ACTIVE MLS LISTINGS FALL TO 46,999-drop 1461 in one Week!
SINGLE FAMILY LISTINGS FALL TO 37,583-LESS THAN SIX MONTH SUPPLY!
MARCH CLOSINGS SURPASS 6000, LIKELY HEADED FOR 7000.
SINGLE FAMILY CLOSINGS TO TOP 6000, PENDINGS RISE AGAIN.
AWC CONTRACTS RISE SHARPLY, PORTENDS NEW BUYER ACTIVITY.
PENDING SALES: 11,561 ( +371 from last week)
PENDING Single Fam: 10,469 ( +291 from last week)
Active W/Contingency: 2,260 ( +270 from last week)
AWC Single Family: 2058 ( +236 from last week)
CLOSED 3/23-3/29 1,856 ( +210 from last week)
Closed Single Family: 1,687 ( +227 from last week)
CLOSED Month To Date: 6,434
CLOSED MTD SIN. FAM: 5,812
ACTIVE LISTINGS: 46,999 ( -1461 from last week)
ACTIVE SINGLE FAM: 37,583 ( -1271 from last week)
Where to begin this week! Really, a lot of positive signs in the resale market. It was a good week for closings, although we are not done yet, as we have not tallied either yesterday or today in these figures. I think we will push over 7000 sales overall, and I know we have pushed over 6000 in Single Family sales after yesterday. (For sake of of consistency, I don't include Monday in these closing stats.) Note that single family closing increases were higher than overall increases-a sign that the biggest part of our market is becoming the healthiest part of our market.
The news I like best is that active listings are dropping sharply. This is exactly what we need to happen most, and it seems to finally be doing it. Now I had a client point out to me that he thinks banks are sitting on a huge backlog of foreclosed homes that haven't been put on the market yet, which could very well be true. However, I have noticed that most foreclosed land parcels are making it to the market very quickly now, within a month of foreclosure, and I would be surprised that banks would treat the homes differently; they don't treat the sales or listing part any differently; they don't even enlist land agents to sell land, they have the same house agents doing it, in most cases. I digress...the point is, if they are sitting on these homes, they are doing the market a favor by stretching the supply out over longer periods of time, and even if they do put them back on the market, it is likely to come gradually, and we are now seeing the kind of demand that is eating away sharply at inventory. Active listings on March 3, 2009 (and this includes a 999 listing drop created by end of month sales) were 49,279. We have dropped 2280 this month already, and we are likely to see a further drop by next Tuesday, as final sales are accounted for. AWC contracts are up, implying further growth in demand. Things are moving forward, at least in the entry level home market, and as long as we don't see a massive effect from the economy collapsing, I think you will see even better buyer activity going into the summer, as more people realize that the tax credit is a significant incentive at these prices.
Tuesday, March 31, 2009
Tuesday, March 24, 2009
Some enlightening news about Pinal County...
This is an article I ran across today about population growth in Pinal county. It seems it is still one of the fastest growing areas of the country in terms of population. Pinal is downplaying it a little, but at the same time, they had their own estimate that was 5% higher than the study's. Either way, it shows Pinal is still going to be at the heart of growth in the metro area.
chris
chris
Arizona Regional Multiple Listing Stats 3/16-3/22/09
PENDINGS REACH 11,000+, New Multiyear High!
SINGLE FAMILY INVENTORY FALLS BELOW 39,000!
On pace for a big sales month in March.
PENDING SALES: 11,190 ( +565 from last week)
Pending Single Fam: 10,178 ( +540 from last week)
ACTIVE W/Contingency: 1,994 ( +152 from last week)
AWC Single Family: 1,822 ( +197 from last week)
CLOSED 3/16-3/22: 1,646 ( +196 from last week)
CLOSED Single Fam: 1,460 ( +134 from last week)
CLOSED MTD(3/22): 4,525 Through 3/22 of '08: 2,538
CLOSED MTD SF: 4,079 Through 3/22 of '08 : 2,141
ACTIVE LISTINGS: 48,460 ( -460 from last week)
ACTIVE SINGLE FAM: 38,854 ( -422 from last week)
Inventory continues to decline in the ARMLS; single family listings have fallen to below 39,000, which it has not been since at least the summer of 2007; that is as far back as I have kept the stats. Given that overall inventory at that time was around 55000, I think we can probably look back to 2006 for inventory levels like that-only this time, the number of listings are falling weekly, not rising. If we end up with 6500 single family sales in March, that would give us a 5.8 month supply of single family homes, going into our best 4-5 month selling season of the year. You do the math: how long do you think it will take us to reach equilbrium? I can see June or July if sales continue to rise at the rate they are. By the way, if you look at the statistics, you can see that single family sales are outperforming the general inventory levels, which is an excellent signal. Single family is the predominant abode, and the fact that it is improving faster than the general rate is all the more encouraging that we may be seeing the light at the end of the tunnel.
