I could not let this go by this weekend without noting it. As of Saturday afternoon, overall listings have fallen to 49,896! I don't know if it will stay below it, so I definitely had to post it while its there. This is a significant milepost, as we have not been in this position since the first half of 2007. This number needs to fall a lot further, but we are getting there at a steady pace. By the way, single family number are at 40,334. Right now about 90% of monthly sales are single family homes, so there is about an 8.4 month supply of single family homes, using the initital sales number from February. (Expect march to be significantly higher) The initial overall sales figure for February finished above 5200, a few hundred more than it looked like it would reach. We have all of our numbers moving in the right direction with the exception of price, which is probably still slipping a little, but maybe not for long.
I was kind of excited to see this so I wanted to share it.
Saturday, February 28, 2009
Tuesday, February 24, 2009
ARMLS STATS 2/16/09-2/22/09
PENDING SALES STILL SPIKING
INVENTORY REACHES ANOTHER MULTI-YEAR LOW
Agents are listing homes to be auctioned as pending...how many?
PENDING : 9,656 ( +595 from last week)
PENDING SINGLE FAM.: 8,746 ( +535 from last week)
ACTIVE W/Contingency: 1,490 ( +131 from last week)
ACTIVE W/CONT. SINGLE FAM: 1,348 (+123 from last week)
CLOSED: 1,242
CLOSED SINGLE FAM: 1,100
ACTIVE LISTINGS: 50,278 ( -401 from last week)
ACTIVE SINGLE FAM.: 40,737 ( -393 from last week)
CLOSED MTD: 2/22/09 3,300
CLOSED SINGLE FAM MTD: 2,943
We have more encouraging news from the housing market in the past week! Pending sales continue to spike, and inventory rates continue to fall sharply. Although this month isn't going to be a great month for sales, it is favorable to 2004, 2007, and 2008. 2004 was not a slump year by any means. It was a very good year. 2005 and early 2006 were still part of the boom, so this is great evidence that we are reaching a condition of normal demand, and the problem that remains is we simply have too much supply.
Just briefly, I would like to display stats for February 1-February 22nd, from the years 2004-2009...I think it is very relevant to point out the comparable position we are in to those months. Here is the chart:
CLOSINGS from February 1st through February 22nd...
2004: 3269
2005: 4,568
2006: 3,582
2007: 2,950
2008: 2,150
2009: 3,300
This gives us a great historical perspective of where we are on the demand side right now. Obviously, Arizona is not insulated from the national economic downturn as a whole, but our housing market seems to be acting as if its in full recovery mode right now. That could change, of course, as economic conditions change, but for right now, all the numbers are headed in the right direction. Most encouraging is the inventory level. We are right on the edge of crossing a psychological barrier that we have not seen in a very long time, in both single family and overall. Inventory levels are our biggest problem, and the market seems to finally be making some inroads into the high levels.
I think we can also do a little projecting of March and April here, using past figures in order to illustrate how quickly we could find ourselves back in some kind of equilibrium. Using the pending figures from my 2008 archives, we can see that pending sales at this time were at 6275; about 2/3rds what they are now. This translated into March sales of 4,263 (using UPDATED MLS STATS)....we can safely extrapolate that there will be at least 5684 sales in March: a third more. I think that might end up low, given our trend growth rate of not only pendings, but continuing strength in the Active W/Contingency category. It shows there are sufficient new contracts coming in, and I would expect closings to be impacted by these numbers. 5684 is very safe for March, and using the same numbers for April's calculation, we may expect 6405 sales in April.
I think these will end up low, but these higher volume of sales will cause a further depletion in inventory, by several thousand in both single family and overall. If inventory by the end of April is at 48000, and we have have 6400 sales, that translates to a 7.5 month supply, which is very close to historical norms for sustainable markets. We have been a growth market, so we have had less months' inventory traditionally, but I don't think anyone is looking for the 7% annual growth in prices that we usually experience any time soon. Current single family numbers are running about ninety percent of all pendings, and only 80% of all inventory, so the effect of increased sales will reduce single family inventory even quicker.
