July has 8,377 closed transactions as of 8/1/2011. Of those 3,597 (43%) are Bank Owned and 1,991 (24%) are Short Sales. The percentage of distressed sales continues in the 2 out of 3 range.

July 2011 had the 4 highest number of homes sold compared to the last 11 years. It’s an above average or above normal number. However 7/11 was down 21% from June in a month to month comparison; but 7/11 was up 18% from 7/10 in a year over year comparison. Note: ARMLS is currently over-reporting 6/11 total closings @ 11,125. My search today for 6/11 closings found 10,582, which is the number I used for this report.

Our inventory remains low with 20,217 in active status. We could add the ~7,600 properties in AWC status (6,900 – 91% of these are short sales), but I like to compare to previous reports of actives less the properties with contracts on them. So we now have a 2.4 month supply of active inventory, but only because there were ‘only’ 8,377 closings instead of +10,000. A balanced market has 4-6 months inventory, so we’re still in a seller’s market with lots of multiple offer situations.

Bank owned properties have a 1 month supply with approx 3,600 active and 3,600 closed in July. HUD owned homes have a 2 week supply with 289 active and 554 closed.

Short sales come in with 3,900 active, 6,900 AWC, 3,900 pending, and 1,991 (24%) closed.

Prices in July had little newsworthy developments as they continued to bump along the bottom. The median price was down slightly in July (110k), but has basically been unchanged since 12/10. Both the average price ($155k) and the price per square foot (~$80) are at or below their previous low figures from 2/11.

As I look back at July’s performance, I remember when July/August used to have a ‘close before school starts’ flurry of activity. But with only 1 of 3 sales normal (non-distressed), and 73% of all closings vacant, the back to school rush might apply more to rentals than sales in this market.

That’s how I see it on August 1, 2011. Try to stay cool this month.

Jim Sexton
John Hall & Associates Inc.

Once again building the Phoenix real estate market report first thing on the first of the month produced some surprising results. The number of closings looks too high, especially the number and percentage of short sale closings. Even though I think these numbers will change, I’ll report them as I see them on 7/1/11.

June 2011 had 10,509 closed transactions; highest number of home sales from any June. In fact, it happens to be the highest number of home sales from any single month ever, previous high 10,250. The Arizona Regional MLS (ARMLS) has reported +10,000 sales only 3 other times: 6/04, 6/05, and 8/05. This is the first time over 10,000 in almost 6 years.

Phoenix Market Trends

Looking at recent Phoenix market trends, June 2011 sales volume increased 7% over May 2011 and by 13% over June 2010.

Fortunately in early July, we have good news on the price front as well. Both the average and median home sales price increased month over month 2% and 3% respectively – $161,000 and $111,000.

Since we have 6 months in the books, I looked at the year to date comparisons 2011 vs. 2010 and 2011 vs. all-time. Remember 2010’s number of transactions were approximately 92,000 which ranked fourth highest home sales all time. Greater Phoenix’s highest year with 104,700 came in 2005. Well, 2011 is off to a very strong start with 53,501 closings YTD. That’s 11% higher than 2010′s numbers and 1% off of the record setting 2005.

Fannie Mae has recently announced a special incentive effective with offers submitted on or after June 14th.

Terms and Conditions:

• Buyers and/or selling agents (the agent representing the buyer) must request the incentive upon submission of initial offer.
• Initial offer must be submitted on or after June 14, 2011 and close by October 31, 2011. Initial offers made prior to June 14 are not eligible for the June 14 – October 31 incentive.
• Sale must close on or before October 31, 2011. No exceptions will be made to this deadline. (Note: Initial offers submitted after September 15, 2011 may not close by the incentive deadline of October 31, 2011.)
• Buyers must be purchasing a HomePath property to use as their primary residence to receive closing cost assistance. Second homes and investment properties are excluded from the incentive.
• Sales closed via the retail channel are eligible, including those utilizing public funds. Pool and auction sales are ineligible.
• Buyers must sign the Owner Occupant Certification Rider to the Real Estate Purchase Addendum.
• Buyers with total closing costs under 3.5% are not eligible to receive the difference as a credit.
• Properties where Fannie Mae acquired the property in connection with financing under a reverse mortgage are not eligible. Ask the listing agent for details.
• Buyers should consult their lenders for guidance on financing. Lenders and mortgage products may impose their own limitations on the use of the 3.5% incentive. For example, the lender may consider the incentive a Seller Contribution and limit the amount to 3.0%. In those instances, the remaining 0.5% will no longer be available to the buyer.
• Fannie Mae reserves the right to remove any property from promotion or end the promotion at any time. Any dispute over the payment of the incentive shall be resolved by Fannie Mae in its sole discretion.

