ARMLS STATS 3/21-3-27/2011

Inventory depletion picks up pace; March '11 will best March '10
Pending Sales still rising as spring buying season takes hold
Are prices finally going to start to rise?


Pending Sales: 13,729 ( +341 from last week)
Pending Sfam: 11,723 ( +301 from last week)

AWC: 7,111 ( +79 from last week)
AWC Sfam: 6,094 ( +37 from last week)

Active: 30,730 ( -932 from last week)
Active Sfam: 24,794 (-786 from last week)

Closed 3/21-3/27/2011: 2,086 (+46 from last week)
Closed Single fam: 1,744 ( +27 from last week)

Closed through 3/27/2011: 7,361 (March 2010: 8801)
Closed Sfam: 6,137


Sorry, I don't have much time for analysis today, but I did want to get the numbers posted. We had another solid week, with 2000+ closings. We are almost assuredly going to pass 9000 sales in March, and there is an outside chance of hitting 9500. It doesn't look like that now, while we are only at 7361, but keep in mind the last week of February, there were 2770 closings; its not always true the last week is the biggest week, but it usually holds true. If I was feeling a bit more optimistic, I would say there was a chance at 10,000 sales in March, but I think that is overstepping a bit. It could happen, but it would count on March's final week to hit into the 3000 sales, and I have no way of accurately forecasting that.

Inventory is falling at a very strong clip reminiscent of 2009; last year, there was a large influx of new listings through March and April, which mediocre sales could not keep up with, and sales fizzled all summer. We seem to be tracking much better this year, with inventory falling far short of last year's levels. So far this year, there are over 4000 less new listings in March compared to 2010; that is after there 2000+ less new listings in February than 2010. I will try to discover where the reductions are coming from after the end of the month when figures are settled, but the trend had not been less foreclosures, but less normal listings, which I would also guess tends to have a downward effect on pricing. I would guess that people are less spooked into selling, don't like the prices they can sell at, or just don't think they can qualify for a home right now. Whatever the reason, they look like they are staying put. I should point out that the percentage of foreclosure listings has gone up of available listings, but that is because there are less listings in total, and the actual number of foreclosures has been static. I don't take that shift as bad news. Whatever the reasons for less inventory is a good sign.

The mediocre news is the median price is low. It is up slightly, and I would expect it to finish slightly higher, but it is still sharply less than last year. We have all been calling false bottoms on the pricing for a long time; we do seem to have a lot more factors on the side of it starting to rise now, however. Lower inventory and that even falling; increasing sales and pending numbers, the economy overall getting stronger, and really a small amount of new home inventory as an alternative. We also have a very strong rental market right now, as well as improving employment prospects; these are all leading indicators that home prices will start to rise. We are also reaching the calendar position of very strong sales for the next six months, so that also works in rising prices' favor.


There is a great article at CNN about the near future of homebuying that I wanted to share with you also; the author interviews an excellent resource who has a long history tracking the housing markets. A very good read.

Have a great day!


Chris

ARMLS STATS 3/14-3/20/2011

Inventory falls sharply, New listings continue to Lag 2010
Pendings trending well, March sales should exceed 9000.
Prices to remain flat for March


Pending: 13,388 (+219 from last week)
Pending Sfam: 11,422 ( +195 from last week)

AWC: 7,032 ( +84 from last week)
AWC Sfam: 6,057 ( +68 from last week)

Active Listings: 31,662 ( -816 from last week)
Active Sfam: 25,580 ( -709 from last week)

Closed 3/14-3/20/11 2,040 ( +342 from last week)
Closed Sfam: 1,717 ( +292 from last week)

Closed 3/1-3/20/11: 5,197
Closed Sfam: 4,324

New Pendings 3/14-3/20: 2,631
(Prior 2 weeks: 3/13: 2,281
3/6: 1,952


Sales for the ARMLS service area continue to trend strongly upward, with large increases in pending sales, and closed sales as well. Given current sales rate, it is likely we will surpass 9000 homes sold in March. We are also seeing a significant upward trend in the forecast for April sales, as the trend line for pending transactions is also up very sharply; almost 35% since the beginning of March. This bodes well for the next few months of sales. While short sale AWC contracts are also up, which do denote sales, 70% of the new weekly AWC's are short sale listings. It is good they are under contract, but they definitely do take some time to go to closing.

