Sales closing in on 9000 for June
Inventory Rises in June, but new listings fall.
Pending: 11,474 down
Pending Sfam: 9,898 down
AWC: 7,547 down
AWC Single Fam: 6,471 down
Closed 6/21-6/27/10: 1919 Up
Closed Single Fam: 1,635 Up
Active Listings: 34,240 Up
Active Sfam: 27,181 Up
MTD CLOSED: 7,401
Single Fam Closed: 6,244
I apologize for missing a few weeks in the middle of the month; I am also a lot busier now, and some things just have to take a back seat. As we get closer to the end of the month we are getting a lot better picture of where we are headed. Some of them are good, some are mediocre.
MLS sales are going to post another decent month in June. I think it is likely we will reach 9000 sales, but we are not quite there yet. Prices are likely to have fallen a bit in June, after the increases in May, as the tax credit effect will fall off a bit. People anxious to get the tax credit were less likely to negotiate as hard if they were up against the wall to get their deal in place in April, most of which would have closed in May. It puffed up prices a bit at that point. We are anticipating a slight fall from that point.
I was a little taken aback by the rise in inventory; its not large but its big enough to take notice of. I don't like the idea that inventory is rising, but when I went deeper into the statistics, I found that new listings in June are actually lagging behind June '09, and still behind May'10, so I am not as concerned about it. In April there was a huge uptick in new listings over last year, and May showed a sizeable gain as well, so we are probably experiencing a little hangover from that. This June is showing a decrease so far, as inventory was probably frontloaded by the tax credit the same way sales were. It bears watching.
We have been seeing some flagging in the economy which has eroded consumer confidence to some degree, and will probably also affect housing. I would expect to see flat pricing throughout the summer, but also see continued strong demand for homes available at lower prices. The 0-200,000 range continues to be strong; the demand for upscale homes seem to be lagging to some degree.
I have been told by contacts in the home rental market that demand is very strong for rental homes, and supply is actually tight, which has been leading to stronger rental rates. I don't know if that is true valley wide, but it was a "boots on the ground" report from a fairly large rental agency. If you have any input or knowledge about this, I am all ears.
We are watching for home sales to cross over 9000 this month, which is very possible, but I am going to expect to see numbers fall slightly in July. The urgency of the tax credit is over, and I think buyers will bide their time while watching prices. This keeps some people on the sidelines, postponing their buying decisions, but i think that people who want a home will still be buying one.
Thanks for Reading!
Tuesday, June 29, 2010
Tuesday, June 8, 2010
ARMLS STATS 6/8/2010
Inventory and Pendings Flat
June Sales off to a good start....
Pending: 12,521 (+5 from last week)
Pending Sfam: 10,756 ( +33 from last week)
AWC: 7,839 ( +78 from last week)
AWC Sfam: 6,734 ( +71 from last week)
Closed: 5/31-6/6 1,859 ( -841 from last week)
Closed Sfam 1,579 ( -723 from last week)
Active Listings: 33,192 ( +51 from last week)
Active Sfam: 26,210 ( +34 from last week)
New listings and pendings are flat after the first week of June, indicating we may have reached a short term equilibrium in the resale market. We are probably seeing as many home sales as the economy will allow for right now, but we are also seeing some evidence of a slow down in the amount of foreclosure activity. Only 37% of the closings in May were bank owned properties. That is down substantially from a year ago. Delinquencies on FHA loans nationally has been falling, according to the federal agency. Three months is enough to be a trend, so that is very encouraging.
We are also seeing stronger homebuilder numbers. This also has an effect on resales, as perhaps more than in the past year; first time buyers are buying new homes as builders begin slowly ramping up and offering incentives. This tends to blunt the sharp upward spike in resales-if a new home is available at the same price, some people are going to choose new homes, even if location is not as optimal as a resale. There is a balancing act there, and we definitely want to see new home sales occurring, even if it slows resales. In my own mind, we are getting close enough to "normal" levels of inventory and sales that I would want builders to jump in and start building again. Consumers want choices, and sometimes it requires the existence of an alternative to cause a buying action from a consumer-we don't need to be down to the last house on the market before builders should start building again. I will use a common fishing theme to illustrate my point. If you have ever fished for trout, you have probably drifted a nightcrawler in front of a fish many times where it shows complete disinterest. Finally you change to a miniscule little fly, and as soon as it is in range, wham! That fish is on it. Now, the juicy nightcrawler you threw out should have been more attractive to the fish, but the fish didn't think so.
