Maricopa & Pinal County Real Estate Commentary

Maricopa & Pinal County Real Estate Commentary

 

May 14 - I think it's fair to say that supply is no longer falling at the moment. We have 20,927 active listings across ARMLS for all areas and types, including those in AWC status. On May 1 we had 20,781. If we confine ourselves to Greater Phoenix and exclude AWC listings, we have 11,662 and we had 11,610 on May 3. REOs are still falling, but short sales and normal listings are inching up. The rapid rise in market prices has been enough to stop the fall that started 18 months ago at the end of November 2010. However this does not mean that prices will stop increasing. The current level of inventory is way below what would be considered normal. We would need a major increase in inventory to get to a balanced market again. We will get there at some point but not any time soon. In the meantime prices will continue to head north. What it does mean is that some of the upward pressure on prices has been reduced, so we may see occasional pauses in the upward trend, almost as if the market is waiting for the rest of us to catch up..

May 13 - Trustee deeds have been recorded at relatively low levels for 2012 - only 9,574 for 2012 to date in Maricopa County. Compare this with the 21,107 in 2011 by May 13. Since the increase in notices mentioned yesterday started in February it makes sense to expect a noticeable increase in trustee deeds starting this month, due to the 91 day foreclosure cycle. Fewer than half of the notices will result in an actual foreclosure, with the rest being resolved by short sale, loan modification, forbearance, etc. Nevertheless we should see an increase in trustee deeds over the next 3 months, probably back over the 2,000 a month mark after the unusually low figure of 1,733 in April. Please do not get excited. This will NOT result in a "flood" of REOs. For one thing, less than half of trustee deeds are being granted to the beneficiary. The majority are granted to third parties. For another, even a 25% increase in deeds will only take us back to the level of February 2012. While we may see a slight increase in REOs coming onto the market this will probably be nowhere near enough to satisfy the current appetite of buyers. The likely effect on the overall market can be described as somewhere between zero and negligible. What is likely to have more of an effect on the market is the increase in pricing that has occurred between August 2011 and May 2012. In 9 months we have seen monthly average sales price per sq ft increase by 24% and monthly median sales prices increase by 31%. These price movements would normally be expected to slow down demand and encourage more sellers, so applying some brakes to the price increases. We now wait to see if this braking effect is substantial or not.

May 12 - We have seen 2,087 notices of trustee sale recorded so far in the month of May for Maricopa County, 2,064 of which are for residential parcels. This is after 9 of the 22 working days in the month. If the trustees continuing recording notices at a similar rate for the rest of May we should see about 5,100 in total. The last 3 months have seen rates of close to 4,500 per month, so this represents an increase of about 15%. It means more foreclosure notice will probably be issued in May 2012 than May 2011, which will probably be treated as newsworthy by the media. The last time we saw over 5,000 notices in a calendar month was August 2011 (5,315) and before that March 2011 (5,690). It is certainly the case that foreclosure notices have picked up after a distinct lull in December 2011 (3,528) and January 2012 (3,479). However we should put these higher numbers into context. Our peak level was 10,712 in March 2009, over twice our expected total this month, and between March 2008 and January 2011 every month was significantly higher than 5,100. My interpretation is that lenders have lost any shyness they once had about issuing notices, probably because they no longer have as much concern about litigation after the legal settlement earlier this year. This was suggested as likely in my observation for February 12. The open question is how long this elevated level of notices will continue before we get pre-foreclosure 30+ day delinquent loans (currently at 6.1% of outstanding first home loans according to LPS) back to or below the historic norm of 4.5%.

May 11 - Sales volumes are significantly down in most locations due to the shortage of homes for sale and higher prices. For example, Phoenix single family sales are down 18%, Mesa is down 10% and Glendale is down 15% compared with this time last year. Scottsdale is an exception. Here the monthly sales rate is up 5% compared with 2011. Since Scottsdale pricing is far higher than most of the valley this changes the mix in favor of higher priced homes and adds yet more fuel to the acceleration of the median and average sales prices. It's looking so far as if May's pricing numbers are likely to be 4-6% higher than April's.

May 10 - It looks like the large rise in prices over the last three months may be finally stopping the decline in inventory. We have almost the same number of active listings (excluding AWC) today as we had this time last week. If we can at least get stability in inventory levels this will improve the situation for over-stressed buyers. Normal listings and short sales increased over the week but REOs declined to just 1,069. This compares with the 14,246 REOs we had available on January 9, 2009, a decline of 92%.