Market Update April 2012

Clear Title of Arizona is pleased to provide its clients with the Clear Connections Monthly Market Update. This report will provide you with the latest real estate trends.

Our business is built around the concept of educating and providing the personal service that Real Estate Agents and Lenders have come to depend upon. It is with this philosophy that we offer the Cromford Report to our clients, associates and friends.  It is intended to keep you informed on critical market trends that affect our businesses.

 

 

Market Summary

In 2011 we experienced a relatively stable and predictable market with very little price movement. In 2012 we have a market in which dramatic change is not only to be expected, but is already happening. Prices have moved in the single month of March 2012 more than they did in the whole of 2011. In these circumstances it is very difficult to appraise homes accurately, and in many cases appraisals are coming well below current market pricing. Normally this would act as a brake on price movement, but as so much of our market is cash-based, with the buyer waiving the appraisal contingency, the braking effect is less than normal.

Let us look at some basic numbers for March 2012 relative to March 2011. So for all areas & types we record the following:

Active Listings (excluding AWC): 14,175 versus 30,230 last year - down 53%
Active Listings (including AWC): 21,841 versus 37,246 last year - down 41%
Pending Listings: 11,964 versus 12,923 - down 7.4%
Monthly Sales: 8,782 versus 9,952 - down 11.8%
Monthly Average Sales Price per Sq. Ft.: $93.06 versus $82.13 - up 13.3%
Monthly Median Sales Price: $129,900 versus $110,000 - up 18.1%

So we can conclude that supply is down dramatically year over year, while pricing is clearly well up over last year at this time. It is no longer possible to measure demand freely since it is now heavily constrained by the lack of supply. Sales volumes are nearly 12% down on last year, so this suggests at first sight that demand has fallen. However we know that sales numbers would be much higher if more homes were available. That is why multiple bids have become the norm for most properties under $450,000 and this supply shortage means the upward pricing pressure is continuing.

We have a confirmed market price bottom during the third quarter of 2011 and we are now a comfortable 18% above that low point when measured by average $/SF, and 21% above when measured by monthly median sales price. The average $/SF for pending listings on Apr 1 is $91.68. The improvement in pricing is due to two separate factors:

Prices are increasing when comparing like with like properties
The sales mix is changing in favor of higher priced normal sales and flips and against distressed sales (especially lender-owned homes)

With annual appreciation now in highly positive territory we repeat our analysis of which cities are looking strongest from that perspective. Here's a ranking table which shows the change in monthly average sales $/SF between March 2011 and March 2012 for single family detached homes:

Coolidge - up 33.5%
El Mirage - up 23.5%
Maricopa - up 22.8%
Florence - up 20.7%
Buckeye - up 20.6%
Queen Creek / San Tan Valley - up 19.2%
Eloy - up 16.8%
Casa Grande - up 15.5%
Waddell - up 14.7%
Tolleson - up 13.8%
Phoenix - up 13.8%
Avondale - up 12.7%
Apache Junction - up 12.4%
Chandler - up 11.9%
Mesa - up 11.6%
Cave Creek - up 11.2%
Peoria - up 10.7%
Glendale - up 10.0%
Laveen - up 9.0%
Surprise - up 8.0%
Gilbert - up 7.5%
Wittmann - up 5.7%
Scottsdale - up 4.9%
Youngtown - up 4.9%
Anthem - up 4.7%
Litchfield Park - up 4.0%
Arizona City - up 2.5%
Goodyear - up 1.4%
Fountain Hills - up 1.2%
Sun City - up 1.2%
Tempe - up 0.8%
New River - down 0.7%
Paradise Valley - down 6.3%
Rio Verde - down 6.9%
Carefree - down 8.4%
Sun Lakes - down 8.4%
Sun City West - down 11.9%
Wickenburg - down 12.5%

It is surely encouraging that we have 18 cities showing double digit appreciation rates, including the giant cities of Phoenix and Mesa. Scottsdale is now well into positive territory but is held back by its relatively slow super-luxury segment, as are Paradise Valley and Carefree. The active adult cities are also much weaker than average.

There is another obvious pattern here. Those cities least affected by foreclosures are seeing the least improvement in pricing (with several still showing negative appreciation). Those with a history of very high foreclosure rates and huge price collapses in 2006 through 2009 are seeing the fastest price improvement as distressed properties start to become a much smaller part of the market. So for example we have Coolidge, one of the most devastated cities where developers pulled out and abandoned their subdivisions, and prices fell by 79% from April 2006 to February 2011. Coolidge has seen average monthly sales $/SF jump by over one third in 12 months. Now it has to be admitted this is a jump from an eye-wateringly low $27.45 to a still very low $36.65 per sq. ft., but 33% is still a healthy percentage growth in value in anybody's book.

We also note that Pinal County is extremely strong, and much of the west valley and southeast valley is doing well. One exception is Tempe, where appreciation is a modest 0.8%. Tempe saw fewer foreclosed homes because it had very little new construction and therefore fewer problem purchase-money loans issued during the crucial bubble period of 2004 to 2007. Its pricing therefore stayed higher for longer than most of its neighbors.

So what we are seeing so far is primarily a strong bounce back for the over-corrected areas. We are still a long way below the long term trend line for Greater Phoenix pricing. So despite the increases so far, housing is still very cheap by any historic measure and relative to our surrounding states. The recovery is still in a very early phase and the supply shortage is yet to have a big impact on normal (non-distressed) transaction pricing.

