ARMLS STATS 5/3/2011

**April Sales Top 9300**

Inventory inexplicably drops further- 2.85 months of Inventory

Average prices climbing

Pending: 13,509 (-641 from last week)

Pending Sfam: 11,659 ( -497 from last week)

AWC: 7,607 ( -50 from last week)
AWC Sfam: 6,580 ( -33 from last week)

Active: 26,747 (-1065 from last week)
Active Sfam: 21,437 ( -852 from last week)

Closed 4/25-5/1: 3,121

Closed Sfam: 2,618

Closed: April: 9,379

Closed Sfam: 7,851

New listings in April: 10,962 (April 2011: 14,078)

April finished with good numbers of sales, although less than March. More importantly, inventory continued to slide at a rapid pace through April. It continues a very good trend for us of inventory reduction through 2011. The number of listings has indeed fallen sharply to numbers I wouldn't have expected even at my most optimistic. We without a doubt, in the ARMLS area, have a normal level of listings compared to the number of sales. There is no other way to say this. We are quickly falling to a level where price appreciation would occur, or where builders would be required to pick up the slack. Currently, the builders are being conservative, but there are opportunities for them out there.

So we are improving, but how does it compare to where we have been over the last several years? Pretty well, but I think this chart will show just just how well. You can click on the chart to make it bigger.

The improvement from 2008 is pretty incredible. If we think about where we were to where we are, it is probably safe to say that if we were optimistic at that time, we were being foolish. The level of inventory was just too massive for our crippled buyers' market to deal with. Even though 2009 was a very good year in terms of number and cutting into the inventory, the economy couldn't sustain the momentum, and by the middle of 2010, the inventory actually started rising again. This particular chart doesn't show that, as we have had some incredible gains in 2011.

As bad as those numbers looked in 2008, we also have to remember that we were still trying to absorb a massive amount of new inventory. There were some numbers bandied about that in 2006, there were 60,000 new homes under construction or for sale in Arizona; a recent stat I saw in CNNMoney placed it in the 8000's. That was an overwhelming wave of available homes at too high of prices. This chart is a good indication of how much better position we are in to see improvements in pricing.

Pricing seems to be what the media focuses on as to whether we are healthy or not, so I have pulled together the average and median prices since the beginning of 2010. The trends are interesting. While we had a dramatic drop in median pricing, the average pricing, while falling, didn't fall as far, and is making a stronger comeback. The market has certainly been affected by the number of homes and condos, especially, at very low prices, thereby affecting prices. The average paints the picture that the dollar volume of sales has held up better than the median price; again, I think the median gets weighed down by the number $10-$20K condo sales that have been occurring more so than the average price does. The trend in pricing is better in 2011, so this is also very positive.

Lastly, we have what is happening this year in the Greater Phoenix market. There has been some dramatic changes since the beginning of the year, with very good trends in most measurables.
It is plain to see what the inventory trend is doing. Very regular, very sharp decreases in available housing, despite the difficulties in getting mortgages, and the continuing high unemployment. The inventory level has fallen below the magical 3 months of inventory, and looks to stay there at least through our busy season. It is simply not feasible for inventory to continue to fall, and for prices to languish at the same time- unless there is an influx of affordable housing into the market from either a wave of foreclosures, or from a rash of new construction. New construction is tricky though; in a city like Phoenix, there is limited opportunities for infill in areas where population tends to be densest. Most construction is on the fringes of the city. New construction can serve the needs of a strong buyer base in Gilbert, for example, but if there is a shortage of homes in Scottsdale, you are likely to see price gains, as new construction means custom home construction, and we don't appear to be quite there yet for the smaller builders who do those projects.

We can also see that the pendings have been rising steadily, but not quite spectacularly. It is my belief that Active with Contingency contracts are spending less time in that category, as lenders expedite short sales. The number of short sales has vacillated to some degree, and is not really in a growth trend any longer. Even though pendings are not as high as they have been in the past, sales are still stronger because I think AWC are turning into pendings at a faster clip. Still, the overall trend in new sales is still positive.

The last stat that I included in the graph is the "New Listings" figure. This is how many listings are going on the market in any given month. I have included the 2010 figures as well to give this some meaning. Clearly, the trend in 2010 for new listings is down and down substantially. For the first four months of the year, the number is down over 15%. That is significant, as we are not replacing the inventory. Between pendings and AWC contracts, we are chipping away at excess inventory rather quickly. Couple this with the relatively few new homes sitting on the market, and you can quickly see where we are going with this. As I said before, new home inventory is tricky; it tends to be concentrated, and concentrated on the outskirts of the metro area. Demand is not necessarily concentrated that way, so you can get a bit of an uneven push in pricing. Some parts of town that are attractive to people because it is close to their work may see higher pricing than some suburbs where there is a new home subdivision nearby.