2017 has remained 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 have increased their 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 mainly 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 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.