SALES Month over Month
Sales declined in September 14.5% to 6,478. This follows a downward trend line of units sold started in
June. The drop in total sales reflects the Valley’s current shortage of inventory.
SALES Year over Year
September sales (6,478) represent a 17.9% drop from the same figure a year ago. A decline in units
sold from August to September is consistent with ten out of the last eleven years, with 2008 as the
exception.
NEW INVENTORY
New inventory declined 7.3% to 8,901 in September. This figure is 397 units (4.27%) be-low the
average of new listings added each month since January.
TOTAL INVENTORY
Total inventory bounced up to 22,862 units in September. This figure has been falling steadily since its
decade high of 58,178 in October 2007. September is the third month in a row that the total inventory
has risen, 2.7% in July, 2.7% in August and 9.2% in Septem-ber. Total inventory figures between 20,000
and 30,000 is considered typical of a normal Valley market, seen in 2002, 2003 and the first two
quarters of 2004.
MONTHS SUPPLY OF INVENTORY (MSI)
As sales declined and total inventory rose, September’s MSI saw a rise from 2.76 months in August to
3.53 in September. MSI below 4 months is considered a seller’s market. Valley wide MSI is tracked in
STAT as a barometer of overall market health, and should not be used to pre-dict inventory supply in
smaller market niches, which have their own unique MSIs.
NEW LIST PRICES
Median list price increased in September by 4.7% to land at $167,400. This metric is 27.8% higher than
the same figure in 2011. The average new list price rose 16.1% to $257,600 in Sep-tember. Likewise,
the average list price showed a significant increase (22.2%) over the same figure a year ago.
SALES PRICES
Both sales price metrics showed improvement in September. The median sales price rose 2.7% in
September to $150,000, while the average sales price increased 2.3% to $198,800. The overall trend l
ines for both metrics have been upward, since reaching their respective bottoms in May 2011 for the
median, and August 2011 for the average. The median sale price, which fell 56.8% from its high of
$264,800 in June 2006, has risen 38.5% from its dec-ade low of $108, 300 in May 2011. Similarly, the
average sales price, which fell 56.8% from its high of $350,400 in May 2007, has increased 31.34%
from it decade low of $151,368 in August 2011.
ARMLS
THE ARMLS PENDING PRICE INDEX™
The Pending Price Index (PPI) is a metric unique to ARMLS which uses pending properties inside the
MLS to predict the sales prices thirty days into the future. Last month the PPI predicted the median
sales price to be $144,000, missing September’s actual median of $150,000 by 4.17%. The averages
sales price predicted last month for September was $190,200, falling 4.54% below the actual
September average of $198,800.
This month the PPI predicts the median sales price to fall to $145,000, and the average sales price to
land at $191,500. Over the last 12 months PPI has underestimated the me-dian sale price each month
by an average of 2.39%, and the average sales price by a monthly average of 3.94%. As sales prices
continue to rise, underestimations are the re-sult of rising prices in pendings added to the pool during
the month, that are not included in the prediction made at the beginning of the month.
ARMLS
PPI SUPPLEMENT
The PPI Supplement focuses on newly pended properties added to the total pending pool each month
on a rolling four month view. The percentage of total pending for ≤$50,000 and $50,001-$100,000
continues to trend downward, reflecting dwindling inventory in these very affordable ranges. Percentage
of pendings in the $100,001-300,000, as the next affordable range, continues to rise, as lack of
inventory in the lower ranges moves Buyers to the next affordable ranges.
PPI SUPPLEMENT - $/SQ FT
The PPI Supplement - $/SQ FT report examines incremental gains or losses over a rolling four months
in the price per square foot of newly pended properties added to the pending pool each month. This
month $/SQ FT fluctuated between ±$1 /SQ FT in ranges $400,000 and below. Ranges above
$400,001, saw increases in the $/SQ FT from $4-15/SQ FT, with the exception of $600,001-650,000
which realized a $6/SQ FT loss. STAT cautions against too much enthusiasm over the rise in $/SQ FT in
these higher ranges, whose small numbers may be unduly influenced by one or several outliers. STAT
will be watching to see if this trend continues in the higher price ranges.
