Supply is Down 73% in this Area and Price Range

New Listings Up 10% from July to August
Supply is Down 73% in this Area and Price Range

For Buyers:
A faint glimmer of good news for buyers, supply finally stopped declining and actually rose a tiny bit in the last week.  While active listings are still 16% lower than they were this time last year, they’re 1% higher than 4 weeks ago.  This rise can be attributed to a 10% increase in new listings from July to August, which is not uncommon as July is typically a low point in the year for new listings.  However this August was 3% below last August in comparison and the lowest August since 2016.  One price range that is still declining in supply is $200K-$250K, which has plummeted 51% since February.  The Southeast Valley on the Maricopa County side has seen the largest decline of 73% in this price range for single family homes.  Gilbert is especially low with only 5 listings in the entire city under $250K as of September 9th, all of them townhomes with an average size of 1,116 square feet.

For Sellers:
For some sellers the idea of listing their home is stressful, even if it’s in great condition. The pressure of keeping their home clean for showings and open houses, enduring negative feedback, and the unknowns of the inspection report can send homeowners right into the arms of flip investors who will happily buy their home “as is” with significant fees attached.  While there is nothing wrong with doing that (there is value in ease and certainty) sellers should understand that if their home lands within a frenzy price range for their area, where there are literally more homes under contract than there are for sale, they may be pleasantly surprised at how little they have to do to sell it on the MLS.  Negotiable listing costs, multiple contracts and buyers willing to buy “as is” make this the perfect market for sellers who know their home is not so perfect.  To find out if your property lands in a frenzy zone, contact your local Realtor.

Commentary written by Tina Tamboer, Senior Housing Analyst with The Cromford Report
©2019 Cromford Associates LLC and Tamboer Consulting LLC

Posted on October 3, 2019 at 5:08 pm
Eric Karlene | Category: Market Updates - Cromford Reports

Contracts up 19% in this Price Range!

Contracts up 19% in this Price Range!
Flip Sales Rebounding Strong after Weak First Quarter

For Buyers:
New listings activated in June were down 10.0% compared to last June and overall supply has dropped 9.5% in 4 weeks, putting it below last year’s count for the first time all year.  Buyers have gotten used to very little supply under $200K but now they’re feeling it hard between $200K-$250K, where new listings were down a whopping 15.1%.  Trying to fill the gap, brand new town home/condo sales have been strongest between $200K-$250K with a median size of 1,362sf.  The top two builders that have sold the highest number of condos in this price range this year are Lennar in Gilbert and DR Horton in Mesa.  Other competing developers building multi-family between $200K-$250K include Bela Flor in Mesa and Maracay in Goodyear.  In Mesa, new condos in this price range have been extremely competitive with resale with an average price per square foot of $155.70 versus $157.47 for resale.

For Sellers:
Listings in escrow are up 7.4% and have soared nearly 19% over last year between $250K and $600K.  Homeowners with property valued under $250K are inundated with offers from investors as flip sales* have rebounded strongly over the past few months.  Making up for lost time after being down 4.2% in the first quarter, successful flip sales have now outperformed 2018 by 4.8%. The median sale price for a flipped home in May was $245K, up 8.4%, and the average size sold was 1,710sf.  The median gross gain for a traditional flip investor was $53K between their acquisition and sale price.  iBuyer companies such as OpenDoor, OfferPad and Zillow showed a median gross gain of just $9,900, however that doesn’t account for significant service charges to the sellers during escrow.

*A flip sale is defined in this case as the sale of property within 6 months of acquiring it.

Commentary written by Tina Tamboer, Senior Housing Analyst with The Cromford Report
©2019 Cromford Associates LLC and Tamboer Consulting LLC

Posted on July 31, 2019 at 8:51 pm
Eric Karlene | Category: Market Updates - Cromford Reports | Tagged , , , , ,

Re-sale prices are not predicted to come down this year.

For Buyers:

Re-sale prices are not predicted to come down this year.  Between August 2018 and January 2019 it looked like the market was going to balance out and cause prices to stabilize around the 2nd half of 2019.  However two things happened to change that prediction.  First, average 30-year mortgage rates dropped from a high of 4.94% in November 2018 to 3.82% as of June 2019.  That alone has saved buyers around $177/month on a median-priced $279,000 home with 4% down.  Second, private sector annual earnings in Greater Phoenix rose 1.8% in April after an 8-month period of stagnation.  In the last decade home prices have gone flat just twice, in 2011 and 2014.  Both times there was a corresponding decline in annual earnings. If annual earnings continue to grow and interest rates remain low, the Greater Phoenix seller market will continue to push home prices up this year.

