July has 8,377 closed transactions as of 8/1/2011. Of those 3,597 (43%) are Bank Owned and 1,991 (24%) are Short Sales. The percentage of distressed sales continues in the 2 out of 3 range.
July 2011 had the 4 highest number of homes sold compared to the last 11 years. It’s an above average or above normal number. However 7/11 was down 21% from June in a month to month comparison; but 7/11 was up 18% from 7/10 in a year over year comparison. Note: ARMLS is currently over-reporting 6/11 total closings @ 11,125. My search today for 6/11 closings found 10,582, which is the number I used for this report.
Our inventory remains low with 20,217 in active status. We could add the ~7,600 properties in AWC status (6,900 – 91% of these are short sales), but I like to compare to previous reports of actives less the properties with contracts on them. So we now have a 2.4 month supply of active inventory, but only because there were ‘only’ 8,377 closings instead of +10,000. A balanced market has 4-6 months inventory, so we’re still in a seller’s market with lots of multiple offer situations.
Bank owned properties have a 1 month supply with approx 3,600 active and 3,600 closed in July. HUD owned homes have a 2 week supply with 289 active and 554 closed.
Short sales come in with 3,900 active, 6,900 AWC, 3,900 pending, and 1,991 (24%) closed.
Prices in July had little newsworthy developments as they continued to bump along the bottom. The median price was down slightly in July (110k), but has basically been unchanged since 12/10. Both the average price ($155k) and the price per square foot (~$80) are at or below their previous low figures from 2/11.
As I look back at July’s performance, I remember when July/August used to have a ‘close before school starts’ flurry of activity. But with only 1 of 3 sales normal (non-distressed), and 73% of all closings vacant, the back to school rush might apply more to rentals than sales in this market.
That’s how I see it on August 1, 2011. Try to stay cool this month.
The Information Market released their greater Maricopa County foreclosure statistics for May 2011. Although April’s numbers were probably more newsworthy with a greater number of foreclosures completed than new notices issued, May’s numbers provide newsworthy occurrences also. It’s time to review the current Phoenix foreclosure market and identify some significant changes that have occurred since the first of the year.
Foreclosure numbers as of 5/31/2011
Total active residential notices are 27,396; the lowest number since 11/08. The number has dropped 28% since the first of the year, which is more than 10,000 fewer residential properties in foreclosure.
The number of new notices in May was basically the same as the number of completed foreclosures. This is only the 2nd time that new monthly notices were not greater than monthly completions in the past 10 years;
There were 4,000+ residential foreclosures cancelled last month; second highest all time.
With only 1,900 short sales closed (Maricopa County) for May, there are other reasons that trustee sales are being canceled.
New notices for May were basically the same as April and April had the fewest since 11/07.
The number of residential properties currently owned by banks in Maricopa County is 18,451; the lowest since July of last year.
Bank Owned Inventory = 18,451
3,901 active listings in ARMLS;
325 listings in AWC status;
4,986 properties in pending status.
This accounts for 9,212 of the 18,451, or 50% of all bank owned properties. Where’s the other 50%? Good question. I imagine there are a number of issues such as previous owner evictions, tenants with valid leases, title issues, maintenance/property condition issues, or a few others that fall into the “miscellaneous legal issues” category. With basically a 1 month supply of active REO listings in the county (3,901 active / 3,765 sold in May), bringing on the other 50% of bank owned inventory will not “flood the market.” In fact, adding 9,000 active listings would add an additional 1 month supply to our current 2.4 month supply for the entire market.
As various sources reported last month, these developments are significant steps necessary for our market to improve. Sure these might be small steps and we’re not out of the woods yet, but I thought you might be interested in a year-to-date review as we head into our summer selling season.
Once again when I ran my initial numbers for May, I was pleasantly surprised. Initial closings for the Greater Phoenix real estate market in May 2011 are 9802, which is within 88 sales of the highest May on record (2005). May 2011 is 5% over April 2011 and 7% above May 2010, which continues 2011’s improvement over 2010’s numbers.
Now the reality check: Prices fell slightly
Average Sales Price $158,000 down 2%;
Median Sales Price-$108,000 down 3%;
Price per square foot-$82.55-down 1%.
These price numbers are all down from April, which can be attributed again to the ‘mix or make-up’ of the sales figures. REO sales were 44% of the total and Short Sales came in at 22% of all sales. So ‘distress sales’ bumped up slightly, which dropped prices accordingly.
I like the Price Analysis that the Cromford Report published at the end of May. It compared prices a number of ways: such as greater Phoenix vs. outside greater Phoenix; single family vs. condos; various price range points from under $25,000 to over $3 million; and finally a breakdown by city showing today’s price per square foot and comparing it to 90 days ago and last year. Yes all cities are down year over year, but the results are mixed comparing the last 90 days. This is valuable information to provide to clients buying a house, REO sellers, appraisers and anyone else trying to evaluate prices for the Phoenix area.
Besides the number of sales in May, probably the biggest news is number of Active Listings. Current number of Actives stands at 23,624 which is only 2.4 month supply of homes. A balanced market has a 4 to 6 month supply, so we are in a ‘seller’s market’, but prices are the last piece to feel the impact of the short supply. It’s a 5 year low for number of Active Listings and if you factor out the AWC’s, you have to go even further back to reach a 2.4 month supply. Within the Active Listing numbers bank-owned properties have a greater shortage with a 1 month supply of inventory and only a 3 week supply of HUD homes. I guess the shortage of supply explains the return of the multiple offer situations and the dreaded multiple counter offers to explain to frustrated buyers.
The market doesn’t really show any signs of cooling off with 13,254 Pending Listings; the same number as the start of May.
There are a few warning signs on the horizon as the Federal government considers how to deal with Fannie and Freddie, maximum loan amounts, and minimum down payment requirements.
We have narrowed the focus of our Maricopa County Foreclosure chart. This improvement affects everyone that has embedded this chart on their website. Since our primarily focus is residential real estate, it only makes sense that our foreclosure chart tracks residential statistics instead of all foreclosures.
Why change now?
Last month when I was updating the chart, I noticed almost all of the numbers in my spreadsheet were slightly different than the source sheet provided by the Information Market/Cromford Report. Since I was going to be removing/replacing all the numbers, why not take advantage of the residential only columns that were added after we began publishing this chart? The spreadsheet was updated.
Why were the numbers different?
After running recent inquires for previous months, Michael Orr and Tom Ruff found there were several (in some cases hundreds) of trustee sales that had been rescinded. They re-ran and updated all months to make sure they are reporting the most accurate data. From my understanding they will be doing this on a monthly basis.
Why our foreclosure statistics will be different
Once I updated the charts it hit me. Unless we add a margin of error to the mix, we’re not going to be able to identify high/low marks or accurately compare past month’s foreclosure activity to the current month. Since we’re only using the data to identify and report trends, a consistent counting time-frame is more efficient than error margins. Our decision is to NOT update the historical data.
Moral of the story
We’re going to assume there is a consistent margin of error and stick with historic data.
Our Maricopa County Residential Foreclosure chart will have slightly different numbers than the Information Market/Cromford Report spreadsheet.