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Phoenix area pricing levels increase

Mid Month Pricing Update and Forecast


For the monthly period ending December 15, the Cromford Report shows we are currently recording a sales $/SF of $84.47 averaged for all areas and types across the ARMLS database. This is 2.9% higher than the $82.35  now measured for November 14. The forecast range was $83.09 to $86.49 with a mid-point of $84.79. The actual figure fell just below the mid point of the forecast range.

The current price level is 1.4% higher than last year on December 15.  This is what used to be known as "appreciation". Today it is known as "that can't be right".But it is.

In fact Cromford Report now predicts that they will be reporting positive annual appreciation from November 29, 2011 onwards unless something very unusual happens to the market.

On December 15 REO sales across Greater Phoenix (all types) averaged $65.06 per sq. ft. (up 4.1% from November 15). Pre-foreclosures and short sales averaged $69.71 (down 3.1%) while normal sales averaged $106.79 (up 2.1%). Normal sales gained market share in a big way, moving from 36.5% to 41.1% of sales, while REOs were the big losers, moving from 34.9% to 29.5%. Short sales and pre-foreclosures advanced once again this month, moving from 28.7% to 29.4% - but note that many short sales closed on ARMLS get reversed later when it turns out they didn't close escrow as planned, so this percentage is probably somewhat over-stated.

On December 15 the pending listings for all areas & types showed an average list $/SF of $81.97, 1.4% above the reading for November 15 - so pending $/SF has moved upwards again and is now at its highest level since May 31, 2011. Among those pending listings we have 30.7% normal, similar to last month, a declining 26.0% REO and a steadily growing 43.3% in short sales and pre-foreclosures. The average pricing for pending listings on December 15 in each category was: $111.66 normal, $68.42 short sales & pre-foreclosures and $64.11 for REOs. All of these are higher than they were last month. Together with the changing mix this tells us we are likely to see a further rise in sales price per sq. ft. over the next month.

Our new mid-point forecast for the average monthly sales $/SF on January 15 is $85.66, which is 1.4% above the December 15 reading, and we have a 90% confidence that it will fall within ± 2% of this mid point, i.e. in the range $83.95 to $87.37. A substantial change in the mix can still have a significant effect on the average price per sq. ft. and we are seeing considerable variation from day to day. However even the lowest point in our forecast range is only slightly below today's reading.

It is now obvious that September 15 - now measured at $78.83 per sq. ft. - will remain the $/SF pricing bottom over the near term. The lowest monthly average sales price is $151,000 and this was measured on August 25. However the record low monthly median sales price is still standing at $107,000 and this record was set ten months ago on February 24. Our current monthly median sales price is back up around $116,000 and we will not be seeing $107,000 again anytime soon.  All of the above data comes from the Cromford Report Mid December forecast.

This has been indicated for a while.  We had record sales numbers during the summer and pricing typically lags sales.  Now that inventory levels are what are historically considered normal, we should see some stability for a while, notwithstanding any major economic meltdown.



Adam Tarr PC
Citywide Real Estate
PHoenix, AZ


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