I don't want to get too excited about this, but....MLS numbers are out, and sales trends over the last month are still holding up fairly well. This is typically a very weak time of the year, and while we are not going to blow away September sales, I am happy to report that sales are not falling off, and quite possibly, we will beat September's sales figures. They will be close; it all depends on how many last day of the month closings we see. I will update this on Friday, as we can see how total October sales figures play out.
October 22-28, 2007
Pending Sales: 4182 ( -27 from last week)
Pending + Active W/Contingency: 4646 ( -23 from last week)
Sold 10/22-10/28: 775 (+20 from last week)
Active: 57940 (+171 from last week)
What we see from this picture is that sales are stable, but are in no way spectacular. This week might have turned up a little low in numbers as well because contracts are often written for the last day of the month, so we might see a little surge by Wednesday that will put us over September's numbers. We are a little short of that. There was a large spike in the last week of september, reaching 1200 closings, so we will see if that happens in October. The new contracts seem to be replacing the closings, so that is a good sign. The sales at the beginning of october seem to be a little slow, with a couple of weeks of tepid sales, but the last few weeks have rebounded nicely. There are still a few more homes going on the market than there should be every month, so the supply of actives are not yet declining, but the increase is pretty small. There was an article in the republic about the decrease in new permits to the point of less than half of the number of new homes sold, so the supply of new spec homes is also being reduced by over 1500 a month, although, it is killing the land business as builders hunker down to sell homes on the dirt they have. This has started to take on the look of things working themselves back to normal, and if we see further rate cuts, we might actually find ourselves in recovery. If we can get close to 5 thousand a month of resales starting by January, with some additional strength in the traditionally strong second quarter, (a not overly aggressive target given our past performance), it will cut 10% of the inventory of resales every couple of months, and I am ballparking here, but I think 30-40 thousand active homes is probably a fairly healthy number for a metro area of this size and how often people move. If we are selling 6000 homes a month, which is probably a healthy target for 2008, thirty thousand homes would be a five to six month supply, which is normal for many markets, although a little long for Phoenix standards. In 2003, we had 80000 mls sales. Right now, we are on a pace for 60,000, or less if the fourth quarter trend continues. That is a number less than 2001, when we were a much smaller metro area. It is hard to believe that this trend can continue. We might not see an immediate increase in resales in January, but I think we are going to see a strengthening trend of new home sales, as the prices have become very manageable. I am curious what the new home sales figures show for October.
Monday, October 29, 2007
Tuesday, October 23, 2007
Pheasant hunting on the Great Plains
Wow,
When I read articles like this, I realize this is what I miss about living in South Dakota. This was always my favorite time of year: football, waterfowl hunting and pheasant hunting following Viking games on Sunday. Groton is a small town about an hour away from where I grew up and I lived in Aberdeen for three years before moving to Arizona. It is a pheasant mecca, and from what I understand, this is a better year than most. There is very little as exciting as having a couple of roosters explode out of the grass in front of you. The noise can be just shocking if you aren't expecting it, which you never are. It is an incredible adrenaline rush, and just about as fun as actually hitting something. Anyway, I had to link this article, because I do miss hunting there.
When I read articles like this, I realize this is what I miss about living in South Dakota. This was always my favorite time of year: football, waterfowl hunting and pheasant hunting following Viking games on Sunday. Groton is a small town about an hour away from where I grew up and I lived in Aberdeen for three years before moving to Arizona. It is a pheasant mecca, and from what I understand, this is a better year than most. There is very little as exciting as having a couple of roosters explode out of the grass in front of you. The noise can be just shocking if you aren't expecting it, which you never are. It is an incredible adrenaline rush, and just about as fun as actually hitting something. Anyway, I had to link this article, because I do miss hunting there.
Monday, October 22, 2007
MLS Weekly Sales Data 10/15/07 to 10/21/07
The weekly MLS numbers are mostly encouraging. They are not overwhelming, but they are showing some residual strength in that the good numbers seem to be trending upward, even though we are in a traditionally week time of the year. The fact that these sales figures are holding steady and even growing modestly gives me a little hope that we might see a bit of real strength by January.
Pending Sales: 4209 (+35 from last week)
Pending Sales + Active with Contingency : 4669 (+27 from last week)
Homes Sold: 755 (+227 from last week)
Active Listings: 57769 (+227 from last week)
I would still like to see the number of actives start shrinking; homes are going on the market faster than they are selling. The encouraging number that caught my attention is that even though there was a nice increase in number of sales this week, the number of pendings and actives kept pace. This hadn't occurred in previous weeks when there was a good sale number; when homes were closing, the pendings were not being replaced. This is a good week, then. Hopefully, the end of month sales will finish strong.
