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Phoenix Metropolitan Area Real Estate Statistics - November 2009

What is happening with the real estate market in the Phoenix metropolitan area?  What changed in November 2009?

[click on the charts to expand]

1) SALES:  November 2009’s sales of 7,494 were much better than November 2008’s 4,361 sales.  That’s 72% more sales this November than last November!  2009 is shaping up to be the 3rd best year for sales in the past 10 years.  86.5% of the sales in November were homes, 12.1% were condos, and 1.4% were manufactured housing.

18.56% of the Phoenix metro area MLS listings sold in November 2009, down from October 2009 but more than double from November 2008 (which was a miserable 7.76%).  20.2% of the homes sold in November; 12.9% of the condos sold; 8.1% of manufactured homes sold.  Bank-owned foreclosure properties accounted for 40.9% of the sales in November 2009 down from July 2009’s 53.4%.  More and more buyers are purchasing homes from regular sellers.  While 34% of the total sales in November 2009 were cash, 38% of the sales were with FHA or VA financing.  This is the first time in at least 10 years that FHA/VA financing has been this high.

2) SALES PRICE:  Prices have fluctuated in the past few months.  The average sales price in November 2009 went up $4,400 to $174,523.  It’s still 14% less than November 2008’s $204,121 average.  The good news is that this percent difference (2009 vs. 2008) is decreasing.

The median sales price in November 2009 increased to $130,000.  This was 13% less than the median sold price of $150,000 in November 2008.  For buyers, Phoenix area homes continue to be very affordable.  As a result, multiple offers are still common in the price range below $200,000.  The Phoenix metropolitan area real estate market bottomed out in early April.

3) INVENTORY:  Did the absorption rate go down (the # of months’ inventory available for sale)?  The inventory of homes in November 2009 rose slightly to 5.4 months.  It was much better than November 2008’s absorption rate of 12.9 months.  A balanced buyer-seller market is six months.  The absorption rate in November 2009: 4.9 months for homes (11 in 2008), 7.8 months for condos (26 in 2008), and 12.3 months for manufactured homes (32 in 2008). Therefore, it is now a seller’s market for homes in the Phoenix metropolitan area.

4) NEW MLS LISTINGS:  In November 2009, the number of new listings was 10,889, which was down 12% from November 2008’s 12,402 new listings.  The majority of the new listings were short sales.  Usually at this time of year, inventory drops.  However, in November, inventory increased to 40,372 active listings.  The good news is that active listing inventory is down 28% from November 2008’s 56,227 listings.

5) AVERAGE DAYS ON MARKET:  Phoenix area homes sold quicker this November at 68 days compared to 81 days in November 2008. However, condos are still taking longer to sell; 95 days in November 2009 which is the exact same as November 2008.  With lower prices for homes thanks to foreclosure listings, buyers continue to select single-family residences instead of condos.

6) SALES PRICE VERSUS LIST PRICE:  The percent of $$$ that sellers keep (sales price divided by list price) in November 2009 was 97.14%, which was the 2nd best (October 2009 was the best) in over 3 years.  It was better than November 2008’s 95.17% to the point that on the average sales price of $174,524, sellers kept almost $3,500 in their pockets compared to last year. This is due to home prices being so low and thus having little room for negotiating in a seller’s market and also due to a rush of buyers for the first time homebuyers tax credit.  A normal market has sellers keeping 97.5% of their final list price.

7) PENDING SALES:  Pending sales are a great indicator of future sales.  Foreclosure listings are still selling fairly quickly which boosts the numbers of pending sales.  The pending sales numbers were very strong in November 2009, reaching better levels than in all of 2008, 2007, and 2006.  Pending sales in December are tracking historically strong but lower which is seasonally normal.  The Phoenix real estate market activity is now performing higher than 2005 levels, except that prices are lower.  In September, there were over 20,000 properties under contract (pending & contingency), an all-time record.  We’re currently at the 17,300 mark.  Short sales make up 55.5% of the properties under contract, which skews the numbers (looks good, but doesn’t count if they don’t convert to actual sales).

8) PRICE PER SQUARE FOOT:  It rose to $91 per square foot in November 2009, which is historically low, but the best since January 2009.  Multiple offers and declining inventory should have helped this statistic go up.  Looks like March 2009 was the bottom of the market for price per square foot.  The price per square foot a year ago was $103! Check out the chart!

9) VACANT HOMES:  An unprecedented number of Phoenix metro area MLS active listings still are vacant.  Sold homes have an even higher number of vacancies.  Vacant properties accounted for 77.5% of all properties sold in November 2009, but it dropped off a hair as more buyers purchased occupied homes.  This was the 9th month of decline.  The normal is under 40%, however.  The vacancy rate of sold properties in November 2008 was 83.1%.

10) ASKING PRICE VERSUS SOLD PRICE:  Is there any difference between asking prices and sold prices?  Yes.  The average new list price in November 2009 was $244,400.  This was $40,600 less than November 2008’s average new list price.  Due to lower priced foreclosure listings and short sale listings.

The median new list price in November 2009 was $145,000.  The median new list price was $24,000 less than from November 2008.  Again, it’s evidence of the predominance of lower-priced foreclosure and short sale listings.

11) SHORT SALES:  Short sales continue to stifle the Phoenix area real estate market.  They control 24% of the active listings and 55.5% of the properties under contract.  Sellers have been lulled into the false hope of short sales and buyer have been led to think the 4-month-long transaction will be worth it, especially when inventory dropped.  There are currently 9,600 short sale listings under contract, up from 5,800 in May.  This number continues to build because they are not converting to actual sales.  What are the chances that the banks will accept all 9,600 offers?  Not good.  In fact, only about 17% of the pending short sale properties will successfully close escrow.  The chart below compares short sale and all sale success rates.  The success rate of short sales is over three times better than a year ago.

What will happen in upcoming months?  December sales typically decline because of the holiday season.  We predicted a sharp drop-off in sales in December & January, however the tax credit has been extended.  Sales so far in December are remarkably strong.  Banks are also holding back on foreclosure auctions.