ARMLS STATS 12/28/2011

****ARMLS Inventory Slips into 18K's.****

Pending: 9,991 ( -353 from last week)

Pending Sfam: 8,720 (-321 from last week)

AWC: 6,950 ( -240 from last week)

AWC Sfam: 6,019 ( -212 from last week)

Active: 18,800 ( -263 from last week)

Active Sfam: 14,641 (-189 from last week)

Closed 12/20-12/26: 1,731 (-12 from last week)

Closed Sfam: 1,443 (-31 from last week)

Closings MTD: 5,820

Inventory has reached another important milestone, and has fallen into the 18,000s. This is the low water mark for inventory since 2005, at least. Inventory continues to fall, even as sales slow down as we reach the least active time of the year. The sales are actually much stronger this month than I expected them to be. Anything above 7000 is really considered to be an excellent December; it appears they could finish even stronger.

The new listings are still looking like they are decreasing, further pressuring supply, and the median price is rising again this month. It might not finish this way, but the price is up by $3,600 over November right now.

I am going to wrap it up with that; the interesting news is that inventory has slipped a long way, and we seem to be heading in the right direction. I will have more on this next week.

ARMLS STATS 12/20/2011

***Single Family Listings fall into 14K***

Overall listings barely 19K.

Prices may be rising sharply again this month

Pendings fall as holidays loom

Pending: 10,344 (-279 from last week)

Pending sfam: 9,041 (-229 from last week)

AWC: 7,190 (-123 from last week)

AWC Sfam: 6,231 (-98 from last week)

Active: 19,063 (-250 from last week)

Active Sfam: 14,830 ( -252 from last week)

Closed: 1,743 ( +349 from last week)

Closed Sfam: 1,474 ( +281 from last week)

We have reached a new milestone in the housing recovery for Metro Phoenix, and that is that single family homes inventory has fallen into the 14,000s. That is a significant note, as it shows not only are we at multiyear lows in inventory, going back to at least 2005, but that it gives us room for an upward blip should be we encounter difficulties from Europe. It also puts into question the idea that there is a massive shadow inventory lying in wait out there; we have been moving consistently downward in inventory levels for all of this year, we are now at a point where we could see violent price gains by April if we have a typical spring buying season. I have no doubt that this will be met by some investors making flip properties available, but many investors are going to be collecting excellent rent, so why get rid of a passive income gold mine? No, it appears we are pushing towards an inventory problem here, that can't possibly be met by builders alone, as the available land becomes too far out for people who work in Central Phoenix. We will see price increases, of that I have no doubt. It is too early to make predictions about this month, but we are already running substantially higher than last month on median prices; I am not sure that will hold up, so we will wait until the stats come in at the end of the month before I make the claim of rising prices again. If they are not already here, they will be by Spring, assuming a normal economic pattern.

We also saw pendings drop fairly sharply; not completely unexpected, as new buying activity the weeks before Christmas do tend to peter out. It appears that December will not be as active a month for buying as was last December. This December is going to look a lot like November of this year, with fairly soft sales in the 7000 range. Last year December proved to be an aberration with over 8200 sales, which seemed awfully high for what is supposed to be the middle of the dead zone for housing sales in Arizona.

New inventory coming on the market is obviously, light, as noted by the slide in overall inventory. We can expect an uptick in that come January, but even with that, we are in excellent position to see housing prices regain some lost value locally.

There is some good external news as well regarding housing; housing permits and new starts are improving, along with builder sentiment. This is positive news, as new construction leads to so many great things on the local level. New jobs, new revenue for local government, increased optimism from consumers who see new housing being constructed, and thus, better demand for housing.

The other interesting story is what builders are beginning to see. If they are feeling better about things, it won't be long until they figure out a way to get people financed, and into homes. We are definitely on a better track than we have been, and I think we will start feeling effects of that even in February, when buyers are out pursuing property. March is a big month for closings, and that activity has to start in February for that to happen. New construction is critical to a strong Arizona recovery, and we may be on the cusp of that happening. We are now only about a month away from the green pastures of the strong housing season in Arizona. It is something to be very excited about!

ARMLS STATS 12/13/2011

Pending Sales: 10,623 ( +170 from last week)

Pending Sfam: 9,270 ( +135 from last week)

AWC: 7,313 (-24 from last week)

AWC Sfam: 6,329 ( -26 from last week)

Active: 19,313 (+21 from last week)

Active single fam: 15,082 (+1 from last week)

Closed: 1,394 (-947 from last week)

Closed Sfam: 1,193 (-795 from last week)

***NOVEMBER: 7,246 Sales***

Median & Average Price up in November

Sales are modest, but best November 2010

Overall Inventory falling toward 18K's; Single Family dropping to 14K's

New listings in November reach multi-year low

Pending: 10,453 ( -481 from last week)

Pending Sfam: 9,135 ( -382 from lat week)

AWC: 7,335 ( -187 from last week)

AWC Single Fam: 6,355 ( -160 from last week)

Active: 19,292 (-213 from last week)

Active Sfam: 15,081 ( -184 from last week)

Closed: 11/28-12/4: 2,341

Closed Sfam: 1,988

Closed November: 7,246 (+8.4% better than November 2010)

New listings in November: 8614 ( -2601 listings, or 23.2% less than Nov.'10)

Median Price: $115,000 (+$3000 from October, 2.7% increase)

( -$50 from November 2010)

Average Price: $160,091 ( November 2010: $158,695)

( October 2011: $153,289)

Sales were modest in November, but very positive regardless. November is traditionally a quiet month, so softer sales are not unexpected. The tally was over 8% better than the same period in 2010, so we are still looking at a strong improvement. They were a bit softer than increases logged by previous months however, if you are a dark lining in a silver cloud kind of observer.

Also up was the median price, which reached $115,000 for the first time all year long. The number had bounced between $109K and $112K most of the year, but we might be seeing a bit of a breakout here. Supporting that idea is the fact that the trend line in price year over year are crossing for the first time all year long, and possible in many years. Last November, median prices were still falling, and finished at $115,050. In a statistical tie with that, 2011's trend line has finally caught up with previous years. This implies that we are moving toward a healthier market. This is of some significance.

While the median is actually $50 short of last year, the average is actually higher, so what I can say now is that we are statistically better off than we were a year ago at this time for the first time since probably 2006. Better prices, better inventory numbers, fewer foreclosures. We have without a doubt, been heading in the right direction; now we can definitively say that we have reached a milestone.

The pending numbers are pretty run of the mill following the end of the month, so there is nothing too interesting there, but what is interesting was the relatively sharp drop in inventory. This is the lowest number of new listings since at least 2009, but likely the lowest since 2004 or sooner. December is typically even smaller, but I am not going to make a call on that as it would be purely speculation. Suffice to say, we are not building inventory, and this matter will raise its head in February and March when the house hunters come out to play.

I will speculate now however, that we will probably see some losses in sales year over year. There will not be the kind of discounted homes available to people that there were in 2011, and as such the investors may pull in their horns a bit. That's okay, because as of right now, there would not be the inventory to accommodate them. Take March for example. We currently have inventory of 19,000. In March of 2011, there were 9,957 sales. There were about a similar amount of listings, but please take into account there are also anywhere from 11,000 to 14000 pendings during this period, and AWC homes as well. There is no perfect way to measure the inventory burn, but in March of 2011 we were burning off 650-1000 per week. Perhaps it won't be that high; it cant be, its just not sustainable given inventory replacement figures. But even at half of that burn, there will be considerably less inventory available for what should be a strong buying season, given economic recovery and increased confidence. Safe to say, those are inflationary pressures for housing prices. We are experiencing it even now, but they will become even more magnified in the spring. Last year inventory started burning in February, but we had 34,000 listings on the market; almost double what we have now, so there was some slack still in the inventory. Where is that slack going to come from now?

