STAT Market Update: July 2016

Horseshoe Bend in Arizona

Each month Tom Ruff of The Information Market gives his stellar commentary on the housing market. Tom is armed with Pending data of which others do not have access. His insights are below. Read the full issue of STAT for the accompanying graphs.

The charts in STAT are mostly self-explanatory but sometimes they need context when market conditions change or even when the calendar falls funny. July 2016 was one of those months. On the surface, MLS sales numbers were disappointing with volume down 3.6% year-over-year and down 13.9% month-over-month. However, the decline in sales is more a factor of the calendar as opposed to declining demand this month. If you compare the sales volumes of July 2015 to July 2016 in the context of business days, you have your culprit! There were 359.7 sales per day in 2015 and 381.5 sales per day in 2016.

I have already seen early reports talking about how market conditions contributed to slowing July numbers. When viewing the closing numbers in July I can almost guarantee you, the missing sales in July simply got pushed into August closings. When August numbers are reported, they’ll be talking about stronger numbers but for both months it was simply the calendar.

Over the past few weeks our team has been working on various Automatic Valuation Models. An AVM is mathematical modeling based on market forces to make predictions. I would like to share with you some of our early observations derived from our modeling efforts.

Statistical Models
Zestimates can sometimes cause uproar with agents. We also create models but make no mistake; no model can outperform the price opinion of an ARMLS Subscriber on an individual property basis, period. If you want to know what your property is worth, ask an ARMLS Subscriber. Our analysis is based on listing prices and at the moment properties are selling at 97.5% of the list price on average. Our model can’t take into consideration the condition, curb appeal or other factors at play but we need to work at making predictions to better help our Subscribers.

The Full Cash Value (FCV) as determined by the County Assessor is based on mathematical models that are clearly meeting their objectives of accurate, fair and equitable. In our analysis based on recent sales by price range, we determined that 1.25 is the best multiplier to determine the value of a property using the FCV model. A restricted supply of homes and consistent demand for homes in the lower price ranges are causing strong appreciation gains, while higher priced homes are seeing limited price gains due to an increase in supply. According to the model, here are the expected valuations based on price ranges equally divided by volume:

Average Modeled Valuations By Price Range

Leaving the FCV model and looking at price per square foot models, the two biggest challenges are properly defining the geography which identifies similar properties and having a large enough sample size to garner meaningful results. Regardless of how strong your data set is, bad data always exists and incorrect data will garner incorrect results.

In conclusion, coming up with a good AVM is a daunting challenge, but to be honest, it’s kind of fun. I believe the greatest value of an AVM is that it creates an interesting tool for investors wanting to identify undervalued assets, but for the individual homeowner they simply provide water cooler conversation, some boasting, some complaining and some agreeing. Again, the best way to know the true value of a home is to consult with a real estate professional.

How do I Search for County Islands in Monsoon?

County islands are hot topics and your client may have a strong opinion about living in one. You can make your search a little easier and a lot more accurate by using the County Island field in Monsoon, which allows you to alter your search to include or exclude these areas.

How to Search:
From the Tax Search, add the County Island field by clicking on Add/Modify/Reorder link at the bottom of the page. Once added, you now have the option to include or exclude county islands from your search.

Select Yes if you are looking for results in a county island or No if you wish to exclude them. The default value of Any turns the search filter off.

County island search

Fun County Island Facts:
Maricopa County recognizes 25 tax areas, 26 if you count the county itself, so anything that does not fall into one of the 25 would be a county island. Remember that postal code areas are different, just because an address is in Gilbert doesn’t mean taxes are paid to Gilbert.

What are County Islands?

tiny island

If your client dreams of living on a county island, they don’t have to look very far. County islands exist all over Arizona. And while there are some attractive perks to island life, there are also very real drawbacks. So before your client embarks, make sure they know exactly what they can expect.

What’s a County Island? 
A country island is an unincorporated area of land completely surrounded by a city or town. This usually happens when a town grows and acquires land from the county but, for whatever reason, the town chooses to omit a particular area during the annexation process. Some well known county islands in the Valley include New River, Sun City, Sun City West, Rio Verde and Tonopah.

What are the Drawbacks?
County island citizens are responsible for their own utilities (like trash collection, septic, water and fire protection). Managing these subscriptions can be somewhat costly and time consuming. Also, island dwellers are not allowed to vote in city elections. And should an emergency arrive, the local police station will direct you to contact the sheriff’s department.

What are the Benefits? 
Living on a country island often means lower taxes, since you’re not paying for for city services. County islanders usually benefit from lower real estate taxes too. In addition to fewer taxes, they’re subject to less governmental oversight, such as city ordinances and code compliance.

If you’d like to see more county islands, this interactive map will show you all the cities and unincorporated areas of land within Maricopa County (hint: county islands are all white). You can also search for or exclude county islands in Monsoon.

What Happened to that Error/Violation I Reported?

