Single Family Inventory Falls below 32000!
Pending Sales Still Rising; AWC too.
Closed escrows well ahead of March 09's pace.
Less than 6 mo. supply of overall and single fam. homes now.
PENDING SALES: 14,077 ( +373 from last week)
Pending Single Fam: 12,671 ( +297 from last week)
Active W/Contingency: 3,436 ( +338 from last week)
AWC Single Fam: 3,122 ( +315 from last week)
CLOSED: 1,843 ( +17 from last week)
Closed Single Fam: 1,644 ( + 8 from last week)
Active Listings: 40,765 ( -1366 from last week)
Active Single Family: 31,957 (-1233 from last week)
Closed MTD 4/26/09: 6,066 (April 26, 2008: 3,592)
Closed MTD Single Fam: 5,447 (April 26, 2008: 3,057)
Sales Comparison March '09:
Overall Closed thru Same date 3/26/09: 5,758
Overal Closed Single Fam. 3/26/09: 5,181
There are enough weeks of positive news that definitely tell us we are moving forward in the housing market. We may still have price issues, as most of the inventory on the market is in fact bank-owned properties. These sell for considerably less money than "normal" market pricing, and therefore, bank-owned sales are going to be a drag on the average prices for a while.
We are seeing massive inventory reductions happening right now that can't be explained by sales and the foreclosures alone. There is simply not a lot of inventory coming on the market from your average homeowner, and I think that this can be attributed to many people deciding that they are just going to have to stay put for a while. Likely reasons are that they know they can't get new financing, or do not wish to try, or they are just not in an economic position to do so because of job fears, or lack of qualifying funds. These people are benefitting the market in that they are no longer contributing to inventory due to "panic listing" that we were seeing previously. We are now reaching very acceptable levels of inventory, during prolonged periods of higher sales. As inventory dwindles down, especially the lower priced bank-owned properties, I think we are likely to see some slowdown in the number of sales for a period of time, as buyers adjust to the idea that a home is not available at the bargain prices it once was. However, we still have many first time buyers, and new residents like retiring baby boomers who will still be buying homes at what are still very acceptable prices; maybe not the sub-$100K that we are seeing from banks right now, but most people still find a mortgage of 450-$750 very acceptable, and more importantly, sustainable.
I am not going to do a lot of commentary today, as thankfully my own business is starting to pick up and I have less time this morning for this, but next week's post follows the end of the month, and I may go into some more detail at that time. There are a lot of interesting trends that will be worth talking about if we finish april strong.
Tuesday, April 28, 2009
Tuesday, April 21, 2009
ARMLS STATS 4/13-4/19/09
ACTIVE LISTINGS DROP SHARPLY AGAIN
PENDINGS RISE SLOWER, AWC TOP 3000.
Outpacing 2008 sales YTD by 60%
PENDING: 13,704 ( +501 from last week)
Pending Single Fam: 12,374 ( +445 from last week)
Active W/Contingency: 3,098 ( +288 from last week)
AWC Single Family: 2,807 ( +267 from last week)
CLOSED: 1,826 ( +467 from last week)
Closed Single Fam: 1,636 ( +402 from last week)
ACTIVE LISTINGS: 42,131 ( -1491 from last week)
Active Single Family: 33,190 (-1332 from last week)
CLOSED MTD (4/19) 4,145 (4/19/08: 2461 Closed)
Closed Single Fam: 3,733 (4/19/08: 2096 Closed)
SALES PACE COMPARISON: 03/19/09: Total 3,971 Single Fam: 3,573
YEAR TO DATE: 21,886 CLOSED 4/19/2008: 13,039 CLOSED
Inventory is still sliding at a rapid pace in the ARMLS coverage area; if we sell the same amount of Single Family homes in April that we did in March, then we have 4.8 months of supply available. Overall inventory is slightly above that, but not much. Obviously, much of the inventory that is selling now is Bank-owned and is being sold to investors, so the sales rate is artificially high, and the prices are artificially low. The number of sales is probably going to peter off as the lowest price inventory dissipates, but it is also probable that we will be in somewhat of a recovery by the time this happens, and first time homebuyers will be back in the market buying the next tier of pricing, which will include many of the homes that are selling now, rehabbed, and re-marketed. My guess is that most investors will not choose to re-market these for a year, due to short-term versus long-term capital gains taxes, but some will go back on the market as ready to live in properties which will command a higher price. Some will be converted to rentals, which there is a growing rental class due to obvious reasons. Either way, they are off the market, and we don't seem to have a lot of inventory flowing back on the market yet. I do expect more foreclosures to hit the market, but at this point, we would have to see 5000 a month for an extended period of time to do anything but meet the current sharply rising demand. As the economic dip starts to flatten, and consumers feel a little more secure, you will see more people taking advantage of this homebuyer tax credit.
