What a difference the last half year has made.  The graph above shows what has happened to the median price of single family detached homes sold in the Phoenix area over the past two years.   The median price has gone from a low of $115,500 in July of 2011 to a high of $147,000 in April, 2012.  The graph below shows a major contributing factor to these sale price increases.  The inventory of homes available for sale in the Phoenix area has been dramatically reduced over the past year.  From a high of 36,722 single family homes for sale in October 2010 to the current low of 9,092 single family homes for sale in April 2012.  The quantity of foreclosure and short sale homes for sale has dropped by about 75%.  Traditional sellers have been waiting for prices to start coming up before putting their homes on the market.  Prices have been increasing steadily and this should slowly cause more traditional sellers to put their homes up for sale.

If you would like a free summary report of data for your city or zip code in the Phoenix area, just send an email request to amy@realtysecrets.net.

The ARMLS (Arizona Regional Multiple Listing Service) STAT Report for May had this to say about sales prices locally – “Both April’s sales price metrics continued on the upward pricing trend line begun in November of last year. Median and average sales prices reacted to the upward pricing pressure exerted by lower inventories. In April, the median sales price climbed 6.2% to $138,000. The average sales price also rose by 4.8% to land at $189,000. With six months of upward sales price momentum, the Valley appears poised for pricing recovery, albeit moderate and slow.”

As Phoenix was one of this first markets in the country to start feeling the effects of the decline, it makes sense that it will be one of the first areas to start experiencing a recovery.

CCN/Money – Buying a home won’t get much cheaper

If you would like us to email you the ARMLS  full ten page STAT report for May, just email your request to amy@realtysecrets.net.

We are seeing multiple offer situations for many properties priced below $150,000.  The inventory of homes for sale is roughly half of what it was a year ago.  We think this will start putting upward pressure on home prices.  It will take time but a slow recovery would be much healthier than a fast one.  Interest rates are also at historical lows which combined with the current low prices will make homes affordable for many people.

Here are some links to recent articles about the housing market. 

Mortgage Rates Reach New Record Lows

Optimism Builds in Housing Market

Foreclosures Post Big Drop

Some Good Signs for the Real Estate Market.

12 Most-Searched Housing Markets.

• The number of homes sold for each of the last three months has been over 9,000.  May saw 9,809 homes sold, an 8.1% increase over May of last year.  This was also the second highest monthly sales figure since August of 2005.
• Total inventory of homes has dropped significantly in recent months.  May inventory was at 31,661 homes, the lowest number in the past 24 months and 23.4% lower than May 2011.    For comparison, inventory in November 2010 was 45,353.
• Average and median sales prices have been relatively flat over the past six months.
• A large portion of sales activity has been for properties priced under $100,000.   46% of pending contracts in May were for properties priced under $100,000.    Another 22.4% were for properties priced between $100,000 and $150,000.
• Foreclosure and short sale properties continue to make up a large portion of sales and of properties still available for sale.

All of this data signals that the Phoenix market area is changing.    We believe there will continue to be significant monthly decreases in the number of properties available for sale for less than $100,000.  We think the lower inventory has already started to put some upward pressure on prices although it may take a while for this to show up statistically.  If more listings start being added to the market in response to the demand then prices are likely to stay fairly flat.  However, we think the lower inventory has already started to put some upward pressure on prices and if inventory continues to shrink we will start to see gradual increases in average prices.

• Sales were strong in both March and April.    In March there were 9941 closed sales and in April 9309 which was an increase of  0.8% over last year.  This is significant because last years April numbers were strong due to the housing tax credit.
• Inventory of homes for sale on the market has also been decreasing weekly.  April’s inventory was 17.3% than it was a year ago.  A reduction in inventory is necessary to balance the market and to create upward pressure on prices.
• Average and median sales prices have remained relatively flat since the start of the year.  The average sales price actually increased 2.2% in April.  The lowest average sales price for the decade occurred in February 2010.
• The number of foreclosures pending has been dropping for 17 consecutive months.

All of these signs are encouraging.  This remains a good time to buy.  Prices have remained fairly steady and are low.  If inventory continues to decrease, prices will start to increase in response.    This affect will vary in different areas of the Phoenix real estate market.  Outlying areas continue to have higher inventory than more centrally located properties.

What does this mean for you?  If you have been waiting for the market to hit bottom before purchasing a home, now is a good time to start the purchase process.  Interest rates are still low and housing prices are affordable.  Start by talking with a lender about the loan options available to you.  FHA loans are still available that require a 3.5% down payment and allow the seller to assist the buyer with closing costs.  Once you have been pre-approved for a loan, contact a realtor to assist you with the home buying process.

If you would like to search for homes on the internet, you can search townhomes, patio homes, and condos at www.townhomesonly.com and you can search for single family homes at www.realtysecrets.net.