Inventory Still Falling
AWC Rise, Pendings Fall
Agents Slow to input Data on Holiday Weekend
PENDING: 13,782 ( -84 from last week)
Pending Single Fam: 12,341 ( -104 from last week)
AWC: 4,581 ( +175 from last week)
AWC Single Fam: 4,161 ( +165 from last week)
CLOSED: 1,979 ( -148 from last week)
Closed SF.: 1,772 ( -130 from last week)
Active Listings: 35,771 ( -800 from last week)
Active Single Fam: 27,590 ( -701 from last week)
CLOSED MTD 5/24: 6,335 4/24/09: 6,028
Closed Single Fam: 5,653 4/24/09: 5,416
Our inventory level continues to decline in the greater Phoenix market, as low prices and interest rates continue to draw buyers to the what is now becoming a more limited supply of homes on the market. Pending sales appear to have fallen somewhat, but the number is rising about one a minute as agents are getting back into the office this morning and inputting their contract acceptances. By the time you read this, the number will be pretty flat. The holiday weekend always causes turmoil in the statistics.
AWC contracts continue to rise, but I doubt that those are all new "standard contracts"- some are going to be short sale contracts, which tend to sit in the AWC for some time. It is better that the number goes up then down of course, but the immediacy of those sales is sometimes questionable.
What is more encouraging is that inventory levels continue to fall. The number of listings is actually lower, as since I posted the number above, the inventory has already fallen by 9, as tardy agents input properties that come off the market. We will see that throughout the day, I expect, so this number will continue to fall markedly today.
We are still hearing about a big wave of foreclosures hitting the market in June, and while this is likely true, at worst it seems like it will put us back to our May inventory levels. We do expect strong sales right into October, as we will see a late summer rush to take advantage of the $8000 tax credit for first time homebuyers. This must be utilized by November, so this should hold up housing sales through that period. Hopefully, this will bridge us to the overall economy recovery. Consumer sentiment soared in May, which many analysts equate with consumer spending, so there is getting to be more evidence pointing to eventual recovery. The US markets soared this morning, discounting even the Atomic testing by North Korea. Consumer spending is still considered the prime indicator of the economy.
While I can't publish the numbers, one local group that follows new housing numbers is pointing to a sharp reduction in builder spec inventory levels. Builders have been reducing activity sharply over the last several years, and inventory is being sold off, and not being replaced. Another weekly report is showing a sharp increase in the new home purchasing index; this increase is based on several factors, not the least of them being that the overall number of subdivisions is half of what it was a year ago, as builders sell out, and don't open additional subdivisions. Still, this index is higher than anytime in the last three years at this point of the season, and that is encouraging. The sales to traffic ratio is far better than it was for the last few years, so that is also a sign of increasingly confident consumers.
Where we are going to see trouble for a while yet is in the high end market. Jumbo loans are still difficult to obtain, although not impossible. There is a thin market for homes upwards of a million dollars. There are currently 2871 single family detached homes between 1,000,000 and 10,000,000 on the market, which is well over 10% of all listings. It seems inordinate when only 67 homes in that price range sold in all of April. That makes the supply of million dollar plus homes at 42 months- obviously, this segment is not keeping up with the rest of the market.
The number of single family listings between $0 and $500,000 is 20,917; the number of sales of single family in April in that price category was 7,409: which would give you a supply of 2.82 months! If you can see where I am going with this, it is that prices for homes of good quality and ready to live in at the lower end are in all likelihood already risingl; it is difficult to break those statistics out, as you have to start nitpicking which homes you would exclude from your statistics, like stripped out houses that sell for very low prices. It is very easy to manipulate these statistics to get to whatever outcome you wish, therefore I don't see the need. Without getting bogged down in the details of the statistics, This is not sufficient supply, as buyers typically haven't found enough choice at this level of inventory; historically prices have continued to rise with less than three months supply of homes. This leads to higher demand/(higher prices) for the best homes in the segment, and/or demand for additional product.
