• Total sales exceeded 100,000 transactions up, exceeding our last “normal” years in 2002, 2003, and 2004.
• Total new listings of 121,041 also approached the pre-boom years.
• Months supply of inventory is also righting itself, and now hovers about 4-4 1/2 months.
• Pending foreclosures dropped significantly, and are now 60% below the decade high.
• Distressed sales (short sales and foreclosures) dropped from 70% of total sales to just under 60% for each of the final two months of the year.
• Short sales now exceed foreclosures.
• Median sales price increased about 5%, while average sales price inched up 3%.
• Unemployment started the year at over 9%, and dropped almost 1.5% through Novembers estimates.

All in all, these numbers paint a picture of a Phoenix real estate market that is strengthening and gaining steam.  Seems that 2012 is going to be a pretty good year!

Credit goes to the Arizona Regional MLS for these stats.  If you’d like to see their full report, complete with some very helpful charts, click here:  Stat 2011 Year in Review

Look at this chart for a striking view of the amazing free fall of total home inventory in Phoenix during 2011.  The heavier line shows that from a high of 42,881 in January to a low of 24, 712 in December, housing inventory has dropped over 40%.

No wonder buyers are saying things like, “I never knew it’d be so hard to find a home.” Well-priced homes are attracting buyers, and in some cases, houses are going over list. Really.  One of my clients offered 15% over list on an entry-level townhouse. Multiple offers. And his bid was not accepted.

Lack of inventory will create an interesting environment. While the last time around, the lack of inventory created a buying and selling frenzy, driving home prices sky high, this time around, both buyers and sellers are taking more time to make decisions and not rushing into a sale.

To read the full report: ARMLS Stat Report – January 2012

Here’s the latest Phoenix real estate market update from the Cromford Report:

• Except above $800,000, sales prices in $/SF are now higher than a year ago.
• Inventory is falling again for all price ranges.
• Above $400,000 demand remains relatively weak.
• Lender-owned inventory is still falling and REOs are losing market share in sales.
• Active short sales are fewer in number, with normal listings gaining market share.

And more specifically, by price range:

1. Homes under $100,000 – Low supply conditions heavily influencing the market. Sales prices are now 6.9% higher than last year.
2. Homes Between $100,000 and $200,000 -  Supply and demand both move lower. Pricing is still moving up.
3. Homes Between $200,000 and $400,000 – Supply has fallen and sales are perking up. Pricing remains extremely stable.
4. Homes Between $400,000 and $800,000 – Supply is down but demand not very strong. Prices stable.
5. Homes over $800,000 – Supply has stopped growing but demand remains weak. Prices remain remarkably stable.

For the full report, click here: The Cromford Report™ – Monthly Market Review – Dec 28, 2011

10 Cities Where List Prices Soared Last Month

Number 2 on the list is the Phoenix-Mesa MSA (Metropolitan Statistical Area), of which Scottsdale plays a significant role.

And today, Michael Orr posts in the Cromford Report Daily Observations:

December 22 – The Daily Market Snapshot is unusual today. Every single item measured is showing improvement over December 22, 2010.

 
(Click for larger chart view.)

It does seems to be a remarkable turnaround since Phoenix was just noted on Forbes list of 13 Cities Where Home Prices Are Falling Dangerously.

2012 is going to be VERY interesting!

Recent updates on the Phoenix and Scottsdale real estate market:

• Phoenix Realtors Positive for 2012
• NO! The sky is not falling in Phoenix real estate
• Improvements and Challenges in the Phoenix Real Estate Market

• In every price range, sales prices in $/SF are now higher than a year ago.
• Inventory is still falling below $200,000 and constraining sales volumes.
• Above $200,000, supply is rising and demand remains relatively weak.
• After a noticeable weak patch during the summer, prices have regained strength.
• Lender‐owned inventory is falling fast, especially at the lower price levels.
• Short sales are overtaking foreclosures as the primary mechanism to resolve mortgage debt problems.

The fact that home prices (per square foot) is improving in all price ranges is great news, especially in the slower November market.

However, the challenges that are constricting the market in the lower end, with falling inventories, make it difficult for buyers are who seriously looking to find the homes they are looking for.  I have more than a handful clients who are in this situation. They have cash or financing lined up, but the house selection is minimal in many price ranges. They increase their geographical search area and their upper limits to the price ranges and still do not have a lot of choices.

As we approach the end of the year, I believe we are all looking forward to a robust spring, where more sellers are ready to sell, and buyers find what they are looking for.

