February 2018 Newsletter

February 2018 Newsletter

We begin February with 17,330 active listings not under contract, 14.8% fewer than the 20,330 in February of 2017. Low inventory and steady demand means prices will continue to rise. In January we saw a 2.5% increase in year-over-year sales volume and an 8.9% increase in the year-over-year median sales price. But low inventory numbers only tell half the story. To get the full story, we need a break down by price point. Sellers control the lower price ranges while buyers have an abundance of choices at the top of the market.

In January of 2017 ARMLS subscribers reported $1,668,131,788 in sales volume. This year saw $1,917,861,388 in sales volume, the highest dollar sales volume for January in the history of ARMLS. We never discuss commission rates, but the total sales number on which those commissions are based was 15% higher this year over 2017. As our new year starts to unfold, we’re entertaining two divergent theories as to what 2018 holds in its card. There are two lines of thought:

1) Low inventory numbers will lead to higher prices and the higher prices, coupled with rising interest rates, will restrict demand and 2018 will see fewer sales than 2017.

2) Millennials, the driving force behind our market, are one year older and their appetites and ability to purchase is increasing. That, coupled with an improving economy, will lead to increased sales in 2018.

Eventually the first proposition will play out. Tight supply will lead to an increase in prices, these higher prices will cool demand, lower demand will mean more supply and more supply means lower prices. The question is when? Exactly when will likely be determined by the strength of our local economy.

Channeling our inner Stuart Smalley, January STAT is going to be a big glass of Kool Aid for subscribers, while possibly providing marketing material for your clients.

Homebuyer Sentiment

The Fannie Mae Home Purchase Sentiment Index® (HPSI) rose 3.7 points in January to 89.5, reaching a new all-time high of Americans surveyed. These are some key highlights:

  • The net share who say it is a good time to buy a home rose 3 percentage points to 27%
  • The net share who say it is a good time to sell rose 4 percentage points to 38%
  • The net share who say home prices will go up rose 8 percentage points to 52%
  • The net share who say they are not concerned about losing their job rose by 5 percentage points to 73%
  • The net share who say their household income is significantly higher than it was 12 months ago remained at 16% from last month

Frank Nothaft, the Chief Economist at CoreLogic, added his two cents about homebuyer confidence.

“The number of homes for sale has remained very low. Job growth lowered the unemployment rate to 4.1% by year’s end, the lowest level in 17 years. Rising income and consumer confidence has increased the number of prospective buyers. The net result of rising demand and limited for-sale inventory is a continued appreciation in home prices.”

Credit Scores: The State of the Union

Experian just released their 2017 State of Credit update . Here’s a snapshot of where America is at credit wise.

“The economy seems to have mostly recovered from the 2008 financial crisis. Housing prices and foreclosure rates are back to normal, and the unemployment rate is at a historic low.

Consumer confidence hit a 17-year high in late 2017 and holiday sales jumped nearly 5% vs. 2016, the largest year-over-year increase since 2011, according to Mastercard’s SpendingPulse, which tracks retail spending — excluding autos — by all payment types. After a rocky few years, average credit scores began a steady climb in 2013. The average VantageScore was 675 in 2017, compared to 673 the year before and only four points from the 2007 average of 679.”

Jobs

The most recent jobs report from the Bureau of Labor Statistics indicates that unemployment is just 4.1 percent. The National Association of Colleges and Employers reports that employers expect to hire 4 percent more members of the Class of 2018 than they did from the Class of 2017.

WalletHub compared over 180 U.S. cities across 26 key indicators to calculate the best places for job seekers.  Each city was ranked according to the estimated strength of the job market in that city as well as socioeconomic factors, such as median annual income and housing affordability. In this report, the Valley is king!

The 10 best cities to find a job in 2018:

1: Chandler, AZ

2: Scottsdale, AZ

3: San Francisco, CA

4: Peoria, AZ

5: Gilbert, AZ

6: Plano, TX

7: Portland, OR

8: Irvine, CA

9: Madison, WI

10: Boston, MA

 

Redfin Prediction

In their annual Housing Market Predictions blog, Redfin wagers that homebuyers will leave high-tax states for more affordable cities. “If state and local tax (SALT) deductions are eliminated in high-tax states like California, New York, New Jersey, Maryland, Massachusetts and Illinois, people will leave these states for places where they can get more home for less money. In a survey of 900 homebuyers, a third of respondents said that they would consider moving to another state if they could no longer deduct state and local income and property taxes. The housing markets affected by potential tax changes account for one in four of the homes sold this year in the metros Redfin tracks. Redfin’s latest Migration Report showed people looking to leave expensive coastal cities for more affordable mid-tier cities like Sacramento, Phoenix and Atlanta.”

The ARMLS Pending Price Index (PPI)

Last month STAT projected a median sales price for January of $245,000. The actual median sales price

was $245,000, placing the hammer directly on the nail. Our sales volume projection for January was 6,125. The actual sales volume in January was 6,082, missing the mark by less than 1%. Looking ahead to February, the ARMLS Pending Price Index anticipates the median sales price will be $250,000. February 1st marks the beginning of our buying season. Historically speaking, it’s quite common to see the median sales price rise from February through June.

 

Sales volume for January 2018 was 2.5% higher than 2017, with 6,082 sales in 2018 compared to 5,932

in 2017. We begin January with 6,362 pending contracts, 3,922 UCB listings and 412 CCBS giving us a total of 10,696 residential listings practically under contract. This compares to 10,234 of the same type of listings one year ago. ARMLS reported 6,435 sales in February of 2017. I expect 2018 volume to be higher at approximately 6,575 sales.

 

This report courtesy of Arizona MLS

 

6871 E AMBER SUN Drive
Active
Residential

Scottsdale, AZ 85266

639,500

  • 3 Bed
  • 2.5 Bath
  • lot size area: 8,140
7443 E RUSTLING Pass
Active
Residential

Scottsdale, AZ 85255

500,000

  • 3 Bed
  • 2 Bath
  • lot size area: 5,940
7027 E MIGHTY SAGUARO Way
Active
Residential

Scottsdale, AZ 85266

695,000

  • 3 Bed
  • 2 Bath
  • lot size area: 8,575
33721 N 71ST Way
Active
Residential

Scottsdale, AZ 85266

599,900

  • 3 Bed
  • 2.5 Bath
  • lot size area: 11,333
11520 E BRONCO Trail
Active
Residential

Scottsdale, AZ 85255

525,000

  • 2 Bed
  • 2.5 Bath
  • lot size area: 6,440
11483 E KORA Way
Active
Residential

Scottsdale, AZ 85255

615,000

  • 3 Bed
  • 2 Bath
  • lot size area: 8,505