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May Sales Month Over Month Figures Are In For The Phoenix Metro Housing Market

Jun 06

filed under: Market Conditions, Real Estate

What I am about to report is taken directly from the Multiple Listing Service for the Phoenix Metro area.

Prices are definitely going up, some very encouraging news and long overdue.

May continued the positive pricing resurgence begun in August/September of 2011 in all four pricing metrics: median and average list price (up 4.8% and 2.5% respectively) and median and average sales price (up 5.1% and 8.2%). The gains in the sales price metrics represent a 13.8% rise from the median’s lowest point in May 2011, and 26.05% increase in the average sales price from its low in August 2011. Even considering the 60% fall from their highs in 2006/2207, these gains are encouraging and long overdue.

How is the low inventory affecting our market

Lack of inventory, particularly at the low end of the pricing spectrum, is problematic and frustrating for potential Buyers and their Agents. But the forces of supply and demand at play in these lower ranges encourage Buyers, convinced of the inherent affordability of the Valley’s housing, to take advantage of affordability at the next higher ranges. Painful as this is for those operating at the low end, it is necessary for meaningful pricing recovery.

The current situation with distressed properties and lenders

The market remained robust in May with high sales figures slightly ahead of the twelve month aver-age. The short sale to foreclosure ratio validates continued lender preference for working with borrowers caught in the unenviable position of negative equity, over taking their homes back through foreclosure. Workouts are only possible if there are Buyers willing to go through the short sale process.

Current national unemployment numbers and how it affects the Phoenix metro area

The Valley does not exist in a vacuum. Disappointing news on the job front for May, which tallied only 69,000 new jobs and an increase in the national unemployment rate to 8.2%, threatens our fragile recovery.1 In the context of the 246,000 new monthly jobs between November 2011 and February 2012, May’s numbers are paltry and remind us that even though the economy is growing, the pace can be slowed and the direction reversed by circumstances distant from the Valley. Troubles in the eurozone, traditionally a hearty consumer of US goods, ripple out as far as Arizona, affecting jobs, production and unemployment, all three key recovery metrics.

The effect of low interest rates and affordability are luring buyers to the Phoenix metro area.

On a more optimistic note, state economists recently raised their predictions of Arizona’s job gain from 29,000 to 47,100 in 2012, double the jobs added in 2011.2 The National Association of Home-builders tracks housing markets showing measurable and sustainable improvement. In April Phoenix joined the top twenty landing at the number two spot on the list.  Our housing market is dependent on jobs for its continued recovery, but other factors also carry weight, such as pricing affordability and long term mortgage rates. On May 17th Freddie Mac reported 3.79% for the average 30-year fixed rate, the lowest it has reported since it began keeping records in 1971.

In May the Valley’s fragile housing recovery continued amid threats at home and abroad. Clearly the momentum has a forward thrust but remains vulnerable. Once again, it is steady as she goes.

Written by Howard Harris