Inventory falls again, April sales slower than March
Pending sales rising, but may be peaking.
April sales will probably reach 9000, but will they reach 9500?
Pending: 14,150 (+127 from last week)
Pending Sfam: 12,156 ( +133 from last week)
AWC: 7,657 ( +113 from last week)
AWC Sfam: 6,613 ( +115 from last week)
Active: 27,812 ( -616 from last week)
Active Sfam: 22,289 ( -564 from last week)
Closed 4/18-4/23 1,891 (-219 from last week)
Closed Sfam: 1,604 ( -171 from last week)
Closed through 4/24/2011: 6,188
Closed Sfam: 5,188
Listed inventory continues to tumble in the ARMLS market area, as fewer listings and strong sales activity carves away what is sitting on the shelf. Keep in mind that last year, once we got through April, sales activity fell into a lackluster summer season, as the tax credit for purchasing a home expired. That means we literally have no idea how this May will perform; last year it was poor, and combined with a sharp uptick in the number of new listings, the summer fizzled. The combination precipitated a sharp drop in pricing the second part of the year as well.
We seem to have stabilized now in terms of pricing, and demand now seems fairly deep and organic, as it seems our housing demand is a result of an improved outlook on jobs and a deeper faith in the housing market at this price level. We have seen some positive numbers emerging as of late, and we may very well be headed towards a nascent recovery in real estate.
We have also seen some improvement in new home sales. The west region posted a 26% gain in March, according to the commerce department. This is not insignificant. Steve Forbes interviewed an economist who had called a housing shortage to occur in 2011, in part due to normal household creation.
We will see if that bears out, but what could continue to drive sales is the fact that rents for homes are going up- I saw the same statistic of 5% increase somewhere, but I don't recall where I saw it, so I will reference this market observer's blog on the rental market.
Stronger rental rates usually will drive more people to buy-if they are capable of qualifying, anyway. We are reaching somewhat of a breaking point in rents. Rent gets too high, people find alternatives. Especially since equivalent rent to a mortgage is already at a tax disadvantage for most people, consumers will be pushed into purchasing; given current pricing and interest rate levels, it is still an excellent time to buy. There are not as many choices as there have been, but most buyers are still likely to find what they want.
With inventory falling, and new listings continuing a 2011 trend of lagging 15% behind last year, we can probably expect to see some price gains, if sales hold up. It seems that they are more likely to hold up this year than what happened last year, so yes, we could see some prices driving northward for a change. I would caution that we are probably close to peaking on the number of pending sales; its drive upward seems to have run out of energy, and I don't think we will get to 15,000 pending sales this year. given our levels of inventory, that is a good strong number. It is also possible that as the choices continue to dry up for consumers, they will turn toward new housing opportunities as well, which of course, helps the builder and job creation. Many good things come about from smaller inventories of available homes, and we are starting to see those signs- I don't think we will see sharp price appreciation, but I do think we will see strong demand at the current levels.
I do see us finishing substantially behind March's 10,000 sales figure, but we are likely to have a strong final week that will push us to maybe 9300 sales by the time its done. April sales, I think, were affected by the rising gas prices we started to be told to expect in February as a result of the middle east unrest. Reaching 9500 would still show a good strong market, and combined with the drop in inventory, we will still be less than three months supply. I give us an outside chance of reaching 9500, but I think it will fall short. I hope I am wrong, but it will still be an excellent month, and we continue to have strong pending numbers forecasting a good month of May as well, which will be an improvement over last year.
Tuesday, April 26, 2011
Tuesday, April 19, 2011
ARMLS STATS 4/19/2011
Inventory Slides Sharply, Shortage this summer?
Pendings Rise; New listing activity trending lower.
