Last Real Estate Market Update for 2019!

19% of Homes Sold Over Asking Price

24% of Sellers Agreed to Closing Cost Assistance

For Buyers:

Supply shortages created an environment of multiple offers and listings sold over asking price last month.  This is especially evident among listings between $125K-$250K where 26% sold over asking price in November compared to the overall percentage of 19% in Greater Phoenix.  In a normal market, we would expect 10-15% of listings to be sold over asking price. 

That statistic may sound hopeless to a buyer who may not have the means or stomach to pay over asking price.  However, 24% of sellers agreed to pay some form of closing cost assistance to buyers in November as well.  This measure increases to 32.5% on sales between $125K-$250K, the primary price point for first-time home buyers.  

The West Valley has the largest share of homes listed between $125K-$250K at 46%.  Pinal County has 31%, the Northeast Valley has 12% and the Southeast Valley has just 10%.  Given this information, it’s not surprising that the West Valley has both a large share of transactions involving seller-paid closing costs combined with a higher-than-average percentage of homes sold over asking price.  Pinal County, on the other hand, has a large percentage of seller-paid closing costs, but a lower-than-average percentage of homes sold over list price.  

For Sellers:

More expensive areas with average sale prices over $500K have significantly fewer sales involving seller-paid closing costs (as would be expected) and a much lower-than-average percentage of homes sold over asking price, but things have been exciting for this market so far this year.  Sales over $500K are up over 16.5% year-to-date over last year, but most impressive is the 21% increase in sales over $2M!  Typically the second half of the year is flat for luxury sales in this range, but this year contracts in escrow have soared 42% over 2018’s level in the last 3 months.

Also impressive is a 24% gain in sales between $500K-$600K, which was helped by an increase in the FHFA loan limit to $484,350 last year.  In 2020, that limit is set to rise again to $510,400.  This means it may get a little easier for buyers to qualify for more expensive homes and that’s good news for sellers.  

Sellers in the mid $300K price range are getting a boost too.  FHA is raising their loan limit in 2020 from $314,827 to $331,760.  FHA financing is an option for buyers who may have less-than-favorable credit and lower down payments.  This is good news for both buyers who can’t move up in price due to the existing limit and sellers who are just out of reach for these buyers.

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

Arizona Real Estate Market Update - November 2019

Contracts In Escrow Up 19% Over Last Year

Despite Rising Prices, Affordability is Good

For Buyers

Buyers waiting for prices to come down have been sorely disappointed so far in 2019.  The average sale price per square foot is up 6.7% since last November and the median sales price is now $283,000, up $21,000 from last November’s measure of $262,000.  

Despite rising prices, affordability has remained normal throughout the year.  One relevant factor is Private Sector Earnings in Greater Phoenix has risen 4.5% annually as interest rates have continually declined.  The median family income was measured at $72,900 last quarter and families making that income could afford 68% of what sold last quarter (according to the HOI index published by the National Association of Home Builders and Wells Fargo).  The historical norm for our market is 60-75%.  

Clearly not all buyers have parked on the fence, demand has been hovering 6-7% above normal for our area for about 4 months while supply is 44% below normal.  The only measurable relief for buyers is last month’s supply level was 47% below normal, so it’s 3% less hard to find something suitable.  

For Sellers

The number of listings under contract may have declined 26% from its May seasonal peak, but it’s nearly 19% higher than it was this time last year.  This, combined with monthly sales up nearly 15% over last year, is a solid indicator that year-end closings will outperform last year despite a shaky start.  

Single Family permits (future supply) are up 4.6% year-to-date and multi-family permits are up 6.4%, reaching a level not seen since 2007. Single family home sales are up 5.7%, but new town home and condo sales are down a whopping 30%, which is surprising.  Resale condos and townhomes have increased in sales volume this year, so the drop in sales for new construction despite an increase in permits indicates that much of the multi-family units constructed are not for individual sale but are for rent.  

