INVENTORY DROPS UNDER 35,000 Listings
Single Family listings falls to 26,000+...
AWC contracts continue to rise-
PENDING SALES: 12,920 (-862 from last week)
Pending Single Fam: 11,525 (-816 from last week)
Active W/Contingency: 4,727 ( +146 from last week)
AWC Single Fam. 4,291 ( +130 from last week)
Closed : 2,865 (+886 from last week)
Closed Single Fam: 2,577 (+805 from last week)
Active Listings: 34,347 ( -1424 from last week)
Active Single Fam: 26,489 ( -1101 from lasts week)
CLOSED MAY '09: 9,293
CLOSED SINGE FAM MAY: 8310
May Sales finished very strong last week, pushing us well into the 9000's in sales. This was an excellent month that also saw inventory levels drop sharply- in excess of 12%. There are 4000+ less listings then there were at the beginning of May. The number of new listings posted was less than April as well, and was less than there was in 2005. We now have 3-4 months inventory for both single family homes, and overall residential, and if you take away the bloated $1,000,000 luxury market, there is only a 2.8 month supply. The real activity does continue to be in the first time homebuyer market. A statistic was put out that 81 % were being purchased by first time buyers, while 19% were investors. the proportion seems a little high, but if the market is made up predominately of people buying to live in these homes, then this is a real recovery, and not just a fire sale.
One of the most interesting stats that I have seen over the last few months is the number of listings going on the market in April and May, and fell into 4 digit territory in April and May. The number has continued to fall, despite the number of foreclosures coming on the market. This demonstrates that many average consumers are not putting their homes on the market. They may fear being unable to re-qualify, or they may not be able to get into as nice a home as they already have, and have decided to stay put. However, I don't think that we are going to escape a W-shaped inventory recovery- we are likely to see some spikes in inventory at some point this year. However, the federal tax incentive for buying a home expires in November, and it is likely that there will be a rush to take advantage of this through the summer, which will likely keep our demand numbers high. It is only a matter of time before we start seeing prices increase in the starter home market. My guess is that they already are. It is an inexact science measuring them, as stripped out homes cause disproportionate price destruction in the statistics. Good homes are already in short supply in the lower end- 2-3 month supply has always been a catalyst for price appreciation in the Phoenix market, and there is no reason why this isn't true now. We have a relatively modest number of single family homes available, and it is easy to see that within a month or two, there will be outright competition for quality starter homes.
The good news about this is builders will start seeing reasons to build again; low inventory in a market that is demanding starter homes is a catalyst for building. They won't be mcmansions, but good solid homes, probably smaller, but there will be some demand, as the availability and prices of no-work-needed starter homes become key issues for buyers who have no experience, expertise, or interest in buying a fix-up, which are becoming the larger share of available inventory. We are already hearing anecdotal evidence that buyers are not interested in buying short sale properties because the process is too complicated and drawn out; buyers are even less interested in buying something in which they need to re-install carpet, re-paint or drywall, or re-do the kitchens. They are looking for something to move into when their apartment lease runs out, and they need to time it that way, and they aren't going to have a lot of money for doing fix-up. Some of this is of course social speculation, but I don't think I am far off; these are realities.
The last remaining trouble spot in our market is of course the luxury market. There are currently 2,944 single family listings of over $1,000,000. That is in excess of 11% of the market. Measure that against sales making up less than 1% of May sales-(only 81 $1M+ sales in May) and you can see where the inventory bubble is now- 36 month supply of Million dollar homes. Take this into account if you are looking in this category- you should be able to buy at a considerable discount.
My general impression is that we are headed for a real estate recovery locally by the end of summer. We may not see drastically increasing prices as of yet, but we are seeing them in the better quality homes. There is starting to be evidence of this nationally; this morning this little gem was posted on the CNBC website: "Pending Sales Up....". A very encouraging article.
These are some new statistics, so I am not sure how well I trust them yet, but I think it gives us a little insight into trends, even if not absolutely accurate.
The median price for all housing in May locally was $120,000- I have seen April's median price listed as $118,000, but in extracting that number myself this morning from the MLS, it gives a figure of $115000. That is a fairly significant jump. It also appears to have been a low point, as March was $119,763. April '09 may turn out have been the bottom of the market in terms of pricing.
Another interesting stat is that the average time from list to close was 85 days in May; falling from the 102 days it took in May'08, and improving just slightly from the 86 days on the market figure from April '09, and 90 days from March '09. The trend is going the right way. Days on the market is more ideal at 60 or less, but if you think about that, most contracts are 30 days, so 60 days leaves 30 days to market and come to an agreement, and 30 days for close. That is fairly quick in the scope of things, and I don't think we are going to see that kind of run on housing just yet. We have to account for the many short sales that are occurring, and anyone who has done one, knows the kind of time they take to do. So 85 days is not all that bad in the current market, but we would like to see it fall much further.
May was a very encouraging month that I think solidifies our hope that we are in the midst of an actual recovery in real estate in Arizona. Prices are not what many of us would like them to be, unless you are a first time homebuyer, but we should all be happy that they are out buying, as they are the demographic currently pulling us out of this multi-year slide.
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