December 2015 capped-off an average year in real estate sales. At the beginning of the year, it was forecast to be a “weak and declining market,” by Freddie Mac’s Multi-Indicator Market Index, or MIMI. However, the market showed real signs of improvement throughout the year, though there were normal ups and downs. In the very first part of 2015, home prices began to stabilize and showed sustainable growth. As distressed properties shrank to a smaller percentage of active listings and the percentage of conventional buyers increased, the entire year proved to be a solid one. In fact, aside from the month of January, monthly sales volumes were higher than in the comparative months of 2014.
Monthly Sales, Inventory, and Market Equilibrium
In December 2015, the number of monthly sales rose to 6,741, an improvement of 3.8 percent for year-over-year figures, and a whopping 26.9 percent for month-over-month. The sales activity increase was accompanied by a mix of upward and downward levels, rising to 5,925 homes listed for sale on the market. This represents an increase of 3.5 percent year-over-year, but, a decrease of 24.6 percent month-over-month. Total inventory hit 22,897 in December 2015, recording a decrease in both year-over-year and month-over-month, or down 8.2 percent and 8.1 percent, respectively. Months of inventory came-in at 3.4 months, well below the six-month period that defines market equilibrium between buyers and sellers.
Median Home Price and Average Sale Price, Year-Over-Year Comparisons
With the close of December 2015, it's clear the year turned out much better than expected. It bested 2014 in many respects, but still posted some mixed results. The Phoenix market came into the year labeled as "improving," but, in two out of the four national metrics, affordability and mortgage currency, the market outperformed national averages. In another metric, home loan purchase applications, improvement was steady throughout 2015, most notably between August and October, when it jumped by 13.73 percent. Sales volume was up from a total of 76,399 in 2014 to 84,249 sales in 2015, an impressive increase of 10.3 percent. In 2014, the median sales price rose to $197,000 but continued an upward trajectory in 2015, reaching a median sales price of $215,000, an improvement of 9.1 percent. The average sales price also increased, going from $257,902 in 2014 to $267,621 in 2015, or, an increase of 3.8 percent. In addition, the price per square foot increased, from $131.70 in 2014 to $137.73 in 2015, representing a rise of 4.58 percent. As mentioned, active inventory was below normal market equilibrium, falling by 11.2 percent to 20,086 properties in 2015, down from 22,626 properties in 2014. Likewise, distressed properties represented a smaller percentage of all active listings, down 26 percent falling to 4,261 properties in 2015 from 5,760 properties in 2014.
New Construction
New home sales, considered by economic experts to be a leading indicator of a healthy real estate market, were up by 18.2 percent in Maricopa County. Spring saw an increase of 40 percent year-over-year in new building permits, which became the highest number of new home sales in December 2015, the best recorded activity in the past seven years. In fact, the sale of some 1,284 new homes was some 44.9 percent higher than in the same period of 2014. With such demonstrable upward trends in median home price, average sale price, new construction, and, the smaller percentage of distressed properties, 2016 should be a bright one in the real estate market.