I do think realistically that we will see greater sales numbers than that over the next few months, with increases for May and June. The upshot is that we may be down below a 7.5 month supply of homes on the market by the end of April, when we will be heading into our best sales season traditionally. I won't make predictions that far out, but if we are at a six month inventory supply by the end of May, we should count ourselves fortunate, because it means we have been through the worst of this crash and are approaching pricing sustainability.
One note I wish to make regarding pending sales. It came to my attention while doing research that there are some listings that go in under pending sales if they are up for auction. I disagree with this practice, and I was concerned how much they skew the numbers. Jay Butler last year got in some credibility issues for including foreclosures in his sales numbers-I have used MLS numbers because they represent market activity, not government forced activity. I want these numbers to be credible to even the biggest sceptics, and therefore I needed to see how many of these "auction properties" were influencing the rise in pendings. Here is what I found. I am not going to change my methodology, as it has been consistent throughout. The numbers of auction homes, while significant, doesn't change the percentages a whole lot at this point. There are approximately 248 of the 9600+ pendings that are listed as auction properties; again, significant, and I don't like using them as pure pendings, but there are not enough to change the overall market trends. Some will sell at auction, some will go back as active, some will be sold before getting to auction, I think. We can't subtract all 248 properties from the pendings, as if they are sold, they are no longer on the market. I will monitor the total number of auction properties for massive increases that would skew the stats, but at this point, they are insignificant, and a fair amount of them will end up as sales, just like the other properties. I don't like it, but they are there, and I thought I should note this for anyone who thinks I am being too optimistic with my numbers.
Have a great week!
chris just
INVENTORY REACHES ANOTHER MULTI-YEAR LOW
Agents are listing homes to be auctioned as pending...how many?
PENDING : 9,656 ( +595 from last week)
PENDING SINGLE FAM.: 8,746 ( +535 from last week)
ACTIVE W/Contingency: 1,490 ( +131 from last week)
ACTIVE W/CONT. SINGLE FAM: 1,348 (+123 from last week)
CLOSED: 1,242
CLOSED SINGLE FAM: 1,100
ACTIVE LISTINGS: 50,278 ( -401 from last week)
ACTIVE SINGLE FAM.: 40,737 ( -393 from last week)
CLOSED MTD: 2/22/09 3,300
CLOSED SINGLE FAM MTD: 2,943
We have more encouraging news from the housing market in the past week! Pending sales continue to spike, and inventory rates continue to fall sharply. Although this month isn't going to be a great month for sales, it is favorable to 2004, 2007, and 2008. 2004 was not a slump year by any means. It was a very good year. 2005 and early 2006 were still part of the boom, so this is great evidence that we are reaching a condition of normal demand, and the problem that remains is we simply have too much supply.
Just briefly, I would like to display stats for February 1-February 22nd, from the years 2004-2009...I think it is very relevant to point out the comparable position we are in to those months. Here is the chart:
CLOSINGS from February 1st through February 22nd...
2004: 3269
2005: 4,568
2006: 3,582
2007: 2,950
2008: 2,150
2009: 3,300
This gives us a great historical perspective of where we are on the demand side right now. Obviously, Arizona is not insulated from the national economic downturn as a whole, but our housing market seems to be acting as if its in full recovery mode right now. That could change, of course, as economic conditions change, but for right now, all the numbers are headed in the right direction. Most encouraging is the inventory level. We are right on the edge of crossing a psychological barrier that we have not seen in a very long time, in both single family and overall. Inventory levels are our biggest problem, and the market seems to finally be making some inroads into the high levels.
I think we can also do a little projecting of March and April here, using past figures in order to illustrate how quickly we could find ourselves back in some kind of equilibrium. Using the pending figures from my 2008 archives, we can see that pending sales at this time were at 6275; about 2/3rds what they are now. This translated into March sales of 4,263 (using UPDATED MLS STATS)....we can safely extrapolate that there will be at least 5684 sales in March: a third more. I think that might end up low, given our trend growth rate of not only pendings, but continuing strength in the Active W/Contingency category. It shows there are sufficient new contracts coming in, and I would expect closings to be impacted by these numbers. 5684 is very safe for March, and using the same numbers for April's calculation, we may expect 6405 sales in April.
