Market Update May 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

No relief is yet in sight for buyers as inventory continues to fall to even lower levels. Sales and pending counts are down due to the lack of enough supply to meet demand. With demand outstripping supply by a wide margin, prices continue to rise substantially each month.

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

    Active Listings (excluding AWC): 13,117 versus 27,052 last year - down 52%
    Active Listings (including AWC): 20,781 versus 34,594 last year - down 40%
    Pending Listings: 11,996 versus 13,326last year - down 10%
    Monthly Sales: 8,480 versus 9,452 last year - down 10%
    Monthly Average Sales Price per Sq. Ft.: $95.79 versus $83.61 last year - up 14.6%
    Monthly Median Sales Price: $137,000 versus $110,000 last year - up 24.5%

With prices fairly flat during the first half of last year but rising fast this year, the appreciation measurements are on their way up to eye-popping levels. The monthly average price per square foot is the more conservative measure, but already shows appreciation approaching 15%. We recall that monthly sales $/SF reached a low of $78.83 in September 2011. so if prices were to stay flat from now on we would be measuring appreciation of 22% by September 15 2012. With no relief in supply, prices are much more likely to continue to rise, so appreciation measurements of well over 25% are on the cards for the fall. The monthly median sales price is more volatile. The disappearance of vast numbers of low-priced REOs from the sales mix causes the median sales price to rise much faster than the average $/SF, so we already see appreciation almost reaching 25% when we look at median sales prices.

As prices rise, demand loses steam and more sellers are enticed into the market. This is the normal mechanism for a market to reach stabilization. Another would be for a fresh source of supply to arrive on the scene. New home builders are ramping up production, but from an abnormally low level, and they are unlikely to have much impact on the overall supply situation in the short term. This is particularly true when we are looking at active listings on ARMLS, since builders are not listing very many of the homes they sell through the MLS. The relatively low capacity of subcontractors to expand their skilled workforce will put a cap on how many new homes can be built. Another theoretical source would be for the banks to release their so-called pent-up "shadow inventory". But since it doesn't exist in Greater Phoenix to any significant extent, this source of supply will remain imaginary.

When you look at the overall active listing counts, the supply situation does not look too dire at first. We have 20,781 active listings in total on ARMLS. However, 7,664 of these are in AWC status so that brings us down to 13,117. Excluding those that are outside the Greater Phoenix area brings us down to 11,828. Excluding those priced at $250,000 or more takes us down to 6,106, and if we restrict ourselves to single family homes we see only 4,069. In the last month 5,443 such single family homes were sold, so the current active (not AWC) supply is only 22 days. One year ago those numbers were 14,036 active (not AWC) and 6,574 sold, so we had 64 days of supply, which was already quite tight. Two years ago we had 15,369 active (not AWC) and 6,236 sold, representing 74 days of supply. That was at the height of the buying spree inspired by the tax credit expiry. At no time since early 2009 has supply been excessive, although there was a worrying upward trend for 6 months in 2010 after the tax credit expiry. Now we are in a severe out-of-balance situation which is likely to last until supply starts to increase significantly.

The supply in the luxury market is also starting to decline, as it is in the active adult 55+ areas of the valley. However here it has not yet reached anything we would describe as out of balance.

The Maricopa County foreclosure statistics for April were:

New Notices of Trustee Sale: 4,448 versus 4,487 in March - down 0.9% for the month
Trustee Deeds Recorded: 1,739 versus 2,092 in March - down 16.9% for the month

As foreclosures decline it becomes more important to examine the home loan delinquency rate to see what is happening upstream of the notice of trustee sale. The Lender Processing Services Mortgage Monitor report for March shows that Arizona now has 6.1% of its outstanding homes loans delinquent by 30 days or more but not in foreclosure, while 3.0% are already in foreclosure. This compares with 6.6% and 3.0% in February and 7.1% and 3.0% in January. Clearly the percentage of home loans that are delinquent but not yet in foreclosure is dropping fast and is now not a lot higher than the long term average of 4.5%. In fact it has fallen by over half since peaking in February 2010 at 12.4% and this is a very important number to watch going forward. Loans in foreclosure remain much higher than the long term average of 0.5%, but if delinquency rates keep falling fast then loans in foreclosure must also drop significantly before too long.

Just a couple of years ago Arizona ranked third highest in the nation at 16.3% non-current loans (30+ days delinquent or in foreclosure) when the national average was 13.5%. Arizona now ranks 33rd among the states for non-current loans at 9.1%, well below the national average of 11.7%. In the last month Arizona fell another two places by dropping below the states of California and Washington and now ranks equal to Missouri and just above Texas. These changes go a long way to explain why we are entering a period of sustained recovery in the Greater Phoenix housing market.

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 2012 (Q1) for single family residential housing at various price points in the flexmls system.

STAT+ is a quarterly publication and a companion to ARMLS’s regular monthly statistical news-letter, STAT™ and the ARMLS Pending Price Index™.

STAT+ focuses on average Days on Market (DOM) and Months Supply of Inventory (MSI) at different price points for residential single family housing within ARMLS’s effective service area in flexmls® Web.


StatPlus provided courtesy of ARMLS®