Surprise real estate represents another local real estate sub-market whereby activity there paints a mixed but telling picture. There are indications that suggest we have seen the bottom in activity levels and that the next year could be better than 2008. However, given the many uncertainties in the current market, time will only tell for sure. Let’s take a look because the data on Surprise homes for sale is very interesting.
In terms of Active (currently available) properties:
- Surprise saw inventory reach a low point in the September-October period at 1,564 properties, this was the lowest point since February 2006!
Since October, inventory has been moving upward again to 1,768 available properties. This is likely the effect of the elimination of down payment assistance by October 1 spurring on purchase activity in September, as well as the onset of the holiday season. Across the Valley, inventory hit a low in September as well which was consistent inventory in April 2007.
In terms of Pending properties, Surprise is seeing very interesting results:
- In October, Surprise had 310 properties under contract for purchase. These results are stronger than 2001-2003 and 2006-2007 periods. In other words, buyer activity for Surprise homes is showing results nearly as strong as the 2004-2005 market period when supply was much tighter.
This is an impressive result. It is also consistent with that of Maricopa homes, Queen Creek homes, and Buckeye homes where Pending sales activity is showing even stronger results.
Looking at “absorption” of inventory is important as well. This is derived by the following formula:
- Add: # of Active (currently available) properties + # of Active with Contingency properties (under contract) + # of Pending properties (under contract) = Total Properties On-Market
- Add: # of Active with Contingency + # of Pending properties = Total Under-Contract properties
- Divide: Total Under-Contract properties by Total Properties On-Market
The result here will be a number that can be interpreted as X% of the total on-market properties are under contract, or “absorption.” Another way to communicate this is that for every 10 homes, there are X.X buyers.
Here are the statistics for real estate in Surprise:
- Surprise is currently trending at 16.3% of on-market properties being under contract, or for every 10 homes there are 1.6 buyers. This appears to be down from 19% and nearly 2 buyers for every 10 homes seen in October.
It appears that absorption is dropping likely due to the holiday seasonal period as well as coming off a peak in September.
Based on the above information, Surprise may be positioned for a stronger year if buyer activity (as defined by the number of properties under contract) remains steady through the holidays until the beginning of the year.
Now, it’s important to look at the impact of foreclosed homes in these local markets. Primarily, if we consider their percentage of total sales for these markets.
Surprise has experienced a high level of Real Estate Owned (REO) or “Lender owned” property activity.
- In July 2008, 45% of properties sold were foreclosed properties. This figure has dropped and in September was approximately 41%. Essentially,
Surprise has been inundated with foreclosures which has dropped prices to levels that are attracting relatively good buyer activity in general.
Finally, let’s look at closed sales activity:
- Surprise Year-to-Date Sales are at 2,640 properties vs. 2,181 properties for 2007.
Surprise has surpassed prior-year sales activity by a significant and growing margin. Clearly, buyers are sensing and acting on opportunities they see in Surprise homes.
Overall, the data is mixed but leaning to indications that Surprise is much better positioned moving into 2009 than the previous year. Foreclosures are likely to continue for some time but the market could see some tightening if buyer activity begins its upward climb after the start of the year as it does typically.
Surprise is definitely a market to watch to see if bottom there has already formed.
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