I think these will end up low, but these higher volume of sales will cause a further depletion in inventory, by several thousand in both single family and overall. If inventory by the end of April is at 48000, and we have have 6400 sales, that translates to a 7.5 month supply, which is very close to historical norms for sustainable markets. We have been a growth market, so we have had less months' inventory traditionally, but I don't think anyone is looking for the 7% annual growth in prices that we usually experience any time soon. Current single family numbers are running about ninety percent of all pendings, and only 80% of all inventory, so the effect of increased sales will reduce single family inventory even quicker.
I do think realistically that we will see greater sales numbers than that over the next few months, with increases for May and June. The upshot is that we may be down below a 7.5 month supply of homes on the market by the end of April, when we will be heading into our best sales season traditionally. I won't make predictions that far out, but if we are at a six month inventory supply by the end of May, we should count ourselves fortunate, because it means we have been through the worst of this crash and are approaching pricing sustainability.
One note I wish to make regarding pending sales. It came to my attention while doing research that there are some listings that go in under pending sales if they are up for auction. I disagree with this practice, and I was concerned how much they skew the numbers. Jay Butler last year got in some credibility issues for including foreclosures in his sales numbers-I have used MLS numbers because they represent market activity, not government forced activity. I want these numbers to be credible to even the biggest sceptics, and therefore I needed to see how many of these "auction properties" were influencing the rise in pendings. Here is what I found. I am not going to change my methodology, as it has been consistent throughout. The numbers of auction homes, while significant, doesn't change the percentages a whole lot at this point. There are approximately 248 of the 9600+ pendings that are listed as auction properties; again, significant, and I don't like using them as pure pendings, but there are not enough to change the overall market trends. Some will sell at auction, some will go back as active, some will be sold before getting to auction, I think. We can't subtract all 248 properties from the pendings, as if they are sold, they are no longer on the market. I will monitor the total number of auction properties for massive increases that would skew the stats, but at this point, they are insignificant, and a fair amount of them will end up as sales, just like the other properties. I don't like it, but they are there, and I thought I should note this for anyone who thinks I am being too optimistic with my numbers.
Have a great week!
chris just
Tuesday, February 17, 2009
ARMLS STATS 2/17/09
PENDINGS TOP 9000!
SURPASSES HIGH HIT LAST YEAR BY 16%-IN JUNE!
INVENTORY reaches multi-year low, Could be in 49K's by end of month.
PENDING CONTRACTS: 9061 ( +616 from last week)
PENDING SINGLE FAM: 8,211 ( +558 from last week)
AWC Contracts: 1,359 ( +56 from last week)
AWC SINGLE FAM. 1,225 ( +48 from last week)
CLOSED ESCROW: 1,116 (+279 from last week)
CLOSED SINGLE FAM: 994 ( +238 from last week)
ACTIVE LISTINGS: 50,679 ( -597 from last week)
ACTIVE SINGLE FAM: 41,130 ( -623 from last week)
CLOSED MTD (FEB 15) 2005 ( +616 from SAME PERIOD Feb. '08)
CLOSED SINGLE FAM. 1795 ( +654 from SAME PERIOD Feb. '08)
The resale market is continuing to show surprising strength, with pendings increasing at a very rapid rate. They are at a very high number comparative to recent performance. Using February of 2008 data at approximately this point in the month, there were 5109 pending sales, and only 880 AWC contracts. Using these numbers, we can safely say that March and likely all of 2009, is going to be far better than 2008, and the stimulus provisions, weak as they are so far, haven't even kicked in yet. The falling prices have a lot to do with this, but there does seem to be a strong demand for housing returning. Even in February 2004, sales through February 15 totaled 1,908 homes, which is 97 less sales than occurred this year! Even in early 2006, while we were still in a relatively strong home sales market, there were only 2,235 overall sales.
