“Listing Success Rate” is defined as, “the percentage of listings that closed with a sale rather than expiring or being canceled”. It compares the number of listings sold this month with the number of listings that were sold, expired or canceled in the same period.
At this moment in time, the Phoenix real estate market is running at about a 60% listing success rate. In other words, 60% of all listings are sold.
What happens to the other 40%?
In a nutshell, they aren’t sold. The listing either expires, or is cancelled, or in the case of many short sale listings, is foreclosed on (and most likely re-listed at some point later as a lender owned (aka “REO”) property).
So is 60% “good”? It depends on your perspective. If you are trying to sell a home, you want to see Listing Success Rate as high as possible. If you are buying a home, a higher rate means (generally speaking) that their is more competition for available listings. More competition for the buyer means less negotiating power, and increased potential for multiple offer situations.
Historically speaking, a 60% listing success rate is quite high. My stats service only tracks this particular metric back to February 2006, and the current Listing Success Rate matches the high of March 2006.
Here is the historical data:
But wait, let’s take a closer look at the numbers.
The critical reviewer of real estate statistics would be asking themselves, “why the big increase in Listing Success Rate 2009?” A very reasonable question.
Currently, the Phoenix real estate market is heavily influenced by “distressed properties”. Distressed in this case means lender owned foreclosures and pre-foreclosure (short sale) properties, not distressed as in the pissed off owner has trashed the home and ripped out the fixtures, flooring and appliances (though believe me, that happens). Distressed listings currently make up almost half of the available listings and in most parts of the Phoenix metro area compose a significant proportion of sales (see the Distressed Sales chart posted last week for the gory details).
As anyone that has tried to buy a bank owned home will tell you, they are moving very quickly. It is the norm, not the exception, to see new bank owned listings get multiple offers within days of coming on the market.
Here is the Listing Success Rate for each major market segment (as of Saturday May 23):
- Lender Owned Properties – 89.8%
- Pre-foreclosures (short sales) – 36.6%
- “Normal” (not lender owned or short sales) – 40.6%
So there is your reason for the sharp increase in overall Listing Success Rate. Almost 90% of lender owned property listings end in a sale. Only 40% of “normal” listings end in a sale.
This market segment breakdown is why I sometimes struggle with the reports and indexes often quoted in the mainstream media and elsewhere. When you break down these overall market aggregated numbers into individual components, they often tell a very different story. It would be easy for a seller in a “normal” situation to see the graph posted above and begin a Happy Dance. The astute normal seller (who hopefully has an astute agent working for them) would note that their market segment isn’t performing quite so well when is comes to Listing Success Rate. Factor in other considerations, such as location, price range, condition, the number of surrounding distressed listings, etc. and you can find yourself in a very different situation than the broad-based metrics may indicate.
It’s a great trend and clearly is better than if the line were going in the other direction, but as always look at all real estate statistics with a critical eye and consider all the factors that compose the metric(s) you are investigating.
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Tables and charts from The Cromford Report using data from public records and data licensed from the Arizona Multiple Listing Service (ARMLS). Cromford Associates LLC, ARMLS and yours truly, Jay Thompson, expressly disclaim and make no representations or warranties of any kind – express, implied or statutory – as to the accuracy of the data, nor its merchantability or fitness for any particular purpose.
In other less legal-like words, if you use this data to make personal, business or investment decisions and something blows up, it’s not our fault and you can’t sue us.
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Great point to make-whenever looking at stats and reports for anything it is important to consider what is making those numbers. It is great that the lines are going up, even if it is not quite time for the happy dance from normal home sellers, it might be soon!
It is amazing how looking at the small details behind stats can cast the information in a whole new light! It is still exciting to realize you are getting a little closer to a better market, much better than the other way around!
**Jim Dolanch-Pittsburgh Real Estate Expert´s last blog post..Pittsburgh is One of the “Best Cities for a Fresh Start”
Jay,
Even though foreclosures dominate the stats it’s still nice to see that the inventory gets worked on there in Phoenix. The same type of a situation is happening here in Las Vegas, REOs rule the day pretty much, especially in the lower half of the real estate market.
MSNBC recently reported that, “Most demographic and market indicators suggest that growth and development across the country are moving away from the suburban and exurban fringe and toward center-cities and close-in suburbs.”
