Market update - March

Sales in February were up 16% over January, but the really big news is the number of pending sales: from February 1 to March 11 they went from 7,344 to 10,180. We are now seeing a continuing trend upward to pending sales in the valley. We are starting to see evidence of demand not seen since 2005.

This is a very positive development that recovery may be on the way. The vast majority of this demand is for bank-owned foreclosures, which are priced incredibly well in this market. Sellers of non-distressed properties and new home builders are seeing very little of this increased demand.

As in January a remarkable 68% of the homes sold through ARMLS in February were lender owned properties and another 10% were pre-foreclosures and/or short sales. The good news is that these percentages didn’t grow further, as they have done for many months. We seem to have reached a plateau in distressed sales volume.

Among active listings: 53% are normal, 24% are in pre-foreclosure and/or short sales, and 23% are already owned by a lender. This shows another movement away from lender owned properties and an increase in pre-foreclosure properties. This is mainly due to lender owned properties spending comparatively short times active, rather than a lack of lender owned properties hitting the market.

On a $/SF basis we are at an average of about $89 across the valley based on February’s ARMLS sales, which is down 53% from the peak of $189 reached in May 2006. Prices have fallen much less in those areas with few foreclosures and much more in some with higher than average foreclosures. The pricing of pending listings suggests a further average $/SF price reduction for sales in March of 4% to 7%.

The median sales price dropped from $130,000 in January to $125,000 in February. This was a much smaller decline than we saw in January. The lowest median prices are still to be found in West and Southwest Phoenix.

The increased demand is primarily for single family detached homes. Year to date sales of these are up 81% compared with 2008,