Arizona Regional Multiple Listing Service (ARMLS) provided the following STAT report (monthly statistics for the Phoenix Metro Area) through May, 2011
Commentary:
Recovery in slow motion is an apt description of gains this month. June STAT reports positive news on several fronts: sold units are up, new inventory added to the supply is down, total inventory continues to decline, and MSI dropped again in May. Pricing, of course, remains in the doldrums surprising no one, since pricing is a trailing indicator and significant gains have to occur in other metrics before we will see much pricing movement.
Most significant in the continued decline in foreclosures pending which fuels lender owned sales. Since STAT began watching distressed properties back in October of 2009, lender owned sales have accounted for two thirds of the total distressed properties, short sales accounting for the other third. The influence of distressed inven-tory on pricing cannot be overestimated. Pricing cannot begin any meaningful rebound until the influence of dis-tressed properties on pricing is quelled.
The rise in foreclosures pending began in earnest in 2008 starting at 12,877 and climbed to its highest level by the end of 2009 to 51,022, almost four times the level at the start of 2008. Beginning in 2010 the numbers began a steady decline to the present 30,517 reported in this issue. Comparing the current downward trajectory with the 2008 upward trend, the two trend lines should intersect in mid July, meaning that the number of foreclosures pending at that point should be somewhere around 23,500, a level not seen since July of 2008. If the trajectory continues on its current path, foreclosures pending could be well below 20,000 by early fall. Naturally other fac-tors or events could derail this prediction, but the steady definitive decline since the end of 2009 remained solid despite many economic events that could have altered its path, but did not.
A pricing rebound is not solely dependent on supply. The demand side of the equation also must grow. Many buyers are taking advantage of the record affordability of housing in the Valley as seen in the record high sales figures in 2011. This demand at some point will absorb the low end of the housing market, after the flow of lender owned properties into the market is stanched. A combination of other key factors must occur to bolster demand: more potential Valley homebuyers getting back to work, net migration of homebuyers drawn to em-ployment here from feeder markets, and continued recovery of feeder markets so that buyers can sell their homes in order to purchase here.
This month STAT introduced a supplement to the PPI to allow its readers to follow in four month segments the relative makeup, according to price range, of pending properties added to the pending pool each month. In May properties $100,000 and under accounted for 46% of the total new pendings for the month. Properties over $500,000 accounted for only 3.33% of the May pendings. Watching how the pendings change in specific price ranges will offer advance clues to changes in activity in the higher price ranges. Over time, as the percentages change, the market will right itself.
Unemployment continues to decline in the Valley. The US Bureau of Labor Statistics reported 8.1% unemployment for the Phoenix Metropolitan Area down from 8.7% in March, and well below the state rate of 9.3%.1 Jobs continue to be added to the market. This month Safelite AutoGlass announced plans to hire 300 in Chandler and the Vanguard Group3 plans to add more than 300 hires to its Scottsdale call center by the end of 2011. Announcements such as these and many more just like them are needed to fuel the recovery.
For now the direction of recovery is the right one and the pace is very slow, but we know that eventually the Valley will get where it needs to go.
ARMLS - June STAT 2011
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