For Sellers:

The May peak buyer season is over.  From this point through the end of the year it’s not uncommon to see contract activity gradually decline 30-40%.  The good news is that despite the predictable decline, listings under contract are coming in 3.7% higher than this time last year.  It’s not evenly distributed along all price points however.  Contracts on listings over $600K are up 3.4% while the $500K-$600K range is up an impressive 33.5%!! Contracts between $250K-$500K are up 16.1% and the low $200K’s are up 8.1%.  Lack of inventory under $200K means that contracts in this range are down 20.6%.  Expect your highest annual appreciation rates to be between 6-10% in the $150K-$225K range as this is where the majority of investor flip activity lies. $225K-$500K appreciation is between 3-5% and over $500K is between 1-3%.

Commentary written by Tina Tamboer, Senior Housing Analyst with The Cromford Report
©2019 Cromford Associates LLC and Tamboer Consulting LLC

Posted on June 8, 2019 at 8:52 pm
Eric Karlene | Category: Market Updates - Cromford Reports | Tagged , , , , ,

Mortgage Payments Drop $50 per Month on a Median Priced Home

Mortgage Payments Drop $50 per Month on a Median Priced Home
Listings Under Contract Up 19% in 5 Weeks!

For Buyers:
Buyers got a break last month as 30-year mortgage rates dropped significantly from an average of 4.41% to 4.08%, which is the lowest they have been since January 2018.  On a $267,000 home (the median sales price in Greater Phoenix) the drop equated to nearly $50 per month in savings on principal and interest, which was enough to get many buyers off the couch and looking for homes.  This rate drop combined with an increased conventional loan limit up to $484K and a 32% increase in weekly seller price reductions meant that price ranges between $200K all the way up to $800K saw a combined 19% increase in contracts written over the last 5 weeks.  Contract activity is expected to increase at this time of year anyway due to seasonality, but last year over the same 5 weeks it only increased 8.6%.  For buyers who are still waiting for prices to begin declining, their wait just got longer.

For Sellers:
The drop in mortgage rates could not have come at a better time for sellers.  Up until 6 weeks ago the negotiating advantage sellers have been enjoying for years in Greater Phoenix had weakened to the point where the market was on track to enter balance within a matter of months and price appreciation would have begun to slow even more.  However by April 4th the average 30-year mortgage rate (as reported by Freddie Mac) had dropped to a 15-month low.  This spurred buyer activity and resulted in Listings Under Contract, which were 10.2% below 2018 last month, to sharply increase and surpass 2018’s April count by 0.8%.  Currently sales volume is down 9.6% from last April, however when these contracts close escrow over the next 4-6 weeks May and June should fare much better.  Don’t get too excited though, the seller market is still much weaker than last year.  Affordability and demand were helped by this interest rate drop but could quickly be negated as prices continue to rise.  Sellers still need to be mindful of their asking price to get under contract before buyer activity seasonally begins to decline between May and the end of the year.

Commentary written by Tina Tamboer, Senior Housing Analyst with The Cromford Report
©2019 Cromford Associates LLC and Tamboer Consulting LLC

Posted on April 12, 2019 at 5:06 pm
Eric Karlene | Category: Info, Market Updates - Cromford Reports | Tagged , , , ,

March 2019 – Sellers: Get Competitive, It’s “Buyer Season”

Price Reductions up 71% on Listings $200K-$250K
Sellers: Get Competitive, It’s “Buyer Season”

For Buyers:
Good news for buyers over the past few weeks, interest rates came down a few notches.  That combined with the increased loan limit for conventional financing gave buyers a little boost.  The new loan limit for conventional financing in Maricopa County is $484,350 as of a few months ago and the new limit for FHA financing is $314,827.  Just 3 years ago, the limits were $417,000 and $271,050 respectively.  The FHA limit increase hasn’t had as much impact on buyer demand as the conventional increase thus far.  While the overall market is down 8.7% in sales this month, the biggest winner has been the $500K-$600K price range which is up 15%.

For Sellers:
“Buyer Season” in Greater Phoenix typically lasts from February to May with a peak in April.  Sellers who decide to list their home in March should be aware that they have just 8-10 more weeks of peak buyer activity before the summer slowdown.  This is a very competitive time for sellers. Price reductions are at their seasonal peak in the luxury price ranges, however it’s most noticeable in the battleground price range of $200K-$400K.  The number of weekly price reductions on listings between $200K-$250K are up a whopping 71% where competing supply is 32% higher than last year and price reductions are up 42% between $250K-$400K where supply is 26% higher.  It’s a good idea to be competitive in both price and condition right out of the gate as buyer demand remains below normal overall in Greater Phoenix.

