(”MLS Listings” are measured at one point in time, usually the 15th day of the current month. “Median Price” of homes sold and the total number of home “MLS Sales” are for the entire preceding month.)
Price (green line)
The median price in metro Phoenix of single family homes sold via the MLS rose $4,000 from $118,000 in April 2009 to $122,000 in May 2009. If the median home price continues to increase, it will once again match prices seen in the year 2000.
The median home price in Phoenix, Arizona has fallen 54% since the peak of $264,800 in July 2006.
This was the first increase in the Phoenix area median home price in two years, since May 2007.
Is this the absolute bottom or just the first bounce as we approach the absolute bottom? I don’t know. I do know the spell has been broken and the free fall in the Phoenix area median home price has ended.
Sales (blue line)
Single family home sales in metro Phoenix AZ in May were incredibly high at 8,287 homes. That was the best month for home sales since September 2005 and was 55% higher than a year earlier in May 2008.
Surprisingly, the number of homes sold increased strongly from April to May - up 8% - which suggests the market is so strong that the high season will stretch into June this year.
Listings (red line)
The number of single family detached homes listed for sale FELL an incredible 10% from mid-May to mid-June. The mid-June inventory is 38% less than a year earlier, in mid-June 2008.
The months of inventory in May of single family homes listed for sale was “normal” with the equivalent of a 4 month supply.
A year ago, in May 2008, we had a 10-month inventory. The inventory peaked at over 17 months in November 2007. Now it’s 4 months.
Be aware that the supply situation varies tremendously within metro Phoenix depending on the geographic location and the price range of the homes you are looking at.
Conclusion
After 2 years of stunning price declines, the median home price in Phoenix rose in May.
Mortgage interest rates increased rapidly recently so we may look back and see that April 2009 was the peak for housing affordability in this cycle with both a very low median home price and very low interest rates.
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Brian 06.16.09 at 3:07 pm
One month, a trend does not make. Still, it is plausible that this is the end of declines, at least precipitous declines. I wonder if we won’t go a little lower before it is over. Trends do not change direction instantly.
But Jim Cramer just proclaimed that the “Housing Bottom is In!!” He claims the bottom beat his prediction by two weeks. That makes great TV, but I don’t know if that is reality. We are at the end of the best part of the traditional selling season in most markets and are also facing much higher mortgage rates. We have a lot more foreclosures to clear, and unemployment must stabilize for demand to increase.
So, the liklihood is we will decelerate the declines and then drift sideways at the bottom for quite some time. There is no rush to buy and won’t be. But people might start feeling safe in buying a home if the NEED to do so.
Joe 06.18.09 at 9:49 am
I think your conclusion should be April of 2009, not April of 2008.
John Wake 06.18.09 at 10:21 am
Joe, Corrected. Thanks.
Joe 06.19.09 at 10:23 pm
No problem. Awesome blog! Keep up the great work!!
Paul 06.24.09 at 8:30 pm
One theory some economists who watch the housing market have is that now that the foreclosure wave has swept into prime mortgages and is affecting higher priced homes, more higher priced homes are going to be sold at distressed prices. And more people in higher priced homes are making the economic decision to walk away due to being so far underwater (they were previously holding on hoping that we would bottom much sooner). Or they are just finally dealing with the reality that the market isn’t going to suddenly bounce back up and are finally lowering their prices to actual market value in order to sell.
So while the median was previously dragged down by an inordinate amount of under $150k foreclosure homes being sold to investors, it will now moderate and even rise as we see more foreclosures in the $200k-$350k range sell. So in effect, it’s not really a bottom, it’s simply a change in the math. It’s all about the mix of homes used to calculate the median.
Any thoughts on this theory John?
John Wake 06.24.09 at 11:54 pm
That’s a very likely scenario, indeed. Just to be clear, that would be a bottom for the least expensive homes.
That will be a tough one to explain to sellers of more expensive homes, “Sure Mr. Seller, the median home price increased from $125,000 to $130,000 but homes in your price range are still falling in price.”