April to be a good month, but probably lags March
Pending: 14,023 ( + 269 from last week)
Pending Sfam: 12,023 ( + 245 from last week)
AWC: 7,544 ( +128 from last week)
AWC Sfam: 6,498 ( +131 from last week)
Active: 28,428 ( -945 from last week)
Active Sfam: 22,853 (-809 from last week)
Closed 4/11-4/17 2,110 ( +490 from last week)
Closed Sfam: 1,775 ( +442 from last week)
Closed through 4/17: 4,189
Closed Sfam: 3,487
New listings April: 6371 (April of 2010: 14,078)
Inventory continues to be the story as it has now fallen precipitously into less than three months worth at current sales activity. Inventory dropped 3.15 percent just in the last week! To be at only 28,000 listings going into the heart of the selling season, at a time when there is little in the way of new standing inventory, would lead you to believe, under normal circumstances, that we could be looking at a shortage this summer. While I do think that is a possibility, we must reserve some caution for the idea that the banks and everyone else says there is still substantial bank inventory waiting in the wings. Of course, the idea of Lender owned properties has always been overstated. Even now, with our massively reduced inventory, Lender owned homes make up a small proportion of listings. Of the 28,428 active listings recorded by me this morning, only 4,986 were lender owned. Lender owned properties have a lot to do with moving price, but they have relative little to do with overall inventory, at least at this point. Short Sale inventory has a higher impact on inventory right now than lender owned properties do. (There are 6,683 of those.)
As far as the overall inventory, lets take a quick look back in time to April 20, 2008. Inventory levels were at 55,587. There were 7,067 pending contracts. There were 2,480 closings as of that day. 4,880 homes ultimately closed that April. Lets not forget that there were probably still 45K-55K new homes also available at that time. The statistic I heard a week or so ago was just 8,000 are now available. Look at those statistics compared to today. Half the inventory; twice the sales and pending numbers; relatively few new housing purchase opportunities. These are all things that point to a rebound in prices. It should not be downplayed that there is excessive bank inventory, but it certainly seems the bank inventory is being balanced by fewer traditional listings.
While March and April are traditionally heavy listing months, May typically slows down, and we continue to burn through inventory through the rest of the summer. It will be interesting to look at statistics on June 1st, and see where the inventory levels are. At this trend line, in both sales, and inventory reductions, price levels are unsustainable, and will go up.
It is worth noting that we had a an after-June swoon last year from which we didn't really recover; inventory continued to build and sales lagged throughout the summer. It was thought this was the effect of the home purchase tax credit ending in the spring, but we could look at the economy in general and the poor employment, as well as the election year politics as to why sales were pummeled, which precipitated the substantial fall in home prices we experienced. By December of 2010, which is normally a poor sales month, things had turned a bit, and December turned in one of the best performances of the whole year. It led right into a strong beginning for 2011, and we really have had no poor trends to speak of since. Prices have not returned yet, but have stabilized; as inventory falls closer and closer to dangerous 2005 levels, we can see that pricing may not take long to climb as well. None of us should want a return to 2005, and we won't see that right now. But we could see what is likely to be truth: there was an over-correction in pricing, and very possibly it will shortly swing the other way.
Pending sales do continue to climb, but I think we may plateau in the 14,000's. That seems to be short term cap. It would be great to see a breakout into the 15,000, but the economy does not support that right now, nor the job market. Still, if it stays in the 13,000-14,000 range through the summer, we will probably get 8000--9000 sales per month, and given current listing trends, it should be enough to sustain a modest housing recovery.
We do seem to be lagging the sales of March a bit; that could simply be a matter of timing, as we have had a lot of weekends already in April, but March may prove a difficult month to duplicate. We are likely to end up in the 9000's, but I think 10,000 sales in April may be asking for too much. Anything over 9000 is still an excellent month. Given the shock of oil prices since February, that would still be a very good month. Inventory continues to be key, however- the news media locally here won't talk about improved housing numbers until people complain about pricing. They may not have long to wait.
chris
Pendings Rise; New listing activity trending lower.
April to be a good month, but probably lags March
Pending: 14,023 ( + 269 from last week)
Pending Sfam: 12,023 ( + 245 from last week)
AWC: 7,544 ( +128 from last week)
AWC Sfam: 6,498 ( +131 from last week)
Active: 28,428 ( -945 from last week)
Active Sfam: 22,853 (-809 from last week)
Closed 4/11-4/17 2,110 ( +490 from last week)
Closed Sfam: 1,775 ( +442 from last week)
Closed through 4/17: 4,189
Closed Sfam: 3,487
New listings April: 6371 (April of 2010: 14,078)
Inventory continues to be the story as it has now fallen precipitously into less than three months worth at current sales activity. Inventory dropped 3.15 percent just in the last week! To be at only 28,000 listings going into the heart of the selling season, at a time when there is little in the way of new standing inventory, would lead you to believe, under normal circumstances, that we could be looking at a shortage this summer. While I do think that is a possibility, we must reserve some caution for the idea that the banks and everyone else says there is still substantial bank inventory waiting in the wings. Of course, the idea of Lender owned properties has always been overstated. Even now, with our massively reduced inventory, Lender owned homes make up a small proportion of listings. Of the 28,428 active listings recorded by me this morning, only 4,986 were lender owned. Lender owned properties have a lot to do with moving price, but they have relative little to do with overall inventory, at least at this point. Short Sale inventory has a higher impact on inventory right now than lender owned properties do. (There are 6,683 of those.)