Even with this demand, as some people rightly point out, the problem is still inventory. I completely agree with that, so let's look at that. Last year, between the first week of January to February 17th, inventory rose by 3,896-almost 7.5%. This year, in the same period, inventory fell 3.6%, during a period where we usually get a rise as people who put off putting their home on the market during the holidays get them listed. Our inventory is 10% below that figure, and seems to be falling fast. We are not geared up for a high finish in February sales, although they will be respectable. I would imagine in March we will see upwards of 6500 sales, however, and that might be conservative. 6500 sales would put our inventory depletion rate at 7.6 months using the current level. The numbers in single family only dwellings look even better. Inventory there is at 41000, and SF sales are making up about 90% of overall sales, so there is a disproportionate amount of sales to listings for single family. That brings the ratio down to 7 months of inventory-not great, but compared to a recent figure I saw for Vegas of 43 months, we are well ahead of the game. These ratios, by the way, can change rapidly, as the increased sales feed on the inventory, further perpetuating the trend. An extra 1000 sales of the estimate would mean 1000 few listings, and that knocks a whole month's worth of inventory off the ratio. The same bad mechanics that brought us into this mess could also bring us out quicker than we can imagine. The market should be fairly stabilized if we reach a 5 month supply of homes-that is well under what many mature markets are normally and experience slight upward pricing pressure at. We are used to higher prices and lower inventory numbers here, but there is still some economic and mortgage debacle fallout coming, and inventory could be buoyant for a while. It is not inconceivable to see a 5 month supply ratio reached by June or July. The government process is going to prevent many homes from becoming inventory this year.
I am most enthused with the inventory trends. I am going to try to make some graphs to show the improvements, but I have decided to do single or double purpose graphs other than an omnibus graph. I have one of those, and it is simply too ponderous to be useful, as many statistical representations become non-effective. I am going to do a seperate one for pendings, Closings, etc, and see how that works. It takes more time, unfortunately.
Here is a link to a story about home prices going up in a west valley community. A very small sample size, but this is the kind of anecdotal evidence that we will experience when we start to recover.
Thanks for reading. I think there is starting to be some light in the tunnel in our market!
chris
SURPASSES HIGH HIT LAST YEAR BY 16%-IN JUNE!
INVENTORY reaches multi-year low, Could be in 49K's by end of month.
PENDING CONTRACTS: 9061 ( +616 from last week)
PENDING SINGLE FAM: 8,211 ( +558 from last week)
AWC Contracts: 1,359 ( +56 from last week)
AWC SINGLE FAM. 1,225 ( +48 from last week)
CLOSED ESCROW: 1,116 (+279 from last week)
CLOSED SINGLE FAM: 994 ( +238 from last week)
ACTIVE LISTINGS: 50,679 ( -597 from last week)
ACTIVE SINGLE FAM: 41,130 ( -623 from last week)
CLOSED MTD (FEB 15) 2005 ( +616 from SAME PERIOD Feb. '08)
CLOSED SINGLE FAM. 1795 ( +654 from SAME PERIOD Feb. '08)
The resale market is continuing to show surprising strength, with pendings increasing at a very rapid rate. They are at a very high number comparative to recent performance. Using February of 2008 data at approximately this point in the month, there were 5109 pending sales, and only 880 AWC contracts. Using these numbers, we can safely say that March and likely all of 2009, is going to be far better than 2008, and the stimulus provisions, weak as they are so far, haven't even kicked in yet. The falling prices have a lot to do with this, but there does seem to be a strong demand for housing returning. Even in February 2004, sales through February 15 totaled 1,908 homes, which is 97 less sales than occurred this year! Even in early 2006, while we were still in a relatively strong home sales market, there were only 2,235 overall sales.