Ducking paddling

Ducks and DI Errors: a lot happening under the surface

If you’ve ever reported an error, you may have found yourself wondering if anything came of it as you check your email for an update. Currently, we do not dispatch the results of the resolution back to the reporting Subscriber (it is something we are seriously considering). This causes it to appear that not much is going on, the reality is we’ve been working intensely to investigate every report. This process can take a while as we receive thousands of reports a year (21,000 reports in 2015 alone).

Understanding the life cycle of a error or violation can give you a better handle on what to expect should you come into contact with an issue.

Before You Report

     Know or Reach Out
Staying up to date on the rules and regulations helps you and us. For example, what counts as a Bedroom or not is an example of something often reported that is rarely a violation. Consult the Rules and Regulations policy or email the Data Integrity department at DI@ARMLS.com if you have a question. You might also try reaching out to the other Subscriber if you find something odd on their listing.

Error / Violation Life Cycle

     Discovery/Reporting 
Our process starts when a possible error is reported by a Subscriber or discovered by the Data Integrity team.

     A Case is Created
Once we determine that the reported error is or could be a violation, a case is created. We work these based on the order they are received.

     Investigation/Research
Depending on the type of violation, we may end up using a multitude of resources during research. These may include: the listing’s own change history, past listings and/or review of similar listings within the same location, Monsoon tax records, public property records and any other related resources available to us. In most cases the research will provide conclusive results, however, a more complex situation may require information from the agent responsible for the listing.

     Resolution 
At the end of the life cycle, the case is closed with an outcome of non-penalty violation, penalty violation or non-violation.

5 Simple Summer Showing Tips

Mercury thermostat heating up

In this busy market, every minute counts. But if you’ve got a full day of showings lined up in the summer, every hot minute can feel like an hour. And with monsoon season upon us, downpours and flash flooding can turn an uncomfortable experience into a frightening one. These simple summer showing tips can help make your outings a little more bearable and a little safer for you and your clients.

Smarten Up Your Route
The ShowingCart feature in ShowingTime lets you create a customized route for multiple showings. A little tweaking can save you what feels like hours out in the heat while on the road.

Aim For Early Showings
Even though 6 p.m. gets you out of peak hours and into the twilight, the ground is still radiating heat from the day. Scheduling an early morning tour will give you the coolest part of the day.

Stay Hydrated
Despite living in a desert, some people still underestimate the severity of dehydration and how quickly it can strike. Make sure your clients have water with them. Or better yet, bring a few frozen water bottles with you to hand out when they forget theirs.

Turn on AC in vacant houses
When homes get too hot, potential buyers may have a hard time focusing on anything other than the melty feeling they’re experiencing. If there’s still electricity running to the property, it’s worth the time to swing by and turn on the air beforehand. This way, the house makes a cool first impression (see what we did there?) and you won’t have to answer the inevitable “Does the A/C work?” question.

Pimp Your Ride 
Keeping monsoon ready supplies in your trunk, like a towel or flashlight, can help comfort your buyers should you get caught in the rain. It can also be vital if there’s a power outage in the home you’re showing. How’s your car’s A/C? If it needs a tuneup, consider getting that done sooner rather than later.

Mobile Flexmls Portal Changes

Flexmls Mobile, not to be confused with the desktop or native app versions, has undergone a few updates to improve the user/portal experience. Here are some of the cooler changes to the mobile portal:

Portal Landing Page 
When a client doesn’t enter the mobile portal through a subscription, the Home tab is now the default landing page a portal user sees.

Flexmls Mobile Agent Landing Screen

Portal View: Map
The List/Map toggles at the bottom of the screen allow for easier navigation on the map screen. There is also a feature where clients can draw on the map to limit the search.

Flexmls Mobile Draw

Portal View: List
The new list view has a better layout, a bigger display picture and is easier to use when sorting. The overall look and experience is more in-line with what clients expect from other third party portals.

Screen-two

Don’t use Flexmls Mobile? Similar changes to desktop and native app portals are coming in the next few months.

Syndication Change for Zillow and Trulia

Staring at choices making decisions

The syndication options Zillow and Trulia will now be combined and renamed as “Zillow Group” in the Flexmls export/syndication options.

The setting to send listings to Zillow, Trulia or both will now be found under one option in Flexmls. Zillow’s syndication policy has changed to no longer support two separate feeds to distinguish between Trulia.com and Zillow.com through Flexmls. This means that now, instead of selecting Zillow and/or Trulia to send your listings, there is one option for both called Zillow Group.

Before and After:

before-after

Do I Need to Do Anything?

• If you had Zillow and Trulia selected for your listing, nothing is required from you.
• If you had Zillow selected but not Trulia, the listing will be automatically enrolled as Zillow Group and begin syndicating out to both Zillow and Trulia.
• If you had Trulia selected but not Zillow, you will need to manually select Zillow Group and the listing will be sent out to both Zillow and Trulia.