As far as the overall inventory, lets take a quick look back in time to April 20, 2008. Inventory levels were at 55,587. There were 7,067 pending contracts. There were 2,480 closings as of that day. 4,880 homes ultimately closed that April. Lets not forget that there were probably still 45K-55K new homes also available at that time. The statistic I heard a week or so ago was just 8,000 are now available. Look at those statistics compared to today. Half the inventory; twice the sales and pending numbers; relatively few new housing purchase opportunities. These are all things that point to a rebound in prices. It should not be downplayed that there is excessive bank inventory, but it certainly seems the bank inventory is being balanced by fewer traditional listings.
While March and April are traditionally heavy listing months, May typically slows down, and we continue to burn through inventory through the rest of the summer. It will be interesting to look at statistics on June 1st, and see where the inventory levels are. At this trend line, in both sales, and inventory reductions, price levels are unsustainable, and will go up.
It is worth noting that we had a an after-June swoon last year from which we didn't really recover; inventory continued to build and sales lagged throughout the summer. It was thought this was the effect of the home purchase tax credit ending in the spring, but we could look at the economy in general and the poor employment, as well as the election year politics as to why sales were pummeled, which precipitated the substantial fall in home prices we experienced. By December of 2010, which is normally a poor sales month, things had turned a bit, and December turned in one of the best performances of the whole year. It led right into a strong beginning for 2011, and we really have had no poor trends to speak of since. Prices have not returned yet, but have stabilized; as inventory falls closer and closer to dangerous 2005 levels, we can see that pricing may not take long to climb as well. None of us should want a return to 2005, and we won't see that right now. But we could see what is likely to be truth: there was an over-correction in pricing, and very possibly it will shortly swing the other way.
Pending sales do continue to climb, but I think we may plateau in the 14,000's. That seems to be short term cap. It would be great to see a breakout into the 15,000, but the economy does not support that right now, nor the job market. Still, if it stays in the 13,000-14,000 range through the summer, we will probably get 8000--9000 sales per month, and given current listing trends, it should be enough to sustain a modest housing recovery.
We do seem to be lagging the sales of March a bit; that could simply be a matter of timing, as we have had a lot of weekends already in April, but March may prove a difficult month to duplicate. We are likely to end up in the 9000's, but I think 10,000 sales in April may be asking for too much. Anything over 9000 is still an excellent month. Given the shock of oil prices since February, that would still be a very good month. Inventory continues to be key, however- the news media locally here won't talk about improved housing numbers until people complain about pricing. They may not have long to wait.
chris
Wednesday, April 13, 2011
MLS Stats 4/13/2011
Pendings Still Rising; Inventory Slides.
March Sales hit 10,002
Less than three months of inventory at current levels.
Pending: 13,754 (+525 from last week)
Pending Sfam: 11,807 (+446 from last week)
AWC: 7,416 ( +259 from last week)
AWC Sfam: 6,367 ( +243 from last week)
Active: 29,373 ( -571 from last week)
Active Sfam: 23,662 ( -509 from last week)
Closed 4/4-4/10: 1,620 ( -1258 from last week)
Closed sfam: 1,333 (-1067 from last week)
Sorry this posting is coming a bit late; I had a full day yesterday, and I just couldn't get to the posting. In the interest of consistency, I did take these statistics at the same time on Tuesday that I normally pull them, so they are accurate for the week.
