By Mike Bodeen · 7 August 2017
July 2017 Market Report
Migration Trend is Interesting
Supply, and its continued reduction, remains the notable story amidst the Valley’s real estate market. The supply of homes for sale remains significantly lower than last year, and the gap widened slightly compared with last month in terms of active listings.
The monthly sales rate is up 3.0% compared with a year ago, but substantially down from last month (16.8%).
Active Listings: 17,412 versus 19,711 last year – down 11.7% – and down 3.7% from 18,087 last month
Under Contract Listings: 10,157 versus 10,897 last year – down 6.8% – and down 5.1% from 10,700 last month
Monthly Sales: 8,003 versus 7,770 last year – up 3.0% – but down 16.8% from 9,615 last month
Monthly Average Sales Price per Sq. Ft.: $148.85 versus $138.39 last year – up 7.6% – but down 1.8% from $151.64 last month
Monthly Median Sales Price: $241,000 versus $225,000 last year – up 7.1% – but down 1.6% from $245,000 last month
According to Michael Orr of the Cromford Report, “We experienced a significant price drop between June and July, but this is no surprise. It happens almost every year, and in fact the drop in 2016 was larger. The effect is primarily due to the decline in luxury home activity. On an annual basis appreciation is running at 7.6% when measured by average $/SF and 7.1% when measured by median sales price. Both of these are very strong compared with general rates of inflation but are unspectacular in the context of the wider housing market. Washington, Oregon, Idaho, Utah and Colorado are seeing even faster appreciation, while California, Nevada and Florida are similar to Arizona. Only Alaska is seeing home prices declining year over year.”
Whereas the home owner benefits from appreciation, home buyers lose ground. Prices continue to increase due to this natural and persistent lack of supply. And as we have previously mentioned (harped), non-homeowners are seeing affordability slip away, and in many cases are also seeing their current rents increase.
Another interesting trend observation by Orr: “At the moment Arizona’s population increase is concentrated in the older age groups which portends strong markets in the housing areas that appeal to this sector. Birth rates are weak and getting weaker, so natural population growth is unlikely to be much of a factor in driving future housing demand. In-migration in key to the state and much of that in-migration has been dominated by retirees, or at least those over 55. This is different from the situation prior to 2007 which saw strong in-migration from the under 40s. We anticipate the median age in Greater Phoenix will increase quite markedly over the next decade. This will have a number of economic effects, not just on housing.”
We will be reporting more on this potential trend in the future.
Market data referenced in this article comes from The Cromford Report.