We have a strategic approach to assist you Our Team
2019
in branding and expanding your business.
Call us today to discuss and design your strategy. Trusted Advisor University 2019 DATES:
Ahwatukee
Kay Handeland 480-688-8533
Ahwatukee Maureen Myles 602-618-8991
Jose Rodriguez 623-363-9605 Bilingual
Chandler
Arrowhead Sue Gawlitta 623-363-9167
Matt Zigler 951-440-7970
Chandler
Sharon Tindell 602-339-2642
Scottsdale
Goodyear
Feb. 27
Feb. 28
Feb. 19th
Mar. 27th
Mar. 28th
Mar. 19th
Apr. 24th
Apr. 26th
Apr. 16th
May 22nd
May 23rd
May 21st
June 26th
June 27th
June 18th
July 24th
July 25th
July 16th
Aug. 28th
Aug. 22nd
Aug. 20th
Sept. 25th
Sept. 26th
Sept. 17th
Oct. 23rd
Oct. 24th
Oct. 15th
Nov. 20th
Nov. 21st Nov.19th
th
✓ Learn how to use the Cromford Report Biltmore
Chandler
✓ Effectively utilize technology ✓ Create a marketing strategy
th
Watch us on Facebook Goodyear & Arrowhead Greater Phoenix & Builder Greater Phoenix Oscar Elosegui Laura Calderon Michael McBride 949-344-9805 602-410-3600 623-882-5018
MPES METRO PHOENIX ECONOMIC SNAPSHOT
Market Sound Byte
Oro Valley Greater Phoenix Kierland & SE Valley Kolbi Kleinman Manny Herrera Shelby Lehman 602-390-8169 520-351-9705 928-231-0105
Paradise Valley Cynthia Lujan 602-881-0117
Southeast Valley Chris Taggart 480-216-1234
Tempe Keith Mady 480-204-5986
Featuring Tina Tamboer and your local Old Republic BDM!
Contact your local BDM to learn more! Meet with your local Old Republic Title Agency Business Development Manager to learn more about the wide variety of products, services & ideas we have to support you in taking your business to the next level!
Tempe & SE Valley Michelle Schwartz John Gronley Sr. Vice President 602-319-6788 602-631-3779 If your home is currently listed, this is not a solicitation for that listing.
Corporate Office | 602.631.3700 2375 E. Camelback Road, Suite 180 | Phoenix, AZ 85016 Produced by DLP Marketing • (480)460-0996 • DLPmarketing.com
Metro Phoenix Economic Snapshot
ENJOY THE RIDE BY: ELLIOTT D. POLL ACK
|
The market continues to favor sellers in 2019, but not nearly as much as it did at the beginning of 2018 as potential buyers are grappling with affordability issues. The monthly average interest rate rose to 4.64% in December 2018, up 0.69% from the previous December’s 3.95%. For homes with a median sales price of $260,000 in Greater Phoenix, that equates to approximately $100 added to the monthly payment. Meanwhile, homes continued to appreciate over the course of 2018. Buyers who decide to shoulder the extra $100 per month on a $260,000 home will be purchasing one that’s approximately 1,845 square feet; nearly 100 square feet smaller than if they had purchased last year. In the 3rd quarter, affordability measured below the normal range for the first time since 2007 according to the Home Opportunity Index (HOI) published by the National Association of Home Builders and Wells Fargo.
ELLIOTT D. POLL ACK & COMPANY
S
tock market volatility sure does stir up a lot of emotions, doesn’t it? We see a lot of headlines lately about how bad the economy is going to do; that it will slow down; that it will start to feel like last time soon. No matter that right now the economy is doing quite well. No matter that we are still growing at rates that are respectable. No matter that there are seven million unfilled jobs in America. No matter that leading indicators are still going up, consumer confidence remains at high levels, and the Fed’s recession indicator is still well below levels that would suggest a downturn. No. Let’s focus on the negative. Are there negatives? Of course. There almost always are. But, while they are worth mentioning, they are not the story. Is the economy likely to slow over the next few quarters? Yes. But the current level of growth is unsustainable in an economy that is demographically going through a period of slow labor force growth and tepid productivity growth. Isn’t the housing market slowing? In many markets it is. This is noteworthy because housing (both new owner and rental housing) account for almost one-sixth of the economy. Yet, the recent declines have been considerably more than offset by the rest of the economy. That is likely to continue to be the case over the next year. In addition, the underlying demographics of single family housing over the next five years are amazing. That doesn’t
mean there can’t be interim declines. Will there be another recession? Absolutely. Our economy, just like every other economy in the history of mankind, is inherently cyclical. The current expansion that we’re experiencing, by the middle of this year, will be the longest expansion is U.S. history. Also, the last recession we went through was the deepest since 1929. Probabilities are that the next recession will be like most of its post-war siblings: short and shallow. Especially if the Fed can continue to increase interest rates now to help alleviate future declines in economic activity, the next downturn is likely to be mild.