We are going to come pretty close to reaching 9000 sales this month, if we don't actually surpass it. I don't think we will blow by 9000, but we should get there. The rest of the summer looks to be set up for similar numbers, I would say. I don't think June is going to be a blockbuster month, as our upward demand keys seems to be flattening out. If we can sustain this level of demand, we will be in very good shape.
Tuesday, May 26, 2009
Tuesday, May 19, 2009
ARMLS STATISTICS FOR GREATER PHOENIX 5/11-517/09
PENDINGS FLATTEN, AWC RISES SHARPLY
SALES AHEAD OF APRIL PACE B?Y 5%
ACTIVE LISTINGS STILL FALLING, BRACE FOR JUNE INFLUX
PENDING SALES: 13,866 ( +9 from last week)
Pending Single Fam: 12,445 ( -7 from last week)
Active W/Contingency: 4,406 ( +336 from last week)
AWC Single Fam: 3,996 ( +314 from last week)
Closed 5/11/-5/17/09 2,127 ( +449 from last week)
Closed Single Fam: 1902 ( +411 from last week)
ACTIVE LISTINGS: 36,571 ( -1247 from last week)
Active Single Fam: 28,291 ( -1083 from last week)
CLOSED MTD (5/17/09) 4,313 (4/17/09: 4,139)
CLOSED MTD SIN. Fam. 3,848
The data was a little mixed this past week; we may have seen the peak of pending sales, as it seems to have lost its upward momentum. This is in contrast to the substantial increase in the AWC numbers, which rose sharply to new highs. June is likely to be the big sales month of the year, so it is not surprising that there are a lot of new contracts that we will see close in June. I think it is highly likely that we will see overall sales in the 10,000's in June, but we are not likely to reach that milestone in May. May is ahead of April as contrasted above, and given the high number of weekend days we have already had in May, I may be underestimating what the final tally may be a little for this month. I think we will reach into the 9000's, however.
The weekly sales were quite strong; anytime we breach 2000 is a good week. This usually foreshadows that the last week of the month, when a great deal of transactions close, will be very strong. It should push us into the 9000's easily. There are 10 weekend days in May, which can affect the number of sales, but I think we will see it made up in the end.
Inventory continues to slide rapidly, as continued foreclosures make homes very affordable. We also have the tax credit for first time home buyers that is giving a great incentive to buyers to make a purchase, along with low interest rates. Word came out yesterday that the tax credit can now be "monetized" for close of escrow-essentially, the buyer doesn't have to wait to file taxes to get it, they will receive a credit at close, and the lending inst. will be reimbursed by the government. This is how I understand it. It should provide some downpayment money for buyers. This ends in November, so we are likely to see a rush on this by the end of summer to utilize this.
We are going to be at a 3-4 month supply of listings on the market by the end of the month. We may see 9500 closings, and inventory is likely to be around 34000. There is word out there that there is an abundance of listings in the higher end market, while there is actually a tight supply of single family homes in good solid neighborhoods. Jumbo loans are still difficult to get, and there is more dollar risk in these high end homes, so we are seeing that segment of the market stick a little.
I keep hearing word of many new foreclosures coming on the market in June, and I think that is likely; however, that number would have to be astronomical to change the momentum of the market. We are absorbing excess inventory at 1000+ per week, and the number of new listings fell sharply in April. There are relatively a low number of new listings in May so far, but that could change by the end of the month. Even if June were to see a big influx, we might simply remain at the inventory level we are at right now. That is a sustainable number; to put it another way, it is not inventory keeping prices down, it is the kind of homes that are selling- foreclosures, short sales, and lower-end homes that first time homebuyers can qualify for.
We are moving in the right direction in housing in Arizona, and after May and June sales occur, we are going to see the market in a much different light. I think even builders are going to start seeing opportunities by then, as they have to look a year or two in advance. We seem to have our feet planted on much firmer ground as of late.