Note that this incentive will be identified on the purchase contract, and must close by October 31, 2011 to receive the incentive from Fannie Mae.

Foreclosure numbers as of 5/31/2011

• Total active residential notices are 27,396; the lowest number since 11/08. The number has dropped 28% since the first of the year, which is more than 10,000 fewer residential properties in foreclosure.
• The number of new notices in May was basically the same as the number of completed foreclosures. This is only the 2nd time that new monthly notices were not greater than monthly completions in the past 10 years;
• There were 4,000+ residential foreclosures cancelled last month; second highest all time.
• With only 1,900 short sales closed (Maricopa County) for May, there are other reasons that trustee sales are being canceled.
• New notices for May were basically the same as April and April had the fewest since 11/07.
• The number of residential properties currently owned by banks in Maricopa County is 18,451; the lowest since July of last year.

Bank Owned Inventory = 18,451

• 3,901 active listings in ARMLS;
• 325 listings in AWC status;
• 4,986 properties in pending status.

This accounts for 9,212 of the 18,451, or 50% of all bank owned properties. Where’s the other 50%? Good question. I imagine there are a number of issues such as previous owner evictions, tenants with valid leases, title issues, maintenance/property condition issues, or a few others that fall into the “miscellaneous legal issues” category. With basically a 1 month supply of active REO listings in the county (3,901 active / 3,765 sold in May), bringing on the other 50% of bank owned inventory will not “flood the market.” In fact, adding 9,000 active listings would add an additional 1 month supply to our current 2.4 month supply for the entire market.

As various sources reported last month, these developments are significant steps necessary for our market to improve. Sure these might be small steps and we’re not out of the woods yet, but I thought you might be interested in a year-to-date review as we head into our summer selling season.

Once again when I ran my initial numbers for May, I was pleasantly surprised. Initial closings for the Greater Phoenix real estate market in May 2011 are 9802, which is within 88 sales of the highest May on record (2005). May 2011 is 5% over April 2011 and 7% above May 2010, which continues 2011’s improvement over 2010’s numbers.

Now the reality check: Prices fell slightly

• Average Sales Price $158,000 down 2%;
• Median Sales Price-$108,000 down 3%;
• Price per square foot-$82.55-down 1%.

These price numbers are all down from April, which can be attributed again to the ‘mix or make-up’ of the sales figures. REO sales were 44% of the total and Short Sales came in at 22% of all sales. So ‘distress sales’ bumped up slightly, which dropped prices accordingly.

I like the Price Analysis that the Cromford Report published at the end of May. It compared prices a number of ways: such as greater Phoenix vs. outside greater Phoenix; single family vs. condos; various price range points from under $25,000 to over $3 million; and finally a breakdown by city showing today’s price per square foot and comparing it to 90 days ago and last year. Yes all cities are down year over year, but the results are mixed comparing the last 90 days. This is valuable information to provide to clients buying a house, REO sellers, appraisers and anyone else trying to evaluate prices for the Phoenix area.

Besides the number of sales in May, probably the biggest news is number of Active Listings. Current number of Actives stands at 23,624 which is only 2.4 month supply of homes. A balanced market has a 4 to 6 month supply, so we are in a ‘seller’s market’, but prices are the last piece to feel the impact of the short supply. It’s a 5 year low for number of Active Listings and if you factor out the AWC’s, you have to go even further back to reach a 2.4 month supply. Within the Active Listing numbers bank-owned properties have a greater shortage with a 1 month supply of inventory and only a 3 week supply of HUD homes. I guess the shortage of supply explains the return of the multiple offer situations and the dreaded multiple counter offers to explain to frustrated buyers.

The market doesn’t really show any signs of cooling off with 13,254 Pending Listings; the same number as the start of May.

There are a few warning signs on the horizon as the Federal government considers how to deal with Fannie and Freddie, maximum loan amounts, and minimum down payment requirements.

Stay tuned by subscribing to our market reports via email.

• 27.73% of the listings sold in April, the highest percentage since November 2005
• 3.61 months’ inventory, the lowest since November 2005
• $161,297 average sold price, the highest in 6 months
• $111,000 median sold price, the best in 5 months
• $193,168 average new list price, the 2nd lowest in 10 years
• Homes sold for 95.68% of final list price, the best in 8 months
• $83.5/square foot, the best in 8 months
• Active listings are down 32.5% since January 1st
• 14,431 pendings on May 13, the 3rd highest total ever

Thank you Leif for sharing your Phoenix Metropolitan Area Real Estate Statistics with us!