One of the exciting things we are seeing is that demand numbers continue to rise. More AWC contracts, more pending contracts, higher sales in the middle months-these are all indicative of us going into the seasonal high-demand period, and with relatively very little excess inventory. If there are people who are in need of buying a home, they simply don't have the choices that they did 3 months ago. Relative scarcity will drive prices back up, although price increases are going to come in fits and starts this time, as I do believe that we are going to have this strong period of sales, and a short period of flat sales as people adjust to the new reality that REO pricing is gone. The fact that we have topped 3000 AWC contracts shows that demand is rising, and hopefully this will continue through the summer.
My prediction is that we will probably exceed March's sales figures, although not by a lot. The pace is pretty similar, and March has an extra day as well. The last week will determine, but right now, I think we can expect 7600-7900 sales in April. I hope I am low with that-I don't mind being too conservative on my estimates.
It is quite apparent that we are bl0wing away the pacing of 2008; as I said, I doubt that pace will hold up- 94500 sales would be a lot to ask given the economy-but we should continue to see good sales through the summer. I do think we will finish upwards of 70000 sales this year-that's probably too low, I will go out on a limb and say 80,000.
Land Market Notes: I have been encountering more instances where we have been competing with other investors for good land deals in the last week. We have lost a few deals to other parties' contracts being better, and have found ourselves in a bidding competition on others. These are healthy signs, but I do think that land investors have an opportunity to find some quality properties now at exceptional pricing. there are some quality deals available for the small investor out there, but you still have to hunt for them.
Have a great week!
chris
PENDINGS RISE SLOWER, AWC TOP 3000.
Outpacing 2008 sales YTD by 60%
PENDING: 13,704 ( +501 from last week)
Pending Single Fam: 12,374 ( +445 from last week)
Active W/Contingency: 3,098 ( +288 from last week)
AWC Single Family: 2,807 ( +267 from last week)
CLOSED: 1,826 ( +467 from last week)
Closed Single Fam: 1,636 ( +402 from last week)
ACTIVE LISTINGS: 42,131 ( -1491 from last week)
Active Single Family: 33,190 (-1332 from last week)
CLOSED MTD (4/19) 4,145 (4/19/08: 2461 Closed)
Closed Single Fam: 3,733 (4/19/08: 2096 Closed)
SALES PACE COMPARISON: 03/19/09: Total 3,971 Single Fam: 3,573
YEAR TO DATE: 21,886 CLOSED 4/19/2008: 13,039 CLOSED
Inventory is still sliding at a rapid pace in the ARMLS coverage area; if we sell the same amount of Single Family homes in April that we did in March, then we have 4.8 months of supply available. Overall inventory is slightly above that, but not much. Obviously, much of the inventory that is selling now is Bank-owned and is being sold to investors, so the sales rate is artificially high, and the prices are artificially low. The number of sales is probably going to peter off as the lowest price inventory dissipates, but it is also probable that we will be in somewhat of a recovery by the time this happens, and first time homebuyers will be back in the market buying the next tier of pricing, which will include many of the homes that are selling now, rehabbed, and re-marketed. My guess is that most investors will not choose to re-market these for a year, due to short-term versus long-term capital gains taxes, but some will go back on the market as ready to live in properties which will command a higher price. Some will be converted to rentals, which there is a growing rental class due to obvious reasons. Either way, they are off the market, and we don't seem to have a lot of inventory flowing back on the market yet. I do expect more foreclosures to hit the market, but at this point, we would have to see 5000 a month for an extended period of time to do anything but meet the current sharply rising demand. As the economic dip starts to flatten, and consumers feel a little more secure, you will see more people taking advantage of this homebuyer tax credit.