SALES AHEAD OF APRIL PACE B?Y 5%
ACTIVE LISTINGS STILL FALLING, BRACE FOR JUNE INFLUX
PENDING SALES: 13,866 ( +9 from last week)
Pending Single Fam: 12,445 ( -7 from last week)
Active W/Contingency: 4,406 ( +336 from last week)
AWC Single Fam: 3,996 ( +314 from last week)
Closed 5/11/-5/17/09 2,127 ( +449 from last week)
Closed Single Fam: 1902 ( +411 from last week)
ACTIVE LISTINGS: 36,571 ( -1247 from last week)
Active Single Fam: 28,291 ( -1083 from last week)
CLOSED MTD (5/17/09) 4,313 (4/17/09: 4,139)
CLOSED MTD SIN. Fam. 3,848
The data was a little mixed this past week; we may have seen the peak of pending sales, as it seems to have lost its upward momentum. This is in contrast to the substantial increase in the AWC numbers, which rose sharply to new highs. June is likely to be the big sales month of the year, so it is not surprising that there are a lot of new contracts that we will see close in June. I think it is highly likely that we will see overall sales in the 10,000's in June, but we are not likely to reach that milestone in May. May is ahead of April as contrasted above, and given the high number of weekend days we have already had in May, I may be underestimating what the final tally may be a little for this month. I think we will reach into the 9000's, however.
The weekly sales were quite strong; anytime we breach 2000 is a good week. This usually foreshadows that the last week of the month, when a great deal of transactions close, will be very strong. It should push us into the 9000's easily. There are 10 weekend days in May, which can affect the number of sales, but I think we will see it made up in the end.
Inventory continues to slide rapidly, as continued foreclosures make homes very affordable. We also have the tax credit for first time home buyers that is giving a great incentive to buyers to make a purchase, along with low interest rates. Word came out yesterday that the tax credit can now be "monetized" for close of escrow-essentially, the buyer doesn't have to wait to file taxes to get it, they will receive a credit at close, and the lending inst. will be reimbursed by the government. This is how I understand it. It should provide some downpayment money for buyers. This ends in November, so we are likely to see a rush on this by the end of summer to utilize this.
We are going to be at a 3-4 month supply of listings on the market by the end of the month. We may see 9500 closings, and inventory is likely to be around 34000. There is word out there that there is an abundance of listings in the higher end market, while there is actually a tight supply of single family homes in good solid neighborhoods. Jumbo loans are still difficult to get, and there is more dollar risk in these high end homes, so we are seeing that segment of the market stick a little.
I keep hearing word of many new foreclosures coming on the market in June, and I think that is likely; however, that number would have to be astronomical to change the momentum of the market. We are absorbing excess inventory at 1000+ per week, and the number of new listings fell sharply in April. There are relatively a low number of new listings in May so far, but that could change by the end of the month. Even if June were to see a big influx, we might simply remain at the inventory level we are at right now. That is a sustainable number; to put it another way, it is not inventory keeping prices down, it is the kind of homes that are selling- foreclosures, short sales, and lower-end homes that first time homebuyers can qualify for.
We are moving in the right direction in housing in Arizona, and after May and June sales occur, we are going to see the market in a much different light. I think even builders are going to start seeing opportunities by then, as they have to look a year or two in advance. We seem to have our feet planted on much firmer ground as of late.
Tuesday, May 12, 2009
ARMLS STATS 5/4-5/10/09
ACTIVE WITH CONTINGENCY CONTRACTS REACH 4,000!
SALES IN MAY START STRONG-big sales Month ahead?
Inventory falls to new multi-year low-Total Listings under 38,000!
Single family homes inventory now well into 29,000's....falling...
PENDING SALES: 13,857 (+204 from last week)
PENDING SingleFam: 12,452 ( +195 from last week)
Active W/Contingency: 4,070 ( +352 from last week)
AWC Single Family: 3,682 ( +310 from last week)
CLOSED 5/4-5-10/09 1,678 ( -1116 from last week)
CLOSED SINGLE FAM: 1,491 ( -1002 from last week)
ACTIVE INVENTORY: 37,818 ( -1013 from last week)
Active Single Family: 29,374 ( -897 from last week)
CLOSED MTD (5/10/09) 2,105
CLOSED Single Fam. 1,868
New Active W/Contingency contracts have reached fresh highs, implying a great amount of new purchasing activity. The absolute numbers are likely to be much higher, but this is normal, as June is one of the best sales months of the year. We have also had a very strong start to May, so that begs the question "Is May going to be the monster month to knock the last of the cobwebs off the Arizona housing machine?"
