September 21, 2016
Founder and Owner, Cromford® Report
Just as predicted, August sales were strong thanks to its 23 working days and fully made amends for the shortfall in July, which only contained 20 working days.
Until now, 2016 has been quite similar in market behavior to 2015 for the majority of the market. However, 2015 started to lose some momentum in August and at the moment we are seeing no similar loss of momentum in 2016. Instead, we are getting very small shifts that are moderating some of the larger trends we saw during the first half of the year:
A little more supply is coming along in the lower price ranges giving some relief to buyers competing for the very few homes listed.
The luxury market has seen a substantial fall in inventory since June with a lot of listings canceled in the last 3 months. This has helped sellers because they face less competition. However luxury pricing remains weaker than in 2015.
New homes continue to gain market share at the expense of re-sales.
Buyers still have the worst of negotiations in most market segments because supply is not keeping up with population growth. Life is hardest for buyers with budgets under $200,000. Those looking for larger single-family homes under $200,000 may want to consider the Southwest Valley with 50 percent of all sales occurring under $185,000 and an average size of 1,929 square feet. Pinal County provides the largest single-family home for the money with an average sale at 2,057 square feet and a median sales price of $154,000.
The Southwest Valley (which includes Southwest Phoenix, Buckeye, Goodyear, Litchfield Park, Avondale, Tolleson and Laveen) has seen the sales price per square foot for single family homes rise 9.4 percent since this time last year. Pinal County (which includes Apache Junction, Gold Canyon, San Tan Valley, Florence, Casa Grande and Maricopa) has only seen a 2.6 percent increase due to more competition from new home subdivisions. Life is easier for buyers who are looking for homes over $200,000, but not by very much. There is more supply, but demand is still high in relation to it until the budget gets over $500,000 where the market is more balanced.
For sellers who own a condominium or townhome, the shortage of single family supply under $200,000 is good news. Sales of condos and townhomes are up 6.1 percent and the median sale price is up 12.5 percent from $137,750 last year to $155,000 as of September 7th. The average sales price per square foot is up 5.3 percent from $131.85 to $138.87 with the average sized unit purchased at 1,267 square feet.
Over the past month, 72 percent of all purchases have been under $300,000, which is why this price point dominates Phoenix metro overall statistics and projections. Sales between $300,000 and $500,000 are up 27.8 percent over last year, up 8.5 percent between $500,000 and $1 million and are exactly the same for sales over $1 million. Appreciation rates are not as strong in these price points because supply grew alongside demand, keeping the market in a balanced state. However, the strongest sales growth is concentrated in the price ranges from $300,000 to $500,000.
The chart shows the annual, average sales prices per square foot for various price ranges compared with the average for 12 months earlier. This data is for single family homes only. We can see that inexpensive homes between $125,000 and $175,000 have increased in price the fastest while prices have declined for homes priced between $1 million and $3 million.
Michael Orr is the founder and owner of the Cromford® Report www.cromfordreport.com. Michael can be reached at email@example.com or by phone at 480-262-5839. Sample of Cromford® Report data included with this article. See Introduction To The Cromford® Report course offered on November 16th.
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