One of the exciting things we are seeing is that demand numbers continue to rise. More AWC contracts, more pending contracts, higher sales in the middle months-these are all indicative of us going into the seasonal high-demand period, and with relatively very little excess inventory. If there are people who are in need of buying a home, they simply don't have the choices that they did 3 months ago. Relative scarcity will drive prices back up, although price increases are going to come in fits and starts this time, as I do believe that we are going to have this strong period of sales, and a short period of flat sales as people adjust to the new reality that REO pricing is gone. The fact that we have topped 3000 AWC contracts shows that demand is rising, and hopefully this will continue through the summer.
My prediction is that we will probably exceed March's sales figures, although not by a lot. The pace is pretty similar, and March has an extra day as well. The last week will determine, but right now, I think we can expect 7600-7900 sales in April. I hope I am low with that-I don't mind being too conservative on my estimates.
It is quite apparent that we are bl0wing away the pacing of 2008; as I said, I doubt that pace will hold up- 94500 sales would be a lot to ask given the economy-but we should continue to see good sales through the summer. I do think we will finish upwards of 70000 sales this year-that's probably too low, I will go out on a limb and say 80,000.
Land Market Notes: I have been encountering more instances where we have been competing with other investors for good land deals in the last week. We have lost a few deals to other parties' contracts being better, and have found ourselves in a bidding competition on others. These are healthy signs, but I do think that land investors have an opportunity to find some quality properties now at exceptional pricing. there are some quality deals available for the small investor out there, but you still have to hunt for them.
Have a great week!
chris
Tuesday, April 14, 2009
ARMLS STATS 4/6-4/12/09
ACTIVE LISTINGS FALL SHARPLY
PENDINGS RISE; HIT 13,000!
AWC CONTRACTS CONTINUE TO SHOW GROWTH IN NEW DEMAND
PENDING SALES: 13,203 ( +1086 from last week)
PENDING Single Fam: 11,929 ( + 990 from last week)
Active With Contingency: 2,810 ( + 263 from last week)
AWC Single Fam: 2540 ( +242 from last week)
Closed 4/6-4/12/09: 1,359 ( -587 from last week)
Closed Single Fam: 1,234 ( -525 from last week)
Active Listings: 43,622 ( -1440 from last week)
Active Single Fam: 34,522 ( -1346 from last week)
APRIL CLOSED( MTD 4/12) 2,272 (Through 4/12/ last year : 1,398 )
CLOSED SINGLE FAM: 2052 (Through 4/12 last year: 1,195 )
March Closed as of 4/12: 2,278
March closed single Fam: 2,056
Active listings continue to nosedive as demand accelerates for homes listed in the Arizona Regional Multiple Listing Service. Given that we are on an identical pace at this time as we were in March, we can expect a similar number of closings; actually I am going to bet a little higher, as there are far more pendings and AWC contracts at this time than there were in March, so the trendline might be higher. We have also just had a holiday weekend, which typically slows some closings. Given March's finally tally of 7,636, that would extrapolate to a 5.7 month supply of overall listings, and using the final tally of 6,899 SF sales, exactly a 5 month supply of single family listings. The inventory number is falling precipitously, and you might see the inventory supply number fall even further by the end of April.
There is of course, the spectre of the foreclosure moratorium ending, and bringing with it a new wave of inventory; in talking to REO agents, I do believe it is coming. However, given our rising demand for homes, and rapidly depleting inventory, I don't think it will swamp the boat. An increase of 5000 homes looks like it would be absorbed in a month at the current rate of demand.
We are looking at a demand spike, no matter how you look at it. Let's look back to last year in the Archives. On April 15th, there were 6,861 pending sales, plus 1,251 AWC contracts. This years numbers are almost double the number of pendings, and more than double the AWC contracts. April sales finished around 4,880 last year, so can we expect 9000 sales in April this year? That remains to be seen; looking at the archives, the pendings will continue a seasonal up trend in April, but 9000 sales would be a big number. Its possible, but I am not predicting it yet. If we see 2000 + sales this week, I may change my mind, but I am thinking more like 8000.