Sales prices remained locked at around $110,000. After reviewing some of the data, it is becoming apparent why we have such a sticky low price. Condos are selling, and a lot of them are selling cheap. Condos are still considered a commodity right now that not many buyers want or can get financing for. So the bank owned condos that are listed sell for in the teens and twenties have a massive effect on pricing. Single family residence prices are running around $120,000, and it is trending up a several thousand dollars. Condos are responsible for some of that drag. I am not saying that there is still not a downward bias on home prices out there; surely there is, especially at the upper end, but we are getting to a lower point of inventory, and with that we are going to see some increases in home prices.

We are also seeing now that home rental prices are rising with some sustainability, and this is going to pull some investor interest. There is a tight rental market. KPHO published an article about the rental market here.

I think my favorite statistic of all however, and the one that makes me the most optimistic, is the number of listings continues to fall sharply; even better, the number of new listings is definitely showing a sharply negative trend from last year. That means the higher number of sales are not being quickly replaced by large numbers of new listings, which is why we can see active listings fall more than 800 since the same time last week.

To put the inventory numbers in perspective, on March 24, 2009 there were 48,460 listings in the MLS system. Today, there are 31K and some change. By the end of May, there were less than 35,000. Now granted, 2009 was a better year than last year in many ways, as last year we had a very heavy influx of inventory start in March and continue steadily throughout the year. This, combined with lighter sales, pressured prices to where they are now.

This year, the different starting point is telling. There is far less slack available in inventory, and we are likely to end up with sharply lower new listings. If we see inventory drop to 25,000 total and near 20,000 single family residences by the end of May- well, I think the laws of supply and demand will determine that prices will not be falling at that point.

Now, these trends could revert and we could get back into troubled area where we were last year. If you recall, March and April were excellent months for sales last year, but they were also a terrible month for inventory. Inventory kept rising, and sales faded after that into a very mediocre summer. Here is a quote from last year at this exact time:

"I would expect inventory to have started to fall, so I have some concern, but overall, the numbers are fairly positive: we are going to have a decent month of sales in March, the inventory could be lower, but it is not terribly high, and we are seeing month over month median price gains." March 23, 2010


I had taken notice of the lack of inventory draw, but obviously not as concerned as I should have been. I think we are on much sounder footing than we were overall last year, and we start with lower inventory and much smaller inventory flow, but sales could fade as they did, and we could have a mediocre summer again. Right now, I don't see that as the likely scenario. More than likely, Arizona is creating jobs, the people with jobs are feeling more confident about their own, and buying a home at the current price and interest rate seems like a very good idea. With all of these in place, we have a real chance to break out this summer. I don't see massive price gains just yet, but I do see a much better inventory picture for us locally than the national numbers point at. If we have a 20% reduction in inventory over the summer, we will see price gains by the start of 3rd quarter; they may not be sharp gains, but the trend will be up on what will likely be a continuing basis.

ARMLS Stats 3/15/2011

Pendings again on the rise; Inventory falls sharply again

Pending: 13,169 ( +401 from last week)

Pending Sfam: 11,227 ( +301 from last week)

AWC: 6,948 ( +162 from last week)

AWC Sfam: 5,989 ( +160 from last week)

Active Listings: 32,478 ( -596 from last week)

Active Sfam: 26,289 ( -546 from last week)

Closed 3/7/11-3/13/11: 1,698 (-689 from last week)

Closed Sfam: 1,425 (-561 from last week)

Closed through 3/13/2011: 3,345

Buying activity continues to improve in the ARMLS service area; pending sales continue to rise as the market draws more buyers to its exceptionally low prices. I would expect that we would see a similar rise next week in pendings. Last year's reading on 3/23/10, there were 13,665 pendings; a number we might not get to at the same time frame. Last March seemed to be a very good month, with good pending sales, followed by good sales numbers in April, but then sales disappointed for the rest of the summer, as inventory just kept swamping the boat. This year, we don't seem to have the same problem. Inventory is around 10% lower than at the same time last year, and it is not being replenished so far in March. March 2010, we added 14,709 new listings. This year on March 15, we have added only 5,384. March 15 does not a full month make, but listings are spread evenly through the month than closings. The trend is clear. This is an important change. March has been the biggest month for listings, so a soft number of listings in March is a strong signal that inventories may begin fading. The trend line so far is that the number of inventory is falling; I will post the first quarter listings at the end of the month, but at this point it looks to be substantially lower than 2010.

