Metro Phoenix AZ Home Sales Data from Your GILBERT REALTOR

Metro Phoenix AZ Home Sales Data from Your GILBERT REALTOR

Summary for the Beginning of November - Compliments of the Cromford Report.

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At the moment we are recording 6,559 sales across all areas and types in the month of October. This is down 2.9% from September and down 11.8% compared to October 2009. With pricing down 6.2% since October 2009, dollar volume has fallen 20.8% since last year. REO monthly sales were down 4.4% compared with September, short sales and pre-foreclosures were down by 4.2% and normal sales increased by a tiny 0.5%. Although prices dipped during the second week of October to the lowest level ($81.98 per sq. ft.) since we started keeping records in 2000, the increased percentage of normal sales and a rise in short sale pricing caused the average price per sq. ft for October to recover to $83.46, some 1.1% higher than September. Normal sales are being boosted by the number of fixed-up foreclosure properties being sold back into the market by investors. "Normal" normal sales are still at a low ebb and there is currently no clear sign of sales pricing returning to the levels above $90 per sq. ft. that we experienced between November 2009 and July 2010.

If we are feeling in an optimistic mood we could interpret the rebound in sales pricing as a positive sign. Reinforcing this feeling is a rise in the Cromford Market Index from 85.8 to 88.1 during October. Indeed the market has stabilized since the third quarter and is healthier than it has been for several months. However, the situation is distorted by unusual factors:

• Several lenders, notably Bank of America, suspended trustee sales for much of October and thus reduced the future supply of REO listings.
• HUD changed management subcontractor from MCB to BLB which caused a hiatus in new HUD listings appearing on ARMLS.
• An unusually large number of REOs were placed into "Temp Off Market" status, presumably for review of their paperwork and/or inclusion in a wholesale package.

It is therefore dangerous to read too much into small signals and it will be some time before we know whether the market is still on a longer term downward trend or starting another recovery attempt.

Almost all the market changes in the last month have been fairly minor, especially considering all the noise about foreclosures and lenders in the media. Due to the time lag between the auction and the recording of trustee's deeds we are just now starting to see the impact of the moratorium. On October 8th we were showing 1752 unrecorded trustee's deeds in our daily records, but this morning that number has dropped to only 1037. We can assume the 715 reduction in this number was a direct result of Bank of America's actions (or lack of action to be precise).  Extending this logic:

• Total Foreclosed in October would have been 715 higher without the moratorium.
• Total Pending Foreclosures would have been 715 lower without the moratorium.
• REO inventory would have been 572 higher without the moratorium (accounting for the usual percentage purchased by third parties).
  

The effect is therefore certainly noticeable but not dramatic. If the moratorium continues for a lengthy time it could lead to a significant reduction in the lender owned supply, but this is not the case right now. However, we have seen a lull in the REOs being listed as active on ARMLS. We have also seen short sales contribute slightly less to overall sales. Pending listings are maintaining reasonable strength given the time of year and suggest that there is life in the demand side of the market yet. We are concerned that once the temporary distortions have gone away, inventory may start to rise again.

The effects of S.B.1070 were very noticeable during July through September in locations with a high percentage of Hispanic residents, causing an unusual build up of inventories in cities like Tolleson. This effect seems to have dissipated now the real world implications of the law seem to be minor compared with the expectations of both sides of the political debate.

If we focus on what the MLS system calls apartment-style/flat homes (single level condos), the pricing picture over the last six months has been extremely dramatic. In May the average pricing for the 510 sold was $103.63. In June this dropped to $98.13, by August it was $92.49 and September's number crashed to just $77.68. October has seen a marked recovery to $90.50. The low pricing in September was accompanied by unusually high sales volume which has died down now that prices have recovered.

For mobile homes, we have also seen dramatic movement, with pricing falling from an average of $45.93 per sq. ft. in April 2010 to $32.80 in October, a decline of 28.5% in just 6 months. Active listings for mobile homes have grown from 933 to 1,004. With sales rates falling, inventory has grown from 6.9 to 9.7 months over the same period, so the lower pricing has not yet stimulated the bargain hunting we might have expected. Unlike apartment-style/flat homes, no price recovery has yet taken price in mobile homes.

In general the market is giving mixed signals and needs to be watched carefully. Any major changes in direction will be reported here promptly.

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