Market Summary for the Beginning of 2010

December proved to be the most interesting month since June. Some new trends and several surprising readings.
Sales were very strong - a total of 7,723 residential resales across all ARMLS areas and types - almost as high as the previous December record set in 2004, and 3.7% higher than November. The annual sales rate has now risen to 92,435, a figure we haven't seen since June 2006.
A bigger change was in the sales mix. Short sales and pre-foreclosure really started to take off with 1,990 sales - up 38% over November and now comprising 26.6% of all sales. Lender owned properties also rose to 3,357, but this was only an increase of 3.7%, and they represented 43.9% of all sales, almost the same as in November. Normal sales dropped a startling 14.6% from November, falling from 36.6% to only 30.2% of all sales.
Along with the increased volume came a sudden sharp drop in short sale pricing, coming in at $81.64 per sq. ft. for December - down 5.8%. However, REO pricing rose again by 2.7% while the lower volume of normal sales averaged $119.45, a 5.5% increase over November. Short sale pricing is now averaging only 10.8% higher than REOs when it had been 20.8% higher in November. Although normal sales declined in volume their pricing was remarkably healthy and appears to have established a bottom of $112.91 on November 16 ($112.30 if we only count single family detached sales).
So we have seen pricing bottoms for overall sales (April 6, 2009), REO sales (April 27, 2009) and Normal sales (November 16, 2009). Short sale pricing is currently close to its lowest point ever, but the pricing of pending short sales is rising and suggests we could be close to a bottom for short sales too, though this is far from certain. REO pricing is now well above the levels of last spring, but the pending $/SF number is falling and suggests REO sales pricing will weaken in the near term. However the pending $/SF for normal sales is continuing to rise and suggests a continuation of the strong rising trend. With different sectors moving in opposite directions, forecasting the overall average $/SF has gotten quite tricky.
Pending listings have fallen to 9,569, but this is by far the highest total for any January in history. On top of that there are 5,723 active listings under contract, mostly short sales and pre-foreclosures.
The surge in active listing supply continued throughout most of December but has been counter-balanced by renewed demand so that the Cromford Market Index has stabilized at a healthy reading between 119 and 120. It is noteworthy that REOs are more plentiful (5,740) than they have been since May, but they are still much scarcer than they were 12 months ago when we had 14,268 active REOs available on ARMLS.
The pattern of trustee deed recordings was definitely surprising, and not in a good way, with no seasonal slow-down as expected. In fact we saw a distinct short term jump in trustee deeds with the 7 days ending on December 23 reporting the highest total we have seen for a weekly period. It seems that one particular bank was clearing their books out prior to Christmas. The final total for December was 5,213, almost as high as July 2009 and a big jump of 37% over the low number recorded in November. At the moment this appears to be a "blip" rather than a new trend.
New notices of trustee sales in Maricopa County numbered 7,871, about 10% more than November and not at all surprising considering that the month of December contained 4 more working days.
January is off to a quiet start with the first three days all non-working. Perhaps the most interesting news is that annual appreciation as of January 3 has risen to -6.0% having reached a record low of -44.5% on April 6, 2009. If pricing stays at the current level of $90.12 per sq. ft. annual appreciation will turn positive on February 24, 2010. Since overall pricing is likely to improve slightly, we could hit that significant milestone a little earlier, perhaps on February 17. Not long to wait now.

The Cromford Report