The health of a residential real estate market can be written about in many ways, often depicting(or spinning) the author’s own viewpoint or opinion. Certainly as real estate professionals we’re prone to do this as much as anyone, so it’s best just to let the facts speak for themselves.

Home Prices Running Steady

In 2004, our local Phoenix Metro area began an upward rise in the median sales price that reached a frenetic peak in July of 2006. In January of 2001, the median sales price in the Phoenix Metro area was $128,000. Three years later it had risen to $151,000, a robust increase of 18%, or 6% per year. Then it went up 14% the next year (2005). Then it soared to its peak in July of 2006 at $260,000. I think we all agree that this price rise was NOT HEALTHY. Just as dramatically unhealthy was the market collapse that saw the median sales price drop to $110,000 in October of 2011, a frightening 58% in 5 years with most of that decrease happening in just 18 months during 2008-2009.

Since 2011, prices have been steadily rising. I realize that “steadily” is not very sexy but in fact, it beats the heck out of two up and down market flings that ruined millions across the country and hundreds of thousands in Arizona. Perhaps steadily should be the new sexy. Prices are again rising, as are rental rates, Arizona’s population is increasing again, jobs are being created, and new home construction is heading up. This is evidence (see below) of our states residential real estate health.

Foreclosures Have Virtually Disappeared.

Foreclosures, which saw hundreds of families lose their homes weekly, have swung to an amazing,almost nation leading, basement rate of .05%. Arizona ranks 43 out 51 states (including DC) for non-current loans and 49 out of 51 for homes in foreclosure. Considering that just a few years ago we were leading the nation in foreclosures, this is an amazing turnaround.

Michael Orr (Cromford Report/ASU) details how the Black Knight Financial Service Mortgage Monitor report for March shows a dramatic fall in mortgage loan delinquency over the past 2 months. There is something of a seasonal pattern in these numbers and January to March is the time of year when the delinquency rate tumbles almost every year. However, it is significant that the total delinquency rate for the USA is now at pre-housing crisis levels and the 30-day delinquency rate is the lowest in well over 15 years.

To provide some perspective, these states have the highest rate of foreclosures compared to AZ’s .05%:

  1.      New Jersey 4.3%
  2.      New York 3.7%
  3.      Hawaii 3.5%
  4.      Maine 2.7%
  5.      Florida 2.6%
  6.      New Mexico 2.4%
  7.      Delaware 2.3%
  8.      District of Columbia 2.2%
  9.      Rhode Island 2.2%
  10.      Connecticut 2.1%

New Construction Permits Highest in 9 Years

For the first quarter of 2016 there were 4,436 single family permits in total, up 33% from 3,333 last year and the highest number since 2007, when there were 8,710. Mesa and Chandler are the two cities with the fastest growth in new home construction while Goodyear and Gilbert are decelerating.

The top locations so far in 2016 are:

  1.         Phoenix 656 – up 47% from 445 in Q1 2015
  2.         Mesa 478 – up 76% from 271
  3.         Gilbert 468 – down 1% from 475
  4.         Peoria 374 – up 22% from 307
  5.         Unincorporated Pinal County 358 – up 37% from 261
  6.         Chandler 340 – up 73% from 196
  7.         Buckeye 314 – up 64% from 191
  8.         Queen Creek 239 up 24% from 192
  9.         Scottsdale 212 – up 13% from 187
  10.         Goodyear 200 – down 17% from 242
  11.         Maricopa 200 – up 36% from 147

So without exaggerating, based on these stories anyway, we’d have to say this checkup went pretty well.