It could be-but lets look at the other factors first. As I have said from the beginning, where the rubber meets the road in housing health is going to be inventory. We saw more inventory slide last week; we are almost at a sustainable ratio of sales to inventory. I would say that we are, but we still do not have a strong enough demand for new homes as of yet, and our builders health is paramount to our economy. Their sales to inventory is getting better as well; the index number that many real estate professionals follow shows us to be in a range not seen for a couple of years, but this is also due to the relatively low number of new subdivisions currently being marketed. So, the upshot is, new sales are not strong enough yet to support our economy. Still, the numbers are encouraging.
Single family inventory based on April sales, is actually under 4 months of supply now- 29400 single family homes across the entire ARMLS system is not that many. You still have a decent selection of homes, but my guess is home prices are already firming up for quality purchases. Of course, the number of bank-owned properties is going to affect the price statistics, which is why I focus less on pricing than demand. I heard an anecdote that an agent put a non-foreclosure home in decent condition on the market last week, and received upwards of 8 offers in three days. We are beginning to see signs of buyers realizing that the combination of prices and interest rates will never be better, and those that can are pushing to buy now.
On the negative side of the inventory discussion is that many are expecting an avalanche of new foreclosure listings in June. No one seems to know how many. However, given our current inventory burn, it may not even register to us at all. My guess is that if that prediction comes to pass, we will have a slight rise in inventory, but that the strength of sales will absorb it through the summer, and we will likely be left where we are now-in a 3-4 month range of supply; quite acceptable for us in Phoenix, and below normal levels of supply for much of the country, where 6 months is thought to be normal in a stable market.
One small "inside the numbers" inventory-related number that I wanted to highlight was new listings. Something significant happened in April, and that is that doing a comparative study between 2005 and 2009, the number of new listings fell below the number of new listings put on the market in the same month in 2005...that is significant because the 2005 monthly statistics are fairly consistent, while the 2009 April statistic showed a substantial drop in new listings compared to the months preceding it. It is the first month that has shown this steep drop. It is also substantially less than 2008's new listing tally for April-approximately 20%...
For those very interested in the new listing numbers, it is likely that March was a month of massive inventory insertion from foreclosures, as that new listings number was high: 14000+; higher than last March, and we seem to have absorbed that inventory quite well. by contrast, April new listings barely topped 11000. We have talked about the idea that perhaps that many people who already own that might normally have considered selling in the past, will not do so, as they might feel they won't qualify, or would only qualify for a lesser quality neighborhood, and therefore have no intention of selling, even if they could get an acceptable price. I do think this is a factor in suppressing inventory, and while I think we are going to have a steady supply of bank-foreclosed property in the future, this is going to be offset by more people who are going to stay put and not become inventory statistics. This could be an ongoing factor in keeping inventory levels low.
Will this be a drag on pricing statistics? Without a doubt it will, but consider this if you were looking for a house, and were not interested in doing a lot of work yourself: would you buy a fix-up from the bank because it was cheap, or would you buy a home from a private party who has taken care of it? Most people are not interested in becoming carpenters and drywallers, and as we see more first time buyers enter the market, you will likely see more demand for the better quality homes, even if they are not steeply discounted.
Now, is May going to be a big month? All signs point to "yes". We are slightly ahead of April's pace of sales at the same date, and at this time in April, there had been only 2 weekend days, where in May 09, there have been 4 out of the ten days were weekends. As of last May 1o, we had only 1,351 total sales, which ended with 5590 total. We are likely to push 9000 sales this month. This is okay, but crossing 10,000 would be an achievement. I don't think we will reach that number this month, but I think in June, given the AWC contract level, we are likely to get to the 5 figure mark in sales. Significantly, we are also in all likelihood, going to pass the 2008 total MLS sales of 59000 by the middle of August!