This is good news if you’re planning to sell your condo because the majority of developments are not competing for buyers.  This is not good news if you’re renting your condo nearby because that’s an increase in competing units for renters.  “Apartment style” private condo rental rates per square foot have grown less than 1% over the course of 3.5 years according to the Arizona Regional MLS records.

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

Arizona Real Estate Market Update - October 2019

Asking Prices up 9% Over Last Year, but are Buyers Paying It?

These Homes Have Appreciated the Most since 2000

For Buyers:

The news media is filled with short-term predictions regarding the economy and how it will, or will not, affect real estate prices.  It’s understandable for buyers to want their home to appreciate in value after they purchase, who doesn’t?  However there is far too much attention paid to short-term influences and fluctuations these days and not enough attention paid to the long view.  Real estate is a long-term investment for many people.  Despite the euphoria of 2005-2007 and the nightmare of 2008-2011, on average homes are selling 81.6% higher today than they were in the year 2000.  That’s an average appreciation rate of 4.3% per year over the course of 19 years.  Smaller homes appreciated the most over time while larger homes appreciated the least.  Homes under 1,000sf have appreciated 122% since 2000, an average of 6.4% per year.  Those between 1,000-2,000sf appreciated 106%, an average of 5.6% per year.  2,000-3,000sf appreciated 68% at 3.6% per year.  3,000-4,000sf appreciated 49% at 2.6% per year and homes over 4,000sf appreciated 11% at 0.6% per year.

For Sellers:

Average asking prices per square foot are up 9% over this time last year and they’re continuing to rise. However, not one individual price range has risen 9% or more; confusing, right? That’s because the sharp increase in the average has more to do with a growing market share of luxury active listings over $500K as inventory has plummeted everywhere else. The highest increase is within $200K-$250K, where sellers are asking 5.6% more than they were last year. That’s followed by listings over $1M where they’re asking 4.2% more and $500K-$1M at 4.0%.  All other price ranges are just 1-3% higher.  But are buyers paying?  Actually, many of them are! In the $200K-$250K range, the average sales price per square foot is still 0.8% higher than the average list price; and between $250-$300K the average sales price is 6.8% higher than the average list per square foot. Things change over $500K.  Between $500K-$1M there’s a -6.3% gap between asking price and sales price and over $1M the average sales price is -15.1% below the average asking price.

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

Real Estate Market Update - September 2019

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

August 2019 Real Estate Market Update

LOWEST # of New Listings Posted in at Least 18 Years

Contracts in Escrow Up Over 15%!

For Buyers:

It’s slim pickings for buyers in Greater Phoenix these days unless your budget is over $500,000.  Overall supply is 14% lower than last August while contracts in escrow are 15.5% higher!  There are a plethora of zip codes considered “frenzies”, where there are literally more properties under contract than there are active for sale; all of them with an average sale price below $400,000.  This is unusual for August, which is typically a much softer month. Buyers will have a slightly easier time in more expensive areas such as Central Phoenix, Ahwatukee, South Tempe and the Northeast Valley, but not much unless they’re willing to go further out or increase their budget.  Any projections of prices flattening out or coming down in Greater Phoenix this year have been obliterated.

For Sellers:
As supply plummets, fewer sellers are deciding to sell.  July was THE lowest month for brand new listings going all the way back to the year 2001.  That’s significant because the population today is 50% larger and the number of housing units is 63% higher than it was 18 years ago.  19% of all MLS sales and 26% of sales between $100K and $250K sold over asking price last July.  Coincidentally (or not), 32% of sales within that same price range still included some form of seller-paid closing cost assistance.  Despite the frenzy market, the annual appreciation rate for Greater Phoenix is just 6.4% and sales between $225K-$500K are clocking 3.5-4.0% on average.  This may seem surprising given the widening gap between supply and demand; but appraisers remain conservative in their valuations and with at least 80% of buyers needing a loan, they’re riding the brakes on runaway appreciation thus far.

