(”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)
After increasing amazingly strongly from $118,000 in April to $135,500 in September, the median price in metro Phoenix for single family detached homes sold via the MLS fell $1,500 in October to $134,000.
The usual weakness in home prices in the autumn finally stopped the train of increasing prices. We’re likely to see declining or sideways prices until February.
Sales (blue line)
Although the number of homes sold often falls from September to October, this year home sales increased in October due to the rush to take advantage of the approaching end of the $8,000 first time homebuyer tax credit. (The program was subsequently extended and expanded.)
Phoenix area home sales in October 2009 were 45% higher than in October 2008.
Listings (red line)
The number of single family detached homes listed for sale on November 15 was 15% less than a year earlier on November 15, 2008.
The inventory of single family homes listed for sale in October was in the normal range with the equivalent of a 4-month supply of homes for sale.
A year ago, in October 2008, we had a 9-month inventory. The inventory peaked at over 17 months in November 2007.
Be aware that the supply situation varies tremendously within metro Phoenix depending on the geographic location and the price range of the homes you’re looking at.
Conclusion
As I forecast last month, the median home price has started to fade and will likely continue to be weak until January but I doubt the median home price will ever hit $118,000 again even with another wave of foreclosures coming next year.
{ 12 comments… read them below or add one }
MPS 11.17.09 at 5:23 pm
“Conclusion
As I forecast last month, the median home price has started to fade and will likely continue to be weak until January but I doubt the median home price will ever hit $118,000 again even with another wave of foreclosures coming next year. ”
Whatcha want to bet on that median home price ever crossing 118K again?
The housing bubble didn’t really have a chance to totally deflate because our federal government has been pissing into it. Now it’s just like a stinky water ballon that’s going to drain soon as they stop. Or are all the unemployed folks gonna rush out and buy a home come Feburary?
MPS 11.17.09 at 5:25 pm
You know what…you may be right…as soon as word of the “100% tax credit for unemployed buyers” leaks next year prices may trend up again.
azrob 11.18.09 at 8:21 am
Actually, I interpret this data rather differently:
Despite almost the highest October sales ever (missed the record by just a couple hundred) median and average sales price actually fell. This is a stunning result, and means that buyers are price constrained. They simply cannot spend more, so instead fight over cheaper homes.
So, even with the $8K in full effect, with buyers thinking this was their last shot, we saw prices barely $16K above the absolute low.
Subtract out the effect of FED buying every MBS (mortgage backed security) in sight from fannie and freddie, and we would have rates over 6%, rather than hovering around 5%. That alone, to the buyer’s perspective, would be a 10% difference to home prices.
So TODAY: $8K plus 10% off due to government programs, both scheduled to end in six months.
Absent a sudden change to the economy like job growth, unless the government continues to shovel money at housing, you get your $100K median price pretty quickly.
John Wake 11.18.09 at 8:40 am
azrob,
I would like to think that as it becomes clear that we are above the bottom on home prices (whenever that happens) that money sitting on the sidelines will be invested into mortgages and begin to replace the Fed buying mortgages, although that would be at higher rates than we have today.
MPS 11.18.09 at 11:14 am
Who’s gonna buy MBS while unemployment is still swelling? Any mortgage issued today is junk because the buyer has a 33% chance of not working in the next three months….just like the shit you buy from Walmart.
AlaskaCraig 11.18.09 at 11:44 am
Who knows what the future will bring. Clearly the actions that this adminstration takes seems desperate at best. But to John’s defense, he is just spectulating on what he thinks might happen. We can all have opinions, lets just be civil about it.
I for one will be buying Phoenix area real estate soon.
MPS 11.18.09 at 12:13 pm
Great, you can buy my house….from the bank.
MPS 11.18.09 at 1:14 pm
Phoenix population growth rate flat since ‘07 http://www.azcentral.com/news/articles/2009/11/18/20091118population1118.html
azrob 11.18.09 at 7:22 pm
MPS
And Reagor of course as usual, misused every math term in the article.
The growth rate ( the derivative of population) wasn’t flat; the growth rate was zero. The population was flat.
John: that “money sitting on the sidelines” doesn’t make any sense. Money is always sitting in something, and quite honestly, I don’t care; the fact that the MBS market shut down is all anybody needs to know, everything sells at a price; clearly, the only people buying mortgages today are the government, because nobody playing with their own money will buy them at prices that allow a 5% 30 year fixed mortgage. The FED by march will be holding over a trillion dollars of this stuff, and they have three options:
1. continue buying it all forever.
2. stop accumulating, but sit on what they have.
3. start selling off the accumulated amounts.
1 really isn’t an option, as eventually it leads to a dollar collapse, so that leaves 2 and 3, either of which will spell higher mortgage rates. Even 2 above will quickly push 30 year fixed rates over 6%.
Now, back to my analysis, that basically buyers today are constrained by their mortgage approval limits, which you as a fellow agent no doubt know, (ie the bank will only let Bill buy a home t0 160K because of his ratios) When rates increase, and they clearly will, Bill’s approval takes a similar decrease. Move rates up from 5 to 6%, and Bill’s preapproval just took a 10 to 15K hit. Multiply that times the majority of buyers, and we see prices drop again.
So, we need to define terms. Yes, the market is about 20K (at least in median) above the low in spring, but this 20K is easy to see: a gift of 8K upfront, and a 10% reduction in mortgage payments due to government influenced rates. Subtract those two out, and the market has not increased at all. Both of those are scheduled to end in the next six months, though who knows what the government does next…
Either, the government continues and increases incentives to buyers, while slowing foreclosures forever, or the true dynamics of the market take back over: falling prices.
And, as a final thought, 60day late mortgage payments are up some 50% since last year. Hardly sounds like a crisis ending to me!
MPS 11.18.09 at 8:16 pm
azrob you are correct again. I think the “real spanking” is coming next year….or whenever “pretend and extend” ends. However we could very well see another “stimulus batch” come spring which may stall our demise…. to my dismay.
MPS 11.18.09 at 9:44 pm
And one more thing to think about. Rents are now dropping like a rock..which means more folks who own rentals will be walking away.
Qman 11.22.09 at 7:56 am
Excellent anlysis azrob. I think you’re right on. One more thing to consider is the irrationality of the market. Market prices clearly inflated past what was rational (even considering the artificially low cost of credit at the time). I would expect prices to become irrationally low when the panic sets in from another sell off, especially if they break the support offered by the April, $118,000 “bottom”. Buying then would be the time to buy. Buying now is a very risky and dangerous action to take for all but the most solvent and long term oriented of us.