You likely heard about the February resale increase yesterday; we have known locally for weeks that February was much better. We can also predict that March is going to finish in excess of 6000 sales; it may top 7000. March last year finished with 4,262, which we have already surpassed. I would expect single family sales to post close to 6500 sales, maybe just short. This is a wholesale different animal than we were dealing with last year at this time.
This article talks about the sharp decline sales prices in these western markets, which I am sure are accurate. Prices are lower on average, I have no doubt; how couldn't they be, when homes in either dangerous or run down areas, or homes that are practically ruined, are being listed and sold for $10,000-$50,000? I went through a list in the MLS last night that showed a home in S. Phoenix listed for $13,000. This home is pending now. It was trashed and needs to be rehabbed, but there is the price: $13,000. How many homes sold at normal market prices does it take to make up for a home that probably sold for $100K plus to now sell for probably $10,000? Lets do the math....if the average price of a phoenix home in these price studies is at $175,000, then ten of them is theoretically $1,750,000. Now, this home that sold down on Chipman, listed for $13,000, and possibly under contract for $10,000, is part of that group. Well, now the cumulative value of the group of ten homes is $1,750,000-$165,000= $1,585,000. You still have to divide the cumulative dollar value by 10 though, don't you? So the average price is now been dragged down to $158,500. You can see how these trashed properties can overly affect the median and average and any other statistic one might use to measure price drops. Keep that in mind the next time you hear about prices falling through the floor. It takes a lot of homes maintaining all or even most of their value to prop up even a few of these throwaway properties. I would think by now that there are quite a few neighborhoods where their value is being maintained if the home is ready-to-live-in, and is not a foreclosure sale.
Other things of note this week:
New Active with Contingency contracts is just about to bust over 2,000; that is a very good milepost; at our very best last year, I don't think we hit around 1600...that was in June which is a seasonally active month for home sales. We might be approaching 3,000 by that time. The point with the active contingency is that it is growing, which means new contracts are coming in fast enough to replace those turning "pending". It is a general signal of recent rising activity, and with this number reaching new highs every week, we can point to the fact that demand is coming back strong.
Another note for those of you interested in land: Pending land sales, while too small of a sample size in MLS to be really accurate, rose by 16% in the last few weeks. Again, small sample size, but pendings had hovered in a similar range for quite a long time. I also had two parcels in the west valley clients of mine had intended to buy shot out from under us over the weekend. They were priced right, but someone came along and snatched them before we could. Most unfortunate for us, but it does look like there are some investors foraying out into the market again.
This has been a good month already, but this week could make or break the month. It is not technically the last week of the month, but a solid week here could put us in position to exceed that 7000 figure in sales for the month, which would put us in a very solid position going into our prime selling season.
chris
SINGLE FAMILY INVENTORY FALLS BELOW 39,000!
On pace for a big sales month in March.
PENDING SALES: 11,190 ( +565 from last week)
Pending Single Fam: 10,178 ( +540 from last week)
ACTIVE W/Contingency: 1,994 ( +152 from last week)
AWC Single Family: 1,822 ( +197 from last week)
CLOSED 3/16-3/22: 1,646 ( +196 from last week)
CLOSED Single Fam: 1,460 ( +134 from last week)
CLOSED MTD(3/22): 4,525 Through 3/22 of '08: 2,538
CLOSED MTD SF: 4,079 Through 3/22 of '08 : 2,141
ACTIVE LISTINGS: 48,460 ( -460 from last week)
ACTIVE SINGLE FAM: 38,854 ( -422 from last week)
Inventory continues to decline in the ARMLS; single family listings have fallen to below 39,000, which it has not been since at least the summer of 2007; that is as far back as I have kept the stats. Given that overall inventory at that time was around 55000, I think we can probably look back to 2006 for inventory levels like that-only this time, the number of listings are falling weekly, not rising. If we end up with 6500 single family sales in March, that would give us a 5.8 month supply of single family homes, going into our best 4-5 month selling season of the year. You do the math: how long do you think it will take us to reach equilbrium? I can see June or July if sales continue to rise at the rate they are. By the way, if you look at the statistics, you can see that single family sales are outperforming the general inventory levels, which is an excellent signal. Single family is the predominant abode, and the fact that it is improving faster than the general rate is all the more encouraging that we may be seeing the light at the end of the tunnel.
