Total sales for May ended up at 8,442, which basically remained flat when compared to April (8,435). At the present time, there are only 9,980 homes that are currently active on the market in Maricopa County, which has approximately 1.4 million homes. Just 30 days ago, we had over 10,000 homes that were actively listed for sale. The bottom line is that we still have a SERIOUS supply problem in today’s market. This lack of supply is hurting the overall number of sales metric, but is helping the market in many other ways, which I will go over in this months report.
ARMLS recently released the numbers for May/2012 in their monthly STAT Report, and the results are very positive. Here is a breakdown of what happened in March in the Metro Phoenix Real Estate Market:
Sales (Month over Month)- As stated above, sales were relatively flat for May, with a total of 8,442 closed listings. Advantage: Seller
Sales (Year over Year)- May/2012 sales of 8,442 were down 13.9% below the May/2011 numbers. Anything over 7,000 represents a robust market. To put this in perspective, our “low-point” for sales was January/2008, coming in at 2,912 total sales. Advantage: Seller
New Inventory- We saw a 1% rise in new listings hitting the market from April to May (9,270 new listings hit the market in May). That being said, remember that as of today, there are only 9,980 active listings on the market, and 9,270 were listed in May/2012. We are basically selling everything that hits the market within 30 days, which is unheard of. More on this later. Advantage: Seller
Total Inventory- Total inventory continued it’s downward trend, dropping in May to 20,162, which represents the 10th decline in the last 12 months. Since the May/2011 figure of 31,661, total inventory has fallen 36.3%. This metric reached it’s “high-point” in October/2007, when we had an inventory of 58,178 homes. This represents a 65.34% drop in inventory. While this metric represents a very healthy correction in the market, it is playing hell for our buyers looking for a home. Advantage: Seller
Months Supply Of Inventory (MSI)- This metric dropped slightly in May, coming in at 2.39 months. With the exception of the past three months (when MSI hovered below 2.5, the Phoenix market has not seen an MSI below 2.5 since September/2005, which was the beginning of the run up and eventual bursting of the real estate bubble. Generally, an MSI below 4 indicates a seller’s market, between 4 and 6 represents a balanced market, and above 6 represents a buyer’s market. It’s no wonder that buyers are finding it hard to find anything to buy these days. Advantage: Seller
New List Prices- Both new list price metrics rose in May, with the median list price increasing 4.7% to $157,000 and the average list price rising 2.5% to $234,200. Each of these metrics have shown an upward trend over the past twelve months. Advantage: Seller
Sales Prices- Again, this metric continues to show improvement. The median price increased 5.1% to $145,000 in May. This also represents an increase of 33.89% vs the decade low of $108,300 in May/2011! The average sales price also increased 8.2% in May to $204,700, capping off a three-month run of increases of 8.4%, 4.8%, and 8.2%. Sales prices which fell nearly 60% from their decade high of $264,800 in June 2006 to their low of $108,300 in May/2011 (median), and $350,400 in May/2007 to the decade low of $151,368 (average), have now recovered by 33.89% and 35.23% for the median and average respectively. This represents seven straight months of upward sales price momentum, proving that the Phoenix real estate market is indeed on it’s way to recovery. Advantage: Sellers
Foreclosures Pending- Foreclosures pending ticked up slightly (540 units) to 18,596 in May, and have hovered around the 18,000 mark since January/2012. Phoenix foreclosures hit a monthly high of 50,568 in November/2009, to give you an idea of how much this metric has changed in the past 2-3 years. This is a very important metric, as we all know that coming out of this mess will depend heavily on the amount of foreclosures on the market. Advantage: Buyers
Distressed Sales-Distressed sales, which is comprised of the total number of bank-owned and short sales, are the main source of the problem in our market (depressed pricing). Distressed sales as a percentage of actual sales reached a market high of 74.1% in September/2010. In May/2012, distressed properties (3,668) represented just 43.4% of total sales. For the sixth month in a row, short sales outpaced foreclosure/bank-owned sales. In May, there were 1,423 lender-owned sales, and 2,245 short sales. This is fantastic news! More and more homeowners are understanding the short sale process, and the many benefits that come with a short sale versus a foreclosure. There is no doubt that if this trend continues, we will continue to see a steady increase in both the average and median sales prices in the months ahead. Advantage: Sellers
Lender-Owned Sales- Decreased in May to 1,423 from 1,583 in April, and it’s percent of total sales dropped to just 16.9% of total sales.. This number has hovered between 40.8% and 46.2% since March/2011. This is great news, and it’s a trend that we hope continues! Advantage: Sellers
Short Sales- The number of short sales in May increased by 5.5% to 2,245, representing 26.6% of total sales. As stated above, I expect this number to continue to trend upward, as more Phoenix short sale agents are getting better at understanding the short sale process. Our team of Phoenix short sale agents are ready to help, if you or someone you know is considering a short sale. Advantage: Buyers & Sellers (short sales are better for the overall health of the market when compared to REO sales!).
Avg Days On Market- Dropped slightly in May to 85 days (April was 86 days). As traditional sales increase, we expect the days on market to continue to decrease in 2012. Advantage: Neither Seller or Buyer
So, what do you think? Is it a seller’s market or a buyer’s market? I still think we are faced with a seller’s market. Overall inventory increased slightly in May (only 9,270 new listings hit the market), and the telling statistic is that there are only 9,980 homes on the market today in Maricopa County, listed as active. This, in a market with approximately 1.4 million homes. This statistic alone explains why it is so difficult for buyers to find homes in today’s market.
There are several positive to take from this report. Sales were relatively flat when compared to April (but we still sold 8,442 homes), and total inventory dropped yet again (for the 10th time in 12 months). Months of Supply dropped slightly to 2.39 months. Both the average and median sales price metrics continue to go up (seven straight months), and the average sales price is now 35.2% higher than it was in May/2011. Foreclosures are down, and the percentage of distressed properties compared to total sales fell to 43.4%. Also, the ratio of short sales to bank-owned in the distressed property mix increased for the 6th month in a row, proving that lenders are now working with homeowners on short sales, which is a HUGE PLUS!
If you are a buyer, whatever you do, DON’T GIVE UP! While there are some incredible deals in this market, you have probably realized (or will soon realize) that trying to purchase a home in this market is a daunting task, especially without the assistance of an experienced Phoenix buyer’s agent. We are working hard to find homes for our buyer clients, but with inventory being so low, its been difficult, at best. For our clients reading this, keep checking your email inbox, and call us immediately when you see something you like. Just remember, THERE IS HOPE! Year-to-date, we have helped 33 families find their dream homes, and we currently have approximately 25 homes under contract for our buyer clients.
As you can see from this report, the Phoenix Real Estate Market is improving. While finding a home has proven to be extremely challenging (due to our low inventory), please understand that it is necessary for a meaningful recovery. Investors with cash are proving to have the “upper-hand” when negotiating against those with financing, but this too shall pass. As prices increase, investors will slowly but surely begin to back out of the market, leaving more choices for those buyers that are owner-occupants. Now more than ever, it’s critical for buyers and sellers to work with a seasoned real estate professional.
Call me today and allow us to set up a plan to help you buy/sell your next home. You’ll be glad you called.
Until next month….Google+