2018 Projections for the Single-Family Homes Market

 Published November 1, 2017 | Arizona Journal of Real Estate & Business

Fletcher Wilcox
Founder, The Wilcox Report                                                         

Previously-owned single-family homes comprise the majority of residential sales — approximately 80 percent of all residential real estate sales in the Arizona Regional Multiple Listings Services, Inc. (ARMLS). On an annual basis, the volume of previously-owned single-family homes are three to four times greater than new single-family home sales.

With year-over-year increases in sales and rising prices, 2017 should end as the best year for dollar sales volume since the record year of 2005. Dollar sales volume can be defined as the total sales price based upon the number of sales.

Dollar sales volume for past years show $26 billion in 2005, $13 billion in 2010 and $20 billion in 2016. The year 2017 will end around $21 to $22 billion, making it the second-best year for dollar sales volume.

Are Housing Prices Close to a Correction?    

Are we approaching another price correction since housing prices continue to increase? The chart below shows the annual median sale price since 2004.  In 2006, the sale price peaked at $279,000, then bottomed out at $125,000 in 2011. Looking at 2017, for the first nine months the median sale price is showing $264,000. Sometime in the second quarter of 2018, the median sale price may hit $280,000.

These are not inflation adjusted numbers. Starting with the year 2006 through the summer of 2017, inflation has been about 18 percent.

If we reach a median sale price of $280,000 in 2018, is it a sign of another price correction? My answer is no. Since 2013, the annual median sale price has increased between seven percent and eight percent each year, which reflects a healthy increase. At the same time, borrowers have been able to qualify for these higher prices, even in light of today’s strict lending standards when compared to 2004–2006.

The chart below compares the monthly median sale price from 2004 to 2005, as well as from 2016 to 2017.

As illustrated, the total sale price increase when comparing 2016 to 2017 on a month-to-month basis, shows a minimum increase of four percent (or $12,230) and a maximum increase of eight percent (or $19,000). Whereas, when comparing 2004 to 2005 on a month-to-month basis, the minimum increase was 27 percent (or $43,000) with a maximum increase hitting as high as 53 percent (or $96,000). Such a tremendous one year run-up in prices was not healthy or sustainable.

One explanation for the run-up in prices during 2004 to 2005 was a result of artificial demand caused by spec investors purchasing with 100 percent financing. Today, spec investors are required to put down 20 percent, which is one reason that I don’t believe we are headed for a price correction.

Let’s look at another reason.

2018 Predictions: Plenty of Demand to Own

2018 will experience fierce competition in many locations for available homes that are priced right, especially those in the mid-to-lower price ranges. The reason for the increased competition is more people, more jobs and tight inventory.

Maricopa County ranks number one for population growth compared to 3,142 counties in the United States — with 81,360 more people added. This number is based on the U.S. Census Bureau’s most recent 2017 numbers. Over half of this increase, or 43,189, comes from domestic migration. Compare Maricopa County to Cook County, where Chicago is located, which has the largest declining population for a county in the United States. Their domestic migration was a minus 66,244. The average daily increase in the population of Maricopa County was 222 people per day. I expect the same numbers or higher for next year.

During the real estate recession, Maricopa County lost approximately 235,000 jobs. Not only have those jobs come back, but an additional 75,000 jobs have been added since then. This job trend translates to more home buyers. Based on U.S. Department of Labor data, I estimate about 165 jobs are created each day in Maricopa County.

There are now more buyers in the Maricopa County market than ever before. Prices and demand will go up. In fact, I know of a lender that has prequalified a number of potential buyers who are ready to buy, but are unable to buy because of our tight inventory.

More buyers, tighter inventory and higher prices will make some homes on the market that don’t meet the expectation of an HGTV reality show look a bit better.

Stay tuned for a positive, single-family home market in 2018.

Fletcher R. Wilcox is the author of TheWilcoxReport.com and Vice President of Business Development for Grand  Canyon Title. His market analysis has been referenced in the Wall Street Journal, Bloomberg News, HousingWire.com and National Mortgage News. Fletcher can be reached at FWilcox@GCTA.com and 602.648.1230.