Pending Sales: 4209 (+35 from last week)
Pending Sales + Active with Contingency : 4669 (+27 from last week)
Homes Sold: 755 (+227 from last week)
Active Listings: 57769 (+227 from last week)
I would still like to see the number of actives start shrinking; homes are going on the market faster than they are selling. The encouraging number that caught my attention is that even though there was a nice increase in number of sales this week, the number of pendings and actives kept pace. This hadn't occurred in previous weeks when there was a good sale number; when homes were closing, the pendings were not being replaced. This is a good week, then. Hopefully, the end of month sales will finish strong.
Monday, October 15, 2007
Weekly MLS Data 10/14/07
10/08/07 to 10/14/07 MLS DATA
Pending Sales: 4174 (+234 from last week)
Pending Sales + Active With Contingency 4642 (+252 from last Week)
Sold 10/08/07 through 10/14/07 528 (-17 from last week)
Active Listings: 57542 (+330 from last week)
Okay, a quick take on the numbers. It is encouraging that after pending sales flagged last month, that we are seeing a few weeks of steady increase. It certainly could be a false start, but we will have to see. That is a fairly strong number, given the time of year and the trend through the summer. The amount of sales is low, but middle months are typically lower. There are once again too many listings going on the market, as they climbed by several hundred. That is as big a problem as any. Still, more pending sales means more sales in the short term, and if we can get that number to continue to grow for the next month, we might start talking about this as a return to a stabilized if still over-supplied housing market.
Pending Sales: 4174 (+234 from last week)
Pending Sales + Active With Contingency 4642 (+252 from last Week)
Sold 10/08/07 through 10/14/07 528 (-17 from last week)
Active Listings: 57542 (+330 from last week)
Okay, a quick take on the numbers. It is encouraging that after pending sales flagged last month, that we are seeing a few weeks of steady increase. It certainly could be a false start, but we will have to see. That is a fairly strong number, given the time of year and the trend through the summer. The amount of sales is low, but middle months are typically lower. There are once again too many listings going on the market, as they climbed by several hundred. That is as big a problem as any. Still, more pending sales means more sales in the short term, and if we can get that number to continue to grow for the next month, we might start talking about this as a return to a stabilized if still over-supplied housing market.
Monday, October 8, 2007
Weekly MLS Data
The weekly MLS data is out, and frankly, it could be a lot worse. I thought it would be a lot worse after reviewing pending numbers last week. It didn't appear that new contracts were replacing the pending and contingency contracts after the end of month sales bloom that always happens, but they have caught up somewhat, and while it is not any kind of boom, the numbers are respectable. Here they are.
10/01/07-10/07/07
Pending Sales: 3940 (+283 from last week)
Pending Sales + Active W/Contingency 4390 (+282 from last week)
Sales Closed 552 (-743 from last week)
Active Listings 57212 (+669 from last week)
Sales were down from the previous week, as normal the first week of the month. The homes under contract is building a little, but I still think we are going to see some weakness as a result of the mortgage crisis that hit its apex in August and September. There were also over 3100 new homes sold in August, as builders continue to make buying a new home very competitive. This is the 5th straight month that new homes sales in the valley have remained steady or positive. (See previous post for details.)
10/01/07-10/07/07
Pending Sales: 3940 (+283 from last week)
Pending Sales + Active W/Contingency 4390 (+282 from last week)
Sales Closed 552 (-743 from last week)
Active Listings 57212 (+669 from last week)
Sales were down from the previous week, as normal the first week of the month. The homes under contract is building a little, but I still think we are going to see some weakness as a result of the mortgage crisis that hit its apex in August and September. There were also over 3100 new homes sold in August, as builders continue to make buying a new home very competitive. This is the 5th straight month that new homes sales in the valley have remained steady or positive. (See previous post for details.)
New Home Sales Stabilizing?