Intranet link to download entire spreadsheet.

April’s initial numbers show another strong month in the greater Phoenix real estate market. We had 9314 closings, # 2 April of all time, with #1 April/05 possibly in reach.  The number of closings was down 7% from March/11, but up 1% from 4/10.  Prices moved in a positive direction with the Average Sales Price up $4000/2% to $161,100 and the Median Sales Price moving up $1000 to $111,000.

Bank owned sales dropped 2.5% to 44% of closings (4118) and Short Sales moved up 1% to 20% of closed sales (1845).

With Active listings below 27,000 and sales over 9000 for the month, there is less than a 3 month supply of homes, which by definition is a seller’s market.  This should indicate an upward movement for prices on the horizon.  On the REO front, there are 5253 Active listings and 4118 sales, or a 1.3 month supply.  Short Sales have more AWC listings (6727) than Active (6484), and another 3849 in Pending status-will they ever close?

Regarding MARS disclosures, we are entering our second month waiting for ‘clarification’ from NAR and the FTC regarding which disclosures need to be made by real estate agents.  We’re still hearing it’s “coming soon”.  Not everyone doing Short Sales are ‘up to speed’ on the state and national requirements.  Some agents think their fees were ‘grandfathered’ and Short Sale Negotiator fees are now being called any thing but a Short Sale negotiator fee.

That’s my report for the Phoenix real estate market. Stay tuned, we’ll post about any MARS development once it’s announced.

For example the chart Foreclosures per Month, shows a dramatic trend with the number of completed foreclosures (Trustee Deeds) catching up with number of new notices.  What that means is that the number of homes in Foreclosure will continue to trend downward.  It appears that we may finally be working our way through the Foreclosure issue.

The next chart/trend that caught my eye was Sales to Landlords/Investors. This chart also gives you the last 10 years tracking not only the number of sales to investors but the percentage.  Understand that this is the ‘honor’ system since the Affidavit of Value is being used to determine Owner Occupants from Landlords, but @ 25% of all sales and over 2000 for the month of March (Maricopa County only)you can see how many buyers are buying to rent.

The final chart describing a trend of today is the percentage of homes purchased for cash. It’s interesting to note that the percentage didn’t top 20% until 10/8 and didn’t cross over 40% until 12/10, but has stayed above 40% since then.

I hope you find these specific Phoenix real estate statistics interesting and informative and agree they present a slightly different view of today’s market.  The Cromford Report contains many similar ‘hidden gems’.  If you get a chance you may want to check it our for yourself or attend a class to better find your way around the website.

We have narrowed the focus of our Maricopa County Foreclosure chart. This improvement affects everyone that has embedded this chart on their website. Since our primarily focus is residential real estate, it only makes sense that our foreclosure chart tracks residential statistics instead of all foreclosures.

Why change now?

Last month when I was updating the chart, I noticed almost all of the numbers in my spreadsheet were slightly different than the source sheet provided by the Information Market/Cromford Report. Since I was going to be removing/replacing all the numbers, why not take advantage of the residential only columns that were added after we began publishing this chart? The spreadsheet was updated.

Why were the numbers different?

After running recent inquires for previous months, Michael Orr and Tom Ruff found there were several (in some cases hundreds) of trustee sales that had been rescinded. They re-ran and updated all months to make sure they are reporting the most accurate data. From my understanding they will be doing this on a monthly basis.

Why our foreclosure statistics will be different

Once I updated the charts it hit me. Unless we add a margin of error to the mix, we’re not going to be able to identify high/low marks or accurately compare past month’s foreclosure activity to the current month. Since we’re only using the data to identify and report trends, a consistent counting time-frame is more efficient than error margins. Our decision is to NOT update the historical data.

Moral of the story

1. We’re going to assume there is a consistent margin of error and stick with historic data.
2. Our Maricopa County Residential Foreclosure chart will have slightly different numbers than the Information Market/Cromford Report spreadsheet.
3. We’ll keep you posted in the event this changes.

Every once in a while I get a few minutes to check out some of the luxury homes for sale in ARMLS. It’s kind of cool that John Hall & Associates REALTOR®, Joan Levinson, has the highest priced home for sale in Paradise Valley. Let’s help her sell it!

In the event you enjoy our (more serious) articles and are considering sending over a token of appreciation, the keys to this palace would be appropriate.

Happy Friday.

We're sorry, but it seems that we're having some problems loading MLS # 4272159 from our database. Please check back soon.