Friday, November 21, 2014

Cromford Report: November Mid Month Pricing Update and Forecast

Source:  The Cromford Report™ 
Michael J. Orr, Owner/Founder of The Cromford Report™/
Director of the Center for Real Estate Theory and Practice at the WP Carey School of Business
Arizona State University


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 November 15, we are currently recording a sales $/SF of $129.52 averaged for all areas and types across the ARMLS database. This is 3.1% above the $125.69 we now measure for October 15 and represents quite a significant surge in average pricing. Our forecast range was $127.00 to $132.18 with a mid-point of $129.59. Last month's mid-point therefore proved to be some 0.09% (7c) above the actual average recorded so far. This is well within our margin of error, in fact one of our most accurate forecasts ever. Given that the market is fairly weak, forecasting a 3.1% increase felt very much like sticking our necks out, but the model proved to be absolutely correct.
On November 15, REO sales across Greater Phoenix (all types) averaged $89.67 per sq. ft. (up 1.4%). Pre-foreclosures and short sales averaged $95.04 (down 0.9%) while normal sales averaged $133.20 (up 3.6%). The market share of normal sales edged up from 89.3% to 89.9% over the last 31 days. REOs lost market share from 6.7% to 6.0%. Short sales and pre-foreclosures gained very slightly from 4.0% to 4.1%. 

On November 15 the pending listings for all areas & types showed an average list $/SF of $130.92, 0.1% below the reading for October 15. Among those pending listings we have 81.7% normal, 7.3% in REOs and 11.0% in short sales and pre-foreclosures. The average pricing for pending listings within Greater Phoenix on October 15 in each category was: $138.63 for normal, $94.53 for short sales & pre-foreclosures and $85.30 for REOs. The figure for REO sales is much lower than last month, while that for short sales & pre-foreclosures is much higher while that for normal sales is slightly lower. 

Our mid-point forecast for the average monthly sales $/SF on December 15 is $130.17, which is 0.5% higher than the November 15 reading. We have a 90% confidence that it will fall within ± 2% of this mid point, i.e. in the range $127.57 to $132.77. Our forecast this month is for a fairly small increase in sales pricing over the next month. Once again this goes against the prevailing trend but is based on the continuing strength in the pending $/SF over the last two months. 

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.
  2. Continuing sales 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.
With demand remaining weak, we still expect the natural price range to remain stuck between $123 and $133 per sq. ft. over the next few months.

We would need to see a strong recovery in demand to change this expectation.

Tuesday, November 11, 2014

Veterans Day 2014


Veterans Day is celebrated on November 11th, the anniversary of the signing of the Armistice that ended World War I.  The main hostilities of WWI were properly finished at the 11th hour of the 11th day of the 11th month of 1918, with Germany signing the Armistice.

Heartfelt thanks go out to the men and women who have served in our armed forces, protecting our nation, and preserving the freedoms we cherish. 

Monday, November 10, 2014

Happy 239th Birthday to the United State Marine Corps

With love and thanks to my husband and his beloved Marine Corps brothers for their dedication and service, and with heartfelt thanks to all who have served or are currently serving.   
   
Semper Fi!

As in years past, it is my honor to share the annual birthday tribute to the United States Marine Corps presented by Bob Parsons, Executive Chairman and Founder of Go Daddy.  Please click HERE to view this 239th birthday presentation.   

In addition to the annual birthday tribute, GoDaddy is partnering with the Semper Fi Fund and  America's Fund to raise money to help critically ill and injured members of all of the United States Armed Forces and their families.  The Bob and Renee Parsons Foundation and GoDaddy.com will match up to $5 million in donations.
The Injured Marine Semper Fi Fund and the America's Fund provide financial support for injured and critically ill members of the U.S. Armed Forces and their families during times of hospitalization and recovery, as well as assistance for those with ongoing medical needs.  

You have the power to make a difference.  Click HERE to help GoDaddy help those heroes who've given so much for our freedom. 
-----
 IN LOVING MEMORY OF BOB "HEAVY" PETRELLA
Every November 10th, my husband and his Marine Corps buddies call to wish each other a happy birthday.  This year, there will be one phone call less... today and always we remember with deep love and affection our dear friend, Bob "Heavy" Petrella, who was  a USMC Captain during the Vietnam War and was a recipient of 2 Purple Hearts and a Bronze Star for valor.

Thanks for the all the great memories, Heavy!  We love you, man!
--------

I invite you to check out this website for a painting titled 
VIETNAM ELEGY 
 created by our dear friend, renowned artist, Denham Clements.




Sunday, November 2, 2014

Cromford Report - October Mid Month Pricing Update and Forecast

Source:  The Cromford Report™ 
Michael J. Orr, Owner/Founder of The Cromford Report™/
Director of the Center for Real Estate Theory and Practice at the WP Carey School of Business
Arizona State University


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 October 15, we are currently recording a sales $/SF of $125.69 averaged for all areas and types across the ARMLS database. This is 0.7% below the $126.63 we now measure for September 15. Our forecast range was $123.11 to $128.13 with a mid-point of $125.62. Last month's forecast therefore proved to be among the most accurate we have ever experienced, being only 7c higher than the mid point.

On October 15, REO sales across Greater Phoenix (all types) averaged $88.44 per sq. ft. (down 0.6%). Pre-foreclosures and short sales averaged $94.10 (down 6.6%) while normal sales averaged $128.62 (down 0.7%). The market share of normal sales was unchanged over the last 30 days at 89.5% of sales. REOs gained market share from 6.3% to 6.5%. Short sales and pre-foreclosures lost market share from 4.2% to 4.0%. 

On October 15 the pending listings for all areas & types showed an average list $/SF of $131.10, 3.1% above the reading for September 15. Among those pending listings we have 81.0% normal, 7.6% in REOs and 11.4% in short sales and pre-foreclosures. The average pricing for pending listings within Greater Phoenix on September 15 in each category was: $139.00 for normal, $91.35 for short sales & pre-foreclosures and $90.74 for REOs. All of these are higher than last month, especially the figure for normal sales. 

Our mid-point forecast for the average monthly sales $/SF on November 15 is $129.59, which is 3.1% higher than the October 15 reading. We have a 90% confidence that it will fall within ± 2% of this mid point, i.e. in the range $127.00 to $132.18. Our forecast this month is for a fairly large increase in sales pricing over the next month. This goes against the prevailing trend but is based on the strong move upward in the pending $/SF over the last month. Month to month forecasting has been hazardous this year with considerable volatility from one month to the next. This optimistic forecast is due primarily to a favorable change in the mix of properties in escrow, rather than an underlying strength in pricing. The underlying longer term price trend is still slightly negative.
With demand remaining weak, we still expect the natural price range to remain stuck between $123 and $133 in the next few months.

In the current conditions we believe the strongest pricing of the year has already occurred between March and June. Pricing is likely to show at least some degree of weakness during the last 3 months of the year due to the usual seasonal increase in supply and lower sales volumes. We would need to see a sudden strong recovery in demand to change this expectation.