Listings are moving quickly now. Its that kind of market. Can you believe it?

Our beautiful listing in the FQ Story Neighborhood went under contract in just four days.

Its a beautiful home, priced right for this strong seller’s market. We worked with the sellers long before they listed to identify the projects to complete in order to get ready for sale.

If you’d like to see more photos of this listing, please have a look here.

The owners did a lot of work to prepare for sale and the home shows beautifully. Local photographer Alonso Parra does a beautiful job with listings, even though he is known more for individual portraits. It does illustrate, however, how important it is to put your best foot forward.

This is a good time to sell, if you’ve been thinking of doing it. If you need help getting ready to list and price your home, give us a call at 602-456-9388.

The August Market Update shows a continued strong summer. Buyers are having a hard time below $200,000, unless you are looking at condos. Sellers are seeing a continued steady upward climb.

See below for greater details.

This trend is intensified in downtown, as we see more people wanting to live in dense areas.

This graphic is almost a month old, but it is still holding up. Our friends at the Cromford Report are doing a good job turning dry numbers in to digestible graphics.

For Buyers:
Unless you’re looking for a property in the lowest price ranges, there’s a decent amount of supply to choose from in the Phoenix Metropolitan Area.

As prices rise, most buyers will adjust what they buy in terms of size or location in accordance with their budget.  Over time, we’ve seen the average size home purchased continue to rise, even when prices were at their highest.

For example, in 2002 the average sized home purchased was 1,607sf.  It rose to 1,632sf in 2006, then 1,715 in 2011 and 1,762sf so far in 2016.  Of properties sold under $200K in 2006, the average size is currently 1,388sf.  Between $200K-$300K, the average size is 1,829sf.  $300K-$500K is 2,385sf.  $500K-$1M is 3,189sf.  $1M-$2M is 4,421sf and over $2M is 6,338sf.

For Sellers:
The median sales price has risen a whopping $20,000 since January’s measure of $210,000, a 9.5% increase.  This type of disparity can spur articles and discussion about real estate “bubbles” and rapid price appreciation.

This looks very exciting for sellers until it’s compared to the price per square foot measure, which has only increased 1.5% from $138.73 to $140.84 during the same time frame.  The difference in growth rates between the median sales price and the average sales price per square foot can be attributed to a shift in the composition of sales by price range.

Due to the lack of supply of properties below $150,000, the Phoenix Metropolitan Area has seen a significant drop in percentage of sales in this price range.  Simultaneously, there has been an increase in market share within the $200,000 – $300,000 price range where there is also more supply.  The increase in supply over $200,000 keeps individual property appreciation per square foot more sustainable.

However, because the under $150,000 market continues to lose market share as the over $200,000 market gains, the median sales price measure is pushed up higher than the rate of the average price per square foot.  For the median measure to increase, sales over $230,000 would need to achieve 51% market share or more.

Prices have been going up for houses in Phoenix over the last few years. Not drastically, though. Its not 2007 all over again. But prices have been climbing in a healthy manner for a while.

So, you say to yourself, “Self, I don’t think I can purchase a home right now. Those prices are too high!”

But the price is not the whole story. Consider the interest rate!

Here’s what I mean.

In December 2013, according to Freddie Mac, average interest rates were about 4.46%. Had you bought a house in CenPho then, you would have paid about $140/square foot.

Let’s say you purchase a 2,000sf home then. The cost would have been $280,000. At 4.46% interest, your Principle + Interest (P&I) would be $1,412.07. (This does not count fees, taxes and insurance. We are not mortgage brokers, so check with them for those details.)

Okay, so fast forward to today. Average prices are over $200/sf in Cenpho. That same 2,000sf home will cost $360,000. At 3.57% interest, that’s $1,630.66, P&I.

To which you say, “Hey, that’s definitely more expensive.”

Yes, but had that loan been at 4.46% interest, the house would have cost $1,815.52, P&I.

Another way to look at it is that you could have purchased a $320,000 home for roughly the same monthly cost with rates at 3.57% as a $280,000 home when rates were at 4.46%.

Does that mean you can afford that house? Maybe. Maybe not. But you are definitely saving $200 per month over where it was when homes were selling for $140/sf.

Interest rates are lower right now and they will not always stay low. On the other hand, there is not much room for new homes in CenPho, other than condos and townhouses, which are not being built in great enough numbers. So, those prices are likely to go up further before they go down. Your chances of getting a home while the interest rates are lower and the prices are lower may be slipping away.

We can help you think through your options. Buy now? Rent for a while longer? Purchase in a different area?

We can help you buy or sell your home. Please give us a call at 602-456-9388.

We’ve been seeing some shifting in the central Phoenix market recently, so I figured we might check in early with the Cromford Report for a Central Phoenix Market Update.

Anecdotally, we’ve seen listings starting to sell more quickly. We expect that as we go in to the high season for home sales –February through June.