Even with this demand, as some people rightly point out, the problem is still inventory. I completely agree with that, so let's look at that. Last year, between the first week of January to February 17th, inventory rose by 3,896-almost 7.5%. This year, in the same period, inventory fell 3.6%, during a period where we usually get a rise as people who put off putting their home on the market during the holidays get them listed. Our inventory is 10% below that figure, and seems to be falling fast. We are not geared up for a high finish in February sales, although they will be respectable. I would imagine in March we will see upwards of 6500 sales, however, and that might be conservative. 6500 sales would put our inventory depletion rate at 7.6 months using the current level. The numbers in single family only dwellings look even better. Inventory there is at 41000, and SF sales are making up about 90% of overall sales, so there is a disproportionate amount of sales to listings for single family. That brings the ratio down to 7 months of inventory-not great, but compared to a recent figure I saw for Vegas of 43 months, we are well ahead of the game. These ratios, by the way, can change rapidly, as the increased sales feed on the inventory, further perpetuating the trend. An extra 1000 sales of the estimate would mean 1000 few listings, and that knocks a whole month's worth of inventory off the ratio. The same bad mechanics that brought us into this mess could also bring us out quicker than we can imagine. The market should be fairly stabilized if we reach a 5 month supply of homes-that is well under what many mature markets are normally and experience slight upward pricing pressure at. We are used to higher prices and lower inventory numbers here, but there is still some economic and mortgage debacle fallout coming, and inventory could be buoyant for a while. It is not inconceivable to see a 5 month supply ratio reached by June or July. The government process is going to prevent many homes from becoming inventory this year.
I am most enthused with the inventory trends. I am going to try to make some graphs to show the improvements, but I have decided to do single or double purpose graphs other than an omnibus graph. I have one of those, and it is simply too ponderous to be useful, as many statistical representations become non-effective. I am going to do a seperate one for pendings, Closings, etc, and see how that works. It takes more time, unfortunately.
Here is a link to a story about home prices going up in a west valley community. A very small sample size, but this is the kind of anecdotal evidence that we will experience when we start to recover.
Thanks for reading. I think there is starting to be some light in the tunnel in our market!
chris
Tuesday, February 10, 2009
ARMLS STATS 2-10/09
PENDING SALES RISE DRAMATICALLY
PENDING FIGURES BLOW PAST 8000, AWC reach 1300!
Active Listings have reached lowest point since at least summer of 2007.*
PENDING SALES: 8445 ( +860 from last week)
PENDING SINGLE FAM.: 7643 ( +758 from last week)
AWC contracts: 1303 (-18 from last week)
AWC contracts Single Fam: 1177 (+100 from last week)
CLOSINGS: (2.2-2.8) 837 ( -769 from last week)
CLOSINGS SINGLE FAM: 756 ( -675 from last week)
ACTIVE LISTINGS: 51,276* (-207 from last week)
ACTIVE SINGLE FAM: 41,753* (-453 from last week)
CLOSED MTD (thru 2/8/09
OVERALL: 861
SINGLE FAM: 778
The numbers are very interesting this week. Pending Sales shot up sharply, surpassing anything we have seen since I started this blog in 3rd quarter of 2007. The number of new AWC contracts also grew, indicating that there is some backbone to this rise. Additionally, inventory is at is lowest peak during that time as well, and this January is a month where inventory has risen in the past. I could dismiss the falling the inventory to the government backed stoppage of foreclosure activities, but that is not something that affects the demand side of the equation. There appears to be the return of demand for housing here. We did not see it show up in closings in January, and the first week of any month is not a big sales month, but for reference points, look at the 2008 archives.
This week in February 2008, we had 4842 pending sales and 837 AWC contracts, for a total of 5679. This year, in the same week, we have 8445 and 1303, for a total of 9748. That is a huge indicator that we can expect better sales in March; I would forecast that February sales will reach into the 5000's, but much of the buildup in pendings came very recently, and the end of February is too close. I would expect March to be a blowout month though, perhaps tallying 7000 sales, or higher, depending on the action in the next two weeks.
Looking deeper into 2008, we didn't reach even 7000 pendings until April 22nd last year. If our increases hold to their normal pattern, we will see inventory fall to the high 40k's by the end of April, and single family home inventory in the high 30k's as well by the end of April. We should see at least 6000+ sales beginning in March, and continue an upward trend all through the summer, slicing inventory closer to equilibrium. We have a long way to go towards equilibrium in the market, but if we can continue at this pace, it is not quite so distant.
What is remarkable is how quickly the pendings are rising. Recorded pendings topped out at 7606 last june, which is one of the strongest months of the year for home sales activity. We have beaten that total by 11% here in early February, which bodes well for the spring. June experienced 5763 sales; a number I don't think we will quite reach in February, but should go into making March a strong month.
