Total sales for February of 7,249 represented a 12.3% increase from January. At the present time, there are only 15,648 homes that are currently active on the market in Maricopa County, which has approximately 1.4 million homes. This lack of supply is hurting the overall number of sales metric, but is helping the market in many other ways, which I will go over in this months report.
ARMLS recently released the numbers for February/2012 in their monthly STAT Report, and the results are very positive. Here is a breakdown of what happened in February in the Metro Phoenix Real Estate Market:
Sales (Month over Month)- As stated above, sales were up 12.3% (compared to January), with a total of 7,249 closed listings. Advantage: Seller
Sales (Year over Year)- February/2012 sales of 7,249 were up 1.3% over the February/2011. Anything over 7,000 represents a robust market. Advantage: Seller
New Inventory- We saw a downturn in new listings hitting the market, decreasing by 9.7% over January (8,884 new listings hit the market in February). That being said, remember that as of today, there are only 15,648 active listings on the market, and 8,884 were listed in February/2012. Supply continues to be a major problem for buyers in today's market. More on this later. Advantage: Seller
Total Inventory- Total inventory dropped 5.2% from January to February, and 41.6% LOWER than February 2011. While this metric represents a very healthy correction in the market, it is playing hell for our buyers looking for a home. We now only have 60% of the homes we had in February/2011 to choose from. Advantage: Seller
Months Supply Of Inventory (MSI)- For the first time since June/2011, this metric has dropped, coming in at 3.27 months. Generally, an MSI below 4 indicates a seller's market, between 4 and 6 represents a balanced market, and above 6 represents a buyer's market. Advantage: Seller
New List Prices- New list price metrics , median and average, came in with mixed results for February. While the new listing median list price jumped 3.5% to $144,000, the average new list price decreased by 5.5% to $229,700. Advantage: Seller
Sales Prices- Again, this metric continues to show improvement. The median price increased 1.7% to $122,000 in February, compared to January ($120,000). Average sales price dropped less than 1% from $167,500 in January, to $166,000 in February. In my opinion, this is the metric that will eventually tell us that we have "hit the bottom" in the Metro Phoenix market. Advantage: Sellers
Foreclosures Pending- The downward trend continues! Foreclosures pending dropped from 18,287 in January to 17,833 in February. Beginning at the high-water mark in November/2009 (50,568), this number has dropped every month since then, and represents 35% of the all-time high. Foreclosures pending has now dropped 24 out of the past 26 months. I can't stress enough how important this news is, and we all hope that it continues. This is a very important metric, as we all know that coming out of this mess will depend heavily on the amount of foreclosures on the market. Advantage: Buyers
Distressed Sales-Distressed sales, which comprise of the total number of bank-owned and short sales, are the main source of the problem in our market (depressed pricing). Distressed sales as a percentage of actual sales reached a market high of 74.1% in September/2010. In February/2012, distressed properties (3,723) represented just 51.4% of total sales (over 6% drop from January). For the third month in a row, short sales outpaced foreclosure/bank-owned sales. In February, there were 1,687 lender-owned sales, and 2,036 short sales. This is fantastic news! More and more homeowners are understanding the short sale process, and the many benefits that come with a short sale versus a foreclosure. There is no doubt that if this trend continues, we will continue to see a steady increase in both the average and median sales prices in the months ahead. Advantage: Sellers
Lender-Owned Sales- Dropped significantly in February to 1,687 from 1,801 in January, and it's percent of total sales dropped by almost 3% to 24.8%. This number has hovered between 40.8% and 46.2% since March/2011. This is great news, and it's a trend that we hope continues! Advantage: Sellers
Short Sales- The number of short sales in February increased by 5.7% to 2,036, representing 28% of total sales. As stated above, I expect this number to continue to trend upward, as more Phoenix short sale agents are getting better at understanding the short sale process. Lender-owned and short sales continue to dominate the market, representing almost 53% of total sales in the Phoenix market. Our team of Phoenix short sale agents are ready to help, if you are considering a short sale. Advantage: Buyers & Sellers (short sales are better for the overall health of the market when compared to REO sales!).
Avg Days On Market- Rose slightly in February to 93 days. As short sales begin to dominate the market, we expect to see this number increase during 2012. Advantage: Neither Seller or Buyer
So, what do you think? Is it a seller's market or a buyer's market? I still think we are temporarily faced with a seller's market. Overall inventory decreased by 9.7% in February (only 8,884 new listings), and the telling statistic is that there are only 15,648 homes on the market today, listed as active. This, in a market with approximately 1.4 million homes. This statistic alone explains why it is so difficult for buyers to find homes in today's market.
There are tons of great things to point out from this report. Sales were up 12.3% over January, new inventory declined 9.7%, and total inventory came down 5.2%. Months of Supply held pretty steady at 3.27 months. All four pricing metrics, average and median new list prices and sales prices (although not robust), showed upward movement. Foreclosures are down, and the percentage of distressed properties compared to total sales fell to 51.4%, a 6.3% drop from January. Also, the ratio of short sales to bank-owned in the distressed property mix increased for the 3rd month in a row, proving that lenders are now working with homeowners on short sales, which is a HUGE PLUS!
While things continue to improve, we need to step back and consider the ramifications of the recent settlement between the Attorney Generals and the lenders. While this settlement may help a few homeowners who were wrongfully displaced due to the robo-signing scandals, I feel that now this decision has been made, we will see an increase in foreclosure activity, as lenders are now "off the hook" with the authorities. While this will definitely help buyers (increased inventory), it will undoubtedly drop our average and median sales prices. With that being said, until we work our way through the distressed inventory, we will never recover. So, while this may bring temporary pain to our market, I think it's a healthy thing in the long run. Hopefully, more homeowners are now aware of the advantages to a Phoenix short sale over a foreclosure, and will choose this route instead of simply walking a way and suffering the long term effects of a foreclosure.
If you are a buyer, hang in there! While there are some incredible deals in this market, you have probably realized (or will soon realize) that trying to purchase a home in this market is a daunting task, especially without the assistance of an experienced Phoenix buyer's agent. We are working hard to find homes for our buyer clients, but with inventory being so low, its been difficult, at best. For our clients reading this, keep checking your email inbox, and call us immediately when you see something you like.
When it comes to finding a home, TIME IS OF THE ESSENCE. If it's a good deal, expect multiple offers in the first 24-48 hours, and be ready to "go in strong". One more piece of advice for our buyer clients...If you are trying to obtain financing, STAY AWAY FROM THE INSTITUTIONAL LENDERS (i.e. Wells Fargo, BofA, CitiMortgage, GMAC, etc.) and Mortgage Brokers, and work with a MORTGAGE BANKER. The "big-banks" have literally screwed up every deal we've worked on in the past 3 months. This is not an anomaly, it is a trend. They have tightened their purse-strings, and are creating major headaches for our buyer clients. Work with a mortgage bank that can close your loan in-house, and has in-house underwriting. We have a list of qualified mortgage banks in the Metro Phoenix market that can close your loan in 15-20 days. The average institutional lender is having a difficult time closing a loan in 60-75 days, if they can close them at all. PLEASE do everything you can to work with a qualified Mortgage Bank. There is nothing more frustrating than waiting 3-4 months for a short sale to be approved, only to lose it because your lender couldn't get it done in time.
Now more than ever, you need a seasoned professional to walk you through these tumultuous times, not a part-timer.
Call me today and allow us to set up a plan to help you buy/sell your next home. You'll be glad you called.
Until next month....