Its the same with homebuyers- just because there are X amounts of resale homes sitting on the market at an attractive price, it doesn't mean they want one of those. They might have a completely different buying trigger. Builders need to have activity to create desire from buyers, and we are just starting to see that happening. Builders crank up subdivisions, and people start buying. I don't want to use the word demand-creative marketing, but I will. The picture has to be painted in their head of a beautiful home in a beautiful neighborhood that they come back to every day after a hard day's work. Its crucial for people buying new homes, the same way the consumer who is looking at buying a new Harley-Davidson might need to see the wind whipping through his or her hair, the open road twisting through the cool pines of the Black Hills as the faces of Mount Rushmore come into view. Empty subdivisions with 1 or 2 scattered homes in place in a ghost town subdivision does not inspire confidence or the image of the happy home life in buyers. Activity begets activity, and builders that are stepping up are beginning to take some buyers who previously might have purchased a resale.
We are hearing some national blogs that keep talking up a double dip in housing. I have no doubt we will have a choppy recovery in housing, but right now we are so far ahead of where we were, it is hard to imagine going back to the bottom. The underlying numbers are getting better- jobs, lower inventory numbers, median prices rising manageably, demographics- so I am not buying the substantial dip. We are in a relatively strong season for sales, and I think that will continue through the summer and into the fall. Most people do expect a stronger economic footing by the end of third quarter, and that will only further support the idea we will continue to return to normal here. The biggest problem we still have is actually a matter of perspective: pricing. If you purchased your home at a much higher price, then you are disappointed that prices are so low. If you are looking to buy a home, you should be a ecstatic about the lower pricing. We can't complain about inventory numbers, as they are not very high, buying activity is strong, interest rates are exceptional, the amount of foreclosure activity is receding-even with traditionally riskier FHA loans, so it really comes down to prices. Prices haven't recovered strongly yet, but they have beeing going up, and this gives new family formations a tremendous opportunity to participate in a rising market. Its all in your perspective, but the case can be made that even if prices slip somewhat, we are still in full recovery.
June Sales off to a good start....
Pending: 12,521 (+5 from last week)
Pending Sfam: 10,756 ( +33 from last week)
AWC: 7,839 ( +78 from last week)
AWC Sfam: 6,734 ( +71 from last week)
Closed: 5/31-6/6 1,859 ( -841 from last week)
Closed Sfam 1,579 ( -723 from last week)
Active Listings: 33,192 ( +51 from last week)
Active Sfam: 26,210 ( +34 from last week)
New listings and pendings are flat after the first week of June, indicating we may have reached a short term equilibrium in the resale market. We are probably seeing as many home sales as the economy will allow for right now, but we are also seeing some evidence of a slow down in the amount of foreclosure activity. Only 37% of the closings in May were bank owned properties. That is down substantially from a year ago. Delinquencies on FHA loans nationally has been falling, according to the federal agency. Three months is enough to be a trend, so that is very encouraging.
We are also seeing stronger homebuilder numbers. This also has an effect on resales, as perhaps more than in the past year; first time buyers are buying new homes as builders begin slowly ramping up and offering incentives. This tends to blunt the sharp upward spike in resales-if a new home is available at the same price, some people are going to choose new homes, even if location is not as optimal as a resale. There is a balancing act there, and we definitely want to see new home sales occurring, even if it slows resales. In my own mind, we are getting close enough to "normal" levels of inventory and sales that I would want builders to jump in and start building again. Consumers want choices, and sometimes it requires the existence of an alternative to cause a buying action from a consumer-we don't need to be down to the last house on the market before builders should start building again. I will use a common fishing theme to illustrate my point. If you have ever fished for trout, you have probably drifted a nightcrawler in front of a fish many times where it shows complete disinterest. Finally you change to a miniscule little fly, and as soon as it is in range, wham! That fish is on it. Now, the juicy nightcrawler you threw out should have been more attractive to the fish, but the fish didn't think so.
