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Market Summary for the Beginning of February

 As normal, January was a relatively slow month for sales with a total of 5,788 reported through ARMLS for all areas and types. This compares with 7,611 for December and 4,704 for January 2009. Nevertheless this is the second highest sales count ever for a January with only January 2005 coming in higher at 6,589. The annual sales rate has now risen to 93,420, a level we last saw in May 2006.

Within Greater Phoenix, 46% of sales were REOs with 23.6% short sales and 30.4% normal transactions. So REOs took the same percentage as in December but short sales grew at the expense of normal transactions.

December's sales within Greater Phoenix included an unusually large number of high-end REOs which were largely absent in January, so REO pricing plunged 7.3% from $74.32 to $68.59 per sq. ft. However, short sale pricing improved by 3.6% from $82.04 to $85.02 and normal pricing improved 3.3% from $119.93 to $123.92. This reversal of the trends that prevailed in 2009 was foretold accurately by the pending listings as mentioned in our January 3 summary. The combined effect was that overall price per sq. ft. advanced slightly from $90.20 to $90.64. Median pricing was much weaker due to the large number of low priced properties but average pricing was stable, buoyed by a stronger market in the mid-range.

Pending listings have risen to 10,741, which at first sight looks good compared with the 7,382 recorded on February 2, 2009. However I am not very impressed with the rate of growth since the start of January (12.9%), since in the same period last year the growth was 34.1%. With the growing number of short sales we must also look at AWC listings and these are currently running at 6,322, up 11.2% since January 1 whereas they were up 30.6% in the same period in 2009. Again, not particularly sparkling growth for the season compared with the buying frenzy that developed during the first quarter of 2009. So I would conclude that demand is still strong but is losing some momentum.

Meanwhile supply of active listings has grown 5.5% since January 1 compared with no change for the same period in 2009. This increase in supply coupled with a loss of momentum in demand has dropped the Cromford Market Index™ from its peak of 126.9 at the end of October 2009 to a level of 117.9 now. This confirms a modest but definite weakening trend in the market balance, the first we have reported since November 2008. However we must remember that an index of 100 is balanced, so we are still well above that level.

The weakening is most significant for single family detached homes in the price range $75,000 to $125,000 with the prices ranges from $150,000 to $600,000 looking relatively strong. The price range $75,000 to $125,000 currently represents as much as 26.3% of the annual market by unit count, so any weakness here is significant. The situation for apartments and townhouses has brightened in recent months with prices having now reached levels that are attracting more buying activity. The contract ratio for Greater Phoenix apartments is now 36 compared with 8 at the same time in 2009. That for Greater Phoenix town homes is 40 compared with 8 at the same time in 2009.

There was a distinct lull in the foreclosure storm in January with "only" 6,762 new notices being filed in Maricopa County. This is the lowest monthly total since November 2008. However the last week of January was busy and I expect February's total will exceed this, so let's not get too excited. Maricopa trustee deeds numbered 4,452 which was 15% lower than December but at a similar level to much of last year.

Looking ahead we see fairly stable $/SF pricing for sales in February with a slight dip noticeable by the third week, driven by lower pricing in the REO market which is less active now than for most of 2009. However we should be able to celebrate our first positive annual appreciation number sometime during the last week of February. With today's overall $/SF at $91.51 and that on February 28 2009 being $89.77, this is not a difficult target. The typical home owner will probably respond "positive appreciation, are you kidding me?", but I am not kidding. The typical home owner probably does not realize quite how low average $/SF prices were last March.

Need help or can't find the house you're looking for?  Call me...I'll be happy to help :)

Candice Boggs
Arizona Homes Realty, LLC.