It is hard to say if there will be an uptick in new listings; maybe there will be, but the pipeline from bank sales appears to be slowing. Short sales are nowhere near their peak either, so I don't a strong uptick if there is one. It is hard to imagine that the inventory will be this low, however. It is not sustainable, and it will drive prices up in this market. As mentioned earlier, it has already started to some degree, but the competition is nowhere near where it will when we reach February and March. Look for some solid if not spectacular pricing pressures by April.

ARMLS Stats 11/29/2011

Inventory Falls Slightly Again

Pendings also down on holiday week

New listings in November will fall to multi-year low

Pending: 10,934 ( -48 from last week)

Pending Sfam: 9,517 ( -56 from last week)

AWC: 7,522 ( -95 from last week)

AWC Sfam: 6,515 (-81 from last week)

Active: 19,505 ( -97 from last week)

Active Sfam: 15,265 (-74 from last week)

Closed: 1,257 ( -585 from last week)

Closed Sfam: 1,092 ( -447 from last week)

Inventory continues to hover at multi-year lows, as new listing inventory falls further and further. New listings in November is likely to be 25% less than last November's total. This is the real story of the inventory numbers. We have not seen this few listings in a month since December 2004. Sales are definitely better than last year, but the level of inventory has now fallen 17.5% from last year. There will likely be some new inventory increases in January, as it is a busy listing month, but not before single family inventory comes close to falling into the 14,000's.

Sales are slower in November, and this year will be no exception. It is likely to far outstrip last year, however. The other indicator that is still holding up is the median price, which is holding at $115,000. I think that it could slip a bit after tomorrow, when a large volume of closings occur. It is still up, and hopefully it is a trend that will continue.

The other numbers don't tell us much; it was a holiday week, and closings are always lower since its a three day workweek for most title companies, and few people request closings for the day after thanksgiving. I am very curious how last December was such a strong sales month, with over 8000 sales. I am looking at November sales and also pending numbers, and it seems a bit of a reach. I neglected the stats last fourth quarter, so I can't see how we arrived at so many sales. It will be the only month this year with less sales than last year; or at least that is what I think. I just don't see how we surpass it.

There were some encouraging economic signals in the past week as well; consumer confidence reached multi-month highs, new home sales were better in October, and locally it appears that new home sales are also stabilizing. There are a lot of reasons for optimism in the housing market, and as long as it doesn't fall apart, we could see some substantial recovery occur in 2012.

ARMLS STATS 11/22/2011

Pendings Fall Slightly as Weekly Sales Up Sharply

Inventory still trending slightly downward

December a wild card?

***2011 sales have already passed 2010 total***

Pending: 10,982 ( -88 from last week)

Pending Sfam: 9,573 ( -56 from last week)

AWC: 7,617 ( -81 from last week)

AWC Sfam: 6,596 ( -58 from last week)

Active: 19,602 (-28 from last week)

Active Sfam: 15,339 ( -53 from last week)

Closed 11/14-11/20: 1,842 ( +475 from last week)

Closed Sfam: 1,539 ( +362 from last week)

Weekly sales were very strong for a mid-month week, which bit into pending sales slightly. Sales up near a third from last week, probably due to buyers avoiding the holiday week to close. This reduces the pending category, as more sales mean pendings decline. The fall wasn't large, but it does show the seasonal weakness.

More surprising is perhaps the continued decline in inventory, despite the weaker sales activity. The sales figures are likely to beat last year, but they are going to be down from previous activity. Apparently, so is listing activity, which shows we will probably fail to reach 10,000 new listings in November as well.

I am not sure what December will bring; last December was surprisingly strong, but we are really not sitting on enough pendings to make the same numbers as December of 2010. I could be wrong, but I don't have any statistics about pendings from last November to say for sure.

I still believe that the median price will fall in November from its $115,000 level right now, but it should hold its ground above $112,000, which is what October was. The average price is running considerably higher in November as well, at $163,800; that's an increase of nearly $10,700. That also shows real gain in the pricing of the market. I would expect that number to mellow by the end of the month, but it does look like there will be a strong gain this month. It is the fallout of simply less inventory available. Its not there, and we are now a good way through the perceived "off-season" of homeselling in Arizona. We have gone through 11 months with over 17% reduction in inventory, and 11% increase in sales. I do expect a solid rise in inventory in January, as it is usually a heavy month for inventory, but we are at such a low point now, that amount will probably be eaten away by mid-february.

I am still puzzled by December. Last December there were 8,243 sales; a strong month whatever the time of year, but exceptional for what should be the middle of the desert, so to speak, for home sales. If December turns into a good month, then we will not have had much of an off-season. I just don't see how we get to 8,243 sales in December. In fact, with the numbers the way they are, monthly sales run at a 10%+ clip. I don't see that happening in December, and that would be the first month in a long time where there weren't really solid gains. I don't think we can expect those kind of strong numbers in December.

An interesting thing happened this past week. Sales for the year exceeded 2010. We are now at 90,474, compared to 90,111. It might not seem like a big deal, but we still have half of a month of sales in November unreported, and all of December. We knew we were doing better, but this puts the numbers in a perspective we can all understand: December sales are all gravy. Its significant that we are doing better than last year, in sales, but also inventory. We are currently YTD 17.7% behind last year; its likely to finish higher than that. Coupled with increased sales that 30% inventory factor swing puts us in a much healthier position going into 2012 than we had in 2011. Sales of homes could surpass 100,000 for 2011, if December were to be a fair month.

That's about all I have time for today, but I want to wish you all a very happy and safe Thanksgiving!

chris

ARMLS DATA 11/15/2011

Pendings Rising through seasonal slowdown

Inventory slightly off, but flat.

Median listing price making big moves?

Pending: 11,070 (+234 from last week)

Pending Sfam: 9,629 (+231 from last week)

AWC: 7,698 ( +100 from last week)

AWC Sfam: 6,654 ( + 78 from last week)

Active: 19,630 ( -24 from last week)

Active Sfam: 15,392 ( -48 from last week)

Closed 10/7-10/13 1,367

Closed Sfam: 1,177

Median Listing price November 2010: 114,900 November 2011: 144,900

Pending sales are continuing to rise in November, but sales are rather slow. November is traditionally a slow month, and I don't think this will be an exception. The good news is that pendings are higher, and inventory is thin, as new listing inventory continues to slide compared to last year. There is also an article in housingwire.com that foreclosures are the lowest percentage of sales since 2009.

We have low interest rates, we are starting to see a dearth of low priced condos in the middle part of the city where my investors would like to buy them, and the economy is showing real signs of recovery. If we can continue with this pace, our spring buying season ought to be a strong one. Demand is likely to be there, and with the relatively few available homes for sale, we should see a good uptick in prices and optimism.

One stat I would like to focus on this week that is interesting but one we don't take note of is the the median listing price. It is not the most telling of stats, but it is an indicator of market optimism or supply. If it goes up, it means people are asking for more money for their homes, people with higher priced homes think they may be able to sell, or simply that the available supply of low priced homes is vanishing. The number stays relatively stable most of the time, so its not particularly noteworthy to spend time hashing it out, but I want to point out something today that I find very interesting. Lets' look at the median listing price for the last year or so.

October 2010: 119,900

November 2010 114,900

December 2010: 109,900

January 2011: 119,000

February 2011: 119,000

March 2011: 117,900

April 2011: 119,000

May 2011: 119,000

June 2011: 119,000

July 2011: 121,900

August 2011: 120,000

September 2011: 129,900

October 2011: 136,900

November 2011: 144,900 (mid month)

As you can see, that number was very stable over the long run, and had been so through much of the last year while inventory was high. Once inventory was depleted, we are now seeing a definite higher trend in what the asking prices of properties out there are. Its a combination of many things, including fewer listings, which tends garner more impact from the higher dollar properties that get listed. That's not telling, but less listings is in of itself a good sign- less inventory will create price bumps. That is not the only reason though. There are a lot less low priced condos, and prices at the low end appear to be rising as a result. We have been chasing those as investments, but they are more difficult to come by. There are less foreclosures, so more of the inventory that is out there is likely to be higher in price as it is not a distress sale. As a broad indicator of a healthy market, the substantial rise of the median listing price in the second half of this year forecasts optimism, either forced or deliberate, by people who are pricing the homes going on the market. Its a strong sign of faith in market price increases. We have seen much smaller gains in the median price increases so far, but they are off their lows, and the trend seems to be higher.