To adjust your settings, see the Export tab on each listing from the Change screen.

Zillow Group may not be an available option as this option is a broker-level decision.

MLSSAZ (TARMLS) / ARMLS Data Share Ending

MLSSA (TARMLS) building

The MLS of Southern Arizona (MLSSAZ), formerly known as TARMLS, has given notice to ARMLS® that the data share agreement between both parties will end on August 8, 2016. Due to their future technology plans, MLSSAZ needs to remove their feed from ARMLS search options.

ARMLS Subscribers will no longer be able to search TARMLS/MLSSAZ listings from Flexmls and conversely, TARMLS/MLSSAZ users will no longer be able to search ARMLS listings.

Flexmls Association screenshot

The data share only consisted of publicly available fields, therefore Subscribers wishing to view listings in the Tucson/Southern Arizona areas can visit MLSSAZ.com. The possibility of a data share agreement in the future will remain open after MLSSAZ completes its technology upgrade.

STAT Market Update: June 2016

Canadian maple leaf

Each month Tom Ruff of The Information Market gives his stellar commentary on the housing market. Tom is armed with Pending data of which others do not have access. His insights are below. Read the full issue of STAT for the accompanying graphs.

One of the things I love about using real estate data is the ability to identify emerging and actionable trends. The economic factors of prior years can and will have a cause and effect on our current market. Five years ago the housing market in Maricopa County saw an influx of Canadian and institutional buyers. This month, we’ll take a quick look at how this impacts our market today and how using this knowledge might improve your marketing efforts.

First – the Canadians
Canadian buyers accounted for 5.95% of the homes purchased in Maricopa County at their peak in April of 2011. The Canadian dollar (CAD) was worth more than the US dollar and Canadians were purchasing at the bottom of our market. Today, the stronger US dollar buys 1.29 Canadian dollars turning our Canadian friends into mostly sellers rather than buyers.

In reviewing buyer/seller addresses on recorded affidavits of value in Maricopa County for the first six months of 2016, we see that for every one Canadian purchasing a home there are nine selling. The fear of some is now confirmed – our collective hockey IQ is falling. Currently in the MLS there are 388 active listings and 109 pending listings with Canadian owners according to mailing address on file with Maricopa County. Of these listings, 65% were purchased between 2009 and 2013 with 20% of the current listings having been purchased in 2011. Buying at the bottom of the market with a strong CAD, seeing significant appreciation gains since and now selling through a stronger USD has to be better than winning Sir Stanley’s “eh.” In short, Canadian sellers who purchased at the bottom are cleaning up and out.

The two charts on the next page will give insight into this phenomenon.

CAD Graphs

The Institutional Buyers
Large institutional buyers made their presence felt in our market in a big way starting in 2011 and increasing their significantly in 2012 until they pulled back in August 2013. The purpose of their purchases was to create large rental pools. According to data from The Information Market, large institutional investors currently hold 12,629 homes in Maricopa County. We have only seen a small number of the homes purchased by these institutions sell, but we have heard rumblings.

In a recent Bloomberg article, John Bertling, the Chief Executive Officer of Invitation Homes states that “Invitation Homes expects to cull about 5% of its properties annually”. More notably, the article states “about 25% of Invitation Homes’ renters who move out each year are leaving to become buyers,” according to the company. That’s similar to what other large firms are experiencing. Colony Starwood Homes has reported losing about 23% of departing tenants to home ownership and American Homes 4 Rent has said it’s figure is about 30%. All three of these companies have significant holdings in Maricopa County. Using the 25% figure, 3,163 new home buyers are coming from this rental pool each year. Can we say boomerang buyers?

Heat map of institutional holdings

Heat map of Canadian holdings

The ARMLS Pending Price Index (PPI) Our last Pending Price Index projected a May 2016 median sales price of $227,000 with the actual median coming in at $230,000 (off by 1.3%). MLS sales volume in June was 8,861 which was 187 more sales than June 2015 of 8,674. Looking ahead to July, the PPI Index projects a median sales price of $223,000. Last year between June and July we saw the median price dip and our model suggests a similar occurrence this year. I personally expect a modest decline in the median sales price in July, but probably not as low as $223,000.

We began July with 6,990 pending and 4,007 UCB listings giving us a total of 10,997 residential listings practically under contract. In comparison there were 10,761 of the same type of listings at this time last year. There are two fewer business days in July this year than last, so don’t be surprised if sales volume is slightly lower than the total last year of 7,914. Even though we have a higher number of residential listings practically under contract, a slightly smaller percentage will be successful.

Get Into The (Sales) Zone

Average subscriber area

The life of a Realtor takes them all over the Valley, but when it comes to sales area, the data points to a smaller area a little closer to home. The average Listing Agent tends to work within a radius of about 6.65 miles while Buyer’s Agents typically have a slightly bigger area of 7.25 miles. #NowYouKnow

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