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Arizona Real Estate Stats 2015

Arizona Real Estate Stats 2015
Each month in STAT, our charts and commentary reflect on the previous month. For example, a December STAT issue will have November’s numbers. This month our commentary will focus on year 2015 in review. 2016-02-10 19:13:26

by Tom Ruff of The Information Market

Permission is granted only to ARMLS® Subscribers for reproduction with attribution to “ARMLS® COPYRIGHT

2016”. For questions regarding this publication contact

STAT: 2015 in Review

Each month in STAT, our charts and commentary reflect on the previous month. For example,

a December STAT issue will have November’s numbers. This month our commentary will focus

on year 2015 in review.

We started 2015 as quietly optimistic, bucking what Freddie Mac’s Multi-Indicator Market Index

(MIMI) defined as a “weak and declining market”. It can be great to be a prognosticator of

prognosticators, especially when we can sit back and relish our own accomplishments. We

were right to be optimistic. The success of 2015 doesn’t rise to champagne corks popping off

but there were market improvements in almost every way.

As 2014 ended and 2015 began, there were obvious improvements in our underlying market

fundamentals. Put simply, our market was healthier. Price increases had returned to sustainable

levels, distressed inventories continued their descent and the percentage of conventional

buyers continued to improve. These improving metrics continued throughout the entirety of

2015. With the exception of January, monthly sales volumes for each and every single month

were higher in 2015 than in 2014.

Beyond a doubt, 2015 was a much better year than 2014. When Freddie Mac published their

quarterly report in October, our market was redefined as improving. Of the four metrics comprising

the index, Phoenix outperformed national metrics in terms of affordability and mortgage

currency, but lagged behind national averages in overall employment and home purchase

applications. As anticipated, our weakest metric, home loan purchase applications

(which were still impacted from credit scores damaged by foreclosures), showed marked improvement

as 2015 progressed. In particular, the home loan purchase application metric improved

13.73% between August and October.

October 1 saw the introduction of new TRID guidelines causing a temporary disruption of our

charts in terms of both sales volume and the median sales price. By mid-December our charts

returned to their normal trajectory, leaving the one last noticeable remnant: +4 days added to

average closing time for home purchased with a mortgage.

All things considered, 2015 will go down as an average year. Of the 15 years ARMLS has been

reporting sales volume, last year ranks as the 8th highest. After the highs and lows our market

has experienced over the last decade, an average year is a nice place to land. It was the type

of year you can build a career around.8


Year-over-year comparisons:

2014 2015 % Chg

Sales Volume 76,399 84,249 10.3%

December 2014 December 2015 % Chg

Median Sales Price $197,000 $215,000 9.1%

Average Sales Price $257,902 $267,621 3.8%

Price Per SqFt $131.70 $137.73 4.58%

Active Inventory

(excludes UCB and CCBS) 22,626 20,086 -11.2%

Distressed Inventory 5760 4261 -26%

Interest Rates 3.86% 3.96%

New Construction

New construction was up 18.2% in Maricopa County, according to public records. Historically,

economists have recognized that new home sales are a leading indicator of economic activity,

which means they are the first to turn up before a rebound and the first to decline before a

recession. New home construction in Maricopa County has been at historic lows for seven

years. In the spring of 2015 in Maricopa County, we saw reports of new home building permits

increasing 40% year-over-year. In December, we saw these numbers translate into newly constructed

homes. December 2015 reported the highest number of new home sales in the last

seven years. The 1,284 new construction sales were 44.9% higher than last year for the same

period. While new home sales account for only 3.7% of the homes sold on the MLS (27% all

new builds were sold on the MLS in 2015), tracking new builds still remains important to the

average agent both as an economic indicator and a source of future product.


The rental market in 2015 remained tight, vacancy rates were low and rents were on the rise.

Say no more, 2015 saw Maricopa County in the midst of an apartment boom. Maps and Facts

Unlimited, citing local sources in October, reported nearly 20,000 apartment units in some

stage of planning and development. As a caveat they added “Apartment permits peaked in

1984 (30 years ago!) when 33,000 units were permitted.” The significance of 1984 is that baby

boomers were between the ages of 20 and 38. Just like the boomers before them, I believe

the current boom in apartment construction can be linked directly to the millennials. In 2015

millennials (adults ages 18 to 34), surpassed Generation X to become the largest share of the

American workforce according to a Pew Research Center Analysis of U.S. Census Bureau data.

The significant number of millennials is impacting our rental market. The renters of today will

become the homeowners of tomorrow and these new apartments will offer a source of buyer


As we begin 2016, all of our housing market metrics are positive, nothing but green lights.

Over the next three years, approximately 3,500 to 4,000 completed foreclosures per month

will hit their magic seven year anniversary and millennials will mature one more year (or at

least grow one year older). Gas prices today are continuing downward with a gallon of regular

selling for $1.97 compared to $2.04 last year at this time. Oil prices are down to $30.48 a barrel

compared to $48.55 last year.

If you followed STAT for any time, you know I’ve been very bullish on housing and that I’ve

been expecting a break out year. To be precise, I’ve been anticipating 2016 to be that year. So

now that we are on the cusp of 2016 and all our housing metrics have been trending in a positive

direction, why do I feel cautious looking ahead to 2016? I don’t know. Maybe it’s because

our market is facing a lack of inventory on the lower end as reflected in the median price appreciation

more than doubling the appreciation of an average priced home. Maybe it’s because

our booms translate into busts and while the metrics are positive now for apartment

construction — is it possible we’re over building? While prices at the gas pump are great, is

the price of oil reflective of a deflationary cycle and what will be the economic impact of job

losses in the oil sector? Will homebuilders that have been focused on affluent buyers be able

and willing to address the entry-level buyer? 10

I believe everyone is in agreement that we currently have a huge amount of pent-up demand,

but pent-up demand can stay that way for a long time, and while our recovery has been consistent

it has also been slow, very slow. While the sentiments of local builders are positive and

have been accentuated by our positive gains in December, the national homebuilder stocks

are trending negatively. The S&P Homebuilders Select Industry Index is down 12.62% yearover-year

and the S&P Building and Construction Select Index is down 17.96%. The stock market

has been volatile, where a 401k based on S&P 500 is down 7.5% in the first two weeks of

the year (which can be problematic for first time buyers hoping to use their 401k as the source

of their down payment).

It’s apparent my concerns for 2016 lie outside of housing numbers. So, what do I expect for

the 2016 housing market? My final answer is I don’t know.

The ARMLS PPI projects a median sales price for January 2016 of $212,000. We begin January

of 2016 with 7,486 Pending/UCB listings compared to 6,731 last year. In January of 2015,

ARMLS reported 4,784 sales, this year we are anticipating 5,300 for January 2016

Press Information
Cactus Country Property Professionals
18212 N 8th Street

Maureen Karpinski
Owner/ Designated Broker

Published by
Maureen Karpinski

# 1245 Words
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