Okay, that's about all I have to say about that today, but there are some reasons for optimism going forward.

ARMLS STATS 11/08/11

Pendings Jump, Inventory flat

Inventory likely not increasing enough to meet spring demand without driving prices

Pending: 10,836 ( +326 from last week)

Pending Sfam: 9,398 ( +256 from last week)

AWC: 7,598 ( +103 from last week)

AWC Sfam: 6,576 ( +83 from last week)

Active: 19,654 (+44 from last week)

Active Sfam: 15,440 ( +32 from last week)

Closed 10/31-11/6 1,941 (-60 from last week)

Closed Sfam: 1,616 ( -97 from last week)

Closed October (updated): 7,612 ( + 105 from earlier estimate)

Sales activity is rising in November, which is a bit unexpected but welcomed, while inventory continues to stay flat. November new inventory is also relatively flat, it appears, but we also will not expect blowout sales in November. We are in the doldrum months, but they are really not performing poorly. The sales figures are better than last year, and prices seem to have stabilized, although we would like to see some increases. Anecdotal evidence is pointing to a shortage of condo or starter property in some areas, as prices in several properties we have pursued for investors have jumped well above asking price. There is simply not the inventory that we have all become used to kicking around the last several years, and the sellers are starting to realize it. That doesn't mean we are going to have prices shooting skyward anytime soon, but the slack is being pulled out of the rope, so to speak. I believe that the spring buying season will do the heavy lifting on prices. We are simply not adding enough inventory to account for sales in those months, and if this trend stays until February, you will have serious competition for housing at that point. It could drive prices, or it could drive people holding inventory to place it on the market. If there is a lot of latent inventory out there, that could happen as well.

Pendings in October were slightly ahead of where they are now, but they are not far off. I would expect to see 7000+ sales in November, possibly down a bit from October. I would also expect we will see lower inventory coming on the market this month than last year. If December follows the trend of last year, when there were 8200+ sales, we could see inventory take a good hit then as well, as December is the poorest month of the year for new inventory; we could go into January with even tighter supply than we see now. Its still hard to tell, but that looks to be the case.

There is not much else to glean from this week's stats, other than October sales finishing above 7600 puts it a little closer to being a stronger month than I thought. 8000 would have been a big surprise for October, so 7600 is a good number.

So much about pricing depends on the lending industry's participation in it, and through mixed parts of government interference and caution, banks are being bottle necked from full participation in home lending.

ARMLS is forecasting a slight right in prices for November, based on pending info, and a sharp fall in December, also based on contracts signed. I don't know if I find that accurate, but we will see. I can't check those numbers, so I don't use them. There are a lot of contracts to be signed for December closings still to be done, so I doubt the median price is going to be fall as far as they forecast. Their sample of December sales is so small as to be useless at this point.

MLS STATS 11/1/2011

Sales softer in October: 7502; Still higher than Oct '10 by 15%

Median price slightly lower, but is it really?

Inventory levels slip after rising slightly through most of October

New listing inventory: down sharply again from last year in October

Pendings: 10,510 ( -915 from last week)

Pendings Single Fam: 9,142 ( -799 from last week)

AWC: 7,495 ( -164 from last week)

AWC: 6,493 ( -127 from last week)

Active: 19,610 ( -123 from last week)

Active Sfam: 15,408 ( -99 from last week)

Closed 10/24-10/30: 2,001 ( +447 from last week)

Closed Sfam: 1,713 ( +390 from last week)

Closed October Preliminary: 7507 ( +986 from October 2010)

New listings in October: 9575 ( -2712 from Oct '10; second lowest '11)

Median Price: $112,000 ( - $1,000 from September)

October sales were softer, as expected, registering as the third worst month of 2011, after February and January. 7502 is a mediocre number, but not bad, considering its still 15% better than the 2010 October sales. October has been a traditionally slow month anyway, so it wasn't surprising. A 15% gain places it right in the swing zone for sales this year compared to last year; The average is 12.8 % increase in sales year over year, so its actually better than average. Of course, we would all like to see a much stronger sales figure, but this is not bad news.

On another front, active listings fell at the end of the month, after rising for a number of weeks in October; the rises were all quite slight, and this week's fall has wiped out about half of the inventory gains since the end of September. Inventory doesn't look like its going to rise much before February, since November is one of the slowest month traditionally for the number of new listings coming on the market. That could change, I imagine, but there is nothing in the statistics right now that are implying that: new listing inventory continues to fall, and sales are stronger than last year. The situation is this: we have two to three months before heavy seasonal demand comes around again, and two of those months, November and December, are not known for big inventory increase months; they are usually the opposite. September and October were those months last year, and that didn't materialize, as inventory has been basically flat since September 1st. December was actually a good sales month last year, so you could see some inventory burn at the end of the year even. There is a very good chance, as we have been predicting, that inventory levels going into the superb sales month of March will be just about where they are now. If that is the case, we will start to see a lot of inventory burn, unless there is a big influx of new inventory from the banks.

We are likely to see prices rise as well, since many people are going to be bidding on few properties. I didn't do stats for 4th quarter last year, but inventory September 22, 2010 stood at 38,840. That is twice where we are right now. That was also a time period in which sales were much softer than they have been running this year, and with inventory being added at a pace approaching 17.5% higher than this year. Its a 30% differential in sales and inventory, and we might be forgiven for anticipating even stronger demand for housing in 2012, as the economy seems to be picking up a little steam. March could be a very telling month for how the housing industry is going to be doing. There just seems to be an event coming that will change the impression of housing here. Unless more inventory comes available from banks or flippers, its going to be very difficult to find a home here that you want by May. There will just be too much competition for it. I keep trying to think of scenarios in which this would not be the case, but I can see only one: that people will be unwilling to pay higher prices for property than they have been, and demand simply folds up. Its possible, but given that rents have been strong, and new family formation, it seems to me that demand is likely to increase, despite prices rising, as housing is being absorbed, rental or sale.

In support of that point, I recently looked at rental listings for homes in Maricopa. There were a large amount of them, which is what I expected. Almost 200, in fact. What I didn't expect was that I could hardly find one that had been listed for more than 60 days. That tells me that even in a seemingly saturated market like Maricopa, rentals were turning over very quickly. To take the Maricopa example a little further, there were actually more listings pending than available, so housing is being absorbed very quickly on all front there.

I don't see this trend reversing before February, when the demand actually starts to really pick up. If you are an agent, be prepared to tell your clients that they may lose a number of potential purchases if they don't put their best foot forward.

I mentioned the slight drop in median price; it did fall overall, but there is something else behind the slight drop. The problem with the median price as a measurement is that it brings a great disparate kind of property into the calculations. The long and short of it is this: month over month, median prices of single family homes was level at $120,000. But the median overall fell by $1000, from $113,000 last month, to $112,000. I can tell you that right now, we are seeing a run on these very low priced condos that are on the market, and they are selling at cash prices from lenders, so they are not only becoming a significant portion of sales, they are at very low prices compared to single family homes. Single family homes since August, are up $4,000. We are not seeing a drop in the single family market, which makes up the bulk of sales. Condo prices, since banks are making it extremely difficult to borrow on, are forced to sell for cash prices to investors, which drives the values extremely low. This kind of inventory also appears to be drying up, as I have been pursuing these for investors, and we are having difficulty finding the same deals we had earlier.

I already touched on it, but I did want to mention again, new active inventory for October was down sharply from last year, and down from last month. It is the second lowest total all year, barely losing out to July. The trend is toward lower inventory not higher, and while that could change next year, I do think we can expect better level of sales too, and probably at higher prices. We have baby boomers who are retiring as well, and we have people gaining confidence in the economy, to some degree, and this will only increase demand.

