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PHOENIX REAL ESTATE MARKET UPDATE


Price AppreciaLon by Price Range Summer 2015 -­‐ Tina Tamboer-­‐Gla4elter, Senior Real Estate Analyst | The Cromford Report


ANNUAL PRICE APPRECIATION When it comes to price apprecia-on, it’s important to remember that sale prices tell us where the market as already been, not where it’s going. Current annual apprecia-on rates are reflec-ng the more balanced market of 2014 and not the recent seller’s market of 2015. Supply was low in 2014, but buyer demand was also low therefore the situa-on was not as cri-cal as it is today. Annual apprecia-on is a lagging responder to shiNs in supply and demand. Price ranges below $300,000 are expected to show higher annual apprecia-on rates in the coming months in response to the developing seller’s market. While apprecia-on rates below $300,000 are expected to be less drama-c, yet s-ll beWer than 2014.


WEEKLY PRICE REDUCTIONS One indica-on of the demarca-on between the over $300,000 market and under $300,000 market is the weekly price reduc-on trend. List prices respond faster to a market shiN in the form of price reduc-ons.


*LISTINGS UNDER $300,000 Due to undersupply and higher demand under $300,000, there is a declining trend in weekly price reduc-ons as marke-ng -mes have shortened by an average of 15 days over the past two months.


*LISTINGS OVER $300,000 In contrast, the over $300,000 market is seeing an increase in weekly price reduc-ons. This reflects the added supply in this price range and increased compe--on.


! The median price of a new home in Maricopa County is $321,085. This places new builds in direct compeLLon for buyers in the over $300,000 market.


Marke-ng -me for sold lis-ngs over $300,000 is almost 6 weeks , or 1.5 months, longer than those under $300,000 and it’s gradually growing longer. The longer lis-ngs remain on the market, the more weekly price reduc-ons will occur. An upward trend in price reduc-ons indicates a weakening advantage for sellers in this price range.


Thanksgiving & Christmas


PHOENIX REAL ESTATE MARKET UPDATE


Sales Price Trends Summer 2015 -­‐ Tina Tamboer-­‐Gla4elter, Senior Real Estate Analyst | The Cromford Report


PRICES BACK ON TRACK? As the Phoenix market recovers gradually, discussion in the press con-nues to revolve around the sustainability of apprecia-on and fears of another price “bubble”. In fact, median prices are not far off from where they would have been anyway had the market con-nued at the pace set in 2001 through 2003, which was the last truly balanced market.


! Median sales prices would need to appreciate another 30% before reaching the peak of 2006.


If we look at sales prices per square foot, one could argue that the market is s-ll underpriced. Price per square foot does not take into account that many homes are larger now, which affects the overall sales price.


Price Reduc-ons Lis-ngs Under $300,000


! The average-­‐sized resale home purchased in Maricopa County is 1,951 square feet compared to 1,764 square feet in 2002.


PRICE vs. PAYMENT (1,950 SF Home) When we follow the average price of a 1,950sf home and compare it with the principle and interest payments over -me, we get a visual of how interest rates are affec-ng affordability.


! While the average sale price for a 1,950sf home has increased 31% since 2008, the principle and interest payment for that same home has only risen 1% due to low interest rates. That makes it only $25 more than it was 12 years ago.


AFFORDABILITY Price Reduc-ons Lis-ngs Over $300,000


The Home Opportunity Index measures the percentage of homes sold that would be affordable to a family making the median household income given today’s lending standards.


! 67.3% of properYes sold in the last quarter were considered affordable to a family making $62,500 per year. This is higher than the naYonal measurement of 62.8%


Thanksgiving & Christmas


Normal 60-­‐75 1991 26.6% $209,242


Jul 03 $1,085 5.63%


$370,593


May 06 $2,130 6.6%


Nov 08 $1,092 6.09%


$263,796 $200,471 Payment +1%


Apr 15 $1,110 3.8%


2009-­‐2012


86.0%


67.3% 62.8%


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