Market Update January 2012

Clear Title of Arizona is pleased to provide its clients with the Clear Connections Monthly Market Update. This report will provide you with the latest real estate trends.

Our business is built around the concept of educating and providing the personal service that Real Estate Agents and Lenders have come to depend upon. It is with this philosophy that we offer the Cromford Report to our clients, associates and friends.  It is intended to keep you informed on critical market trends that affect our businesses.

 

 

Market Summary

2011 went out with a flourish because December's ARMLS sales totalled 8,107 for all areas and types. This is 16.3% higher than November and the highest sales total since August. It is not quite so impressive when compared with December 2010 when 8,241 sales were recorded, but remember that last year at this time we were remarking about how surprisingly high that total was.

We must also express caution about this sales number. It includes 2,642 short sales and pre-foreclosures for Greater Phoenix and we do not believe that number is going to survive close scrutiny. Many agents enter a date like 12/31/2011 as the planned close of escrow date and if a listing is in pending status and its close of escrow date is passed, the flexmls system automatically changes the status to closed. This practice, probably invented when short sales were scarce, means that we probably have between 100 and 300 "closed sales" that didn't really close escrow. Short sales are particularly prone to late or canceled closing. Only when the deed records do we find out what really happened. If no deed records we may not find out for quite some time that no sales occurred. For December 2010, 137 sales had dropped out by the time the dust settled.

You may not realize this, but to ensure we are providing accurate statistics and insight, we perform a reconciliation between what the ARMLS data tells us about sales and what actually ends up with the county recorder. This takes us a few weeks, but the data gradually improves in quality as we complete this work. For the four month period between August 2011 and November 2011, which has been fully reconciled, we found and corrected for Maricopa County alone:

    2,196 ARMLS records with the wrong sales price
    9,617 ARMLS records with the wrong close of escrow date
    412 ARMLS records with the wrong parcel number
    93 closed ARMLS sales transactions that we know for certain did not close escrow
    351 closed ARMLS sales transactions that have no corresponding recording at the county, so probably didn't happen in real life

If you are deriving statistics directly from the ARMLS data on flexmls, please be aware of this problem.

The majority of the sales that probably or definitely did not happen were unsuccessful short sales that the ARMLS data shows as successful. Weeding these out takes some time. What results from the process is:

    the sales count goes down
    the market share of short sales goes down
    the average price and average $/SF goes up

Among the 8,107 sales we currently have are 2,174 REOs and 3,219 normal sales for Greater Phoenix. There were also 72 out-of-area sales. The normal sales count is the strongest since June and very impressive. The short sales count at 2,642 is the highest ever in history, but as we said, we don't yet have a great deal of confidence in that number. The REO sales count at 2,174 is slightly up from November, but otherwise the weakest since May 2008.

We can safely conclude that demand remains strong, because not only do we have a good sales count, but our pending listing count is the highest it has ever been for the beginning of January. These two effects have caused the Cromford Demand Index™ to start rising again after a flat period over the last few months. In addition, the active inventory has started to fall steeply again, down 7% in the last month and down 42% compared with this time last year. When demand strengthens and supply falls, the market gets tougher for buyers and better for sellers. This can be seen in the Cromford Market Index™ chart.

Pricing

Average sales pricing per sq. ft. has been on an upward trend since September 15, but is taking a breather at the moment. The effect is due to a large batch of low priced short sales in the last 2 days of December. With REO prices going up and short sales prices coming down, this change in the mix is to be expected, especially with new REO supply very limited. The 5.7% rise in average $/SF over the 3.5 months since September 15 is not a pace that can be sustained without more positive public sentiment towards housing. However if that positive sentiment change does occur, it is possible that this could create a feedback loop generating another rapid rise in pricing. There is very little supply to meet any increased demand from ordinary owner occupiers.

Foreclosures

A temporary rise in completed trustee sales saw 2,848 recorded in Maricopa County in December, an 11% increase over November. This rise is of no statistical significance and is due to the one-time bump in Countrywide loans that were noticed en-masse by Recontrust (a Bank of America subsidiary) in August. No doubt this increase will get plenty of comments in the media when it is reported elsewhere in a few weeks. The 15% drop in new notices of trustee sale is of more significance, 3,539 being the lowest number recorded in Maricopa County since November 2007. I wonder if that will get reported anywhere? If it does it will be a sign that sentiment is at last starting to improve to follow the technical market improvements that started 13 months ago in December 2010.

Daily Market Snapshot - Concise

The table below provides a concise statistical summary of today's residential resale market in the Phoenix metropolitan area.