Commentary written by Tina Tamboer, Senior Housing Analyst with The Cromford Report
©2019 Cromford Associates LLC and Tamboer Consulting LLC

Posted on March 10, 2019 at 10:22 pm
Eric Karlene | Category: Market Updates - Cromford Reports

It’s Still a Good Time to Sell… For Now

Greater Phoenix Buyer Contracts Down 15%
It’s Still a Good Time to Sell… For Now

For Buyers:
The monthly average interest rate rose to 4.64% in December 2018, up 0.69% from the previous December’s 3.95%. For buyers who will purchase at the current median sales price of $260,000, that equates to approximately $100 added to their monthly payment compared to last year.  Buyers averaged 1,845 square feet at this price; nearly 100 square feet smaller than if they had purchased last year.  It doesn’t help matters by renting either.  As single family homes appreciated 8.1% per square foot, single family lease payments also rose 8.6% during the same time frame. With that, buying is still a good option over renting if only to stabilize one’s monthly housing expense. Sale prices will continue rising in the first half of 2019, but at a slower rate and they’re not expected to decline at this juncture. Instead, buyers may see a little more flexibility from sellers in the form of repairs, closing costs, and possibly interest rate buy-downs in the higher price ranges.

For Sellers:
The market continues to favor sellers entering into 2019, but not nearly as much as it did at the beginning of 2018. Supply is still 34% below normal compared to 36% below normal this time last year.  It’s buyer demand that has shifted as buyers grapple with affordability and concerns about an overvalued market.  Demand at this time last year was measured 1% above normal; today it’s 13% below normal.  While it may feel like a buyers market compared to the last four years, it is far from one. Greater Phoenix is still in a seller’s market, however it’s weaker out of the gate.  This means there is still more demand than supply, but multiple offers will not be as common, there will be fewer sales overall and scenarios will vary widely depending on price range.  Demand could change in either direction depending on interest rates, however for the time being buyers and sellers have to play the hand they’ve been dealt.  For those wondering if it’s still a good time to sell, the answer is “yes” for now.

Commentary written by Tina Tamboer, Senior Housing Analyst with The Cromford Report
©2019 Cromford Associates LLC and Tamboer Consulting LLC

Posted on January 22, 2019 at 4:34 am
Eric Karlene | Category: Market Updates - Cromford Reports

December 2018 – Seasonally, This is the Calm Before the Storm for Buyer Activity

New Listings Up 18% in October between $250K-$400K
The 4th Quarter is Seasonally the Best Time to be a Buyer

For Buyers:
Remember when you would not eat your dinner as a kid and your parents would serve it to you for breakfast or lunch until it was gone?  Okay even if you can’t relate, you can imagine a kid’s disappointment in having to see the same thing day after day until they reluctantly eat it. Buyers may be feeling the same way this month as existing inventory has gotten stale and very little new inventory has been added in the first weeks of December. It’s down a whopping 26% from last December with nearly every price range under $1.5M participating in the decline.  This reluctance to list in December has offset the 16% decline in listings under contract and the market has managed to maintain a seller market, albeit a weaker one.  In the meantime, existing sellers are dressing up their leftovers with incentives.  Seller-assisted closing costs have risen on sales between $175K-$300K and price reductions were up 25% in the first week of December compared to last year.

For Sellers:
Seasonally, this is the calm before the storm in terms of buyer activity.  Every year, listings under contract drop sharply in the latter half of December before reaching their lowest point on January 1st.  Conversely, between January and April buyer contract activity will sharply accelerate.  How much it will increase this year remains to be seen depending on interest rates and other lending factors. The past 3 years has seen contracts rise roughly between 70-90%  in the first 4 months.  Despite this expectation, sellers need to be prepared to compete more in 2019 than they had to this year. The first 4 months are also typically strong for new listings to enter the market.  Even though 2019 looks like it will start off with a seller’s advantage, it will be much weaker than last year.  The market appears to be resisting higher prices for homes that don’t live up to buyers’ expectation of value for their money.

Commentary written by Tina Tamboer, Senior Housing Analyst with The Cromford Report
©2018 Cromford Associates LLC and Tamboer Consulting LLC

Posted on December 13, 2018 at 5:44 pm
Eric Karlene | Category: Market Updates - Cromford Reports

Tina Tamboer on Phoenix Home Affordability

 

Cited from the Cormford Report.

Posted on October 9, 2018 at 7:14 pm
Eric Karlene | Category: Market Updates - Cromford Reports

Price Reductions up 27% on Active Listings Between $250K-$400K

Seller Concessions Spike on Listings Sold Between $200K-$250K
Price Reductions up 27% on Active Listings Between $250K-$400K

For Buyers:
October marks the 4th month in a row that supply has continued to rise between $200K – $400K, which is good news for many buyers as it provides them with more choice and fewer competing offers.  However, for those buyers with budgets under $200K, this trend in supply doesn’t apply to them and their choices are still extremely limited.  Last January, inventory under $200K made up 18% of all active listings.  Within that price range, single family homes made up 50%, condos and townhomes 30%, and mobile homes 20%.  As of this month, inventory under $200K only makes up 12% of actives and has declined 36% since January.  Single family homes make up 45%, condos and townhomes 36%, and mobile homes 19%.  This drop in supply equates to 591 fewer single family homes, 198 fewer condos and townhomes, and 229 fewer mobile homes available for sale under $200K since the beginning of 2018.

For Sellers:
When supply rises, sellers react in a number of ways to compete with one another for the existing buyer pool.  One option is a price reduction on their active listing prior to contract. This does not necessarily result in a decline in sale price, only a decline in sellers’ expectations for appreciation.  Sales price trends may still continue to rise, but perhaps only at 5% instead of 8%, for example.  Another option is to agree to a concession, such as paying a portion of closing costs or a home warranty; and finally to agree to a much lower sale price than what they were asking. Typically sellers agree to the first two options before submitting to a “low ball” contract, which is why sales price trends are the last measures to respond to a shift in supply and demand.  With that being said, weekly price reductions this month between $250K-$400K are up 27% compared to last year, while price reductions between $200K-$250K are only up 1.7%.  However, seller concessions on sales between $200K-$250K reached 41% so far this month compared to last quarter’s measure of 36%.  Only 21% of sales between $250K-$400K recorded a seller concession.  Which leads us to conclude that sellers below $250K are agreeing to more concessions than price reductions; while sellers over $250K are submitting to more price reductions.  Despite this slight weakening in sellers’ advantage, Greater Phoenix is not close to a balanced or buyer’s market so expect overall prices to continue rising over the next 3-6 months.

Commentary written by Tina Tamboer, Senior Housing Analyst with The Cromford Report
©2018 Cromford Associates LLC and Tamboer Consulting LLC

Posted on October 9, 2018 at 6:55 pm
Eric Karlene | Category: Market Updates - Cromford Reports | Tagged , , , , ,

July 2018 Market Report – Cost of Waiting to Buy Means Less Closet Space or Higher Payment

 

Cost of Waiting to Buy Means Less Closet Space or Higher Payment
More New Homes Sell in Low $200’s This Year

For Buyers:
Hearing cries for more affordable housing supply, developers have sold more new homes in the low $200’s this year; selling 35% more than they did last year within the same time frame. However, the under $200,000 market remains neglected for additional supply.  As of May 2018, only 6% of new homes sold were under $200,000, 37% were between $200,000 and $300,000 and 41% were between $300,000 and $500,000. This means that properties under $200,000 will continue to appreciate faster than any other price point and homes sold in this price range are only getting smaller.  The annual average home size sold between $100K -$200K, new and resale combined, is currently 1,390sf compared to 1,454sf last year.  That’s a loss of 64sf and roughly the size of a couple of closets.  Since 2014, the annual average home size sold has consistently hovered around 1,975sf.  Those buyers who didn’t want to sacrifice living space paid an average of $22,000 more for a 1,975sf home in the past year.

For Sellers:
Greater Phoenix is officially in the seasonal summer slowdown and contracts in escrow are expected to continue declining overall until the end of the year.  The peak of the market for contract activity usually hits at the end of April, as it did both this year and last year.  So far levels have dropped 17% from the peak, which is closely following last year’s drop of 18% between April and July.  If the 2018 market follows last year and previous years, we can expect contracts in escrow to drop about 4% per month until the end of the year.  This would be considered perfectly normal, anything more could indicate a non-seasonal drop in demand.

Commentary written by Tina Tamboer, Senior Housing Analyst with The Cromford Report
©2018 Cromford Associates LLC and Tamboer Consulting LLC

Posted on July 9, 2018 at 3:26 pm
Eric Karlene | Category: Market Updates - Cromford Reports | Tagged , , , , , , , , , , , , ,