The Cromford Report™ Monthly Market Review
The Kennedy Group is pleased to provide this Mid-Month Market Report. The latest real estate trends and statistics are delivered each month in our Market Report as a complimentary service. 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. Greater Phoenix – Single Family Detached Market Headlines
Overview Active listing counts continue to move down while sales rates have increased and pending sales remain numerous. Average sales pricing reached a new low point in January below $81, but pricing has now moved back up to the $83 to $84 per sq. ft. that we saw in the fourth quarter of 2010. With the significant improvement in the overall market dynamics we see little chance of significant reductions in price over the near term. A gradual rise in pricing is a more likely development. Foreclosures New notices of foreclosure are dropping fast. April’s total is not quite in yet but looks almost certain to be lower than for any month since 2007. Trustee sales volume is down compared with March and similar to January and February. As a combination of these two factors, the inventory of pending foreclosures is falling extremely quickly. Those interested in purchasing REOs at bargain prices should not depend on the current strong supply lasting a great deal longer. Contrasting Price Ranges The market can be divided into price ranges, each of which has its own characteristics. We analyze five distinct price ranges below, contrasting April 26 numbers with those of three months earlier - January 26, 2011: 1. Homes under $100,000
Summary: Extremely strong demand and falling supply. Prices now stable for four months. Average sales pricing for April was 23¢ per sq. ft. lower than March and 12¢ per sq. ft. lower than in January. We have been hovering very close to $42 per sq. ft. for four months now. Pending sales are priced at $43.17 per sq. ft., just a shade higher than last month, so there is no sign of significant price movement in the near term for this price range. Meanwhile the market dynamics are improving substantially. Demand is strong with sales up 41.5% over the same time last year and pending sales up another 4.9% since last month to a record level of 5,159. Supply is falling fast with active listings down 8.8% in the last month and 22.4% in the last quarter. They remain 27.7% higher than last year however, so we still have some time before supply starts to look tight. This supply continues to gradually shift away from REOs (down 10.7% in one month) towards short sales (down only 7.6% and now more than 58% of active listings in this price range). Normal listings are down 9.9%, and many of the latter are flips - former foreclosed homes that have been acquired by investors then fixed up and offered for resale. REOs constitute less than 28% of the supply, but 67% of the sales in this sector. Normal sales fell back from 15% to 13% of the market between March and February while short sales and pre-foreclosures also fell from 20% to 19%. Average pricing per sq. ft. for closed REOs in this price range was $40.04, down 38¢ from March. Short sales and pre-foreclosures lost 16¢ from $43.04 to $42.88, while normal sales gained $1.01 from $49.28 to $50.29 - the highest reading since November. Inventory now stands at 119 days measured using the annual sales rate (27,039), another big improvement over last month when it stood at 135 days. Prices are likely to rise before we return to normality since they are highly over-corrected now, in some places well below the levels of 15 years ago. Active list pricing fell yet again during the month, down by another 0.5%. Both REOs and short sales are priced around $44 per sq. ft. on average while normal listings are priced close to $54 per sq. ft. on average. With demand rising strongly and supply sharply down, the market below $100,000 has shown remarkable improvement since November. Depopulation is still a factor suppressing demand in certain geographies, particularly the older inner city areas. However, taken as a whole, the recovery in this price sector is now well under way again. The areas showing the fastest reduction in distressed supply include many of the outermost locations such as, Maricopa (city), Queen Creek and Buckeye. The most active ZIP codes for sales in this price range were Maricopa 85138, Buckeye 85326, San Tan Valley 85143, Phoenix 85037, Phoenix 85041, Phoenix 85033, El Mirage 85335 and Phoenix 85043. 2. Homes Between $100,000 and $200,000