2
018 was a successful year for the Greater Phoenix residential resale market in both price appreciation and sales volume. For the overall market, price trends capping off 2018 are as follows according to Arizona Regional MLS sales:
Take it from someone who has been trying to predict the economy for nearly a half century. Projecting the exact timing and depth of a cycle well in advance is tough to do. But that doesn’t stop us from making an experienced, educated guess. We feel confident that the economy is likely to continue to do well through 2019. There is a great deal of stimulus right now between the tax cuts, government spending and consumer spending. It is late in the cycle but there are no signs of it ending at the moment even given the 50-year low in the unemployment rate and the age of this expansion.
• The annual average sales price increased 8.8% from $297,317 to $323,562
For the time being, enjoy the ride. The odds are that the end is not near. And the long-term outlook for the U.S. economy remains excellent regardless of where we presently stand in this cycle.
Flip sales were strong throughout most of 2018 until the last few months. The slowdown in flips could be in response to declining profit margins. Flip investors had been averaging at least a 3035% between the acquisition and sale price over the past 7 years. However increasing acquisition costs have pushed their margins down to just under 26% as of November 2018.
Sales volume decreased, but a miniscule 0.1% from an annual rate of 93,519 to 93,420. This makes 2018 the 5th highest year overall for sales transaction volume. The top 4 years in order were 2005, 2011, 2004, and 2017. Total dollar volume increased 8.6% from $27.8 billion to $30.2 billion, placing 2018 in a close second place overall for total money spent on residential resale transactions. 2005 is still the highest year for total dollar volume at $30.9 billion and transaction volume at 103,177.
Overall the Greater Phoenix housing market is considered healthy going into 2019, however appreciation rates over 8% are not sustainable going forward. Supply is still 34% below normal, but buyer affordability concerns, rising interest rates and fears that the market is overvalued have pushed buyer demand to nearly 13% below normal in just a few months. As the seller market weakens, higher price ranges may see more sellers offer interest rate buy-downs while the lower price ranges may see higher percentages of seller assisted closing costs and concessions.
ANNUAL SALES RATE
12 MONTH MOVING AVERAGE SALES PRICE PER SQ. FT. GREATER PHOENIX - ARMLS RESIDENTIAL - MEASURED MONTHLY 1/1/2019
GREATER PHOENIX - ARMLS RESIDENTIAL - MEASURED MONTHLY 1/1/2019
EMPLOYMENT 2.4% Increase in 2019 2.2% Increase in 2020
Dwelling Type
Annual Sales Rate
Condo
Greater Phoenix - ARMLS Residential - Measured Monthly Last Update: 1/1/2018 11:16:51 PM
County
Maricopa
Mobile
Pinal
SFR
Yavapai
© 2016 Cromford Associates LLC - sharing is permitted from Cromford Report subscribers only
2007
2008
2010
2011
2012
2013
2014
2015
2016
2017
Transaction Type
City
Aguila
HUD
87,920
82,291
75,071
83,666
87,728
Anthem
REO
Apache Junction
Short
Arizona City
Normal
Arlington Avondale
Transaction Type HUD
Normal REO Short
,384
68,210
62,346
70K
73,064
79,181
90K
80K
2009
93,511
2006
99,527
100K
2005
89,222
2004
91,042
2003
97,634
110K
2002
103,178
2001
9
SINGLE FAMILY PERMITS 0.0% Increase in 2019 5.0% Increase in 2020
• The annual median sales price gained 8.4% from $239,900 to $260,000
GREATER PHOENIX ECONOMIC SNAPSHOT
RETAIL SALES 6.7% Increase in 2019 5.5% Increase in 2020
Builders continued to focus primarily between $300,000 and $500,000 in 2018 with 41% of their sales landing in this range. However, they also sold 24% more models in the low $200,000s last year; especially in the areas of Pinal County, Buckeye and Avondale. New homes sold between $200,000 and $250,000 in 2018 were 1,811 square feet on average compared to resale homes sold through the MLS at an average of 1,647 square feet.
• The annual average price per square foot rose 8.1% from $150.37 to $162.51
SOURCE: ELLIOTT D. POLLACK & CO., JANUARY 2019
POPULATION 1.9% Increase in 2019 2.0% Increase in 2020
Buyers are not experiencing relief by continuing to rent either. Single family homes rented through the Arizona Regional MLS showed an increase of 8.6% in average lease price per square foot. Renters with budgets between $1,200 and $1,400 leased homes that were 1,632 square feet on average; 42 square feet smaller than a year ago.
