“Appreciation of around 5% seems to be the order of the day. This may not appear to be a big number but in a deflationary climate a 5% climb should be interpreted as rather impressive. It is mostly down to supply shortages at the low end, with a sprinkling of strong demand in a few luxury markets. We did see the usual seasonal price weakness from the end of June through the beginning of September, but that short term trend is gradually giving way to a resumption of the longer term upward trend. Indications are that sales prices will move moderately higher over the next 4 months. We expect rents to move higher more quickly.” -Michael Orr of the Cromford Report
“…Indications are that sales prices will move moderately higher over the next 4 months. We expect rents to move higher more quickly.”
What I appreciate about Michael Orr’s statistical reporting is his passion for thoroughness and accuracy. Make no mistake, Michael is bullish on the Phoenix-Scottsdale metro residential real estate market, but he is also the first one to report possible downside risks. He has a very solid grip on our market. This is why we invest (pay) to be able to reproduce his stats. We want our clients to have the very best numbers available to help them in their real estate decision making.
If sales prices and rents continue to increase, that’s the double whammy for sidelined buyers who are getting hit with the rent increases. One benefit of Orr’s mentioned deflationary climate is that interest rates have remained low when most all experts had been predicting them to increase.
Here are the MLS stats for Sept 1, 2015 compared with to Sept 1, 2014 for all areas & types:
- Active Listings: 19,101 versus 23,296 last year – down 18.0% – and down 1.8% from 19,459 last month
- Under Contract Listings (including Pending & UCB): 9,571 versus 8,797 last year – up 8.8% – but down 1.4% from 9,705 last month
- Monthly Sales: 7,056 versus 6,492 last year – up 8.7% – but down 11.6% from 7,978 last month
- Monthly Average Sales Price per Sq. Ft.: $132.54 versus $126.14 last year – up 5.1% – but down 0.3% from $132.88 last month
- Monthly Median Sales Price: $208,000 versus $198,000 last year – up 5.1% – but down 1.8% from $211,750 last month
Orr’s comment about 5% appreciation in a deflationary climate makes that 5% seem fairly healthy, which incidentally is on par with or greater than pre-boom/bust appreciation numbers in the early 2000’s. Make no mistake,if someone is looking for a stable investment in very unstable times, Phoenix real estate seems to make a lot of sense