 

A Class on Social Influence & the Psychology of Persuasion when Working with Sellers & Buyers

A Class on

Social Influence & the Psychology of Persuasion

 Create influence with buyers & sellers

Turn numbers into knowledge

Turn knowledge into authority

Review social psychology and persuasion

How to get your happy clients to spread the word about you

Get more referral business in 2018!          

JOIN US:

Thursday, November 9th 11:30am to 1:00pm (lunch provided)

LOCATION:

10958 E. TAOS DR, SCOTTSDALE, AZ. 85262

Class will be held in a Luxury Listing Presented by: Yvonne Faustinos, Russ Lyon Sotheby’s International Realty

RSVP:     mailto:FWilcox@gcta.com or 602.648.1230

The Presenter: Fletcher R. Wilcox is V.P. of Business Development and a Real Estate Analyst at Grand Canyon Title. He is founder of The Wilcox Report. His market analysis on the Greater Phoenix residential real estate market has been referenced in the Wall Street Journal, Bloomberg News, MarketWatch, National Mortgage News, Housing Wire.com..and on local and national T.V. Fletcher teaches residential contract writing for renewal hours and served on one of the three Arizona Association of REALTORS subcommittees for the February 2017 AAR Residential Resale Real Estate Purchase Contract.

Sponsors

 

Mathew Kelchner                Ron Peters                                                    Yvonne Faustinos

Suburban Mortgage           Alta Vista Inspection Services                     REALTOR

Branch Manager                 Exclusive 100-Day Inspection Guarantee  Russ Lyon Sotheby’s International Realty

NMLS215995

 

602.758.3459                     480.816.8552                                       480.580.4524

 

 

 

 

West Valley Real Estate Event: Predictions for 2018 & How to Use Market Data With Your Clients & Appraisal Q & A!

          West Valley Real Estate Event  

                                                                                                                         

Wednesday, November 1, 2017 from 10:30 a.m. to 12:00 p.m.

  • Predictions for 2018

  • How to use market data for credibility with your clients

  • 2017 real estate trends for sales, new listings, estimated months of supply

  • Compare home prices today and before the real estate recession

  • What month of the year has the highest sale price?

  • Appraisals and home values

  • What can you say to an appraiser?

  • What have you always wanted to ask an appraiser?

  • How much does solar increase value?

  • Bring your questions

Where: Cachet at the Wigwam

14200 W Village Pkwy #2256 Litchfield Park, AZ 85340

Realtors will tour Cachet’s beautiful single family homes, townhomes and condos.

Lunch served at 12:00 p.m.

RSVP to FWilcox@GCTA.com or 602.648.1230

Speakers

Fletcher R. Wilcox is V.P. of Business Development and a Real Estate Analyst at Grand Canyon Title. He grew up in Phoenix. Graduated from A.S.U. He is author of The Wilcox Report. His market analysis on the Greater Phoenix residential real estate market has been mentioned in the Wall Street Journal, Bloomberg News, MarketWatch, National Mortgage News, Housing Wire.com. Fletcher teaches residential contract writing for renewal hours and served on one of the three Arizona Association of REALTORS subcommittees for the February 2017 AAR Residential Resale Real Estate Purchase Contract.


 

 

 

 

 

 

 

Robert Oglesby is the Founder, President, and Chief Appraiser of AppraisalTek, a full service appraisal company that has established a reputation for providing high-quality appraisal services. Robert supervises all appraisal management operations for multiple large mortgage bankers and his company processes a high volume of appraisals every month. Robert employs and manages full-time employees, including staff appraisers and independent contractors. Robert is a LEED Green Associate, and active certified appraiser. In addition to his work at AppraisalTek, Robert organizes and presents professional seminars for real estate professionals.

     Sponsor

 

 

 

 

 

 

Home Prices Keep Going Up in Greater Phoenix!

It has been a long time since the median sale price for a previously owned single family home was this high.

May 2017 Results  

The median sale price for a previously owned single family home in May was $269,000. The last time the sale price was at the $269,000 level was almost ten years ago.  It was August of 2007.

The data in this report was compiled from the Arizona Regional Multiple Listing Services, Inc.  The geographic area is Greater Phoenix (Maricopa County).

