The rapid shifts of this yearâ€™s market has certainly kept the real estate community on its toes.Â As we enter the final quarter for the year the market still continues on its jerky recovery path.Â The adage that local markets shift quickly and national markets slowly, has never seemed more true than in 2012.Â We began the year much as we ended 2011 â€“ with the prices finally edging up gently and the market bottom established.Â Â By March of 2012 the market acceleration went in to overdrive â€“ supply dropped rapidly and demand escalated wildly upward.Â This brought long dreamed of price appreciation at a rather breathtaking rate and the market strongly swung to the sellerâ€™s side while handing buyers nothing but frustration.Â FHA buyers got pushed to the sidelines and cash became the only game in town with over 40% of the buyers purchasing with cash.Â Then the summer slowdown occurred and inventory began to creep up as some sidelined sellers came back into the market encouraged by pricing shifts just as some buyers exited thanks to these same shifts.
That brings us to the 3rd quarter of 2012.Â The market has quieted since the spring feeding frenzy â€“ supply has crept upwards while demand has slowed.Â The drop off in demand is largely due to seasonal buying patterns, higher pricing, as well as the lowered supply (i.e. buyers canâ€™t find a home â€“ too few choices â€“ or canâ€™t compete against multiple offers â€“ such as the FHA buyer).Â In essence, the market is balancing a bit.Â Does this mean that price appreciation is over?Â Or did we just form another â€œreal estate bubbleâ€?Â In short, no.Â While there is no magic crystal ball to consult on pricing, it is true that in most parts of the valley housing prices are still below the cost of the construction.Â Ultimately, at whatever pace, the pricing will still need to adjust above the hard costs of building.Â So we expect to see some additional upward price movement â€“ the only question is at what pace.
However, there still seems to be little that the facts can do to stop the negative reporting or negative consumer sentiment that crops up periodically about the Valleyâ€™s housing market.Â We much prefer to place our belief in facts.Â In light of that, here are some facts from the Cromford Report that you may find of interest:
- The average cumulative days on market for monthly sales (all areas & types) isÂ Â down to 70.Â The last time we were thisÂ low was July 27,2006 â€“ over six years ago!Â Â The highest point was exactly twice this at 140 days on February 9,Â Â 2008.
- 8.8% of ArizonaÂ first home loans are either delinquent by 30 days or more or already inÂ foreclosure.Â This is lower than the 11.2% reported for the country.Â Â However the annual changes were more significant.Â Arizona saw a 23.3% decline inÂ non-current first home loans between June 2011 and June 2012.Â This is the fastest decline of any stateÂ in the nation.
- Greater PhoenixÂ REO (foreclosures) sales dropped below 14% of the monthly total in August – the first time this has occurred since January 4, 2008.Â At their peak on February 11, 2009 theyÂ Â constituted 71.1% of monthly sales.Â Â Although it will take some time for them to disappear completely,Â REOâ€™s are no longer a major factor in the market.Â Contrary to popular myth, there are notÂ a lot of foreclosed homes in lendersâ€™ possession, so we donâ€™t expect thisÂ REO supply to increase.
- Here are theÂ numbers for August 1, 2012 relative to August 1, 2011. Â For all areas and types in MLS reportsÂ the following:
Active listings â€“ 20,085 vs. 27,787 last year (down 28%)
Pending listings â€“ 10,412 vs. 11,491 last year (down 9%)
Monthly sales â€“ 7112 vs. 8663 last year (down 18%)
Monthly average sales price per sq. ft. $98.54 vs. $79.86 (up 23%)
No financial market moves smoothly upward or downward, there are little fits and starts along the way.Â This market is no exception.Â Â We are in a recovery â€“ how long and how high and how fast are the only unanswered questions.Â As always, we will strive to get you posted as our market continues its crawl out.