Other inventory questions
Inventory has certainly taken quite a tumble, but the rate of decline is already becoming unsustainable. Even this week, we lost almost a 1000 single family homes; by the end of May, can we expect that number to reach 26000? I honestly don't know the answer-our rate of decline suggests we will, but should we really be expecting our inventory to fall to a two and a half month level? That is hard to conceive, but it is possible. I think that we can expect inventory to fall further through May, but that inventory levels are likely to level off over the summer. Two and half month's of inventory will cause prices to go up, without a doubt.
Will we see inventory rise with the addition of foreclosure sales? We might. I think it will only be a bump, but it might go up a bit, and it might not happen until this fall. Summer sales are strong enough to absorb much of this inventory. Nothing falls forever, just as nothing rises for ever.
How does this tie into the broader economy?
Low levels of inventory will eventually draw builders back into the market. I think they are waiting on pricing, which right now is not attractive to them, as foreclosure inventory is priced very low; but as those prices start to rise, which they will, and when they can offer alternative new housing at comparable prices, you will see the builders return to production. These are likely to be more affordable homes than the mcmansions that became all the rage, but that is a healthy thing. I don't think you will see the monstrous projects that we all got used to either; builders will take smaller risks, perhaps focusing on smaller to medium sized subdivisions to test the market before committing to planning new whole communities the way they have done in the past. Lenders may not be ready to risk that kind of investment either.
Another way this impacts our economy is obviously the re-employment of the trades, from framers and drywallers, to surveyors and engineers, builders will need people. This is a crucial item for our economy, and I hope we start seeing this before the end of the year. The White House is now forecasting 3.5% growth rate by the end of the year, and many indicators are showing that is possible. Let's hope so.
A good week, to be sure-there are a lot of reasons for optimism in the housing market now; we are heading in the right direction with excellent momentum.
SALES IN MAY START STRONG-big sales Month ahead?
Inventory falls to new multi-year low-Total Listings under 38,000!
Single family homes inventory now well into 29,000's....falling...
PENDING SALES: 13,857 (+204 from last week)
PENDING SingleFam: 12,452 ( +195 from last week)
Active W/Contingency: 4,070 ( +352 from last week)
AWC Single Family: 3,682 ( +310 from last week)
CLOSED 5/4-5-10/09 1,678 ( -1116 from last week)
CLOSED SINGLE FAM: 1,491 ( -1002 from last week)
ACTIVE INVENTORY: 37,818 ( -1013 from last week)
Active Single Family: 29,374 ( -897 from last week)
CLOSED MTD (5/10/09) 2,105
CLOSED Single Fam. 1,868
New Active W/Contingency contracts have reached fresh highs, implying a great amount of new purchasing activity. The absolute numbers are likely to be much higher, but this is normal, as June is one of the best sales months of the year. We have also had a very strong start to May, so that begs the question "Is May going to be the monster month to knock the last of the cobwebs off the Arizona housing machine?"
It could be-but lets look at the other factors first. As I have said from the beginning, where the rubber meets the road in housing health is going to be inventory. We saw more inventory slide last week; we are almost at a sustainable ratio of sales to inventory. I would say that we are, but we still do not have a strong enough demand for new homes as of yet, and our builders health is paramount to our economy. Their sales to inventory is getting better as well; the index number that many real estate professionals follow shows us to be in a range not seen for a couple of years, but this is also due to the relatively low number of new subdivisions currently being marketed. So, the upshot is, new sales are not strong enough yet to support our economy. Still, the numbers are encouraging.
Single family inventory based on April sales, is actually under 4 months of supply now- 29400 single family homes across the entire ARMLS system is not that many. You still have a decent selection of homes, but my guess is home prices are already firming up for quality purchases. Of course, the number of bank-owned properties is going to affect the price statistics, which is why I focus less on pricing than demand. I heard an anecdote that an agent put a non-foreclosure home in decent condition on the market last week, and received upwards of 8 offers in three days. We are beginning to see signs of buyers realizing that the combination of prices and interest rates will never be better, and those that can are pushing to buy now.