Central Phoenix Active Listings

The end of 2015 was a little slow for our folks listing properties. It was to the point where we were advising prospective sellers to hold off and watch. We are seeing better activity, so we are encouraging those folks to list now, rather than later.

Cromford confirms what we are seeing in our central phoenix market update. See how the active listings in CenPho zip codes dropped quickly at the end of last year, but they are rebounding now.

What I find interesting is how the Cromford Index responds quickly to that. We see that little dip in the pink line on the index. That corresponds to the increased number of listings –the greater the number of listings, the less of a seller’s market it is.

To be precise, there are a lot of factors that go in to the Cromford Index. It is proprietary, so I don’t know all of them. But some have been explained to me, and inventory is one of them.

Regardless, and despite the small drop, I find it interesting that we are still at a higher point on the index that almost any time last year.

So, what does that mean? Well, I take it to mean that if folks continue to list, we could see a turn in the Cromford Index. However, if the preponderance of people listing get a little greedy and price above market, then sales of well-priced homes will continue to be robust.

If you need help building a strategy around your sale or purchase, please contact us at 602-456-9388.

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I had the pleasure this month of doing a presentation to a One Community business lunch group with the esteemed Tina Tamboer of the Cromford Report.

We were exploring the larger questions of why people perceive changes in the market as they do, as well as noting the market shift we are under-going right now.

For instance, there is always a lag between when the Cromford Index starts to see a shift between seller’s and buyer’s market conditions and when the market actually changes. This is as close to a crystal ball as I’ve ever seen.

The chart to the right is a little hard to see because I grabbed it from Tina’s powerpoint presentation. But, generally, you can see that the shift in the Cromford Index almost always precedes shifts in the market.

Paradoxically, you CAN see the market index dropping while prices are still increasing. But once sellers see fewer and fewer buyers, or stay on the market longer, prices begin to drop.

That is what we are seeing right now. We see the Index shifting back toward a balanced market, or maybe even a buyer’s market. Tina figures that this trend will persist over the next few months.

That is why this month’s update from Cromford seems odd at first, but makes sense when you learn more about how the Cromford Index works.

“Our mid-point forecast for the average monthly sales $/SF on November 15 is $135.55, which is 0.3% lower than the November 15 reading. We have a 90% confidence that it will fall within ± 2% of this mid point, i.e. in the range $132.84 to $138.26.”

What they are saying is that the prices are staying pretty close to the same as last month, even going up a small amount. But, in the next few months, they will likely chase the Cromford Index downward.

What does this mean? It means if you are a seller right now, price aggressively. Don’t think that because your buddy Frank sold his house 3 months ago for a huge profit that the market is in that same place. If he sold it three months ago, then he probably priced it based on comparable properties that sold six months ago. Thats, like, a different epoch altogether!

So, sellers, either be competitive and get ahead of this line or find yourself chasing it downward after being on the market for a while. Buyers, this is not a market where you can offer 10% less than asking and get it. But the advantage is trending your way.

Over-all, too, our market still remains generally affordable, despite price increases since 2014. This chart says that right now a family making the median household income can afford 70.9 percent of all houses on the market. Not bad.

We do, however, need homes for first time home buyers and moderate-income buyers, especially in the CenPho market. I hear there are some developments on the way on that. More later.

If you need advice on how to buy or sell, let’s consult the market data tea leaves together. Call me at 602-456-9388.

The cooling trend that started gently in August has now developed more momentum. Supply is still growing faster than it did last year while demand continues to show a slow weakening trend. Things are getting better for buyers and worse for sellers.

It remains a seller’s market in most areas where properties can be easily found for the median sales price of $213,000 or less. Elsewhere we are dropping towards a balanced market and one or two areas have retreated to a level where buyers have a small advantage.

The Cromford® Market Index moved from around the 144 mark at the beginning of October to around the 134 mark at the beginning of November (all cities). This has now become a significant enough change for most people to feel a difference. More sellers are becoming frustrated, especially those in those with the highest growth in active listings and relatively weak demand.

We’ve advised our clients to price competitively. If you are thinking about selling, let’s talk about how to build a strategy. It is easy to believe that a seller’s market might return in January, after the holidays. But, previous years indicate that this may not always be the case.

Call me at 602-456-9388 for more information.

September developed a bit of a cooling trend, as compared to earlier in the year with a very strong seller’s market. Supply has started to grow and demand weakened slightly again. This is not really a major market development like we saw around this time two years ago, but it might be considered mildly disappointing for those rooting for the market to go from strength to strength.

It remains a seller’s market overall. The Cromford® Market Index moved from around the 148 mark at the beginning of August to around the 144 mark at the beginning of October, reversing the gains in August. This is not enough change for my friends at the Index to predict a major change.  But it is fair to say that market balance moved to give seller’s slightly less of an advantage in most areas.