A small breath of fresh air for many of you affected by the real estate market in Arizona. New home sales figures in the metro area have remained steady, and at a slightly better price than some respected analysts would have thought. In an article in the Arizona Republic, RL Brown analyzes the latest data. It appears there are just about as many new homes selling as resales-or at least a lot a closer comparison than would be normal. There are definitely some bargains out there in the new home market, and I have no doubt that is why so many homeowners are feeling the pinch of slow resales. Builders have always had better pricing power than consumer resellers, and certainly more so than usual given the low equity loans many people used to get into a home. This is at least a positive trend, and I am optimistic even more given the pricing levels mentioned in the article.
Remember, on Tuesdays I will post the weekly MLS data. There were some interesting numbers worth parsing this past week as well.
chris
Remember, on Tuesdays I will post the weekly MLS data. There were some interesting numbers worth parsing this past week as well.
chris
Friday, October 5, 2007
Phoenix Housing in the News, other tidbits
There was a recent article posted in New York Resident magazine that lists Phoenix as a top 10 place to own a second home. It gives a few highlights about desert life, and pretty accurately reflects the current situation with the housing market. Here is the link to that article...
Also, on the techinical side of things, there is a question that many people in the real estate industry have been wondering about for the last several months. I don't have the answer yet, but here is the question and some more evidence that the premise of the question is valid:
If we have so much growth of population in the Valley, why is our housing market still stumbling along?
Perfectly valid question, because I wonder about it myself. Where are these people living if they aren't buying houses, and to hear it from the apartment industry, that market is cooling as well. Well, a little birdy at the DMV says that 300,000 thousand licenses were turned in for new Arizona Driver's Licenses this year through August. There were over 10,000 Californians claim AZ status alone just in August. That is not an insignificant stat, and people have to live somewhere. If we do have strong growth of population, and evidence points to the idea that we do, then where are they going? These people are not going to be staying on friends' couches forever. I am optimistic that there is a growing amount of people that are going to be in need of housing in the very near future here. It seems almost inevitable, although this idea could be offset by the following piece of analysis.
On a related note about future demand trends, and this may set off some strong feelings with some of you; this is not a political blog, so please refrain from judgement as I am only analyzing this from a real estate professional's point of view, not a sociologist. There is a lot of talk about many immigrants leaving Arizona in preparation for a new employment law coming into effect in January. I forget the nature of the law, but it boils down to it will be hard to get work if you can't prove you are legal. At least in theory. This could have the effect of lowering the population in the valley, further exacerbating the housing vacancy issue. I will make no judgements here, but it is a side effect of a tougher immigration policy, and although I don't know how much effect it will have, it could be substantial, and whether you are in favor of strict immigration control or not, this couldn't come at a worse time for the housing industry and it will cause some pain. It is a brilliant example of why you address problems like these sooner than later. We have all gotten use to higher home values and lower home maintenance costs and job growth in part because of immigration, and now we have to fix it. We have become use to the things that come with it that do benefit us, whether right or wrong, and we will be paying in various ways, including flat property values as we thin the population. I hope the expected influx of baby boomers does offset this in the coming years, as i think a vibrant real estate market is crucial to Arizona's continued success.
One last item related to new home sales. A local tracking report that I read detailed a horriffic week in new home sales. There were actually a lot of new sales for the week-maybe not a lot, but a very respectable showing, let's say. The buzzkill was the number of cancellations that came too uncomfortably close to zeroing out the sales. It was really ridiculous. There are going to be weeks like that, I suppose, and I know of at least one builder administratively through a significant number sales into cancellations probably based on the public report not being up to snuff or something like that, but still a cancellation is a cancellation, and nobody likes to see those. There is definitely some hangover regarding loans, although I have heard that is easing significantly-or maybe it was just never as bad as the media pointed out. We are going to have to watch new home sales figures very closely; as I have said, I think there is a good chance that new home sales will recover before resales, as builders have pricing power that most owners do not, and it is no competition. We are seeing subdivisions come on line starting in the $99K's as I noted in an earlier post, and that is crazy reasonable. Eventually this will drive some sales. The buyers in this category, first time homebuyers, to a large degree, were the first traumatized by the price increases of 2005, and once they realize they can afford homes again, they will lead the market back to recovery, if there is to be one.
Also, on the techinical side of things, there is a question that many people in the real estate industry have been wondering about for the last several months. I don't have the answer yet, but here is the question and some more evidence that the premise of the question is valid:
If we have so much growth of population in the Valley, why is our housing market still stumbling along?
