Each month about this time we look back at the previous month, analyze how pricing has behaved and report on how well our forecasting techniques performed. We also give a forecast for how pricing will move over the next 30 days.
For the monthly period ending June 15, we are currently recording a sales $/SF of $120.88 averaged for all areas and types across the ARMLS database. This is 1.9% higher than the $117.75 we now measure for May 15. Our forecast range was $118.03 to $122.85 with a mid-point of $120.44. This month we were just 44c below the actual number so can clock up another successful month for our forecasting formula.
On June 15 REO sales across Greater Phoenix (all types) averaged $87.00 per sq. ft. (up 0.2%). Pre-foreclosures and short sales averaged $86.74 (down 0.4%) while normal sales averaged $129.44 (up 2.5%). The market share of normal sales rose again over the last 30 days, moving from 76.4% to 78.4% of sales. REOs lost market share from 10.8% to 9.5%. Short sales and pre-foreclosures continued to lose market share from 12.8% to 12.1%. It is a long time since REOs were less than 10% of sales – December 9, 2007 in fact. Now it is the pricing for normal homes that largely determine the overall market numbers.
On June 15 the pending listings for all areas & types showed an average list $/SF of $114.32, 0.2% below the reading for May 15 – so pending $/SF has remained pretty flat for the last month. Among those pending listings we have 61.5% normal, down from 62.3% last month, a lower 11.8% in REOs and a higher 26.7% in short sales and pre-foreclosures. The average pricing for pending listings on June 15 in each category was: $132.56 normal, $79.89 short sales & pre-foreclosures and $84.05 for REOs. The short sale pricing is a lower number than last month, but the other two are higher. The unfavorable change in mix towards short sales should limit upward overall price movement over the next month.
Our new mid-point forecast for the average monthly sales $/SF on July 15 is $122.14, which is 1.04% higher than the June 15 reading. We have a 90% confidence that it will fall within ± 2% of this mid point, i.e. in the range $119.70 to $124.58. In other words we expect prices will move slightly higher in the next 30 days though by a smaller percentage than they did in the last 2 months. The actual result will depend very much on how many of the pending and UCB short sales get to close escrow. If more of them close than normal then the average price per square foot will be lower than expected.
We are entering the summer doldrums when prices tend to slow down, drift sideways or even downward in most years. Our forecast suggests that any downturn will be mild this year, but we do expect the spring momentum to be broken and not resumed until the temperatures drop below 100 again.
September 15, 2011 – measured at $78.82 per sq. ft. – remains the $/SF pricing bottom 21 months ago. The record low monthly median sales price is still standing at $107,000 and this record low point was set on February 24, 2011. Our current monthly median sales price is now $176,950 – 65.4% above that low point. That is quite a bounce for just 21 months, but not abnormal in the circumstances. Our market was heavily over-corrected between March 2009 and September 2011 and we now look back on that time as the opportunity of a lifetime to buy homes at abnormally low prices which we are unlikely to ever see again.