It was statistically a very nice week for housing. Despite the number of closings being down substantially from the previous week, 1600+ sales in the first full week of a month is a good indicator of strong sales. Pendings have recovered nicely from the drop that occurs at the end of the month, which also forecasts stronger sales. Inventory continues to slide; it is not as sharp a drop as we have been seeing, but as inventory gets smaller, it is statistically harder to keep up the same reductions, as the law of percentages begins to take hold. Make no mistake, it is still a very sharp in inventory. I suppose it is inevitable as inventory drops and prices firm up, that it will attract sellers who are at the margins of being able to sell, and are only waiting for an opportunity to do so. Average prices rose by a few thousand dollars in March compared to February, and there are some submarkets that are definitely firming up. We may see some rising level of new listings, which have been falling sharply. It does appear that new listings in April appear to be sharply lower as well. It is quite conceivable we will see inventory slide by another 1000 units by the end of April.
Single family inventory is already creeping into the area of being in relative short supply. We are currently below 3 months supply- any less is will undoubtedly lead to price increases. We are in fact already seeing that median list prices are higher by 8900 from March to this month. It will probably narrow a bit as sheer numbers of listings increase. Prices do look like they could be on an upward trend, given all the factors affecting them.
March Sales hit 10,002
Less than three months of inventory at current levels.
Pending: 13,754 (+525 from last week)
Pending Sfam: 11,807 (+446 from last week)
AWC: 7,416 ( +259 from last week)
AWC Sfam: 6,367 ( +243 from last week)
Active: 29,373 ( -571 from last week)
Active Sfam: 23,662 ( -509 from last week)
Closed 4/4-4/10: 1,620 ( -1258 from last week)
Closed sfam: 1,333 (-1067 from last week)
Sorry this posting is coming a bit late; I had a full day yesterday, and I just couldn't get to the posting. In the interest of consistency, I did take these statistics at the same time on Tuesday that I normally pull them, so they are accurate for the week.
It was statistically a very nice week for housing. Despite the number of closings being down substantially from the previous week, 1600+ sales in the first full week of a month is a good indicator of strong sales. Pendings have recovered nicely from the drop that occurs at the end of the month, which also forecasts stronger sales. Inventory continues to slide; it is not as sharp a drop as we have been seeing, but as inventory gets smaller, it is statistically harder to keep up the same reductions, as the law of percentages begins to take hold. Make no mistake, it is still a very sharp in inventory. I suppose it is inevitable as inventory drops and prices firm up, that it will attract sellers who are at the margins of being able to sell, and are only waiting for an opportunity to do so. Average prices rose by a few thousand dollars in March compared to February, and there are some submarkets that are definitely firming up. We may see some rising level of new listings, which have been falling sharply. It does appear that new listings in April appear to be sharply lower as well. It is quite conceivable we will see inventory slide by another 1000 units by the end of April.
Single family inventory is already creeping into the area of being in relative short supply. We are currently below 3 months supply- any less is will undoubtedly lead to price increases. We are in fact already seeing that median list prices are higher by 8900 from March to this month. It will probably narrow a bit as sheer numbers of listings increase. Prices do look like they could be on an upward trend, given all the factors affecting them.
Tuesday, April 5, 2011
ARMLS STATS 4/5/2011
**March Sales Just Miss 10,000**
Active listings fall under 30,000
Median Price Rises slightly; Further gain expected in April
PENDING SALES: 13,229 ( -500 from last week)
PENDING SFAM: 11,361 ( -362 from last week)
AWC: 7,157 ( +46 from last week)
AWC Sfam: 6,124 ( +30 from last week)
Active Listings: 29,944 (-786 from last week)
Active Sfam: 24,171 ( -623 from last week)
Closed 3/27-4/3 2,878 ( +792 from last week)
Closed Sfam: 2,400 ( +656 from last week)
Closed March'11 9,944 ( +2745 from Feb'11, +1143 from March 2010)
Closed Sfam: 8,296
New Listings 3/11: 12,355 ( -2354 from March 2010) -16% from 2010
Inventory to Sales Ratio: 3.01 months
Ratio Single Family: 2.91 months
March was a big month for housing sales, by any measure you would want to take. March 2011 could be seen as a turning point if activity through the summer retains its current energy. Pendings normally fall at the end of the month when there is a rush of closings, but since the beginning of last week, there have been 3,001 new pending sales, which is a strong number, and should forecast good sales for April as well.