You can look this up in the Archives, but here is where we were at this time last month. These numbers are predictive of trends, and as you can see we have had tremendous changes since March 15:
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
As you can see, there is a stark difference in pendings and AWC contracts-this usually predicts a higher build in sales even by the end of this month, but May looks like it will be a monster month for sales; maybe even enough to spark a general mood change amongst buyers. May could top 10000 sales, and inventory could fall to a 4 month supply. The supply number could be affected by foreclosure listings, but we don't know that for sure yet.
We are hearing the little shock waves all the through the media now, and that only helps the general psyche of Americans who are on the fence about buying a home. The $8000 tax credit should push them over.
I am very encouraged by the rapidity of the real estate housing recovery. There seems to be a lot of hemming and hawing about this with people who don't want to stick their neck out to far, but the fact is that buyers are turning out and buying again. June may bring us to a sea change in the psychology about the whole housing market, and it will be pretty simple to point at Arizona and see the change. I wish I had time to do the graphs I keep promising; I myself have gotten a lot busier in the last several weeks in the land market, which I am grateful for, but doing the charts is time-consuming and gets pushed down the priority list every week, unfortunately.
LAND MARKET NOTES:
I just want to mention for potential land investors out there that things are changing rapidly in our business too. We are not in full stage recovery yet; I actually see that not happening this year. But, if you are a land investor, and you want to make the most profitable investments, you can't wait until we are in recovery. I am not going to bring up any specific investments or areas, I have clients who are trying to buy right now, and no sense in making it more expensive for them to purchase properties by advertising the areas of interest, but there are some tremendous opportunities to buy high curb appeal properties at some bargain prices. We are talking about getting properties at pre-2000 pricing for land that has immediate end-user appeal. Again, you can contact me privately, and I will be happy to discuss the opportunities with you, but I won't muddy the water by discussing what these are. There are some excellent opportunities for small investors to make out on this with mid-five figure commitments, so don't feel like there are only opportunities for the big guys, its just not true. If you are interested in what is going on, and have some comfort in holding for 2-3 years to make a nice return, call me and we can discuss what opportunities abound. These kind of prices are already changing as the housing market continues to strengthen, and as a wise old investor once told me, you make the money on the purchase as much as the sale. Now is the best time to cut a great deal on investment land if you have the stomach for putting the cash into it.
Chris Just
Just Land Consultants
PENDINGS RISE; HIT 13,000!
AWC CONTRACTS CONTINUE TO SHOW GROWTH IN NEW DEMAND
PENDING SALES: 13,203 ( +1086 from last week)
PENDING Single Fam: 11,929 ( + 990 from last week)
Active With Contingency: 2,810 ( + 263 from last week)
AWC Single Fam: 2540 ( +242 from last week)
Closed 4/6-4/12/09: 1,359 ( -587 from last week)
Closed Single Fam: 1,234 ( -525 from last week)
Active Listings: 43,622 ( -1440 from last week)
Active Single Fam: 34,522 ( -1346 from last week)
APRIL CLOSED( MTD 4/12) 2,272 (Through 4/12/ last year : 1,398 )
CLOSED SINGLE FAM: 2052 (Through 4/12 last year: 1,195 )
March Closed as of 4/12: 2,278
March closed single Fam: 2,056
Active listings continue to nosedive as demand accelerates for homes listed in the Arizona Regional Multiple Listing Service. Given that we are on an identical pace at this time as we were in March, we can expect a similar number of closings; actually I am going to bet a little higher, as there are far more pendings and AWC contracts at this time than there were in March, so the trendline might be higher. We have also just had a holiday weekend, which typically slows some closings. Given March's finally tally of 7,636, that would extrapolate to a 5.7 month supply of overall listings, and using the final tally of 6,899 SF sales, exactly a 5 month supply of single family listings. The inventory number is falling precipitously, and you might see the inventory supply number fall even further by the end of April.
There is of course, the spectre of the foreclosure moratorium ending, and bringing with it a new wave of inventory; in talking to REO agents, I do believe it is coming. However, given our rising demand for homes, and rapidly depleting inventory, I don't think it will swamp the boat. An increase of 5000 homes looks like it would be absorbed in a month at the current rate of demand.
