Realtor Andreas Jaeger

04/06/2023

Here are several key stats for the $1M plus market by comparison to the overall above.

Active Listings (excluding UCB & CCBS): 1,841 versus 772 last year - up 138.5% - but down 3.2% from 1,901 last month.

Under Contract Listings (including Pending, CCBS & UCB): 735 versus 872 last year - down 15.7% from last year - but up 6.5% from last month.

Listing Success Rate: 58% current versus 83% last year, but on a fast downward trajectory

So, some key distinctions between the overall market and the $1M plus luxury market are - while overall inventories are up, in the luxury sector Listings Under Contract are up (demand) versus down in the overall market, albeit the high end Listing Success Rate is vacillating between a recent low of about 50% and a hard to decipher, but improving 58% today.

Note that the inconsistent nature of this Listing Success Rate data in the high end is because there are relatively few transactions by contrast with the overall market. -
Below we see the smoother trend lines of the overall Listing Success Rate, with a very parallel, slightly higher trend.

The respective Listing Success Rates gives us a very solid argument for competitive positioning for listings across the board!

04/05/2023

The March 2023 real estate market data is in and I like it.

There were 7,880 closed transactions with a median sales price of $446,750.

Closings were down 30.8% from March 2022, but up 33% from February 2023.

The median sales price was down 4.9% from a year ago but up 1.5% from last month
The median sales price has risen two months in a row.

New home sales totaled 1,699 with a median sales price of $507,664.

The new home sales count was up 9.1% from March 2022 and up 40.6% from February 2023.

The new home median sales price is up 2.1% from a year ago, but down 1.4% from last month.

The resale transaction count was 6,181 with a median sales price of $429,000.

The resale count was down 37% from March 2022 but up 31% from February 2023.

The resale median sales price was down 7.7% from last year but up 2.1% from last month.

This is a recovering market with new homes leading the way. In fact they are a long way in front of the resale market with the monthly closings at their highest level since December 2021 and higher prices than this time last year.

Since the majority of new homes are not listed in the ARMLS database, the overall market is doing better than the ARMLS numbers tell us. Overall pricing is well down from the peak of $490,000 reached in May 2023, but has rebounded from its low point of $439,900 in January 2023.

What we have witnessed over the past 12 months is not a crash, but a normal correction taking out the over-exuberance, especially the abnormal demand from over-optimistic iBuyers and institutional investors.

Market dynamics remain surprisingly healthy after this short correction and with tight inventory still declining, we are likely to see prices continue to rise going forward. This will not please the Federal Reserve who would clearly like to see lower pricing in both home sales and rents.

Investor purchases were 13.7% of the total, which is the lowest share since December 2020.

Momentum has evaporated from rental prices but they remain around $1.30 to $1.35 per square foot per month. This is 30% to 35% higher than they were in early 2020.

Just on the face of it you can see, while there is a definite seasonal component, we have pretty good activity year round.

We're seeing about 30% fewer transactions year-over-year, but with a seasonal upward parallel trend mirroring the past several years.

HOWEVER, from an industry point-of-view, what we have lost in units is just now being made up in current volume, as evidenced below.

Notice how the current volume is almost identical to 2021 - a banner year.

It's an improving market with Unit Sales still significantly lagging year-over-year, but trending up and just now made up in current Volume matching 2021 at this time.

03/29/2023

The latest S&P / Case-Shiller® Home Price Index® numbers were published today.

The new report covers home sales during the period November 2022 to January 2022. As such it does not reflect at all the improving market we have seen over the last 3 months.

Comparing with the previous month's series we see the following changes:

Miami +0.09%
Los Angeles -0.22%
Boston -0.27%
Charlotte -0.28%
Atlanta -0.29%
San Diego -0.37%
New York -0.39%
Chicago -0.51%
Cleveland -0.61%
Detroit -0.65%
Washington -0.71%
Portland -0.72
Tampa -0.73%
Minneapolis -0.85%
Denver -0.87%
Dallas -0.95%
Phoenix -1.16%
San Francisco -1.33%
Las Vegas -1.41%
Seattle -1.43%

Phoenix has risen from 19th to 17th place but is well below the national average, which was -0.55%.

