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Market Reports

Phoenix Metro Real Estate Update: 2010 home sales showing signs of being 2nd highest on record

by Dru Bloomfield on August 9, 2010

The Arizona Regional MLS (ARMLS) has published its July home sales report for the Phoenix Metropolitan area.

Highlights include:

June home sales continue to increase, following a five month trend
June sales were the high monthly total in the past 12 months AND number of sales were the highest since August 2005
If this year’s home sales continue tracking at their current rate, 2010 sales could could exceed 100,000, and go on record as the second highest sales year ever.
Inventory has held steady all year long, with just over 40,000 units.
The Months Supply of Inventory metric has remained just under 5 months for all of 2010.
Average and median list prices set new record lows for the decade.
Sales prices have been showing signs of stabilization.
However, the ARMLS Pending Price Index continues to predict a slight reduction in sales prices.
As of this report, pending foreclosures are down, and lender owned sales continue to decline.
Average Days on Market (DOM), or the number of days it takes to get an accepted contract has been fairy stable over the past year.

Read the report to get complete commentary and graphic view:

ARMLS – Your monthly statistics for the Phoenix Metro area – July 20, 2010

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Scottsdale Real Estate Update: Comparing Short Sales and Foreclosures, 2009 vs. 2010

by Dru Bloomfield on July 17, 2010

Here’s a quick update on the status of the Scottsdale real estate market, looking at it from a “distressed” point of view.

First, a reminder of where the Scottsdale market was last year at this time. A quarter of the listings were either pre-foreclosures or lender-owned properties, yet these two types of sales accounted for almost half of the sales. Depending on the type of sale, listing prices in June 2009 ranged from about $180 to $350 per square foot. Sales prices ranged from approximately $140 to $210 per square foot, with normal sales being about 50% higher than distressed sales.

Looking at today’s market, you will see that not much has changed. More pre-foreclosures are listed, but not significantly more. Sales of lender-owned properties are down a bit, pre-foreclosures are up a bit, for a wash. Listing prices ranged from about $190 to $310 per square foot. In June 2010, sales prices ranged from approximately $145 to $215 per square foot, with normal sales being about 50% higher than distressed sales. Not a lot of difference. According to the Cromford Index, the market is a bit more distressed.

All in all, more of the same, a bit of bumping across the bottom as many have predicted. Only time will tell when, we start to see some significant improvement.

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For the sake of clarity, I have included the following definitions of terms that were used in this Cromford Report chart:

The Distress Index gauge at the center shows a value from 0 to 100 which expresses the overall level of foreclosure activity.
REOs or lender-owned properties have already been through the foreclosure process and completed their trustee sale. These properties were sold by the trustee to the beneficiary (lender). In a few trustee sales (typically less than 5% at the moment), the property may be sold to an investor or wholesaler who is prepared to bid higher than the bank. These properties are not classified as lender-owned.
The Pre-foreclosure category includes those properties that have started the foreclosure process, but have not yet had the trustee sale. We also include those which are being marketed in a short-sale situation, even if a notice of trustee sale has not been issued. In a full pre-foreclosure situation, the owner(s) have received a notice of trustee sale and the property is being marketed in order to try to sell the home before foreclosure completes. Many of pre-foreclosures are in a “short sale” situation, where the price asked is lower than the outstanding debt secured by the home. Such sales require the approval of the lender.
Normal sales are those where the owner has the unencumbered right to sell the property without requiring approval from a lender, court or external corporation of any kind, and the owner is not a financial institution. In a normal market, these constitute the vast majority of all listings and sales. The degree to which these sales become a smaller proportion of all sales indicates the level of distress being felt in the market.
Active listings include active-with-contingency and are measured at the beginning of the calendar month. All figures are for single family detached homes only. Monthly sales means sales that closed during the preceding calendar month. The date shown at the top of the dashboard is the date on which this measurement was taken.

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Scottsdale Real Estate Tip: Pricing your house to sell

by Dru Bloomfield on July 14, 2010

I have all kinds of great real estate statistics at my fingertips, and I find the Scottsdale real estate market really interesting.

Different from the surrounding cities because of its price range. Highly desirable because of its beauty, features, attractions, schools, and more. People from around the world know Scottsdale, because of its branding. Scottsdale is a destination, that often becomes a first or second or third home for people visiting the city.

What home sellers need to know is that regardless of the attraction Scottsdale has, home buyers are still looking for value. A deal. Concerns exist that real estate prices haven’t reached the bottom of the market. And when you look at these next charts, you will see why buyers have been taking their time and making fairly aggressive offers when they do make a move.