We are looking at a demand spike, no matter how you look at it. Let's look back to last year in the Archives. On April 15th, there were 6,861 pending sales, plus 1,251 AWC contracts. This years numbers are almost double the number of pendings, and more than double the AWC contracts. April sales finished around 4,880 last year, so can we expect 9000 sales in April this year? That remains to be seen; looking at the archives, the pendings will continue a seasonal up trend in April, but 9000 sales would be a big number. Its possible, but I am not predicting it yet. If we see 2000 + sales this week, I may change my mind, but I am thinking more like 8000.
You can look this up in the Archives, but here is where we were at this time last month. These numbers are predictive of trends, and as you can see we have had tremendous changes since March 15:
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
As you can see, there is a stark difference in pendings and AWC contracts-this usually predicts a higher build in sales even by the end of this month, but May looks like it will be a monster month for sales; maybe even enough to spark a general mood change amongst buyers. May could top 10000 sales, and inventory could fall to a 4 month supply. The supply number could be affected by foreclosure listings, but we don't know that for sure yet.
We are hearing the little shock waves all the through the media now, and that only helps the general psyche of Americans who are on the fence about buying a home. The $8000 tax credit should push them over.
I am very encouraged by the rapidity of the real estate housing recovery. There seems to be a lot of hemming and hawing about this with people who don't want to stick their neck out to far, but the fact is that buyers are turning out and buying again. June may bring us to a sea change in the psychology about the whole housing market, and it will be pretty simple to point at Arizona and see the change. I wish I had time to do the graphs I keep promising; I myself have gotten a lot busier in the last several weeks in the land market, which I am grateful for, but doing the charts is time-consuming and gets pushed down the priority list every week, unfortunately.
LAND MARKET NOTES:
I just want to mention for potential land investors out there that things are changing rapidly in our business too. We are not in full stage recovery yet; I actually see that not happening this year. But, if you are a land investor, and you want to make the most profitable investments, you can't wait until we are in recovery. I am not going to bring up any specific investments or areas, I have clients who are trying to buy right now, and no sense in making it more expensive for them to purchase properties by advertising the areas of interest, but there are some tremendous opportunities to buy high curb appeal properties at some bargain prices. We are talking about getting properties at pre-2000 pricing for land that has immediate end-user appeal. Again, you can contact me privately, and I will be happy to discuss the opportunities with you, but I won't muddy the water by discussing what these are. There are some excellent opportunities for small investors to make out on this with mid-five figure commitments, so don't feel like there are only opportunities for the big guys, its just not true. If you are interested in what is going on, and have some comfort in holding for 2-3 years to make a nice return, call me and we can discuss what opportunities abound. These kind of prices are already changing as the housing market continues to strengthen, and as a wise old investor once told me, you make the money on the purchase as much as the sale. Now is the best time to cut a great deal on investment land if you have the stomach for putting the cash into it.
Chris Just
Just Land Consultants
Tuesday, April 7, 2009
MLS STATS 3/30/09-4/03/09
March Sales obliterate 2008 Sales!
Active Listings Fall Sharply...fall almost 2000 from last week!
Pending Sales Still Rising...AWC contracts climb too...
Less than a six month supply of Single Family Residences?
Media begins acknowledging housing recovery....
PENDING SALES: 12,117 ( +556 from last week)
Pending Single Fam: 10,939 ( +470 from last week)
Active With Conting. 2,547 ( +287 from last week)
AWC Single Family: 2,298 ( +240 from last week)
ClOSED 3/30-4/3/09 1,946 ( +90 from last week)
Closed Single Fam: 1,759 ( +72 from last week)
ACTIVE Listings: 45,062 ( -1937 from last week)
Active Single Fam. 35,868 (-1715 from last week)
MARCH SALES:
MARCH 2009 CLOSED: 7,624 March 2008 : 4,262
SINGLE FAMILY: 6,890 March 2008: 3,576
March sales finished strong, reaching over 7600, topping my forecast a little. Single family sales were very strong. Examine against March of 2008, and you can see how far we have come. To almost double last year's sales shows that we are in a much stronger market, and that investors are putting a floor on homes priced too cheap. Many of these will become rentals, as there will be a large rental class of people who lost their ability to purchase a home for a while. They have to live somewhere too, and essentially investors who are buying these homes are going to be renting back to these people. Regardless, someone thinks these homes are worth buying, and they are buying in droves now.
