Phoenix Metropolitan Area - Recent News and Commentary
October 2 -- Market Summary for the Beginning of October
The market is hurtling towards normality at great speed now.
Sellers have had it all their own way for a couple of years but their grip on the controls is loosening.
Here are the basic ARMLS numbers for October 1, 2013 relative to October 1, 2012 for all areas & types:
- Active Listings (excluding UCB): 20,215 versus 15,562 last year - up 29.9% - and up 11.2% from 18,182 last month
- Active Listings (including UCB): 23,151 versus 21,624 last year - up 7.1% - and up 8.4% compared with 21,359 last month
- Pending Listings: 6,576 versus 9,714 last year - down 31.8% - and down 9.9% from 7,302 last month
- Under Contract Listings (including Pending & UCB): 9,512 versus 15,776 last year - down 39.7% - and down 9.2% from 10,479 last month
- Monthly Sales: 6,307 versus 6,292 last year - up 0.2% - and down 12.9% from 7,240 last month
- Monthly Average Sales Price per Sq. Ft.: $120.40 versus $101.63 last year - up 18.5% - and up 1.0% from $119.26 last month
- Monthly Median Sales Price: $184,500 versus $150,000 last year - up 23.0% - and up 2.5% from $180,000 last month
Sales volume over the last month remains fairly strong compared with last year, but pending listing counts are collapsing. A fall of 32% from October 2012 can be partly explained by the drop in short sales, but it is clear from the very strong growth in active listing counts that demand is weakening. New listings are being added at a relatively low rate, so it is not a flood of supply that is causing the changed market balance. Instead it is a sudden drop in buying interest that started mid Summer. Some would blame the rise in interest rates, yet a lot of the fall in buyer enthusiasm is among the cash buyers. Phoenix has just got too expensive for many investors and they are off somewhere where there are still plenty of foreclosures going on, such as Atlanta. Phoenix has got too expensive for many ordinary owner-occupiers too. However I doubt that it will get any cheaper. The economy probably has to improve if we are to see demand grow once more.
Supply is rising and demand is falling, but pricing pressure will remain upward until they reach a balance. Indeed we are seeing upward movement in prices start again after the usual summer lull.
We are on course to reach balance between supply and demand in December with both well below normal levels. If we do, then pressure on prices will be neutral. Momentum and inflation are likely to keep them going for a little while until we hit the long term trend line at around $130 per sq. ft.
Look out folks - normality ahead! It could feel quite strange because we haven't had a normal market since 2002.
Septemaber 15 -- 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 September 15, we are currently recording a sales $/SF of $119.05 averaged for all areas and types across the ARMLS database. This is 0.4% lower than the $119.58 we now measure for August 15. Our forecast range was $117.26 to $122.04 with a mid-point of $120.09. This month the forecasting model worked fairly well and we were 0.9% above the actual measurement.
On September 15 REO sales across Greater Phoenix (all types) averaged $86.89 per sq. ft. (up 0.7%). Pre-foreclosures and short sales averaged $89.14 (up 0.4%) while normal sales averaged $125.33 (down 1.2%). The market share of normal sales increased over the last 31 days, moving from 78.9% to 81.6% of sales. REOs lost market share from 9.2% to 8.7%. Short sales and pre-foreclosures declined from 11.9% to 9.7%.
On September 15 the pending listings for all areas & types showed an average list $/SF of $117.04, 2.6% above the reading for August 15 and the highest we have seen since October 16, 2008. Among those pending listings we have 65.9% normal, up from 65.1% last month, a lower 9.4% in REOs and a higher 24.7% in short sales and pre-foreclosures. The average pricing for pending listings on September 15 in each category was: $131.92 normal, $84.35 short sales & pre-foreclosures and $83.78 for REOs. The normal pricing and short sale pricing are both higher than last month, but the REO pricing is slightly lower.
Our new mid-point forecast for the average monthly sales $/SF on October 15 is $122.14, which is 2.59% higher than the September 15 reading. We have a 90% confidence that it will fall within ± 2% of this mid point, i.e. in the range $119.70 to $124.58. In other words we expect prices will move higher in the next 30 days, similar to what happened at the same point in 2012. This foresees the resumption of the upward trend that usually restarts during the letter half of September. Despite the reduced demand and increased supply, the former still exceeds the latter by a significant margin. However the degree of imbalance is much less so price increases are expected to moderate.
September 15, 2011 - measured at $78.82 per sq. ft. - remains the $/SF pricing bottom exactly 2 years ago. The record low monthly median sales price is still standing at $107,000 and this record low point was set on February 24, 2011. Our current monthly median sales price is now $180,246 - 68.5% above that low point. We note that the monthly median sales price has declined over the last month.
© 2013 Cromford Associates LLC
The data used to create the Cromford Report™ is obtained from public records and obtained under license from the Arizona Regional Multiple Listing Service, Inc (ARMLS). Cromford Associates LLC and ARMLS expressly disclaim and make no representations or warranties of any kind, whether express, implied or statutory, as to the accuracy of the data used or the merchantability or fitness for any particular purpose.