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Clouds hang over Arizona home market forecast

Phoenix Business Journal – by Jan Buchholz

The Arizona Regional Multiple Listing Service Inc. released its Pending Price Index, which uses the pending prices of homes under contract in the system to forecast average and median sales prices for the upcoming four months. The conclusion is that the Phoenix market still may not have hit bottom.

“Casting about in MLS data for signs of a market bottom and subsequent recovery has proved elusive over 2009 and 2010,” the report concludes. “The one-step-forward-two-steps-back phenomenon has become all too familiar in our fragile recovery.”

Here’s a few specifics:

  • The PPI predicts that the median sales price of a home in November will be about $120,000, relatively unchanged from October. The median is expected to drop in December to $117,000, rise in January back to $120,000 and then drop once again in February fairly dramatically to $105,000.
  • Average sales prices are projected to rise slightly in December but to fall in both January and February. The estimate is for the average price to be about $161,200 in November and drop to $145,800 in February.
  • October sales dropped nearly 19 percent compared to sales in October 2009.
  • New inventory declined in October, but total inventory increased to 45,252 listings. That’s a 15 percent increase in total inventory from October 2009.
  • October listings represent nearly seven months of supply making this a buyer’s market. A seller’s market is a four to five month supply.
  • Pending foreclosures have been trending downward slightly for the past 12 months and stood at 41,203 in October.
  • Lender owned sales dropped slightly from September to October, but represented a larger percentage of total sales.
  • Distressed sales, short sales and lender owned sales, peaked in September representing 74 percent of total transactions. In October distressed sales represented 65 percent of the total. It is unknown how foreclosure moratoriums by some lenders will affect this number in the future.
  • Though homes are increasingly affordable and interest rates are at historical lows, there still are not enough buyers to create a recovery market. Job growth, unemployment rates and migration are the key factors that will impact the residential housing market. Without positive trends in those three matrixes, no significant housing recovery is predicted in the short term. However, there have been modest indicators in recent months that those factors are improving.

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