We still have a large unknown regarding the true supply of homes available, as there may be a great many foreclosures that have yet to make it to market. This is the last bastion from which the chronically down on the real estate market has left to argue from. I agree, it is a bit of an unknown. It could be a bit of an iceberg, where what we see above the waterline (MLS) is only a small portion of what lies beneath. I just don't think that is the case. This argument seems to be based on the idea that every home on the street is in foreclosure, and that is simply not the case. There are or were neighborhoods where this occurred-however, you are not seeing it now in the same way. The inventory on MLS is sliding remarkably quickly, which tells me that the people who were trying to sell homes have either done it, or have decided against it for now, and are going to keep it. Some will go back to banks, no doubt, but that is a wave that has seemingly crashed the shore already. There will always be some homes going back to banks. The tsunami predicted seems to have passed its window to really wipe us out.
Why do I say that? One simple reason: demand. Demand is increasing weekly, and while I will not breathlessly compare it to 2005 like some other people, it is certainly at a lofty place. The price is not what it was during the peak, but the demand for homes is climbing, as people realize that they could have the opportunity to buy into a home at a price that is not only a decade behind, but perhaps even cheaper, if they find the right foreclosure deal. Imagine going and buying a 3 bed 2ba home for under a $100,000? If you chose to live there for a while, accummulating not just house appreciation, but making undersized housing payments (don't forget that interest rates are at 4+%)that allow you to save money for other things. This could turn into one of the greatest wealth building opportunities for many Americans that we have had since the early 2000's...imagine making that payment for the next 15 years. You would have money left over for a lot of different things that normally would go to housing.
Pending sales and AWC contracts continue to surprise, climbing weekly now. Go back in my archives and see what they were last year at this time. It is remarkable difference. Our demand numbers show that people still want to own a home, regardless of the rush to rentals we heard about in the media for the last few years.
One of the most important stories from March is that we have passed an important milestone, and that is the supply of single family homes. MArch single family sales were 6890. There are currently 35,868 homes on the market. Dividing the supply by the demand gives us how many months of supply of homes. That number is now 5.2, and is likely to continue to fall. 5.2 months is not a tight supply yet that will cause price increases, but if we fall any further you can look for price increases to start. We already have anecdotal evidence of bidding wars on homes, multiple contracts, etc. People wanting to buy homes have discovered an old useful tool : FHA. This is a story about it. Even overall supply, which contains timeshares, mobile homes, and miscellaneous other items not directly related to supply of residences, has fallen below a six month supply. I think you can look for price equilibrium no later than July. By the time we find that out, prices will have already started to increase, due to tight supply chains of residences.
We have now seen several media reports documenting signs of life in the housing industry. Diana Olick even acknowledged the Phoenix market in her piece on CNBC yesterday. They are not the only one. The other traditionally sour media outlet- MSNBC- had an article today addressing some notable bright spots in the housing sector. Of course, there are still bad news articles out there, with good reason, but you can't ignore the demand side of what is happening now. We have turned a corner, and barring an economic collapse, we are going to see a good summer in real estate, albeit at lower prices, as the critics will wail. Lower prices were critical to the recovery, so I am not going to bemoan them too much; first time homebuyers and new families need the lower prices, and at least they are going to get a chance now to own a home.
The acknowledgement of the media is significant, because if media now sees some improvement, it means improvement has been around for a while, and it will give confidence to many first time homebuyers to come out and start looking. People are still sheeple, and many will not do anything until the media says its okay. This is a critical aspect to keeping the recovery moving forward. There will be no permanent recovery until the media acknowledges that we have left the trough.
Active Listings Fall Sharply...fall almost 2000 from last week!
Pending Sales Still Rising...AWC contracts climb too...
Less than a six month supply of Single Family Residences?
Media begins acknowledging housing recovery....
