Monday, January 16, 2012
My friends, its my opinion that the market in Phoenix is no longer in ICU but has been moved into a regular ward. The recovery is officially underway and slow progress is now being demonstrated in the stats. There are several key factors that together will lead towards slow progress in 2012.
Inventory (aka number of homes on the market).
The 2011 high for inventory was 42,881 in January and ended a consistent slide with 24,712 available on the market in December. The reduction of our inventory plays a major part in the supply and demand piece required to kick start a recovery.
Months Supply Of Inventory
This metric is a good way of viewing the market from a 30,000 foot level. As an example the MSI in December of 2007 was 15.98 months and now stands at 3.51 which is a reduction of 80.4%!
New List Prices
New list prices trended up in 2011 and overall showed an improvement of 4.76% for the year.
The average sale price for the year showed a valley wide increase of 3.31%, a modest increase for sure but a step in the right direction.
Foreclosures pending are homes in some stage of aquisition by the lender, prior to actual foreclosure. The high in November 2009 was 50,568 and December 2011 ended out with 19,979. A reduction in this number each month is a good metric in support of a recovery since ultimately the pricing discrepancies wont be adjusted until this number is greatly reduced.
Bank owned sales and short sales are referred to as "distressed sales". In December 2011 these sales accounted for 59.8% of all transactions.
Average Days On Market (How long does it take to sell my home?)
The DOM number came down through 2011 and ended the year at 95. This means the average house sat on the market for 95 days before it sold. Be aware that this number is probably articificially inflated by the number of short sales in the market that take much longer to close.
Overall there are many key indicators that suggest the market is positioned for a much healthier 2012. Please feel free to contact me any time for questions or concerns.