You likely heard about the February resale increase yesterday; we have known locally for weeks that February was much better. We can also predict that March is going to finish in excess of 6000 sales; it may top 7000. March last year finished with 4,262, which we have already surpassed. I would expect single family sales to post close to 6500 sales, maybe just short. This is a wholesale different animal than we were dealing with last year at this time.
This article talks about the sharp decline sales prices in these western markets, which I am sure are accurate. Prices are lower on average, I have no doubt; how couldn't they be, when homes in either dangerous or run down areas, or homes that are practically ruined, are being listed and sold for $10,000-$50,000? I went through a list in the MLS last night that showed a home in S. Phoenix listed for $13,000. This home is pending now. It was trashed and needs to be rehabbed, but there is the price: $13,000. How many homes sold at normal market prices does it take to make up for a home that probably sold for $100K plus to now sell for probably $10,000? Lets do the math....if the average price of a phoenix home in these price studies is at $175,000, then ten of them is theoretically $1,750,000. Now, this home that sold down on Chipman, listed for $13,000, and possibly under contract for $10,000, is part of that group. Well, now the cumulative value of the group of ten homes is $1,750,000-$165,000= $1,585,000. You still have to divide the cumulative dollar value by 10 though, don't you? So the average price is now been dragged down to $158,500. You can see how these trashed properties can overly affect the median and average and any other statistic one might use to measure price drops. Keep that in mind the next time you hear about prices falling through the floor. It takes a lot of homes maintaining all or even most of their value to prop up even a few of these throwaway properties. I would think by now that there are quite a few neighborhoods where their value is being maintained if the home is ready-to-live-in, and is not a foreclosure sale.
Other things of note this week:
New Active with Contingency contracts is just about to bust over 2,000; that is a very good milepost; at our very best last year, I don't think we hit around 1600...that was in June which is a seasonally active month for home sales. We might be approaching 3,000 by that time. The point with the active contingency is that it is growing, which means new contracts are coming in fast enough to replace those turning "pending". It is a general signal of recent rising activity, and with this number reaching new highs every week, we can point to the fact that demand is coming back strong.
Another note for those of you interested in land: Pending land sales, while too small of a sample size in MLS to be really accurate, rose by 16% in the last few weeks. Again, small sample size, but pendings had hovered in a similar range for quite a long time. I also had two parcels in the west valley clients of mine had intended to buy shot out from under us over the weekend. They were priced right, but someone came along and snatched them before we could. Most unfortunate for us, but it does look like there are some investors foraying out into the market again.
This has been a good month already, but this week could make or break the month. It is not technically the last week of the month, but a solid week here could put us in position to exceed that 7000 figure in sales for the month, which would put us in a very solid position going into our prime selling season.
chris
Tuesday, March 17, 2009
MLS STATS 3/09-3/15/09
ACTIVE LISTINGS FALL BELOW 49,000!
PENDINGS, AWC STILL RISING SHARPLY
CLOSINGS BLOWING AWAY MARCH '08.
Sorry, I am a little late today with this, but it couldn't be helped.
PENDING: 10,625 ( +466 from last week)
PEND SINGLE FAM: 9,638 ( +411 from last week)
ACTIVE W/CONT: 1,842 ( +131 from last week)
AWC SINGLE FAM: 1,685 ( +123 from last week)
CLOSED 3/9-3/15 1,450 ( +170 from last week)
CLOSED SINGLE FAM: 1,324 ( +156 from last week)
CLOSED MTD (3/15) 2,804 March 15, 2008: 1,695
CLOSED SINGLE FAM MTD: 2,551 : 1,446
ACTIVE LISTINGS: 48,865
ACTIVE SINGLE FAM: 39,276
Nothing but good news this week on the resale front. Housing numbers are all headed in the right direction, with inventory falling and reaching another low point, pendings rising at a rapid rate, and being backed up by new contracts, as AWC reaches multi-year highs. We still have areas where prices are ridiculously low; I have talked to investors who are saying they can buy newer houses in places like Buckeye for $50,000-this is a huge drag on housing prices, but those kind of houses are not the norm, they are the exception. I really believe that you will see the prices of ready-to-live-in homes in solid neighborhoods start to solidify as inventory of these homes slip. I would make the point this way: when I remove all single family listings under $75,000, the inventory level falls to 35,516. Homes priced at that number are either very outlying, or are rehabs, fixups, or foreclosures that appear to be in bad shape. 35,000 homes when there are pending sales of almost 10,000 and new contracts of 1600 doesn't look that high. The inventory of good single family homes is coming back in line with no normal inventory levels. At the rate we are going, equilibrium is going to be a lot sooner than conventional wisdom is prepared for.
