"We want to list it a little higher so we have wiggle room".....I'd think again.

**From ARMLS STAT:

Pollyanna vs Reality

From time to time there will be a set of numbers within STAT that just jumps at you, this month it was the dichotomy of list prices and sale prices. Over the past year we’ve repeatedly discussed the remarkable stability in our home prices. When we removed all the distressed sales and compared only the normal sales between December 2013 and December 2014, we saw the price per-square-foot rose only slightly, 1.7% from $133.10 to $135.41. When we compared January 2015 prices to December 2014 prices we saw a 1.2% decline in the median sales price and a 0.6% decline in the average sale price.  

As we continually state, these monthly anomalies are in no way an indication of declining prices, but only reiterate the remarkable price stability in our market. However, they do amplify the growing disparity between the price of properties listed for sale and the price at which properties are selling. 

In January the median list price increased 5.4% over December and the average list price in-creased 7.6%, widening an already existing gap. This gap becomes even more noticeable when we put the numbers side by side. The average list price in January was $354,500 while the average sales price was $255,000. The median list price in January was $230,000 while the median sales price in January was $194,700. Why is the average list price so much higher than the average sales price? If the property being marketed is listed too far above market expectations, reality will manifest in the lack of showings and/or offers leading to a price (reduction? - word missing).

Pending Price Index

Last month our Pending Price Index (PPI) projected a January median price of $195,000 with the actual median coming in at $194,700. Looking ahead to February, the ARMLS Pending Price Index projects a median sales price of $194,822. Prices are expected to remain flat. Sales volume for January was nearly identical to sales volume in January 2014, final numbers showed 4,784 this year compared to 4,797. January 2015 had 20 business days while January 2014 had 21.  With both the number of pending sales contracts and the number of UCB listings being greater than last year at this time, it is anticipated that February 2015 sales volume will exceed the volume of 5,474 of February 2014. We may only be taking baby steps at this time but our market is modestly moving forward.  

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MikeB Comment: You've no doubt received your own copy of ARMLS STAT in your email (as an ARMLS member). I've attached here as well.

It's a must read for the major talking point to sellers that in the 'flat' market we're currently experiencing, in most cases they cannot hope to push the envelope in price. 

The formula for getting a property sold remains the same: 

Competitively Position your listing as the 'next best' available in that market segment, all things considered, and it will be the next one sold. 

Here is a great YouTube video put on by our brokerage's trainer on the subject.  

http://youtu.be/3E5a__4V3zU

**Ps. While this is a Valley-centric piece I know that to a greater or lesser degree the same is happening State-wide i.e. the growing disparity between the initial asking price and sale price. So I'm trusting those of you in our Northern and Southern offices can get value from the above. But if this is interesting to you and you want data at your local level read on...

Strength back in the Phoenix area real estate market...

February 16 - Since the Super Bowl ended we have seen the liveliest two weeks for demand for a long time and we can see several areas with very strong numbers of listings under contract compared with this time last year.

Market Segment (within Greater Phoenix)	Under Contract 2/16/14	Under Contract 2/16/15	Growth %
All of Greater Phoenix	9,393	10,288	10%	healthy overall growth 2015 over 2014
Normal Listings Across Greater Phoenix	6,657	8,432	27%	strength in normal listings
Distressed Listings Across Greater Phoenix	2,736	1,858	-32%	distressed listings fading in significance
Normal Single Family (Greater PHX)	5,517	7,063	28%	single family resurgence
Normal Condo (Greater PHX)	971	1,187	22%	condo slightly behind single family
Normal Under $100,000	558	486	-13%	little demand under $100K
Normal $100,000 to $150,000	1302	1427	10%	average
Normal $150,000 to $175,000	716	940	31%	strong
Normal $175,000 to $200,000	664	919	38%	very strong
Normal $200,000 to $250,000	937	1,416	51%	exceptional demand growth
Normal $250,000 to $300,000	721	948	31%	strong
Normal $300,000 to $400,000	741	1,088	47%	exceptional demand growth
Normal $400,000 to $500,000	369	480	30%	strong
Normal $500,000 to $600,000	180	241	34%	strong
Normal $600,000 to $800,000	183	207	13%	average
Normal $800,000 to $1,000,000	94	97	3%	little growth
Normal $1,000,000 to $1,500,000	97	100	3%	little growth
Normal $1,500,000 to $3,000,000	80	69	-14%	weaker than last year
Over $3,000,000	15	14	-7%	weaker than last year

The high end luxury market is fading while the regular luxury market is showing just a little growth over last year.


The most popular ranges are $150,000 to $600,000, which is good news for developers and for sellers of existing homes. Here we see a very sudden upswing in buyer interest that wasn't there in January.
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Mid Month Pricing Update and Forecast:
     
Each month about this time we look back at the previous month, analyze how pricing has behaved and report on how well our forecasting techniques performed. We also give a forecast for how pricing will move over the next 30 days.

For the monthly period ending February 15, we are currently recording a sales $/SF of $130.82 averaged for all areas and types across the ARMLS database. This is 0.5% above the $130.11 we now measure for January 15 and represents a small increase in average pricing, as forecast. In fact our forecast range was $129.13 to $134.41 with a mid-point of $131.77. Last month's forecast was 95 cents above the actual price per square foot measured, but well within the forecast range.

