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.
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