There is still a huge wave of negative sentiment out there, and with the mass media's help, that will be the case for quite a while into the recovery. I still have yet to see a story that talks about how much better we are doing this year than last year in the same time frames. The closest thing I saw was an article about how February sales were up, but due mostly to foreclosure sales. Its true foreclosures were up, but MLS sales are not foreclosure sales, and MLS stats were much stronger as well for February; I don't count them, only MLS sales. Newspaper articles tend to hew to the line of popular sentiment, catching the breeze of what people already feel; in spite of the positive news, we still see negativity everyday in the mass media. My guess is that a lot of smart investors will come and pick up homes this year, as broadbased sentiment will suppress home price longer than necessary.
I am looking at March sales and trying to draw a comparison with last year, but obviously if you checked the numbers, you see we are doing exceptionally well comparatively to last March. With the end of the month sales really dictating how well we do, we have three weeks left in this month. We are likely to see numbers into the high 6000's for sales, and quite possibly into the 7000's-and we are only in March! We have 5 traditionally excellent months ahead of us, and I really think that we will see drastic inventory drawdowns by July. It will be very difficult to say there is a resale glut on the market if single family falls into the low 30k's, which could happen very quickly if current trends are indicative of wher we are going. Keep your fingers crossed.
We are reaching a nadir for land demand and sales right now. Activity is pretty bad, as investors just don't have any urgency to buy. There are some fabulous deals to be had out there, and if you have interest in buying extemely low priced assets that even if all they do is return to 2004 levels in the next few years, you will have done exceptionally well. Lots in Scottsdale that were selling for multiple hundreds of thousands of dollars can be had for the price of Wittman land. If you have interest in land, give me a call, and we can see if there is a opportunity buy available that might fit your comfort level as an investor. Thanks for reading!
chris
PENDINGS, AWC STILL RISING SHARPLY
CLOSINGS BLOWING AWAY MARCH '08.
Sorry, I am a little late today with this, but it couldn't be helped.
PENDING: 10,625 ( +466 from last week)
PEND SINGLE FAM: 9,638 ( +411 from last week)
ACTIVE W/CONT: 1,842 ( +131 from last week)
AWC SINGLE FAM: 1,685 ( +123 from last week)
CLOSED 3/9-3/15 1,450 ( +170 from last week)
CLOSED SINGLE FAM: 1,324 ( +156 from last week)
CLOSED MTD (3/15) 2,804 March 15, 2008: 1,695
CLOSED SINGLE FAM MTD: 2,551 : 1,446
ACTIVE LISTINGS: 48,865
ACTIVE SINGLE FAM: 39,276
Nothing but good news this week on the resale front. Housing numbers are all headed in the right direction, with inventory falling and reaching another low point, pendings rising at a rapid rate, and being backed up by new contracts, as AWC reaches multi-year highs. We still have areas where prices are ridiculously low; I have talked to investors who are saying they can buy newer houses in places like Buckeye for $50,000-this is a huge drag on housing prices, but those kind of houses are not the norm, they are the exception. I really believe that you will see the prices of ready-to-live-in homes in solid neighborhoods start to solidify as inventory of these homes slip. I would make the point this way: when I remove all single family listings under $75,000, the inventory level falls to 35,516. Homes priced at that number are either very outlying, or are rehabs, fixups, or foreclosures that appear to be in bad shape. 35,000 homes when there are pending sales of almost 10,000 and new contracts of 1600 doesn't look that high. The inventory of good single family homes is coming back in line with no normal inventory levels. At the rate we are going, equilibrium is going to be a lot sooner than conventional wisdom is prepared for.
There is still a huge wave of negative sentiment out there, and with the mass media's help, that will be the case for quite a while into the recovery. I still have yet to see a story that talks about how much better we are doing this year than last year in the same time frames. The closest thing I saw was an article about how February sales were up, but due mostly to foreclosure sales. Its true foreclosures were up, but MLS sales are not foreclosure sales, and MLS stats were much stronger as well for February; I don't count them, only MLS sales. Newspaper articles tend to hew to the line of popular sentiment, catching the breeze of what people already feel; in spite of the positive news, we still see negativity everyday in the mass media. My guess is that a lot of smart investors will come and pick up homes this year, as broadbased sentiment will suppress home price longer than necessary.