We just missed 10,000 sales in March; I was hoping we would get there, as I noted that previous months last week of sales forecast a very strong finish. Just a hair short, but still a very impressive month. The number could fluctuate a bit, but we have seen multiple reasons now to hope the worst is past: our new listings are falling, so inventory can be depleted faster; we had a blowout month for sales, and the pendings are forecasting another good month in April; prices ticked up 1% in March, so maybe we have seen the bottom in pricing, and our general economic outlook is improving. If April follows March even half way, we could see inventory reduced by several more thousand listings, and if this continues, we will find ourselves in a shortage position. Typically, inventory to sales ratio of 2.5 times will lead to price gains, as that has proven simply to be too little inventory.
This all depends on us staying on a positive course. Sales could fall, new listings could start to rise again, as they did last year, and mortgages could become harder to obtain. All of these things are possible, and even one of them could have an adverse effect. But, as it is, we had an excellent quarter, with sales up 10% over last year, listings down 14.1%, and a prices steady. As we look at forecasting numbers, they also appear to support stronger sales over the next few months, and the lower level of new listings has been consistent, so it appears to be a trend. These are all reasons for great optimism that this is going to be a solid housing season through the middle of 2011.
Active listings fall under 30,000
Median Price Rises slightly; Further gain expected in April
PENDING SALES: 13,229 ( -500 from last week)
PENDING SFAM: 11,361 ( -362 from last week)
AWC: 7,157 ( +46 from last week)
AWC Sfam: 6,124 ( +30 from last week)
Active Listings: 29,944 (-786 from last week)
Active Sfam: 24,171 ( -623 from last week)
Closed 3/27-4/3 2,878 ( +792 from last week)
Closed Sfam: 2,400 ( +656 from last week)
Closed March'11 9,944 ( +2745 from Feb'11, +1143 from March 2010)
Closed Sfam: 8,296
New Listings 3/11: 12,355 ( -2354 from March 2010) -16% from 2010
Inventory to Sales Ratio: 3.01 months
Ratio Single Family: 2.91 months
March was a big month for housing sales, by any measure you would want to take. March 2011 could be seen as a turning point if activity through the summer retains its current energy. Pendings normally fall at the end of the month when there is a rush of closings, but since the beginning of last week, there have been 3,001 new pending sales, which is a strong number, and should forecast good sales for April as well.
We just missed 10,000 sales in March; I was hoping we would get there, as I noted that previous months last week of sales forecast a very strong finish. Just a hair short, but still a very impressive month. The number could fluctuate a bit, but we have seen multiple reasons now to hope the worst is past: our new listings are falling, so inventory can be depleted faster; we had a blowout month for sales, and the pendings are forecasting another good month in April; prices ticked up 1% in March, so maybe we have seen the bottom in pricing, and our general economic outlook is improving. If April follows March even half way, we could see inventory reduced by several more thousand listings, and if this continues, we will find ourselves in a shortage position. Typically, inventory to sales ratio of 2.5 times will lead to price gains, as that has proven simply to be too little inventory.
This all depends on us staying on a positive course. Sales could fall, new listings could start to rise again, as they did last year, and mortgages could become harder to obtain. All of these things are possible, and even one of them could have an adverse effect. But, as it is, we had an excellent quarter, with sales up 10% over last year, listings down 14.1%, and a prices steady. As we look at forecasting numbers, they also appear to support stronger sales over the next few months, and the lower level of new listings has been consistent, so it appears to be a trend. These are all reasons for great optimism that this is going to be a solid housing season through the middle of 2011.
Friday, April 1, 2011
Arizona Housing Statistics-Not an April Fools joke.
**March Sales Blow Doors off Last Year...developing**
March sales finished very strong; I am not going to publish the number until Tuesday, but the results were very good. More importantly, we also had our lowest number of new listings in March since March 2005. Remember those heady days, when inventory was so tight that the median price of a home increased by $15K-$20K a month? The median price that month was $209,000. All reminiscing aside, the drop in new inventory is a significant trend- through first quarter we are down almost 15% in the number of new listings. One month could be an aberration, but a whole quarter means that it is likely a trend, but even if listings rise, the net effect of making it through one quarter with low listing numbers will have a sharp impact on inventory in the following months, which is a far better quarter than first quarter, as a rule.
