Phoenix Real Estate Trends Monthly Report-November 2011-Buyer's or Seller's Market?

When looking at total sales, November sales of 7,146 continued the downward trend from the high of 11,125 in June.  Overall, November represented a 1.7% drop below October sales.  That being said, there were several promising signs in November, as you will see from this report.

ARMLS recently released the numbers for November/2011 in their monthly STAT Report, and the results are mixed.  Here is a breakdown of what happened in November in the Metro Phoenix Real Estate Market:

Sales (Month over Month)- Sales were down 1.7% (compared to October/2011), with a total of 7,146 closed listings.   This represents 5 straight months of declining sales.  Advantage:  Buyer

Sales (Year over Year)- November/2011 sales were up 5.3% over the November/2010 figure of.  Advantage:  Seller

New Inventory- This metric has been following a downward trend since April, and November was no different.  November's new listing figure of 8,428 is the lowest since December/2004 (7,117).  At its peak in March/2006, new listings hit a high-water mark of 16,686.  November's figures come in at 50.6% of the all-time high. This is seen as a positive metric.   Advantage:  Seller

Total Inventory-  This number dropped 1.7% in November, to 26,798.  Overall, in 20011, this metric has been a downward trend, with the largest drop taking place between January (42,881) to July's 27,655, followed by a more gentle decline between August and November.  November's 26,798 represents a decline of 41% compared to November/201o numbers.  Advantage:  Seller

Months Supply Of Inventory (MSI)- Increased slightly from 3.61 months in October/2011 to 3.75 months in November/2011. Generally, an MSI below 4 indicates a seller's market, between 4 and 6 represents a balanced market, and above 6 represents a buyer's market.  Advantage:  Seller

New List Prices- The median new list price decreased a mere .8%, going from $139,000 in October to $137,900 in November, while the average new list price declined 3.3% from $229,900 in October, to $222,400 in November.  While the decline was minimal in both areas, it bucks the trend of rising prices we have been seeing over the past two months.  In my opinion, this is the metric that will eventually tell us that we have "hit the bottom" in the Metro Phoenix market.  Advantage: Buyer

Sales Prices- The median price rose 2.7% to $115,000 in November, compared to October (112,000).   Average sales price rose 4.7% to to $161,600. In my opinion, this is the metric that will eventually tell us that we have "hit the bottom" in the Metro Phoenix market.  We need to see several more months of this appreciation to call it a "trend", but I'm very happy to see this number increase.  It is no doubt due to the continued decline of REO (bank-owned) sales in the market.  Advantage: Sellers

Foreclosures Pending- Dropped from 23,211 in October to 22,389 in November.  Beginning at the high-water mark in November/2009 (50,568), this number has dropped every month since then, and represents 44.2% of the all-time high. Foreclosures pending has now dropped 21 out of the past 23 months.  This is a HUGE improvement over the high of 40,641 in January/2011.  Advantage: Buyers

Distressed Sales-Distressed sales, which comprise of the total number of bank-owned and short sales, are the main source of the problem in our market (depressed pricing).  Distressed sales as a percentage of actual sales reached a market high of 74.1% in September/2010.  In November/2011, distressed properties (4,246) represented just 59.4% of total sales.  Several months ago, I predicted that short sales would overtake REO/Bank-Owned Sales, and it appears that this will still happen in 2011.  In October, there were 2,128 lender-owned sales, and 2,118 short sales.  This is fantastic news!  More and more homeowners are understanding the short sale process, and the many benefits that come with a short sale versus a foreclosure.  There is no doubt that if this trend continues, we will continue to see a steady increase in both the average and median sales prices in the months ahead.  Advantage: Sellers

Lender-Owned Sales- Declined 21% in November to 2,128 from 2,693 in October, and it's percent of total sales declined to 29.8%.  This number has hovered between 40.8% and 46.2% since March/2011.  This is great news, and it's a trend that we hope continues!  Advantage:  Sellers

Short Sales- The number of short sales in November declined 9,6% to 2,118, representing 29.6% of total sales. As stated above, I expect this number to continue to trend upward, as more Phoenix short sale agents are getting better at understanding the short sale process.  Lender-owned and short sales continue to dominate the market, representing almost 60% of total sales in the Phoenix market.  Our team of Phoenix short sale agents are ready to help, if you are considering a short sale.  Advantage:  Buyers & Sellers (short sales are better for the overall health of the market when compared to REO sales!).

