Distressed Phoenix area properties dropped another 4% in value overall from November 2008's numbers and were down 35% year over year. It is interesting to note that non-distressed closings in the Phoenix Metropolitan Area actually showed an increase of 2% in value month over month, while being down 17% year over year. One can only wonder what would happen to prices if the government ever manages to actually do something to help stem the tide of foreclosures causing that inventory to be suddenly taken off the table.
Phoenix Arizona Real Estate Closings Up In December 2008
One very bright spot in the Phoenix real estate market can be found in the volume of closings. A recent search of the Phoenix real estate MLS showed December's closing numbers posting solid gains, up 27% over November and 66% year over year. In fact the closing numbers for December where the highest since 2005. The increase was largely due to a gigantic increase in volume of Foreclosures and Short Sales Closing in the Phoenix market, which were up 744% year over year and 42% just since November.
Closing volume of non-distressed properties were off 29% year over year, but was up a solid 8% from November's figures. Distressed Properties did sell for just 3.3% less then asking price on average as compared to 6.8% for Non-Distressed Properties.
Competition Driving Sales Prices Up Above List Price In Some Areas Of The Phoenix Area
And guess what, folks, there are now pockets where properties are selling for more than list price as competition for ‘the deal of a lifetime’ stiffens.
While not wanting to be overly optimistic, in many cases it does appear as if buyers have returned to the Phoenix marketplace in force to take advantage of the combination of lower prices and lower interest rates. Anyone who has attempted to purchase a really clean Bank Owned Property in Queen Creek or Maricopa lately can attest to that fact as they more than likely were involved in a bidding war.
Phoenix AZ Distressed Properties Still Majority Of Homes Sold In December 2008
Once again, single family homes in the Phoenix metropolitan area declined slightly less overall then other property types. Distressed properties accounted for over 63.8% of all of the single family homes that closed in December and prices overall were down slightly less then both the month to month and the year over year averages of other property types.
Dissecting the numbers even further may demonstrate the effect the growing number of foreclosures has on Arizona’s market today. For instance, while distressed properties now account for over 46% of the single family homes listed in the Phoenix MLS system the real hits are being seen in the lower price ranges. This can easily be demonstrated with a quick MLS search for December closing of homes over $500,000.
Distressed listings comprise less then 9% of the total current inventory and less then 29% of the homes sold in December over $500,000. The smaller number of distressed properties accounts for the relatively modest decline in prices these homes have experienced over the past year, being down just 10.7% as a group. So even though the number of sales in this category has declined by 32% in the past year and the number of foreclosures have increased by over 380% it has only affected the overall pricing by a modest amount.
Home Prices Under $200,000 Hit Hard With Dropping Value
On the opposite side of the spectrum a search for closings of homes priced under $200,000 clearly demonstrates the effect distressed sales have on the market. While enjoying a tremendous increase in volume (up almost 350% from December 2007) this group of homes also experienced the most drastic price decline, dropping over 35% year over year. Foreclosures (including short sales) amount to over 69% of the homes listed and over 72% of those sold during the month under $200,000. Distressed home market share went from 19.5% in 2007 to over 72% last month and the effect was reflected in a steeper decline in price.
So upscale, central parts of the valley like Scottsdale, Paradise Valley and certain communities in Chandler, Gilbert and Mesa have not been as hard hit as the outlying communities like Queen Creek, Maricopa and Buckeye.
As lenders work through their inventory of homes owned we are likely to continue to see soft prices even through dramatic increases in the volume of sales. A rebound may likely occur once the supply of distressed properties declines, either naturally through absorption or through government intervention...be certain you are where you want to be before that happens.
Jim Greisiger is a licensed Broker in the state of Arizona with over 30 years residential real estate experience. My website is: AZREAdv.com. I can be emailed at: jgreisiger (at) qwest.net
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