The Phoenix-area real estate market’s three-month experiment with stasis came to an abrupt end in October: Although sales levels were normal, as compared with October 2003, the most-recent October before the real estate boom, both asking and selling prices dropped precipitously among the homes tracked in the October 2006 edition of the BloodhoundRealty.com Market-Basket of Homes.
Average prices for Market Basket homes in October were down 4.07%, compared to September, a difference of $10,327. Year-over-year, prices are down 7.97%, and down 9.88% from the December 2005 high. Prices in October were strongly affected by deep discounting by new home builders. Even so, two-year appreciation on an average Market Basket home is 38.21%. Three-year appreciation is 63.15%.
A total of 162 sales were recorded, down from September’s total of 183. Market-Basket homes spent an average of 103 days on market, 3 days more than in September. For comparison purposes, 149 Market Basket homes sold in October of 2003, the last relatively normal year, in an average of 54 days.
As has been the case in recent months, many Market-Basket homes are selling at or above list price. A few deeply-discounted properties pulled down the average – most notably deeply discounted builder’s spec homes. Average discounting netted out to 1.96%, down from 2.03% in September.
Inventories of available Market Basket homes continue their decline. There are now 1,229 homes available for sale in the Market-Basket, where there were 1,337 in September, 1,406 in August and 1,506 in July. With sales of 162 homes, the implied absorption rate is 7.58 months, up from 7.31 months in September, but down significantly from almost 10 months in July. A six-month absorption rate is considered normal. The number of homes listed as “Sale Pending” is 191, up from 165 in September.
Based on the idea of the Consumer Price Index market-basket of goods and services, the Market-Basket of Homes uses average sales prices for a small subset of all Valley home sales to get a clearer idea of what is happening in the middle of the bell curve. The alternative method, striking a median among all closed transactions, introduces too many extraneous factors to provide a reliable indicator of what is happening to prices for those homes that are most avidly desired by the greatest number of people. To that end, the Market-Basket of Homes looks at sales prices for MLS-listed suburban homes from 1300sf to 1900sf built in 1998 or later, the homes that drive the resale market.
The BloodhoundRealty.com Market-Basket of Homes is updated monthly and is always available at http://www.BloodhoundRealty.com/MarketBasket.pdf.
I’ll take a look at the overall MLS numbers, but probably not until Tuesday to give things time to shake out. Preview: September 2005 Part II — very similar sales, very similar prices. The market as a whole is less affected than is the Market Basket by new builds. It would seem that the imminent, hold-your-breath, any-minute-now Phoenix housing collapse has been delayed again. Dang…
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mike says:
As has been the case in recent months, many Market-Basket homes are selling at or above list price. A few deeply-discounted properties pulled down the average – most notably deeply discounted builder’s spec homes.
It’s funny, but it’s true … we see what we want to see. Some people see a human face in the surface shadows on Mars, while others see Jesus in the char marks on their grilled cheese sandwiches.
And still others see hope (“inventories are down to 7.6 months” or “many selling at or above listing price” or “this month’s drop was caused by a few spec home sales”) in what can only honestly be described as very bad, forboding sales data.
(From your own PDF) The monthly yoy price figures since Jan 06: +36, +31, +27, +20, +10, +5, -1, -2, -3, -8 are continuous and predictable (and, trust me, destined to get even worse), not likely the result of an anomaly last month like the sale of a few deeply-discounted spec homes.
You still haven’t taken off those rose-colored glasses, Greg; I don’t see what purpose self-deception serves.
November 6, 2006 — 5:08 am