Market Summary

Market Update

Michael Orr b&w

Michael Orr
Journal Columnist
Founder and Owner, Cromford® Report


The market conditions in early June remain similar to April and May, with different price ranges in dramatically different situations. Sales volume is strong, well above 2015, but supply is the main factor that determines how the various market sectors are doing.

Overall supply has started to fall as homes are taken off the market for the summer season. This is particularly obvious in the higher price ranges. However, supply remains excessive over $500,000 and is far below normal for homes under $200,000. Between $200,000 and $500,000 supply becomes increasingly good and is matched by healthy demand, especially under $425,000. Somewhere between $425,000 and $500,000 demand weakens and sellers start to lose their advantage.

Unlike April, we saw significant year over year growth in sales during May – concentrated in the mid-range between $200,000 and $500,000. Under contract counts are starting to fade a however, signaling that end of the spring selling season is near. Dollar volume in May was $2.485 billion, up 11 percent from May 2015, with more than half of that coming from higher sales volume and the rest from higher pricing.

The fix and flip sector is stronger than last year, but is constrained by a shortage of properties available to buy below market value. We are nowhere near the peak that we saw in 3Q 2012 when flip sales were 12 percent of the total market across Maricopa and Pinal counties. In the spring of 2015, we reached a low below 5 percent of the market and have since recovered to around 6 percent. Since 2012 the median acquisition cost for a flip has risen 55 percent from $91,250 to $141,250, while the median sq. ft. has dropped from 1,650 to 1,545. On the other hand, the median gross profit has increased 22 percent from $35,144 to $43,150.

When we examine the various dwelling types we see that the most affordable homes are appreciating the fastest. This trend favors twin homes (up 12 percent on average), mobile homes (up 11 percent on average) and townhomes (up 9 percent on average). Appreciation for single family homes is a respectable 5 percent while apartment-style homes are slightly below average at 4 percent and patio homes bringing up the rear at 1 percent. Patio homes tend to have the highest price per sq. ft. at $157 while mobile homes are the least expensive at $76.

One way to measure supply is to calculate the ratio of homes for sale to the total number of homes in an area. For example, in Maricopa County, 1 in 75 single-family homes are for sale. We can see that the supply of homes for sale (without a contract) is abundant in the following locations:

Market Summary

In most of these areas, sellers are having a hard time due to the competition from other sellers. Phoenix 85018 is an exception because demand is stronger than ever for homes in this increasingly trendy area. Nearby 85008, 85014, 85251 and 85257 are also seeing strong demand and fast turnover.

At the other end of the scale, supply is chronically weak in the following areas:

Market Summary2


Even with weak demand, prices will rise when supply is as scarce as this.

New home closings were once again strong in May, up 39 percent from May 2015 across Maricopa County, whereas re-sale closings were up 6 percent. This shift in favor of new homes is a trend we expect to continue for some time. At $321,108 the median sales price for a new home is up 4 percent from May 2015. The re-sale monthly median came in at $225,000 for May, up 7 percent because of the scarcity of affordable homes. At first sight it appears that new homes are dramatically more expensive than re-sales but this is an illusion. The median new home is significantly larger than the median re-sale and the difference in living space is enough to account for almost all of the price difference.


Michael Orr is the founder and owner of the Cromford® Report Michael can be reached at or by phone at 480-262-5839. Sample of Cromford® Report data included with this article. See Introduction To The Cromford® Report class offered on July 13th Click Here.