First off, you’ll see the Listing Success Rate, which is a comparison between the number of listings sold and the total number of listings closed (sold, expired or canceled) in the last month, expressed as a percentage. So basically, about the same number of listing were canceled or expired as closed last month.

In the next chart you’ll see a number of different Average List Price per Square Foot gauges.

Active Listings – the average price per square foot for all homes for sale, listed as Active or Active with Contingencies, as of July 8th, 2010

Pending Listings – the average price per square foot for all homes pending (under contract) as of July 8th 2010

Closed Listing – average price per square foot for all homes that closed in the prior month

And, then in the lower graph on the same chart, you will see that the actual sales prices is less than all three of these figures, except for this most recent month where pending listings have dipped below the sales price. This most likely indicates that future sales prices in the next couple months may be down. The most telling number on this page is the List Price Premium, which shows that Scottsdale homes are selling at 46% less than the list price, when comparing on a price per square foot basis.

Taking a more detailed look at Average Sales Price per Square Foot, you’ll see that the home appreciation I wrote about a few days ago, is a potential trend. When looking at the figures on an annual basis, it clear to see that depreciation has definitely slowed, and maybe, just maybe, we are at the bottom of the market. Comparing this past month with the same time last year, you’ll see a 5% increase in appreciation.

Now to look at Sales, which are up and have been for the past several months. The annual trend has been increasing, but shows signs of tapering off. Comparing the number of sales for this past month with the same time last year, you’ll see a 5% improvement.

So, for Scottsdale home owners who are thinking about selling, the market is gradually improving. At the same time, the home buyer’s mindset is one of holding the upper hand.

The good new is that Scottsdale home sales are up. Prices are somewhat stable and even appreciating slightly. However, prices (average per square foot) are on average 46% higher than the actual sales price, which would definitely explain why so many home listings are expiring or being cancelled.

Bottom line: Buyers know when a home is priced well and they will jump on it, making an offer that much closer to the asking price. Selling a home quickly will make some home sellers feel like they’ve left money on the table, but in reality, the sales prices for a home that sells quickly, in most every case, will be higher than a listing that priced too high that stagnates on the market. If you want to sell your home, you need to price it to the current market. First time, every time.

Related Posts:

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Phoenix Real Estate Market Summary – July 2010

by Dru Bloomfield on July 12, 2010

Mike Orr, founder of the Cromford Report, does a fabulous job of looking at the details of the Phoenix real estate market. So thorough that , with his permission, I’m sharing his full report for July 2010.

I’ve taken the liberty of underlining what I see as the highlights of his very detailed information and our current real estate market.

Market Summary for the Beginning of July
Cromford Report – July 4, 2010

The overall market continues to deteriorate. If we compare some key indicators with the same time last month and last year we see that:

Active listings are up slightly (1.7%) from June and 11% higher than last year.

Pending listings are down 17% from June and 18% lower than last year.

Listing success rate is down to 63.5% compared with 65.5% last month and 62.7% last year.

Sales price % of list has fallen to 96.07% from 96.22% in June and 96.11% last year.

Days inventory rose from 156 to 159 in June, but was 177 last year.

Months supply rose from 4.3 to 4.7 in the last month but was 4.1 last year.

Only the change in pending listings could be regarded as a major movement, but the changes are mostly negative and we have witnessed the Cromford Market Index™ falling to 99.5 from 108.7 last month and 115.2 on July 3, 2009. We now have a market where supply is roughly equivalent to demand. The period when demand outstripped supply lasted from May 18, 2009 to July 1, 2010. The significant danger now is that this trend will continue, and we think this is most likely at the bottom end of the market. If the Cromford Market Index™ continues to fall at the current rate for several months, then the outlook is not rosy. However, if it stabilizes between 90 and 100 then this range can be considered perfectly normal and the market is likely to stay stable. Individual cities that show the weakest Cromford Market Index™ readings (as of July 1) include:

Maricopa (67)

Chandler (85)

Cave Creek (88)

Sun City West (88)

Sun City (91)

Queen Creek (91) – (includes San Tan Valley)

Gilbert (92)

Laveen (94)

Scottsdale (95)

A clear exception to the trend can be seen in Paradise Valley where the Cromford Market Index™ has improved to 101, its highest reading since March 2006. Here supply has fallen quite quickly in recent months while demand has improved, largely due to more realistic pricing by sellers.

Monthly closed sales were 9,261 in July and 9,029 in June, so these are still strong due to the large backlog of contracts signed by April 30. However the monthly sales number has fallen 3.5% below the equivalent 2009 level, and looks to be headed lower for July and August.

