May 5 - Continuing yesterday’s theme, we will compare the cost of housing in Greater Phoenix with examples from the rest of the world. We’ll use average price per sq. ft as our…Read More
Market Summary for the Beginning of May
April was a stellar month for re-sale transactions, especially in the light of the weak supply. It was not very impressive for new home transactions completed.
Here are the basic ARMLS numbers for May 1, 2013 relative to May 1, 2012 for all areas & types:
- Active Listings (excluding UCB): 15,482 versus 13,117 last year – up 18.0% – but down 5.7% from 16,415 last month
- Active Listings (including UCB): 19,847 versus 20,781 last year – down 4.5% – and down 4.0% from 20,670 last month
- Pending Listings: 10,888 versus 11,996 last year – down 9.8% – but up 2.2% from 10,658 last month
- Monthly Sales: 8,649 versus 8,302 last year – up 7.4% – and up 4.7% from 8,260 last month
- Monthly Average Sales Price per Sq. Ft.: $116.66 versus $96.50 last year – up 21% – and up 3.0% from last month
- Monthly Median Sales Price: $172,000 versus $137,000 last year – up 25.5% – and up 3.0% from last month
This April was the strongest month for sales since March 2012, with 8,542 sales in greater Phoenix (107 out of territory). Of these
- 220 were HUD sales
- 737 were REO sales
- 1,175 were short sales
- 6,410 were normal sales
That is the largest number of normal sales in a month since June 2006 at the height of the housing bubble. This is also the first time we have seen year over year growth in the total monthly sales rate since February 2012. At last the annual sales rate has stopped falling and because of the higher monthly sales rate we now have 2.3 months of supply, including UCB listings. If we exclude those UCB listings we have only 1.8 months of supply. That a scary low number but it was even lower last year (1.4 months).
The average days on market for monthly sales is down to 70 days from 86 last year. However the average days on market for active listings is still 117, which suggests that the inventory of active listings is well picked over and contains a lot of homes that are undesirable or over-priced. Attractive homes at realistic prices are few and far between and last only a few days before they go under contract.
If we look at recorded deeds at the Maricopa County Recorder we see 8,310 re-sales (excluding Trustee Deeds). We also see only 722 new home sales which is lower than any month since July 2012. The new home median sales price has risen from $232,666 to $279,310 since then, which may have something to do with the low sales number. There is plenty of pent-up demand for new homes, but a lot of prospective buyers cannot qualify and/or cannot raise the required down-payment at the higher price levels.
Overall supply is still weak and getting weaker as the spring season progresses, but the situation is not deteriorating as fast as it did this time last year. The number of new listings being added is slightly higher than last year but it is not enough to replace listings going under contract or getting cancelled or expired.
The appreciation rate has dropped to 21% because prices were rising so fast this time last year. It is unlikely that they will be able to rise so fast this year, but prices will continue to rise at a strong pace over the near term, at least until we hit the summer months. We saw a 3% rise during April, equivalent to what we should expect to see in a whole year under normal conditions. It should not surprise anyone if prices continue to rise at 2 to 3% per month until we get to the end of June.
The rate of foreclosure notices and trustee deeds is drifting gradually lower. There is nothing of great interest to report in the world of foreclosures as they are close to getting back to normal now. The Market Distress index is down to 22.7 from 44.0 last year and 59.8 in 2011. Distressed homes are no longer having much of an impact on the market.
April 28 - The average $/SF for Greater Phoenix listings under contract exceeded $115 today. On March 23 it broke the $110 barrier and February 10 saw it break $105. Like the spring of 2012, it just seems unstoppable at the moment. The increases for REO listings are rather muted, while Read More
April 21 - Another way to segment the available inventory of active listings is to use price ranges. First let us look at all active listings for Greater Phoenix, including UCB. This is for all dwelling types …Read More
Mid Month Pricing Update and Forecast
Each month about this time we look back at the previous month, analyze how pricing has behaved and report on how well our forecasting techniques performed. We also give a forecast for how pricing will move over the next 30 days.
For the monthly period ending April 15, we are currently recording a sales $/SF of $113.37 averaged for all areas and types across the ARMLS database. This is 0.78% lower than the $114.26 we now measure for March 15. Our forecast range was $116.17 to $120.91 with a mid-point of $118.54. This month we recorded the largest forecast miss we have experienced since we started operation. The actual value was well below our low-point. Even stranger, the pending $/SF has continued to increase strongly over the same period, moving 3.2% higher. It is therefore a surprise that the sales $/SF has moved lower, but it is of no great long term significance as we shall see in a moment. It is quite unusual that the pending $/SF and sales $/SF numbers diverge like this, but it has happened on occasion and when it does, they always come back together again. Almost always the sales $/SF eventually follows the lead set by the pending $/SF. Since the pending $/SF is the principal number used in our forecasting model, when this happens our forecast diverges substantially from reality.