Avg Days On Market- Declined in November to 90 days, a level not seen since November/2009.  This number is substantially better than the 12 month high in February/2011 of 116 days.  Advantage:  Seller

So, what do you think?  Is it a seller's market or a buyer's market?  I still think we are temporarily faced with a seller's market.  Already low inventory dropped lower, which makes it more challenging for buyers to find homes, as our current inventories are now at historic lows.

The good news is that we are seeing positive news in several areas:  foreclosures pending continues its downward trend, short sales are about to outpace lender-owned sales MSI (months of inventory) remains under 4, and the average Days On Market dropped again in November.  In September, we saw our first increase in both average and median sales price, and we all held our breath hoping for yet another positive month in October, only to be disappointed.  November saw both average and median prices shoot skyward.  We can only hope that this trend continues, and I feel that a continued upward trend with short sales will help to increase this metric.

Jobs are the key to any recovery, and I'm still talking to homeowners & Phoenix short sale clients who have either recently lost their job, or have had hours cut back at work.  The US Bureau of Labor Statistics reported a fall in the national unemployment rate from 9.0 to 8.6% in November.  They also released statistics on December 6th, showing an 8.1% unemployment rate in the Phoenix Metro Market.  While this metric is beginning to move in the right direction, it is moving at a snail's pace. Net migration is also an issue, with births just barely outpacing deaths for the Phoenix Metro area.  The bottom line is, we need more jobs and we need the larger "institutional lenders" (i.e. Wells Fargo, BofA, Citi, GMAC) to begin lending again.

If you are a buyer, hang in there!  While there are some incredible deals in this market, you have probably realized (or will soon realize) that trying to purchase a home in this market is a daunting task, especially without the assistance of an experienced Phoenix buyer's agent.  We are working hard to find homes for our buyer clients, but with inventory being so low, its been difficult, at best.  For our clients reading this, keep checking your email inbox, and call us immediately when you see something you like.  When it comes to finding a home, TIME IS OF THE ESSENCE.  If it's a good deal, expect multiple offers in the first 24-48 hours, and be ready to "go in strong".  One more piece of advice for our buyer clients...If you are trying to obtain financing, STAY AWAY FROM THE INSTITUTIONAL LENDERS (i.e. Wells Fargo, BofA, CitiMortgage, GMAC, etc.) and Mortgage Brokers, and work with a MORTGAGE BANKER.  The "big-banks" have literally screwed up every deal we've worked on in the past 3 months.  This is not an anomaly, it is a trend.  They have tightened their purse-strings, and are creating major headaches for our buyer clients.  Work with a mortgage bank that can close your loan in-house, and has in-house underwriting.  We have a list of qualified mortgage banks in the Metro Phoenix market that can close your loan in 15-20 days.  The average institutional lender cannot is having a difficult time closing a loan in 60-75 days, if they can close them at all.  PLEASE do everything you can to work with a qualified Mortgage Bank.  There is nothing more frustrating than waiting 3-4 months for a short sale to be approved, only to lose it because your lender couldn't get it done in time.

Now more than ever, you need a seasoned professional to walk you through these tumultuous times, not a part-timer.

Call me today and allow us to set up a plan to help you buy/sell your next home.  You'll be glad you called.

Until next month....

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Bob Hertzog

Summit Home Consultants

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Copyright © By Bob Hertzog 2011 *Phoenix Real Estate Trends-November-2011...Buyer's or Seller's Market?


Bob Hertzog

Designated Broker-Summit Home Consultants




Comment balloon 3 commentsBob Hertzog • December 09 2011 09:20PM
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