Summary: Supply down and demand strongly up. Pricing remains stable. Green figures in all five rows suggest a market doing well. Having peaked in October, supply has fallen another 8.9% in the past month and down 24.4% when compared with January. Lender owned active listings are down by over 40% since January while short sale listings are down 20.4% and normal listings down 19.7%. Demand has also strengthened nicely over the last month with pending listings up 7.6% and monthly sales up a less impressive 1.9%. As a result months’ supply dropped from 3.8 to 3.4 months. When measured against annual sales (30,754), inventory fell from 116 to 107 days over the same period. This inventory level is consistent with a healthy market. In April REOs fell from 41% to 39% of monthly sales while normal listings increased from 37% to 41%. Short sales and pre-foreclosures declined from 22% to 20% of sales. The market distress index improved from 63.5 to 61.9 and the contract ratio advanced strongly from 83.1 to 104.8. All of these are positive signals. Average sales pricing climbed 1.5% during April to $70.10 per sq. ft., the highest reading since last November. The average price for pending sales dropped to $69.53, but still pretty close to the levels recorded for the last 9 months. Average sales price per sq. ft. in this sector is below the low-point of $70.86 set in March 2009 but has remained in the range $68.21 to $70.67 over the last 9 months. Active listing pricing is almost the same as last month. With the improvement in the supply position and an increase in demand, the outlook for this sector remains positive. The most active ZIP codes for sales in this price range were Surprise 85379, Queen Creek 85142, Chandler 85225, Gilbert 85296, Goodyear 85338, Laveen 85339, Sun City West 85375, Surprise 85388 and Surprise 85374. 3. Homes Between $200,000 and $400,000
Summary: The balance between supply and demand continues to improve. Recovery is well under way. The supply of single family homes priced between $200,000 and $400,000 dropped by another 5.1% in April, and is now down 13.6% over the last three months. Over the last month REO supply dropped by 3.1%, short sales and pre-foreclosures fell by 4.3% and normal listings by 5.8%. The reduction in supply was coupled with an increase in demand. The monthly sales rate rose by 3.1% in April causing months’ supply to fall from 4.9 to 4.5. The annual sales rate fell slightly to 14,617, but the larger fall in active listings meant that when measured on an annual sales basis, inventory has fallen from 147 to 142 days. REOs fell from 24% to 22% of monthly sales, while short sales rose from 20% to 21%. Normal sales retained a 56% market share. These changes caused little change to the market distress index which moved from 41.2 to 41.4. The contract ratio improved significantly from 57.2 to 64.3 over the last month. Average sales pricing fell 0.5% over the last month to $102.03 per sq. ft., but excluding March 2011 this was still the highest level since July 2010. List prices for active listings are also slightly lower at $111.43 per sq. ft. while the average list price of pending sales dropped back a little to $101.68 per sq. ft. between March and April. This sector remains very stable and the short term outlook is positive, particularly for homes over $300,000. The most active ZIP codes for sales in this price range were Peoria 85383, Scottsdale 85254, Chandler 85249, Queen Creek 85142, Cave Creek 85331, Phoenix 85086 and Scottsdale 85255. 4. Homes Between $400,000 and $800,000
Summary: Supply falling faster now and demand rising quickly too. Sales prices are increasing! Although we just failed to get five green figures in our table, this sector continues to improve quickly. Single family homes between $400,000 and $800,000 have experienced a 5.9% fall in active listings in the last month and 7.9% in the last quarter. The sales volume was very strong in April, with monthly sales up 29.1% compared with March and 54.3% compared with January. Although pending sales fell by 1.6% over the last month they are up 14.1% since January. With the increase in the monthly sales rate, months’ supply now stands at 6.1 months compared with 8.4 on March 26. The annual sales rate rose slightly to 3,928 and inventory dropped to 225 days when measured on an annual sales basis. Both measures of inventory are the lowest we have seen for several years for this price range. REO supply rebounded during April, up 5.3% over the last month, but down 22.0% over the last 3 months. Active short sales and pre-foreclosures fell by 7.7% while normal listings fell by 5.9%. REOs comprised 14% of monthly sales, down from 17% in March. Short sales took a 19% market share while normal sales rose to 68%, the highest percentage measured in well over two years. As a result the market distress index dropped to 28.3. The contract ratio rose from 35.6 to 39.2, the best figure in several years. Average sales pricing for this price range rose 1.9% compared to March to $149.89 per sq. ft. - the highest level since July 2010. The long term annual average sales price per square foot ($146.44) is now lower than the