The trends are overall pretty positive that February will be the beginning of a very interesting time in real estate in Arizona.

ARMLS STATS 10/25/2011

Pendings Rise, Inventory Flat

October to be a slow month for sales

Pending: 11,425 ( +147 from last week)

Pending Sfam: 9,941 ( +100 from last week)

AWC: 7,659 ( -127 from last week)

AWC Sfam: 6,620 ( -117 from last week)

Active: 19,733 ( +43 from last week)

Active Sfam: 15,507 ( +73 from last week)

Closed 10/17-10/23: 1,553

Closed Sfam: 1,323

New listings in October: 7,453

October is shaping up to be a soft month this year, with sales perhaps reaching their lowest point since February. Much of this has to do with the summer swoon we experienced when the debt discussions came about. Weakened consumer confidence is the result. There are of course, other factors. October is often the third weakest sales month of the year, research shows. We are going to be looking at sales in the 7000, most likely, and I think it will surpass February, but we will have to see how this week goes. The good news is that pendings are trending upward again, although we are likely to see that fall at the end of the month when there is a rush of sales.

Active listings are also climbing, as expected, but ever so slightly as to be almost flat. We are in our slow season, but we still continue to see soft numbers of listings. Less listings and more sales means its difficult for inventory to grow. A few more months of this level of inventory growth and relative sales, and we will be back to our big sales months with very limited inventory to satiate it with.

I want to focus on pending growth; if we can maintain pending sales in the high 11,000's into 12,000's, through the winter months, it probably means a strong recovery in March, including on prices. That will mean relatively few homes available, and lots of demand, because once we get to March there will be a lot of buying pressure on the relatively few homes available. I would also like to mention that pendings are a very true indicator of traditional sales; professional investors are buying many of the homes at courthouse steps, while retail investors and home livers buy them through MLS. The word is that there is strong demand at the auctions, which means inevitably some of these homes will appear in MLS once rehabbed. However, many will be turned into rentals, and ultimately, we may see the effect of too many investor purchases turning into a boon to renters in a few years, as there will be a lot of rental properties. Of course, right now, there are lots of renters, so it is lucrative. There was article discussing that today: there is solid growth in revenue for investors.

Overall, we are kind of sitting in the doldrums for a while; the president came up with some new programs for refinancing that I think almost everyone is non-plussed about. The government can't save housing short of making lenders take a massive haircut, or do quickly adjustable loans, and they are not doing that. Everything is a half-measure, so don't expect their program to make a lot of difference or cause even a stir.

ARMLS STATS 10/18/2011

Pendings, Inventory, both Up but statistically Flat

Median price might be rising, median asking price Sharply higher

Builder sentiment getting stronger?

Pending: 11,278 ( +60 from last week)

Pending Sfam: 9,841 ( +48 from last week)

AWC: 7,786 ( +62 from last week)

AWC SFam: 6,737 ( +54 from last week)

Active: 19,690 ( +96 from last week)

Active Sfam: 15,434 ( +65 from last week)

Closed 10/10-10/16: 1,643 ( +379 from last week)

Closed Sfam: 1,414 ( +311 from last week)

New Listings in October: 5,259

Median Price: $115,000 (+$2000 from September)

Just a couple of comments. Listings toward the end of September grew faster than expected, so there might be more inventory coming than we have seen all year. Through September 13th, there were only 3367 new listings, but the month finished with 9700, so there were quite a few added late. It still is way below last September- 24% less, but its significant to note the number of new listings accelerated. We are through the 18th of october, and we have 5259, which a bit ahead of September's pace. September did finish with upwards of 9700, so the pace was something like 323 a day, while we are currently at 292 a day in October. It certainly doesn't look like any overwhelming number, but it does seem to be growing slightly. Not unexpected, but significant anyway.

Secondly, we are perhaps beginning to see the median price rise take hold. The October median was substantially higher, and so far we are running a bit higher than that, at $115,000. That doesn't mean we will stay there; it often falls off at the end of the month when a large bulk of homes sold, but that didn't occur in September. It stayed fairly high. We shouldn't expect straightline northward movement in the median price, especially considering the time of year we are in, but the bias seems to be higher, even if the number stays relatively flat. Another good sign for the housing industry. It is only an indicator and not a direct route to higher prices, but the median listing price has been climbing, and so far in October is $20,000 higher than last October, and $10,000 higher than last month, which was up already near $10,000 from the previous month. There is either optimism by sellers, or the low end is being cleaned out and higher end homes are being put on the market. Its not a direct indicator, but certainly the higher asking price is a good sign.

Inventory has started to rise a bit; nothing substantial, and statistically almost nothing, but it has gone up three weeks in a row after falling pretty much every week all year. It is our relatively slow time, but in retrospect, September was a decent month for activity, with over 8100 homes sold. I don't expect October to hold up to that level. We are running behind that pace, and I expect it to fall into the 7000's. Certainly not a bad number, its just a slower time of the year. It should handily beat last October's 6,521 sales, but we will have to wait and see. We have started to see the fallout a bit of the economic malaise of the summer gov't uncertainty. It's not terrible, but it would be nice if we were really hitting on all cylinders. Pendings were up slightly, but statistically, they were virtually flat.

The one really bright spot that came out today was a marked increase in the Builder's sentiment index. It is still exceedingly poor, but these were the biggest jumps in a year. If the builders have reason for optimism, perhaps we do to.

I think it is fairly safe to say we are in hibernation mode until the spring buying season. We seem to be holding up pretty well, but I don't see any fundamental changes to the housing market locally until we get to the high demand months. What we do want to monitor is new inventory; it has remained exceptionally light all year, which has allowed us some room for recovery. If we don't have any great changes in the trends, we could have a very strong market going forward in 2012.

Pendings and Active with Contingency Rise

Inventory Rises slightly as expected

Pending: 11,218 ( +236 from last week)

Pending Sfam: 9,793 ( +179 from last week)

AWC: 7,724 ( +170 from last week)

AWC Sfam: 6,683 ( +127 from last week)

Active: 19,594 ( +114 from last week)

Active Sfam: 15,369 ( +120 from last week)

Closed: 10/3-10/9: 1,264

Closed sfam: 1,103

No commentary this week; nothing really interesting with these numbers.

ARMLS STATS 10/4/2011

***September Sales Tops 8,000***

Median Prices Sharply to $113K- highest of the year.

Inventory rises again as season fade in buying activity hits

Pending: 10,982 ( -1056 from last week)

Pending Sfam: 9,614 ( -929 from last week)

AWC: 7,554 ( -234 from last week)

AWC Sfam: 6,556 ( -188 from last week)

Closed 9/26-10/2 2,760 ( +1195 from last week)

Closed Sfam: 2,376 ( +1029 from last week)

CLOSED MONTH OF SEPTEMBER: 8,020 (+19.7% from Aug.2010)

Active: 19,480 ( +184 from last week)

Active Sfam: 15,249 ( +113 from last week)

New Listings in Sept.: 9,583 ( September 2010: 12,841; August 2011: 10,292) -25.4%

Median Price: 113,479 ( +$4,479 from August 2011) 4.1% increase

September Sales finished fairly well, as the sales numbers look to have topped 8000. That is very good for September, but is definitely down from the excellent month of August. It is not extraordinary, but its is a sustainable number for the slow season. Continued sales in the 8000's for the rest of the year would put us at 12-13% increase. I think that is fairly likely to happen. This will end up being a pretty fair year for sales, i think.

