Phoenix Market Update

It has become hard these days to buy a home in the greater Phoenix real estate market.  We have officially entered into a “seller’s market” and some say that it's been a seller’s market for the last 12 months.  The average days on the market according to MLS statistics in February was 3.27 months and over the last 12 months it was 3.35 months.  Anything below 4 months is officially considered a sellers' market.
So what does that mean to our buyers and sellers?

To buyers, it means a hard time finding a home and getting an offer accepted.

The lower the price range, the less inventory and the more competition.

The better the area (i.e. high demand areas), the stronger the competition.

The nicer the house, the strong the competition.

All in all, it is very competitive in our market today.  On many properties we are seeing multiple offers within the first couple of days on the market with the cash buyer often winning.  To buy a home, it's important to work with a realtor and lender that understand what is happening in the market, to look at houses quickly (possibly even same day) as they come on the market, to be prepared to offer over list price, and to be prepared to be competing with many other offers.

From a selling perspective, we are seeing prices gradually move up.   And while all homeowner’s are excited about this frenzy, it's important to remember that houses should still be listed at a price that is within the range of what other comparable properties are selling for, for a couple of reasons:

If the buyer is obtaining financing the home must still appraise. We have seen homes not appraising quite often lately!

If you overprice your home it's going to get “stale” and once it has many days on the market buyers aren’t even going to want to look because they think there is something wrong with it.

Cash buyers are looking for a “good deal” and won’t be willing to pay over market value in most cases for a home

The market is ever changing, however it has changed so much over the past 12 months that many people truly don’t understand what is going on out there and why.  It's simple laws of economics, too little supply with high demand = price increases and in our case, our market has really turned into a crazy frenzy.
FEBRUARY SALES STATISTICS

Sales in February increased 12.3% over the previous month to land at 7,249.  February’s sales figure of 7,249 is up 1.3% over the same figure in 2011.

Sales above 7,000 units are seen as robust for the Valley’s market.

New listings added to the market fell in February by 9.7% to 8,884. This figure is 15.8% below the new inventory figure for February 2011.

Total inventory for February was 23,736, down 5.2% from January and 41.6% from February 2011.

Total inventory has been on a steady downward path since February of 2011.

MONTHS SUPPLY OF INVENTORY (MSI)

Valley wide month’s supply of inventory declined in February to 3.27 from 3.88 in January.

The Valley’s MSI dropped below 4 months for the first time in March 2011 and has remained a Seller’s market since.

The twelve month MSI aver-age is 3.35 months.

NEW LIST PRICES

Trend lines for new list prices continued on an upward tilt for both average and median list prices. February’s average list price of $229,700 represents a gain of $41,000 over July 2011, when average list prices started to rise.

Median list price, which began to rise in August 2011, gained $20,000 over the August to February period, to land at $144,900.

SALES PRICES

Average sales price began to rise incrementally in August 2011, from a low of $151,400 to February’s $166,600, a gain of $15,258.

Likewise, median sales price climbed from a low of $108,300 in May 2011 to $122,000 in February, a gain of $13,700.

While the pricing movement is slow, it is definitely upward.

FORECLOSURES

Phoenix foreclosures pending, which fuel foreclosure sales, continued on the downward trajectory begun from a high of 50,568 in November of 2009 to February’s figure of 17,833.

The decline in foreclosures pending represents a 64.73% decline from its 2009 high.

DISTRESSED SALES

February’s distressed sales (3,723) as a percentage of total sales continued downward for the fourth month in a row to 51.4%, well below the 60% barrier crossed in November 2011.

At their highest level, in September 2010, distressed sales, composed of foreclosures and short sales, represented 74.1% of total sales.

In February, there were 1,687 lender owned sales and 2,036 short sales.

In November 2011, short sales displaced foreclosures as the dominant component of the distressed property mix. The rise in short sales over lender owned sales, indicates a lender preference for work out over foreclosure.

This trend is good news for Sellers whose must sell under distressed conditions.

Data gathered by the Arizona Regional Multiple Listing Service (ARMLS)

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