The Cromford Report™ Monthly Market Review August 2011 Brought to you by:
Our business is built around the concept of educating and providing the personal service that our clients have come to depend upon. It is with this philosophy that we offer select data from the Cromford Report to our clients, associates and friends. It is intended to keep you informed on critical market trends that affect the Real Estate profession. Market Overview Although we didn’t see the record breaking sales numbers of June, July had plenty of positive news for market watchers. An important exception was pricing, and no doubt much will be made of that by the housing doom folks, but then Cromford Report readers all know that pricing is a trailing indicator, don’t we? Demand for homes remains high, while fewer homes are entering the market for sale.According to the current ARMLS data, 8,522 homes closed during July across all areas and types. This is 19.4% below the 10,568 we are measuring today for June. This dip between June and July is a normal seasonal effect. The key comparison to make is with July 2010. Here we are up 23.3% compared with 6,911 a clear sign that the market is healthier today than it was last year when we were reporting significant deterioration. Due to the exceptionally large number of short sales in the MLS numbers, we experience a great deal of “turbulence” in these sales figures, as they continue to change for many weeks after the end of the month. On July 2 last month we could see 3,057 short sales and pre-foreclosures across Greater Phoenix, but this number is now measured at 2,481. The flexmls system automatically closes pending transactions when their Close of Escrow date is reached. Quite often a snag occurs in real life and a sale fails to close when expected and has to be manually reversed later. This is far more likely to happen with short sales than other types because of the large number of approvals and documents needed to successfully close escrow. As usual our sales figures will be constantly monitored and corrected as newer statistics emerge on a daily basis. The 19% drop-out rate for June is the highest we have seen and is unlikely to be repeated in July’s numbers, but please treat all reports with caution due to this effect. Sales Month Over Month Total sales in July (8,387) regressed to pre-March levels. The 24.6% decline from June’s 11,125 is a disappointment. However, it follows a distinct wave pattern in total sales which started with November’s trough. We should not read too much into July’s decline which could reverse itself next month if sales follow the pattern of the last nine months. Sales Year Over Year July sales (8,387) represented an 18.1% increase over July 2010. This figure, while disappointing after the June’s emotional and numerical high (11,125), follows a typical June to July sales pattern, where sales fell from June to July in eight of last ten years. New Inventory New inventory dropped again in July to 9,140, besting December’s twelve month low of 9,443. New inventory added each month has traveled on a downward trend line since last August. Declines in new inventory affect the current supply and are recognized as a healthy sign.
Total Inventory Total inventory in July continued its decline started in November. July’s figure (27,663) is a 5.3% decline from June and a 35.5% drop from July 2010. The Valley’s large inventory perpetuates the market’s imbalance in many market niches, and the steady decline in to-tal inventory is a vital component in righting the supply and demand balance.
Months Supply Of Inventory (Msi) Months supply of inventory ticked up to 3.30 in July from June’s 2.62, not a surprise given the decline in sales activity. Even with the slight rise, the trajectory of MSI has been on a steady downward trend line since November. MSIs below 4 indicate a Seller’s market, between 4 and 6 a balanced market and above 6 a Buyer’s market. The MSI for the entire Valley as provided in STAT is merely a barometer of market health, and not indicative of inventory supply in smaller market niches which can vary widely. In reality, many areas and price ranges are in oversupply, even though the MSI for the entire Valley indicates a Seller’s market.
New List Prices New list pricing continues on the anemic flat line of the last twelve months. The median new list price ticked up 4% to $124,900, while the average fell .9% to $188,700 from last month’s $190,400. The median price is 3.9% below last year’s July median, and the aver-age is 5% lower than July of 2010. All in all, there is not much of a pulse for a market trying for a pricing recovery.
Sales Prices Sales prices show the same lackluster recovery attempt as list pricing. Median sales price declined 1.4% to $109,000 in July. This median figure is 12.8% below July 2010’s $125,000. The average sales price also declined 3.1% to $155,000, 12% below July 2010’s figure of $176,100. Sales pricing, like new list prices, is a different verse of the same song.
The Armls Pending Price Index™ The ARMLS Pending Price Index (PPI) is a metric unique to ARMLS which focuses on pend-ing sales in the MLS system. By focusing on pending prices of properties yet to close, ARMLS is able to forecast pricing trends ninety days into the future. Naturally the predic-tive accuracy diminishes with time as fewer properties make up the pending pool. The PPI scorecard last month was off by 3.4%, predicting an average sales price for July of $158,200: the actual was $152,800. The median of $112,000 predicted last month came in only 1.79% off the mark at $110,000. This month’s prediction calls for a slight rise in the median sales price to $110,000 in Au-gust, followed by a decline to $105,000 in September and a drop again to $98,000 in Octo-ber. The median sales price has not dropped below $100,000 this decade, but the market seems to be edging closer and closer to that benchmark. The average sales price predicted for the next ninety days is downward for all three months: $152,800 for August, $144,700 for September and $134,900 in October. The overall impression is that pricing is going to continue to languish. It took many months to get to where we are, and unfortunately, it will take many months to climb back.
|
||