Zip
Black Canyon City 85003 85004 85006 85007
ENJOY THE RIDE BY: ELLIOTT D. POLL ACK
|
The market continues to favor sellers in 2019, but not nearly as much as it did at the beginning of 2018 as potential buyers are grappling with affordability issues. The monthly average interest rate rose to 4.64% in December 2018, up 0.69% from the previous December’s 3.95%. For homes with a median sales price of $260,000 in Greater Phoenix, that equates to approximately $100 added to the monthly payment. Meanwhile, homes continued to appreciate over the course of 2018. Buyers who decide to shoulder the extra $100 per month on a $260,000 home will be purchasing one that’s approximately 1,845 square feet; nearly 100 square feet smaller than if they had purchased last year. In the 3rd quarter, affordability measured below the normal range for the first time since 2007 according to the Home Opportunity Index (HOI) published by the National Association of Home Builders and Wells Fargo.
ELLIOTT D. POLL ACK & COMPANY
S
tock market volatility sure does stir up a lot of emotions, doesn’t it? We see a lot of headlines lately about how bad the economy is going to do; that it will slow down; that it will start to feel like last time soon. No matter that right now the economy is doing quite well. No matter that we are still growing at rates that are respectable. No matter that there are seven million unfilled jobs in America. No matter that leading indicators are still going up, consumer confidence remains at high levels, and the Fed’s recession indicator is still well below levels that would suggest a downturn. No. Let’s focus on the negative. Are there negatives? Of course. There almost always are. But, while they are worth mentioning, they are not the story. Is the economy likely to slow over the next few quarters? Yes. But the current level of growth is unsustainable in an economy that is demographically going through a period of slow labor force growth and tepid productivity growth. Isn’t the housing market slowing? In many markets it is. This is noteworthy because housing (both new owner and rental housing) account for almost one-sixth of the economy. Yet, the recent declines have been considerably more than offset by the rest of the economy. That is likely to continue to be the case over the next year. In addition, the underlying demographics of single family housing over the next five years are amazing. That doesn’t
mean there can’t be interim declines. Will there be another recession? Absolutely. Our economy, just like every other economy in the history of mankind, is inherently cyclical. The current expansion that we’re experiencing, by the middle of this year, will be the longest expansion is U.S. history. Also, the last recession we went through was the deepest since 1929. Probabilities are that the next recession will be like most of its post-war siblings: short and shallow. Especially if the Fed can continue to increase interest rates now to help alleviate future declines in economic activity, the next downturn is likely to be mild.
2
018 was a successful year for the Greater Phoenix residential resale market in both price appreciation and sales volume. For the overall market, price trends capping off 2018 are as follows according to Arizona Regional MLS sales:
Take it from someone who has been trying to predict the economy for nearly a half century. Projecting the exact timing and depth of a cycle well in advance is tough to do. But that doesn’t stop us from making an experienced, educated guess. We feel confident that the economy is likely to continue to do well through 2019. There is a great deal of stimulus right now between the tax cuts, government spending and consumer spending. It is late in the cycle but there are no signs of it ending at the moment even given the 50-year low in the unemployment rate and the age of this expansion.
• The annual average sales price increased 8.8% from $297,317 to $323,562
For the time being, enjoy the ride. The odds are that the end is not near. And the long-term outlook for the U.S. economy remains excellent regardless of where we presently stand in this cycle.
Flip sales were strong throughout most of 2018 until the last few months. The slowdown in flips could be in response to declining profit margins. Flip investors had been averaging at least a 3035% between the acquisition and sale price over the past 7 years. However increasing acquisition costs have pushed their margins down to just under 26% as of November 2018.
Sales volume decreased, but a miniscule 0.1% from an annual rate of 93,519 to 93,420. This makes 2018 the 5th highest year overall for sales transaction volume. The top 4 years in order were 2005, 2011, 2004, and 2017. Total dollar volume increased 8.6% from $27.8 billion to $30.2 billion, placing 2018 in a close second place overall for total money spent on residential resale transactions. 2005 is still the highest year for total dollar volume at $30.9 billion and transaction volume at 103,177.
Overall the Greater Phoenix housing market is considered healthy going into 2019, however appreciation rates over 8% are not sustainable going forward. Supply is still 34% below normal, but buyer affordability concerns, rising interest rates and fears that the market is overvalued have pushed buyer demand to nearly 13% below normal in just a few months. As the seller market weakens, higher price ranges may see more sellers offer interest rate buy-downs while the lower price ranges may see higher percentages of seller assisted closing costs and concessions.