Its the same with homebuyers- just because there are X amounts of resale homes sitting on the market at an attractive price, it doesn't mean they want one of those. They might have a completely different buying trigger. Builders need to have activity to create desire from buyers, and we are just starting to see that happening. Builders crank up subdivisions, and people start buying. I don't want to use the word demand-creative marketing, but I will. The picture has to be painted in their head of a beautiful home in a beautiful neighborhood that they come back to every day after a hard day's work. Its crucial for people buying new homes, the same way the consumer who is looking at buying a new Harley-Davidson might need to see the wind whipping through his or her hair, the open road twisting through the cool pines of the Black Hills as the faces of Mount Rushmore come into view. Empty subdivisions with 1 or 2 scattered homes in place in a ghost town subdivision does not inspire confidence or the image of the happy home life in buyers. Activity begets activity, and builders that are stepping up are beginning to take some buyers who previously might have purchased a resale.
We are hearing some national blogs that keep talking up a double dip in housing. I have no doubt we will have a choppy recovery in housing, but right now we are so far ahead of where we were, it is hard to imagine going back to the bottom. The underlying numbers are getting better- jobs, lower inventory numbers, median prices rising manageably, demographics- so I am not buying the substantial dip. We are in a relatively strong season for sales, and I think that will continue through the summer and into the fall. Most people do expect a stronger economic footing by the end of third quarter, and that will only further support the idea we will continue to return to normal here. The biggest problem we still have is actually a matter of perspective: pricing. If you purchased your home at a much higher price, then you are disappointed that prices are so low. If you are looking to buy a home, you should be a ecstatic about the lower pricing. We can't complain about inventory numbers, as they are not very high, buying activity is strong, interest rates are exceptional, the amount of foreclosure activity is receding-even with traditionally riskier FHA loans, so it really comes down to prices. Prices haven't recovered strongly yet, but they have beeing going up, and this gives new family formations a tremendous opportunity to participate in a rising market. Its all in your perspective, but the case can be made that even if prices slip somewhat, we are still in full recovery.
Tuesday, June 1, 2010
ARMLS STATS 6/1/2010
****Prelim May Sales: 9,166****
Median Price rises 1.56 % from April
Number of New Listings down sharply from April Influx
AWC numbers continue to slide- Short Sale Bottleneck opening up?
Pending: 12,516 ( -1664 from last week)
Pending Sfam: 10,723 ( -1441 from last week)
AWC: 7,761 ( -294 from last week)
AWC Sfam: 6,663 ( -232 from last week)
Closed: 2,700 ( +774 from last week)
Closed Sfam: 2,302 ( +658 from last week)
Active Listings: 33,141 ( -224 from last week)
Single Fam: 26,176 ( -115 from last week)
CLOSED MAY 2010: 9,166
Closed Single Fam: 7,763
Preliminary sales figures for May came in higher than projected. 9000 is purely a psychological number, but we did cross it. We are not going to have as many sales as we did in May 2009, but it is important to realize that the median price a year ago was only $119,000- lots of low priced, low end homes were being scooped up by investors at that time. That is still happening, but as I have documented in previous posts, the percentage of lender-owned sales and listings have fallen substantially. That seems to be backed up by this article. Their numbers are slightly different, as they probably include outside of MLS sales; they also are referring to single family sales only, I believe, but the idea is the same: there are less lender-owned sales, so more homes are being sold in which the property owner will need to find a new home, whether it is a rental or another sale. It will of course be both, but that is a far better situation than an empty home selling and not re-creating demand for housing somewhere else. It is more likely that homes sold through normal channels means that the seller will purchase another home somewhere else to live. The percentage of a lender-owned sales requiring another home to live in is zero, so you can see my point about it being categorically better, even if we don't know what the exact percentage of re-buying is occurring. 9166 is a good strong number, but we may have bumped up against the glass ceiling here. The economy is not strong enough, and price appreciation is not attractive enough to continue to see the kind of gains monthly we were used to. June should be a decent month, but probably down from April and May due to the wave of tax credit homebuyers petering out. We still have several strong months for sales ahead, and we are outpacing 2009 in number of closings by 9.8%. We are also ahead of last year's median price YTD by 5.5%, and ahead of overall dollar volume of sales by 15.1%. We should be very happy with these numbers, but I think we are all looking for that one big sign that tells us the slump is over. We are not going to get that sign; it is just going to happen as a process of there being more positive news than negative news.
