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 July 15, we are currently recording a sales $/SF of $119.27 averaged for all areas and types across the ARMLS database. This is 1.5% lower than the $120.44 we now measure for June 15. Our forecast range was $119.70 to $124.58 with a mid-point of $122.14. Last month we were quite a ways off in our forecast with the actual number coming in 2.5% below our midpoint. Our gut told us the forecast was too high but we allowed the numbers to stand. Sometimes the gut does better than the math, but not always.
On July 15 REO sales across Greater Phoenix (all types) averaged $85.87 per sq. ft. (down 1.1%). Pre-foreclosures and short sales averaged $88.70 (up 0.5%) while normal sales averaged $126.78 (down 2.2%). The market share of normal sales rose again over the last 30 days, moving from 78.2% to 79.9% of sales. REOs lost market share from 9.6% to 7.8%. Short sales and pre-foreclosures stayed flat at 12.2%.
On July 15 the pending listings for all areas & types showed an average list $/SF of $113.94, 2.7% below the reading for June 15, and pending $/SF has fallen steadily over the last month. Among those pending listings we have 62.7% normal, up from 61.5% last month, a lower 12.0% in REOs and a higher 25.3% in short sales and pre-foreclosures. The average pricing for pending listings on July 15 in each category was: $130.50 normal, $80.47 short sales & pre-foreclosures and $84.32 for REOs. The normal pricing is a lower number than last month, but the other two are higher.
Our new mid-point forecast for the average monthly sales $/SF on August 15 is $118.88, which is 0.33% lower than the July 15 reading. We have a 90% confidence that it will fall within ± 2% of this mid point, i.e. in the range $116.50 to $121.26. In other words we expect prices will move slightly lower in the next 30 days, similar to what happened at the same point in 2012. This month our gut agrees with the math, but 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 now well into the summer doldrums when prices tend to drift sideways or downward in most years. The spring price momentum is well and truly broken and will probably not be resumed until the temperatures drop below 100 again. Future appreciation will depend very much on how lenders change their mortgage guidelines. Demand is weakening, but could quickly rise again if more people could qualify for homes loans.
September 15, 2011 – measured at $78.82 per sq. ft. – remains the $/SF pricing bottom 22 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 $185,000 – 72.9% above that low point. Note that the median sales price has continued to move higher even though the average price per square foot has dropped over the last month. This illustrates that the summer doldrums are caused by the scarcity of luxury home sales. Luxury home sales have a highly positive effect on the average $/SF but little impact on the median.