I am looking at March sales and trying to draw a comparison with last year, but obviously if you checked the numbers, you see we are doing exceptionally well comparatively to last March. With the end of the month sales really dictating how well we do, we have three weeks left in this month. We are likely to see numbers into the high 6000's for sales, and quite possibly into the 7000's-and we are only in March! We have 5 traditionally excellent months ahead of us, and I really think that we will see drastic inventory drawdowns by July. It will be very difficult to say there is a resale glut on the market if single family falls into the low 30k's, which could happen very quickly if current trends are indicative of wher we are going. Keep your fingers crossed.
We are reaching a nadir for land demand and sales right now. Activity is pretty bad, as investors just don't have any urgency to buy. There are some fabulous deals to be had out there, and if you have interest in buying extemely low priced assets that even if all they do is return to 2004 levels in the next few years, you will have done exceptionally well. Lots in Scottsdale that were selling for multiple hundreds of thousands of dollars can be had for the price of Wittman land. If you have interest in land, give me a call, and we can see if there is a opportunity buy available that might fit your comfort level as an investor. Thanks for reading!
chris
Tuesday, March 10, 2009
Arizona Regional Multiple Listing Stats 3/2-3/8/09
PENDING SALES MAINTAIN ABOVE 10,000
ACTIVE WITH CONTINGENCY CONTRACTS RISE SHARPLY
Closings down from usual end of February spike; inventory slips slightly.
PENDING: 10,159 (+572 from last week)
Pending Single Fam: 9,227 ( +516 from last week)
Active with Contingency: 1,711 ( +148 from last week)
AWC Single Fam: 1,562 (+131 from last week)
CLOSED 3/2-3/8/09: 1,280 (-903 from last week)
CLOSED SINGLE FAM: 1,168 (-798 from last week)
CLOSED MTD 3/8/09: 1,315
CLOSED SINGLE FAM: 1,194
ACTIVE LISTINGS: 49,186 ( -93 from last week)
ACTIVE SINGLE FAM: 39,615 ( -177 from last week)
Pending sales continue to forecast better times ahead for the resale housing industry, as pendings hover just over 10,000. Backing up the number of pendings was a sharp rise in Active with contingency contracts. This number could also be attributed to longer term short sale tie-ups, but regardless, it does show demand is out there. I have not done a price study of what these homes are selling for, but I am fairly sure many are of the lower priced entry level variety. That sector had been priced out for a while, and they are the building blocks of a strong housing housing market. The number of AWC contracts is encouraging to me, in both that it continues to grow along with pending sales. This indicates demand, which is what we lacked for the last couple of years. Closings are down for the week, but this is typical following an end of the month spike in Sales. Actually 1280 is not a bad number for the first week out of the gate.
Although it wasn't a big drop, I am encouraged by the fact that inventory was down. Our biggest challenge is still inventory levels. Its difficult to see if inventory reductions will continue at the pace they did in February; this past week's reduction was fairly small, although I would point out that single family inventory reduction occurred at twice the pace of overall reduction. That's good news, but its even better than that, as single family inventory is a smaller number to start with, so the effect is it gets us 20% closer to equlibrium for single family homes, our primary concern. A sales figure of 7000 overall sales in March might net us 6300 Single Family sales, which combined with a conservative reduction in inventory to let's say 38000 listings, would put us right at 6 months worth of single family inventory. That is a significant milestone in my mind, as that is fairly normal for many markets. Ours might be used to something different, so it might not have the effect on everyone's psyche just yet. The real beauty of that is of course that we would be just starting to reach our optimum activity period for sales, and if inventory doesn't have another wave coming, there could be drastic reductions April-June. I am not predicting that yet, but one can maybe start seeing the mechanics of a Recovery.
There are a couple of things regarding inventory and pricing that are worth pointing out. I still hear so many people talking about the median prices posted by various news organizations- I have no doubt that they are real numbers, but here the grain of salt that you need to take with those numbers. Those prices are deeply reflective of foreclosure homes-essentially, fixups with no SPDS provided by the lender, little info available for the buyer about the state of the home, and essentially no warranty. Now, if you are in the real estate business you understand what that means. The price of these properties is going to be far below market and is going to drag down the overall average. These are the equivalent of buying the Patek Phillipe watch at the pawn shop. You don't know the history, there is no guarantee it won't need work, and the price is going to be cheaper than getting it at your favorite jeweler. Yes, its still a Patek Phillipe, but what you paid for it is not representative of the true retail price. Many-no, most people are not going to buy that fixup, they are going to look for a house that is move-in ready, aren't they? If its priced like a fixup, good for them, but we are going to see some stabilization of pricing in the "ready to go" housing market, despite the dragging effect of foreclosure sale pricing. The foreclosure inventory is still ridiculously high, and there are many bargains for investors, who will look like geniuses for buying up those properties in 5 years, but these properties become more and more marginalized as part of the market as "good" inventory falls, and the number of buyers becomes larger.
