December Mid Month Pricing Update and Forecast

  Article Courtesy of Michael Orr
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 $84.47 averaged for all areas and types across the ARMLS database. This is 2.9% higher than the $82.35 we now measure for November 14. Our forecast range was $83.09 to $86.49 with a mid-point of $84.79. The actual figure fell just below the mid point of our forecast range, so we are very happy with our accuracy over the last month. 


The current price level is 1.4% higher than last year on December 15. I probably need to say that again to let it sink in. The average price per square foot is now 1.4% higher than it was 12 months ago. This is what used to be known as "appreciation". Today it is known as "that can't be right".  But it is. 

And since we forecast it last month we can't feign surprise this month. In fact we now predict that we will be reporting positive annual appreciation from November 29, 2011 onwards unless something very unusual happens to the market.

On December 15 REO sales across Greater Phoenix (all types) averaged $65.06 per sq. ft. (up 4.1% from November 15). Pre-foreclosures and short sales averaged $69.71 (down 3.1%) while normal sales averaged $106.79 (up 2.1%). Normal sales gained market share in a big way, moving from 36.5% to 41.1% of sales, while REOs were the big losers, moving from 34.9% to 29.5%. Short sales and pre-foreclosures advanced once again this month, moving from 28.7% to 29.4% - but note that many short sales closed on ARMLS get reversed later when it turns out they didn't close escrow as planned, so this percentage is probably somewhat over-stated.

On December 15 the pending listings for all areas & types showed an average list $/SF of $81.97, 1.4% above the reading for November 15 - so pending $/SF has moved upwards again and is now at its highest level since May 31, 2011. Among those pending listings we have 30.7% normal, similar to last month, a declining 26.0% REO and a steadily growing 43.3% in short sales and pre-foreclosures. The average pricing for pending listings on December 15 in each category was: $111.66 normal, $68.42 short sales & pre-foreclosures and $64.11 for REOs. All of these are higher than they were last month. Together with the changing mix this tells us we are likely to see a further rise in sales price per sq. ft. over the next month.

Our new mid-point forecast for the average monthly sales $/SF on January 15 is $85.66, which is 1.4% above the December 15 reading, and we have a 90% confidence that it will fall within ± 2% of this mid point, i.e. in the range $83.95 to $87.37. A substantial change in the mix can still have a significant effect on the average price per sq. ft. and we are seeing considerable variation from day to day. However even the lowest point in our forecast range is only slightly below today's reading.

It is now obvious that September 15 - now measured at $78.83 per sq. ft. - will remain the $/SF pricing bottom over the near term. The lowest monthly average sales price is $151,000 and this was measured on August 25. However the record low monthly median sales price is still standing at $107,000 and this record was set ten months ago on February 24. Our current monthly median sales price is back up around $116,000 and we will not be seeing $107,000 again anytime soon.