Maybe more importantly than the number of sales is the fact that the median price rose somewhat unexpectedly. I should say we have been expecting a rise for quite a while due to market forces, but it has stayed flat, so we had just about come to accept that. Now, we had a sudden price rise in a relatively quiet sales month, and it raises some eyebrows that maybe are going to head in the right direction on prices, given inventory levels, and what is another strong indicator of higher prices: a higher median listing figure. That number has been rising for several months now, and it went up almost $7000 in September from August, and its actually $10,000 higher than last September. That is also very significant, as it does show either lower priced inventory is being cleaned up, or that sellers are more confident in their pricing, but as I have said on more than one occasion, it is likely a mix of the two.

We are entering the Autumn doldrums for sales, and it is starting to show up. September sales were a bit slower, and that is being followed now by lower pendings and a slight uptick in inventory. This was expected, but we expected it to happen in July, so we have had a good extra quarter of inventory reduction. I expect inventory to build at slight levels for the next few months, maybe take a breather in December, before rising a bit in January. Come February though, I do expect us to start burning inventory off, as buying demand picks up. It has been mentioned before in this blog, but February and March are key demand months, and what little excess inventory is currently on the market will quickly be absorbed by demand in the spring buying season. This will spark some price increases at that time.

It really is too bad I didn't post in the fourth quarter last year, so we could compare trends, but we did seen inventory build through that time frame. Sales are stronger this year, with less inventory coming on the market, so we will build but not quite as quickly. I do expect a strong buying season in 2012. I think that our overall economy is getting better, even if it is at a slower pace than any of us would like, and I do think there will be more confidence in buying at the price levels we are at. The median price increase is indicative of a better confidence level, and relative scarcity of available housing, and I think we will see even more confidence by the time springtime rolls around.

ARMLS STATS 9/27/2011

Sales in September not better than August

Pendings still rising slightly

Inventory rose for the first time all year

Washington battles weighing on September sales?

Median Price trending upward?

Pending: 12,038 ( +14 from last week)

Pending Sfam: 10,543 ( +24 from last week)

AWC: 7,778 ( +45 from last week)

AWC Sfam: 6,744 ( +37 from last week)

Active: 19,296 (+123 from last week)

Active Sfam: 15,136 ( +57 from last week)

Closed 9/19-9/25: 1,565 (-135 from last week)

Closed Sfam: 1,347 ( -95 from last week)

Listings to date in September: 7,895

Closings to date in September: 5,398

Median Price: $114,950 (+$5,950 from August)

This week was really a mixed bag in housing news. You had pendings holding up much better for the most part than expected throughout the summer and holding their gains, which forecasts future decent sales. You also are seeing a couple of trends in the pricing which are encouraging; the median price is showing a substantially higher level than what it was last month, and what it has been all year long, but that could change with the large influx of sales at the end of the month. It usually does, but it still seems likely we are going to log a strong uptick in median price.

The other stat that supports that notion is that median listing prices have also been rising, and the last month, has risen $10,000 per listing. That speaks to either the lower end inventory being cleaned out, or sellers are optimistic about what prices they can get for their homes. As in almost all things, its a mix of the two assuredly. The median listing price for most of the first half of the year was around $119,000; September's Median is $134,900. That is not really a fluke; July had bumped up to $122,500, then August rose to $124,000. Obvious improvements, but also notable as July was the first month that the median list price was equal to or higher than the previous year. July was the same, August was up $5K, and September right now is up $14,900 over last September. It will likely not finish that high, but its still a significant change. Third quarter might be noted as when things turned. Clearly, we have had a change, and seem to be headed in the right direction.

There is other evidence supporting Arizona's fundamentals. Retail sales have been surprisingly strong in Arizona, logging a 7.5% increase over last August. That is not insignificant, and as you can see by the article, it is also not an aberration. If people are willing to spend on cars, they will be willing to spend on homes, which is what we are seeing. Couple that with low interest rates, as well as low prices, and we have been able to maintain a solid level of housing sales throughout the summer months. However, lets take a look at the negative side.

For the first time that I can remember all year, the inventory level went up. It didn't go up a lot, but psychologically, the inventory level falling is what all of us in the inventory have prayed for for the last several years, so its unsettling. However, we have to assess that in the larger picture.

• Inventory was expected to start climbing in July.
• Inventory has reached a "barebones" level; its low enough to start encouraging certain sellers to want to list their homes because they are more optimistic they can sell it.
• This could be a blip, as it appears September sales were forecast by some of the fallout of the Washington bickering that started up in July.
• New resale inventory for September might reach the lowest level of the year, so a big move in inventory doesn't look particularly likely, as pending numbers are holding their own.

For these reasons, it seems like a significant rise in inventory is probably not that likely at this point. We may see some slight moves, but we are in the very bottom of the seasonal trough, so its not particularly significant.

The other downside is that September sales could end up being fairly weak compared to the last several months. They are often weaker in September, but we of course want to see a straight line up, don't we? Even though they might look weaker than the rest of the summer, it still appears they bill blow the doors off last September, so it might not be all that bad. I am still seeing that we will sell upwards of 7700 homes in September- not great, but a a 16% or better improvement over last September. Its really only half-bad news, and that is debatable. This might be as about as good as you could hope for.

The stat that really stands out, if it stands up, is the median pricing. If the median price makes that kind of move now, even when the market is at its seasonal cooling off period, what will it be like in February, March, April? The market fundamentals have mostly pointed to some price increases, for months, really, if you follow my blog, but they have stayed oddly low. I think that is mostly a matter of consumer sentiment, just like the divergence of what consumers are saying about the direction of the economy, and what they are actually doing, which is spending again, as evidenced by the retail numbers. Its the equivalent of saying: "This economy scares me, so I am saving my money and not doing anything." But when the friend points out the subject just bought a new car, he replies, yeah, but its a Small new car." The sentiment is things are still really bad, because for some people they are really bad, but for many, only the sentiment is bad, and the reality is that they are buying cars, trips, boats, and bikes....and houses.

People are doing the same thing with housing now; they speak poorly of the housing economy, but they are out buying in pretty good numbers, but the sentiment is still negative enough to have held prices down while fundamentals should have pushed prices long before now. We are seeing it in submarkets- Wittmann house prices have been up sharply. There wasn't a house selling there above $100,000 a few years ago- now it looks like a decent home on an acre there will be $150,000+, and you will have to fight for it. Same thing in certain other areas that we have tried to invest in. I am not going to forecast any price increases for fourth quarter, but I have a very positive outlook for the end of first quarter 2012. Second quarter could be a foodfight, if inventory stays at the level it is now. If we enter February with less than 18,000 single family homes, look out by April, because it will be tough to buy what you want without a bidding war.

Even though September is looking like a mixed bag, I am encouraged that it seems we bounced off the softness that the idiots in washington cost us with their debt haggling. The uncertainty at that point certainly was the cause of pendings sliding back to lower levels in the 11,000's in early September, and is the reason why we will experience weaker sales this month, and likely October as well. Pendings have recovered to a degree that tells me we will maintain the current course for the next few months, anyway. But, I will not be surprised if the cumulative effect of low inventory and strong demand pushes prices through this period anyway. I am not banking on it, but I won't be surprised either.

ARMLS STATS 9/21/11

August Sales Rise Nationally 7.7%

Pendings up slightly, actives down slightly

New September listings on pace for less than 9000?

Pending: 12,024 ( +23 from last week)

Pending Sfam: 10,519 ( +17 from last week)

AWC: 7,733 ( -87 from last week)

AWC Sfam: 6,707 (-69 from last week)

Active: 19,173 ( -34 from last week)

Active Sfam: 15,066 ( -20 from last week)

Closed: 9/12-9/18: 1700

Closed Sfam: 1,442

I apologize for not getting these out yesterday on the normal schedule; I was out of town.

September is not going to set any records for sales, but it looks like it will be okay. The pending numbers continue to hold up this summer compared to 2010, so the indications are that it sales are holding up pretty well. The fall is not a great time for sales until December, but we are holding up here. We are also seeing some substantially higher median listing price, which denotes people are either more confident in their pricing, or that there are fewer and fewer low priced properties coming on the market. That is the more likely reason. We are seeing that the condo market is absorbing inventory at these low prices, and there has been some news about luxury condo sales recovering locally. We also had the interesting headline this morning on CNBC about August home sales surprising. There was even another good bit of news (nationally) about the construction industry mending a bit. It was not about residential construction, but construction jobs of any kind would be most welcome. Its also an indicator of banks willingness to open up lending again, and that is crucially important to our recovery.