On the negative side of the inventory discussion is that many are expecting an avalanche of new foreclosure listings in June. No one seems to know how many. However, given our current inventory burn, it may not even register to us at all. My guess is that if that prediction comes to pass, we will have a slight rise in inventory, but that the strength of sales will absorb it through the summer, and we will likely be left where we are now-in a 3-4 month range of supply; quite acceptable for us in Phoenix, and below normal levels of supply for much of the country, where 6 months is thought to be normal in a stable market.
One small "inside the numbers" inventory-related number that I wanted to highlight was new listings. Something significant happened in April, and that is that doing a comparative study between 2005 and 2009, the number of new listings fell below the number of new listings put on the market in the same month in 2005...that is significant because the 2005 monthly statistics are fairly consistent, while the 2009 April statistic showed a substantial drop in new listings compared to the months preceding it. It is the first month that has shown this steep drop. It is also substantially less than 2008's new listing tally for April-approximately 20%...
For those very interested in the new listing numbers, it is likely that March was a month of massive inventory insertion from foreclosures, as that new listings number was high: 14000+; higher than last March, and we seem to have absorbed that inventory quite well. by contrast, April new listings barely topped 11000. We have talked about the idea that perhaps that many people who already own that might normally have considered selling in the past, will not do so, as they might feel they won't qualify, or would only qualify for a lesser quality neighborhood, and therefore have no intention of selling, even if they could get an acceptable price. I do think this is a factor in suppressing inventory, and while I think we are going to have a steady supply of bank-foreclosed property in the future, this is going to be offset by more people who are going to stay put and not become inventory statistics. This could be an ongoing factor in keeping inventory levels low.
Will this be a drag on pricing statistics? Without a doubt it will, but consider this if you were looking for a house, and were not interested in doing a lot of work yourself: would you buy a fix-up from the bank because it was cheap, or would you buy a home from a private party who has taken care of it? Most people are not interested in becoming carpenters and drywallers, and as we see more first time buyers enter the market, you will likely see more demand for the better quality homes, even if they are not steeply discounted.
Now, is May going to be a big month? All signs point to "yes". We are slightly ahead of April's pace of sales at the same date, and at this time in April, there had been only 2 weekend days, where in May 09, there have been 4 out of the ten days were weekends. As of last May 1o, we had only 1,351 total sales, which ended with 5590 total. We are likely to push 9000 sales this month. This is okay, but crossing 10,000 would be an achievement. I don't think we will reach that number this month, but I think in June, given the AWC contract level, we are likely to get to the 5 figure mark in sales. Significantly, we are also in all likelihood, going to pass the 2008 total MLS sales of 59000 by the middle of August!
Other inventory questions
Inventory has certainly taken quite a tumble, but the rate of decline is already becoming unsustainable. Even this week, we lost almost a 1000 single family homes; by the end of May, can we expect that number to reach 26000? I honestly don't know the answer-our rate of decline suggests we will, but should we really be expecting our inventory to fall to a two and a half month level? That is hard to conceive, but it is possible. I think that we can expect inventory to fall further through May, but that inventory levels are likely to level off over the summer. Two and half month's of inventory will cause prices to go up, without a doubt.
Will we see inventory rise with the addition of foreclosure sales? We might. I think it will only be a bump, but it might go up a bit, and it might not happen until this fall. Summer sales are strong enough to absorb much of this inventory. Nothing falls forever, just as nothing rises for ever.
How does this tie into the broader economy?
Low levels of inventory will eventually draw builders back into the market. I think they are waiting on pricing, which right now is not attractive to them, as foreclosure inventory is priced very low; but as those prices start to rise, which they will, and when they can offer alternative new housing at comparable prices, you will see the builders return to production. These are likely to be more affordable homes than the mcmansions that became all the rage, but that is a healthy thing. I don't think you will see the monstrous projects that we all got used to either; builders will take smaller risks, perhaps focusing on smaller to medium sized subdivisions to test the market before committing to planning new whole communities the way they have done in the past. Lenders may not be ready to risk that kind of investment either.
