May Sales finish Strong, 9K+ expected, to beat 2010
New monthly listings continue to lag last year; inventory drops again
Prices not yet rising, even as inventory falls to very low levels
***INVENTORY FALLS UNDER 24,000***
Pending: 13,905 ( -471 from last week)
Pending Sfam: 12,058 ( -346 from last week)
AWC: 7,865 ( -74 from last week)
AWC sfam: 6,786 ( -72 from last week)
Active: 23,992 ( -605 from last week)
Active Sfam: 19,192 ( -494 from last week)
Closed weekly: 2,420 ( +202 from last week)
Closed Sfam: 2,045 ( +194 from last week)
Closed MTD (5/29) 8,497
Closed Sfam: 7,143
Stats are going to show that we are doing very well in the ARMLS area, except for one: price. Prices are not rising, and its a puzzling thing, as we have reached very low levels of inventory, strong demand for housing both in MLS and at Foreclosure auctions. Prices were actually being pushed up due to demand at foreclosure auctions. So why not in MLS sales?
I think the quick easy answer is lending. Much of the price flatness in sales in the MLS has to do with such a large portion being cash sales, as lenders still are unwilling to lend on Condos, and restrictions for any kind of lending are tight. Mortgage rates continue to fall for the qualified, but qualifying is something not achievable for many people burned by the economic downturn. The ugly side of it is that you will see rents at 2-3 times what the mortgage would be for the same property. This is not beneficial to the consumer who can't get out of the rental market and into the ownership market. Lenders have over-reacted in their lending restrictions. They should be less concerned now that all of the fat in pricing has been sliced away, and more cognizant of the ease with with people can afford homes should take center stage. Instead they make it more difficult to borrow, further hurting the consumer, but also the economy. They are holding the prices down, and the economy with it. Banks, instead of lending the money, have taken zero interest loans from the fed, and have invested heavily in commodities, like oil, further damaging consumers. An article in CNBC a few weeks ago said JPMORGAN CHASE had DOUBLED their holdings in commodities futures this year; what effect does that have on the price of oil and gasoline? Then, you start seeing them call higher prices for oil going forward, just as Goldman Sachs has done. I am not going to write about the facts of all this, so I will step off the soapbox now, but I think the idea of these banks being both investment banks and consumer banks is a bad one.
As far as our numbers go, our inventory is still falling fast, sales have been strong, and are likely to be strong in June as well. The second half of the year, I don't know. Its a little early to tell the numbers, but I do expect them to be better than last year. Sales were slow over the third quarter last year, and we don't want a repeat of that. Much depends on if new inventory in MLS continues on its current trend line or starts to rise. Right now, inventory has been falling steadily and we are in more than a healthy place in that regard, but we still don't have a sense of recovery yet. It could be the media, it could be the fact that prices aren't improving, but we have not turned the corner mentally yet. We are quite likely to gain some inventory in third quarter over today's levels- that is fairly normal, as sales do slow in July and August, but we are at such low levels now that we could absorb heavy listing numbers and slower sales. We are approaching a 2 month supply of inventory, which maybe sounds unbelievable when they are tossing out the shadow inventory like its a foregone conclusion these will swamp the boat. The fact is, they are not on the market, so i can only look at what is on the market, or what is coming on the market, and the last six months says we don't have a lot of available inventory. Look at the stats- inventory drops, new listings are sharply lower, sales are stronger.
I expect that we will cross 9000, and if something weird happens, it will pass 9500. The last day of the month always sees heavy sales, and even though our last two days are affected by a holiday, we could still see a big rush in closings today. If it is a good day, we could see 9800 plus, but I am not going to call it that way, and I don't want to sound too optimistic.
New listings are lagging again this month, with probably a 13-14% fall from last year. This has been a consistent theme all of 2011. There are simply not as many homes going on the market. May could end up with the lowest number of new listings of any month this year to date.
We should start seeing some optimism about the housing market in Arizona pretty soon, as long we quit monitoring the 24 hour news cycle. All knowledge is not empowering; sometimes it is enslaving, and we are currently enslaved by media who revel in telling us how bad we have it. If we are waiting for someone to come and tell us the recession is over and to go back to your normal lives, its not going to happen. We have problems with pricing to work through, but we don't have problems with inventory to work through, or apparently demand. What we have is mostly an image problem in real estate. The picture is not that bad, but no one wants to look at it from other than the prism of the financial downturn that has plagued us for the last several years.
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