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 November 2017, single family home sales increased year over year in three sectors, with investor flips growing fastest. New homes grew at a faster rate than normal re-sales:
- New homes (up 10%)
- Normal re-sales (up 7%)
- Investor flips (up 15%)
Because of lower distress levels, single family home sales decreased year over year in the remaining sectors:
- GSE – Fannie Mae, Freddie Mac, etc. (down 50%)
- Bank owned homes (down 26%)
- Third party purchases at trustee sales (down 19%)
- Short sales / pre-foreclosures (down 79%)
- HUD homes (down 19%)
November is always a short month and there were only 19 working days in both 2016 and 2017. This makes it valid to compare November 2017 with November 2016, but comparisons with October 2017 are a little unfair. On this basis, the 6.6% growth in unit sales was a small improvement on the past few months.
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 15% over November 2016.
- Total dollars spent on townhouses & condos rose by 15% over November 2016.
The advantage held by attached homes for several months appears to have dissipated in November.
During November, average single family pricing moved sharply higher, reading $319,856, up from $308,182 last month and up 7.6% from $297,310 in November 2016. Average new single family home prices during November were only 3.0% higher than last year at $376,931, mainly because of a 2.4% drop in average new home size.
MEDIAN SALES PRICE
The median sales price rose 6.1% from $250,000 in Nov 2016 to $259,900 in Nov 2017.
NEW HOME SALES
Newly-built single-family homes saw 1,525 closings in November, up 10% from 1,387 in November 2016. The total dollar value of single-family new homes closed in November was up 13% from $508 million in 2016 to $575 million in 2017. Townhouse / condo homes saw a decline of 6% from $38 million, in contrast to last month’s huge increase.
The average sq. ft. of a new single family home in November was 2,380, down 2.4% from 2,438 in November 2016. The average sq. ft. of a non-distressed resale was 2,042, so new single-family homes are 17% larger on average than the existing homes that sold. For new-built townhouse / condos the average size was 30% larger than re-sales.
The share (in dollars) for new homes in the single-family market has moved up slightly from 21.0% in November 2016 to 21.7% in November 2017.
DEMAND
Total single family, townhouse & condo sales were up 6% in November from a year earlier. Single-family sales rose less 7% and townhouse/ condo sales rose 5% compared to November 2016.
Single-family homes priced over $500,000 took 26% market share in dollars, up from 24% last year. There was a 22% increase in unit sales over $500,000 while average pricing rose by 4%. Entry level single family homes under $200,000 lost market share from 17% to 12%, primarily due to low supply. The mid range between $200,000 and $500,000 has robust demand and reasonable supply and grew market share from 59% to 61%.
Townhouse/condos priced over $500,000 grew their market share from 13% to 14% while those under $200,000 dropped from 44% to a 39% share of the attached market. The mid-range increased from 44% to 47%.
Numbers reflect single family homes only.
AVERAGE PRICE PER SQUARE FOOT
Average price per sq. ft. for single family homes
gained 6.6% from $142.55 in November 2016 to $151.95 in November 2017.
SUPPLY
The number of active single family listings without an existing contract was 14,068 for the Greater Phoenix area as of December 1, 2017. This is down 1.6% since November 1. The inventory of single family homes under $150,000 stands at 30 days, 35% lower than a year ago. So far we have seen 0.6% more new listings created in 2017 than in 2016. Supply is very constrained below $200,000 and inadequate to meet demand up to about $600,000. Supply is good over $600,000 but below $1,500,000, but continues to fall compared with last year and and is becoming scarce in a few more popular areas. Supply is very plentiful over $1,500,000 except for new homes which are usually snapped up quickly.
CHANGES IN TRANSACTION MIX
We saw an increase in non-distressed transactions (up 8% over this time last year), with investor flips growing by an even stronger 15%. New home sales were up by a lower percentage than last month at 10% and distressed transactions fell 26%. We saw a 19% decrease in third party purchases at trustee sales and new notices of foreclosure remain at very low levels. Reversions to lenders decreased by 8%. Compared with the last several months, townhomes and condos took a smaller share of the market.
2017 has remained similar to 2015 and 2016, but with the following notable differences:
- The year-to-date closed transaction rate is up 14% over last year
- New homes have increased their market share over existing homes
- Attached homes are gaining market share over single-family homes
- Homes under $200,000 are getting ever scarcer
- 2017 numbers favor the Southeast Valley and Pinal County
The increase in transactions is mainly due to buyers qualifying more easily for loans. This is not because lending standards have fallen, although underwriting rules have eased a little. Instead it is because buyers have higher credit scores and are finding down payments more easily. It is now several years since the end of the foreclosure wave and those former home owners affected are coming out of the penalty box and returning to the market with much better credit ratings than they had a couple years ago. We are also seeing loans close more swiftly than last year, which means listings spend less time in pending or UCB status and close more quickly after getting an acceptable offer. In 2016 it was the West Valley that had the most favorable conditions for sellers. In 2017 this has shifted in favor of Pinal County and the Southeast Valley. Here supply is well below last year and is causing major problems for buyers on a constrained budget. The high end of the market has picked up volume compared to last year, but the change in pricing is modest. Most of the appreciation is being driven by the market under $300,000. There are several fashionable areas where the luxury market remains strong, for example Arcadia and Old Town Scottsdale. In addition luxury condominiums are in short supply and high demand. In common with the rest of the USA, we are seeing ongoing challenges for large luxury single family home sellers in the more remote areas, especially those with homes over $2 million. This is caused by demographic trends as baby boomers retire and/or downsize and millennials enter the housing market. The mid range from $200,000 to $500,000 is currently very healthy and the lower end of the luxury market, from $500,000 to $1 million, is also looking significantly stronger than last year. The low end of the market looks as though it will never get relief for its chronic supply problem, and it may not be too long before homes under $200,000 are as rare as they were in 2006.
