Sales jumped in June; median price up
by Catherine Reagor - Jul. 8, 2011 12:00 AM
The Arizona Republic
Frenzied home-sales activity in June proved earlier speculation about a third dip in metro-Phoenix home prices to be untrue.
The median price of an existing home in the region climbed to $118,950 last month, after hovering at a real-estate crash low of $115,000 for six straight months, according to the Information Market, a realty-data company.
The rate of home sales also rose, with a nearly record 9,450 used and new homes sold in Maricopa County in June, the largest monthly number since the end of housing boom in December 2006. And that number doesn't include the more than 1,300 homes sold at foreclosure auctions by lenders.
The home-sales market has been dominated by foreclosure homes, but foreclosures also declined. The region had 2,000 fewer active foreclosure filings in June than May. At the same time, the number of homes for sale was down nearly 10 percent from May.
The combination means a decrease in inventory, as more foreclosure homes are resold and fewer homes come on to the market to replace them. That drop in supply helps trigger an uptick in prices.
Market indicators started to show signs of a recovery in March. The recent numbers are a further confirmation.
"Supply continues to drop while demand is extremely strong," said real-estate analyst Mike Orr, who publishes the online daily "Cromford Report."
He said there are still some market watchers who believe there is a large "shadow inventory" looming over Phoenix. These homes, which aren't in foreclosure but could soon be taken back by lenders, could flood the market and drive prices down again. But his figures show Phoenix's shadow inventory has been steadily falling since November 2010 and won't impact prices.
Who's buying in Valley
Most of the buyers of Valley homes continue to be investors, according to public records.
More than 1,300 foreclosure homes sold in June at what are known as trustee-sale auctions, the Information Market said. Those sales aren't included in the overall tally for metro Phoenix's home sales because public documents record them differently. But those auction sales definitely contribute to a shrinking inventory and higher home prices.
Many auction buyers are paying cash, and bidding wars are typical now as people try to buy the houses on the courthouse steps, hoping either to turn them into rentals or flip them for a quick profit.
The new-home market continues to struggle. Housing analyst RL Brown, who publishes the "Phoenix Housing Market Letter," said the wide disparity between foreclosure resales and new-home prices will continue to hurt the homebuilding market.
Short sales in the Valley climbed almost 50 percent in June from May, according to the Arizona Regional Multiple Listing Service. In these sales, lenders agree to let distressed borrowers sell a home for less than they owe, ensuring the bank gets some money rather than having to foreclose. The increase in these sales signals that more lenders are working with buyers to avoid foreclosure.
Some real-estate agents are finding it more difficult to find homes for clients to buy because listings are steadily falling.
Julie Bieganski, a Phoenix real-estate agent and investor, tracks the drop in listings every day and said it's much tougher to find deals on homes for herself and clients.
On July 1, Orr's data showed 28,827 active listings across metro Phoenix, down 8 percent from June 1 and down 30 percent from July 1, 2010.
The forecast for July
June has traditionally been a strong month for the housing market as more families look for homes before the school year starts. But investors are motivated differently, more by the timing of the short sale or foreclosure auction they are interested in.
Last year, a federal tax credit spurred many home sales, but that incentive is gone. Now, because of tighter lending guidelines, it can be more difficult for traditional buyers who are trying to obtain mortgages.
However, if the sales activity on June 30 is any sign of what is to be expected of July, the Valley's housing market could be in for another strong month. A record 2,216 homes sold on that day, more than any other single day in history.
"I was not surprised the median home price increased. It was something we were expecting," said Tom Ruff, a real-estate analyst with the Information Market. "July could very well be a landmark month as some buyers start to realize what the investors have known for quite some time. Historically low prices coupled with historically low interest rates make a very strong tonic."