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
In April 2017, single family home sales increased year over year in three sectors, with new homes gaining market share once again. Investor flips grew at a faster rate than normal-resales, but new homes were the runaway success story.
- New homes (up 27%)
- Normal re-sales (up 1%)
- Investor flips (up 13%)
Because of lower distress levels, single family home sales decreased year over year in the remaining sectors:
- GSE – Fannie Mae, Freddie Mac, etc. (down 43%)
- Bank owned homes (down 41%)
- Third party purchases at trustee sales (down 20%)
- Short sales / pre-foreclosures (down 32%)
- HUD homes (down 61%)
Due to rising prices, 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 10% over April 2016.
- Total dollars spent on townhouses & condos rose by 26% over April 2016.
During April, average single family pricing moved higher, reading $309,034, up from $303,318 last month and up 7.1% from $288,444 in April 2016. Average new single family home prices during April were 10.2% higher than last year at $383,648.
MEDIAN SALES PRICE
The median sales price rose 6.4% from $246,900 in April 2016 to $250,000 in April 2017.
NEW HOME SALES
April was yet another very strong month for new home closing. Newly-built single family homes saw 1,398 closings in April, up 27% from 1,102 in April 2016. The total dollar value of single family new homes closed in April was up 40% from $384 million in 2016 to $536 million in 2017.
The average sq. ft. of a new single family home in April was 2,439, down 1.3% from 2,471 in April 2016. More builders are starting to offer options at entry pricing levels, although many of these are a long way from the center of the valley. The average sq. ft. of a non-distressed resale was 2,012, so new single family homes are 21% larger on average than the existing homes that sold.
The share (in dollars) for new homes in the single-family market has moved up from 14.7% in April 2016 to 18.7% in April 2017.
DEMAND
Total price for single family homes sold in April.
Total single family, townhouse & condo sales were up over 3% in April from a year earlier. Single family sales rose less than 3% and townhouse / condo sales rose 8% compared to April 2016. There was one fewer working day in April 2017 than April 2016, which tends to cause weaker sales comparisons.
Single family homes priced over $500,000 took 26% dollar market share, up from 23% last year. There was a 20% increase in unit sales over $500,000 but average pricing rose 5%. Entry level single family homes under $200,000 lost market share from 19% to 15%, partly due to low supply. The mid range between $200,000 and $500,000 has robust demand and reasonable supply and grew market share from 58% to 59%.
Numbers reflect single family homes only.
AVERAGE PRICE PER SQUARE FOOT
Average price per sq. ft. for single family homes
gained 6.7% from $139.64 in March 2016 to $148.98 in April 2017.
SUPPLY
The number of active single family listings without an existing contract was 14,778 for the Greater Phoenix area as of May 1, 2017. This is down 3.3% since April 1. The inventory of single family homes under $150,000 stands at 19 days, 32% lower than a year ago. So far we have seen 1.1% fewer new listings created in 2017 than in 2016 and this is inadequate supply to match the increase in demand except at the highest price points. In the mid range between $200,000 and $500,00 we are seeing lower supply than last year and current demand is causing supply to tighten in the most popular areas.
CHANGES IN TRANSACTION MIX
We saw an increase in non-distressed transactions (up 1%), with investor flips up 13%. New home sales were up by an even higher percentage than last month at 27% and distressed transactions fell 33%. We saw a 20% decline in third party purchases at trustee sales and new notices of foreclosure remain at very low levels. Reversions to lenders decreased by 26%.
So far 2017 has been quite similar to 2015 and 2016, but with the following notable differences:
- The year-to-date closed transaction rate is up 14% over last year
- New homes are gaining market share over existing homes
- Attached homes are gaining market share over single-family homes
- Homes under $200,000 are getting ever scarcer
- 2017 numbers favor the Southeast Valley and Pinal County
The increase in transactions is partly due to buyers qualifying more easily for loans. This is not because lending standards have fallen, although underwriting rules have eased a little. Instead it is because buyers have higher credit scores and are finding down payments more easily. It is now several years since the end of the foreclosure wave and those former home owners affected are coming out of the penalty box and returning to the market with much better credit ratings than they had a couple of years ago. We are also seeing loans close more swiftly than last year, which means listings spend less time in pending or UCB status and close more quickly after getting an acceptable offer. In 2016 it was the West Valley that had the most favorable conditions for sellers. In 2017 this has shifted in favor of Pinal County and the Southeast Valley. Here supply is well below last year and is causing major problems for buyers on a constrained budget. The high end of the market has picked up volume compared to last year, but the change in pricing is modest. Most of the appreciation is being driven by the market under $300,000. There are several fashionable areas where the luxury market remains strong, for example Arcadia and Old Town Scottsdale. In addition luxury condominiums are in short supply and high demand. In common with the rest of the USA, we are seeing ongoing challenges for large luxury single family home sellers in the more remote areas especially those with homes over $2 million. This is caused by demographic trends as baby boomers retire and/or downsize and millennials enter the housing market. The mid range from $200,000 to $500,000 is currently very healthy and the lower end of the luxury market, from $500,000 to $1 million, is also looking significantly stronger than last year. The low end of the market looks as though it will never get relief for its chronic supply problem, and it may not be too long before homes under $200,000 are as rare as they were in 2006.
