November 29, 2016 |
Founder and Owner, Cromford® Report
The market in 2016 has continued to follow predictable patterns, following all the usual seasonal trends and largely mirroring the market of 2015. However, 2016 is having a stronger second half for sellers than 2015: we see higher sales and an increasing appreciation rate. We nearly always see a rise in active inventory between September and the beginning of December and this year is no exception. The rise is slightly below normal in most areas, with just a few exceptions, notably the city of Surprise, where it is bigger than usual, and Chandler where inventory has fallen. Buyers are probably feeling disappointed by the sub-par influx of new listings and the fact that much of the existing re-sale inventory is a little stale, especially in the higher price ranges. To compensate, new homes are being constructed at a faster rate than we have seen since 2007.
The top end of the luxury market, over $2 million, had a much better October than last year, with more sales volume and higher pricing. However, the market between $500,000 and $2 million is still not firing on all cylinders and must be considered the weakest price range. Some major areas that used to be very popular are now going out of fashion; impacted by excessive inventory and lack-luster buyer demand. At the same time, there are also areas which are in fashion and generating very strong demand. Location is crucial for this price range.
Below $500,000, the market is looking very healthy across the board with supply getting tighter and tighter as we drop down in price. Consequently, appreciation is strongest in the lowest price sectors of the market.
One locality that is highly sought after at the moment is Arcadia, although exactly what area we are referring to needs to be discussed. The original, classic definition of “Arcadia Proper” lies south of Camelback Rd, north of Indian School Rd, west of 68th St and east of 44th St. This lies mostly in Phoenix 85018 zip code with a small section in Scottsdale 85251 from 64th St east. To this area, we will add all the areas north of Camelback Rd but south of Camelback Mountain. This defines an area of very desirable and expensive homes which we call “Arcadia Grande,” to distinguish it from “Arcadia Proper.” We are not including the newly invented areas of “Arcadia Lite” (east of 44th St) or “Arcadia South”, “Osborne Arcadia” or “Baja Arcadia” (south of Indian School Rd and the canal).
Now that we are clear, we can reveal that “Arcadia Grande” has achieved the notable feat of exceeding the average price per sq. ft. that is had at the peak of the housing bubble. Below is a chart to show this, based on the annual average $/SF. Note the explosive price acceleration over the last year.
In contrast, the average price per sq. ft. has declined very slightly over the past year in Paradise Valley, north of Camelback Mountain. The other 5 more expensive cities (Carefree, Scottsdale, Fountain Hills, Cave Creek & Rio Verde) have all appreciated modestly, by between 3 percent and 4 percent.
In the table below, we can see the strongest price growth has mostly occurred in the less expensive locations such as Youngtown, Arizona City, and El Mirage.