Read the full report here: The Cromford Report – Monthly Market Review – Nov 28, 2011

Past Phoenix Market Reports:

• Greater Phoenix Real Estate Update for Single Family Homes–October 2011
• Greater Phoenix Home Sales Pricing Trending Upward
• Scottsdale Real Estate: “Shadow inventory” on the decline

Market Headlines

• A big contrast exists between the market under $200,000 and the market above that figure
• Enthusiastic buying below $100,000 is causing significant price rises as inventory becomes tight.
• Above $200,000 the market continues to deteriorate slightly.
• Above $400,000 there is potential for further price weakness unless demand improves.
• The overall average for sales pricing is now on an upward trend.
• REO inventory is falling fast, especially at the lower price levels.

1. Homes under $100,000

Summary: Supply getting tight and now constraining the market. Prices are rising and are now 2% higher than last year.

The sales count in this price range dipped 5% between September and October but is still over 40% higher than October 2010. Pending sales are down by nearly 8%compared with last month and are 28% higher than last year. The sales volume is now limited by the low supply. In fact this is the only price range where supply fell last month, down 4.6% and now 49% below this time last year.

2. Homes Between $100,000 and $200,000

Summary: Supply edges up and demand weakens. However pricing is very stable and now trending slightly higher.

Supply increased by 2.1% over the past month but is still down 2.6% compared with 3 months ago and 47% compared with this time last year. Lender owned active listings are down by 70% over the last 12 months while short sale listings are down 42% and normal listings are down 39%.

3. Homes Between $200,000 and $400,000

Summary: Supply is higher and demand is fading. Nevertheless, pricing remains stable at the moment.

The supply of single family homes priced between $200,000 and $400,000 increased by 4.2% between September 26 and October 26 and is now up 6% over the last three months. However it is down 30.4% over the last year. Over the last month REO supply fell by 1.3%, short sales and pre-foreclosures fell by 4.8% and normal listings was where all the growth came, increasing by 9.8%.

4. Homes Between $400,000 and $800,000

Summary: Supply is up and demand is down. Sales prices dropped in September but now appear to have stabilized.

Single family homes between $400,000 and $800,000 have seen active listings grow 8% over the last month and 12% over the last 3 months. This is still down 24% compared with this time last year, but this is just one of many signals that the dynamics of this price range are starting to deteriorate. The sales volume weakened again in October, with monthly sales down 7% compared with September and also down 7% compared with October 2010. Pending sales fell by 5.1% over the last month and are now a remarkable 22% below last year.

5. Homes over $800,000

Summary: The luxury market remains weak. Supply is growing while demand is muted.

We have a mixed picture this month for the luxury market. The monthly sales rate was 18% higher than last year but pending sales are down 17% compared with last October and 19.5% lower than three months ago. Demand has still not recovered from the steep drop off which coincided with the debt limit crisis and the stock market decline in July. Supply is on the rise, up 7.2% over the last month although still 25% below last year.

If you’d like the full report, email me at dru@drubloomfield.com and I’ll email you back the full report in PDF format.

Prior reports:

• Phoenix Real Estate: Supply is down, so why aren’t home prices rising?
• Greater Phoenix Home Sales Pricing Trending Upward
• Greater Phoenix Short Sale Update: Less than 6 months supply

Good news is that, my wonderful contacts at ORTC, emailed me the presentation last night.  The full presentation was much longer, but the following charts were especially helpful.

This section of the presentation:

 “Supply is way down. So why aren’t prices rising?”

Was answered:

“It typically takes 12-18 months for prices to respond to a big change in the supply/demand balance.”

The following charts show Mike’s logic.

First, "Days Inventory” is defined as the number of active listings divided by the average daily sales over the last year.

Next, he shared the 10+ year history of Days Inventory, also including those properties that are noted as Active with Contingency. These are, for the most part, short sales that the seller has accepted the offer, and all parties are waiting for the bank short sale agreements to be negotiated and accepted.

The “normal” market in Phoenix real estate ended in early 2003.

The “bubble” lasted almost 3 years, ending in early 2006.

Mike called the period of early 2006 through mid-2007 as “running on fumes”, while home pricing remained stable.

Late 2007 marked the beginning of the pricing free fall.

And then mid-2009, we started seeing signs of stabilization.

Taking shorts sales into account, Days Inventory is still running at a lower level than our normal markets of the last decade.

And when you look at the true number of homes available for sale, excluding those with contingencies, you see that the situation is even more striking.

I’ve heard Mike say this before, and he noted it in his presentation slides.  Basically, “The longer it take before prices respond, the larger the response is likely to be.”

I still get regular requests to help buyers find a “good deal”, and I know exactly what they mean. The reality is that with housing inventories running as such low levels, finding a house that matches their needs and wants, is really the bigger challenge.

I hope that sellers will be encouraged by this historical perspective.  I know I am.

More on our local real estate market:

• Greater Phoenix Home Sales Pricing Trending Upward
• Historical Look at Scottsdale’s Median Home Sales Price (2001-2011)
• Scottsdale Real Estate Update: A Historical Look at Supply and Demand