Total sales for March increased by 1,620, which represents a 22.3% increase over February. At the present time, there are only 11,202 homes that are currently active on the market in Maricopa County, which has approximately 1.4 million homes. Just 30 days ago, we had over 15,000 homes that were actively listed for sale. The bottom line is that we have a SERIOUS supply problem in today's market. 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 March/2012 in their monthly STAT Report, and the results are very positive. Here is a breakdown of what happened in March in the Metro Phoenix Real Estate Market:
Sales (Month over Month)- As stated above, sales were up 22.3% (compared to February), with a total of 8,869 closed listings. Advantage: Seller
Sales (Year over Year)- March/2012 sales of 8,869 were down 10.7% below the March/2011 numbers. Anything over 7,000 represents a robust market. To put this in perspective, our "low-point" for sales was January/2008, coming in at 2,912 total sales. Advantage: Seller
New Inventory- We saw an upturn in new listings hitting the market, increasing by 6.8% over February (9,942 new listings hit the market in March). That being said, remember that as of today, there are only 11,202 active listings on the market, and 9,942 were listed in March/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 7.9% from February to March. 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 March/2011 to choose from. Advantage: Seller
Months Supply Of Inventory (MSI)- For the second month in a row, this metric has dropped, coming in at 2.47 months. Last month, this figure was at 3.27 months. This is a HUGE drop! 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. It's no wonder that buyers are finding it hard to find anything to buy these days. Advantage: Seller
New List Prices- New list price metrics , median and average, came in higher for March. The new listing median list price jumped 3.5% to $149,900, and the average new list price increased by 1.4% to $232,900. To sum up, prices ARE going up. Advantage: Seller
Sales Prices- Again, this metric continues to show improvement. The median price increased 6.4% to $129,900 in March, compared to February ($122,000). This also represents an increase of 19.9% vs the decade low of $108,300 in May/2011. The average sales price also increased 8.4% in March to $180,600. The last time the average sales price was $180,000 was in January 2009, while pricing was decreasing. In my opinion, this is the metric that will eventually tell us that we have "hit the bottom" in the Metro Phoenix market. We haven't hit the bottom yet, but this is definitely good news! Advantage: Sellers
Foreclosures Pending- Foreclosures pending increased from 17,833 in February to 18,029 in March. The recent deal that was cut between the banks and the various Attorney General's undoubtedly has a lot to do with this increase. Unfortunately, I see this number increasing over the next several months. Banks now know that they are "off the hook" when it comes to robo-signing scandal, and we can all expect them to "cash-in" on their latest victory. 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 is comprised 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 March/2012, distressed properties (4,147) represented just 46.8% of total sales. For the fourth month in a row, short sales outpaced foreclosure/bank-owned sales. In March, there were 1,872 lender-owned sales, and 2,275 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- Increased in March to 1,872 from 1,687 in February, but it's percent of total sales dropped to just 21.1% of total sales.. 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 March increased by almost 12% to 2,036, representing 23% 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- Dropped slightly in March to 92 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 faced with a seller's market. Overall inventory decreased by 7.9% in March (only 8,869 new listings), and the telling statistic is that there are only 11,202 homes on the market today in Maricopa County, 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 22.3% over February and total inventory dropped 7.9%. Months of Supply dropped big-time from 3.27 months to 2.47 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 46.8%, a 5.2% drop from February. Also, the ratio of short sales to bank-owned in the distressed property mix increased for the 4th 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. Just look at the foreclosure numbers for this month, and I think you'll agree. As the months go by, we will continue to see more foreclosures, in my opinion. 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....