A piece of good news is that the deterioration in the Greater Phoenix market seems to be less than that reported in most other parts of the US. The National Associates of Realtors® (NAR) reported that their national Pending Home Sales index fell to 77.6 in May, down 30% from April. The decline was lowest in NAR’s west region where it fell 20.9%. We reported a 13.65% decline in pending listings between April and May.

The market for lender owned properties has deteriorated the most:

REO active listings are up 15% over June 3, 2010 and 24% over July 3, 2009.

REO pending listings are down 17% from June and 39% lower than last year.

REO listing success rate is down to 92.3%, compared with 94.0% last month and 91.2% last year.

REO sales price % of list has fallen to 98.09% from 98.38% in June and 99.15% last year.

Days inventory rose from 44 to 53 in the last month and was 41 last year.

Months supply rose from 1.4 to 1.8 in the last month and was only 0.9 last year.

Buyers have clearly reduced their appetite for lender owned properties, but the trustees are still generating REOs at a fairly constant rate when measured over a three month period. The result is that the contract ratio for REOs on ARMLS has fallen from a peak of 163.87 on June 18, 2009 to only 68.31 on July 3, 2010. The trend is still downwards so we can expect future weakness in the REO market, especially compared with the frantic buying of 2009. Average list price per sq. ft. for active REOs has fallen from $87.56 on April 1 to $81.72 on July 3. Average $/SF for active REO listings is now lower than this time last year though still higher than April 2009 when it averaged about $78 per sq. ft. Median sales prices for REOs have fallen back from $105,000 in early June to $99,000 now. The lowest recorded median sales price for REOs was $88,640 on April 24, 2009, so we are still well above that low point.

Significant good news is that banks are issuing fewer new foreclosure notices. The new notice count for June 2010 was the lowest monthly number since April 2008. Since there are fewer properties going into foreclosure while the rate of trustee sales remains flat, the inventory of pending foreclosures is falling fast. We can see in the following chart that the peak (just over 51,000) was reached at the end of 2009 and since March the fall has been accelerating, We now have 42,586 properties in Maricopa County pending foreclosure, down about 17% in six months. This tells us that the foreclosure tsunami is finally starting to flow back out.

If we look more closely at short sales, we see that the situation is looking more mixed. Compared with last month, active listings are up a little, while pending listings are down a little. However the monthly sales rate is at a new high point of 2,341. Listing success rate and sales price % of list are both improving, but the contract ratio is down from 123.4 last month to 108.3. This is still a very healthy number and higher than the 104.8 we saw at the same time last year. Overall, short sales are doing pretty well and better than many people expected at this time last year.

For normal listings, the active listing count is still falling, but the pending listing count is falling faster. The monthly sales rate is also falling, as is the listing success rate and the sale price % of list. However all of these measurements remain higher than last year. This suggests a temporary lull in the market rather than a major change in direction. It seems natural that the expiry of the tax credit would cause a temporary lull. Is something else happening? We don’t yet know for sure.

The media is once again full of phrases like “collapse”, “plummet”, or even “carnage”. Talk of “mild to moderate deterioration” does not make good headlines, but it is an accurate description of what is currently happening in Greater Phoenix. Before we panic, let us remember that pending listings are still at the second highest level ever for July (lower than 2009 but higher than 2005). See chart below for confirmation. Of course the new home market is still very quiet, but contracts for resales, and especially short sales, are still doing very nicely, even after the tax credit expiry.

We shall have to wait until the effects of the tax credit have worked their way through the market. By the end of August we should be able to confirm whether there is additional underlying weakness in demand and, if there is, examine its possible causes by investigating the locations and price ranges most affected.

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Scottsdale Real Estate Update: A Hopeful Sign?

by Dru Bloomfield on July 11, 2010

Always on the lookout for signs of improvement in the Scottsdale real estate market, I found one today.

For the first time in almost three years, positive (greater than zero!) appreciation was noted. In fact, you will see that Scottsdale real estate appreciation has been improving fairly steadily over the past year, and more significantly since January 2010.

While we still have a way to go towards a healthy market, it’s encouraging to see some positive signs.

Recent Posts on the Scottsdale Real Estate Market:

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Steady as She Goes – Greater Phoenix Home Inventory Update

by Dru Bloomfield on July 5, 2010

Here’s a quick update on the Phoenix Metro housing inventory situation. Not much has changed in the past several months, and based on past volatility, that’s a good thing.

It’s still a seller’s market at $275K and under, and a buyer’s market at $600K and above. There’s definitely some softening at the upper end, compared to a couple months ago, but no dramatic changes at this point.