On February 15, REO sales across Greater Phoenix (all types) averaged $83.12 per sq. ft. (down 1.5%). Pre-foreclosures and short sales averaged $98.43 (down 11.3%) while normal sales averaged $135.44 (up 1.3%). The market share of normal sales dropped from 89.6% to 89.1% over the last 31 days. REOs gained market share from 6.2% to 6.5%. Short sales and pre-foreclosures also rose from 4.2% to 4.4%. Despite the increase in distressed home share, the 1.3% rise in the average price per sq. ft. of normal sales carried the day.

On February 15 the pending listings for all areas & types showed an average list $/SF of $130.80, 0.4% above the reading for January 15. Among those pending listings we have 84.4% normal, 6.7% in REOs and 8.9% in short sales and pre-foreclosures. This is a large decline in the share for distressed homes, which will be positive for pricing as we move into March. The average pricing for pending listings within Greater Phoenix on February 15 in each category was: $137.77 for normal, $92.31 for short sales & pre-foreclosures and $86.03 for REOs. The figure for REO sales is higher than last month, but those for short sales & pre-foreclosures and normal sales are lower.
Our mid-point forecast for the average monthly sales $/SF on March 15 is $132.18, which is 1.0% higher than the February 15 reading. We have a 90% confidence that it will fall within ± 2% of this mid point, i.e. in the range $129.54 to $134.82. Our forecast this month is therefore for a slight move higher in sales pricing over the next month. This also happens to follow a pattern which is common in most years where pricing moves higher during the spring season.


We are seeing much stronger upward movement in pending listing counts and under contract counts than we did last month or last year. We therefore expect good demand during the spring selling season and no significant downward pressure in pricing.
Supply numbers are still weaker than last year at this time, so the market is shaping up quite nicely for sellers as long as they are patient. If the current trends continue and spread through more market segments then we could see prices regain a little upward momentum later in the year.

Market Update - Stats heavy so if that bores you look at the bullet points : )

Market Summary for the Beginning of February

January was a mixed bag. 

Supporting the pessimists we saw weaker sales counts than last year (down 1.7%) and lower prices than in December (median down 1.0%, $/SF down 0.8%). We also witnessed the pending listing count failing to beat last year, though it did rise 27.7% during January.

Supporting the optimists, the active listing count (excluding UCB) rose only 6% during January and remains 6.2% below the same point in 2014. More importantly, the under contract count rose 30.5% during January and finally overtook last year, beating it by 2.1%.

Overall it looks like a reasonable but not at all spectacular start to the year. Supply remains weak, especially at the affordable end of the market. At the top end supply is starting to pack on weight and sellers of luxury homes are going to be facing more competition.

Contract activity is definitely looking up, although this is strongly weighted towards UCB status and away from pending status compared to earlier years. As long as we assume that most agents are using UCB "incorrectly" and that most of the UCB listings would have been designated as pending six years ago (pre Zillow's dominance), then the picture looks consistent with a very modest recovery in demand. 34% of normal listings under contract are now coded as UCB. Six years ago this was just 7% (when it was called AWC). The shift towards UCB has been strong and relentless and is still moving in the same direction.

Sellers at the low and medium price ranges have some valid reasons to feel hopeful as we head into the prime selling season. Buyers are certainly not in trouble yet, but they need to keep an eye on supply. If that starts falling early this year we could see the re-emergence of multiple bids over the next 21 months.

Here are the basic ARMLS numbers for February 1, 2015 relative to February 1, 2014 for all areas & types:

• Active Listings (excluding UCB): 23,950 versus 25,541 last year - down 6.2% - but up 6.0% from 22,604 last month 

• Active Listings (including UCB): 27,095 versus 28,413 last year - down 4.6% - but up 8.7% compared with 24,918 last month 

• Pending Listings: 5,631 versus 5,723 last year - down 1.6% - but up 27.7% from 4,410 last month

• Under Contract Listings (including Pending & UCB): 8,776 versus 8,595 last year - up 2.1% - and up 30.5% from 6,724 last month

• Monthly Sales: 4,781 versus 4,862 last year - down 1.7% - and down 26.1% from 6,466 last month

• Monthly Average Sales Price per Sq. Ft.: $130.87 versus $125.54 last year - up 4.2% - but down 0.8% from $131.87 last month 

• Monthly Median Sales Price: $195,000 versus $183,000 last year - up 6.6% - but down 1.0% from $197,000 last month

The first time home buyer is critical to the next stage of the recovery. Some writers point to signs of the Millennial generation becoming home owners in normal numbers at last. I am not seeing convincing evidence of that yet, though that could be because it is still too early to detect. Those involved in credit repair appear to be busy, so I suspect improvement in demand may be more connected to former home owners coming back onto the market after their long time-out in the penalty box.

Household Formation News - Could Have BIG Impact on Market

January 31 - The local housing market might be pretty quiet right now, but we are seeing dramatic action in the numbers just released by the Census Bureau. Household formation shot through the roof during the fourth quarter. THIS IS BIG NEWS, despite there being little reporting of it in the media at large.

The annual household formation numbers for the fourth quarter were as follows:

• October 2014 = 1,435,000
• November 2014 = 1,618,000
• December 2014 = 2,001,000

These are colossal numbers, especially compared with 12 months ago:

• October 2013 = -110,000
• November 2013 = 103,000
• December 2013 = -205,000

The December number of just over 2 million is the highest we have seen since June 2005, almost 10 years ago and at the height of the housing bubble.

At the moment this household formation rate is translating into demand for rentals, but in every up cycle this is the first stage and it is usually followed by an upturn in demand for homes to buy. Household formation is usually a leading indicator of both upturns and downturns in the housing market, especially when examined as a 12-month rolling average. 

The current chasrt looks like this: