In the Arizona Regional Multiple Listings Service at large, 6,170 homes sold in August against an inventory of 46,830, an implied absorption rate of 7.6 months. There are 6,185 properties listed as “Sale Pending.” All of these numbers are largely unchanged from July.
The historical numbers make it plain that we did not experience the traditional selling season, but they also make it plain that a simplistic year-over-year analysis — which we can expect from the Arizona Republic a week or more from now — is misleading.
Number of Homes Sold (with Days on Market)
March 2003 6471 67
2004 8678 60
2005 9959 36
2006 7469 58April 2003 7429 67
2004 8889 61
2005 9567 32
2006 6725 60May 2003 7428 67
2004 8932 56
2005 9853 27
2006 7582 63June 2003 7409 67
2004 9969 55
2005 10225 26
2006 7209 67July 2003 7643 64
2004 8974 51
2005 9326 25
2006 6101 70August 2003 7648 63
2004 8968 47
2005 9996 25
2006 6170 76
Prices are virtually unchanged as well. The average sales price for a closed MLS transaction in July was $332,426. For the month of August, the average was $331,266, a net loss of about 0.35%.
Note that this may not accurately reflect the Phoenix-area real estate market as a whole. All private sales and most new-home builder sales are excluded from MLS statistics. However, for MLS-represented resale homes, the month of August was virtually a repeat of July — a few more transactions taking a few more days to sell for marginally less money. If the pending sales are any indication, September may be more of the same.
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Greg Swann says:
Values are down about 6% from the peak. 10% would not be a “cratering”, in any case, for homes that are up 50%+ over the last three years.
> price numbers are bogus as they do not include in incentives which are substantial – $$$$ back, pools, cars, trips, cars
All of that would be mortgage fraud for a resale home. You don’t know what you’re talking about. You haven’t all along.
September 9, 2006 — 12:56 am
mike says:
Hmmm. Unsold inventory is up to 7.6 mos and median price is dropping.
Do you still feel as strongly about those 21 reasons to bank on Phoenix as you did when you wrote them a month ago?
September 9, 2006 — 7:49 pm
Greg Swann says:
> Unsold inventory is up to 7.6 mos and median price is dropping.
Average price. I don’t know the median.
> Do you still feel as strongly about those 21 reasons to bank on Phoenix as you did when you wrote them a month ago?
Of course. Nothing has changed in our long-term fundamentals. For the short-run, clearing the builder inventory — happening now — will make a dramatic difference. Another strong month in the Market Basket will argue that we’re at the trough. Things can change, but so far we’re holding up pretty well.
September 9, 2006 — 8:41 pm
Dave Barnes says:
Greg,
I think you wrong to use the mean price as a metric. The median would be much better as it is not influenced by the outliers as is the mean.
,dave
September 10, 2006 — 6:51 am
mike says:
Do you still feel as strongly about those 21 reasons to bank on Phoenix as you did when you wrote them a month ago?
Of course. Nothing has changed in our long-term fundamentals.
Ok, I check back with you in a couple more months.
September 10, 2006 — 10:15 am
Greg Swann says:
> I think you wrong to use the mean price as a metric. The median would be much better as it is not influenced by the outliers as is the mean.
That may be true, but if I work directly from the raw numbers from the MLS, the work is independently verifiable. I don’t tell lies, but some visitors insist that any facts that don’t fit their preconceptions must be deceits, so I try to stay on very firm ground. Dr. Jay Butler at ASU does median numbers, but I have no idea what is the source of his data — and he doesn’t share access to the raw numbers. It’s a problem. One of the things I like about the Market Basket of homes is that I can read every listing for every home that sells. I learn not only what the numbers are, but why they are what they are.
September 10, 2006 — 12:42 pm
Bad Deals says:
> All of that would be mortgage fraud for a resale home
I believe cash back is only fraud if it is outside of the deal (ie cash back after closing – not part of the transaction) and not included on the HUD -1 or if it is included HUD -1, but it is misleading. I’m not an attorney though and I’m not 100% sure. For example I think cash back (listed on HUD) for closing costs, repairs, etc.. are OK if the underwriter is aware via documentation.
September 18, 2006 — 12:10 am
Greg Swann says:
> I believe cash back is only fraud if it is outside of the deal
This is correct, although generally the lender will want the cash applied to the buyer’s non-recurring closing costs (I write it that way to eliminate friction). The limit on that kind of money is almost always 3%. No other considerations — the writer above said “incentives which are substantial – $$$$ back, pools, cars, trips, cars” — are going to be included on the HUD-1. The lender wants to know that they’re paying for a house, not a house plus a car. Even chattel appliances have to convey at no value.
September 18, 2006 — 3:56 pm