To expand a bit further on the inventory question, I will also say this: the lack of inventory coming on the market is not because banks are selling less. Those numbers, as mentioned before, are fairly stable. Regular people are not selling their homes; either choosing to sit tight because they can't qualify for what they want anyway, or just deciding to make a go of it. Either way, that is less homes on the market, and good for price stability over a slightly longer term. Lenders still make up a large percentage of listings, but if all they are doing is replacing other people who decide to stick it out, we end up with lower pricing in the short term due to being foreclosures, and a return to market stability as there is not a flood of inventory. There are three trend lines occurring right now that if continued, would point toward sharp reduction in inventory:

• Monthly sales are up sharply through the first quarter this year.
• We are starting with substantially lower inventory than we did last year.
• New inventory numbers are sharply lower in both the first two months this year, and trending solidly lower for the current month.

These three trends together allow me to be cautiously optimistic that the market has a chance to break out a bit this year. We are going into our best 6 months of sales, we have a head start on inventory reduction already, and the sales so far are trending stronger. The economy is also on better footing than at any time since 2008, so even the most pessimistic observer has to acknowledge that we are starting the selling season race this year in a much better position than we have in the last few years.

I did want to touch on prices a bit as well. Median prices have been infamously down this year from prior periods; essentially a double dip in pricing, as we saw some recovery last year. I don't think it is quite as simple as that, however.

First of all, condo sales, whose prices also suffered, are selling at an increased rate compared to all inventory; averaging about a 20% increase in sales compared to last year through the first two months of this year. These are selling at lower prices than a year ago, so their increased weight of numbers combined with even lower prices are pushing median prices down. However, it should also be noted that median condo prices have been rising so far this year as well, and the downward gravity is going to allow prices to float upwards a bit. Lets remember, condos only make up a small portion of the market, and don't have a massive impact, but when their median price is half the median of overall prices, their weight doubles its effect overall.

One of the chief demons of lower sales prices is simply that the homes that sell are homes in the lowest price ranges. People that are buying homes are buying lesser homes, leaving the higher priced homes to languish longer on the market until ultimately they lower prices. Also providing an impact is the fact that homes listed for $500,000 and up are selling at a lower rate than last year. This is doubly telling since, overall sales are up fairly sharply. The median price for homes in the $500K and up continues to slide, so that also affects price.

I want to be cautiously optimistic that all of our figures show a return to normal, but we did see a strong march last year turn into a mid-summer fizzle. Circumstances are a little different this year, but we have to prove we can keep eating up inventory, and keep sales strong.

3/8/2011 Stats

Pendings Rise Sharply, Inventory Falls

Pendings: 12,768 ( +748 from last week)

Pending Sfam: 10,926 ( +693 from last week)

AWC: 6,786 ( +217 from last week)

AWC Sfam: 5,829 ( +169 from last week)

Active: 33,074 ( -596 from last week)

Active Sfam: 26,835 ( -530 from last week)

Closed 2/28-3/6: 2,387 (-392 from last week)

Closed Sfam: 1,986 (-365 from last week)

Buying activity increased sharply, as pending sales climbed rapidly in the first week of the month. Active listings also continue to fall, as the combination of good sales totals continue to impact inventory. These are good numbers for us; if inventory continues to fall like it has, and remember the sales are running at a higher trend line, this summer could be the first year of a real improvement in housing fundamentals.

That being said, prices are still not recovering yet. It is highly likely that home prices will rise in March, and will almost assuredly be higher by April than where they are today. The influence of more lower priced homes selling than higher priced homes has a significant impact on lowering median prices. Simply put: more volume at lower prices will drag the median price.

3/1/11 ARMLS STATS

February Closings Up 10 % + over 2010 in ARMLS

Overall inventory lower; Single family almost identical to 2011

Sales rate in first two months of 2011 up 13.2%

Prices sharply lower than last year; cheaper homes fastest selling category?

New Statistic: Monthly Listings trending lower? This year so far, yes.

