Seller Price Reductions up 46% and 61% in these Price Ranges

Supply Continues to Rise in the Middle
Seller Price Reductions up 46% and 61% in these Price Ranges

For Buyers:
Overall supply is down 9.6% compared to last September.  At first glance that’s nothing new.  However, for those of you who pay close attention to our monthly infographic (I know you’re out there), you have no doubt noticed that last May supply was down 15.5%, June supply was down 12.2%, July was down 11.1% and August was down 9.9% from last August.   What this means for buyers is that the Greater Phoenix market is still in short supply, but it’s subtly becoming less bad.  Most significantly, supply continues to increase between $200K-$400K.  Last month we reported an 8.1% increase in listings between $200K-$250K since May, that is now 9.7%.  Between $250K-$300K, supply has risen 15% in only 8 weeks.  Between $300K-$400K, supply has slowly risen 10% since January.  All other price ranges are either declining in supply or following their normal seasonal trends.  This is great news for buyers; more choice in the marketplace means less negotiating pressure. However, don’t expect sale prices to plummet anytime soon. The first price to respond to a supply shift isn’t a sale price, it’s a list price in the form of a price reduction.

For Sellers:
Despite the increase in supply between $200K-$250K, there hasn’t been a correlating increase in weekly list price reductions from sellers yet.  However that is not the case for the market between $250K-$300K where weekly list price reductions have risen 46% in the past 8 weeks and weekly reductions between $300K-$400K have risen 61% since January.  This is not an indicator that sellers are becoming desperate. Make no mistake, there are very few desperate sellers in this marketplace. There are, however, many optimistic sellers who may be taming their expectations. Average annual price appreciation per square foot remains between 3.5% – 5.0% for sales between $200K-$400K, so it’s still a seller’s market despite recent developments.  Expect prices to continue increasing at least through the remainder of 2018.

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

Posted on September 11, 2018 at 4:51 pm
Eric Karlene | Category: Uncategorized | Tagged , , , , , , , , ,

August 2018 Market Update – Supply between $200K-$250K has Risen 8.1% since May

Supply between $200K-$250K has Risen 8.1% since May
Seller Price Reductions Up 7% in Popular Price Range

For Buyers:
If your budget lies somewhere between $200,000 and $400,000 for a home, there’s good news for you.  Supply between $200,000 and $250,000 has been rising gradually over the past 12 weeks.  After dropping 15% from 2,300 listings in January to 1,944 in May, it has since risen 8.1% to 2,101 listings in August, placing it only 6.7% below last year’s count instead of 18% below like it was 3-4 months ago. Listings between $250,000 and $400,000 have also risen sharply 5.3% from 4,791 to 5,044 over the past 4 weeks, placing them only 0.2% below last year’s count of 5,053 listings. The increase in competition has resulted in a notable 7.3% increase in weekly seller price reductions from an average of 778 per week in June to 835 in July.  56% of year-to-date sales in Greater Phoenix have been between $200K-$400K so this increase in supply should come as a little bit of relief for the majority of buyers.

For Sellers:
If you have a home listed between $200,000 and $400,000, then you make up 48% of everything that’s listed in the MLS.  Listings under contract in this price range have averaged 7.4% higher in volume than 2017 all year, until now.  Over the last two weeks, including the end of July through the first week in August, listings in escrow have dropped to 2.2% below last year’s level.  Buyer activity is expected to slow seasonally from the peak in April through the end of the year; however open contracts have dropped 26% since the 2018 April peak compared to a lower 20% drop in 2017 over the same time frame; all while corresponding supply has been rising.  Sellers haven’t seemed to notice this sharper decline as their average asking price per square foot has soared from just 3% higher than last year in March to as high as 7% higher in July.  The average sales price per square foot was up 5.9% in July, compared to 4.6% in June.  However, price is a lagging responder to shifts in supply and demand. We will have to wait and see if buyers accommodate sellers’ price expectations given that they have more to choose from in the marketplace right now.

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

Posted on August 12, 2018 at 11:21 pm
Eric Karlene | Category: Uncategorized | Tagged , , , , , , , , , ,

Is Greater Phoenix “Overvalued”?

Is Greater Phoenix “Overvalued”?
Mortgage Payments Are Lower Than They Were 13 Years Ago

For Buyers:
Interest rates have been increasing along with the inflation rate as of late, which has spawned a string of headlines about affordability. While the rate hike has knocked some buyers out of the market without a doubt, general affordability hasn’t taken a big hit yet.  According to the National Association of Home Builders and Wells Fargo, buyers making the median family income could still afford 65% of what sold in the Valley last quarter.  A measure between 60-75% is considered normal.

Let’s look at the historical cost of a 1,900sf home in Greater Phoenix, for example.  In March 2005, a home that size would run $281K on average.  Today that same home would be $309K, $28,000 more (+10%).  However, the interest rate back then was 5.9% compared to 4.5% today, meaning that the principal and interest payment has dropped nearly $100 from where it was 13 years ago for the same home.  At the same time, the median family income rose from $58K to $69K according to HUD (+19%).  Which is why despite recent increases in interest rates, the affordability of real estate in the Valley is still considered very good.

For Sellers:
Last April CoreLogic released a report ranking the Greater Phoenix area as “overvalued”. In fact, they placed 37% of our nation’s top 100 metropolitan areas in that category.  As of May, after 6 years of higher-than-normal appreciation rates, the monthly average sales price per square foot has finally reached its place along the long-term 3% appreciation line established between 2000-2003 before the 2005 bubble and 2008 crash.  Meaning that if we had fallen asleep in 2003, and the last 15 years were just a long horrible dream, we would have woken up today and not known anything had happened.  Prices are where they would have been had the market followed the average long-term rate of inflation.  That brings to light that current appreciation rates of 6% or more are no longer sustainable in the long term.  However that doesn’t mean that prices will “peak” or “crash” anytime soon.  Most likely as demand slowly wanes, prices will go flat and hang out until they once again fall in line with the rate of inflation, but don’t expect that to happen in 2018.  Supply and demand measures today indicate another 3-6 months of positive appreciation for the majority of homes priced below $400K.

