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 September 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 6%)
- Normal re-sales (up less than 1%)
- Investor flips (up 13%)
Because of lower distress levels, single family home sales decreased year over year in the remaining sectors:
- GSE – Fannie Mae, Freddie Mac, etc. (down 55%)
- Bank owned homes (down 37%)
- Third party purchases at trustee sales (down 8%)
- Short sales / pre-foreclosures (down 32%)
- HUD homes (down 15%)
There was one extra working day in September in 2016, which makes the comparison slightly unfair towards September 2017. However, we can see that the year over year sales comparisons were more favorable earlier this year than they are now.
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 5% over September 2016.
- Total dollars spent on townhouses & condos rose by 25% over September 2016.
During September, average single family pricing moved slightly lower, reading $306,483, down from $308,401 last month but up 4.3% from $293,717 in September 2016. Average new single family home prices during September were only 0.2% higher than last year at $367,689, partly because of a drop in average new home size.
MEDIAN SALES PRICE
The median sales price rose 4.8% from $242,358 in Aug 2016 to $254,000 in Aug 2017.
NEW HOME SALES
September was was not quite as strong for new home closings as earlier in 2017. Newly-built single-family homes saw 1,511 closings in September, up 6% from 1,429 in September 2016. The total dollar value of single-family new homes closed in September was up 6% from $524 million in 2016 to $556 million in 2017.
The average sq. ft. of a new single family home in September was 2,378, down 3.3% from 2,460 in September 2016. The average sq. ft. of a non-distressed resale was 2,022, so new single-family homes are 18% larger on average than the existing homes that sold.
The share (in dollars) for new homes in the single-family market has moved up slightly from 21.1% in September 2016 to 21.3% in September 2017.
DEMAND
Total single family, townhouse & condo sales were up 2% in September from a year earlier. Single-family sales rose less than 1% and townhouse/ condo sales rose 12% compared to September 2016. Compared with August this is a smaller year over year increase for single-family sales but a much larger increase for townhouse/condo sales.
Single-family homes priced over $500,000 took 24% market share in dollars, up from 23% last year. There was an 8% increase in unit sales over $500,000 while average pricing fell by 2%. Entry level single family homes under $200,000 lost market share from 17% to 14%, 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 60% to 63%.
Townhouse/condos priced over $500,000 grew their market share dramatically from 11% to 17% while those under $200,000 dropped from 44% to a 38% share of the market. The mid-range was unchanged at 45%
Numbers reflect single family homes only.
AVERAGE PRICE PER SQUARE FOOT
Average price per sq. ft. for single family homes
gained 5.2% from $139.60 in September 2016 to $146.91 in September 2017.
SUPPLY
The number of active single family listings without an existing contract was 14,017 for the Greater Phoenix area as of October 1, 2017. This is up 4.2% since September 1. The inventory of single family homes under $150,000 stands at 32 days, 5.6% lower than a year ago. So far we have seen 0.4% 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 continues to fall compared with last year and is becoming scarce in a few more popular areas. Supply is very plentiful over $1,500,00.
CHANGES IN TRANSACTION MIX
We saw a small increase in non-distressed transactions (up 1% over this time last year), with investor flips growing impressively by 12.7%. New home sales were up by a lower percentage than last month at 6% and distressed transactions fell 27.4%. We saw an 8.3% decline in third party purchases at trustee sales and new notices of foreclosure remain at very low levels. Reversions to lenders decreased by 41.2%.
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.
