Market Update - Signs of a Slow Recovery?

In Arizona, where home prices dropped by nearly 50% during the housing collapse, it’s expected that median home value change will improve over the next five years, but will lag the national trend in the next year, according to Fiserv.

Phoenix-area home prices in July were up 19.9 percent from a year earlier, easily the largest percentage gain among major U.S. cities, according to a CoreLogic report.

Despite Arizona ranking first in the nation in home price improvement from July 2011 to July 2012, over the period from the first quarter of this year to the first quarter of 2017, the improvement is expected to be 2.5% per annum — 39th among all states.

Greater Phoenix REO sales dropped below 14% of the monthly total, the first time this has occurred since January 4, 2008. At their peak on February 11, 2009, they constituted 71.1% of monthly sales. Although it will take some time for them to disappear completely, REOs are no longer a major factor in the market. Contrary to the popular myth, there are not a lot of foreclosed homes in lenders’ possession, so we don’t expect this REO supply to increase.

In contrast, short sales comprised 31.4% of all sales in Greater Phoenix in July. This is even higher than the 29.3% for June 2012. With short sales selling for a lower average price per sq. ft. than REOs, this has a negative effect on average pricing over the last 2 months.

Normal sales have fallen from 56% to 54.6% of sales and their pricing is down from $116.82 to $115.62 per sq. ft.

The number of home refinance closings throughout the Valley in July -- roughly 11,500 total -- is a whopping 128 percent hike since January, and refinances have also steadily increased each month so far this year in metro Phoenix.

Sources: 24/7 Wall St.; CoreLogic