Election Prep, CPI Controversy & Maricopa County Real Estate Market Update

June 04, 2018•4 min read

I'm already preparing for the upcoming election, as both a REALTOR and as a voter. The local agent's association, WeSERV, had groups who interviewed candidates vying for local political offices. I participated in the 3 days of interviews for 16 candidates for Mesa, Chandler, and Gilbert Mayor and City Council positions. Click here for the YouTube Short. It was a fascinating experience and I hope to do it again.

Anyone with a cell phone can PRETEND to be an "expert" on YouTube. Click here to watch the video.

For the monthly period ending May 15, we are currently recording a sales $/SF of $307.16 averaged for all areas and types across the ARMLS database. This is up a massive 3.2% from the $297.57 we now measure for April 15.However, the light volumes mean prices are more volatile than usual.A larger sample size would make for more reliable readings.
After the surge between mid-April and mid-May,we would not be surprised to see pricing fall back over the next monthand our official forecast feels over-optimistic.
Now the above Cromford Report data is for the entire Maricopa County. I've been chatting with a few of you this past month and some cities, such as Chandler, are in solid Seller's Markets and prices are going up faster than other areas.
(It is my understanding that Chandler is outpacing Gilbert due to future water supply. Gilbert just increased the cost of their water by more than I care to admit to help defray water and sewer-type infrastructure costs. I live here and am not impressed to say the least.)

Are you considering buying or selling a home? Reply to this email or text me at 602-730-2143.

Here is why I think CPI (Consumer Price Index)sucksfor deciding if inflation is still happening.

Why do we care? The Federal Reserve uses it as one indicator to decide if we have inflation and, if so, by how much. The goal the Feds have repeatedly said is they want 2% inflation. As you can, hopefully, see in the chart above CPI is45% shelter costs. For those who might not have rented in a while, most leases are for 12 months. Therefore, whatever that number ends up being, some of the data is a year old. WTH!

In our soon-to-be hellishly hot county, inflation numbers with rents counted is +5.8%; far more than 2.0% goal inflation rate. Yuck!

So, what are "shelter costs" actually?

Now I'm gonna bag on how they determine "shelter costs." I'm guessing you are thinking this is logical. "Of course they ask various well-known websites, such as various MLS, Zillow rental, and apartment focused sites for data on what is being advertised." Nope.

Look at the CPI graph again at the 3 row box below the pie graph. The part about 26.713% being "owner's equivalent rent of residences" means they are telemarketing homeowners and asking how much they think their house will rent for.YES, you read that right!They ask people who AREN'T renting their homes how much they think the market will bear. Whatever they say, unless they are in the property management business for homes similar to theirs,the number is absolutely WRONG.

(Totally random question: have you ever had a telemarketing call, actually answered it, and then given a reply to all the questions? I suspect the odds are more in the favor of someone winning the lottery than finding enough homeowners to be statistically viable who have tenants in similar homes to theirs to answer that question skillfully.)

In Maricopa County, as I'm not going to take even more time and find the national numbers, the inflation rate would only be 2.1% if shelter costs weren't included. As for rents, we have had flat rents of individually owned houses here since Sept 2021. (Yes, apartments have been increasing their prices, but that is a whole other issue that our state's AG is working on handling.)

Are we in a BUYER'S, SELLER'S or BALANCED market?

Yeppers. Most of the Valley is in a Seller's market, though a fair number of those on the outskirts are in Buyer's Markets. Where would you love to move to? Reply to this email if you are curious about the housing market going into the melting months, when it usually goes slower the more we get tired of going in and out of our cars into the heat.