Perfectly valid question, because I wonder about it myself. Where are these people living if they aren't buying houses, and to hear it from the apartment industry, that market is cooling as well. Well, a little birdy at the DMV says that 300,000 thousand licenses were turned in for new Arizona Driver's Licenses this year through August. There were over 10,000 Californians claim AZ status alone just in August. That is not an insignificant stat, and people have to live somewhere. If we do have strong growth of population, and evidence points to the idea that we do, then where are they going? These people are not going to be staying on friends' couches forever. I am optimistic that there is a growing amount of people that are going to be in need of housing in the very near future here. It seems almost inevitable, although this idea could be offset by the following piece of analysis.
On a related note about future demand trends, and this may set off some strong feelings with some of you; this is not a political blog, so please refrain from judgement as I am only analyzing this from a real estate professional's point of view, not a sociologist. There is a lot of talk about many immigrants leaving Arizona in preparation for a new employment law coming into effect in January. I forget the nature of the law, but it boils down to it will be hard to get work if you can't prove you are legal. At least in theory. This could have the effect of lowering the population in the valley, further exacerbating the housing vacancy issue. I will make no judgements here, but it is a side effect of a tougher immigration policy, and although I don't know how much effect it will have, it could be substantial, and whether you are in favor of strict immigration control or not, this couldn't come at a worse time for the housing industry and it will cause some pain. It is a brilliant example of why you address problems like these sooner than later. We have all gotten use to higher home values and lower home maintenance costs and job growth in part because of immigration, and now we have to fix it. We have become use to the things that come with it that do benefit us, whether right or wrong, and we will be paying in various ways, including flat property values as we thin the population. I hope the expected influx of baby boomers does offset this in the coming years, as i think a vibrant real estate market is crucial to Arizona's continued success.
One last item related to new home sales. A local tracking report that I read detailed a horriffic week in new home sales. There were actually a lot of new sales for the week-maybe not a lot, but a very respectable showing, let's say. The buzzkill was the number of cancellations that came too uncomfortably close to zeroing out the sales. It was really ridiculous. There are going to be weeks like that, I suppose, and I know of at least one builder administratively through a significant number sales into cancellations probably based on the public report not being up to snuff or something like that, but still a cancellation is a cancellation, and nobody likes to see those. There is definitely some hangover regarding loans, although I have heard that is easing significantly-or maybe it was just never as bad as the media pointed out. We are going to have to watch new home sales figures very closely; as I have said, I think there is a good chance that new home sales will recover before resales, as builders have pricing power that most owners do not, and it is no competition. We are seeing subdivisions come on line starting in the $99K's as I noted in an earlier post, and that is crazy reasonable. Eventually this will drive some sales. The buyers in this category, first time homebuyers, to a large degree, were the first traumatized by the price increases of 2005, and once they realize they can afford homes again, they will lead the market back to recovery, if there is to be one.
Thursday, October 4, 2007
New Home Prices in Metro Phoenix too High? Think again...
Something came to light today that illustrates my contention about the current housing slump. I haven't expressed it outright here previously, but my belief about the slowdown in home purchases has very little to do about price, and much to do about psychology. I don't know how much you study the news trends, but I do a lot, having previously worked in the media. This is what I know. Newspapers will hew to the line of whichever way the wind is blowing, and if it blowing south, well, expect your news to be slanted that way. We are no doubt in a trough, and it came about for a lot of good reasons, not least of which is a run up in prices. True enough. You could barely buy a home in the $200K's in Pinal County by the end of 2005. That number goes against pretty much every reason someone from metro phoenix would buy there: affordability you cuold qualify for as first time homebuyer. That all changed when prices started touching $300K for a home that sold for $109K in 2003. I digress from the point of this post, and that is that prices are not the main reason people aren't buying houses right now. We have created a monster of psychological block: that it is a bad thing to buy a home because its value may fall, and we can't get mortgages, and we won't be able to sell it anytime soon. Those are media driven issues, much like the way media drove the "housing hot spot" message in 2004-2005. People can make the argument all day that prices are too high, but here is why I disagree. Elite Communities is offering new homes in Pinal County south of Chandler starting from $99,900. When you can buy a new home in very nice master plan starting from $99,000, do not come and tell me that people can't afford to buy. This is a pre-2003 price, and while it may not be the house of many people's dreams, if you are living with a family in an apartment in Chandler or Gilbert or Mesa, it might be your dream right now. Ifyou can buy a home whose mortgage is going to be well under a $1,000 a month, simple math says it is likely going to be less than an apartment that you can rent in any crime-free area of those communities. Most people who don't follow this information might not realize this, but most "A" grade apartments sell for well in excess of $100k per door! I can give you a long list of those. What do you think that means for the owner of those units? They have to rent at a price that gives them a return, so you can start to see the math, and the math is that you can buy a new home for less than what it would cost you to rent an apartment. We don't even have to get into the deductions, etc, to understand what a good deal that is. It makes me nuts that I bought a home in central phoenix that is noticably more money for a home that needed major updating, when I should have waited a bit and and bought a home down there. Especially since I spend half my time in Pinal anyway. Off the point, but the point should be that the price of these homes should cause a boomlet of sales, but I am guessing it won't and it cannot be about price.