Here are the basic ARMLS numbers for October 1, 2015 relative to October 1, 2014 for all areas & types:
    •    Active Listings (excluding UCB): 20,024 versus 23,514 last year – down 14.8% – but up 4.8% from 19,101 last month
    •    Active Listings (including UCB): 23,238 versus 26,336 last year – down 11.8% – but up 3.7% compared with 22,413 last month
    •    Pending Listings: 5,789 versus 5,481 last year – up 5.6% – but down 7.5% from 6,259 last month
    •    Under Contract Listings (including Pending & UCB): 9,003 versus 8,303 last year – up 8.4% – but down 5.9% from 9,571 last month
    •    Monthly Sales: 6,966 versus 6,230 last year – up 11.8% – but down 0.9% from 7,100 last month
    •    Monthly Average Sales Price per Sq. Ft.: $133.24 versus $126.82 last year – up 5.1% – but up 0.7% from $132.26 last month
    •    Monthly Median Sales Price: $211,000 versus $195,000 last year – up 8.2% – but up 1.4% from $208,000 last month

–Source. Cromfordreport.com

The Cromford Report folks track household formation to see how many new buyers are coming on the market.

I think its an interesting story for Phoenix, in particular. After the recession, we saw young couples choosing to rent longer, or even live with family for a while. Add that to the fact that this new generation of home buyer is coming on the market with higher levels of debt than ever before, and we see the makings of some serious downward pressure on the sub-$200k market.

However, and there is always a however, CenPho and historic neighborhoods are a little different. Well, in regards to sub-$200k, all of the valley is in the same boat. See in my previous post why we have a shortage, sub $200k. But, its particularly difficult in the urban dense areas because more people are moving in to those areas.

I also covered a few months ago how I believe we are over-building apartment complexes at the peril of owner-occupied properties. There is a six to one ratio of apartment to owner-occupied being built in downtown. That seems way off.

I think we will have options for young couples to own their own home if they want it, but we need to build more in-fill and the city needs to find a way to help.  With 43% of the land mass of Phoenix comprised of empty lots, and many of those owners holding to speculate, we need to get some of those properties in the hands of in-fill developers without the prices being prohibitively high.

Watch this trend if you are looking to buy in the next year to year-and-a-half.

If you are looking for more information, please call me at 602-456-9388.

Thanks again to our friends at the Cromford Report for their excellent analysis on all things real estate.

Here are a few highlights:

“For the monthly period ending August 15, we are currently recording a sales $/SF of $132.74 averaged for all areas and types across the ARMLS database. This is 2.0% below the $135.42 we now measure for July 15. Our forecast range was $131.71 to $137.09 with a mid-point of $134.40. Last month’s mid-point forecast was $1.66 above the actual price per square foot measured, but the actual result was well within the 90% confidence interval.

On August 15 the pending listings for all areas & types showed an average list $/SF of $135.41, 0.5% below the reading for July 15. Among those pending listings we have 86.9% normal, 4.7% in REOs and 8.5% in short sales and pre-foreclosures. The average pricing for pending listings within Greater Phoenix on August 15 in each category was: $140.36 for normal, $98.69 for short sales & pre-foreclosures and $89.08 for REOs.

Our mid-point forecast for the average monthly sales $/SF on September 15 is $131.55, which is 0.9% lower than the August 15 reading. We have a 90% confidence that it will fall within ± 2% of this mid point, i.e. in the range $128.92 to $134.18. We have already experienced considerable seasonal price weakness this summer and our forecast this month is for this weakness to continue until mid September at least.”

Single Family Homes and Condos

So, how does that translate in to the Cenpho and historic markets? Well, while we see higher prices than most areas, generally, and tighter supply, we have seen a similar dip in prices. Interestingly, though, we only see that dip when we include condos in the mix, along with single family residences. See below.

Single Family Homes and Condos

Condos typically take longer to sell, as people are weary to take on HOA dues. This could be part of it. It is certainly interesting news if you are in the condo market.

Watch for these prices to go up again after late September.

If you are looking for more information, please call me at 602-456-9388. 

In my last post, we looked at the number of houses coming on the market and the number selling, as compared to previous years.

Here’s another interesting indicator: how many listings are cancelled after being on the market for a while.

“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.”

So, why so few cancellations in 2008? I suspect that it had to do with the fact that people felt like they had no other option than to sell. Many were in houses they could not afford. They had to sell, short sell or foreclose. Whereas in other years, people might have chosen to wait for another year for prices to rise. Their payments were in line with what they could afford, so they had options.

Also notice that the number of days on market (average) is a little lower than last year. So, this year they are selling. Prices are increasing slightly over last year and people are selling homes. I don’t see any indication that these price increases are irrational. However if interest rates rise later this year and buyers can’t get loans as easily, those prices may be forced to come down and this dynamic will change. If that happens, I don’t see major changes in 2015 –probably next year.

So, what does this mean for you? It means that it is a good time to list, especially as people return from summer vacation in about a month. It means that you might want to buy before those people return and enter the market.

Let’s look at your specific situation and build a strategy. Call me a 602-456-9388.

Info Source: The Comford Report