On the local front, new construction continues to be dogged by just how low the pricing for resale homes is. How do you sell a new condo for $100K when there are used condos for half of that price? Why would someone build a new custom home when you can buy a finished one for substantially less money? These are difficult obstructions for the market to overcome, and the primary reason that the new home construction business is so slow. These prices are assuredly under their economic value (meaning what is a reasonably expected rate of return for the asset class), and that condition will not last forever in a market. I have said it before, but if we get to the spring buying season without a reasonable uptick in inventory, buying a home at that time is going include a lot of bidding up prices for the best properties. We will be in a position of having half the inventory that we started this year's buying season with, and given the flow of 2011, that would mean we would drain ALL inventory off the market. Obviously, that will not happen, but what will happen is that as prices rise, more people will put their home on the market, thinking they can get a better price now. Builders who have some inventory ready may be able to sell specs to people who need a home now and don't feel like competing on buying a dozen properties before they are able to snag one with a blue sky offer.

This is not necessarily a bad thing; prices need to come up, and if this is the mechanism that shifts peoples' thinking, so be it. It could also happen that a lot of foreclosures may be coming available, and while I doubt there will be even a worst case scenario of 20% increase in the inventory levels over the next 3 months, that still amounts to very little. 20% would add 3 thousand extra homes to the single family market. A lot of Buyers' agents would tell you that they wish there were 3000 more homes on the market, because it is beginning to be slim pickings if you are a buyer. So if inventory increases by 3000 homes by January 1st, that would be just in time for the Spring Buying season, which will absorb 3000 homes in March Closings alone. When we go from 6K-7K closings a month to 9500-11000 for the next four months. The inventory wave does not appear to have sufficient legs to put these all out on the market in that short time frame. Regardless, I don't think that is going to happen; here's why.

I referenced in the title about inventory in September. Here are the facts. We have had a significant slowdown in the numbers of homes being listed all year. We are down about 17% from 2010. The trend all year is towards lower listing numbers; as a matter of fact, I went back to 2003, which is prior to any segment of the real estate boom years, and we are trending 6.3% less than that year. We have grown much larger as a city in that time, and despite the fact that our sales are 22.6% higher than 2003 sales, there is less inventory coming on the market. Most people will tell you that 2003 was a healthy time period for real estate in Arizona, but our inventory comparisons along with sales comparisons tell us that all things being equal, our inventory level is 30% below a historically healthy level. There is 22% higher sales, 6.3% less incoming inventory, so you have almost 30% higher inventory factor in 2003 than you do in 2011. I think that means that we can absorb a 30% increase in inventory and still be at the same levels as 2003. That is not bad. Of course, there is no evidence that we are going to see a 30% increase in inventory; as I said, the trend is lower, and right now, the trend in September could put us below 9000 listings this month, which would be the lowest total for a month for the year. So far, there are 5929 listings in September, through 20 days. That is about 296 a day. There are 10 days left in September, so an additional 2960 would be expected. That is a pace for 8889 for the month. I think it will finish a bit higher than that, but I don't have any evidence that more will be coming on the latter half of September than they normally do; listings tend to come on the market on a regular basis, as opposed to closings, which come as a rush at the end of the month.

It is difficult at this point to see where a big influx of inventory is really going to come from when by all appearances, it seems to be weakening. That can all change, I know, but my point is that the upside risk to higher inventory levels is very far below the dam wall at this point. The potential flood is not large enough at the current level of sales to matter much in the ARMLS region. I don't think there are too many experts out there who feel the next wave of foreclosures is going to be larger than the first wave of foreclosures; circumstances are simply different now.

MLS Stats 9/13/2011

Pendings Drive Back Over 12,000 This Week

Median Listing Price Rising?

New listing activity maintains lowered trajectory in August

Pending: 12,002 ( +417 from last week)

Pending Sfam: 10,502 ( +142 from last week)

AWC: 7,820 (+102 from last week)

AWC Sfam: 6,776 ( +101 from last week)

Active Listings: 19,207 ( -58 from last week)

Active Sfamily: 15,086 ( -71 from last week)

Closed 9/5-9/11: 1,139 ( -1,307 from last week)

Closed Sfam: 957 (-1,142 from last week)

New Listings in August: 10,241 (August 2010: 12,972

For the year: -16.7 % less than 2010

New Listings September: 3,367 ( September 2010: 12,841)

Sales 2011: +11.9 over 2010

Median list price August: 124,900 (August 2010 : 119,000)

Pending sales in September are recovering from the dramatic drop that typically accompanies the end of the month sales. We are just never sure, given the economy, if the pendings will recover in any given month, but they have shown very good resiliency. My stats are a little spotty for the fourth quarter last year, but I did take a reading on September 21, 2010. There were 10,250 pendings that day; a number substantially less than our current figure. I would expect that pendings next week, which will match the same week as the 10,250 reading, will be higher yet. This means we are 15-20% ahead of last year's pace, and shows we are heading toward some recovery in housing in Arizona. Our inventory is exceptionally low in the MLS, despite what you hear in the news media. There are and will continue to be homes in arrears on payments, etc, but that will be the case for a long time to come. To start counting them as inventory or "pre-inventory" is ludicrous. All houses are potential inventory; I will give a good example. You have a home that is constantly running 60 days late on its payments; so someone publishes that somewhere, and adds it to the "shadow inventory". But, on the same block you have a family whose head of household got transferred to a great new job in San Diego, but will need to start next month. He's not upside down on his house, and not behind on payments, but he decides to put his home on the market that very day. Which of these situations is a better example of shadow inventory? You can answer that by saying which one become inventory, and which one dogs along being called shadow inventory for the next year until the owner caught up or refi-ed. My point is, every house is shadow inventory, even the paid for ones. Shadow inventory is a wildly inaccurate way to assess inventory. We have tens of thousands in supposed "shadow inventory" right now; but our actual inventory is down 16+% for the year, so what does the shadow inventory tell us? Not a darn thing, other than that this house might possibly find its way on the market in the next year. But then again, so will your 90 year old Aunt Hilda's the week after she falls down and needs to go to skilled care. No one was looking at that as shadow inventory, were they? Or how about the divorce that is just brewing because an athlete got caught with another woman? Do we count those? No, we don't. Right now, it seems like the only inventory there is is the bank -related inventory, and buyers will tell you that they are feeling like they don't have enough choices right now. You know why? Because there is barely more than 2 months worth of ACTUAL inventory. People who might normally be considered movers after several years are hunkering down and keeping their home if they can afford it, because they might have a hard time getting a mortgage, or selling the home doesn't benefit them enough financially to go pursue another house.

We aren't allowed to count sales as soon as a college graduate gets a hot shot job out of college; lets not start adding homes to inventory just because someone loses theirs. You can't buy a home that's in shadow inventory, so its not inventory.

What is encouraging is how buoyant demand has been this summer. I really thought we would experience a great fall-off after June, since that is the beginning of a seasonal slowdown. Certainly sales are less than the peak in June, but we saw strong sales through the dog days of July and August, and that is very encouraging. Our pending number continue to bounce back each month, portending strong sales for the next month. I keep saying this, but if we stay on this track until February, there will be a lot of fighting by buyers over the choicest properties on the market, since their really is no excess to meet the demand spike that occurs in the buying season. We have practically shaved more inventory since the beginning of the year than there is inventory, so where does that leave us when we go through the sustained demand months of February-June? Yup, buyers pushing prices up.

