(”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 $5,500 in September to $135,500.
The median home price in metropolitan Phoenix bottomed out in April at $118,000 and has risen since then by $17,500 or 15%.
The median home price usually starts to fade seasonally in September so going against the seasonal trend and having such a strong median price increase ($5,500) is bullish for Arizona residential real estate. We haven’t seen a median price increase from August to September since 2005.
Sales (blue line)
Although home sales didn’t go opposite the seasonal trend as happened with the median sale price, the seasonal downward trend was weak this September.
Single family home sales in metro Phoenix AZ barely fell in September. Even in the boom year of 2004 the number of homes sold fell a lot more between August and September (home sales down about 300 homes) than this year (home sales down about 100 homes).
Home sales in September 2009 were 24% higher than the number of home sold in September 2008.
Listings (red line)
The number of single family detached homes listed for sale increased by over 200 homes in September but that is an unsually small increase for a September.
The inventory of single family homes listed for sale in September was in the normal range with the equivalent of a 4-month supply.
A year ago, in September 2008, we had a 8-month inventory. The inventory peaked at over 17 months in November 2007. Now it’s just 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
The market clearly bottomed out last spring. Prices will likely retreat between now and January but I doubt the median home price will ever hit $118,000 again even with another wave of foreclosures coming next year.
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ken44 10.16.09 at 7:38 pm
—-Conclusion
The market clearly bottomed out last spring. Prices will likely retreat between now and January but I doubt the median home price will ever hit $118,000 again even with another wave of foreclosures coming next year.—–
I think you`re 110% correct.
Those still waiting for better prices clearly missed the boat. I don`t think homes prices will move upward all that much but the bottom has been reached.
roberto 10.17.09 at 9:27 am
what a wothless analysis!
Really, to point out the strong buying going on right now, without mentioning something that john definitely KNOWS: people are buying to beat the deadline on the 8K credit, is ridiculous, or dishonest.
The 8k credit is over november 30th, to get a home closed by that date, you need a contract basically right now… hence lots of buying at the low end.
why don’t you go call the bottom of the car buying market as the month before cash for clunkers too? see how that one works out for you!
John Wake 10.17.09 at 10:41 am
roberto, Watch the video.
roberto 10.17.09 at 6:35 pm
I apologize John, you did mention the 8k credit in the video, and possible ramifications of its ending.
I don’t think we are at a bottom, ex increasing government stimulus:
1. despite all the attempted workouts, foreclosures are still climbing, we have over 50K in foreclosure in maricopa, that is 1.5 times mls homes for sale today, and is the elephant in the room.
2. we are still losing jobs.
3. state budget, more cuts coming = more jobs loss. (as a university professor and Realtor, trust me, this is starting to weigh on people’s minds who in the past NEVER worried about job security)
4. even continuing 8k credit will not have the same pop, there aren’t an infinite number of qualified new home buyers out there.
5. continuing drops in rental prices, high vacancies will start to drive out the over leveraged landlords. At some point, they will start to give up.
6. there is simply NO WAY to keep rates this low forever, and given all of the stimulus, inflation’s return is not at all far fetched, and/or a currency crisis of the brazil/argentina/iceland type is not at all out of the question. [ok, having a fixed rate loan at a low rate acts as a counterbalance to this. If rates climb drastically causing prices to drop, in reality, the present value of the mortgage drops as well, offsetting the loss as long as you don't ever sell the home!]
ken44 10.17.09 at 7:16 pm
Make no mistake when homes are on dumped back on the market by the banks next year there will be another feeding frenzy which will cause rents to continue sliding. However, the worst seems to be behind us. I fully expect the $8000 credit to be extended and agree that landlords who are over-extended will have a tough time making it as long as investors are out in full force.
My guess is by 2012 investors will begin putting their homes on the market which will keep prices in check for the next few years but rents will rise. A few years after that we’ll finally begin to see steady price appreciation.
It’s been a wild ride and something I’ll never forget.
Peter Fork 10.18.09 at 1:43 pm
Hi John, thanks again for sharing your valuable data with us.
What is the effect of having most houses bought by investors/speculators of the medium and long term prices? What about rent prices?
John Wake 10.18.09 at 2:39 pm
I hear rents are drifting lower but I don’t follow rents closely. Some commenters here speculated that many investors will want to sell their investments in the next few years which will keep the supply of homes listed for sale high. (Although right now the supply is within the normal range in many places in the Valley of the Sun.) My question is do investors on average hold property for a shorter amount of time as owner-occupants. I don’t know the answer.
roberto 10.18.09 at 6:24 pm
I am a landlord still, and one of my real estate partners handles rentals. Rents are definitely down, and even advertising my tempe condo at virtually the same price I charged 12 years ago, I got very few calls six months ago when it last vacated. The tenant is now buying a home with me, (despite my advice to wait) and though glad to get a sale, I’m not looking forward to having to rent it out again…
I don’t think landlords will just decide to sell, at least not landlords like me, I am prepared to wait decades for the market to come back, I’m prepared to literally keep it the rest of my life. BUT there are tons of accidental landlords today: 2005 - 2008 buyers, or even earlier buyers who refinanced, who due to job/life change have to leave, and can’t sell. They have no hardship, but are too far underwater. As monthly losses pile up on the negative cash-flow, and the ever hoped for sudden recovery doesn’t materialize, some will simply call it quits and stop paying the mortgage. Others will suffer other life-setbacks and be unable to pay the mortgage. One friend from NY has a half dozen rentals out here, they are all losing money, all are very upside down, and he just bought an expensive home in NY. Now he is having bill problems, which home(s) do you think will start missing payments first?
Imagine you left town, and rented your home for say $500 less than the mortgage. Maybe you hang on a year, two years, then the renter leaves. The apartment needs carpet and paint, you are far away, rents are even lower, you are going to have to hire a property manager making your negative cash flow even worse… That scenario will play out for years.
If they actually offer the $15K to all home-buyers, a HUGE number of people will buy another home, and attempt to rent their existing home, creating utter destruction to rental prices. Even the $8k, while seeming to help one segment (inventory) hurts another (rental vacancy)…
When the problem is too many homes, too few jobs, you can’t simply solve it by any magic.
Ken44 10.18.09 at 7:00 pm
Roberto
My feeling is many of those well underwater have given up. Rents are down but they’re still on par with 2005 when investors buying/renting them out. Rents will still drop but not by all that much and those who can’t afford a $100 hit will likely have already left the game.
John:
In 2005 most of the investors I ran across were RE agents who rented out properties bought a year or two earlier. They were flipping them for a quick $50-70 grand profit. My guess is this time around the profits will be much smaller but the new owners will be much more stable. Once this starts rents likely should go up and properties should begin showing steady appreciation.
Phxfan 10.19.09 at 8:09 am
Here’s some interesting trend information over the last several months. The prices residential rents have been listed for locally:
http://rentbits.com/rb/rates.do?location=phoenix%2Carizona&rid=&city=phoenix&state=az&pageNo=0&cpn=0&type=H&beds=all&beds=3%2B
John Wake 10.19.09 at 10:17 am
Phxfan, Nice find!
You Guys That Follow Rents; What do you think of that rentbits.com data?
ken44 10.19.09 at 2:49 pm
It’s ok but I prefer:http://www.zilpy.com/
I like the fact it include the vacancy rate. Ultimately I run rental prices by Craigslist because that is by far the most popular site people use.
John Wake 10.19.09 at 8:28 pm
ken44, Excellent!