By Mike Bodeen · 9 May 2016
The Complete List:
Affordability reigns when it comes to Valley appreciation rates. Mega-appreciation is taking place in Tonopah (Where?), Wittman, and Youngtown, while the luxury end in the Northeast Valley (Above $500,000) of the market grabs 6 out of 7 of the bottom performers.
Price points are the major divider. Cities where values are over $500,000 are currently overstocked with listings, I also don’t think it’s any accident that financing is playing a big part in what’s going on in the cities. A major draw for buyers, FHA financing, only loans up to $271,050. This financing enables buyers to put as little as 3.5% as a cash down payment which means they could affordably own a home upwards of $281,000.
Conventional financing, often needing 20% down or more, will loan up to $417,000 without the loan having to move into the “Jumbo Loan” ranks. Jumbo loans come at a higher cost with more intense qualifying, therefore, homes priced under $521,000 can qualify conventionally for normal conventional loans.
Here are the Valley appreciation rankings based on the previous 12 months using an annual average price per square foot measure:
1. Tonopah 27.0%
2. Wittmann 19.7%
3. Youngtown 16.3%
4. Tolleson 10.8%
5. Eloy 10.7%
6. Sun City 10.5%
7. El Mirage 9.8%
8. Glendale 9.8%
9. Avondale 8.7%
10. Waddell 8.2%
11. Laveen 8.1%
12. Florence 7.8%
13. Tempe 7.8%
14. Buckeye 7.5%
15. Arizona City 7.4%
16. New River 7.4%
17. Phoenix 7.3%
18. Maricopa 7.2%
19. Coolidge 7.1%
20. Queen Creek 7.0%
21. Mesa 6.6%
22. Sun City West 6.4%
23. Surprise 6.4%
24. Apache Junction 6.3%
25. Anthem 5.7%
26. Chandler 5.5%
27. Peoria 4.8%
28. Gilbert 4.7%
29. Desert Hills 4.7%
30. Goodyear 4.4%
31. Wickenburg 4.4%
32. Litchfield Park 3.4%
33. Sun Lakes 2.9%
34. Casa Grande 1.6%
35. Scottsdale 1.4%
36. Carefree 1.3%
37. Fountain Hills 0.5%
38. Cave Creek -0.5%
39. Rio Verde -0.5%
40. Paradise Valley -0.7%
41. Gold Canyon -3.9%
We note that ten out of the top eleven cities are in the West Valley. Six out of the bottom seven cities are in the Northeast Valley. In fact, all of the North Eastern cities are in the bottom seven. This underscores how badly the luxury market has been affected by excessive supply. If you were to remove all sales over $500,000 you would get a different picture of the Northeast Valley:
1. Paradise Valley 26.1% (but only 3 sales a year were under $500,000)
2. Carefree 8.5%
3. Scottsdale 5.5%
4. Fountain Hills 4.6%
5. Cave Creek 1.0%
6. Rio Verde 0.0%
We can disregard the Paradise Valley number since there is almost no market in PV under $500,000. The appreciation numbers for Carefree, Scottsdale and Fountain Hills are perfectly respectable for the market under $500,000. However Cave Creek & Rio Verde seem to be stuck in neutral even for the lower price ranges.
(With thanks to Michael Orr of the Cromford Report for this data)
Market data referenced in this article comes from The Cromford Report.