19 cities are in negative territory but Miami has turned around. San Francisco, Las Vegas and Seattle continued to see significant declines month to month, but Los Angeles and San Diego saw much smaller drops than last month.

Comparing year over year, we see the following changes:

Miami +13.8%
Tampa +10.5%
Atlanta +8.4%
Charlotte +8.1%
New York +5.2%
Dallas +5.0%
Cleveland +4.8%
Chicago +4.8%
Boston +4.2%
Detroit +3.2%
Washington +2.4%
Minneapolis +1.7%
Denver +1.0%
Los Angeles +0.9%
Las Vegas +0.4%
Phoenix +0.0%
Portland -0.5%
San Diego -1.4%
Seattle -5.1%
San Francisco -7.6%

San Francisco and Seattle are at the bottom of this table once again, and both are now significantly negative on a year over year basis.

Phoenix is in 16th place down from 15th last month and is flat compared to a year ago.

Average sales prices have been rising in Phoenix over the past 2 months. However these sales are all excluded from the Case-Shiller calculations. It is likely that it will be another 2 months before we see the trend in the Case-Shiller HPI turn around for Phoenix.

Case-Schiller® gives us some national comparative major metro perspective, with the limitation of being a 3-month look back (Nov - Jan).

In this case, that means it's looking at Q4 data, which shows closing data results from the 'softer' part of last year before this year's recovery (at least in Arizona cities) to about where we were before the slump this data is reflecting.

Your evidence for this 'context' can be taken from your personal Collateral Analytics account / 5-year forecast:

Here's how those 'bank grade' forecasts look sampled statewide:

Maricopa County as a whole - note: every individual city forecaste run in the county is pretty much the same in terms of the trend line showing the slump shown in the Case-Schiller® data followed by the current recovery before essentially flattening out.

This can be seen as very positive right now, as it suggests the massive runup in values in preceding years may be preserved.

Flagstaff: Northern Arizona win the sustained appreciation contest, as we see both Flag and Sedona continue to appreciate before flattening, while preserving upcoming gains.
image.png

Tucson: If this turns out to be accurate, Tucson will continue to experience significant appreciation in Southern Az before retreating to yet above where we are today.
image.png
Tubac: Again, trending very much like Tucson...

With general bank solvency concerns in the air, these charts couldn't be more valuable right now in giving some objective data suggesting those massive appreciation gains over the last 4 years in particular may be preserved.

01/13/2023

Here is our latest table of Cromford® Market Index values for the single-family markets in the 17 largest cities:

This has been another week in which the balance in the market moved strongly in favor of sellers. The average change in the CMI over the past month is 22%, up from 21% last week.

Paradise Valley continues to improve for sellers at a rapid rate. Its supply index is down from 52.1 to 43.2 and its demand index is up from 57.6 to 73.2. So demand is still well below normal, but supply is below normal to a far greater degree. Surprisingly, the average $/SF in PV is already starting to rise, across active, under contract and even closed listings.

Also improving fast for sellers are Chandler, Mesa, Avondale - all up 39% or more for the last month. These are leading the charge.

Above 20%, we have Phoenix, Tempe and Glendale, while Peoria, Gilbert, Cave Creek, Queen Creek, Surprise, Fountain Hills and Buckeye are above 10%.

Scottsdale, Maricopa and Goodyear are below 10% but all improving, unlike last week when Goodyear was still going backwards.

Remember that the Cromford® Market Index is the earliest of leading indicators. It tends to go down before most people expect it to and it goes back up before people think it should. It can be up to a month before other market indicators follow suit. For example, last year it peaked on February 7 and started to weaken. During the bubble years, it reached an all time low of 26.5 on November 6, 2007 and then rose very slowly over the following 2 years, not exceeding 100 until May 2009.

Among the 17 largest cities we see 6 currently in a buyer's market below 90, 4 balanced between 90 and 110, and 7 in a seller's market over 110.