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

Congratulations to My 2nd Quarter Buyers & Seller!

I am so happy for Dani & Rudy Brake who just moved to Phoenix to start their residencies at Mayo Hospital. We saw a few homes and went home thinking they would be under contract on one of the houses they had seen. That didn’t work as planned, but we found another house and they toured it via FaceTime. It was a great success and when they came out to see the home they loved it! (Phew!). Congratulations and we are glad you are close to the hospital so you can sleep more and drive less. 

We have a long history of home buying and selling with Alexis MacDonald and her mother, so it was a thrill to help Alexis buy her Phoenix home in time to begin her residency in Scottsdale. Now with that completed and her move to the East Coast for her fellowship, selling her home was the next step. Unfortunately for Alexis, the paperwork details and closing hit during her last two months of residency! But sell she did and now she is moving on to her next step! Congratulations and see you when you come back to visit!

I am so happy for Michael & Michele Gann who just bought their first home, as a married couple, in Historic Downtown Phoenix. They love the lifestyle and activities of downtown Phoenix, including two of the great restaurants on Roosevelt Row (wink, wink). They have a perfect space to accommodate their style and add to their collection as they enjoy antiquing. Michael is a return client and I am so happy to have worked with both of them this time! 

Congratulations to Dr. Seth Assar and his family on the purchase of their new-build home at Sky Crossing in Desert Ridge. This community offers them the lifestyle they want with a community center, parks, new home amenities and great schools. And, just a few days before closing, they had their second baby! They have so much to celebrate!!

I have known Wendy & MIke Powell for approximately 2 years as they have been deciding wether or not to move to Arizona from Texas. We started their search in Scottsdale and ended up in Mesa close to their daughter and grandson, Justin. They came to town to look at homes and on their way out, we negotiated a great price on a purchase rather than putting them into a rental for 1 year. The next time they came to see the house was for closing! Everything was handled with them back in TX. After one hospital visit and a simultaneous signing, they closed! 

Time to settle in and enjoy the new lifestyle!

Congrats to my longtime friend Stephanie Susman! After many years as a landlord, we sold her Scottsdale condo! The property took longer than anticipated to sell but she held strong and we found a great buyer with a fair offer and no repair requests. Now Stephanie can focus on her one house! Congrats, Stephanie. 

Congratulations to Marci Rosenberg and her sisters for selling their mother’s home at a great price. This was an emotional sale as it was the closing of a chapter in their lives. Everything was handled with dignity and respect and we were able to sell the home even before it hit the market. Mom would be very proud of them and very pleased with the buyers!

Real Estate Market Update for The Greater Phoenix Metro Area | June 2019

Monthly Sales Up 7.1% in Greater Phoenix

Higher Incomes in Greater Phoenix Fueling More Contracts and Rising Prices

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

Real Estate Market Update | May 2019

Median Sales Price up 5.9% to $270,000 in Greater Phoenix

Sales Rebound, Up 3.7% Over Last Year

For Buyers:

The median rent paid on single family rentals through the Arizona Regional MLS is currently $1,625 per month, which is comparable to what the mortgage payment would be on a median-priced $270,000 home with 4% down at today’s interest rate (including approximate taxes, homeowners insurance and mortgage insurance).  If a buyer were to purchase that home today, within 5 years they would have nearly $35,000 in equity just from making their mortgage payment, not including any appreciation in value.  If prices were to rise at a modest 2.1% per year (the average long term rate of inflation) within that same 5 years, then they would have an additional $43,000 in equity just from appreciation.  This scenario would result in $78,000 in total equity within 5 years and by year 3 they would be able to remove any mortgage insurance from their payment, which would save another $200 per month approximately.

