Reproduction of this document allowed by Arizona Regional Multiple Listing Service who provided the document
SALES Month over Month
Total sales in March increased by 1,620 sales (22.3%) to land at 8,869. This continues the upward sales trend begun in January.
SALES Year over Year
March sales of 8,869 fell 10.7% below the March 2011 figure. However, it is slightly above the 12 month average of 8,453. High sales figures, a consequence of the Valley’s strong affordability, contrast sharply with the decade record low sales figure of 2,912 sales in January 2008.
ARMLS STAT APRIL 2012
NEW INVENTORY
New inventory rose slightly (6.8%) in March to 9,492. New listings, which had been on a downward trend line since April 2011, reversed direction in January and have been following an upward trend since then.
TOTAL INVENTORY
Total inventory, which began a decline from 56,227 in November 2009, continued to fall in March by 7.9%, to 21,863. The reduction in total inventory to this level is reminiscent of inventory numbers in 2003 and 2004, the Valley’s last normal market. 3
NEW INVENTORY
New inventory rose slightly (6.8%) in March to 9,492. New listings, which had been on a downward trend line since April 2011, reversed direction in January and have been following an upward trend since then.
TOTAL INVENTORY
Total inventory, which began a decline from 56,227 in November 2009, continued to fall in March by 7.9%, to 21,863. The reduction in total inventory to this level is reminiscent of inventory numbers in 2003 and 2004, the Valley’s last normal market.
MONTHS SUPPLY OF INVENTORY (MSI)
Market wide MSI fell to 2.47 months in March, the lowest level since September 2005. While the market wide MSI is not indicative of inventory supply in smaller market niches, it does signal declining inventory and upward market pressure on pricing.
NEW LIST PRICES
New list pricing continued upward in March. The median new list price rose 3.5% to $149,900. The last time the median new list price hit the $149,000 mark was in May of 2009, when pricing was still in free fall. The average new list price rose 1.4% to $232,900, continuing the positive pricing momentum started in August. 4
SALES PRICES
After remaining relatively flat for the first eight months of 2011, median sales pricing began a slow and steady rise in September 2011, which continued in March to land at $129,900. The median sales price climbed 19.9% from the decade low of $108,300 in May 2011. The average sales price rose 8.4% in March to $180,600. The last time average sales price was $180,000 was in January 2009, while pricing was declining.
Median sales price hit its decade high of $264,800 in June 2006 to tumble 59.1% to its low of $108,300 in May 2011. Average sales price fell 56.8% from its decade high of $350,400 in May 2007 to $151,368 in August 2011. The upward pricing we have seen over the last months is welcome, but should be seen only as the first steps in the right direction of a long climb.
THE ARMLS PENDING PRICE INDEX™
The Pending Price Index is a forecasting tool unique to ARMLS, which uses pending proper-ties in the MLS system to predict median and average pricing 90 days into the future. The thirty day predictions have proved to be the most reliable, usually within the acceptable margin of +/- 5%. The 60 and 90 day predictions are less so, as they are more heavily influenced by short sales, whose closing dates are less reliable. STAT depends solely on the data in the MLS system for its predictions, and postponed closing dates, particularly on Short Sales, cause deviations from STAT’s published predictions by unacceptable margins. Last month’s STAT predicted the median sale price for March to be $126,000, missing the mark by 3.10%, with the actual median price of $130,000. STAT predicts the April median price to land at $133,000. The average price prediction last month was $174,000, missing the actual April average price of $181,000 by 3.79%. STAT predicts the average sales price for April to be $180,000.
The current market is relatively brisk with less than three months’ supply of inventory. While ARMLS will continue to track 60 and 90 day predictions, it is temporarily suspending its reporting on the 60 and 90 day predictions until their reliability settles down to more closely resemble actual pricing metrics.
ARMLS STAT APRIL 2012
PPI SUPPLEMENT
The PPI Supplement focuses on newly pended properties added to the total pending pool each month. Looking back over the most recent four months of new pending data, STAT reports a shift in the makeup of pendings at the various price points. Pending properties in the ranges $50,000 and under and the $50,001 to $100,000 declined 3.7% and 7.64%, respectively, over the last four months. The $100,001 – $150,000 declined .93% over that last three months.
Also noteworthy is the percentage rise during the December to March period, in the $150,001 to $200,000, the $200,001 to 250,000, the $250,001 to $300,000 and the $300,001 to $350,000 price ranges. These in-creased 2.46%, 2.25%, 1.24%, 1.14% and 1.21 %, respectively. Changes in the percentage of properties in the $350,001 and above are too small to be significant at this point. As the inventory in the lower ranges is absorbed, buyers are shifting to more plentiful inventory in the higher price ranges, which are still very affordable. Pricing recovery will first be seen in incremental gains in the pending pool.
Pending Contracts Signed In March
Price Range PPI Avg PPI Med PPI Units Units % of Total
<=50,000 35,088 36,550 737 7.57%
50,001 - 100,000 78,338 80,000 2,186 22.46%
100,001 - 150,000 125,893 125,000 2,478 25.46%
150,001 - 200,000 173,230 171,000 1,507 15.48%
200,001 - 250,000 226,105 225,000 933 9.58%
250,001 - 300,000 275,100 274,000 554 5.69%
300,001 - 350,000 326,331 325,000 377 3.87%
350,001 - 400,000 375,754 375,000 266 2.73%
400,001 - 450,000 427,168 425,000 172 1.77%
450,001 - 500,000 478,457 480,000 76 0.78%
500,001 - 550,000 528,305 525,000 86 0.88%
550,001 - 600,000 577,791 575,000 71 0.73%
600,001 - 650,000 635,347 637,500 47 0.48%
650,001 - 700,000 679,768 680,000 37 0.38%
700,001 - 750,000 733,255 740,000 29 0.30%
>=750,001 1,279,186 1,025,000 178 1.83%
PPI SUPPLEMENT – $/SQ FT
The PPI – $/SQ FT report examines on a rolling four month basis incremental gains and losses in the price per square foot of newly pended properties, added to the pending pool each month. Since ranges above $350,001 have relatively small numbers of pendings each month, they are more vulnerable to influence by one or several atypical sales, and are thus not statistically significant. In the ranges from $50,001 through $350,000, there were only small price per square foot gains, with the $200,001 to $250,000 and $250,001 to $300,000, showing increases of 3.13% and 1.89%, respectively.