Combine this with inventory falling to just 30,230 as of this morning, and you are starting from a very good point inventory wise heading into the heart of the selling season in Phoenix. The trends point to prices heading up. There is simply far less inventory available now, including a very small number of spec homes compared to a few years ago. If buyers are able to obtain financing, prices are low enough that will enable them an advantageous housing cost for the next 10 years. Low housing costs translates into more discretionary spending, or investment funds. Low prices from this era, for some people, will translate into exceptional wealth-building opportunities down the road.
We also had some good news on the jobs front this morning, as the unemployment rate dropped to 8.8 percent, and a couple hundred thousand new jobs were created. There were several articles this week touting a nascent recovery in hiring by private industry. I hope that is true; we would actually like to see increases at an even stronger clip, but we have to be happy that is moving in the right direction.
As a follow-up, there was an article published yesterday forecasting a housing shortage in this country- hard to swallow, I know, but despite the fact that 13% of all homes are vacant in this country, those homes are not always where people want or can live. Detroit? Cleveland? Bakersfield? Fresno? I am not knocking these places, but they are not where new jobs are being created yet. Arizona has and will have many more foreclosures, but we seem to be stabilizing a bit, and inventory seems to be fading for whatever reason. If sales continue at current rates, we will have a strong summer season, and potentially find ourselves in the position forecast by this housing expert.
A housing shortage? It is hard to look at prices and think that, but the fact is we are approaching what is a 3 month supply of homes; in 2005, with rapid price gains each month, we were never less than 2 months of supply. We could find ourselves in that position sometime this summer. It will not equate to a boom, but I think it will push prices higher, and since there are very few new spec homes out there in metro phoenix- an article I posted the other day claims there are only 8,100 new homes on the market in Phoenix, compared to 53,000 in 2006! That article is a great read, by the way. We have a lot more things in real estate's favor now, and we might see the tide begin to turn this year.
I will have more on Tuesday.
chris
March sales finished very strong; I am not going to publish the number until Tuesday, but the results were very good. More importantly, we also had our lowest number of new listings in March since March 2005. Remember those heady days, when inventory was so tight that the median price of a home increased by $15K-$20K a month? The median price that month was $209,000. All reminiscing aside, the drop in new inventory is a significant trend- through first quarter we are down almost 15% in the number of new listings. One month could be an aberration, but a whole quarter means that it is likely a trend, but even if listings rise, the net effect of making it through one quarter with low listing numbers will have a sharp impact on inventory in the following months, which is a far better quarter than first quarter, as a rule.
Combine this with inventory falling to just 30,230 as of this morning, and you are starting from a very good point inventory wise heading into the heart of the selling season in Phoenix. The trends point to prices heading up. There is simply far less inventory available now, including a very small number of spec homes compared to a few years ago. If buyers are able to obtain financing, prices are low enough that will enable them an advantageous housing cost for the next 10 years. Low housing costs translates into more discretionary spending, or investment funds. Low prices from this era, for some people, will translate into exceptional wealth-building opportunities down the road.
We also had some good news on the jobs front this morning, as the unemployment rate dropped to 8.8 percent, and a couple hundred thousand new jobs were created. There were several articles this week touting a nascent recovery in hiring by private industry. I hope that is true; we would actually like to see increases at an even stronger clip, but we have to be happy that is moving in the right direction.
As a follow-up, there was an article published yesterday forecasting a housing shortage in this country- hard to swallow, I know, but despite the fact that 13% of all homes are vacant in this country, those homes are not always where people want or can live. Detroit? Cleveland? Bakersfield? Fresno? I am not knocking these places, but they are not where new jobs are being created yet. Arizona has and will have many more foreclosures, but we seem to be stabilizing a bit, and inventory seems to be fading for whatever reason. If sales continue at current rates, we will have a strong summer season, and potentially find ourselves in the position forecast by this housing expert.
A housing shortage? It is hard to look at prices and think that, but the fact is we are approaching what is a 3 month supply of homes; in 2005, with rapid price gains each month, we were never less than 2 months of supply. We could find ourselves in that position sometime this summer. It will not equate to a boom, but I think it will push prices higher, and since there are very few new spec homes out there in metro phoenix- an article I posted the other day claims there are only 8,100 new homes on the market in Phoenix, compared to 53,000 in 2006! That article is a great read, by the way. We have a lot more things in real estate's favor now, and we might see the tide begin to turn this year.
I will have more on Tuesday.
chris
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