STAT Market Update: August 2016

Desert landscape

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.

Over the past two months, we’ve shared our thoughts and prognostications on how the July and August 2016 housing numbers would come out and what others would say about them. Now with the actual numbers out, there is no one better than our good friend Michael Orr of the Cromford Report to explain what actually happened:

“Just as we predicted last month, August was a very robust month for sales, up almost 14% from August last year in stark contrast to the uninspiring numbers in July (down over 3% from July 2015). We have already seen countless headlines about weak sales in July and no doubt we will see as many stories about the very strong recovery in August once the numbers are widely distributed. However all these headlines serve to do is illustrate that reporters (and even some real estate analysts) have a hard time properly understanding the effect of the Gregorian calendar on monthly real estate numbers.

July 2015 had 22 working days
July 2016 had 20 working days (10% fewer)
August 2015 had 21 working days
August 2016 had 23 working days (10% more)

“All the variation in monthly sales counts in July & August are due to the above facts and had nothing to do with conditions in the real estate market which remained very similar throughout the period. It is amusing to see all the analysts trying to explain the July numbers with ‘low inventory’ and ‘poor affordability’ the favorite excuses. Nope. The correct reason was ‘there was a weekend at both ends of July’. It will be interesting to see what explanations are used for the August bounce, because inventory has moved lower still and affordability did not improve at all. If we combined July and August in both 2015 and 2016 we get 43 working days in both years and the numbers match properly again. Then we see that the two month sales count rose 4.6% over last year. We have been seeing a similar volume improvement in the ARMLS numbers all year. Nothing unusual has gone on in July or August. However, sales have increased much more than this among new homes, just as they have all year. New homes are poorly represented among ARMLS listings since about 90% of them sell outside of ARMLS. In public recordings however, we are seeing new home growth rates far in excess of the growth rates for re-sale homes.”

Confessions of an AVM Modeler

Automated Valuation Models (AVMs), whether we love them or hate them, are here to stay. Over the past few months we’ve been working on our own model through continual testing and improvement. We hit upon this topic in STAT last month but it’s big enough to drive an RV through and therefore worthy of another write-up.

By analyzing all past sales we are able to calculate an estimated value for nearly all 1.25 million homes in Maricopa County. Our model is tested by comparing new sales as they occur to our previously calculated estimated value with the thought being that the price for which the home sells is its true value. We then ran our test against the last 10,384 sales. The historical data used to calculate the AVM were from home sales occurring prior to the 10,384 sales used in the test – no listing data was used.

Our test results read as follows:

47.5% of estimated values were within 5%
75.2% within 10%
88.3% within 15%

The full test results are displayed on the chart below.

Public Records Only AVM Accuracy

Chart of test results

Going one step further, we can break down the percentage differences between the actual sales price and our AVM. When we test our model against MLS sales only, properties that were sold using a real estate agent via the MLS sell between 8.5% and 9.0% higher than properties not listed on the MLS.

When we view the public remarks sections of the listings in our sample, it gives us further insights into both the properties the AVM undervalued as well as overvalued.

For the properties overvalued by more than 20% we see phrases such as: “great fix & flip”, “property offered as is”, “fix up needed”, “handyman special”, and “no loans/cash only/as is.”

When we categorize the properties overvalued by the AVM the following groups reoccur: incorrect data, houses that burned down, houses that were torn down, partial interest, mobile homes, wholesale properties, hard money loans, investor buys, fixer uppers, REOs, properties in foreclosure, short sales and non-MLS sales.

For the properties undervalued by more than 20% we see these comments in the MLS: “painstakingly restored”, “completely reconstructed master suite added”, “master architect rebuild”, “beautifully remodeled”, “stunning high quality remodel” and “beautifully upgraded.”

When we categorize the properties undervalued by our AVM the following groups reoccur: sold on the MLS, partially renovated, added square footage, custom homes, complete remodels, new construction on previous tear downs, suspected fraud, extraordinary properties and incorrect data.

MLS Listing Data Model

The AVM discussed earlier was built without using listing data. If we factor the listing price into our model, our accuracy scores go up dramatically! Further proof that if you want to know what your home is worth, ask an ARMLS Subscriber

84.6% of estimated values were within 5%
94.2% within 10%
96.8% within 15%

The full test results are displayed on the chart below.

Chart of test results

On a final note, we have found that by using our AVM to audit the reported sales price we can identify data errors that we would have had no other way of identifying. Comparing our AVM to the actual sales price is now an intrinsic part of our data cleanup.

ARMLS Pending Price Index (PPI)

Last month STAT projected a median sales price for August of $225,000. As has been the trend this year, our mathematical projections were slightly lower than the actual results. The reported median sales price for August was $230,000, 2.2% higher than the $225,000 projected by our model. Looking ahead to September 2016, we expect little change in the median sales price. The ARMLS Pending Price Index projects a median sales price of $227,000. A betting man would wager on $230,000.

MLS sales volume in August 2016 was 7,843, which was 11.9% higher than the total last year of 7,010. STAT had expected August sales volume that resulted in strong year-over-year gains, as there were 23 business days this year compared to 21 business days in 2015. We begin September with 6,388 pending and 3,644 UCB listings giving us a total of 10,032 residential listings practically under contract – this compares to 9,596 of the same type of listings at this time last year. There were 21 business days in both years. MLS sales volume in October 2016 will be comparable to last year’s total of 6,935 where STAT is projecting 7,175 sales. We have now reached the point in the year where monthly sales volume begins its annual descent, with declines each month through November. Sales volume for the first eight months of 2016 might best be described as 2015 revisited with ARMLS reporting 60,564 sales this year compared to 58,958 sales last year.