The May 2017 median sale price represented a year-over-year increase of 6.5% or $16,500 compared to May 2016 when it was $252,500. This is a healthy increase.  See Table A.

A Brief History of Median Sale Price

The first time in Maricopa County history that the median sale price of a previously owned single family home reached the May 2017 level was in June 2005. Back then the year-over-year increase was not 6.5% or even close.  It was 47.1% or $86,500.  It went from $183,500 in June 2004 to $270,000 in June 2005.  See Table B.

The May median sale price of $269,000 has come a long way since August 2011 when it bottomed at $120,000. But it still has a little way to go to reach the peak month of $287,500 in June 2006.

Sales in May 2017

May 2017 sales were up 9.5% or by 614 compared to May 2016. Additionally, May 2017 sales were up 13.3% or by 834 over April 2017.  Compare this to May 2016 sales which were up 5.4% or by 332 over April 2016.  See Table C.

New Monthly Listings in May 2017

May 2017 new monthly listings had the highest year-over-year increase for a month this year. There were 466 more listings that hit the market this May than last May.  This jump in inventory most likely will help keep up sales momentum in June and July.

Overall, the number of new monthly listings is flat when comparing the number for the first five months of 2017 to 2016. See total in Table D.

Estimated Months of Supply by Price Point

It is a seller’s market for homes priced under $600,000 (as long as they are priced right). For all price points under $600,000 the estimated months of supply is under four months.  The price range with the highest number of sales was $200,000 to $249,999.  The estimated months of supply in this range was one month.  See Table E.

 

Fletcher R. Wilcox is V.P. of Business Development and a Real Estate Analyst at Grand Canyon Title Agency.
He is author of www.TheWilcoxReport.com. His market analysis on residential real estate in Greater Phoenix has been referenced in the Phoenix Business Journal, the Wall Street Journal, Bloomberg News, MarketWatch, HousingWire.com, National Mortgage News, and the Arizona Republic. He has been a guest speaker on local radio and both local and national TV.
He teaches real estate agents marketing strategies and teaches residential contract writing and Arizona title procedures. He served on one of the subcommittees at the Arizona Association of REALTORS subcommittees making recommendations on changes to the February 2017 AAR Residential Resale Real Estate Purchase Contract. Fletcher started snowboarding in 2006. He is not very good.   Fletcher may be reached at FWilcox@GCTA.com  602.648.1230

Who will be the top real agent, broker and more!

Old Town Scottsdale 2017 Friday Night Industry Party

Awards will be for

  • Residential real estate agent of the year
  • Residential real estate broker of the year
  • Residential rookie agent of the year
  • Residential team of the year
  • Commercial managing principal of the year
  • Commercial real estate broker of the year
  • Home inspector of the year
  • Certified appraiser of the year
  • Escrow officer of the year
  • Title sales representative of the year
  • Mortgage loan originator of the year

Arizona jobs projected to increase by 138,553 and Greater Phoenix jobs by 115,258. More jobs will keep the fire going for already hot housing market.

On March 9, the Arizona Office of Economic Opportunity released job projections.  Jobs in Arizona are projected to increase by 138,553 from the Second Quarter of 2016 through the Second Quarter of 2018.  The majority of the increase in jobs is expected to be in Greater Phoenix.  Jobs in Greater Phoenix are projected to increase by 115,258.  Greater Phoenix in this report is defined as Maricopa and Pinal counties.

This increase in jobs, along with a growing population, will continue to fuel the demand for residential housing.    Greater Phoenix is currently in the midst of a very hot demand for previously owned single family properties in many price ranges.

According to the Arizona Regional Multiple Listing Services, Inc., sales of previously owned single family homes in the first two months of 2017 are fourteen percent higher than for the same period last year.  The number of sales in January and February 2017 were 9,999 compared to 8,777 for the same period last year.

While sales are up inventory is down.  The number of previously owned new monthly listings in January and February 2017 were 5% or 860 less than for the same period last year.

When writing a contract, be prepared for your buyers to compete against multiple offers when a property is priced at market.

Expect prices to go up in many prices ranges.

