Phoenix Arizona Real Estate Market Update

Phoenix Arizona Real Estate Market Update

Mike Orr, author, statistician, real estate market forecaster and numbers nerd in general has kept pace with the real estate market and gave his research relating to Phoenix Arizons Real Estate Market Update at a recent seminar.  His report, the Cromford Report, is the go to source for real estate market pricing, trends and forecasting.

I had the privilege of attending a seminar with  Mike Orr as one of the speakers.  His information is informative, accurate and concise...but he is quick to point out that while he cannot predict the future, the future will reveal either the fallacy of his predictions or confirm them....For the most part, Mike Orr's predictions are generall spot-on.

The information reported below is my recant of what he reported.  The pictures are slides used in his Power Point presentation and let me make it perfectly clear, this is his information and research with my supporting narrative quoting what he said as well as my own speculation...So, here we go!

The Phoenix Real Estate Market has undergone significant changes in a short period of time.  In 2010, the Phoenix Real Estate market was dominated by foreclosures, inventory, lender owned real estate and falling real estate prices.  Since 2010, we have seen Phoenix Real Estate prices rise, Phoenix Real Estate absorbed and general relative stability in the real estate market.

The Phoenix Arizona Real Estate Market is filled with multitudes of emotions about Arizona Real Estate Investment.  These emotions are cyclical and will apply to all real estate markets in the United States.  The emotional cycle runs something like this...

The Cromford Report has followed the ups and downs of the Phoenix Real Estate Market over a 13 year period.  Below is the monthly average home sales price per square foot since 1999.  Using 1999 as the base year we see that the median price per square foot of homes in the Phoenix real estate market went from  $99 per square foot to a high of $190 per square foot in 2006 to a low of $79 per square foot in 2011 with present median sales price per square foot of $127.

Applying the consumer price index over this period of time now places Phoenix Arizona Real Estate at a normal level based upon the starting date of 1999 to present, or said another way, pricing of Phoenix Arizona real estate is in line with inflation over this period of time.

The Phoenix Real Estate Market Monthly Median Sales Price has seen an abrupt increase from January 2013 thru July 2013 with relative flattening of Maricopa County Real Estate prices since that time.  Interestingly, there has been a slight downturn in Median Sales Prices over the last 8 months, albeit slight.  Overall, we have seen pricing stability for the most part.

Phoenix Arizona Under Contract Listings market segments have changed over the last year. As homes under $100,000 were gobbled up the inventory either shrunk or the fewer buyers of under $100,000 are in the market place.  We see more activity in the $200,000 to $250,000 home prices. There is roughly a 50% increase in the homes under contract over $500,000 from last year to now.

The Cromford report produces a dial indicator of Phoenix Arizona Real Estate Market activity.  This index expresses the correlation between supply and demand.  Currently, we are seeing rising inventory a decreasing demand resulting in the apparent shift back towards a "buyers market".

The next chart supports the data that the Phoenix Arizona Real Estate Market is seeing a shift back to a "buyers market" with the chart reflecting the graph shifting below a "balanced market".  This is a result of less demand and more inventory.

A narrative of the factors contributing to the "market shift" are shown below in the slide.

The implications on real estate sales in Phoenix Arizona are expressed below:

Maricopa County Arizona Real Estate Demand has dropped for the following reasons:

Real Estate Foreclosures in Arizona are some of the lowest in the Nation:

The Arizona Real Estate Crash left some 26% of the population without homes.  Those people moved to other states or are in the rental pool at the moment.  With consumer credit destroyed it will take some time before these people can enter the home ownership market again.

Now, let's take a moment to look at a growing sector of the Maricopa County Real Estate Market, the Luxury Market.  For many years the luxury market has taken a significant beating with pricing and absorption.  A recent phenomenon is the renewed interest in Phoenix Luxury Homes.

Go figure, but there has been a shift in the purchasing mentality of available home buyers.  Many are called the "millenial" group, a growing population of potential buyers that aren't buying.

So, where does all of this research into the Phoenix Real Estate Market leave us?  Well, for one, having to adapt but recognizing the changing mindset and demographics.

Not the most positive information but factual and for the most part prediction that home sellers and Realtors will have to do their homework to be successful in the current market.....just remember though, as soon as we figure it all out, it will change again, which leads me back to the my favorite analogy....the Real Estate Cycle as shown below.

Thank you for taking time and allowing me to share with you the information as presented by Mike Orr, the Cromford Report.  

And...for your next real estate transaction be sure to give me a call!  I used to say over 33+ years of real estate experience....well, that is old news now but I have just about "Seen it ALL".  

"Always Available", be sure to give me a call.  I have experience in all "Facets of the Real Estate Industry".