Pending Contracts Signed In February
Price Range PPI Avg PPI Sq Ft PPI Units Avg Pending Price SqFt
<=50,000 34,898 1,166 769 30
50,001 - 100,000 78,183 1,501 2,334 52
100,001 - 150,000 125,661 1,805 2,397 70
150,001 - 200,000 173,788 2,079 1,422 84
200,001 - 250,000 226,283 2,353 781 96
250,001 - 300,000 275,802 2,604 476 106
300,001 - 350,000 326,449 2,762 306 118
350,001 - 400,000 374,685 2,976 217 126
400,001 - 450,000 427,532 3,095 122 138
450,001 - 500,000 477,282 3,388 100 141
500,001 - 550,000 530,024 3,460 55 153
550,001 - 600,000 577,562 3,388 56 170
600,001 - 650,000 629,825 3,748 36 168
650,001 - 700,000 669,182 3,646 22 184
700,001 - 750,000 730,287 3,959 27 184
>=750,001 1,394,592 5,195 166 268
FORECLOSURES PENDING
Foreclosures pending in March increased by 196 units, to end at 18,029. Foreclosures pending remain on the steady downward trend line, begun from a high of 50,568 per month in November 2009. Foreclosures pending are the precursors to lender owned inventory and sales. Steady declines in properties are good news for the Valley’s pricing recovery. This is the third month in a row foreclosures pending has hovered around 18,000. Prior to January, this level was last seen in second quarter of 2008.
AVERAGE DAYS ON MARKET (DOM)
Average Days on Market dropped another day in March to 92. This metric fell below 100 in September, and has remained in the 92-95 day range since then. Market wide DOM is not reflective of DOM in smaller markets, which are influenced by the supply and demand of that specific market niche. DOM as reported in STAT is a barometer of overall market health. STAT recorded its highest DOM of 138 in February 2008.
DISTRESSED SALES
Distressed sales as a percentage of total sales fell 4.6% in March, to 46.8%. This is the first time since ARMLS began tracking this metric that it dipped below 50%. Distressed properties have unduly influenced Valley pricing for some time. In September of 2010, its percentage reached an all-time high of 74.1% of total sales.
In March, there were 2,275 short sales closed compared to 1,872 lender owned sales. In the past foreclosures dominated short sales, but in November 2011, the trend reversed, and short sales have eclipsed lender owned since. This possibly reflects greater lender appetite for workout
COMMENTARY
March STAT reports a continuation of good news seen over the last several months. A 7.9% decline in inventory to 21,863, coupled with a 22.3% rise in sales to 8,869, exerts positive pressure on pricing. Once again STAT reports gains in all four pricing metrics: median and average prices, for both listing and sales. The upward pricing trend that began in the August/September time frame continues. Although not robust, it is steady and definitely upward.
MSI dropped to 2.47 in March, which makes for a brisk market, fueling Subscriber complaints over lack of adequate inventory. The current forces of supply and demand should support this upward pricing trend. Valley pricing fell approximately 60% between June 2006 and the Q2/Q3 2011, leaving much ground to be made up. Many doubt that the high average of $350,400 or the high median of $264,800 will be matched in this recovery.
At the Scottsdale Area Association of REALTORS® Economic Forecast on April 2, NAR Chief Economist Lawrence Yun reported on the recovery and forecasted some trends and concerns for Phoenix Metro, Arizona and the nation. While the Valley has record affordability and historically low interest rates, other factors are impeding recovery.
As the Valley watches inventory dwindle, particularly worrisome, according to Dr. Yun, is that builders are not restocking to keep up with the US population growth of 3 million per year. Some areas are seeing shortages already. Large builders have been able to tap their stock holdings to get the necessary capital to build, but other medium to small builders are stuck without access to funding.
While interest rates are historically very low, many homebuyers are still denied credit. Banks have tightened their lending standards, keeping many buyers out of the market. The FNMA average credit score is 720, and the FHA average score is 650. Consumers with credit scores of 720-760 rep-resent only 20% of the population. If lending standards were set back to the year 2,000, Dr. Yun believes that sales could be 15-20% higher than they are today.
Banks, though profitable, have not seen their stocks rise. Investors are staying away from bank stocks, fearing the negative effects of lawsuits. There has been only partial implementation of the Dodd-Frank legislation1, which has left banks and investors uncertain of the implications of full implementation. This further encourages them to hoard cash, and hold firm on restrictive lending standards.
Arizona, California, Florida and Nevada, where job losses were the most severe, are now leading U.S. job expansion. Arizona posted a 40,600 job growth year over year through February.2 From August through December, the four above states added 222,100 jobs, 28% of the U.S. increase in employment, according to Labor Department figures.3 While unemployment for Phoenix is 8.3%,3 greater Phoenix job growth increased by 37,800 jobs (1.6%) from a year ago, according to Economist Elliott Pollach’s March 12 publication.4
While important indicators are moving in the right direction, and there are many positive metrics in March STAT, there are still hurdles and issues to overcome. As STAT has said in months past, this recovery is steady as she goes.