Loan officers nationwide report that new mortgage applications are rising in volume. This could have something to do with the fact that typical 30 year fixed mortgage rates have dropped by 0.5% since the start of the year.

01/12/2023

The downward slope in demand and appreciation will likely reverse, recover and then stabilize commencing sometime in Q1 of 2023.

For sellers: The current softening in the market is easing and recovery can be seen on the forecast horizon.

For buyers: Again, to the extent our near-term 5-year forecast is realized early next year, buying into a softer market will give you negotiating power in the present market with evidence the recovery and stabilization of prices in the near future will sustain the massive gains in appreciation these past couple of years.

01/12/2023

Mortgage rates expected to fall
Source: Fannie Mae December 2022 housing forecast, MBA housing forecast

In their final forecasts of the year, economists at the Mortgage Bankers Association and mortgage giant Fannie Mae projected that while the Federal Reserve is probably not done raising short-term interest rates, mortgage rates have already peaked.

Fannie Mae economists think rates for 30-year fixed-rate loans peaked at 6.6 percent during the fourth quarter of 2022 and could dip below 6 percent by the first quarter of next year. MBA economists are predicting an even sharper decline, with mortgage rates falling to 5.2 percent by the end of next year and averaging 4.4 percent during the second half of 2024.

09/07/2022

Please feel free to give me a call at 602-740-9210. 

02/01/2022

https://www.realtorandreasjaeger.com/

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09/14/2021

Welcome to my Realtor® newsletter. It comes out a few times a year / quarterly or when there are significant developments in the luxury property market in Arizona.

To see quality listings $600K-$2M including lots and land, in Scottsdale, Paradise Valley, Cave Creek, Carefree, Fountain Hills please feel free to use this link.

https://www.flexmls.com/link.html?1lonmovup3ww,12,1
The link is valid until 10/5/2021.

To receive a complimentary bank-grade appraisal on a specific property, to see rental listings or different price ranges or any other additional filters, please feel free to email, call or text my cell at 602-740-9210.

Good news for buyers: There has been a very significant increase in the number of listings under contract (not $-volume) across most price ranges, however most markedly between $400K and $500K. This is driven by multiple factors such as homeowners taking advantage of historically high price levels as well as investors taking advantage of speculative purchases and flips by bringing more properties on the market. However, for those of you currently active in the market to buy a property you will probably say that the inventory still feels low with very few high-price listings selling very quickly above asking price.

One important metric we look at to gauge the state of the market is the Cromford Contract Ratio. It measures the relationship between supply and demand. The index still indicates a never-before-seen shortage of supply with demand outstripping supply nearly 2-to-1 (down from an insane near 4-to-1 in June). This still translated into over 50% of all listings closing in record time and over asking price in August.

See the first image below the text.

The red line is 2021, the green is 2020 and yellow is 2019.

See the second image below the text.

Looking at the price ranges above the $400-500K range we still see this trend, namely, Listings Under Contract in 2021 YTD significantly outperforming 2020 and 2019.

See the third and fourth image below the text: Same is true over $1M And over $2M

While the above represent pure volume in terms of number of listings under contract, the latest S&P / Case-Shiller® Home Price Index® was also published recently. The Phoenix Metro once again rose by far more than the average and retained its position at the top of this table with a nearly 30% average price increase year-over-year. Phoenix has now been at the top of this table for 25 consecutive months - new record.

While we do not expect this high rate of price increase to continue, most ZIP codes in the metro area are forecast to increase by 10% or more for 2021 to 2022 which is still substantial. This means a home that was offered for $450K this year will likely cost over $500 in 2022.

It is important to remember that the high price levels are driven by multiple factors. A number of those have existed for years such as a low new-build rate compared to buyers in the market, high migration-rates from other states into Arizona, and corporate investors looking to buy portfolios of rental properties thus increasing the imbalance between supply and demand and driving prices further up. In addition, the most important recent additional factor is that the corona scare resulted in fewer homes offered up for sale in 2020 (in addition to fewer foreclosure homes coming onto the market due to delinquency forbearance) resulting in a market with a desperately low inventory.

