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
- Sales increased year over year in all three non-distressed sectors and also for trustee sales to third parties:
- Normal re-sales (up 10%)
- New Homes (up 39%)
- Investor flips (up 14%)
- Third party purchases at trustee sales (up 8%)
Single family home sales decreased year over year in the remaining four distressed sectors:
- Bank owned homes (down 29%)
- GSE – Fannie Mae, Freddie Mac, etc. (down 30%)
- HUD sales (down 41%)
- Short sales / pre-foreclosures (down 33%)
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 15% over May 2015.
- Total dollars spent on townhouses & condos rose by 16% over May 2015.
During May, average single family pricing moved a little higher again, reaching $291,505, up from $288,610 last month and $281,945 in May 2015. Average new home prices are only 0.7% higher than last year because the average new single family home size has declined by 3.1% over the past 12 months.
MEDIAN SALES PRICE
The median sales price rose 9.3% from $215,000 in April 2015 to $235,000 in April 2016.
NEW HOME SALES
May was yet another strong month for new home closings. Newly-built single family homes saw 1,216 closings in May, up 39% from 876 in May 2015. The total dollar value of single family new homes closed in May was up 40% from $307 million in 2015 to $429 million in 2016.
The average sq. ft. of a new single family home in May was 2,475, down 3.1% from 2,554 in May 2015. Some builders are starting to offer more options at the entry pricing level, although many of these are a long way from the center of the valley. The average sq. ft. of a non-distressed resale was 2,030, so new single family homes are still 22% larger on average than existing homes.
The market share for new single family homes has climbed from 10.3% in May 2015 to 12.9% in May 2016.
DEMAND
Total single family, townhouse & condo sales were up 11% in May from a year earlier. Single family sales were up 11% to their highest total since May 2013. Townhouse / condo sales were up 9% compared to May 2015 but slightly lower than last month.
Single family homes priced over $500,000 took 23% dollar market share, down from 25% last year. There was 7% growth in dollar volume and it was all concentrated in the range below $1 million, while the amount spent on homes over $1 million was almost the same as in May 2015. Demand remains weaker than last year in most luxury areas while supply is excessive. Entry level single family homes under $200,000 lost market share from 21% to 18%, due to very low supply. The mid range between $200,000 and $500,000 has robust demand and adequate supply and grew market share from 54% to 59%.
Total price for single family homes sold in May
Numbers reflect single family homes only
Total price for single family homes sold in May
AVERAGE PRICE PER SQUARE FOOT
Average price per square foot gained 3.4% from $134.89 in May 2015 to $139.48 in May 2016.
SUPPLY
The number of active single family listings without an existing contract was 15,877 for the Greater Phoenix area as of June 1, 2016. This is down 5.5% since May 1. The inventory of single family homes under $150,000 stands at a mere 27 days, down from 30 days a year ago. Overall we have seen 6.1% more new listings created in 2016 than at the same stage in 2015. We expect active listings to decline for the next couple of months before starting to rise again in the fall. New supply has been excessive at the upper price points but inadequate below $200,000. In the mid range between $200,000 and $500,000 we are seeing plenty of supply but demand is more than strong enough to cope with the new listings.
CHANGES IN TRANSACTION MIX
We saw growth in non-distressed transactions (11%), with investor flips up 14%. New home sales were up sharply by 39% but distressed transactions fell 22%. We did see an 8% rise in third party purchases at trustee sales. Reversions to lenders declined by 35%.
OUTLOOK
In many ways, the 2016 Greater Phoenix housing market 2016 has been remarkably similar to 2015 so far. A quiet start to the year has been followed by a strong growth in sales during the spring. In both years, the entry level market has been short of supply, thus generating significant increases in pricing. In both years, the mid-range market has been very healthy with large increases in sales volume but relatively stable pricing. We are seeing new homes take a more significant share of this mid-range sector in 2016. The most noticeable difference in 2016 has been the weakness at the upper end of the market over $500,000. We saw a strong first half for the luxury market in 2015, but 2016 has seen supply reach excessive levels in many locations coupled with fading demand, especially for homes over $1 million. The current outlook calls for all of these trends to continue over the next several months.