Overall, I am very optimistic about our mid-year status. We haven't seen the benefits of the stimulus bill kick in as of yet, and we are already positioned for recovery in the market, in terms of equilbrium. I know there are a lot of naysayers out there who keep pointing at the falling prices of homes-they are right, homes prices will have downward pressure until we reach equilibrium. That was a foregone conclusion when inventory spiked and the number of sales dissipated. It doesn't take a great deal of sophistication to understand that they would fall, but many of these people think the prices are still going to fall through the floor, and that is just not the case. They have fallen sharply no doubt, but the biggest reductions are behind us, it appears, as buying activity is picking up a lot of steam. We might see even more spikes once that huge tax credit is confirmed for buyers.
Have a great week!
chris just
PENDING FIGURES BLOW PAST 8000, AWC reach 1300!
Active Listings have reached lowest point since at least summer of 2007.*
PENDING SALES: 8445 ( +860 from last week)
PENDING SINGLE FAM.: 7643 ( +758 from last week)
AWC contracts: 1303 (-18 from last week)
AWC contracts Single Fam: 1177 (+100 from last week)
CLOSINGS: (2.2-2.8) 837 ( -769 from last week)
CLOSINGS SINGLE FAM: 756 ( -675 from last week)
ACTIVE LISTINGS: 51,276* (-207 from last week)
ACTIVE SINGLE FAM: 41,753* (-453 from last week)
CLOSED MTD (thru 2/8/09
OVERALL: 861
SINGLE FAM: 778
The numbers are very interesting this week. Pending Sales shot up sharply, surpassing anything we have seen since I started this blog in 3rd quarter of 2007. The number of new AWC contracts also grew, indicating that there is some backbone to this rise. Additionally, inventory is at is lowest peak during that time as well, and this January is a month where inventory has risen in the past. I could dismiss the falling the inventory to the government backed stoppage of foreclosure activities, but that is not something that affects the demand side of the equation. There appears to be the return of demand for housing here. We did not see it show up in closings in January, and the first week of any month is not a big sales month, but for reference points, look at the 2008 archives.
This week in February 2008, we had 4842 pending sales and 837 AWC contracts, for a total of 5679. This year, in the same week, we have 8445 and 1303, for a total of 9748. That is a huge indicator that we can expect better sales in March; I would forecast that February sales will reach into the 5000's, but much of the buildup in pendings came very recently, and the end of February is too close. I would expect March to be a blowout month though, perhaps tallying 7000 sales, or higher, depending on the action in the next two weeks.
Looking deeper into 2008, we didn't reach even 7000 pendings until April 22nd last year. If our increases hold to their normal pattern, we will see inventory fall to the high 40k's by the end of April, and single family home inventory in the high 30k's as well by the end of April. We should see at least 6000+ sales beginning in March, and continue an upward trend all through the summer, slicing inventory closer to equilibrium. We have a long way to go towards equilibrium in the market, but if we can continue at this pace, it is not quite so distant.
What is remarkable is how quickly the pendings are rising. Recorded pendings topped out at 7606 last june, which is one of the strongest months of the year for home sales activity. We have beaten that total by 11% here in early February, which bodes well for the spring. June experienced 5763 sales; a number I don't think we will quite reach in February, but should go into making March a strong month.
Overall, I am very optimistic about our mid-year status. We haven't seen the benefits of the stimulus bill kick in as of yet, and we are already positioned for recovery in the market, in terms of equilbrium. I know there are a lot of naysayers out there who keep pointing at the falling prices of homes-they are right, homes prices will have downward pressure until we reach equilibrium. That was a foregone conclusion when inventory spiked and the number of sales dissipated. It doesn't take a great deal of sophistication to understand that they would fall, but many of these people think the prices are still going to fall through the floor, and that is just not the case. They have fallen sharply no doubt, but the biggest reductions are behind us, it appears, as buying activity is picking up a lot of steam. We might see even more spikes once that huge tax credit is confirmed for buyers.
Have a great week!
chris just
Tuesday, February 3, 2009
MLS STATS 1/26/09-2/1/09
January Closings fall short of Target, but beat '08 by 60%!