Sales this week obviously fall off after last week's, since they included end of the month numbers. I am a little bit concerned that we will hit some soft spots in sales though, since we have had to absorb some wicked rides in the stock market that can affect people's confidence. If September was a little soft, I would not be surprised, but the pending numbers are growing again, and if that is an indication, than we seem to be holding on to the same track.

Just a quick note about the Median List Price. It had been hanging around near $115K-119K for the better part of the last year, but we have seen it pop up to $123K, and now $124K+ in August; that means that the bottom is probably coming up on list prices. It is not a giant indicator, but it is a trend nevertheless. Happy to see it, along with a stabilized median sales price. It has been bouncing along on the same track for a significant time, and now that inventory has been largely cleaned up, I would expect that the trend will be higher rather than lower. It might not happen until Spring, but its going to happen.

Have a great week!

MLS Stats 9/13/2011

Pendings Drive Back Over 12,000 This Week

Median Listing Price Rising?

New listing activity maintains lowered trajectory in August

Pending: 12,002 ( +417 from last week)

Pending Sfam: 10,502 ( +142 from last week)

AWC: 7,820 (+102 from last week)

AWC Sfam: 6,776 ( +101 from last week)

Active Listings: 19,207 ( -58 from last week)

Active Sfamily: 15,086 ( -71 from last week)

Closed 9/5-9/11: 1,139 ( -1,307 from last week)

Closed Sfam: 957 (-1,142 from last week)

New Listings in August: 10,241 (August 2010: 12,972

For the year: -16.7 % less than 2010

New Listings September: 3,367 ( September 2010: 12,841)

Sales 2011: +11.9 over 2010

Median list price August: 124,900 (August 2010 : 119,000)

Pending sales in September are recovering from the dramatic drop that typically accompanies the end of the month sales. We are just never sure, given the economy, if the pendings will recover in any given month, but they have shown very good resiliency. My stats are a little spotty for the fourth quarter last year, but I did take a reading on September 21, 2010. There were 10,250 pendings that day; a number substantially less than our current figure. I would expect that pendings next week, which will match the same week as the 10,250 reading, will be higher yet. This means we are 15-20% ahead of last year's pace, and shows we are heading toward some recovery in housing in Arizona. Our inventory is exceptionally low in the MLS, despite what you hear in the news media. There are and will continue to be homes in arrears on payments, etc, but that will be the case for a long time to come. To start counting them as inventory or "pre-inventory" is ludicrous. All houses are potential inventory; I will give a good example. You have a home that is constantly running 60 days late on its payments; so someone publishes that somewhere, and adds it to the "shadow inventory". But, on the same block you have a family whose head of household got transferred to a great new job in San Diego, but will need to start next month. He's not upside down on his house, and not behind on payments, but he decides to put his home on the market that very day. Which of these situations is a better example of shadow inventory? You can answer that by saying which one become inventory, and which one dogs along being called shadow inventory for the next year until the owner caught up or refi-ed. My point is, every house is shadow inventory, even the paid for ones. Shadow inventory is a wildly inaccurate way to assess inventory. We have tens of thousands in supposed "shadow inventory" right now; but our actual inventory is down 16+% for the year, so what does the shadow inventory tell us? Not a darn thing, other than that this house might possibly find its way on the market in the next year. But then again, so will your 90 year old Aunt Hilda's the week after she falls down and needs to go to skilled care. No one was looking at that as shadow inventory, were they? Or how about the divorce that is just brewing because an athlete got caught with another woman? Do we count those? No, we don't. Right now, it seems like the only inventory there is is the bank -related inventory, and buyers will tell you that they are feeling like they don't have enough choices right now. You know why? Because there is barely more than 2 months worth of ACTUAL inventory. People who might normally be considered movers after several years are hunkering down and keeping their home if they can afford it, because they might have a hard time getting a mortgage, or selling the home doesn't benefit them enough financially to go pursue another house.

We aren't allowed to count sales as soon as a college graduate gets a hot shot job out of college; lets not start adding homes to inventory just because someone loses theirs. You can't buy a home that's in shadow inventory, so its not inventory.

What is encouraging is how buoyant demand has been this summer. I really thought we would experience a great fall-off after June, since that is the beginning of a seasonal slowdown. Certainly sales are less than the peak in June, but we saw strong sales through the dog days of July and August, and that is very encouraging. Our pending number continue to bounce back each month, portending strong sales for the next month. I keep saying this, but if we stay on this track until February, there will be a lot of fighting by buyers over the choicest properties on the market, since their really is no excess to meet the demand spike that occurs in the buying season. We have practically shaved more inventory since the beginning of the year than there is inventory, so where does that leave us when we go through the sustained demand months of February-June? Yup, buyers pushing prices up.

Sales this week obviously fall off after last week's, since they included end of the month numbers. I am a little bit concerned that we will hit some soft spots in sales though, since we have had to absorb some wicked rides in the stock market that can affect people's confidence. If September was a little soft, I would not be surprised, but the pending numbers are growing again, and if that is an indication, than we seem to be holding on to the same track.

Just a quick note about the Median List Price. It had been hanging around near $115K-119K for the better part of the last year, but we have seen it pop up to $123K, and now $124K+ in August; that means that the bottom is probably coming up on list prices. It is not a giant indicator, but it is a trend nevertheless. Happy to see it, along with a stabilized median sales price. It has been bouncing along on the same track for a significant time, and now that inventory has been largely cleaned up, I would expect that the trend will be higher rather than lower. It might not happen until Spring, but its going to happen.

Have a great week!

ARMLS STATS Sept 6, 2011

***August Sales beat Aug.2010, July 2010 Handily***

Active Listings still falling, new inventory still lagging 2010

Median Prices basically flat, but up slightly

Pending: 11,585 ( -305 from last week)

Pending Sfam: 10,360 ( -270 from last week)

AWC: 7,718 ( N/A)

AWC Sfam: 6,675 ( N/A)

Closed: 8/29-9/4/2011: 2,446

Closed Sfam: 2,099

Active: 19,265 ( -147 from last week)

Active Sfam: 15,157 (-153 from last week)

AUGUST SALES: 8,815 ( +1852 from August 2010)

AUGUST MLS HOUSING STATS

A quick report on the month of August initial MLS SALES and INVENTORY numbers:

Residential Sales in August 2011: 8730 (Single Family residences and Condos)

Residential Sales in August 2010: 6,963

Change: up +25.4

Residential Sales July 2010: 8,493

Active residential Listings: 19,278 (Single Family residence only inventory 15,181)

September 22 2010* 38,804

*I don't have the stats from the exact week. (I have to apologize here; I took a hiatus last fall doing the stats, so I have a big gap in the weekly pending and active numbers starting in September that last until February this year. I am sorry.)

New Inventory on the Market in August 2011: 10,101

New inventory on the market in August 2010: 12,972

Difference: 2,871 (-22.1 %)

As we can see, new (resale) inventory is also much lower. When sales are up 25% and new inventory is down 22%, you can see why we have been burning inventory all year long. If you go back and read through the stats for 2011, you will see a steady reduction in inventory all year long. We are now

As we can see, the inventory and production numbers have been very good in the Arizona Regional Multiple Listing Area. We have slashed inventory in half from last September, and it appears that maybe the median price slide has been stabilized as well. A good deal of how low that is is the result of rebounding condo sales, at very low prices, since banks are loathe to loan money on them. We have seen homes that once kissed around the $175K mark go for $25,000. Its inevitable that the median price will be dragged down by this, which is why I think the sliding inventory numbers are the most important aspect. I have said it several times in back posts, but if we continue to sell homes through this slow period at the rate that we are, inventory is going to be about where it is coming February when a purchasing spike occurs. If we get to February and we have normal seasonal demand, I see no direction but for prices to rise through the strong demand period that runs from February through June. Inventory is just not there to absorb the demand.