Another way this impacts our economy is obviously the re-employment of the trades, from framers and drywallers, to surveyors and engineers, builders will need people. This is a crucial item for our economy, and I hope we start seeing this before the end of the year. The White House is now forecasting 3.5% growth rate by the end of the year, and many indicators are showing that is possible. Let's hope so.
A good week, to be sure-there are a lot of reasons for optimism in the housing market now; we are heading in the right direction with excellent momentum.
Thursday, May 7, 2009
****ARMLS SINGLE FAMILY LISTINGS FALL BELOW 30,000****
***NEWS FLASH***
Single family home listings in the ARMLS system fell to 29,969 today to a symbolic mile marker on th road to real estate recovery in the Phoenix metro market. Overall listings, including condos, mobiles, etc, stand at 38,481, a substantial improvement over the peak of 58000+, and down significantly from the 52,000+ at the beginning of the year. The single family home market now has approximately a 4 month supply, given current inventory and April's sales figures of 7600+ single family homes.
Single family home listings in the ARMLS system fell to 29,969 today to a symbolic mile marker on th road to real estate recovery in the Phoenix metro market. Overall listings, including condos, mobiles, etc, stand at 38,481, a substantial improvement over the peak of 58000+, and down significantly from the 52,000+ at the beginning of the year. The single family home market now has approximately a 4 month supply, given current inventory and April's sales figures of 7600+ single family homes.
Tuesday, May 5, 2009
ARMLS STATS 4/27-5/3/09
APRIL CLOSINGS SURGE TO 8500+!
LISTINGS DROP UNDER 39000 IN END OF MONTH PURGE
INVENTORY SUPPLY FALLS TO 4.5 Months, SINGLE FAM INV. NOW 4 months...
NEW CONTRACTS GAIN GROUND SIGNIFYING BUYING ACTIVITY CONTINUES
PENDING: 13,653 ( -424 from last week)
Pending Single Fam.: 12,257 ( -414 from last week)
Active W/Contingency: 3,718 ( +282 from last week)
AWC Single Fam: 3,372 ( +250 from last week)
CLOSED 4/27-5/3 : 2,794 ( +951 from last week)
Closed Single Fam: 2,493 ( +849 from last week)
Active Listings: 38,831 ( -1934 from last week)
Active Single Fam: 30,271 ( -1686 from last week)
CLOSED APRIL: 8,542 ( +930 from March 09, +3733 from April 08)
CLOSED SINGLE FAM: 7,658 ( +784 from March 09, +3562 from April 08)
The last week of April surprised me in its scale-I didn't see us crossing over 8500, but it is very welcome news. This rate of sales is predicated largely on the bargain priced homes that are available, as well as the historically low interest rate, but we are seeing buyers entering the market. We are hearing anecdotes of bidding wars on homes, and it will not be long before competition for these homes starts to drive up prices on the best of them.
One of the most important items to note is that we are only entering the best sales season of the year- May-September are all excellent months for sales. While I don't see the inventory dropping as precipitously as it has been all through the end of summer, we are seeing that buying activity is sufficiently strong to eat up the excess at a tremendous rate right now. We have gone from a 11 month supply of homes at the beginning of the year to 4.5 month supply. A 4 month supply of homes is well within an acceptable level of inventory. At the current pace, we will decline significantly below that by the end of June, when I expect prices to start firming up.
These numbers certainly look rosy, but there are a couple of factors that we have to keep in mind. Nobody really knows how many more foreclosures and how many will hit the market in Phoenix. It could be a wave, or it could be a trickle. The situation is that in all likelihood, it will be something significant, but perhaps not throwing the market inventory levels out of wack by very much. We do have a significant factor from the other side as well, which is more people are going to be staying put in their homes because they are afraid or they right about not being able to obtain financing for a different home. They may not qualify for a home that is better than the standard of living they now have, and will be unwilling to give it up. We are seeing that much of the inventory coming on the market is foreclosure homes, and they make up the bulk of the sales, due to their price concessions. It does not appear to me that we will have normal levels of housing coming on to the market from the usual source: the consumer.
