The numbers are in for residential sales in Greater Phoenix for the first month of the 2009 year.  As usual we'll start with a wide view in this post and delve in deeper into more detailed sales data and commentary as the month progresses.  Take a look at previous homes sales news reports.

Sales skyrocketed -with a bit of exaggeration- in January 2009 at lease compared to 2008: they rose 64% from 2,869 to 4,694. 

What's driving sales?  Affordability!  It's been a long while since housing was this affordable, though it could probably be even more affordable.  See what I mean:

1. Luxury Homes On A Budget.

2. Homes for $125,000 or less.

3. Home Sale Rise Dramatically

Prices per square foot have come down 40% and 42% based on median price.  In reality when you look at individual markets in the valley prices have come down more in some parts: homes can often be bought for 1/3 of peak and these are not devastated homes. 

So prices are down and interest rates are down as well, to historic low levels. There should be more homes selling for these reasons alone: home prices are putting pressure on rental rates already.  But, financing is not easy: it's definitely out there, but there are enough restrictions to limit the pool of buyers: however, whomever has good credit, employment and some assets can buy a home and with very little money down.  The caveat is that the ceiling for FHA -the most popular loan out there now- is around $271,000 which limits which homes sell. 

It is those price ranges within the FHA guidelines which are selling best, but the lower the price range the more are selling: below $200,000 is better and below $150,000 is phenomenal.

Pending Sales.

Current pending sales, a good indicator of things to come, are at 7,344 compared to 4,036 in 2008 and 5,864 in 2007.  This is quite a high number. 

Supply Of Properties.

The rate of sales is higher then new listing to the market.  January listings went up over December to 52,771 but were down from 55,912 in 2008.    Last year the months of supply was a depressing 20.3 months.  This month it's 11.2 months: still high but a marked improvement. 

Pricing

While home sales saw a steep incline, prices fared worse.  The high supply in general and the flood of bank owned properties in particular means that competition for buyers is stiff as banks want to remove real estate from their books at least before the new ones show up and they will continue to show up on the books for at least a while or until there is some kind of radical government driven change, but don't count on it.

Before I mentioned that with any median pricing information it's important to note that there are so many bank owned properties being sold in the very low price range that it has driven the median price down more than it really is.  In other words the median price is heavily skewed by the high number of low price homes sales. 

The drop of 42% in median pricing from last year does not mean every home dropped that much in price.  In some areas it dropped more but in most areas it dropped less.  We'll take a look at this in the detailed reports to come.

January 2009 median price based on monthly sales was $130,000 and $183,797 based on annualized sales.  It was $225,000 and $249,704 in 2008 respectively and $250,900 and $257,025 respectively in 2007.

Per square foot pricing was $93.52 in January, $98.64 in December 2008 and $167.24 in January 2008. 

Those numbers look scary but remember they are skewed, even the per square foot prices. 

Foreclosures/Bank Owned Homes in Greater Phoenix

Lender owned homes dominate sales but they don't dominate active properties.  26% of active homes were lender owned in January.  This is actually down from December's 27%.

This quarter of the supply is the most motivated, thus less expensive: like I mentioned above, real estate is not an asset for banks it's a liability with a lot of bad consequences for the the banks valuation so they need to be gone, they need to be sold.

Aggressive pricing allows these lender owned homes to be sold quicker ten normal sales.  A staggering 68% of all residential properties sold were lender owned.  This is up from 64% in December and 53% in November 2008, but it's these homes that allow sales to go up.

There is no good and no bad here: some lose some win: it's a shift and a big one at that.  I know that's a grave oversimplification.  There are people losing their homes and others are walking away from properties because the value have dropped so far that for them it makes financial sense to leave the properties: but, on the other hand so many people and families out priced before can now buy decent homes with a decent comfortable payment.

Please come back to see our detailed reports.  There are usually quite few throughout the month focusing on specific price ranges, neighborhoods, zip codes, home types and so on.