AZ Market Update

Sep 14 - This week we again have the only 3 cities that moved in a direction favorable to sellers over the last month, with Buckeye running out of steam.

The other 14 cities all moved in a direction favorable to buyers. The downward trend accelerated since last week. The average CMI change in these 17 cities over the last month was -5.9%, more negative than last week when we measured -3.9%.

There must be something in the waters of Cave Creek, as it is far out of step with the rest of the valley, falling hard earlier in the year but bouncing back now. Paradise Valley is losing momentum and is likely to have turned negative by next week. Tempe retains some momentum, but it is weakening. Overall the situation is deteriorating for sellers, though they still have the advantage in most locations. One exception is Queen Creek, which we would classify as balanced. With a CMI of 97.7, buyers have a slight edge in this large community that includes the poorly-defined and unincorporated San Tan Valley area.

Most negative again this week is Chandler, down 20%, though it remains comfortably in first place. Fountain Hills, Goodyear and Gilbert are also much weaker than this time last month.

14 out of 17 cities are sellers markets with Goodyear, Queen Creek and Maricopa in the balanced zone.

Sep 7 - This week we again have the same 4 cities that moved in a direction favorable to sellers, but the other 13 moved in a direction favorable to buyers. The downward trend accelerated since last week. The average CMI change in these 17 cities over the last month was -3.9%, more negative than last week when we measured -2.9%.

Buckeye is still moving higher but has lost momentum. Cave Creek is bouncing back hard, and is the fastest riser over the past month. Paradise Valley and Tempe are also looking relatively strong.

Most negative this week is Chandler, down 16%, though it remains comfortably ahead of the rest. Fountain Hills and Gilbert are also significantly weaker than this time last month.

15 out of 17 are sellers markets with Queen Creek and Maricopa in the balanced zone.

Among the secondary cities Casa Grande has slipped below 90 and is now classified as a buyer's market. It is the only one so far. Among the rest of the secondary cities, Anthem, Apache Junction, Laveen, Sun Lakes and Tolleson are looking strong with CMI's over 200. Only Laveen and Arizona City have seen an increase in their CMI over the past month, so the general trend is downward among these 12 cities too.

Sep 4 - However, the downward momentum has increase since mid-August and the advantage that sellers have had over buyers is beginning to disintegrate.

When the 30-year fixed mortgage rate stays above 7%, demand for re-sale homes is so feeble that it is not even enough to eat up the small number of new listings that appear each week. Available supply is starting to grow.

At 155, the CMI still has a long way to fall before we arrive at a balanced market around 110. However each day it moves lower strengthens the bargaining power of active buyers who are in a position to afford a home.

Aug 31 - This week we have 4 cities that moved in a direction favorable to sellers, up from 2 last week. Paradise Valley and Tempe are the new members of the green team.

Even so, the trend downwards is slightly stronger than last week. The average CMI change in these 17 cities over the last month was -2.9%, more negative than last week when we measured -2.7%.

Buckeye is moving higher and has Surprise in its sights. Cave Creek is bouncing back hard, having been one of the earliest to decline several months ago.

Most negative again is Fountain Hills, a former number one. However it remains a seller's market with a CMI over 190. 16 out of 17 are sellers markets with Queen Creek in the balanced zone.

Chandler is also declining fast although it remains out in front by a long way.

Aug 24 - We have only 2 cities that moved in a direction favorable to sellers, down from 3 last week. Gilbert defected to the red camp again.

Even so, the trend downwards is slowing down. The average CMI change in these 17 cities over the last month was -2.7%, less negative than last week when we measured -3.3%.

Buckeye is still bucking the trend and has overtaken Goodyear as predicted. Cave Creek is also bouncing back hard, having been one the earliest to decline several months ago.

Again most negative is Fountain Hills, a former superstar and number one. However it remains a seller's market with a CMI over 190. 16 out of 17 are sellers markets with Queen Creek in the balanced zone.

Aug 17 - After two and a half months of a deteriorating trend, this table is starting to move in the opposite direction again. We have 3 cities that moved in a direction favorable to sellers, up from 2 last week.

Gilbert is the latest recruit to the green camp.

The average CMI change in these 17 cities over the last month was -3.3%, less negative than last week when we measured -5.0%.

