonable expectation would be 4-9% for properties selling under $300,000, even in a frenzy market.  Sales over $300,000 are experiencing flat or declining annual appreciation due to an increase in competition, which means your property in this price range may sell for about the same or less than your neighbor’s home did last year.  This is especially true for those listed over $1 Million.

Please don’t hesitate to call if you have any questions or would like more information on the housing market. Also, if you’re thinking of selling, we would be happy to give you an updated  value on your home.  Thinking of buying?  Let us help you set up a home search on our website search portal and get you started on finding your dream home.

February 2016

FOR BUYERS:

So far 2016 is looking very similar to 2015 in terms of buyer activity in February.  Contracts in escrow are up 8.6% over last year at this time.  That is conservative considering we started off the year with 15% more contracts in escrow.  The real struggle for buyers will be competing for properties under $150,000.  Supply in this price range is down a whopping 40% from this time last year causing frenzy activity around those properties that are in good condition.  As a result, listings in escrow under $150,000 are down 27%.  Supply for properties available for sale between $150,000 and $200,000 is down 20%, which is still significant but not as extreme as under $150,000.

FOR SELLERS:

Sellers have both good news and bad news.  The good news is that buyer activity is still strong in 2016.  Boomerang buyers, those consumers who have waited the required 4-7 years after short sale or foreclosure to qualify for financing, are keeping demand stable in every price range thus far.  The bad news for sellers is, despite the overall 7.5% decline in supply, the number of competing listings over $200,000 has increased 5% compared to this time last year.  This added competition is keeping annual appreciation more subdued for sellers on the higher end of the spectrum.