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Phoenix Housing Market Report March 2009 – Unusual Patterns
February’s ARMLS sales volume rose 16% compared with January, following a normal seasonal pattern. But once again the big news was the dramatic rise in pending sales from 7,344 to 10,180 between February 1 and March 11. We continue to see new records set for annual growth in pending sales, which is evidence of demand strength not seen since 2005. Active listings fell sharply between February and March, another very unusual occurrence. In addition the number of active listings with a contingent offer rose by a startling 34% between February 1 and March 5.
These are extremely positive developments that confirm the market recovery is now well under way. The catch is that the vast bulk of the sales and pending sales are for lender-owned properties and it is clearly the extremely low pricing of these properties that is fueling the high demand. Sellers of non-distressed properties and new home builders are seeing very little of this increased demand.
As in January a remarkable 68% of the homes sold through ARMLS in February were lender owned properties and another 10% were pre-foreclosures and/or short sales. The good news is that these percentages didn’t grow further, as they have done for many months. We seem to have reached a plateau in distressed sales volume.
Among active listings: 53% are normal, 24% are in pre-foreclosure and/or short sales, and 23% are already owned by a lender. This shows another movement away from lender owned properties and an increase in pre-foreclosure properties. This is mainly due to lender owned properties spending comparatively short times active, rather than a lack of lender owned properties hitting the market.
We saw a slight reduction in Maricopa County foreclosure notices in February compared with January. However trustee sales increased by 24% hitting a new record of 5,237 for the month. At the beginning of March the number of pending foreclosures was at a new high of 34,555.
On a $/SF basis we are at an average of about $89 across the valley based on February’s ARMLS sales, which is down 53% from the peak of $189 reached in May 2006. Prices have fallen much less in those areas with few foreclosures and much more in some with higher than average foreclosures. The pricing of pending listings suggests a further average $/SF price reduction for sales in March of 4% to 7%.
The median sales price dropped from $130,000 in January to $125,000 in February. This was a much smaller decline than we saw in January. The lowest median prices are still to be found in West and Southwest Phoenix. January’s monthly median sales price (single family detached) was $27,950 in ZIP code 85009, $32,950 in 85007, $35,900 in 85031, $39,000 in 85033, $35,000 in 85035, $27,250 in 85040 and $40,000 in 85017.
Overall demand is now at 113% of normal while supply is at 164% of normal. This combination means that the market supply/demand balance again improved during February while the level of market distress stayed fairly flat.
The increased demand is primarily for single family detached homes. Year to date sales of these are up 81% compared with 2008, but sales of apartments and town homes are also now recovering, standing at 5% higher than 2008 year to date.
Phoenix Housing Market Snapshot
Unless otherwise stated, all figures quoted above are for “all areas and types” in the ARMLS database.
On a personal note, we bought 2 fourplexes yesterday and I went to sign documents at the title company and the escrow officer said they were slammed; she has to work weekends just to catch up. If you haven’t made a decision to jump in and buy real estate yet now may be the time. The real estate market can turn very quickly when the inventory levels start to decrease.
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