Clear Title of Arizona is pleased to provide its clients with the Clear Connections Monthly Market Update. This report will provide you with the latest real estate trends.
Our business is built around the concept of educating and providing the personal service that Real Estate Agents and Lenders have come to depend upon. We want to provide accurate data to our clients, associates and friends. It is intended to keep you informed on critical market trends that affect our businesses.
SINGLE FAMILY HOME
Single Family Home increased year over year in only one sector:
- New Homes (up 22%)
Single family home sales decreased year over year in the remaining seven sectors:
- Normal re-sales (down 2%)
- Investor flips (down 7%)
- Third party purchases at trustee sales (down 30%)
- Bank owned homes (down 37%)
- GSE – Fannie Mae, Freddie Mac, etc. (down 49%)
- HUD sales (down 61%)
- Short sales / pre-foreclosures (down 39%)
The change in total dollars spent on homes was more favorable than the change in the unit count.
- Total dollars spent on single family homes rose by 2% over July 2015.
- Total dollars spent on townhouses & condos rose by 10% over July 2015.
During July, average single family pricing moved a little lower, as they do most years, reading $286,779, down from $292,878 last month and up from $273,416 in July 2015. Average new single family home prices were 5.9% higher than last year while the average new single family home size has declined by 4.9% over the past 12 months.
MEDIAN SALES PRICE
The median sales price rose 7% from $221,500 in June 2015 to $237,000 in June 2016.
NEW HOME SALES
July was yet another strong month for new home closings. Newly-built single family homes saw 1,129 closings in July, up 22% from 923 in July 2015. The total dollar value of single family new homes closed in July was up 30% from $323 million in 2015 to $418 million in 2016.
The average sq. ft. of a new single family home in June was 2,441, down 4.9% from 2,566 in July 2015. Some builders are starting to offer more options at the entry pricing level, although many of these are a long way from the center of the valley. The average sq. ft. of a non-distressed resale was 2,017, so new single family homes are still 21% larger on average than the existing homes that sold.
The market share for new single family homes has climbed from 14.1% in July 2015 to 17.6% in July 2016.
Total single family, townhouse & condo sales were down 2% in July from a year earlier. However with only 20 working days in 2016, versus 22 in 2015, July’s rate of sales per working day grew 7%. Single family sales were down 3% while townhouse / condo sales were flat compared to July 2015 and 8% lower than last month.
Single family homes priced over $500,000 took 21% comparison dollar market share, down from 23% last year. There was a 4% decline in dollar volume but the ranges over $2 million increased by 64%, while the homes between $500,000 and $2 million was down 10% compared with July 2015. Demand remains weaker than last year in most luxury areas while supply is high. However many cancellations have brought supply down over the last 2 months. Entry level single family homes under $200,000 lost market share from 22% to 19%, due to very low supply. The mid range between $200,000 and $500,000 has robust demand and adequate supply and grew market share from 55% to 59%.
Total price for single family homes sold in July. *Numbers reflect single family homes only.
Total units for single family homes sold in July. *Numbers reflect single family homes only.
AVERAGE PRICE PER SQUARE FOOT
Average price per square foot for single family homes gained 5.6% from $130.74 in July 2015 to $138.11 in July 2016.
The number of active single family listings without an existing contract was 15,137 for the Greater Phoenix area as of August 1, 2016. This is down 3.0% since July 1. The inventory of single family homes under $150,000 stands at a mere 31 days, although up from 29 days a year ago. Overall we have seen 5.1% more new listings created in 2016 than at the same stage in 2015. We expect active listing counts to be little changed for the next month before starting to rise again in September. New supply has been excessive at the upper price points but inadequate below $200,000. In the mid range between $200,000 and $500,000 we are seeing plenty of supply but demand is more than strong enough to cope with the new listings.
CHANGES IN TRANSACTION MIX
We saw a slight decline in non-distressed transactions (-2%), with investor flips down 7%. New home sales were up sharply by 22% but distressed transactions fell 38%. We saw a 30% fall in third party purchases at trustee sales, but new notices of foreclosure are at very low levels. Reversions to lenders declined by 33%.
The 2016 Greater Phoenix housing market 2016 has been remarkably similar to 2015 so far. We saw strong growth in sales during the spring and summer. The sales shortfall in July is merely a quirk of the calendar, placing weekends at both ends of the month. It will no doubt be compensated by a very healthy sales count in August. In both years, the entry level market has been very short of supply, which has driven strong appreciation. In both years, the mid-range market has been very healthy with large increases in sales volume but relatively stable pricing reflecting mild appreciation. One significant change is that we are seeing new homes take a much more significant share of this mid-range sector in 2016. The bulk of the market strongly favors sellers over buyers. However, the other most noticeable difference in 2016 has been weakness at the upper end of the market, particularly over $1,000,000. We saw a strong first half for the luxury market in 2015, but 2016 has seen supply reach excessive levels in many locations coupled with fading demand, especially for homes over $2 million. This was particularly noticeable for the month of June, but July was much stronger for homes over $2 million so the two months balance out when combined. There are some areas where the luxury market remains strong, for example Arcadia and Old Town Scottsdale, and certain upscale new condo developments in fashionable locations. Most of the other more expensive areas are seeing little to no increases in pricing, and in some cases a slow decline is occurring as sellers are increasingly forced to compete with each other. The current outlook calls for all of these trends to continue over the next few months. Data from the Census Bureau tells us that demographic changes are expected to drive the housing market in different directions in the medium term, with very strong growth in population counts for those aged 65 or above and surprisingly weak population counts for ages below 18. In fact population counts under 5 have been dropping at an alarming rate, especially in Pinal County. As a result the median age in both Maricopa and Pinal counties is moving higher unusually quickly.