On April 15 REO sales across Greater Phoenix (all types) averaged $81.77 per sq. ft. (down 4.3%). Pre-foreclosures and short sales averaged $84.76 (up 0.2%) while normal sales averaged $123.35 (down 1.5%). The market share of normal sales rose again over the last 30 days, moving from 72.3% to 74.4% of sales. REOs lost market share from 12.5% to 11.2%. Short sales and pre-foreclosures continued to lose market share from 15.3% to 14.4%.
On April 15 the pending listings for all areas & types showed an average list $/SF of $111.75, 3.2% above the reading for March 15 – so pending $/SF has made another significant move upward over the last month, unaffected by the fall in sales $/SF. Among those pending listings we have 60.0% normal, up from 56.3% last month, a lower 12.9% in REOs and a weaker 27.0% in short sales and pre-foreclosures. The average pricing for pending listings on April 15 in each category was: $130.32 normal, $78.75 short sales & pre-foreclosures and $84.91 for REOs. All of these are showing an upward trend in pending $/SF although the short sales trend is only weak, However the favorable change in mix away from distressed properties should still cause sales prices to move even higher.
Our new mid-point forecast for the average monthly sales $/SF on May 15 is $117.75, which is 3.86% higher than the April 15 reading. We have a 90% confidence that it will fall within ± 2% of this mid point, i.e. in the range $115.40 to $120.11. In other words we still expect prices are move substantially higher in the next 30 days even though they didn’t over the last 30 days.
What went on between March 15 and April to upset our forecasting system?
If we look at the Average Price per Sq Ft chart we see that the sales $/SF jumped sharply upwards on March 1 then fell back by a similar amount on March 29. This is symptomatic of a some very expensive homes closing on February 28. Indeed when we look closely at the 942 closings on February 28 we the following:
- ARMLS 4575989 sold for $6,665,000 at $562.02 per sq. ft.
- ARMLS 4835291 sold for $2,100,000 at $500.00 per sq. ft.
- ARMLS 4831716 sold for $2,730,000 at $411.02 per sq. ft.
These exceptional sales were included in our monthly average from March 1 to March 28 but dropped out from March 29 onwards. They have an abnormal impact because of their high prices and their larger than average living space.
The end of March saw no homes close over $328 per sq. ft. The 3 highly priced homes above made the March 15 average $/SF number exceptionally high and their absence made the April 15 number return to normal. If we compare February 15 with April 15 we see an increase of $108.47 to $113.37 which is still a major step upwards. The “blip” of March 15 at $114.26 can safely be regarded as a freakish result. April 15 is the normal result and if we ignore March 15 we see a continued strengthening trend remains in place.
The pending $/SF line has behaved in a much more regular and reasonable looking fashion than the sales $/SF and you can see this on the same line chart we mentioned above.
Sometimes reality is more random than our forecasting model allows for. This does not undermine our confidence that our model will be correct within plus or minus 2%, better than 9 times out of 10. We have just experienced one of the exceptions.
Today we are seeing projected growth of 55,700 people for the Phoenix/Mesa/Scottsdale conurbation between July 2012 and 2013 with 63,900 and 79,700 for the following two years. This projection is provided by Read More
April 7 - Distressed supply continues to disappear. The number of active REO listings across Greater Phoenix (excluding UCB) is down 18% in just the last month and is now down 93% from the peak in January 2009. Short sales are down 12% (excluding UCB) ..Read More
Market Summary for the Beginning of April
March was a somewhat stronger month for sales volumes but most trends continued in the same direction as they have for many months.
Here are the basic ARMLS numbers for April 1, 2013 relative to April 1, 2012 for all areas & types:
- Active Listings (excluding UCB): 16,415 versus 14,175 last year – up 15.8% – but down 3.9% from 17,090 last month …Read More
March 31 – There were 964 trustee deeds issued in Maricopa County during March at an average rate of 48 per working day. This is the first time we have seen fewer than 1,000 trustee deeds issued in any month since September 2007, five and a half years ago. 901 (93%) of the trustee deeds were issued for residential properties. In almost every month since mid 2007 somewhere between 93% and 96% of the trustee deeds are residential. Prior to 2004 the typical residential percentage was 89% to 92%. During the bubble years of 2004 to 2006 we saw extremely low rates of trustee deeds and up to 40% of those were non-residential. Read More
March 24 - In 2004, the monthly average price per sq. ft. at this point in the year (week 12) stood at $115.50 for all areas & types. It had risen from $113.54 at the beginning of the year. In 2013 we are at a similar point – $114.62, Read More