The Thrill is gone from the Phoenix Market

From the Cromford Report:

There is no upward momentum in prices any more and annual appreciation rates are starting to fall like a rock as comparisons with this time last year get harder. The average price per square foot is holding up strongly because:

• low end homes are selling in much smaller numbers than last year
• distressed homes selling for below market are much rarer than last year
• the high end luxury market is stronger than the mid-range

These are all pulling prices artificially in the same direction.

The monthly median sales price avoids contamination by the luxury market but is subject to massive contamination by distressed homes. Because [Distressed Homes] are now scarce the median sales price now gives us a good guide to what is happening in the non-luxury market. By separating the market into lender-owned, short sales & pre-foreclosures and normal sales, we can better see what is happening to prices:

• Normal sales: monthly median sales price now = $198,000 and on May 17, 2013 = $190,150. Appreciation rate = 4.2%
• Short sales & pre-foreclosures: monthly median sales price now = $140,000 and on May 17, 2013 = $140,000. Appreciation rate = zero.
• Lender owned homes (including HUD): monthly median sales price now = $133,630 and on May 17, 2013 = $136.000. Appreciation rate = negative1.7%

So we are seeing around 4% annual appreciation for normal sales and either flat or negative appreciation for distressed sales.


You can still [find] plenty of increases in you look at the annual averages, but that is all because of the upward movement between May 2012 and July 2013.


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