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

Posted on June 14, 2018 at 4:49 am
Eric Karlene | Category: Market Updates - Cromford Reports | Tagged , , , , , , ,

When is the Phoenix Housing Market Going to Slow Down?

 

  • Even though median prices are within 98% of the peak, the fact that interest rates are so much lower today means that homes are still affordable.
  • The median family income has risen $11,000 since 2005, indication there is room for families to bear the increase in price.
  • Despite appreciation rates higher than the rate of inflation over the past 7 years, families making the median income could afford 65% of what sold in Greater Phoenix last quarter.
  • Overall Greater Phoenix home prices have finally reached where they are supposed to be historically and it’s expected to continue rising through the end of 2018.

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

 

Posted on June 8, 2018 at 4:07 am
Eric Karlene | Category: Uncategorized | Tagged , , , , , , , , , , ,

May 2018 Market Report – Good time to List Luxury Properties

Supply between $175K-$200K dropped 18% in 3 Weeks
Summer is a good time to List Luxury Properties over $500K

For Buyers:
Supply under $200K has continued to drop rapidly, but the $175K-$200K range has accelerated its decline over the past month far more dramatically than any other price range. After being consistently 30-35% below last year, the active supply level dropped a whopping 18% in a 3-week period putting the current count for this group 44% below last year. Single family homes only make up 41% of active listings under $200K, but they account for 69% of actives between $175K-$200K. As more buyers are looking to condos and townhouses for affordable housing, supply for attached homes under $200K has dropped 33% over the last year. However, condo supply between $200K-$300K has actually risen 10% while single family homes in the same price point have dropped 15%.

For Sellers:
We are officially at the peak of the market seasonally for listings in escrow. Over the next few weeks, especially as temperatures reach over 100 degrees in the Valley, expect to see a gradual decline in buyer contracts that will continue through the end of the year. This is a seasonal trend that consistently happens every year and in every price point, even the frenzy market under $200K. The one exception is the luxury market over $500K. While it’s typical to see a decline at the beginning of Summer like everyone else, escrow counts tend to drop for a couple months and then go flat until the end of the year. In fact, luxury supply drops more than buyer activity does in the Summer making it a great time to list luxury property for those willing to brave the heat between June and September.

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

Posted on May 15, 2018 at 10:11 pm
Eric Karlene | Category: Market Updates - Cromford Reports | Tagged , , , , , , , , , , , ,

April 2018 Market Update – MLS Sales Outperform non-MLS Sales in Frenzy Market

MLS Sales Outperform non-MLS Sales in Frenzy Market
Supply Under $200K Down 36% Over Last Year

For Buyers:
Greater Phoenix ended the 1st Quarter 13% lower in supply, which was not helped by a 2% decline in new listings entering the market. All price ranges are below last year’s level of supply with the exception of the $1M+ market, which is up 1.5%. On the opposite end of the spectrum, supply under $200K is down 36% from last year and all prices in between are down 10%. Buyer competition is typically at it’s strongest at this time of year and is expected to begin tapering off seasonally in May or June.

For Sellers:
Despite the highly competitive, fast appreciating environment in the $100K-$200K market, more sellers decided not to list their home on the MLS and many chose to sell to an investor instead. This is ironic considering MLS sales in that price range sell for 12% more per square foot on average compared to normal non-MLS sales, which could equate to a $12,000-$22,000 gap. Additionally, the annual average sales price per square foot rose faster for MLS sales in this range at 7.9% while non-MLS sales rose only 6.0% over the last year.

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

Posted on April 12, 2018 at 8:53 pm
Eric Karlene | Category: Market Updates - Cromford Reports | Tagged , , , , , ,

March 2018 Market Update – Median Sale Price up $20,000 over March 2017

 

Median Sale Price up $20,000 over March 2017
17% of Sales are Closing Over Asking Price

For Buyers:
The percentage of seller concessions awarded to buyers has dropped down to 24% in the first quarter of 2018 after 2.5 years of consistently landing between 26%-28%, yet another indicator of dwindling buyer negotiating power in a prolonged supply shortage. The highest percentage of closings with seller concessions in the last 30 days were sale prices between $150K-$250K at 30-36%. Buyers were most likely to get closing costs in Youngtown at 54%, followed by Buckeye at 52%. Cities with the smallest percentage of closing costs were in affluent and retirement areas such as Paradise Valley, Sun City West and Sun Lakes at 2-3%.

For Sellers:
The percentage of successful sales over asking price is increasing. So far in March, 17% of sales closed over list price, last March it was 14%. Properties sold between $100K-$200K had the highest percentage at 24%, followed by the $200K-$300K range at 18%. The market between $300K-$1M is the most improved with 12% sold over list compared to only 7% last March. There were zero sales over list in the market over $1M. Areas with the highest percentage are El Mirage and Youngtown, both at 50%, followed by Tolleson with 45.5% of sales closing over asking price.

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

Posted on March 16, 2018 at 4:41 pm
Eric Karlene | Category: Market Updates - Cromford Reports | Tagged , , , , , , , , ,

Past Successes!

Posted on February 28, 2018 at 7:02 pm
Eric Karlene | Category: Uncategorized | Tagged , , , , , ,