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 sales increased year over year in the three largest sectors:
- New Homes (up 34%)
- Normal re-sales (up 14%)
- Investor flips (up 16%)
Because of lower distress levels, single family home sales decreased year over year in the remaining five sectors:
- Third party purchases at trustee sales (down 9%)
- Bank owned homes (down 33%)
- GSE – Fannie Mae, Freddie Mac, etc. (down 23%)
- HUD sales (down 57%)
- Short sales / pre-foreclosures (down 16%)
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 22% over August 2015.
- Total dollars spent on townhouses & condos rose by 31% over August 2015.
During August, average single family pricing moved a little higher, reading $288,545, up from $286,815 last month and up from $269,145 in August 2015. Average new single family home prices were 0.9% higher than last year while the average new single family home size has declined by 4.4% over the past 12 months.
MEDIAN SALES PRICE
The median sales price rose 9.4% from $225,000 in August 2015 to $242,500 in August 2016.
NEW HOME SALES
August was yet another strong month for new home closings. Newly-built single family homes saw 1,316 closings in August, up 34% from 985 in July 2015. The total dollar value of single family new homes closed in August was up 35% from $334 million in 2015 to $450 million in 2016.
The average sq. ft. of a new single family home in June was 2,384, down 4.4% from 2,494 in August 2015. 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 2,017, so new single family homes are still 17% larger on average than the existing homes that sold. This percentage has fallen from 23% this time last year.
The market share (in dollars) for new single family homes has climbed from 16.0% in August 2015 to 17.7% in August 2016.
DEMAND
Total single family, townhouse & condo sales were up 15% in August from a year earlier. However with 23 working days in 2016, versus 21 in 2015, August’s rate of sales per working day grew 5%, lower than the 7% we saw in July. Single family sales were up 14% while townhouse / condo sales were up 21% compared to August 2015.
Single family homes priced over $500,000 took 21% dollar market share, the same as last year. There was a 23% increase in dollar volume but the ranges over $2 million decreased by 3%, while the amount spent on homes between $500,000 and $2 million was up 27% compared with August 2015. Demand has improved relative to summer 2015 in many luxury areas while supply has fallen from the extreme highs of the spring. Entry level single family homes under $200,000 lost market share from 22% to 18%, 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 57% to 61%.
Total price 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 6.3% from $129.57 in August 2015 to $137.72 in August 2016.
SUPPLY
The number of active single family listings without an existing contract was 14,625 for the Greater Phoenix area as of September 1, 2016. This is down 3.4% since August 1. The inventory of single family homes under $150,000 stands at a mere 31 days, although this is the same as a year ago. Overall we have seen 5.3% more new listings created in 2016 than at the same stage in 2015. We expect active listing counts to rise a little during September and continue to rise during October and November. New supply has been strong 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 current demand is more than strong enough to cope with the new listings.
CHANGES IN TRANSACTION MIX
We saw an increase in non-distressed transactions (up 14%), with investor flips up 16%. New home sales were up sharply by 34% but distressed transactions fell 20%. We saw a 9% fall in third party purchases at trustee sales and new notices of foreclosure remain at very low levels. Reversions to lenders increased by 12% thanks to the extra working days in August 2016.
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 jump in August is merely a quirk of the calendar and makes up for the lower numbers in July. 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. New homes have been taking a much more significant share of this mid-range sector in 2016. In addition, sales of new condos and townhomes have finally taken off posting their highest monthly sales (120) since 2008. The bulk of the market strongly favors sellers over buyers. This is less true of the luxury market although the large reduction in supply since June has helped some sellers. There are a few areas where the luxury market remains strong, for example Arcadia, Old Town Scottsdale and the DC Ranch area. There are also several upscale condo developments in fashionable locations which are reported to be seeing strong buyer interest but hardly any of these have reached the stage where deeds are being recorded. We should see the impact of this upscale buyer interest in 2017’s sales statistics. 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 to attract buyers. The current outlook calls for all of these trends to continue over the next few months. We have a large wave of baby boomers reaching retirement age and many are looking to downsize to more convenient and manageable homes closer to amenities. This could be leading to a glut of big detached homes on large lots and a corresponding shortage of smaller, often attached, homes with the features that these buyers are looking for.