The Maricopa County foreclosure statistics are:

New Notices of Trustee Sale: 4,487 versus 4,584 in February - down 2.1% for the month
Trustee Deeds Recorded: 2,091 versus 2,219 in February - down 5.8% for the month

To put the current levels of foreclosure in proper context we need to compare March 2012 to March 2011:

New Notices of Trustee Sale: 4,487 versus 5,693 - down 21.2%
Trustee Sales: 2,091 versus 5,173 - down 59.6%

Since fewer than half of the trustee deeds were issued in favor of the beneficiary, we have a lower supply of REO properties coming onto the market than we have seen since 2007. There is still much talk of a "shadow inventory" supposedly manipulated in a conspiracy by the banks, but no sign whatsoever of it actually coming onto the market any time soon. Anyone attempting to buy a residential property in Greater Phoenix would love to see some of that mythical "shadow inventory" emerge in volume to relieve the severe shortage of homes currently offered for sale. My advice is: don't hold your breath.

Daily Market Snapshot - Concise

The table below provides a concise statistical summary of today’s residential resale market in the Phoenix metropolitan area.

The figures shown are for the entire Arizona Regional area as defined by ARMLS. All residential resale transactions recorded by ARMLS are included. Geographically, this includes Maricopa county, the majority of Pinal county and a small part of Yavapai county. In addition, “out of area” listings recorded in ARMLS are included, although these constitute a very small percentage (typically less than 1%) of total sales and have very little effect on the statistics.

All dwelling types are included. For-sale-by-owner, auctions and other non-MLS transactions are not included. Land, commercial units, and multiple dwelling units are also excluded.

For a more detailed version with many additional statistics please see the Expanded Market Snapshot (subscribers only).

Snapshots for individual cities, ZIP codes and price ranges are also available to subscribers.

This table is usually updated every day.


 Explanation of Terminology

ST = SHORT TERM TREND - The arrows in this column indicate the direction of the change between TODAY and LAST MTH
LT = LONG TERM TREND - The arrows in this column indicate the direction of the change between TODAY and LAST YR
Color code: The background to the trend arrow is colored green if the direction is favorable for sellers and is colored red if the direction is favorable for buyers. It is colored yellow if the change was zero. If the circle is white then then the statistic is neutral for both buyers and sellers.
Columns: Each data column shows measurements taken on a single day with the date shown at the top of the column.
TODAY means the date given at the top of the page.
LAST MTH means the same date last month.
LAST QTR means the same date three months ago.
LAST YR means the same date one year ago.
2 YRS AGO means the same date two years ago.

City Rankings - Annual Average Sales Price per Square Foot

This table ranks the cities by their annual average sales price per square foot. Only single family detached homes are included in these numbers. Information for the 12 major and 17 secondary cities is current as of the date shown. Data for the 14 small cities is updated on a monthly basis, and is measured on the 13th of each month.

The primary function of this table is to show the least and most affordable areas in the Phoenix metropolitan area together with longer term pricing trends.

Annual averages are based on a relatively large number of sales. Therefore they are not as subject to rapid change as monthly averages. The downside is that they do not necessarily represent the current market very accurately, since they include sales from up to a year ago. Pricing may have moved a great deal since then.

Note that Higley has been included in Gilbert and Ahwatukee included in Phoenix. Desert Hills is still counted separately though it is increasingly being incorporated into Phoenix.

Explanation of Terminology
All statistics are for single family detached homes recorded on ARMLS as sold in the city shown.

 Daily Market Snapshot - Pre-foreclosure/Short Sales

The table below provides a statistical analysis of today’s residential resale market for short sales and pre-foreclosures in the Phoenix metropolitan area.

To be included in this analysis the property must not be lender owned, and must either be in pre-foreclosure or classified as a short sale.

The figures shown are for the Greater Phoenix area. Geographically, this includes Maricopa county, a large part of Pinal county and a small part of Yavapai county. “Out of area” listings recorded on ARMLS are not included.

All residential single-family dwelling types recognized by ARMLS are included. For-sale-by-owner, auctions and other non-MLS transactions are not included. Land, commercial units and multiple dwelling units are also excluded.

This table is usually updated every day.

Foreclosures - Per Month

The following line chart shows the number of notices and trustee deeds on a monthly basis from 2002 onwards.

The data is for the county of Maricopa and includes all real estate property types, including land and commercial. A commercial parcel counts as 1 foreclosure even if there are multiple structures within that parcel.

The red line denotes notices of trustee sales which is the first formal notification that the lender has asked the trustee to start the foreclosure process. The blue line denotes the foreclosure auctions where the property is either sold to a third party or transferred to the beneficiary (lender). Place the cursor over a circular plot symbol to see the date and value.

This chart is updated monthly.

 

 As an added feature, Clear Title Agency of Arizona will also begin providing to our readers, the Stat Plus Report. This report focuses on the average Days on Market (DOM) and Months Supply of Inventory (MSI) in the first quarter of 2011 (Q1) for single family residential housing at various price points in the flexmls system.

The monthly STAT newsletter addresses DOM and MSI for the entire residential market as a barometer of overall market health. It is a macro look at these two key metrics, and does not, however, give any insight into inherent differ-ences between various price ranges. STAT+ will allow Subscribers to address market supply more in depth with Buyers and Sellers. STAT+ was first published in the fourth quarter (Q4)2010.

 
DOM from Q4 2010 to Q1 2011 increased or stayed the same for all price ranges $2,000,000 and below. MSI in Q1 2011 decreased from Q4 2010 in the $250,000 and below ranges and the ranges between $500,000 and $1,500,000, reflecting increases in the average number of sold properties per month. More dramatic changes in the DOM and MSI for properties above $2,000,000 are less reliable due to the small sample size in the higher ranges. 
 
StatPlus provided courtesy of ARMLS®