Phoenix Metro Area February Home Sales

Phoenix region home sales in February remained slow by historical standards but they still rose to the highest point for that month in three years and posted a normal gain over January as already-robust demand from absentee and cash-only buyers grew. The median sale price inched up from the month before and was the same as a year ago, marking the first time since January 2007 that the overall median didn’t drop on a year-over-year basis, a real estate information service reported.

Among the other signs of price stability last month: The $131,900 median paid for existing, single-family detached houses was 5.5 percent higher than a year ago – the first time that median increased year-over-year since March 2007. The median price paid per square foot for those resale houses increased 5.8 percent from a year ago, marking the first annual gain since October 2006, according to MDA DataQuick, a San Diego-based firm that tracks real estate trends nationally via public property records.

The steadiness and gains in various median sale prices mainly reflect a firming of prices across more submarkets, as well as a continuing reduction in recent months of lower-cost foreclosure resales. In addition, last month’s overall median sale price got a boost from a shift toward more sales of new homes, which tend to sell for more than the typical resale home, and a small increase in the portion of total home sales above $200,000.

The future course of prices will depend largely on the economy’s ability to gain traction and reduce job losses, as well as the magnitude and timing of future foreclosures and the housing market’s reaction to less government stimulus.

A total of 6,824 new and resale houses and condos closed escrow in the combined Maricopa-Pinal counties metropolitan area in February, up 9.6 percent from the month before and up 13.0 percent from a year earlier.

A rise in sales between January and February is normal for the season, with that gain averaging 9.4 percent since 1994, when DataQuick’s complete Phoenix-area statistics begin.

February’s total sales were the highest for that month since February 2007, when 8,940 homes sold. Total resales – houses and condos combined – were the highest for a February since 2006.

The number of newly built homes sold in February rose 17.0 percent compared with January but fell 14.6 percent from a year ago. Last month’s new-home sales were 9.5 percent of total sales, compared with 8.9 percent in January and 12.5 percent a year earlier. Builders continue to struggle to compete with low-cost foreclosures.

Last month foreclosure resales continued to claim just over half of all Phoenix resales, but they remained well below last year’s peak level.

In February, 51.3 percent of the houses and condos that resold had been foreclosed on in the prior 12 months, down from 52.1 percent in January and down from 65.1 percent a year earlier. Foreclosure resales hit a high last March of 66.2 percent of all homes resold.

The waning of foreclosure resales over the past year has coincided with lower declines and, more recently, steadiness and gains in various home price measures.

The median price paid in February for all new and resale houses and condos combined was $135,000, up from $131,540 in January and the same as a year earlier.

February’s overall median was still lower than the $136,500 median in December 2009, and it was 48.9 percent below the peak median of $264,100 reached in June 2006. Prior to last month, the overall median had fallen on a year-over-year basis for 36 consecutive months. The low for the median in this cycle was $125,000 in April 2009.

The median paid last month for resale single-family detached houses was $131,900, up 1.5 percent from $130,000 in January and up 5.5 percent from a year ago. It was 50.8 percent lower than the June 2006 peak of $268,000.

The median paid for resale condos in February was $91,500, down slightly from $95,000 in January and down 22.9 percent from a year earlier. It was 50.9 percent lower than its April 2007 peak of $186,500.

An alternative price gauge inched higher in February: The median paid per square foot for resale single-family (detached) houses was $73, up from $72 in January and up 5.8 percent from a year earlier. However, the figure remained 57.3 percent below its record level of $171 in June 2006.

Investors and first-time buyers continued to drive much of the resale activity last month. In February, 43.7 percent of all Phoenix-area home purchase loans were government-insured FHA mortgages, a popular choice among first-time buyers, according to an analysis of public property records. Absentee buyers purchased 41.2 percent of all homes sold in February, up from 39.1 percent in January, and paid a median of $114,500 last month. Absentee buyers are mainly investors, but include second-home buyers and others who indicate at the time of sale that the property tax bill will go to a different address.

Buyers who appear to have used cash to purchase their homes accounted for 43.6 percent of all February sales, up from 40.6 percent in January. Last month’s cash buyers paid a median of $105,000. Specifically, these were transactions where there was no indication of a purchase loan recorded at the time of sale. Some of these “cash” buyers could have used alternative financing arrangements outside of a typical, recorded purchase mortgage, and in some cases these buyers might be taking out mortgages after their purchases. All-cash deals have become popular in many Western markets where prices have dropped sharply, luring investor buyers who don’t always qualify for traditional mortgages. Moreover, sellers favor the relative speed and certainty of all-cash transactions.

The “flipping” of homes has trended higher over the past year but was steady last month at 3.3 percent of all homes sold, the same as in January. The figure represents the percentage of homes sold that had previously been sold on the open market between three weeks to six months prior. The flipping rate was 2.1 percent in February 2009.

Foreclosure activity dipped in February: The 4,635 single-family house and condo units foreclosed on in the Phoenix region represented a 6.2 percent decline from January and an 18.4 percent drop from a year earlier. The figures are based on the number of trustees deeds filed with the county recorder’s office. The document signals that a home was lost to foreclosure. The foreclosure totals can include units that the county assessor has designated as condos, but are currently used as apartments (e.g. a 100-unit complex designated as condos but used as apartments could be foreclosed on and those units would be reflected in the foreclosure total for that month). For this reason and others, the number of foreclosure filings has seesawed month-to-month over the past year, and a single month’s increase or decline doesn’t necessarily indicate the beginning of a lasting trend.

Phoenix MSA Home Sales

Number of sales	9-Feb	10-Feb	%Chng
Resale houses	4,849	5,355	10.40%
Resale condos	435	823	89.20%
New homes	756	646	-14.60%
All homes	6,040	6,824	13.00%

Median sale price	9-Feb	10-Feb	%Chng
Resale houses	$125,000	$131,900	5.50%
Resale condos	$118,750	$91,500	-22.90%
New homes	$202,309	$205,156	1.40%
All homes	$135,000	$135,000	0.00%