Is the New Home market picking up?

The Arizona Republic today has an article about Signs of Life in the new construction home market.  Reading through the article the only real “news” is that the New Home Builders are buying up land again.  The article mentioned the amount of $90 million purchased recently.   This lets me know that the builders are seeing and expecting more home sales.

Hopefully they are correct, and the trend of confidence in the housing market continues.

Home prices seem to be stabilizing

After several years of home prices dropping, the stats are starting to look encouraging.  As you can see from the 2009 Average Sales Price per Square Foot on a monthly average and the start of 2010’s numbers.  Home sales prices are showing signs of stabilizing.  This chart takes into the average, single family homes, condos, manufactured homes, and all areas of the Valley.  This average price per square foot is not reflective of each individual neighborhood.

Taking a broader look at a bit more data …

The Arizona Regional Multiple Listing Service Home Sales Report for the county for the month of April (the most current data available as of today);

The data for single family home sales shows us that the largest number of home sales was in the 100,000 to 160,000 price range with 2,111 sales.  (total sales for single family homes in the month of April was 6,718)

There are strong sales numbers up to 400,000 with a jump in buyers at the 200-250,000 price as well.

Looking at the same data at the bottom of the page check out the  financing type.   Most buyers are either using FHA loan or cash to purchase.

Taking this into consideration, and what I  have been hearing from others in the filed.  We still have lots of investors buying up the inventory. We also have lots of primary home buyers as well.

The investors were expected to be the first to jump into the market.  They have been buying up inventory for quite a while now.   It is I believe the primary home buyers purchasing that is stabilizing our prices.

Market Review of 2009

Well the numbers are not yet in for December, and they won’t be for a couple of weeks.  I have access to great statistics, they compile the numbers daily, weekly and monthly, and I get to share the details with you.

I started by checking out many, many different charts to look for what I believe is the best representation of our market currently and over this past year.  This chart, shows the annual appreciation based on monthly sales price per square foot.  I have 2002 and 2003 on this chart to show what a ‘normal’ year appreciation looked like.  In 2004, and 2005 we saw huge appreciation that is not typical of a normal market and then in 2006, 2007, and 2008 we saw the bubble pop.

Back in about April we started to see changes, the number of homes being purchased increased, the inventory started reducing, and the plummeting price drops slowed.  In a ‘normal’ market there is around a 6% increase to value each year.   In April we hit the low of 44% loss and as I write this we are sitting on average across the entire valley 12% loss.

OK so when your looking at losses, none are going to be good news.  But the dramatic change from earlier this year indicates to me, that we are moving toward  a normalized market.

Let me say again, that this is an over view of the entire Valley of the Sun, each smaller area may tell a different story and usually does

Part of the story that needs to be told is the market by price.  A look at inventory broken down by price tells a great story.  In a ‘normal’ market there is about 6 months (180 days) worth of inventory.  Less and you have sellers market, more and you have a buyers market.

What is interesting is we have all 3 happening at the same time.  A price point of  $300-400k is our ‘normal’ market with about 6 months of inventory.  Prices higher are in the buyers market and lower are in a sellers market.

So depending on the price point you are purchasing in, you may find yourself in a bidding war, and some sales prices over asking.

Inventory is down, pending closing up, all improvements

Here in the greater Phoenix area there is a lot of talk about the changing market.  Our outlying areas have seen the greatest recovery.  Well, let me rephrase that.  Those outer areas, prices have dropped to such a level that people are jumping in to purchase.

This chart is the current inventory, the number of homes currently on the market actively listed, divided by the number of homes that are closing.  Giving us an idea how long it would take at the current level to sell all of the homes available.  Back in April of 2008 there was a 420 day supply of homes.  That is a lot of homes, and not many people purchasing.

Move forward a little more than a year, and we have 209 day supply of homes.  Currently we have people buying homes, and fewer on the market.

The first chart must be looked at comparing it to active listings.  Together they tell a better picture.  This is the chart of active listings.   I included the 2002 and 2003 data because they show a ‘normal’ market.

You can see the inventory levels rose and reached their highest point in late 2007, and remained high all through 2008.  The first part of 2009 we see the number of listings is reducing, currently at 41,197 active listings.

The last chart to compare is the pending listings.  Is this a fluke or going to last.  This chart is jagged, due to many closing at the end of the month.  You can see the current pending listings is high.  Due in part to lenders taking longer to approve buyers.

From this information we know there are lots of people purchasing homes.  The inventory levels are dropping,  and there are lots of homes pending and about to close.  At least for the next few months, the Phoenix market is moving!

Housing Market Recovery in the wind

Who would have thought that the out lying areas would recover first.   We are seeing a huge number of homes selling in the outer communities like Queen Creek, Buckeye, and Maricopa.  Some of these towns are showing a 3 month supply of homes.  (the number of active homes on the market divided by the number of homes that sold in the past month.)  That is a huge difference from about a year ago when those areas had over a year supply of homes. 

Since the prices plummeted in those areas, we are seeing prices under 100k for a 2000 square foot home. Once again, the “drive till you can afford it”  is back. 

FHA requires 3 1/2% down payment, and you can ask for the seller to contribute up to 6% to closing costs.  With the first time home buyer tax credits, buying a home is back on the “to do list” in a big way.  

This just in: People are buying homes!

