Phoenix Real Estate Market Trends Report
We would like to share our Phoenix Real Estate Market Trends Report for early February 2015. We’ll be combining information and data from the Cromford Report, Credit Suisse, ARMLS and feedback from some of the over 800 agents with Realty Executives. As we’ve mentioned in the past, the data collected reflects the past month’s activity. Thus, our February Phoenix real estate market trends report is largely based on mid-late January as well as early February statistics.
Since this is a Phoenix Real Estate Market Trends Report, we’ll start out with only Phoenix numbers. According ARMLS, active listings rose from 3800 in early January to 4350 as of 2/12/2015. This is an expected trend as many home sellers wait until early in the new year to put their places on the market. BTW: The 4350 number is a near match to this time last year.
The number of homes that have gone from active to pending (in escrow) took a nice bounce in January and early February. This is also a normal trend… although we would not be surprised to hear the media make a big deal out of it. There is a clear graph from the Cromford Report that show the pending trend over time.
Next let’s look at what Credit Suisse reported on Newswire.
Buyers are waiting on the sidelines for a better price in Phoenix, causing an increase in price negotiations. The buyer traffic levels grew to 25 compared to 13 in November but are still well below agents’ expectations.
“Sellers still think they can be aggressive with pricing, but buyers are clearly rejecting anything that doesn’t seem reasonable,” agents said about the market.”
Buyers are waiting for sellers to lower prices, especially first-time buyers, as renting remains a favorable option.
No Phoenix real estate market trends report would be complete without looking at some of the insights ASU’s Michael Orr brings to the table. Orr, an Oxford graduate in math is also a wise social scientist who is wickedly accurate in his predictions and analysis. Below are his thoughts from February 8th.
From the normal snapshot as of February 8, we can pick out the following improvements for sellers over the last 12 months:
- Active Listings – down 5% from 22,872 to 21,750
- UCB Listings (Under Contract accepting backup offers) – up 38% from 1,825 to 2,519
- Pending Listings (Properties under contract but not taking backup offers) – up 14% from 4,404 to 5,036
- Days of Inventory – down from 138 to 132
- Months of Supply – down from 6.1 to 5.6 months (Six months is a long term average number)
- Contract Ratio – up from 27.2 to 34.7. (A value between 30 and 60 is considered in the balanced range. Higher numbers, above 60, favor home sellers and lower numbers favor the home buyer.)
The trend is in a happy direction for all the above statistics, with UCB counts way out in front.
Phoenix Real Estate Market Trends Report
Thoughts from Gene & Ron Urban
We are seeing some good signs and some not.
The Good News:
- We, like many other Realtors, are seeing a strong up-tic in consumer inquires. A high proportion is from home sellers asking if it is time to sell their place and how much we think it is worth.
- Some home buyers are showing interest in looking at places, many of these people who looked for while last year and gave up feeling home prices were too high. Many were afraid we were heading towards another real estate bubble despite there being no basis for the fear.
- Home sales are starting to pick up.
- Many people who lost their homes to short sale and foreclosure in years past can now qualify for financing. We expect to see a number of these folks choose ownership over renting.
- New FHA loan guidelines have significantly lowered the cost of home ownership.
- Bad weather in the mid-west and east make our 70 degree days look really good. FYI… if you want to help kick start our market, post lots of good Arizona pics on Face Book so your east coast friends get jealous
The No So Good News:
- Too many home sellers think they can get top dollar for their homes. Do you remember that number we gave you from Michale Orr called contract ratio? We are at the very bottom range of a balanced market and just barley climbing out of a full-on buyer’s market. We have a long ways to go before it will be a seller’s market. Homes sellers who are serious about selling their places will need to be realistic.
- Home buyers are very cautious and pretty picky about what they want to own. Many agents have commented on a lack of handyman skills in many younger home buyers. The result is a desire, maybe even need, to purchase homes that have been very well maintained and ideally updated with modern features and finishes.
Phoenix Real Estate Market Trends Report – Conclusions
The Urban Team’s Gene Urban was recently on CNBC’s Power Lunch with Tyler Anderson. During a pre-show interview his statement on the market was: “The Phoenix real estate market is getting more robust. I’m not saying the dam is bursting, but the spillway is flowing nicely.”
We expect a nice uptick in the market from February to mid-July. This, like the recent increase in homes on the market, is normal.
Recent changes in FHA loan policy will make loans more affordable for many buyers; add to this the large number of former homeowners who now qualify for new home loans and we expect to see a bump in demand.
Home sellers really need to be realistic about pricing their homes. Most stats show we are far from a seller’s advantage market.
FYI to Sellers: Some feel their home is worth more because they’ve put in new carpet, a new roof, AC, windows and updated the kitchen and baths. Most of these items are simply part of maintaining a home. Roofs have to be replaced as does an AC unit. You are making the home better but that does not mean you’ve added appraised value. The other factor has to do with comparable homes in the neighborhood. If most of the people have remodeled their kitchens then that becomes the norm verses something special and worth more.
This ends our Phoenix real estate market trends report for early February 2015. Hope it was helpful and educational. If you have questions, want clarification or even to tell us we are full of it… give us a call at 602-234-5777 or use the form below.
Best to you,
The Urban Team
7600 N 16th St #100
Phoenix, AZ 85020
connecting people to the perfect place for over 20 years