Monthly Active to sales ratio: Overall-4.75, Single Family-4.59

Pending: 12,020 ( -669 from last week)

Pending Sfam: 10,233 ( -588 from last week)

AWC: 6,569 (-56 from last week)

AWC Sfam: 5,660 (-42 from last week)

Active: 33,670 ( -672 from Last Week)

Active Sfam: 27,365 (-553 from Last Week)

CLOSED 2/21-2/27/11: 2,779

Closed Sfam: 2,351

Closed February: 7,078 (+657 from Feb 2010)

Closed Sfam Feb: 5,958 ( +555 from Feb 2010)

Monthly Listings: January 2010: 13,219

January 2011: 12,573

_________

- 646

February 2010 12,902

February 2011: 10,412

__________

-2490

In 2010, the number of new lender listed properties was 6884; which is not as high a number as I would have expected. That means out of 26,121 new listings in those months, the percent of lender listings was about 26.3; high, but not as high as I would have expected frankly.

In 2011, the number of lender listed properties for that same period was 6547; lower, but as a percentage of total listings, higher. That's not really a bad thing. There were substantially fewer listings in the same period: 3,136 due to a sharp drop in February especially. This drop was not attributable to a decrease in lender listings; there were still 3147 lender listings in February, slightly lower than January, but in proportion to the normally lower February listings compared to January. Lender listings made up a much higher proportion of listings, which means normal or short sale listings were down.

Short sale listings were down, moderately, which is good, but I think what that leaves us with is probably more encouraging: fewer home sales from other people. If less people try to sell their homes, other inventory will get cleared faster. I have no idea what is behind this reduction in listings; they could pop back in March and April; it could be a trend that the worst of the "have to sell" pressure is over, and more people are just going to ride it out in the home they are in. Its too early to tell, but we are 1/6 through the year, and we are average substantially fewer listings than last year.

On a less positive note, we also note that the average home price is substantially lower than it was a year ago. Does this mean housing prices for the same house have fallen? Not necessarily. It could mean we are seeing lots of lower priced housing sell; it could mean we are seeing less higher priced housing sell. It could mean that more homes in less desirable areas that weren't moving before are now selling. It could mean more fixups are selling than ready-to-go homes; implying investor activity. There needs to be more qualitative investigation done on this as the trend line on the sales doesn't really follow the normal ticking down of pricing that you see when prices are falling. It looks like it would be or at least include a rapid set of sales of homes in lower price categories. I am going to try and break that out, but I don't have any easy answers without some deep research by zip code.

We do see some positive trends in overall sales numbers, in relation to previous months, as well as year over year; we see inventory is sliding a bit right now, although last year March and April were very new listing heavy, so we will be watching that, and we are not at a terrible sales to inventory ratio.

The negative of course is the pricing; it is substantially lower than last year, and we are average about $110,000 per house sale. That is down 11% from the same period last year. Not really very good, but I don't really know why at this point; all other sales stats point to what should be some price stability; we are not overburdened with inventory, demand is as good as its been for a while, and quite honestly there is a different tone to where we are in the economy than there has been for quite some time. I am going to point a finger at the banks and say that it is probably tougher for anyone to buy a home that is of any significant price, and that is causing some of this deflation in the move up market. That is a guess, but I think i am probably not far off on that. They are driving their own prices down by kicking people downward into smaller and cheaper homes due to more stringent lending requirements; that also drives house prices down, as there are less available buyers for given price categories; except downward. That is my guess.

I think there are other issues as well: we have been in our doldrum season, and there is some price slippage during that time; the slow recovery in higher income occupations will drive people toward not purchasing move up housing; it could be people's general lack of faith in housing, although the statistics of number of buyers is not supporting that. I think we will see good sales in March, and I wouldnt be surprised to see some significant price moves upward by April. It could be that current pricing is a lagging indicator of the amount of inventory we were saddled with at the end of last summer's disappointing sales.

On the news front, I was pleased to see Dr. Doom Marc Faber say it is time to buy housing. (video) He is notorious for being a gloomy gus, so anything positive from him speaks volumes. There has been some news about national pending number fell in January, but if you have relatives in the northern part of the United States, you are probably not surprised. The weather was simply atrocious for much of the country in January and February, with deep snow and blizzards socking people in and discouraging homebuying. We will see those numbers improve stats in March and April, would be my guess; most of the people who were ready to buy will still buy eventually.