The figures shown are for the entire Arizona Regional area as defined by ARMLS. All residential resale transactions recorded by ARMLS are included. Geographically, this includes Maricopa county, the majority of Pinal county and a small part of Yavapai county. In addition, "out of area" listings recorded in ARMLS are included, although these constitute a very small percentage (typically less than 1%) of total sales and have very little effect on the statistics.

All dwelling types are included. For-sale-by-owner, auctions and other non-MLS transactions are not included. Land, commercial units, and multiple dwelling units are also excluded.

For a more detailed version with many additional statistics please see the Expanded Market Snapshot (subscribers only).

Snapshots for individual cities, ZIP codes and price ranges are also available to subscribers.

This table is usually updated every day.

You can print the table using the button in its top left corner.


 Explanation of Terminology

ST = SHORT TERM TREND - The arrows in this column indicate the direction of the change between TODAY and LAST MTH
LT = LONG TERM TREND - The arrows in this column indicate the direction of the change between TODAY and LAST YR
Color code: The background to the trend arrow is colored green if the direction is favorable for sellers and is colored red if the direction is favorable for buyers. It is colored yellow if the change was zero. If the circle is white then then the statistic is neutral for both buyers and sellers.
Columns: Each data column shows measurements taken on a single day with the date shown at the top of the column.
TODAY means the date given at the top of the page.
LAST MTH means the same date last month.
LAST QTR means the same date three months ago.
LAST YR means the same date one year ago.
2 YRS AGO means the same date two years ago.

City Rankings - Annual Average Sales Price per Square Foot

This table ranks the cities by their annual average sales price per square foot. Only single family detached homes are included in these numbers. Information for the 12 major and 17 secondary cities is current as of the date shown. Data for the 14 small cities is updated on a monthly basis, and is measured on the 13th of each month.

The primary function of this table is to show the least and most affordable areas in the Phoenix metropolitan area together with longer term pricing trends.

Annual averages are based on a relatively large number of sales. Therefore they are not as subject to rapid change as monthly averages. The downside is that they do not necessarily represent the current market very accurately, since they include sales from up to a year ago. Pricing may have moved a great deal since then.

Note that Higley has been included in Gilbert and Ahwatukee included in Phoenix. Desert Hills is still counted separately though it is increasingly being incorporated into Phoenix.

Explanation of Terminology
All statistics are for single family detached homes recorded on ARMLS as sold in the city shown.

 Daily Market Snapshot - Pre-foreclosure/Short Sales

The table below provides a statistical analysis of today's residential resale market for short sales and pre-foreclosures in the Phoenix metropolitan area.

To be included in this analysis the property must not be lender owned, and must either be in pre-foreclosure or classified as a short sale.

The figures shown are for the Greater Phoenix area. Geographically, this includes Maricopa county, a large part of Pinal county and a small part of Yavapai county. "Out of area" listings recorded on ARMLS are not included.

All residential single-family dwelling types recognized by ARMLS are included. For-sale-by-owner, auctions and other non-MLS transactions are not included. Land, commercial units and multiple dwelling units are also excluded.

This table is usually updated every day.

Foreclosures - Per Month

The following line chart shows the number of notices and trustee deeds on a monthly basis from 2002 onwards.

The data is for the county of Maricopa and includes all real estate property types, including land and commercial. A commercial parcel counts as 1 foreclosure even if there are multiple structures within that parcel.

The red line denotes notices of trustee sales which is the first formal notification that the lender  has asked the trustee to start the foreclosure process. The blue line denotes the foreclosure auctions where the property is either sold to a third party or transferred to the beneficiary (lender).

 

 As an added feature, Clear Title Agency of Arizona will also begin providing to our readers, the Stat Plus Report. This report focuses on the average Days on Market (DOM) and Months Supply of Inventory (MSI) in the first quarter of 2011 (Q1) for single family residential housing at various price points in the flexmls system.

The monthly STAT newsletter addresses DOM and MSI for the entire residential market as a barometer of overall market health. It is a macro look at these two key metrics, and does not, however, give any insight into inherent differ-ences between various price ranges. STAT+ will allow Subscribers to address market supply more in depth with Buyers and Sellers. STAT+ was first published in the fourth quarter (Q4)2010.

 
DOM from Q4 2010 to Q1 2011 increased or stayed the same for all price ranges $2,000,000 and below. MSI in Q1 2011 decreased from Q4 2010 in the $250,000 and below ranges and the ranges between $500,000 and $1,500,000, reflecting increases in the average number of sold properties per month. More dramatic changes in the DOM and MSI for properties above $2,000,000 are less reliable due to the small sample size in the higher ranges. 
 
StatPlus provided courtesy of ARMLS®