ARMLS Statistics: Milestone!

****NEWS FLASH****
ARMLS Single Family Homes Listed Falls below 20,000!
Overall listings under 25,000!


We don't know how long this trend will last, but at least for right now we have fallen below 20,000 single family residences listed in the Arizona Regional Multiple Listing Service. Why is that significant? 20,000 is really more of a psychological milestone than a real one, since inventory is relative to sales more than an absolute number, but we have to think about this in terms of where we have come from, and inventory has fallen by more than half since the worst of the housing crisis. Builder inventory has also fallen substantially, so we are just not in the woods the way we were just a few years ago. This is important for builders and job creation, but it is only an early step. Builders are likely to face some tough sledding for a while, as they have not shared as much in the increased homes sales as has the resale market. A likely reason for this is price; they are not likely to be able to compete with the prices of foreclosure homes, which has been a substantial part of the sales. Another reason is that many of the sales are bought by investors to be converted to rentals. The rental market is very strong here now, and for that reason, investors are buying homes. They are not likely to buy new homes for this purpose however, and that is apparent when you look at new homes sales that continue to drag. There are simply not the choices that there used to be in new home sales, with less than 25% of the projects (new subdivisions) as there were in 2007! This means fewer choices in fewer areas, and this is without a doubt the reason for some of the lower sales we see from builders.

What begins to change for builders is that we simply are running short of housing. Apartments can only be built so quickly, and these are not always appropriate for everyone. New housing will be in demand again, but jobs need to be created first. Arizona seems to be doing a fair job of creating jobs, but it is a still a relatively poor job market. As the job market changes, the builder market will change, and create even more jobs.

For today, the fact that we have fallen below 20,000 single family residences listed for sale is an important milestone, and one that seemed like we would never reach. It is worth acknowledging at the very least.

chris