Chicken Little’s  ”The Sky is Falling” is everywhere in the papers.  I figured a little positive press would be welcoming.

 

People are buying homes!  

 

There it has been said, now for the proof.  January statistics are in and the Arizona Regional MLS has published their report for this month.  

 

January is the 8th consecutive month of increased sales comparing months year to year.  January 2009 had 4742 closings that is a 63% increase over January of 2008 with only 2912 closings.  

 

January 2008 was the slowest month for closing in the past 8 years.  I don’t expect we will see that 63% increase again next month.  Time will tell though. 

 

The closings in January and in the past few months are more comparable to those in 2001, 2002 and 2003.   This is all good news, there are still a lot of homes on the market and hopefully, we will see the inventory start to lower as well, when that happens prices will stabilize.

Foreclosures and the Adult Communites

Although there are no adult communities within McCormick Ranch, our initial website is focused on Active Adult Communities and we work with many 55+ buyers.   

We are seeing lots of numbers being published for the ratios of Bank Owned and Short Sale properties in the valley.   We are not seeing those same numbers in the Adult Communities.   Since it is a cold rainy day, I have been playing with numbers and really surprised myself with what I found!

Taking only single family detached homes in the entire MLS for the valley, a total of 41,832 this morning, 10,796 of them were Bank Owned and an additional 9,003 were Short Sales.  Those numbers round off to 25% of the single family homes on the general market are bank owned and another 21% are short sales.  

 

 

BUT when you look at the Active Adult Community 55+ single family homes, there are a total of 2819 on the market.  Of that 2819 only 52 are bank owned and 63 are short sales which works out to 2% of the homes are bank owned and another 2% are short sales.

 

 

HMMMM  kinda makes you wonder.    Our 55+ citizens have indeed saved for their retirement homes, their financing is minimal and their risk taking days are in the past.

There were very few zero down,  or investor homes sold in these communities in the 2005 and 2006 sales surge.    I believe it is the investors who did get in to these adult communities, that are making up the Bank Owned and Short Sale properties.

State of the Phoenix Housing Market

The worst month for home sales in Maricopa County (the greater Phoenix area) was January 2008. There were a total of 2,912 homes that closed and sold. The lowest number in 8 years or more. From there the number of homes sold each month improved with our banner month in June. In June, 2008 (5,748 homes sold) we had more homes sold than June 2007 (5,438). That started a trend where month over month we have had more homes sold than in 2007. It has continued thru the rest of the year.

What does this mean? It means we have hit the lowest spot in our market and are starting to see recovery. Does this mean housing prices are headed up again? Not necessarily. We still have an inventory of 47,396 homes on the market, and 6,139 listings waiting to close. That is still a lot of competition.

There are currently 34,846 listings under 350k. This is important because it is the FHA loan limit. And the price point of most of the home sales. Of those properties priced under 350k, 10,231 are foreclosure properties. Just under 1/3. Foreclosures are driving the market and will continue to do so for a while.

The good news is our market is showing signs of recovery for the past 6 months.

85258 McCormick Ranch area home statistics

This month we have seen a slight increase in the number of listings, and decrease in the number of sold and pending properties.  It could be we are leveling out.  The summer months are not a popular time for seasonal people to come purchase a property.  It is when families are looking to get into their new home before the schools start for the new year.  Check out the pending status for Single Family homes, the only group to keep the numbers strong.  Summer will soon be over, and the cooler months will arrive.  With snow up north we will see more visitors, and more of the condos and patio homes selling.

 

	2-May-08	6-Jun-08	7-Jul-08	3-Aug-08
Total Active Listings	554	507	475	483
Single Family Homes	285	253	242	249
Patio/Town/Gemini Homes	149	128	127	129
Apartment style Homes	120	126	106	105
Total Pending Listings	79	51	67	56
Single Family Homes	37	23	33	34
Patio/Town/Gemini Homes	26	17	14	7
Apartment style Homes	16	11	20	15
	April	May	June	July
Total Sold	55	68	51	45
Single Family Homes	32	35	23	21
Patio/Town/Gemini Homes	14	19	16	10
Apartment style Homes	9	14	12	14

85258 Sales Statistics

Looking at the numbers from this past month we have a growing positive trend.  Currently the number of active listings is decreasing, we are seeing the lowest number of actively listed homes in quite a while.  Where last month there was a dip in the number of homes pending, we see that show up in this months closings.  With the increase of pending’s again, we should see a strong number of sold by the end of the month.

 

	3-Mar-08	4-Apr-08	2-May-08	6-Jun-08	7-Jul-08
Total Active Listings	556	572	554	507	475
Single Family Homes	279	287	285	253	242
Patio/Town/Gemini Homes	150	167	149	128	127
Apartment style Homes	127	118	120	126	106
Total Pending Listings	72	70	79	51	67
Single Family Homes	33	39	37	23	33
Patio/Town/Gemini Homes	22	17	26	17	14
Apartment style Homes	17	14	16	11	20
	Feb	March	April	May	June
Total Sold	42	55	55	68	51
Single Family Homes	21	19	32	35	23
Patio/Town/Gemini Homes	17	21	14	19	16
Apartment style Homes	4	15	9	14	12
Average Sales Price
Single Family Homes	590k	761k	640	600	662
Patio/Town/Gemini Homes	529k	440k	494	429	353
Apartment style Homes	155k	173k	244	260	190

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