Buckeye is bucking the trend and has overtaken Goodyear as predicted. Cave Creek is bouncing back having been one the earliest to decline several months ago.

Most negative is Fountain Hills, a former superstar and number one. However it remains a strong seller's market with a CMI over 200. 15 out of 17 are sellers markets with Maricopa and Queen Creek in the balanced zone.

Aug 10 - Over the last month the market has moved slowly and slightly in a direction favorable to buyers, but this has made precious little difference. We are still in a seller's market in 15 of 17 cities and in a balanced market in Maricopa and Queen Creek.

The average CMI change in these 17 cities over the last month was -5.0%, less negative than last week when we measured -6.0%.

Only 2 cities continue to show a positive change from this time last month, Buckeye and Cave Creek. Buckeye continues to improve for sellers and has overtaken Maricopa. Now it is taking aim at Goodyear.

 

Aug 4 - The market continues to slowly lose steam and the average CMI change in these 17 cities over the last month was -6.0%, just a shade more negative than last week when we measured -5.9%

Only 4 cities continue to show a positive change from this time last month, while 1 is unchanged and 12 show a negative trend for sellers, particularly Tempe, Fountain Hills, Avondale, Glendale and Peoria.

Buckeye is the only city improving a lot for sellers and has overtaken Maricopa which slips into 16th.

Queen Creek has dropped into the balanced zone below 110, while the other 16 are seller's markets.

Jul 27 - The market continues to slowly lose steam and the average CMI change in these 17 cities over the last month was -5.9%, more negative than last week when we measured -5.3%

Only 5 cities continue to show a positive change from this time last month, while 12 show a negative trend for sellers, particularly Tempe, Fountain Hills, Avondale, Glendale and Peoria.

Buckeye is the highlight and has overtaken Queen Creek which slips into last place.

Mortgage rates jumped back over 7% today and both sellers and buyers in the re-sale market find this depressing. Our CMI represents the data in the MLS which is largely comprised of re-sale listings. The situation in the new home market is quite different, because home builders do not suffer a lack of motivation. For new homes, volumes are quite good, despite the high interest rates. Prices are also on the rise. Buyers of new homes appear to retain a strong will to buy and homebuilders' finances look stronger than they have for many years. This is reflected in their stock prices which in many cases are hitting new all-time highs this month. Some examples:

  • Lennar Corporation (LEN) - $125.82 - all-time high was $133.24 on July 14
  • D R Horton (DHI) - $127.05 - all-time high was $132.30 on July 25
  • Meritage Homes Corporation (MTH) - $138.40 - all-time high was $148.74 on July 18
  • KB Home (KBH) - $53.05 - - all-time high was $55.37 on July 19
  • Pulte Group Inc (PHM) - $83.64 - all-time high was $86.01 on July 27

The builders are loving the fact that supply is so weak in the competing re-sale sector. This is the opposite of where they were in 2009 when they had to cope with a flood of bank-owned and short-sale homes at rock-bottom prices. This made new-homes look very expensive, especially as re-sale homes were changing hands for less than their rebuild-cost.

Jul 20 - The downward trend in the overall market has accelerated and the average change in these 17 cities over the last month was -5.3%, more negative than last when we measured -3.3%

7 cities continue to show a positive change from this time last month, but 10 show a negative trend for sellers, particularly Tempe, Cave Creek, Avondale, Glendale, Peoria and Gilbert.

Mortgage rates jumped back to an average of 7% for the 30-year fixed. The 7% mark seems to be psychologically important for buyers.

On a less gloomy note, the top placed city (Chandler) rose 9% and the bottom placed city (Buckeye) rose a massive 16%. Buckeye is a just 0.7% away from being classed as a seller's market.

The re-sale market is unhealthy despite the high CMI readings. Demand is low and getting weaker. The reason the CMIs are so high is that supply is very low and not improving much, if at all. There are few buyers and not much for them to buy.

The new home market is in a much stronger condition. Many buyers are preferring a new home and the builders are willing to construct them if the buyers can afford them. The financial reports from the public homebuilders show strong volumes, increased prices and healthy profit margins. We have never before seen such a stark contrast between the re-sale and new home markets.

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