I am still encouraged about the state of things going into the second quarter of the year. Our inventory levels are sliding, pending sales portends excellent sales in the short term, and we are reaching what is traditionally our best sales season. It will be interesting to see where we are at the end of June. I have high hopes for the resale market.
By the way, if anyone has any land clients, and you are not comfortable working outside your specialty, I certainly will be happy to speak with them, and more than happy to pay a 25% referral to you.
Have a great week!
chris just
ACTIVE WITH CONTINGENCY CONTRACTS RISE SHARPLY
Closings down from usual end of February spike; inventory slips slightly.
PENDING: 10,159 (+572 from last week)
Pending Single Fam: 9,227 ( +516 from last week)
Active with Contingency: 1,711 ( +148 from last week)
AWC Single Fam: 1,562 (+131 from last week)
CLOSED 3/2-3/8/09: 1,280 (-903 from last week)
CLOSED SINGLE FAM: 1,168 (-798 from last week)
CLOSED MTD 3/8/09: 1,315
CLOSED SINGLE FAM: 1,194
ACTIVE LISTINGS: 49,186 ( -93 from last week)
ACTIVE SINGLE FAM: 39,615 ( -177 from last week)
Pending sales continue to forecast better times ahead for the resale housing industry, as pendings hover just over 10,000. Backing up the number of pendings was a sharp rise in Active with contingency contracts. This number could also be attributed to longer term short sale tie-ups, but regardless, it does show demand is out there. I have not done a price study of what these homes are selling for, but I am fairly sure many are of the lower priced entry level variety. That sector had been priced out for a while, and they are the building blocks of a strong housing housing market. The number of AWC contracts is encouraging to me, in both that it continues to grow along with pending sales. This indicates demand, which is what we lacked for the last couple of years. Closings are down for the week, but this is typical following an end of the month spike in Sales. Actually 1280 is not a bad number for the first week out of the gate.
Although it wasn't a big drop, I am encouraged by the fact that inventory was down. Our biggest challenge is still inventory levels. Its difficult to see if inventory reductions will continue at the pace they did in February; this past week's reduction was fairly small, although I would point out that single family inventory reduction occurred at twice the pace of overall reduction. That's good news, but its even better than that, as single family inventory is a smaller number to start with, so the effect is it gets us 20% closer to equlibrium for single family homes, our primary concern. A sales figure of 7000 overall sales in March might net us 6300 Single Family sales, which combined with a conservative reduction in inventory to let's say 38000 listings, would put us right at 6 months worth of single family inventory. That is a significant milestone in my mind, as that is fairly normal for many markets. Ours might be used to something different, so it might not have the effect on everyone's psyche just yet. The real beauty of that is of course that we would be just starting to reach our optimum activity period for sales, and if inventory doesn't have another wave coming, there could be drastic reductions April-June. I am not predicting that yet, but one can maybe start seeing the mechanics of a Recovery.
There are a couple of things regarding inventory and pricing that are worth pointing out. I still hear so many people talking about the median prices posted by various news organizations- I have no doubt that they are real numbers, but here the grain of salt that you need to take with those numbers. Those prices are deeply reflective of foreclosure homes-essentially, fixups with no SPDS provided by the lender, little info available for the buyer about the state of the home, and essentially no warranty. Now, if you are in the real estate business you understand what that means. The price of these properties is going to be far below market and is going to drag down the overall average. These are the equivalent of buying the Patek Phillipe watch at the pawn shop. You don't know the history, there is no guarantee it won't need work, and the price is going to be cheaper than getting it at your favorite jeweler. Yes, its still a Patek Phillipe, but what you paid for it is not representative of the true retail price. Many-no, most people are not going to buy that fixup, they are going to look for a house that is move-in ready, aren't they? If its priced like a fixup, good for them, but we are going to see some stabilization of pricing in the "ready to go" housing market, despite the dragging effect of foreclosure sale pricing. The foreclosure inventory is still ridiculously high, and there are many bargains for investors, who will look like geniuses for buying up those properties in 5 years, but these properties become more and more marginalized as part of the market as "good" inventory falls, and the number of buyers becomes larger.
