**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
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