Sometimes there’s temptation to use percentages here. For instance, I could tell you that sales of single-family detached homes in Maricopa County over the past 30 days jumped 10% over last week’s report.
Sounds really cool, huh? But it’s only 200 homes.
Percentages often lack perspective. Something to keep in mind the next time you hear about the percentage increase in foreclosures either here in Phoenix or in other real estate markets around the country.
Sales did increase to 2,286 from 2,201 a week ago (covering the preceding 30 days) while inventory rose by a grand net of 36 homes. The result is an absorption rate figure of 17.36 months; if no new inventory came to the market, at the current sales pace that’s how long it would take for all the inventory to clear out.
I’ll have the map in a second but wanted to share this with you first. Let’s take a closer look at the city of El Mirage, just west of Sun City and to the south of Surprise.
As of the moment there are 414 single-family homes for sale in El Mirage. Of those, 83 are short sales and 89 are bank-owned homes – this accounts for 41% of the inventory.
There have been 33 sales in El Mirage over the past 30 days. Four of those were short sales and another 18 were REOs (real estate owned, the bank’s euphemism for a home that was foreclosed.) That accounts for 67% of the sales.
Have prices been declining in El Mirage? Absolutely. But at the same time, the bottom is being defined by these sales of foreclosed homes. This isn’t to say we’ve reached bottom, but if you believe as I do the bottom will be defined less by price than by activity, then it’s being defined by these bank-owned homes carrying a 4-month absorption rate (18 sales with 89 homes in inventory the last 30 days.)
Someone recently asked on Trulia how you compete with the pricing on a foreclosure down the block? Easy. Price your home to match the foreclosure. And as my friend Thomas Johnson in Houston adds, make sure to advertise that your copper pipes haven’t been stripped from the premesis.
Two last notes before the map. The absorption rate for bank-owned homes overall fell to 7.6 months – 443 sales with 3,383 active homes. Short sales actually are selling at a worse rate than the overall market at 18.04 months of inventory.
As always click on any of the below markers for details on a given city or town. And also as always, all data is provided by the Arizona Regional MLS and is deemed reliable but not guaranteed.[tags]Phoenix real estate, absorption rate, bank owned homes[/tags]