The majority of the increase in jobs will be in Greater Phoenix 

To read the report go to https://laborstats.az.gov/sites/default/files/documents/files/ST_IndProjReport.pdf

2016-2018 Projected Job Growth by Region
Area Name 2016 Estimated Total Employment Level 2018 Projected Total Employment Level Numeric Growth Annualized Percentage Growth
Arizona 2,852,181 2,990,734 138,553 2.4%
Phoenix MSA1 2,051,434 2,166,692 115,258 2.8%
Tucson MSA2 382,515 392,583 10,068 1.3%
Balance Of State3 414,363 427,176 12,813 1.5%
1) Maricopa and Pinal Counties
2) Pima County 
3) All other areas in Arizona less Maricopa, Pinal, and Pima Counties 

Arizona’s industry employment projections are produced in conjunction with the U.S. Department of Labor (U.S. DOL), Employment and Training Administration (ETA).

Fletcher R. Wilcox is V.P. of Business Development and a Real Estate Analyst at Grand Canyon Title Agency.

He is author of www.TheWilcoxReport.com. His market analysis on residential real estate in Greater Phoenix has been mentioned in the Wall Street Journal, Bloomberg News, MarketWatch, HousingWire.com, National Mortgage News, Arizona Republic and the Phoenix Business Journal. He has been a guest speaker on local radio and both local and national TV.

He teaches real estate agents strategies on marketing and instructs real estate classes in residential contract writing and Arizona title procedures.  Fletcher started snowboarding in 2006. He is not very good.

Fletcher may be reached at mailto:FWilcox@GCTA.com  602.648.1230

Anticipatory Contract Writing

Published in the Arizona REALTOR’s Voice

by Fletcher R. Wilcox on September 9, 2016 

There are 30 blank lines at the beginning of Section 8, Lines 311-340, Additional Terms and Conditions in the AAR Residential Resale Real Estate Purchase Contract (Contract). The purpose of these lines is for the buyer, before presenting an offer to the seller, to put in language that changes, adds to, or subtracts provisions in the body of the Contract.

The key to writing provisions language in the Additional Terms and Conditions section is to do so in clear and understandable terms. Knowledge of the Contract and its timelines is essential in constructing good language.

There are times when a buyer places language into the Additional Terms and Conditions Section in anticipation of situations that may occur in a transaction. The buyer wants the property. Emotions are high. This is when mistakes may be made. In the two scenarios below, a buyer makes the earnest money nonrefundable to present a better offer to the seller. Is the language clear and understandable?

You be the judge.

Scenario One
Language written in the Additional Terms and Conditions section reads, “Earnest money to be nonrefundable after ten day inspection period.”

On day seven after Contract acceptance, the Buyer’s Inspection Notice and Seller’s Response (BINSR) was delivered to the seller giving the seller the opportunity to correct five disapproved items. According to the Contract timeline, the seller then has five days to respond to the buyer. In this situation, the seller responded to the buyer on the fifth day, which was day twelve after contract acceptance. The seller checked the box on the BINSR stating, “Seller is unwilling or unable to correct any of the items disapproved by the Buyer.”

At the beginning of the transaction the buyer was hot for the property. Fifteen days later, upon receiving the seller’s response declining to fix the five requested items, the buyer’s emotions toward the property have cooled. The buyer then canceled the Contract and demanded a return of the earnest money. The seller argued that the buyer can cancel, but the buyer doesn’t get the earnest money, they do. Seller argued the 10 day inspection period ended when the BINSR was delivered and that the buyer canceled after this period. The buyer countered that the 10 day inspection period includes the entire buyer disapproval process in section 6J.

We have an escrow dispute. Is the language written in Section 8 clear and understandable?

Clearer language on behalf of the buyer addressing when the earnest money would be nonrefundable may be, “Buyer’s earnest money shall be nonrefundable unless Buyer elects to cancel pursuant to Section 6J.” Section 6J includes the BINSR timeframes for both buyer and seller responses.

Scenario Two
Language in the Additional Terms and Conditions section reads, “Earnest money to be nonrefundable and released to seller on the twenty first day after contract acceptance.” The buyer wanted 20 days for due diligence and was willing to make the earnest money nonrefundable after this time.