The article goes on to report that the reason behind the shift is multi-fold including, “Empty-nesters don’t need the big house and don’t want to mow the big lawn. High gas prices are making long commutes less practical. The urban renaissance in big cities ranging from New York to Portland, Ore. — and the revival of charming, vibrant downtowns in small cities like Missoula, Mont. — is making the bedroom suburb and the strip mall seem positively dull.”
We at {Company name redacted} agree. I recently drove around downtown Phoenix on a Saturday night and was delighted with all the activities, energy, and people. ASU was showing a movie outside in a park, hundreds of kids were enjoying their prom, urban-ites were knoshing at the many new restaurants in the area (e.g. Sens, Hanny’s, The Pasta Bar, and more), and folks were just milling around. It was great! Such atmosphere is gaining traction in downtown Phoenix and we’ll will see a domino effect; more people will encourage more businesses, more business will draw more people, and the trend will continue.
Folks the pieces are falling into place. If you want to live “urban” give us a call and take advantage of the crazy low prices that are available today.
“Tempe Condo Pro” –
Do you really think it’s appropriate to leave a comment on a fellow agent’s blog — a local agent no less — encouraging people to work with you?
I sell condos in Tempe too you know.
While I do appreciate your comment and insight, blatant advertising of your services on my blog is a violation of my comment policy (that is linked to just above the comment submit button).
I’ve redacted your company name and link to your site. I’ve got no problem with you visiting here and welcome your comments, but please abide by the comment policy that is in place and refrain from advertising your services. If you want to advertise the great deals in Tempe condos, I suggest starting your own blog. I assure you that I won’t post advertisements for my services on your blog.
**Jay Thompson´s last blog post..Memorial Day 2009
I agree, Jay. Though it is a downer to see so many REO’s on the market, it is great to see that the inventory is moving, and as the REO’s get bought up, hopefully, the regular for sell homes will start to move more quickly.
Also, I have to agree that “tempe condo pro” was out of line for blatenly advertising on your blog, but I’m impressed you were so nice about it and just wanted to let you know that I enjoy the conversation that continues in the comments (even when there are comments like “tempe condo pro”) almost as much as I enjoy the posts.
Jay’s too nice with his comment policy… just delete the idiot
@Jay – I believe it refreshing that you are not solely taking this stat and running with it to sell, sell, sell, but I believe you may have under played its value. As a listing success statistic and an explosion in pendings is very good news for your market place. If you continue to burn through foreclosure listings at the rate you have been your markets move up buyers will be able to seriously consider selling.
I have recently noticed that the Phoenix area has been getting lots of exposure on HGTV as of late. This I am sure is not a negative. It would be nice to see a few more markets start posting numbers similar. Here in Houston we have had sales fall off for some time but that trend is slowing and inventory is at good levels. I would love to see the real estate market return to stability.
**James Wheelock´s last blog post..$1,900 :: 12518 Cape Sable Ct, Humble TX, 77346
Great points, thanks for sharing. In Charleston SC it looks like REO properties & short sales make about about 10% of of active listings. About 25% of our short sale listings are not making it to closing. Short sale listings that have more then two loans/liens in place are pretty much doomed from the start.
I agree with Leon, it’s always best to take a very critical look at statistics. Let’s hope this upward trend continues.
Prescott Homes
You did a great job breaking down the stats-though it sounds good to have 60% selling rate (and it is certainly not bad!) it is careful to realize roughly 89% of that selling rate is from foreclosures. Not a bright picture; however, at least they are selling.
**MaryAnn Knell-Peoria Real Estate´s last blog post..Help for Peoria’s Homeowners
It would be intersting to see if the 89% of foreclosures drops by Christmas-it would be great to see the “normal” sales jump up more. It seems by Christmas, with foreclosures selling so quickly in your area, that the supply would soon be gone or very low, so that then the short sales or “normal” sales numbers would jump up. It would be a good indicator of the overall economy, since your area has been one of the hardest hit, along with CA and FL.
Wow
60% can seem like a high number but that doesn’t mean there is less negotiate power for the buyers trying to buy from the other 40%. 40% is still a big number and with the post financial/housing crisis there is still room for people to get as best price they can on a property as long as they know what they are looking for and can afford it.
best 2 cheap´s last blog ..Adjustable-Rate Mortgage Payment