The Cromford Report™ Monthly Market Review Brought to you by: 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. Revised HARP Program Before getting into the market update, there has been some BIG news building over the past few weeks. Revisions have been announced to The HARP program, which was rolled out in 2009. The program was designed to help those homeowners who are “underwater” on their homes. What was announced? The changes may cut fees for borrowers to refinance and also eliminate a cap that prevented “underwater” borrowers from accessing the program. Am I eligible? To be eligible, you must have a mortgage owned or guaranteed by Fannie Mae or Freddie Mac, sold to those agencies on or before May 31, 2009. The current loan-to-value ratio on the mortgage must be greater than 80%. Borrowers cannot have missed mortgage payments in the past 6 months and cannot have had more than one missed payment in the past 12 months. How do I take advantage of HARP? The first step borrowers should take is to see whether their mortgages are owned by Fannie Mae or Freddie Mac. Contact me to find out whether you are eligible. When do the changes go into effect? The FHFA is expected to publish final changes in November.
Market Overview For the monthly period ending November 14, we are currently recording a sales $/SF of $82.36 averaged for all areas and types. This is 1.7% higher than the $80.99 for October 15. The current price level is 2.01% lower than last year on November 14. As of November 14 REO sales across Greater Phoenix (all types) averaged $62.95 per sq. ft. (up 0.8% from October 15). Pre-foreclosures and short sales averaged $72.25 (up 0.4%) while normal sales averaged $104.56 (up 0.6%). Normal sales gained market share, moving from 35.0% to 36.4% of sales, while REOs were the big losers, moving from 37.9% to 33.8%. Short sales and pre-foreclosures advanced once again this month, moving from 27.1% to 29.8% - another record high. It is clear that the age of the REO is in decline while short sales and pre-foreclosures are becoming ever more important. As they become scarcer, REOs are getting more expensive. In addition the pricing for short sales and pre-foreclosures is no longer declining. The overall price movement (up 1.7%) is more than twice the movement of each individual component (REO up 0.8%, normal up 0.6%, short sales up 0.4%). This happens because of the change in the mix in favor of more expensive normal and short sales and away from the cheaper REOs. Pending listings for all areas & types showed an average list $/SF of $80.61, 3.0% above the reading for October 15 - so pending $/SF has moved upwards in a serious way for the first time in many months. This is a very positive signal, especially when all three sales components are moving upwards at the same time. Together with the changing mix this tells us we are likely to see a further rise in sales price per sq. ft. over the next month. Market Snapshot On the surface the preliminary numbers for October suggest it was quite similar to September. Looking at the ARMLS data across all areas and types we see the following:
Just like in October, we can see that all these numbers are far better than 12 months ago but most are not quite as good as the previous month. Supply rose very slightly while demand declined slightly. We have emphasized many times that changes in the balance of supply versus demand take a long time to be reflected in changes to pricing. This is illustrated by the latest numbers. The most positive move it has done for at least 15 months, driven by the large reduction in supply over the last 12 months:
Again, the overall average numbers hide discrepancies between different segments of the market. The specific price movements for the different price ranges are:
We can see that there were no price ranges hitting new lows last month. Below $150,000 recent pricing tends look healthy and on a strong upward trend. Above this point the picture is rather mixed. All but 5 ranges are showing price appreciation for the last 12 months. So why does the overall market number not show price appreciation? The reason is that the sales volume has decreased in the upper ranges so the more expensive homes make less contribution to the overall mix, driving the overall average down. Maricopa County Foreclosures New notices were down 4% to 4,354 in October. Trustee sales were down 17% to 2,364 the lowest number since March 2008. Sales to third parties were 1,125 leaving only 1,239 going back to the lenders – the lowest total since October 2007. REO inventory is down to 10,451 almost exactly half of what it was 12 months ago. |
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