PENDING SALES: 12,117 ( +556 from last week)
Pending Single Fam: 10,939 ( +470 from last week)
Active With Conting. 2,547 ( +287 from last week)
AWC Single Family: 2,298 ( +240 from last week)
ClOSED 3/30-4/3/09 1,946 ( +90 from last week)
Closed Single Fam: 1,759 ( +72 from last week)
ACTIVE Listings: 45,062 ( -1937 from last week)
Active Single Fam. 35,868 (-1715 from last week)
MARCH SALES:
MARCH 2009 CLOSED: 7,624 March 2008 : 4,262
SINGLE FAMILY: 6,890 March 2008: 3,576
March sales finished strong, reaching over 7600, topping my forecast a little. Single family sales were very strong. Examine against March of 2008, and you can see how far we have come. To almost double last year's sales shows that we are in a much stronger market, and that investors are putting a floor on homes priced too cheap. Many of these will become rentals, as there will be a large rental class of people who lost their ability to purchase a home for a while. They have to live somewhere too, and essentially investors who are buying these homes are going to be renting back to these people. Regardless, someone thinks these homes are worth buying, and they are buying in droves now.
We still have a large unknown regarding the true supply of homes available, as there may be a great many foreclosures that have yet to make it to market. This is the last bastion from which the chronically down on the real estate market has left to argue from. I agree, it is a bit of an unknown. It could be a bit of an iceberg, where what we see above the waterline (MLS) is only a small portion of what lies beneath. I just don't think that is the case. This argument seems to be based on the idea that every home on the street is in foreclosure, and that is simply not the case. There are or were neighborhoods where this occurred-however, you are not seeing it now in the same way. The inventory on MLS is sliding remarkably quickly, which tells me that the people who were trying to sell homes have either done it, or have decided against it for now, and are going to keep it. Some will go back to banks, no doubt, but that is a wave that has seemingly crashed the shore already. There will always be some homes going back to banks. The tsunami predicted seems to have passed its window to really wipe us out.
Why do I say that? One simple reason: demand. Demand is increasing weekly, and while I will not breathlessly compare it to 2005 like some other people, it is certainly at a lofty place. The price is not what it was during the peak, but the demand for homes is climbing, as people realize that they could have the opportunity to buy into a home at a price that is not only a decade behind, but perhaps even cheaper, if they find the right foreclosure deal. Imagine going and buying a 3 bed 2ba home for under a $100,000? If you chose to live there for a while, accummulating not just house appreciation, but making undersized housing payments (don't forget that interest rates are at 4+%)that allow you to save money for other things. This could turn into one of the greatest wealth building opportunities for many Americans that we have had since the early 2000's...imagine making that payment for the next 15 years. You would have money left over for a lot of different things that normally would go to housing.
Pending sales and AWC contracts continue to surprise, climbing weekly now. Go back in my archives and see what they were last year at this time. It is remarkable difference. Our demand numbers show that people still want to own a home, regardless of the rush to rentals we heard about in the media for the last few years.
One of the most important stories from March is that we have passed an important milestone, and that is the supply of single family homes. MArch single family sales were 6890. There are currently 35,868 homes on the market. Dividing the supply by the demand gives us how many months of supply of homes. That number is now 5.2, and is likely to continue to fall. 5.2 months is not a tight supply yet that will cause price increases, but if we fall any further you can look for price increases to start. We already have anecdotal evidence of bidding wars on homes, multiple contracts, etc. People wanting to buy homes have discovered an old useful tool : FHA. This is a story about it. Even overall supply, which contains timeshares, mobile homes, and miscellaneous other items not directly related to supply of residences, has fallen below a six month supply. I think you can look for price equilibrium no later than July. By the time we find that out, prices will have already started to increase, due to tight supply chains of residences.
We have now seen several media reports documenting signs of life in the housing industry. Diana Olick even acknowledged the Phoenix market in her piece on CNBC yesterday. They are not the only one. The other traditionally sour media outlet- MSNBC- had an article today addressing some notable bright spots in the housing sector. Of course, there are still bad news articles out there, with good reason, but you can't ignore the demand side of what is happening now. We have turned a corner, and barring an economic collapse, we are going to see a good summer in real estate, albeit at lower prices, as the critics will wail. Lower prices were critical to the recovery, so I am not going to bemoan them too much; first time homebuyers and new families need the lower prices, and at least they are going to get a chance now to own a home.
The acknowledgement of the media is significant, because if media now sees some improvement, it means improvement has been around for a while, and it will give confidence to many first time homebuyers to come out and start looking. People are still sheeple, and many will not do anything until the media says its okay. This is a critical aspect to keeping the recovery moving forward. There will be no permanent recovery until the media acknowledges that we have left the trough.
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