monthly average, a strong signal that prices are now moving gently upwards for this sector. The average price for pending sales dropped back to $152.59 per sq. ft. after a strong surge in March, but is still higher than the months June 2010 through February 2011. However, active list pricing fell slightly from $170.99 to $170.40 per sq. ft. ft. With prices gently rising and supply lower than at any time in the last year, this sector remains in long slow recovery mode. The short term outlook for this sector remains positive. The most active ZIP codes for sales in this price range were Scottsdale 85255, Scottsdale 85259, Scottsdale 85262, Scottsdale 85266, Peoria 85383, Phoenix 85086, Fountain Hills 85268 and Cave Creek 85331. 5. Homes over $800,000
Summary: Demand stronger while supply slowly declines. Recovery is under way. This is another sector showing five green figures in the table. The supply of homes above $800,000 continues to fall though less dramatically than elsewhere and is now down 3.5% in the last month and 6.6% compared with three months ago. It is now lower than at any time in the three years. April sales were up 16.5% compared with March and are up 58.4% compared with January. They are also up 23.7% compared with April 2010, so demand has strengthened a lot over the last four weeks. Pending sales are flat compared with last month. The increasing monthly sales rate and fall in the number of active listings means that months’ supply is down again from 15.9 to 13.1 over the last month. The annual sales rate rebounded to 1,296, so when measured on an annual sales basis, inventory stands at 522 days compared with 677 days a year ago. Active REOs increased from 43 to 48 but these represent only 2.6% of total active listings. There were 15 REO sales which represents 11% of the closed listings. The REO sales price average of $168.11 per sq. ft. is lower than we have seen for several years and suggests some amazing bargains were closed between March 26 and April 25. In contrast, the pricing for the 19 short sales and pre-foreclosures rose to $235.39 per sq. ft., at the high end of the range for the last year. Active short sales and pre-foreclosures numbered only 179, the lowest level in over two years. Normal sales pricing averaged $270.10 per sq. ft. for 107 sales. The market distress index fell to 18.2 from 22.3, the lowest score in recent years and the contract ratio edged up from 15.7 to 15.9. Average active listing pricing was almost unchanged over the last month and at $358.01 is still much higher than achieved sales pricing at $250.56 per sq. ft. Many sellers continue to set unrealistic list prices in this sector and the average time on market for active listings lengthened to 293 days. The monthly average sales price per sq. ft. was up 3.8% compared with March but the small number of sales in this price range often leads to considerable fluctuation from month to month. The annual average price per sq. ft. does not fluctuate wildly and it moved a little lower to hit $249.73 in March, the lowest level recorded since 2001. The fact that the monthly average was slightly higher than the annual average is a positive sign. The improved demand is a good sign for this sector and although there is still plenty of supply, 88% of this supply is NOT distressed. Thus we see pricing continuing to firm up. The short term outlook for this sector is positive. The most active ZIP codes for sales in this price range were Paradise Valley 85253, Scottsdale 85255, Scottsdale 85262 and, Scottsdale 85266. There were 71 sales among these four ZIP codes and 40 elsewhere. Forecast Last month we forecast that sales prices would stay in the range $81 to $85 per sq. ft. and this indeed is what they did. The actual monthly average sales pricing for single family detached homes across Greater Phoenix was $83.88 per sq. ft. on April 26. This is edging towards the top end of our range and takes us back to the price levels of October through December 2010, having bottomed out during January and February 2011. The average $/SF for pending sales is still between $81 and $83 and this suggests we will only see small changes in average sales $/SF over the next four weeks. Any change is likely to be slightly upward, but we expect prices to remain in the range between $82 and $86 per sq. ft. for the next month with the final number most likely to fall around $84. Explanations of Terms Used
The data used to create this report is obtained from public records and extracted under license from the Arizona Regional Multiple Listing Service, Inc (ARMLS). Although certain corrections and checks have been applied to this data, 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. This report is copyrighted in 2011 by Cromford Associates LLC. |
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||