The Information Market released their greater Maricopa County foreclosure statistics for May 2011. Although April’s numbers were probably more newsworthy with a greater number of foreclosures completed than new notices issued, May’s numbers provide newsworthy occurrences also. It’s time to review the current Phoenix foreclosure market and identify some significant changes that have occurred since the first of the year.

Foreclosure numbers as of 5/31/2011

• Total active residential notices are 27,396; the lowest number since 11/08. The number has dropped 28% since the first of the year, which is more than 10,000 fewer residential properties in foreclosure.
• The number of new notices in May was basically the same as the number of completed foreclosures. This is only the 2nd time that new monthly notices were not greater than monthly completions in the past 10 years;
• There were 4,000+ residential foreclosures cancelled last month; second highest all time.
• With only 1,900 short sales closed (Maricopa County) for May, there are other reasons that trustee sales are being canceled.
• New notices for May were basically the same as April and April had the fewest since 11/07.
• The number of residential properties currently owned by banks in Maricopa County is 18,451; the lowest since July of last year.

Bank Owned Inventory = 18,451

• 3,901 active listings in ARMLS;
• 325 listings in AWC status;
• 4,986 properties in pending status.

This accounts for 9,212 of the 18,451, or 50% of all bank owned properties. Where’s the other 50%? Good question. I imagine there are a number of issues such as previous owner evictions, tenants with valid leases, title issues, maintenance/property condition issues, or a few others that fall into the “miscellaneous legal issues” category. With basically a 1 month supply of active REO listings in the county (3,901 active / 3,765 sold in May), bringing on the other 50% of bank owned inventory will not “flood the market.” In fact, adding 9,000 active listings would add an additional 1 month supply to our current 2.4 month supply for the entire market.

As various sources reported last month, these developments are significant steps necessary for our market to improve. Sure these might be small steps and we’re not out of the woods yet, but I thought you might be interested in a year-to-date review as we head into our summer selling season.

November 2010 is in the books.  Ok the numbers aren’t really final, but I report on initial returns.  Also with some national and local reports talking about a softening market in October, it’s time to see what November brought, besides Black Friday.  Prices are still either sliding or bumping along the bottom.  Our Phoenix marketplace did establish a new price bottom in the last 45 days but closed sales showed some seasonal improvement.  But wait, I’m getting ahead of myself.

Active listings have held steady in the last 30 days @ 45,000.  Of those 6000 are AWC and 90% of those are Short Sales (“SS”).

Pending Listings remain strong @ +9900 up over November 1.

Closed escrows are up over October @ 6706; REO’s made up 44% or 2918 of closings; and SS’s were 21% or 1403.  That leaves 2385 closings that were not in a Distress Category, and most analysts refer to these sales as “Normal” – more on these Normal sales later.

Prices are down, with the average sales price @ $159,700 a similar figure to September 2010 and the previous bottom which occurred in March and April 2009; the median was down to $115,500 which is the lowest of the year, and equal to the ‘bottom’ from April of 2009.  Prices have dropped primarily because of REO’s, (again 44% of all sales) as the average sales price for REO’s is $117,000 and the Median $89,900.

So the sound bite for the month is: “Number of sales is average (4^th highest in the last 10 years), seasonally strong with nearly 10,000 in escrow; prices are bottoming again because of the number and percentage of REO’s.”

But this month I want to start to talk about Normal sales.  It’s interesting to look at what’s counted as a Normal sale.  4 years ago, would you count a New home sale, a fix and flip, an estate sales or a third party relocation sale, as Normal sales?  Probably not, but since they are not in a Distressed category, today we count them as Normal.  In November, approximately 1/3 of all closings were Normal (2385), but 75% of these sales were Vacant, i.e. no seller becoming a buyer creating another sale.

Wow a lot to chew on after Thanksgiving, I know.  December should stay ‘seasonally strong’ with all the properties currently in escrow and with banks allowing REO sales to start closing again.  We should finish the year above 90,000 sales for the 4^th time in the last 10 years.