Pendings continue to rise, Inventory continues to fall
Pending Sales: 7585 ( +282 from last week)
Pending Single Fam. 6885 ( +263 from last week)
AWC: 1195 ( +34 from last week)
AWC Single Fam. 1077 ( +15 from last week)
Closings: 1606 (+699 from last week)
Closings-Single Fam. 1444 ( +621 from last week)
Active Listings: 51,483 ( -925 from last week)
Single Family: 42,026 ( -674 from last week)
Closed in January: 4,725
Single Fam. 4,276
The final closings tally for January disappointed me a bit; I had hoped we would reach 5000 sales, but the second to last week was a little light, and we just couldn't finish strong enough to get there. That is the only real negative we are looking at that; the rest of the numbers paint a really nice picture that is going to develop beginning in March. The predictive numbers are all looking very strong-pendings are showing surprising strength; last February at this time there only 4,252 Pending Sales-by April of last year, we had reached 6000 pending sales. We were also ecstatic that March Sales topped 4000! If we have a similar rate of increase, we could expect as many as 10500 pendings by April, and further increases to follow, as the summer months did very well; much better than April. We already have more pending sales than we had at any time last year except for one week in June '08.
I think it is very clear that we have demand growing, and while it may not yet be back to a healthy market level, it is not far off, and it may get to a sustainable level by May. The other side of the equation, of course is the supply side, and those are the numbers that we have to worry about.
The good news is that inventory is falling. Home sales haven't been particularly strong this month, but the inventory fell all through January. I was surprised by that, as January last year saw a rapid increase in the number of Listings, from about 52000 in the beginning of the month, to 55385 by Feb 3, 2008. -That's approaching a six percent increase, and was no laughing matter at the time, as it took the rest of the year for that to come back down. This January worked out differently. We know there is some government intervention in probably preventing new foreclosure inventory from coming on the market, but it is part of the equation now, and so be it. Home sales were also very strong in December, here and nationally, and that might denote a trend of stronger demand. January, while weaker, still was better than last year, by a large margin- 4725 to 2866...that is very significant, as demand is what will take us out of the downturn.
Regardless of the "why", we are now at lower inventory levels that we haven't seen since I began recording these numbers weekly in 2007. Check the archives; we came close last summer, but the inventory started rising again. The predictors tell me that inventory will fall this year; we have buying strength even in the weakest of months, and that bodes well for the March-August period to show definite strength. We might have just started to run out of excess listings as well, as eventually the panic was going to stop. The government intervention is also going to start making a difference, with homebuyer incentives, mortgage workouts, etc.
I am going to go out on a limb here and say that there will be a completely different tone to our real estate economy by July 1st. We are not going to be fully recovered, and there will still be downward pricing pressure, but the downward pressure is almost spent. Inventory levels will still be elevated, but they will have likely fallen into the mid 40K's by that time, and the single family home inventory is going to be sub 40k's. Inventory rose all through January and February last year. That doesn't appear to be the case this year, and we may see some swift deterioration in supply of listings, as sales will be much stronger than 2nd quarter '08, and it is not expected we will see as much inventory go on the market. A few thousand homes a month reduction is possible during the best months if you look at the way the statistics play out. I did a little unscientific statistical model, and given current trends, would expect us to reach 84000 sales in MLS this year.
I should mention the other factor in this-we are not dealing with a massive new home inventory as we were in 2007-2008; builders are cutting back specs, and therefore people in need of buying a home are going more to resale options than having countless specs to choose from. The builders, who I thought would be the first to recover as they had pricing power more than homeowners, may have to suffer a bit longer, unfortunately. Banks have changed that equation with the willingness to let sellers reduce prices.
These factors all point to inventory being substantially reduced by the end of the third quarter. I have a lot more confidence in this than I did in December.