FORECLOSURES PENDING
Foreclosures pending continued on their downward trend line, begun from a high of 50,568 in
November 2009, to 14,584 in September. This represents a 10.9% decline from last month.
Foreclosures pending have declined 37.17% over the last twelve months, and 71.6% since from the
November 2009 high. Foreclosures pending in the 5,000-7,000 range is considered typical of a normal
market.
ARMLS
DISTRESSED SALES
Distressed sales, composed of lender owned and short sales, fell again in September as a percent of
total sales to 39.9%. In February 2011, distressed sales were at an all time high of 70.7% of total sales.
This month lender owned sales (835) represented 12.9% of total sales, and short sales (1,749)
accounted for 27%. The current short sale to foreclo-sure ratio is approximately 2:1, representing a
reversal of foreclosure dominance over short sales prior to November 2011. This trend reflects lender
appetite for workout over taking a property back through foreclosure.
AVERAGE DAYS ON MARKET (DOM)
Average Days on market shed another day in September to land at 68. DOM reached an all time high of
138 in February 2008. This market wide metric should not be used to predict sales time in smaller
market niches which are influenced by their own unique supply and demand. Continued declines in
DOM reflect competitive pressure from dwin-dling inventory.
COMMENTARY
STAT offers up its share of incremental good news in October. While total sales declined, both list and
sales pricing continued upward. Distressed properties still command their share of attention, but their
influence continues to decline, accounting for 39.9% of total sales this month. While this metric still
remains high, it pales next to its all time high of 70.7% in February, 2011. Foreclosures pending
continue downward, having declined 37.17% over the last twelve months. Total inventory rose 9.2%, but
brought little relief to the tight inventory at the low end of the pricing spectrum.
Since May, STAT has been tracking inventory $350,000 and below, to monitor the mix of Active With
Contingency (AWC) to Actives. At the end of September, total actives under $350,000 were 15,736 with
6,054 (38.47%) in AWC status. While the AWCs have declined from 58.5% of actives when STAT
started tracking in May, the percentage of AWCs relative to actives remains high. The Valley’s mar-ket is
recovering noticeably, but still in slow motion.
Unemployment, job growth and net migration are at the epicenter of the tentative recovery. Em-ployers
are risk averse in the face of uncertainty regarding the Presidential election, the makeup of the new
Congress, the looming fiscal cliff and Europe’s financial woes. In the coming months much of this
uncertainty will resolve itself. Aruna Murthy, Director of Economic Analysis for the Arizona Department of
Administration, cites year over year gains in employment for Arizona, over 2% for each of the past three
months, faster than the national average.1 According to Lee Mc Pheters, di-rector of the JPMorgan
Chase Economic Outlook Center and research professor of economics at ASU, Arizona has regained
87,000 of the 314,000 jobs lost during the recession.2 Phoenix Metro created 47,550 jobs over the past
year, or almost 87% of all the jobs created in the state.3
Historically new home construction has been the driver of employment. In Boston, at the recent Council
of Multiple Listing Services conference on September 28, economist Dr. Elliott Eisenberg was optimistic
about new home construction, which is coming back and contributing to GDP. Its revival places Arizona
in eighth place in new home construction employment, with a 6.7% twelve month gain (7,500 jobs),
according to the Associated General Contractors Monthly Report.4 In addi-tion, RL Brown reported
1,062 new home permits in August.3 This is good news not only for employ-ment but also for the
Valley’s tight inventory.
The Valley is tied to many factors beyond its control. It continues its recovery though, with perhaps the
most disappointing metric of all, its speed. Slow motion is motion nonetheless, and each step gets us
closer to normal.
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