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 January 2017, single family home sales increased year over year in three major sectors, with new homes gaining market share once again:
- New Homes (up 39%)
- Normal re-sales (up 19%)
- Investor flips (up 28%)
Because of lower distress levels, single family home sales decreased year over year in the remaining sectors:
- GSE – Fannie Mae, Freddie Mac, etc. (down 23%)
- Bank owned homes (down 30%)
- HUD Sales (down 68%)
- Third party purchases at trustee sales (down 21%)
- Short sales / pre-foreclosures (down 18%)
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 24% over January 2016
- Total dollars spent on townhouses & condos rose by 43% over January 2016
During January, average single family pricing edged down slightly, reading $295,986, down from $296,907 last month but up from $281,638 in January 2016. Average new single family home prices during January were 5.1% higher than last year while the average new single family home size has declined by 0.8% over the past 12 months.
MEDIAN SALES PRICE
The median sales price rose 6.7% from $225,000 in January 2016 to $240,000 in January 2017.
NEW HOME SALES
January was yet another very strong month for new home closings. Newly-built single family homes saw 960 closings in January, up 39% from 690 in January 2016. The total dollar value of single family new homes closed in January was up 46% from $240 million in 2016 to $351 million in 2017.
The average sq. ft. of a new single family home in January was 2,423, down 0.8% from 2,443 in January 2016. 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 1,994, so new single family homes are 21% larger on average than the existing homes that sold.
The market share (in dollars) for new single family homes has climbed from 15.0% in January 2016 to 17.7% in January 2017.
DEMAND
Total price for single family homes sold in January.
Total single family, townhouse & condo sales were up 19% in January from a year earlier. Single family sales rose 18% and townhouse / condo sales rose 24% compared to January 2016.
Single family homes priced over $500,000 took 25% dollar market share, the same as last year. There was a 25% increase in unit sales over $500,000 but slightly softer pricing meant a 22% increase in dollar volume. Entry level single family homes under $200,000 lost market share from 21% to 17%, partly due to low supply. The mid range between $200,000 and $500,000 has robust demand and reasonable supply and grew market share from 54% to 58%.
Numbers reflect single family homes only.
AVERAGE PRICE PER SQUARE FOOT
Average price per square foot for single family homes gained 4.9% from $137.27 in January 2016 to $143.99 in January 2076.
SUPPLY
The number of active single family listings without an existing contract was 15,321 for the Greater Phoenix area as of February 1, 2017. This is up 2.7% since January 1, a smaller rise than usual. The inventory of single family homes under $150,000 stands at 42 days, 17% lower than a year ago. So far we have seen 3.3% fewer new listings created in 2017 than in 2016 and this was therefore inadequate to match the increase in demand except at the highest price points. In the mid range between $200,000 and $500,000 we are seeing lower supply than last year and current demand is causing supply to tighten in the most popular areas.
CHANGES IN TRANSACTION MIX
We saw an increase in non-distressed transactions (up 19%), with investor flips up 28%. New home sales were up by the highest percentage at 39% but distressed transactions fell 24%. We saw a 21% decline in third party purchases at trustee sales and new notices of foreclosure remain at very low levels. Reversions to lenders decreased by 32%.
The entry level market has been very short of supply for more than 2 years now, and this has driven strong appreciation which looks likely to continue for a while yet. During the fourth quarter of 2016 we saw improving supply in certain parts of the West Valley, but this trend has not continued into the rst quarter of 2017 and buyers have less choice in many parts of Glendale and Surprise. There has been adequate supply for the mid range but the very strong growth in sales has caused this supply to be absorbed quickly, especially in the Southeast. Some areas are seeing declines in supply since the start of 2017 which is quite unusual. Most notable here are Casa Grande and Gilbert 85296.
The bulk of the market strongly favors sellers over buyers, though this is much less true for the high end of the market. There are several areas where the luxury market remains strong, for example Arcadia and Old Town Scottsdale. However the current outlook calls for ongoing challenges for luxury home sellers in the more remote areas especially those with homes over $2 million.
We have a large wave of baby boomers reaching retirement age and many are looking to downsize to more convenient and manageable “lock and leave” homes, closer to amenities. To this local band of retirees we can add strong domestic migration, heavily dominated by older age groups moving here to retire. This is creating higher transactions volumes and putting pressure on supply. However we are seeing a rapid aging of the population and a decline in the birth rate which gives us some concerns over the very long term.
