Phoenix Real Estate Weekly Market Update June

Dated: 06/18/2018

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Phoenix Real Estate - June Market Update

Posted by Riley Bishop on Monday, June 18th, 2018 at 7:13am.

 

June 11 

The data is preliminary, based on affidavits of value recorded during May, but here are the statistics for iBuyers in Maricopa County during May 2018.

iBuyer

Homes Purchased May 2018

Homes Sold May 2018

Homes Purchased May 2017

Homes Sold May 2017

Opendoor

257

235

118

63

OfferPad

99

66

49

33

Zillow (Signpost Homes)

3

0

0

0

During May we saw 2 investment groups actively buying - Cerberus and Progress Residential. Both are busy in the process of converting their recently purchased homes into rentals. So far Zillow has only purchased 5 homes (as of June 8) at an average of 100.3% of their "Zestimate". Only 1 if these homes is listed on the MLS and it currently remains active. The others are listed as "coming soon" on the Zillow site, and are not displayed in the MLS.

Over the last 3 weeks, Opendoor has paid an average of 96.9% of Zestimate while OfferPad has paid 94.5% of Zestimate. Clearly gross margins are getting squeezed with 5 major players trying to buy homes in a bifurcated market in which homes for sale are already pretty scarce. The competition is also likely to be putting pressure on the size of the fees charged by iBuyers to home sellers, as they try to pad their margins in places other than the difference in purchase/sale price.

June 12 




Switching gears from the furor in the sub-$500,000 market, The single-family luxury market has grown in volume since last year. Using MLS data for the 3 months March, April, May we see:

  • $500,000 and $1 million - 26% decrease in sales

  • $1 million and $2 million - 33% increase in sales

  •  $2 million (+) - a 41% increase in sales

All this activity has caused inventory to fall compared to last year, we will take a look using Months of Supply, which is the theoretical time it would take for all homes in a given market to sell if there are no new listings.

  • Months of Supply for Homes between $500,000 and $1 million has dropped 29% from 4.9 months to 3.5 months

  • Months of Supply for Homes between $1 million and $2 million has dropped 31% from 10.7 months to 7.7 months

  • Months of Supply for Homes over $2 million has dropped 32% from 18.8 months to 12.8 months

So far we have not seen this have a big effect on pricing, as the average $/SF is only up 2.3% compared to a year ago for homes over $500,000, far less than the appreciation seen across lower price ranges in the Phoenix Valley. 

Report for Maricopa COunty - Homes between $500,000 and $1,000,000

 

June 13

Scottsdale, Carefree, Cavecreek, and Fountain Hills, better known as the Northeast Valley, continues to swing in favor of sellers, especially at the low-end. We are seeing much of this action taking place in Fountain Hills, as previously discussed HERE.

For homes below $500,000:

  • Active Listings (excluding those with Contracts) dropped 31% from 542 to 376 between June 1,

    2017

    and June 1, 2018

  • Quarterly Homes Sales (March-May) dropped 8% from 947 to 867 between 2017 and 2018

  • Average $/SF for those sales climbed 5.2% from $194.52 to $204.72

  • Months of supply fell 25% from 1.7 to 1.3 months.

Clearly the shortage of homes for sale is causing the sales rate to decline. We see this in a tight market in which all the low-hanging fruit has been picked, and buyers become less enthusiastic about their options.

For homes between $500,000 and $1 million:

  • Active Listings (excluding those with Contracts) dropped 18% from 1,257 to 1,037 between June 1, 2017 and June 1, 2018

  • Quarterly Home Sales (March-May) rose 16% from 865 to 1,006 between 2017 and 2018

  • Average $/SF for those sales climbed 2.8% from $218.66 to $224.73

  • Months of Supply fell 30% from 4.4 to 3.1 months

For homes over $1 million:

  • Active Listings (excluding UCB & CCBS) dropped 8% from 1,348 to 1,238 between June 1, 2017 and June 1, 2018

  • Quarterly Home Sales (March-May) rose 31% from 318 to 416 between 2017 and 2018

  • Average $/SF for those sales climbed 2.0% from $355.44 to $362.60

  • Months of Supply fell 30% from 12.7 to 8.9

All three price ranges show a shift in favor of sellers in Northeast Valley, and without an even flow of more listings coming on the market, we don't expect any drastic changes soon. 

 

June 15 

Below is a table showing The Cromford® Market Index for the 17 largest cities and their single-family housing markets;

11 of the 17 cities featured are showing a swing in favor of sellers and 6 improving for buyers.

Scottsdale is benefitting from low supply levels and increasing demand, and with a12% move further into a sellers market over the past month. Surprise is just behind with a 10% move in favor of sellers, Tempe and Maricopa with 7%, and the remaining improvements are rather modest for the season.

Buckeye and Glendale were the biggest movers in favor of buyers, while Phoenix continues to become more favorable for buyers (-4% move).

Not in the table above, Anthem is down to 95.9, its lowest level since 2014 and is showing a serious advantage to buyers.

 

The lesser-mentioned, but wildly appreciated parts of the Central Valley are the outskirts and remote areas. Appreciation rates over the last year of more than 25% in Coolidge and 18% in Tonopah are very impressive, even Wickenburg saw nearly a 16% appreciation rate on average. 

The 6 most appreciated places are on the fringes of the Central Valley; among the top 10, only Youngtown could be classed as a more central location. We look to places like Florence, Maricopa and Rio Verde and see very promising potential for further appreciation over the next 12 months.

Notice that the larger cities are further down the table, with Queen Creek at 9% leading the pack and Scottsdale at just under 5%. We expect better things from Scottsdale over the next 12 months given the recent improvement in its Cromford® Market Index at a time when similar valley markets seem to be doing the opposite. Barring certain exceptions, we think many investors are missing the opportunities in these smaller and far-flung locations. Things are looking difficult at the moment for Anthem and New River, and Gold Canyon and Carefree just don't enjoy the publicity of Paradise Valley and Scottsdale, often being overlooked by buyers coming in from out-of-state. Despite their breathtaking surroundings, these very upscale locations tend to appreciate more slowly as a result, even when supply is scarce.

In the West Valley, Youngtown, El Mirage, and Sun City have been the top price gainers, while in the Southeast, Apache Junction, Queen Creek and Mesa are top. In the Northeast, Fountain Hills and Cave Creek are the leaders, both at the edge of the conurbation.

Phoenix itself has been only a modest performer, ranking in the bottom 1/3 (27th of 42) and returning below average appreciation of 6.7%.

 


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