Phoenix Metro Area Market Review - June 2012
June’s good news showcases an 8.1% increase in total sales, continuing the strong demand seen over the last twelve months. While all four pricing metrics (median and average new list price and sales price) declined slightly, they still continued on the same upward trajectory begun in September/October 2011. Phoenix Metro’s rise in home prices, despite the downtick in June, outpaces national and regional gains in other west markets. Foreclosures pending continued their decline. Total distressed property as a percentage of total sales ticked up 3.4%, but the overall trend line is declining.
Lack of inventory continues to frustrate Buyers and their Agents. The tightening noose of low inventory ex- presses itself in metrics such as DOM, which fell 10 days in June, and MSI, which dropped from 3.88 in January to 2.18 in June.
While total inventory for June is 19,857, the bulk (15,245)of that inventory lies below $350,000. Masking the lack of inventory is the inclusion of AWC listings (active with contingency) into the active/accepting backup offers bucket. Of the 15,245 listings below $350,000, only 8,892 are active, with 6,353 in the AWC status. Confusion about AWC, spawned by the industry rise in short sales, prompted many Agents to place listings, relegated by lenders to “short sale limbo” while waiting for final approval or signatures, into the AWC status. Many of these listings belong more appropriately in pending, since they are no longer accepting backup offers.
Since April, ARMLS has been tracking the percentage of AWCs in the total active pool of $350,000 and below. Over the three month period, the percentage of AWCs in the total active pool has dropped from 49% to 45% to 41% in June. ARMLS encourages Agents to place listings into pending status, even though not all signatures or approvals are in place, if those listings are really not accepting backup offers.
New home building, which came to a near standstill in the Valley in recent years, is showing some signs of life. June saw Arizona building permits reach a three year high, which will eventually add additional housing to available inventory.2 Efforts such as the Phoenix City Council’s new six month pilot program to reduce red tape and permit turnaround times and lower expenses, will encourage much needed new building.
Discouraging news on the job front indicating that the job market is cooling, reminds us just how fragile the Valley’s recovery is. Affordability though remains the Valley’s recovery trump card, and is aided by mortgage interest rates at unprecedented low levels. Freddie Mac reported the 30-year fixed-rate mortgage (FRM) aver- aged 3.66% for the week ending June 28, 2012. Last year at this time, the 30-year FRM averaged 4.51%.5 Once again, the Valley’s recovery prognosis is steady as she goes.
If you are ready to buy or sell property in the Phoenix Metro area, give us a call, we have the experience, knowledge, and we are here to assist you.