Overall, an excellent week. We should be able to expect further signs of strengthening our market. Prices are down to acceptable levels, mortgages rates are historically low, (which further reduces the effective price of housing), and the government is going to make buying a home even more attractive. I don't know that it will help the land market come back in 2009, but I think housing may be off life support by the middle of the year.
chris just
Pendings continue to rise, Inventory continues to fall
Pending Sales: 7585 ( +282 from last week)
Pending Single Fam. 6885 ( +263 from last week)
AWC: 1195 ( +34 from last week)
AWC Single Fam. 1077 ( +15 from last week)
Closings: 1606 (+699 from last week)
Closings-Single Fam. 1444 ( +621 from last week)
Active Listings: 51,483 ( -925 from last week)
Single Family: 42,026 ( -674 from last week)
Closed in January: 4,725
Single Fam. 4,276
The final closings tally for January disappointed me a bit; I had hoped we would reach 5000 sales, but the second to last week was a little light, and we just couldn't finish strong enough to get there. That is the only real negative we are looking at that; the rest of the numbers paint a really nice picture that is going to develop beginning in March. The predictive numbers are all looking very strong-pendings are showing surprising strength; last February at this time there only 4,252 Pending Sales-by April of last year, we had reached 6000 pending sales. We were also ecstatic that March Sales topped 4000! If we have a similar rate of increase, we could expect as many as 10500 pendings by April, and further increases to follow, as the summer months did very well; much better than April. We already have more pending sales than we had at any time last year except for one week in June '08.
I think it is very clear that we have demand growing, and while it may not yet be back to a healthy market level, it is not far off, and it may get to a sustainable level by May. The other side of the equation, of course is the supply side, and those are the numbers that we have to worry about.
The good news is that inventory is falling. Home sales haven't been particularly strong this month, but the inventory fell all through January. I was surprised by that, as January last year saw a rapid increase in the number of Listings, from about 52000 in the beginning of the month, to 55385 by Feb 3, 2008. -That's approaching a six percent increase, and was no laughing matter at the time, as it took the rest of the year for that to come back down. This January worked out differently. We know there is some government intervention in probably preventing new foreclosure inventory from coming on the market, but it is part of the equation now, and so be it. Home sales were also very strong in December, here and nationally, and that might denote a trend of stronger demand. January, while weaker, still was better than last year, by a large margin- 4725 to 2866...that is very significant, as demand is what will take us out of the downturn.
Regardless of the "why", we are now at lower inventory levels that we haven't seen since I began recording these numbers weekly in 2007. Check the archives; we came close last summer, but the inventory started rising again. The predictors tell me that inventory will fall this year; we have buying strength even in the weakest of months, and that bodes well for the March-August period to show definite strength. We might have just started to run out of excess listings as well, as eventually the panic was going to stop. The government intervention is also going to start making a difference, with homebuyer incentives, mortgage workouts, etc.
I am going to go out on a limb here and say that there will be a completely different tone to our real estate economy by July 1st. We are not going to be fully recovered, and there will still be downward pricing pressure, but the downward pressure is almost spent. Inventory levels will still be elevated, but they will have likely fallen into the mid 40K's by that time, and the single family home inventory is going to be sub 40k's. Inventory rose all through January and February last year. That doesn't appear to be the case this year, and we may see some swift deterioration in supply of listings, as sales will be much stronger than 2nd quarter '08, and it is not expected we will see as much inventory go on the market. A few thousand homes a month reduction is possible during the best months if you look at the way the statistics play out. I did a little unscientific statistical model, and given current trends, would expect us to reach 84000 sales in MLS this year.
I should mention the other factor in this-we are not dealing with a massive new home inventory as we were in 2007-2008; builders are cutting back specs, and therefore people in need of buying a home are going more to resale options than having countless specs to choose from. The builders, who I thought would be the first to recover as they had pricing power more than homeowners, may have to suffer a bit longer, unfortunately. Banks have changed that equation with the willingness to let sellers reduce prices.
These factors all point to inventory being substantially reduced by the end of the third quarter. I have a lot more confidence in this than I did in December.
Overall, an excellent week. We should be able to expect further signs of strengthening our market. Prices are down to acceptable levels, mortgages rates are historically low, (which further reduces the effective price of housing), and the government is going to make buying a home even more attractive. I don't know that it will help the land market come back in 2009, but I think housing may be off life support by the middle of the year.
chris just
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