Mid Month Pricing Update And Forecast As Reported By The Cromford Report

MID MONTH PRICING UPDATE AND FORECAST AS REPORTED BY THE CROMFORD REPORT

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 December 15, we are currently recording a sales $/SF of $131.05 averaged for all areas and types across the ARMLS database. This is 1.3% above the $129.31 we now measure for November 15 and represents another advance in average pricing, though not quite back to the peak levels of mid April. Our forecast range was $127.57 to $132.77 with a mid-point of $130.17. Last month's forecast proved reasonable and the actual result was in the top half of our predicted range.

On December 15, REO sales across Greater Phoenix (all types) averaged $86.89 per sq. ft. (down 2.3%). Pre-foreclosures and short sales averaged $105.73 (up 11.4%) while normal sales averaged $133.77 (up 0.4%). The market share of normal sales edged up from 89.7% to 90.8% over the last 30 days. REOs lost market share from 6.3% to 5.2%. Short sales and pre-foreclosures were flat at 4.0%. The increase in short sale pricing had the largest impact on the overall $/SF.

On December 15 the pending listings for all areas & types showed an average list $/SF of $129.55, 1.0% below the reading for November 15. Among those pending listings we have 80.9% normal, 7.9% in REOs and 11.3% in short sales and pre-foreclosures. The average pricing for pending listings within GreaterPhoenix on December 15 in each category was: $137.50 for normal, $95.59 for short sales & pre-foreclosures and $86.57 for REOs. The figure for REO sales is a little higher than last month, as is that for short sales & pre-foreclosures while that for normal sales is lower.

Our mid-point forecast for the average monthly sales $/SF on January 15 is $129.69, which is 1.0% lower than the December 15 reading. We have a 90% confidence that it will fall within ± 2% of this mid point, i.e. in the range $127.10 to $132.28. Our forecast this month is for a fairly small decrease in sales pricing over the next month. This follows a pattern which is common in most years where a weaker January follows a strong December.

Just as in November, there are several factors helping the average $/SF for closed sales to stay high

1. A continuing fall in the share of homes sold among the lower price ranges below $200,000.
2. Continuing relative strength for very high end luxury homes.
3. More sellers agreeing to pay buyers' closing costs and other concessions, a significant invisible discount that does not show up in the recorded sales price.

Until demand shows more significant signs of strengthening, we still expect the natural price range to remain stuck between $125 and $135 per sq. ft. over the next few months.

We wait to see if the introduction of 3% down payments for conventional home loans will stimulate more home buyers to apply. At the moment it is too early to tell what the effect might be.