For Sellers:

Low interest rates are continuing to fuel buyer demand and there are now 2.5% more listings under contract today than there were last year at this time and 3.7% more sales. All in all an impressive rebound as interest rates have remained below 4.2%, keeping affordability stable for the time being.  Increased demand in the 2nd quarter has resulted in strengthening the weakening seller market after a full 7 months of decline.  May is typically the highest month for listings under contract and buyer activity is expected to decline from here through December as it typically does every year.  Don’t think you’ve missed the boat if you need to list however.  On average since 2001, about 52% of all sales happen in the first half of the year and 48% in the second.

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

Congratulations First Quarter Buyers & Sellers!

Congratulations to Zachary Morgan, who purchased his first house in Phoenix and is now moved in and settled. Zachary loved this home and we negotiated a great price. It was a pleasure working with Zachary and I truly appreciate the referral from Clayton Freed & Jason Blakeman. Now he has a house where all can meet and hang out! 

Congratulations to Kelly & Mark Krueger on the sale of their home on Bethany Home & Central Ave. The house sold in 5 days just before Thanksgiving and then fell out of escrow a week before close! We put it back on the market and it sold again in 5 days! Kelly & Mark had a beautiful home and the new buyers love it. There were some bumps along the way, but they handled it with grace. Now they are enjoying life in Park City, Utah, and I hope to see them in December when we come skiing! Thank you, Renee Hanson, for referring Kelly & Mark to me.

I cannot believe we finally sold Soumya Pandalai’s condo! After many years of renting the property at 32nd St and Camelback, Soumya’s renter decided to buy the condo. I loved working with Soumya and her parents as we brought the sale to close. I will miss the ongoing conversations with them and I am so happy for Soumya!

Congratulations Dr. Peter Molloy for selling his home in Biltmore Hillside Villas. After completing negotiations with an investor, we sold the home and closed escrow while Dr. Molloy and his wife were vacationing in Thailand. I would message him that the house was safe and secure, and he would tell me about his ride on an elephant. It was an absolute pleasure working with Dr. Molloy and thank you Renee Hanson for another wonderful referral.

Alisha Ramirez & Nicholas Nicholson have moved into their first home together and I was so happy to be a part of it! Alisha and her family lived across the street from me at my prior house and her mom would play outside with my kids when I was busy cooking dinner. Alisha and Nicholas hold a very special place in my heart, and I am glad they live just around the corner. I cannot wait to meet up at Aunt Chilada’s for dinner!

Real Estate Market Update - March 2019

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

Arizona Real Estate Market Update - February 2019

List Price Reductions up 24% in Greater Phoenix, 

Up 42% in Some Areas

Sellers: Stop Trying to Time the Market

For Buyers:

A weak 4th quarter for sales in 2018 has resulted in 11,874 price reductions in the first 5 weeks of 2019.  That’s 24% higher than this same time last year.  Price reductions on listings between $200K-$500K specifically are up 40%.  The most notable price range with a 42% increase is $200K-$250K. This may come as a surprise to some because this price range is below the median sales price of $263K.  However this area is currently a battleground of competition between traditional sellers, flip investors and new construction as inventory is up 26% and contracts are down 10%.  Flip investors acquire and sell over 50% of their inventory in this price range.  New home builders increased their sales by 22% in this range last year. Traditional sellers are now under more pressure to improve the condition of their home and provide incentives for buyers in order to compete.

For Sellers:

This is not a good time for sellers to get caught up in timing the market so as to sell their home at the ideal “peak of price”.  While it’s understandable for sellers not to want to leave any money on the table, the reality is that price peaks don’t happen in seller markets.  They occur in balanced markets.  Balanced markets are fine to sell in, but they’re not as fun or profitable for sellers as they expect; especially if their property is hard to sell due to condition or location.  As the seller market continues to weaken, it’s more important than ever for sellers to list their property while they still have the advantage of low competition, price it competitively and don’t spit on the first contract.  Buyer activity, while lower, will continue to accelerate through May.  This is go time.

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

January Real Estate Market Update

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