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.
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