On day 21 after contract acceptance, the seller requested and received the earnest money from the escrow company. Fifteen days later when the close of escrow date came, the transaction did not close and could not close due to an I.R.S. lien attached to the property. For the transaction to close, the seller either had to have the lien paid at close of escrow or obtain a waiver from the I.R.S. The seller was unable to perform either. The buyer delivered a Cure Period Notice to the seller for seller’s failure to close escrow.

On the fourth day after delivery of the Cure Period Notice the seller was in breach, so the buyer canceled the transaction and demanded a return of the earnest money which, according to the language written in Section 8, was now in the seller’s possession.

Will the buyer be able to get the earnest money from the seller? Is the language written in Section 8 clear and understandable?

The buyer and their agent, in making the earnest money nonrefundable and released to the seller, did not anticipate what happens if the seller breaches the Contract. Clearer language on behalf of the buyer may be, “On the twenty first day after contract acceptance, earnest money shall be nonrefundable. However, in the event seller breaches the Contract, buyer is entitled to a return of the earnest money.”

Conclusion
Whether representing a seller or buyer, anticipatory contract writing is first thinking through possible scenarios that might arise based on the market or situation of the buyer, seller or home and addressing those situations with clear and understandable language. This type of writing is enhanced with a strong knowledge of the Contract and its timelines.

This article is not intended as legal advice. Consult your designated broker and legal counsel.


Fletcher WilcoxFletcher R. Wilcox is V.P. of Business Development for Grand Canyon Title Agency. He teaches contract law renewal hours and is author of The Wilcox Report.

What time of the year are there the most new listings and the most real estate sales? A review of the numbers in Greater Phoenix.

 When are Real Estate Agents the Busiest?

By

Fletcher R. Wilcox

Grand Canyon Title Agency

Real estate agents make their commissions as listing agents and as selling agents. So at what times of the year are agents the busiest listing seller’s homes and closing on sales with buyers? What times of the year are listings and sales the slowest? Does real estate activity really slow down in the hot summer months?

So, what I did was research the number of new listings and sales for existing single family homes in Maricopa County, Arizona.  I broke down the years 2014, 2015 and the first half of 2016 into quarters. The data is from the Arizona Multiple Listing Services, Inc. (ARMLS).

The Findings

image001

New Listings: Which Quarter Had the Most and the Least?

In both 2014, 2015 and in the first half of 2016 we saw the same pattern for new listings. The first quarter, the winter quarter, had the most new listings. Then like a stair step, the number of new listings declines in each of the following quarters with the fourth quarter having considerable less new listings than the first quarter. Then as the chart below shows, listings shoot up again in the first quarter of the New Year.

More New Listings and Sales in First-Half of 2016 Than in Either 2014 or 2015

When comparing the number of new listings in the first two quarters of 2016 there were 2,792 more new listings than 2015 and 1,280 than 2014. This increase in inventory along with job growth and population growth and boomerang buyers has fueled home ownership. There were 1,268 more sales in the first two quarters of 2016 than 2015 and a whopping 4,243 more sales than 2014.

image001

 

Sales

Sales: Which Quarter Had the Most and Least?

While the first quarter has the most new listings, the second quarter has the most sales. The chart below shows single family sales. In 2014, the quarter with the least number of sales was the first quarter. In 2015, it was a toss-up for the least number of sales between the first quarter and the fourth quarter. There were only thirty-six more closings in the fourth quarter over the first quarter. The second best quarter for sales has been the third quarter.

There are More Sales in the Hot Summer Months Than You Might Think

If we compare sales in the third quarter, the hot weather months of July, August and September, to the best quarter, the second quarter, we saw a decline in sales of 12% in both 2015 and 2014.

However, the third quarter has been the second best quarter for sales. In 2015, third quarter sales were 18% higher than in both the first and fourth quarters.

image002

Conclusions

In recent history, the first and second quarters of the year had the most new listings followed by the second and third quarters as the most sales. While real estate sales slow-down in the hot weather third quarter compared to the spring second quarter, the third quarter has been the number two quarter for most sales. While sales in the first and fourth quarters are the slowest, there is still lots of sales activity. Data shows sales in the first and fourth quarters range between 12,000 and 14,000. Look for sales in the fourth quarter of  2016 to be over 14,000 sales.