The other item is where is the economy going? There is still talk of a lot of job losses, but how does it affect the Phoenix job market? Are we going to suffer massive job losses forcing people to sell their homes, or are we through the worst of it? These are factors we have to consider as well.
On a more optimistic note, we are still seeing increases in Active with Contingency Contracts, which shows there is continuing depth in this housing recovery. Pending sales held their ground even though there was a massive amount of closings at the end of the month. We do have strength in demand, even if prices are not showing it yet.
I have been working on a spreadsheet of 2009 sales activity, which I will post later this week.
The chart is still coming together, but I will post it as soon as I get it worked out.
LISTINGS DROP UNDER 39000 IN END OF MONTH PURGE
INVENTORY SUPPLY FALLS TO 4.5 Months, SINGLE FAM INV. NOW 4 months...
NEW CONTRACTS GAIN GROUND SIGNIFYING BUYING ACTIVITY CONTINUES
PENDING: 13,653 ( -424 from last week)
Pending Single Fam.: 12,257 ( -414 from last week)
Active W/Contingency: 3,718 ( +282 from last week)
AWC Single Fam: 3,372 ( +250 from last week)
CLOSED 4/27-5/3 : 2,794 ( +951 from last week)
Closed Single Fam: 2,493 ( +849 from last week)
Active Listings: 38,831 ( -1934 from last week)
Active Single Fam: 30,271 ( -1686 from last week)
CLOSED APRIL: 8,542 ( +930 from March 09, +3733 from April 08)
CLOSED SINGLE FAM: 7,658 ( +784 from March 09, +3562 from April 08)
The last week of April surprised me in its scale-I didn't see us crossing over 8500, but it is very welcome news. This rate of sales is predicated largely on the bargain priced homes that are available, as well as the historically low interest rate, but we are seeing buyers entering the market. We are hearing anecdotes of bidding wars on homes, and it will not be long before competition for these homes starts to drive up prices on the best of them.
One of the most important items to note is that we are only entering the best sales season of the year- May-September are all excellent months for sales. While I don't see the inventory dropping as precipitously as it has been all through the end of summer, we are seeing that buying activity is sufficiently strong to eat up the excess at a tremendous rate right now. We have gone from a 11 month supply of homes at the beginning of the year to 4.5 month supply. A 4 month supply of homes is well within an acceptable level of inventory. At the current pace, we will decline significantly below that by the end of June, when I expect prices to start firming up.
These numbers certainly look rosy, but there are a couple of factors that we have to keep in mind. Nobody really knows how many more foreclosures and how many will hit the market in Phoenix. It could be a wave, or it could be a trickle. The situation is that in all likelihood, it will be something significant, but perhaps not throwing the market inventory levels out of wack by very much. We do have a significant factor from the other side as well, which is more people are going to be staying put in their homes because they are afraid or they right about not being able to obtain financing for a different home. They may not qualify for a home that is better than the standard of living they now have, and will be unwilling to give it up. We are seeing that much of the inventory coming on the market is foreclosure homes, and they make up the bulk of the sales, due to their price concessions. It does not appear to me that we will have normal levels of housing coming on to the market from the usual source: the consumer.
The other item is where is the economy going? There is still talk of a lot of job losses, but how does it affect the Phoenix job market? Are we going to suffer massive job losses forcing people to sell their homes, or are we through the worst of it? These are factors we have to consider as well.
On a more optimistic note, we are still seeing increases in Active with Contingency Contracts, which shows there is continuing depth in this housing recovery. Pending sales held their ground even though there was a massive amount of closings at the end of the month. We do have strength in demand, even if prices are not showing it yet.
I have been working on a spreadsheet of 2009 sales activity, which I will post later this week.
The chart is still coming together, but I will post it as soon as I get it worked out.
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