When was the last time you heard the words "Phoenix" and "Seller's Market" used in the same sentence? 2005? 2006? I don't know about you, but I'm hearing it everyday now. Could Phoenix be a seller's market? Well, that depends on several factors.
ARMLS recently released the numbers for June/2011 in their monthly STAT Report, and they are very eye-opening. Here is a breakdown of what happened in June/2011 in the Metro Phoenix Real Estate Market:
Sales (Month over Month)- Sales were up 13.4% (compared to May/2011), to a total of 11,125 closed listings. Advantage: Seller
Sales (Year over Year)- June/2011 sales were up 19.9% over June/2010. The 11,125 sales represent the highest sales figure in the last 10 years (yes, that includes the "boom" years of 2005/2006). Advantage: Seller
New Inventory- Dropped by only .5%, but this is the third month in a row of falling inventory. June/2011 new inventory is 15.4% lower than June/2010. Advantage: Seller
Total Inventory- We now have 5 months in a row of falling inventory, with June/2011 coming in at 29,203. This is the first time this number has dropped below 30,000 since ARMLS started recording it in June/2008. Advantage: Seller
Months Supply Of Inventory (MSI)- Dropped from 3.23 months in May/2011 to 2.62 months in June (an 18.9% decline). Advantage: Seller
New List Prices- Both the median and average new list prices both declined in June to $120,100 and $190,400 respectively. This is the tricky one that is leaving everyone scratching their head. The reason is simple. Distressed sales (short sales and bank-owned homes) represented 67.8% of the total sales in June. REO and short sale agents are pricing their properties extremely low at the time of the listing, in hopes of inciting a "bidding war". This is why our buyers are faced with multiple offers within the first few days of a property being listed. This is why our buyers (and their respective agents) are pulling their hair out. Advantage: Buyers (well, sort-of).
Sales Prices- Both the median and average sales prices came up slightly to $110,500 and $160,000 respectively. Advantage: Sellers
Foreclosures Pending- Dropped 9.51% to 27,616 in June. Beginning at the high-water mark in November/2009 (50,568), this number has dropped every month since then. Advantage: Sellers
Lender-Owned Sales- There were 4,542 sales in June, and they accounted for 40.8% of the total sales. This number has been trending downward each month since February's high of 49.6%. Advantage: Sellers
Short Sales- Increased from 21.4% of total sales in May to 27% in June. This shift from lender-owned to short sales tells us that lenders are finally beginning to work with homeowners on the short sale process. Our team of Phoenix short sale agents are definitely seeing evidence of this trend. Advantage: Buyers & Sellers (short sales are better for the overall health of the market when compared to REO sales!).
Avg Days On Market- Unchanged at 106 days for both May & June. That being said, it is 10 days lower than the 12 month high of 116 in February/2011. Advantage: Seller
So, what do you think? Is it a seller's market or a buyer's market? I think we are temporarily faced with a seller's market. The sad thing is, the "sellers" in over two-thirds of the market are lenders, not homeowners putting equity in their pocket. I'm also deeply concerned with the job outlook in Phoenix. According to the US Bank 2011 Small Business Annual Survey, 70% of small businesses expect the number of employees working for them to remain the same over the next 12 months. Economic uncertainty was cited as their biggest challenge.
I'm also deeply concerned for the future of the $300k+ market in Phoenix. This market remains anemic with Monthly Supply of Inventory (MSI) ranging from 3.5 months up to 26.78 months ($3 million+ homes). To put it in perspective, we sold 3,748 homes in the $100,000-$250,000 price range in June/2011. We sold just 88 homes priced at $1 million+ during the same month. Obviously, this market has a long, long way to go.
So, if you're a buyer, hopefully you now have a better idea as to why finding a home has been such a daunting task as of late. You can expect the good deals to go fast, and you need to be ready to put your best foot forward when facing competition from other buyers.
More importantly, you need a seasoned professional to represent you when purchasing a home, not a part-timer.
Call me today and allow us to set up a plan to help you find your next home. You'll be glad you called.
Until next month....
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Copyright © By Bob Hertzog 2011 *Phoenix Real Estate Trends-June-2011...Are We Experiencing A Seller's Market?*