ANNUAL SALES RATE
12 MONTH MOVING AVERAGE SALES PRICE PER SQ. FT. GREATER PHOENIX - ARMLS RESIDENTIAL - MEASURED MONTHLY 1/1/2019
GREATER PHOENIX - ARMLS RESIDENTIAL - MEASURED MONTHLY 1/1/2019
EMPLOYMENT 2.4% Increase in 2019 2.2% Increase in 2020
Dwelling Type
Annual Sales Rate
Condo
Greater Phoenix - ARMLS Residential - Measured Monthly Last Update: 1/1/2018 11:16:51 PM
County
Maricopa
Mobile
Pinal
SFR
Yavapai
© 2016 Cromford Associates LLC - sharing is permitted from Cromford Report subscribers only
2007
2008
2010
2011
2012
2013
2014
2015
2016
2017
Transaction Type
City
Aguila
HUD
87,920
82,291
75,071
83,666
87,728
Anthem
REO
Apache Junction
Short
Arizona City
Normal
Arlington Avondale
Transaction Type HUD
Normal REO Short
,384
68,210
62,346
70K
73,064
79,181
90K
80K
2009
93,511
2006
99,527
100K
2005
89,222
2004
91,042
2003
97,634
110K
2002
103,178
2001
9
SINGLE FAMILY PERMITS 0.0% Increase in 2019 5.0% Increase in 2020
• The annual median sales price gained 8.4% from $239,900 to $260,000
GREATER PHOENIX ECONOMIC SNAPSHOT
RETAIL SALES 6.7% Increase in 2019 5.5% Increase in 2020
Builders continued to focus primarily between $300,000 and $500,000 in 2018 with 41% of their sales landing in this range. However, they also sold 24% more models in the low $200,000s last year; especially in the areas of Pinal County, Buckeye and Avondale. New homes sold between $200,000 and $250,000 in 2018 were 1,811 square feet on average compared to resale homes sold through the MLS at an average of 1,647 square feet.
• The annual average price per square foot rose 8.1% from $150.37 to $162.51
SOURCE: ELLIOTT D. POLLACK & CO., JANUARY 2019
POPULATION 1.9% Increase in 2019 2.0% Increase in 2020
Buyers are not experiencing relief by continuing to rent either. Single family homes rented through the Arizona Regional MLS showed an increase of 8.6% in average lease price per square foot. Renters with budgets between $1,200 and $1,400 leased homes that were 1,632 square feet on average; 42 square feet smaller than a year ago.
Zip
Black Canyon City 85003 85004 85006 85007
We have a strategic approach to assist you Our Team
2019
in branding and expanding your business.
Call us today to discuss and design your strategy. Trusted Advisor University 2019 DATES:
Ahwatukee
Kay Handeland 480-688-8533
Ahwatukee Maureen Myles 602-618-8991
Jose Rodriguez 623-363-9605 Bilingual
Chandler
Arrowhead Sue Gawlitta 623-363-9167
Matt Zigler 951-440-7970
Chandler
Sharon Tindell 602-339-2642
Scottsdale
Goodyear
Feb. 27
Feb. 28
Feb. 19th
Mar. 27th
Mar. 28th
Mar. 19th
Apr. 24th
Apr. 26th
Apr. 16th
May 22nd
May 23rd
May 21st
June 26th
June 27th
June 18th
July 24th
July 25th
July 16th
Aug. 28th
Aug. 22nd
Aug. 20th
Sept. 25th
Sept. 26th
Sept. 17th
Oct. 23rd
Oct. 24th
Oct. 15th
Nov. 20th
Nov. 21st Nov.19th
th
✓ Learn how to use the Cromford Report Biltmore
Chandler
✓ Effectively utilize technology ✓ Create a marketing strategy
th
Watch us on Facebook Goodyear & Arrowhead Greater Phoenix & Builder Greater Phoenix Oscar Elosegui Laura Calderon Michael McBride 949-344-9805 602-410-3600 623-882-5018
MPES METRO PHOENIX ECONOMIC SNAPSHOT
Market Sound Byte
Oro Valley Greater Phoenix Kierland & SE Valley Kolbi Kleinman Manny Herrera Shelby Lehman 602-390-8169 520-351-9705 928-231-0105
Paradise Valley Cynthia Lujan 602-881-0117
Southeast Valley Chris Taggart 480-216-1234
Tempe Keith Mady 480-204-5986
Featuring Tina Tamboer and your local Old Republic BDM!
Contact your local BDM to learn more! Meet with your local Old Republic Title Agency Business Development Manager to learn more about the wide variety of products, services & ideas we have to support you in taking your business to the next level!
Tempe & SE Valley Michelle Schwartz John Gronley Sr. Vice President 602-319-6788 602-631-3779 If your home is currently listed, this is not a solicitation for that listing.
Corporate Office | 602.631.3700 2375 E. Camelback Road, Suite 180 | Phoenix, AZ 85016 Produced by DLP Marketing • (480)460-0996 • DLPmarketing.com
Metro Phoenix Economic Snapshot