Fletcher Wilcox 2016 picture

Fletcher R. Wilcox is V.P. of Business Development and a Real Estate Analyst at Grand Canyon Title Agency.

He is author of www.TheWilcoxReport.com. His market analysis on residential real estate in Greater Phoenix has been mentioned in the Wall Street Journal, Bloomberg News, MarketWatch, HousingWire.com, National Mortgage News, Arizona Republic and the Phoenix Business Journal. He has been a guest speaker on local radio and both local and national TV.

He teaches real estate agents strategies in marketing and instructs real estate renewal classes in residential contract writing and Arizona title procedures.  Fletcher started snowboarding in 2006. He is not very good.

Fletcher may be reached at FWilcox@GCTA.com  602.648.1230

 

Report: More luxury sales in 2016 than 2015. Join me on the Biltmore Estates luxury tour this Wednesday, April 20.

The upper end of the market has had more sales so far this year than last year.

According to data from the Arizona Regional Multiple Listing Services, Inc. (ARMLS) there were twenty-one more sales over $1,000,000 of previously owned single family homes in the first quarter of 2016 than the first quarter of 2015.  The geographic area is Maricopa County.

The table below segments the sales by price range.

Download (PDF, Unknown)

Join me this Wednesday, April 20 from 11:00 a.m. to 1:00 p.m. for a tour of six homes in the Biltmore Estates.  The beautiful Biltmore Estates is located on Lincoln west of 32nd street in Phoenix.  See the great views!   NOTE: THIS IS A REAL ESTATE AGENT ONLY TOUR.

Download (DOCX, Unknown)

Hope to see you!

Fletcher R. Wilcox

V.P. Business Development

Real Estate Analyst

Grand Canyon Title Agency

A Division of FNTA

602.648.1230

Author of www.TheWilcoxReport.com

A report on real estate, lending and job growth trends in Greater Phoenix.

Twitter@FletchWilcox

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Maricopa County Number One in U.S. for Net Domestic Migration. This is good for Real Estate Sales.

Growth

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A Report on Real Estate, Lending, Job Growth and Population Trends

Maricopa County Number One in U.S. for Net Domestic Migration.

This is good for Real Estate

By Fletcher R. Wilcox on March 25, 2016

On March 24, the U.S. Census Bureau released their population estimates for metro areas and counties. They breakout their population estimates by 381 metropolitan statistical areas and 3,142 counties.

Maricopa County # 1 in Net Domestic Migration

Who says there are more people moving out of than moving into Maricopa County? If they do, they are wrong. Of the 3,142 counties in the United States, the U.S. Census Bureau ranked Maricopa County number one in net domestic migration from July 1, 2014 to July 1, 2015. Domestic migration is the difference between U.S. citizens moving into or out of a particular state. There were 37,670 more people that moved into Maricopa County than moved out. Placing second in domestic migration was Clark County, Nevada at 24,901.

The population of Maricopa County is estimated at 4,167,947 increasing 77,925 from July 1, 2014 to July 1, 2015. In this time period there were 55,671 babies, 28,981 deaths leading to a natural increase of 26,690. International migration was 11,820.

Phoenix-Mesa-Scottsdale Metro Statistical Area # Four in Numeric Population Gain

The population of Phoenix-Mesa-Scottsdale metro area increased by 87,988 people from July 1, 2014 to July 1, 2015 making it number four in numeric population gain amongst metro areas. Number one on the list was the metro area of Houston-The Woodlands-Sugar Land, Texas with a population gain of 159,083.

Why Population Growth is good for Real Estate

More people mean more demand for housing. The addition of 55,671 babies means more first time homebuyers and more move-up buyers with families needing bigger houses.

Fletcher R. Wilcox

V.P. Business Development & Real Estate Analyst at Grand Canyon Title Agency

Grand Canyon Title Agency is a wholly owned subsidiary of the Fortune 314 company FNF.

FWilcox@GCTA.com 602.648.1230

Author of www.TheWilcoxReport.com

Twitter@FletchWilcox

 

 

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