Elections Around the Valley

Map with pin in Phoenix

Calling ALL Voters!

As you may know, ARMLS elections are underway with one open spot available in this All –Subscriber election. Voting opened on 9/14 and will continue until 11:59 p.m. on 9/26. Be sure to cast your vote at 

In addition to the ARMLS election, there are other elections happening all over town.

In the west Valley, qualifying members can vote to elect four new directors to the WEMAR board. Voting runs September 9 to 3:00 p.m. on September 30 and is open to all members of the West Maricopa Association of Realtors. Visit the WEMAR website to meet the candidates and cast your vote.

With 6 open director positions and 13 positions at AAR representing PAR, this election is one of the largest currently underway. Voting is done online and will end at 5:00 p.m. on Tuesday, September 27. A list of candidates along with voting information are available at

WPAR elections are underway for three open slots on their Board of Directors. Visit their website to learn about the candidates and check your email for updates and information around voting.

SAAR board elections will begin on October 1st. More information will be available as the date gets closer on their website and in your SAAR newsletter.

The eKey, iOS 10 and iPhone 7


Apple released their newest operating system (iOS 10) and now the iPhone 7. If you have an iPhone and use the eKEY here is what you need to know:

If you have an iPhone 6, iPhone 6 Plus or older
The newest version of Apple’s operating system (iOS 10) is available for download. The eKEY will work just fine with this new operating system.

If you have an iPhone 7 or 7 Plus
Despite the newest iPhone running iOS 10, they are not compatible with the eKEY yet. Supra has engineers updating the eKEY app to work with the iPhone 7. If you’ve already purchased an iPhone 7 and have the eKEY, we can help by giving you a loaner ActiveKEY until the update is live.

RV Parking vs. RV Gate vs. RV Garage

RV in the desert

RV (Recreational Vehicle) ownership is at an all time high in the U.S. with 21% of households intending to purchase an RV some time in the future. Becoming familiar with the RV fields in Flexmls will help you when listing or searching out an RV friendly home. And that’s sure to make your client one happy camper.

The three most commonly used RV options in Flexmls are RV Parking, RV Gate and RV Garage, all located under Parking Features. 

RV Parking
RV Parking refers to the physical space, covered or uncovered, on the property that is able to store an RV. This is usually a cement slab, but can come in any form. It could also mean there is RV Parking adjacent to the property such as a lot where all residents of the community would be allowed to park their RVs.

RV Gate
An RV Gate is a gate on a fence that could fit an RV. If you have an RV Gate and the property is located in an HOA, you might want to double check to see if the HOA prohibits RV Parking in the backyard. It’s important to remember that just because you have an RV gate doesn’t automatically mean there is RV parking, for example if the area is landscaped or can’t support the weight of an RV.

RV Garage
An RV Garage is just that- a garage large enough to house an RV. This is a form of RV Parking, so if you have an RV Garage be sure to also select RV Parking.

In Flexmls we currently have 1,887 listings where both RV Gate and RV have been selected (2,979 as RV Parking only and 3,814 listings as RV Gate only). Remember when searching in the MLS for RV options in the Parking Features to enable and/or/not accordingly.

Flexmls Parking Features Screenshot

Flexmls Email Opt-In Update

New: When a contact clicks on a view listing(s)/search/CMA link from a manual email, that contact is then opted-in to receive subscriptions. 

Before, the only way to opt-in contacts for subscriptions was via the Flexmls invitation email that could only be re-sent once. Now, you can encourage your contacts to opt-in by sending them a manual email of listings. Make sure to add your prospect in Contact Management prior to using this feature.

opt-in email text

In addition, if Send a Copy to Me is selected on a manual email, it will now include a link back to the private version view in your copy of the email.

private link screenshot


All-Subscriber Elections


Nominations are now open for the All-Subscriber Election

This year, one seat (a 3 year term) is open in the All-Subscriber election. In order to run, you must meet ALL of the eligibility requirements:

(A) You must be an active Subscriber now and at all times during the election process AND
(B) You must have been an active Subscriber on July 31, 2016 and continuously since then AND
(C) You must have one of the following ARMLS Membership types: Realtor, Designated Realtor, Appraiser or Salesperson.

You can nominate yourself by submitting the Election Form on the ARMLS website. Nominations close on September 9, 2016 at 11:59 p.m.

For more details, including an elections calendar, head over to the ARMLS elections page.

Labor Day Hours

Common laborer's tools

In observance of Labor Day, ARMLS will operate according to the following holiday schedule:

Monday September 5 The ARMLS Helpdesk (480-303-7020) and the Tempe Support Center (130 S. Priest Dr., Suite 101, Tempe) will be open from 9:00 a.m. to 3:00 p.m. All other departments and Support Centers will be closed.

Tuesday September 6: All ARMLS locations will return to normal business hours.

What Does FWA Mean?

Files in a Filing Cabinet

Maybe you’ve seen or heard this term but were unsure of its meaning. FWA simply means “Filed With ARMLS”. The official definition and rule can be found in section 1.17 of the Rules and Regulations and states:

“…the filing with or submission of information to ARMLS by a Subscriber, or the Subscriber’s authorized representative, for inclusion in the ARMLS Compilation. FWA may take on the tense required by usage, and may mean “file,” “filed,” or “filing” depending on context.”

FWA occurs when an ARMLS subscriber or an authorized representative, such as an assistant or transaction coordinator, files information into the Flexmls database. Some of the information that’s commonly filed with ARMLS could include: new listings, listing photos, status or price changes, and/or extending the listing expiration date. All of the information that you file with ARMLS will be included in ARMLS Compilation (the MLS detail sheet of your listing for example).

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.

1 2 3 53  Scroll to top