I am still encouraged about the state of things going into the second quarter of the year. Our inventory levels are sliding, pending sales portends excellent sales in the short term, and we are reaching what is traditionally our best sales season. It will be interesting to see where we are at the end of June. I have high hopes for the resale market.
By the way, if anyone has any land clients, and you are not comfortable working outside your specialty, I certainly will be happy to speak with them, and more than happy to pay a 25% referral to you.
Have a great week!
chris just
Thursday, March 5, 2009
PENDING SALES TOP 10,000!
Just a bit of brightness locally amid all of the national gloom...our pending sales for all listings has topped 10,000! That means that there is a 20%+ ratio of pending sales to listings. At this time in 2008 the ratio was only 9.5% of pending sales to active listings. The picture becomes clearer that the market is performing at a much higher level than last year-and yes, it has a lot to do with pricing, but as I like to point out to people, when doesn't it have to do with pricing? Even in 2005, much of the buying frenzy was caused by expectation of rising prices, so either get in now, or miss the boat. We are going to see pretty soon a similar wave of people saying that prices have bottomed, and its time to get in the boat. I think there will be a secondary wave of buying sometime this summer. I expect a very good summer of home sales, not just here, but in other recovering markets. I wish I could say the same thing about the land market, but I think that will trail by a year. There are some good bargains to be had, if you will let your agent look for some.
By the way, single family pendings are over 9100 as well, making the ratio of pendings to listings a healthy 23%. I wish there were historical numbers of 2002-2006 that I could compare the pendings to active, but I know of no one that keeps historical data of pendings-other than me now. 23% is a healthy ratio, I think, given the still relatively high amount of inventory. It seems to me that in 2005 the ratio was more like 50%, which led to overheating of the market. The 23% is likely to go higher, as inventory comes down.
I think the national news lags the real time by several months, and judging by what we are seeing right now, it is hard to say that the market has not already hit bottom several months ago and we are heading towards an upswing. The overall price level might go down with so many fixups and repos being sold, but the supply demand aspect is in full correction; the pricing will follow soon enough. I would venture a guess that quality resale homes' prices are already tightening, as the share of them on the market is much thinner.
There is a host of bad news out there, but there seems to be a lot of people interested in buying a home here in Arizona, anyway. Let's hope that continues.
chris
By the way, single family pendings are over 9100 as well, making the ratio of pendings to listings a healthy 23%. I wish there were historical numbers of 2002-2006 that I could compare the pendings to active, but I know of no one that keeps historical data of pendings-other than me now. 23% is a healthy ratio, I think, given the still relatively high amount of inventory. It seems to me that in 2005 the ratio was more like 50%, which led to overheating of the market. The 23% is likely to go higher, as inventory comes down.
I think the national news lags the real time by several months, and judging by what we are seeing right now, it is hard to say that the market has not already hit bottom several months ago and we are heading towards an upswing. The overall price level might go down with so many fixups and repos being sold, but the supply demand aspect is in full correction; the pricing will follow soon enough. I would venture a guess that quality resale homes' prices are already tightening, as the share of them on the market is much thinner.
There is a host of bad news out there, but there seems to be a lot of people interested in buying a home here in Arizona, anyway. Let's hope that continues.
chris
Tuesday, March 3, 2009
Arizona Regional Multiple Listing Stats
FEBRUARY FINISHES STRONG: 5400+
Active listings Drop sharply, Single Family Inventory now below 40,000!
AWC CONTRACTS CONTINUE TO RISE-now 1500+
PENDING: 9,587 ( -69 from last week)
PENDING Single Family: 8,711 ( -35 from last week)
Active w/Contingency: 1,563 ( +73 from last week)
Active with Contingency Single Fam: 1,431 ( +83 from last week)
CLOSED 2/23-3/1: 2,183 ( +941 from last week)
CLOSED SINGLE FAM: 1,966 ( +866 from last week)
CLOSED FEBRUARY: 5,467 (+742 from Jan '09) (+2028 from Feb'08)
CLOSED SINGLE FAM FEB: 4,896 (+620 from Jan.09) (+2015 from Feb'08)
ACTIVE LISTINGS: 49,279 ( -999 from last week)
ACTIVE-Single Fam: 39,792 ( -765 from last week)
The last week of February was a good one for the Arizona Market, despite the national news on the housing front. Arizona's economy might be doing better than others, or perhaps we have better affordability-I am not sure why our pending numbers have spiked, while the national figures have fallen. We are clearly in our best position in several years on the housing front. Prices have deflated, much like everything else-stocks, energy, commodities, building supplies, you name it-but we are in a demand rebound as these trends do indicate. Our pending numbers are holding just about steady from last week, even though there is normally a precipitous drop at the end of the month due to closings. We had a great week of closings, yet new contracts have been replacing the closing contracts. The number of active listings keeps sliding sharply; we are now at a 9 month supply of overall listings, and a 8.1 month supply of single family homes. This is not a scientific formula, but generally a six month supply is normal for stable markets, and I think we would see the beginning of equilibrium in prices at a 5 month supply. This is not far off, if current trends continue. We could see inventory levels for Single Family homes nearing 37000 by the end of April. I am forecasting 7500 overall sales for May- its not exactly scientific, but its based on a formula I concocted. It seems logical as well, so it passes the smell test for plausibility. Remember, we are not even to the best selling season yet, and we have things going in a very good direction. Our inventory should really get chewed up in May, June, and July.
