Monday, December 08, 2014

Phoenix Real Estate in November: Sales down 4%, Cash Sales down Sharply, Inventory up only 3%

by Bill McBride on 12/08/2014 12:40:00 PM

This is a key distressed market to follow since Phoenix saw a large bubble / bust followed by strong investor buying.  These key markets hopefully show us changes in trends for sales and inventory.

The Arizona Regional Multiple Listing Service (ARMLS) reports (table below):

1) Overall sales in November were down 3.8% year-over-year.

2) Cash Sales (frequently investors) were down about 20% to 28.0% of total sales. Non-cash sales were up 5.0% year-over-year.

3) Active inventory is now up 2.5% year-over-year - and at about the same level as in November 2011 (in 2011 house prices bottomed in Phoenix).  Note: This is the smallest year-over-year inventory increase this year, so the inventory build may be slowing.

More inventory (a theme this year) - and less investor buying - suggested price increases would slow sharply in 2014.  And prices increases did slow ...

According to Case-Shiller, Phoenix house prices bottomed in August 2011 (mostly flat for all of 2011), and then increased 23% in 2012, and another 15% in 2013.  Those large increases were probably due to investor buying, low inventory and some bounce back from the steep price declines in 2007 through 2010.  Now, with more inventory, price increases have flattened out in 2014.

As an example, the Phoenix Case-Shiller index through September shows prices up less than 1% in 2014, and the Zillow index shows Phoenix prices up 3% over the last year.

November Residential Sales and Inventory, Greater Phoenix Area, ARMLS
  SalesYoY
Change
Sales
Cash
Sales
Percent
Cash
Active
Inventory
YoY
Change
Inventory
Nov-084,417---1,21727.6%56,2271---
Nov-097,49469.7%2,57234.3%40,372-28.2%
Nov-106,789-9.4%2,96643.7%45,35312.3%
Nov-117,1475.3%3,24545.4%26,798-40.9%
Nov-126,810-4.7%2,94543.2%23,232-13.3%
Nov-135,181-23.9%1,76134.0%26,76215.2%
Nov-144,986-3.8%1,39628.0%27,4262.5%
1 November 2008 probably includes pending listings