These numbers do a shift around a bit for the next few days, but it still shows a very solid month of August for sales. I had some expectations that perhaps August was going to fall significantly below July's numbers, but we seem to have outperformed. I do think Arizona fundamentals for sales growth are better than some places: we probably still have an influx of people and jobs, even if they aren't terribly high paying jobs; and home prices are reasonably affordable for people. We may also see the "rent effect" start to hit Arizona, with rents going higher, some people will start opting for the purchase of a home, even if they are still tentative, since the cost of renting is blowing past the cost of buying right now. I do think fundamentally that Arizona is recovering, and that even this wave of foreclosure sales they keep talking about comes to fruition, we have reached such a low level of inventory that it would be difficult to see this swamping the boat again. Demand has returned, inventory is low and getting lower, and prices will eventually be forced upward, or builders will start building to meet demand.

Well, I promised I wouldn't go into an in-depth analysis, so I am going to give it a rest here. I am moderately optimistic about the housing market given another strong month when weakness might have been expected. Its surely better on all fronts than 2010, and we have now reduced inventory to very manageable levels. There is still a crisis of confidence out there over the economy, but there is no doubt that real estate is stabilizing.

ARMLS 8/30/2011

August'11 will beat August'10

Inventory Still Falling

Pending: 12,190 ( -79 from last week)

Pending Sfam: 10,630 ( -93 from last week)

AWC: 7,483 (-20 from last week)

AWC Sfam: 6,774 ( -43 from last week)

Active: 19,412 (-187 from last week)

Active Sfam: 15,310 (-123 from last week)

Closed 8/22-8/28: 1,885 (+47 from last week)

Closed sfam: 1,661 (+99 from last week)

Closed MTD: 6,851

It looks like August is going to be a good month for sales; this month has surpassed sales as of today; if tomorrow is a typical last day of the month, we will expect to blow past last year by a good 10%. I am not sure if it surpasses July, but it is pretty solid nonetheless. The pending numbers seem to be holding up as well. The new inventory numbers for August are saying down as well. It might cross into the 10,000, but it will be close. Our slow season isn't turning out to be that slow, frankly.

We are starting to see the effect of the slimmer inventory now. I have been looking for some rental properties for some clients, but it is getting difficult to find quality at a lower price. Certain areas are selling better than others; I don't think Maryvale will recover anytime soon, but hot areas are rebounding to some degree.

ARMLS STATS August 23, 2011

Inventory Still falling modestly, pendings higher again.
New inventory for July trending behind 2010.
Where is the backlog of homes?

Pending: 12,269 (+ 128 from last week)
Pending Sfam: 10,723 ( +141 from last week)

AWC: 7,863 (+11 from last week)
AWC Sfam: 6,817 ( +1 from last week)

Active: 19,599 (-103 from last week)
Active Sfam: 15,433 ( -137 from last week)

Closed: 1,838 (+310 from last week)
Closed sfam: 1,562 ( +251 from last week)

Closed MTD: 5,202

I will do commentary later...

ARMLS STATS 8/16/2011

Pendings Rise, Actives continue to drop
Sales are light in August so far

Pending: 12,141 ( +204 from last week)
Pending Sfam: 10,582 ( +148 from last week)

AWC: 7,852 ( +53 from last week)
AWC Sfam: 6,816 ( +56 from last week)

Active: 19,702 ( -134 from last week)
Active Sfam: 15,570 ( -128 from last week)

Closed 8/8-8/14/2011 1,528
Closed sfam: 1,311

MTD: 3,376

The closings were surprisingly light so far in August, but the pending sales are still climbing, albeit slowly. We are still in the slow summer period, so its not unexpected. Actually this is all pretty good news, as if we can keep inventory levels where they are through the summer and fall, it shows we have some stability.


Sales are slowing, but we are still going to be better than last August. I don't know if it will be as high as July though yet. It is encouraging to see that pendings are still rising, along with a falling inventory. I don't have a lot of time today, so I am going to wrap this up, but these stats show we are moving in the direction we want. Active single family inventory in the 15,500 range? That is incredible when put in perspective. Pricing was down in july, but it does look like we are going to be going in the right direction even on that. We might not finish much higher in August, but the median price is even trending higher.

I will be back next week with a better post!

chris

ARMLS STATS 8/9/2011

Pending Sales Rise, Inventory slightly lower
July closings at 8,549.
Would you rather be in inflated stocks, or already discounted Hard Assets?

Pending Sales: 11,937 ( +366 from last week)
Pending Sfam: 10,434 ( +312 from last week)

AWC: 7,799 ( +176 from last week)
AWC Sfam: 6,760 ( +168 from last week)

Active: 19,836 ( -195 from last week)
Active Sfam: 15,698 ( -219 from last week)

Closed 8/1-8/7 1,405
Closed Sfam: 1,205


Despite the drumbeat of negativity in the news, the real estate market here is so far still marching forward this summer, albeit with a few caveats. As we noticed last week, home sales were very strong in July, a typically weakened month in Phoenix. The median price was a little lower, which is puzzling, but not enough to be disturbing. It could simply amount to a lot of condominium sales which come in at lower prices. We are getting down now where there are only about 4000 listings of other than single family homes now, so that means condo sales must be occurring with great regularity as well. These are going to be lower than the median price and will probably drive the number down. It is difficult to measure that median number with any great degree of certainty what drives it.

Well, the elephant in the room is what is going to happen on Wall Street. The stock market swung back pretty strong today, but it doesn't mean the instability is over. The fact that globalism and multi-national companies is the source of financial viruses is now without question. The US needs to seriously think about how they want to encourage re-investment in America and our mostly strong system based on productive Americans, as opposed to through our taxing regime, encouraging our biggest most profitable countries to keep and invest their money overseas in banks and bonds that are now looking very suspect. I think the market falls a bit more, and I think another group of americans figures out that investing in Wall Street is a gamble in which you hope to be betting on the same company at the same time the giant players who can move the markets do so.

There is a silver lining to this, however. Gas prices may slip, and we might see, like we did after the fall of the market 10 years ago in 2001, that people will put their money into hard assets like real estate. This is always cyclical anyway, but financial contagion is a catalyst for a broad shift toward investment in that what we can see. I have no faith in the market at this point, given their exposure to other banks on the continent. Hard assets are at least that; you own them and prices can still go up or down, but you still have the asset. People can do no more with gold than they can with land, and you see people rushing to buy gold and driving it skyward. Of course, gold is more liquid than land, and that is what makes it more attractive now. Eventually builders will need land to increase housing units, as the country and especially Arizona grows. That is a no doubter, and land, if you want to think about it in Wall Street terms, is extremely over sold. I will give an example of this. I know of a piece of farmland in Pinal county for sale for about $5000 per acre. Right now, alfalfa is selling for a minimum of $250 a ton. In Arizona, an acre in Alfalfa can produce anywhere from 8-13 tons per acre. Even at the low side of things, the gross return on that for a farmer is a 2-3 year payback. Now, obviously, there are many expenses in there, but the return on investment is very quick, and that is traditionally a very high return on farmland, implying that the price of the land is very low, since the price has been coming down even though Alfalfa has shot up 200-250% in the last year. People have been wary of hard assets, and probably with good reason, but at current prices they are a very smart buy.

Housing this week shows we are probably leveling off in our inventory reduction for the rest of the summer, or even the rest of the year, but as long as it doesn't start rising precipitously over the next 4 months, we will be going into the first quarter buying season in excellent position. I had high hopes for buying demand for the rest of the summer; now with this last bit of nonsense in the stock market, we might see some marginal demand destruction if people get spooked. Hopefully this settles down immediately and everyone can get back to business.

One interesting stat for the week was that inventory for single family homes, as both a percentage and even the raw number, fell faster than overall inventory. I don't know if there was a raft of condos that came on the market, but I am assuming that was probably the case. It just could be that single family purchasing is recovering to the point where it is growing faster than overall demand. It doesn't happen often, so it was kind of interesting. Stronger single family home demand signifies to me a stronger market, as families buying homes is the backbone of the industry.

EDIT: Stocks have slid back into the negative. Trust in hard assets; farmland or energy land if you can get it.