Current Housng Market Conditions in the Phoenix Area
As a custom home builder in Arizona, at Woodridge Custom Builders LLC we must stay abreast of the housing market in the Phoenix area. Data available through the local multiple listing services (MLS) through August 2009 reveals interesting housing market information. Is the news good? It still depends on whom you ask. Here we have detailed information on closed sales, pending sales, active listings, types of homes sold, average days on the market, average sales price, list price to sales price ratio, cancellations and expired listings, and months of inventory. Whether the news below is good or not depends upon if you’re a buyer, seller, banker, or in our case, custom home builders. One conclusion for us is that the market looks better each month and nowhere as bad as it did 20 months ago.
Comparing closed sales over a three-year period revealed that in August 2009, 7,028 homes sold compared to 4,847 in August of the previous year and only 3,838 in August of 2007. Wow! Does that indicate that this market has turned around? One may think so. July and August have seen a decrease in the number of homes sold since June when 8,235 homes closed. On the seller’s side, this is due in part to the decreasing inventory – A GOOD THING. On the buyer’s side, the market remains very competitive for homes prices less than $200,000. The first-time homebuyer credit offered by the stimulus plan ends December 1, and this may prompt potential buyers to make decisions over the next few months before the benefit expires.
What homes are selling? In August only 31% of the homes sold were regular sales while 51% were foreclosed homes and 18% were short sales. Pending sales have dropped each month since this year’s high of 9,641 in June. However, considering that the number of pending sales for August (7,179) is more than twice that in August of 2007 (3,527) indicates that things are happening here again. Buyers most likely feel the competitive atmosphere, many buyers, especially for foreclosed homes are now offering more than list price to be the best and most competitive bidder. The good news is that prices remain affordable with the average sales price around $176,000.
There is awesome news regarding the average days on the market where August saw an 11-day decrease. This is the lowest since December 2006. This number drops when there is more buyer interest and competition for properties. This may lead to higher sales prices. The list price to sales price ratio is another indicator of market activity. In August the list price to sales price ratio was 96.9%, a slight in increase from the prior month. This is another indicator that buyers must compete for great homes. For bank owned homes, the selling price is often above list price.
Monthly cancellations and expired listings have steadily dropped since June 2009, August experienced the lowest number of cancellations and expirations in the past three-year period. This may mean that fewer sellers are pulling their homes off the market to wait for a better time. For buyers, it creates a competitive market and it means more homes are staying on the market with seller success.
The number of active listings remained around 31,600 in the Phoenix-Maricopa County area for the month of August. This is down from a three-year high of 60,600. Nearly half as many homes are now out there for sale as were in November 2007.
Over the same three-year period the months of inventory have dropped to 4 ½ months, up a bit from July at nearly 4 months, but nothing like the 22 ¾ months of inventory in January 2008. Note: taking the number of active listings and dividing it by sales for the past month measure the active listings. The great news here is that 5 or fewer months of inventory indicate a seller’s market.
At Woodridge Custom Builders LLC we pay attention to the housing market, as our potential customers have been concerned about knowing when the right time might be to move ahead with their custom home plans. A couple of our customers that suspended their plans in 2008, are moving forward with their plans as this data indicates much positive activity.
The information provided here is based on the MLS system and covers the Maricopa County area only, the data fluctuates daily.