We have a psychological issue with the market right now-all of us, and it about a lot more than price. I read a report in the Minneapolis Star Tribune last night that 65% of Minnsesotans have a dim view of the direction of our nation. We have a national malaise, created by the war, the housing bubble deflation, the acrimony between the political parties-whatever it is, it goes beyond simply that housing is unaffordable. I agree the resale market is going to be tough for a while, because prices moved up so quickly. But what we have now is a disparity between new home and resale pricing, in favor of new, and people are still not flocking to buy. I have every intention of buying a home in Pinal County myself, and soon I hope. At that price, I can afford to have a little crash pad condo in central phoenix for the weekend social life, buy a new a home in Maricopa so I don't have to travel back and forth as much, and still be in both for half of what a phoenix home would cost. There are opportunities in the market for potential home buyers now, and I don't think you are going to see these prices last for long, and certainly it would be hard to see that they would have any chance of going lower. It is ironic that the media rarely covers the story that Pinal County homes are so affordable again. I imagine it just doesn't fit in with the current bad news trendline. A little less doom and gloom and a little more looking for a silver lining would be welcome from the news organizations.
We have a psychological issue with the market right now-all of us, and it about a lot more than price. I read a report in the Minneapolis Star Tribune last night that 65% of Minnsesotans have a dim view of the direction of our nation. We have a national malaise, created by the war, the housing bubble deflation, the acrimony between the political parties-whatever it is, it goes beyond simply that housing is unaffordable. I agree the resale market is going to be tough for a while, because prices moved up so quickly. But what we have now is a disparity between new home and resale pricing, in favor of new, and people are still not flocking to buy. I have every intention of buying a home in Pinal County myself, and soon I hope. At that price, I can afford to have a little crash pad condo in central phoenix for the weekend social life, buy a new a home in Maricopa so I don't have to travel back and forth as much, and still be in both for half of what a phoenix home would cost. There are opportunities in the market for potential home buyers now, and I don't think you are going to see these prices last for long, and certainly it would be hard to see that they would have any chance of going lower. It is ironic that the media rarely covers the story that Pinal County homes are so affordable again. I imagine it just doesn't fit in with the current bad news trendline. A little less doom and gloom and a little more looking for a silver lining would be welcome from the news organizations.
Monday, October 1, 2007
Resale Home Estimates 9-24-07 to 9-30-07
Home sales statistics for the week of 9-24-07:
Universal Pending Sales: 3656 (-599 from last week)
Pending Sales + Active W/Contingencies: 4108 (-643 from last week)
Sales Closed 9-24-07 to 9-30-07 1295 (+558 from last week)
Active Listings as of 10/01/07 56543 ( -685 from last week)
Obviously, this week benefitted from the end of month closings. More troubling is that the pending sales have fallen steeply, and active w/contingency contracts have not been replaced by an equal or greater amount of new sales. Still, the methodology I am using is less than a month old, so it is difficult to say definitively that sales are falling off for this week. It is nice to see total listings going down at least a little. Hopefully, this reduction in actives becomes a trend. New sales figures should be available on Thursday.
Universal Pending Sales: 3656 (-599 from last week)
Pending Sales + Active W/Contingencies: 4108 (-643 from last week)
Sales Closed 9-24-07 to 9-30-07 1295 (+558 from last week)
Active Listings as of 10/01/07 56543 ( -685 from last week)
Obviously, this week benefitted from the end of month closings. More troubling is that the pending sales have fallen steeply, and active w/contingency contracts have not been replaced by an equal or greater amount of new sales. Still, the methodology I am using is less than a month old, so it is difficult to say definitively that sales are falling off for this week. It is nice to see total listings going down at least a little. Hopefully, this reduction in actives becomes a trend. New sales figures should be available on Thursday.
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