I do think that the Obama administration's efforts to stem foreclosures are going to keep quite a few homes off the market over the next few year that would have become inventory as well. I think the plan really misses the heart of who needs help, as you have to almost be so well qualified as to not be in any financial trouble, but it should prevent some foreclosures. We seem to be doing pretty well without it, though, and I am optimisitic that by the end of July we will see prices for ready to live in homes stabilize. There will no doubt be low priced foreclosure and fixups out there dragging down the price, but normal liveable housing will see the prices stabilize.
The next several months are setting up to be the end of the down cycle for resales. Builder sales are another matter, unfortunately, but there can be no recovery in new housing without the resale market reaching equilibrium. The good news is that it might be very much in our immediate future.
Chris
Active listings Drop sharply, Single Family Inventory now below 40,000!
AWC CONTRACTS CONTINUE TO RISE-now 1500+
PENDING: 9,587 ( -69 from last week)
PENDING Single Family: 8,711 ( -35 from last week)
Active w/Contingency: 1,563 ( +73 from last week)
Active with Contingency Single Fam: 1,431 ( +83 from last week)
CLOSED 2/23-3/1: 2,183 ( +941 from last week)
CLOSED SINGLE FAM: 1,966 ( +866 from last week)
CLOSED FEBRUARY: 5,467 (+742 from Jan '09) (+2028 from Feb'08)
CLOSED SINGLE FAM FEB: 4,896 (+620 from Jan.09) (+2015 from Feb'08)
ACTIVE LISTINGS: 49,279 ( -999 from last week)
ACTIVE-Single Fam: 39,792 ( -765 from last week)
The last week of February was a good one for the Arizona Market, despite the national news on the housing front. Arizona's economy might be doing better than others, or perhaps we have better affordability-I am not sure why our pending numbers have spiked, while the national figures have fallen. We are clearly in our best position in several years on the housing front. Prices have deflated, much like everything else-stocks, energy, commodities, building supplies, you name it-but we are in a demand rebound as these trends do indicate. Our pending numbers are holding just about steady from last week, even though there is normally a precipitous drop at the end of the month due to closings. We had a great week of closings, yet new contracts have been replacing the closing contracts. The number of active listings keeps sliding sharply; we are now at a 9 month supply of overall listings, and a 8.1 month supply of single family homes. This is not a scientific formula, but generally a six month supply is normal for stable markets, and I think we would see the beginning of equilibrium in prices at a 5 month supply. This is not far off, if current trends continue. We could see inventory levels for Single Family homes nearing 37000 by the end of April. I am forecasting 7500 overall sales for May- its not exactly scientific, but its based on a formula I concocted. It seems logical as well, so it passes the smell test for plausibility. Remember, we are not even to the best selling season yet, and we have things going in a very good direction. Our inventory should really get chewed up in May, June, and July.
I do think that the Obama administration's efforts to stem foreclosures are going to keep quite a few homes off the market over the next few year that would have become inventory as well. I think the plan really misses the heart of who needs help, as you have to almost be so well qualified as to not be in any financial trouble, but it should prevent some foreclosures. We seem to be doing pretty well without it, though, and I am optimisitic that by the end of July we will see prices for ready to live in homes stabilize. There will no doubt be low priced foreclosure and fixups out there dragging down the price, but normal liveable housing will see the prices stabilize.
The next several months are setting up to be the end of the down cycle for resales. Builder sales are another matter, unfortunately, but there can be no recovery in new housing without the resale market reaching equilibrium. The good news is that it might be very much in our immediate future.
Chris
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