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 July 2017, single family home sales increased year over year in three sectors, with investor flips growing fastest. New homes grew at a faster rate than normal re-sales:

  • New homes (up 19%)
  • Normal re-sales (up 3%)
  • Investor flips (up 19%)

Because of lower distress levels, single family home sales decreased year over year in the remaining sectors:

  • GSE – Fannie Mae, Freddie Mac, etc. (down 8%)
  • Bank owned homes (down 34%)
  • Third party purchases at trustee sales (down 19%)
  • Short sales / pre-foreclosures (down 24%)
  • HUD homes (down 42%)

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 11% over July 2016.
  • Total dollars spent on townhouses & condos rose by 14% over July 2016.

During July, average single family pricing moved lower, reading $305,839, down from $313,684 last month but up 6.9% from $286,046 in July 2016. Average new single family home prices during July were 3.6% lower than last year at $352,800.

MEDIAN SALES PRICE

Median Sales Price
The median sales price rose 7.2% from $236,989 in July 2016 to $254,000 in July 2017.

NEW HOME SALES

July was another very strong month for new home closing. Newly-built single family homes saw 1,331 closings in July, up 19% from 1,122 in July 2016. The total dollar value of single family new homes closed in July was up 14% from $410 million in 2016 to $470 million in 2017.

The average sq. ft. of a new single family home in July was 2,337, down 4.6% from 2,451 in July 2016. This explains why the average new home price fell year over year. 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 2,050, so new single family homes are 14% larger on average than the existing homes that sold. This is the smallest percentage difference that we have seen in over six years.

The share (in dollars) for new homes in the single-family market has moved up from 17.1% in July 2016 to 17.5% in July 2017.

DEMAND

Total single family, townhouse & condo sales were up 4% in July from a year earlier. Single family sales rose 4% and townhouse / condo sales rose 1% compared to July 2016. These are the weakest year over year increases we have seen for many months. Both July 2017 and July 2016 had 20 working days, so this is a fair comparison, requiring no adjustment.

Single family homes priced over $500,000 took 23% dollar market share, up from 22% last year. There was a 23% increase in unit sales over $500,000 but average pricing fell by 2%. Entry level single family homes under $200,000 lost market share from 18% to 14%, primarily due to low supply. The mid range between $200,000 and $500,000 has robust demand and reasonable supply and grew market share from 60% to 63%.

7,156 Each house represents 500 units
Numbers reflect single family homes only.

AVERAGE PRICE PER SQUARE FOOT

Average price per sq. ft. for single family homes

gained 6.6% from $137.26 in July 2016 to $146.29 in July 2017.

SUPPLY

The number of active single family listings without an existing contract was 13,389 for the Greater Phoenix area as of August 1, 2017. This is down 4.1% since July 1. The inventory of single family homes under $150,000 stands at 29 days, 4% lower than a year ago. So far we have seen 0.3% more new listings created in 2017 than in 2016. Supply is very constrained below $200,000 and inadequate to meet demand up to about $600,000. Supply is good over $600,000 but continues to fall compared with last year and is becoming scarce in a few more popular areas.

CHANGES IN TRANSACTION MIX

We saw an increase in non-distressed transactions (up 4%), with investor flips up 19%. New home sales were up by a higher percentage than last month at 19% and distressed transactions fell 23%. We saw a 19% decline in third party purchases at trustee sales and new notices of foreclosure remain at very low levels. Reversions to lenders decreased by 44%.

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.