As I alluded in the title, the median price of homes rose again in May, by 1.5%- $2,000- from $128000 to $130,000. It might not seem like a huge jump, but if we ran up the price 1.5% a month, that would be 18% per year gain. I don't think we will see that happen the same every month; it is likely to happen in fits and spurts, but price levels are really the most negative thing that can be said about the housing market.
The level of inventory has been flat for the last month, but we did see quite a few less new listings come on the market in May compared to April. In April, 14076 new listings were posted under residential in the MLS. In May, there were 11,396 new listings. Inventory levels are at a comfortable level, but we wouldn't mind seeing the inventory chewed up a bit more.
We are seeing some clearing of the AWC. Whether that is short sales happening quicker remains to be seen, but it is somewhat encouraging that that number is falling. I haven't done a lot of analysis on this yet, but next week I will probably have some more insights. I will do some research and see if this is the case, but it looks like it is.
One other thing that we heard about today was a strong pickup in construction spending across the board in April. This article at CNBC discusses manufacturing being up, but also this bit about new construction activity.
Median Price rises 1.56 % from April
Number of New Listings down sharply from April Influx
AWC numbers continue to slide- Short Sale Bottleneck opening up?
Pending: 12,516 ( -1664 from last week)
Pending Sfam: 10,723 ( -1441 from last week)
AWC: 7,761 ( -294 from last week)
AWC Sfam: 6,663 ( -232 from last week)
Closed: 2,700 ( +774 from last week)
Closed Sfam: 2,302 ( +658 from last week)
Active Listings: 33,141 ( -224 from last week)
Single Fam: 26,176 ( -115 from last week)
CLOSED MAY 2010: 9,166
Closed Single Fam: 7,763
Preliminary sales figures for May came in higher than projected. 9000 is purely a psychological number, but we did cross it. We are not going to have as many sales as we did in May 2009, but it is important to realize that the median price a year ago was only $119,000- lots of low priced, low end homes were being scooped up by investors at that time. That is still happening, but as I have documented in previous posts, the percentage of lender-owned sales and listings have fallen substantially. That seems to be backed up by this article. Their numbers are slightly different, as they probably include outside of MLS sales; they also are referring to single family sales only, I believe, but the idea is the same: there are less lender-owned sales, so more homes are being sold in which the property owner will need to find a new home, whether it is a rental or another sale. It will of course be both, but that is a far better situation than an empty home selling and not re-creating demand for housing somewhere else. It is more likely that homes sold through normal channels means that the seller will purchase another home somewhere else to live. The percentage of a lender-owned sales requiring another home to live in is zero, so you can see my point about it being categorically better, even if we don't know what the exact percentage of re-buying is occurring. 9166 is a good strong number, but we may have bumped up against the glass ceiling here. The economy is not strong enough, and price appreciation is not attractive enough to continue to see the kind of gains monthly we were used to. June should be a decent month, but probably down from April and May due to the wave of tax credit homebuyers petering out. We still have several strong months for sales ahead, and we are outpacing 2009 in number of closings by 9.8%. We are also ahead of last year's median price YTD by 5.5%, and ahead of overall dollar volume of sales by 15.1%. We should be very happy with these numbers, but I think we are all looking for that one big sign that tells us the slump is over. We are not going to get that sign; it is just going to happen as a process of there being more positive news than negative news.
As I alluded in the title, the median price of homes rose again in May, by 1.5%- $2,000- from $128000 to $130,000. It might not seem like a huge jump, but if we ran up the price 1.5% a month, that would be 18% per year gain. I don't think we will see that happen the same every month; it is likely to happen in fits and spurts, but price levels are really the most negative thing that can be said about the housing market.
The level of inventory has been flat for the last month, but we did see quite a few less new listings come on the market in May compared to April. In April, 14076 new listings were posted under residential in the MLS. In May, there were 11,396 new listings. Inventory levels are at a comfortable level, but we wouldn't mind seeing the inventory chewed up a bit more.
We are seeing some clearing of the AWC. Whether that is short sales happening quicker remains to be seen, but it is somewhat encouraging that that number is falling. I haven't done a lot of analysis on this yet, but next week I will probably have some more insights. I will do some research and see if this is the case, but it looks like it is.
One other thing that we heard about today was a strong pickup in construction spending across the board in April. This article at CNBC discusses manufacturing being up, but also this bit about new construction activity.
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