May Market Update
May 21, 2017 - By Resource
Is the month of May going well for Phoenix Arizona real estate market? Let’s find out! Read below for everything you need to know about what has been happening in the Phoenix residential market!
We are clearly experiencing a hot market, but the questions are: how hot, and is it overheating? One of our favorite measures of the current state of the market is the Contract Ratio. This compares the number of homes under contract with the number available for sale. We saw extremely high contract ratio numbers between 2011 and 2013, but that was a very different market from today because distressed sales were such a high percentage of the total. If we remove short sales, pre-foreclosures, bank owned homes, GSE owned homes and HUD homes from our analysis, we get a more realistic picture.
Here we see a strong seller’s market overall, but only a small improvement for sellers over the past month. There are 9 cities showing better conditions for sellers and 8 showing some deterioration. With the big cities of Phoenix, Mesa and Chandler all showing improvements, the overall change is still in favor of sellers. The Southeast Valley continues to outperform the other areas of the valley (except much of Pinal County, which does not feature very strongly in this table due to most of its cities being relatively small). Mesa has overtaken Glendale since last week, while Gilbert has overtaken Tempe. The West Valley is a weaker picture than usual with only Surprise showing any positive move over the last month and Buckeye slipping into last place. The Northeast is looking more positive with Paradise Valley and Fountain Hills improving by 9% and 6% respectively and Cave Creek up 4%. However, the largest city in the Northeast, Scottsdale, is still languishing close to the bottom of the table with a fairly balanced market.
MLS sales volume in March 2017 was 8,666, 4.5% higher than the 8,293 total last year. This accounted for 134 fewer sales than our projected total of 8,800. Sales volume for the first four months of 2017 is 9.4% higher than 2017, with 30,149 sales in 2017 compared to 27,554 for the first 4 months of 2016. It should be noted, there was one more business day last April than this April. If we look at a daily sales average there were 433.3 sales per day in 2017 and only 395.9 sales per day in 2016 or a 9.45% increase, which is directly in line with our year-over- year sales total.
We begin May with 7,427 pending contracts, 4,701 UCB listings and 583 CCBS, giving us a total of 12,711 residential listings practically under contract. This compares to 13,115 of the same type of listings at this time last year. Even though we enter May with fewer residential listings practically under contract this year, I’m still projecting the sales volume in May 2017 to exceed the volume of 8,676 of May 2016. STAT is projecting 8,950 sales in May, a number I obviously just pulled out of a hat. There were 20 business days in 2016 and 21 business days this year.
Despite generally strong pricing the monthly median sales price for single-family homes in Phoenix is currently lower at $235,000 in mid May then it was at $240,000 at the end of May last year. This illustrates that even for a large city like Phoenix, the monthly median sales price can be volatile and give strange results.