At the start of June, we continue strong before summer heats up in Phoenix & Scottsdale. Here’s what our friends at the Cromford Report are saying:
- Total Monthly Sales Up 3.4%
- Monthly Median Sales Price Up 6.5% to $226,900
Welcome to June! The weather is heating up and Realtors are using oven mitts on lava-hot lockboxes and keys to show property. If you’re planning to continue your search into the summer, you may find some relief in the competition for that perfect property. While other potential buyers are distracted by graduations, vacations and weekend getaways, that leaves a slightly longer window of opportunity for snagging up those new properties that hit the market. Don’t expect current price trends to change anytime soon. There is still more demand than supply in many areas under $500,000 so expect sales prices to continue rising through the summer, especially for properties under $200,000.
This month we’ve introduced the Listing Success Rate into our graphic. This measure counts all of the listings that closed, canceled or expired over the last month and takes a percentage of those that closed. The current measure is 76.7%, which is very positive considering it was 66% at the end of 2014. The price ranges with the highest success rates are $100,000-$200,000 with 85% of listings successfully closing and only 15% cancelling or expiring followed by the $200,000-$300,000 price range with an 81% success rate. The higher price ranges over $500,000 are seeing lower success rates with those over $1M seeing more properties cancel or expire in a month than close. This is actually typical as many sellers in these price ranges choose to cancel their listings once temperatures reach over 100 degrees and relist when things cool off in October, causing a higher than normal cancellation rate for June.
Camille’s thoughts: In a nutshell, listings, pending listing & the median sale price are going up! In case you’re curious, our median sale price stands today at $226,900. It peaked at $265K in June 2006 and reached a trough of $108,100 in May 2011. The trend I’ve been reporting for the last several months appears to be holding strong. We still have over 14% to go to reach the peak, but we’ve improved 110%!
To the point of competition for buyers under $500K, Marisa & I listed a gorgeous home in excellent condition near Uptown Phoenix (where all the cool new restaurants, offices & shops keep popping up) in late May for $335K. Within days, we had multiple offers and one over asking!
**Sellers over $500K** Take note and use the next 2 months that are typically slow to prepare for renewed buyer demand when it gets cooler this fall. When you get an interested buyer, there are very few locations in town (i.e. Arcadia)where you won’t necessary have to put your best foot forward and be nice, should you be lucky enough to get an offer.
**Buyers over $500K** There are still tons of locations where finding a luxury or near-luxury home at a good price is an option. Your best bet will be homes that need work, if you are brave enough to take on a challenge. If it’s perfect and something you’d expect to find on a home improvement show in the “after” segment, good luck. You’ll need it!
Here are a few more points from the Cromford Report that were so interesting, I had to share them:
June 12 – We already know that appreciation is strongest for the least expensive homes at the moment. Contrary to what you might expect, prices are rising the fastest in areas with the highest crime rates, worst performing schools and worst reputations. Most areas with the highest levels of desirability and either appreciating very slowly or depreciating. There are a few exceptions; Arcadia springs to mind.
In the same way the least expensive dwelling types (on a price per sq. ft. basis ) are appreciating the fastest and those with the highest price per sq. ft. are slowest to rise in price. Comparing the annual average $/SF between June 1 2015 and June 1, 2016 we see the following:
- Twin homes – up 12% from $89 to $99 per sq. ft.
- Mobile homes – up 11% from $68 to $76 per sq. ft.
- Townhouses – up 9% from $123 to $134 per sq. ft.
- Single family detached – up 5% from $131 to $138 per sq. ft.
- Apartment-style homes – up 4% from $141 to $146 per sq. ft.
- Patio homes – up 1% from $156 to $157 per sq. ft.
- June 11 – Fix and flips appear to be attracting attention again after a quiet period during the first half of 2015. Mind you we are nowhere near the peak that we saw in 3Q 2012 when flip sales were 12% of the total market across Maricopa and Pinal counties. In the spring of 2015 we reached a low of below 5% of the market and have since recovered to around 6%.
- June 5 – In an interesting development, the percentage of home purchases that were all-cash in Maricopa County fell to its lowest level since October 2008 in May 2016. The percentage was 19.5%, down from 20.9% in April.In May 2015 this percentage was 21.3%, so this supports the theory that some lenders are being a little less restrictive in their loan underwriting.
- June 1 – A couple of statistics that came out this morning suggest a stronger market.Only 182 homes were purchased by third parties at trustee sales in Maricopa County during May. However this represents 65% of all the auctions, so only 98 properties went back to the beneficiary (or lender). This is the lowest monthly total of REOs created since October 2006, almost 10 years ago. Also 65% is the highest percentage of properties catching a bid since April 2006, more than 10 years ago.The total dollar volume of homes closed through ARMLS during May was $2.464 billion. This is up 10% from May 2015 and the highest monthly total since June 2006
So, a few more things to consider: The least desirable areas and property types are generating the highest appreciation (Go figure!!). The lack of “turn-key” inventory is prompting flippers to jump back into the market (sellers, are you paying attention??). Cash sales are declining. The money is flowing from banks again- some buyers who could buy with cash are choosing instead to finance with rates as low as they are.
Finally, contrary to popular belief REOs or “bank-owned” properties A) are not here in any kind of abundance & B) after auctions on the county courthouse steps fell out of favor, they’re gaining popularity again; they were once popular enough to spawn an HGTV show here about that business in Phoenix. Coincidentally, May 2016 was the best month I’ve ever had since I got into the business almost 11 years ago.
There’s some food for thought. Hopefully, this info was enough to make you start asking questions…