While the corona-driven factors are likely to dissipate over time, the structural imbalance between supply and demand in Arizona is likely to continue for some time. Most important of which is an influx of buyers from other states and Canada (retirees, seasonal homeowners, second homeowners and permanent relocations), which will likely continue to drive price increases above national averages in Arizona for the foreseeable future.

Every client's situation is different and individual circumstances call for different strategies, however in general, if you are asking yourself if you should buy or sell or wait, here are some of the key factors to consider:
If you are considering selling - this is one of the best years in history to sell your house. On average, homes sold very fast (within hours or few days of listing) with below-average seller concessions, and most of the time, above the asking price. The decision to sell has to be balanced against a number of factors. Most importantly, prices are forecast to continue to increase at above average rates in Arizona. So when considering total return on a property holding is still a good strategy for most investors focusing on long-term total cash flow. Second, if you are looking to rent for a while after selling your home, rember rentals are expensive at the moment and hard to find. Third, if you are considering replacing the property you sold with a purchase within the next 12 to 18 months, keep in mind that inventory (and the number of choices available) are at historic lows, and prices will continue to increase at above average rate for the foreseeable future. You may find yourself getting further away rather than closer to your dream home.
If you own an investment property in a neighborhood where you are unsure of future developments such as general neighborhood deterioration, this would be a good time to sell.

If you are considering buying - waiting to buy in a market where prices are increasing as fast as they are in Arizona is a very expensive strategy. Most buyer's income is not going up as fast as home prices are, thus their target property is getting further and further away from them as time goes on. Additionally, interest rates have been at historic lows. As a rule of thumb, a 0.1% increase in mortgage rates translates into a 10% loss of buying power because the higher mortgage payment results in a lower qualified loan amount (which is exactly the opposite of what a buyer needs when the price of the home they are looking to buy has increased significantly).
If you are waiting because of other personal circumstances such as a recent relocation or gaining more certainty in a newly acquired job opportunity, it is wise not to wait any longer than you absolutely have to before making your decision to buy.

The Q2 year-over-year comparisons 2021 vs 2020 look like this:
Phoenix +29.3%
San Diego +27.1%
Seattle +25.0%
San Francisco +21.9%
Tampa +21.5%
Dallas +21.3%
Miami +20.1%
Las Vegas +19.8%
Denver +19.6%
Portland +19.2%
Charlotte +19.0%
Los Angeles +18.7%
Boston +18.6%
New York +16.7%
Atlanta +16.5%
Detroit +16.3%
Washington +16.1%
Cleveland +15.4%
Minneapolis +13.8%
Chicago +13.3%
Latest economic forecasts report that the corona scare has raised inflationary pressures which will ultimately lead to an increase in the 30-year fixed mortgage to an average of 3.2% in the medium term. This is about 0.2%pts higher than current averages. On average, this will decrease the approved loan amount for mortgages by about 20% while price will continue to increase. This should help ease the demand on the housing market as first-time-home buyers get crowded out of the market or into lower price segments.

I am here for you if you need help making real estate decisions. I would love to talk to you about your needs and help you where I can. Please feel free to contact me anytime for a no-obligation, personalized review of your home or investment property to maximize your return-on-investment or lifestyle.

I have a host of quality resources such as lenders, insurers, property managers, handymen, remodeling contractors, staging resources, designers, photographers, the list goes on... If you need to sell a property without wanting to remodel it, or if you need to sell a home without listing it publicly for sale I can help.

I can provide a complimentary bank-grade appraisal on a property you own or you may be interested in. I can consult you on property decisions as part of your overall financial strategy and I can help you with detailed cash-flow and return-on-invested-capital analysis if you are making investment decisions.

Russ Lyon Sotheby's International Realty is the market-share leader in the Luxury Segment in Arizona. To see market share statistics of Russ Lyon and competring brokerages, and to see why we are the market leader in quality real estate in Arizona, please visit my website at https://www.realtorandreasjaeger.com/ See how we bring more buyers to your listing than any other brokerage in Arizona, and how we have the best buyer resources and practices in the market available to you.

Best,


Andreas Jaeger
Russ Lyon Sotheby's International Realt