***BLOWOUT SALES FOR JUNE! BEST EVER?***
Prices Rise slightly too; new listings in June lowest of year.
Inventory levels at lowest levels since 2005 or before.
Pending: 11,781 ( -1503 from last week)
Pending Sfam: 10,290 ( -1292 from last week)
AWC: 7,518 ( -441 from last week)
AWC Sfam: 6,504 ( -399 from last week)
Active: 21,393 ( -618 from last week)
Active Sfam: 17,039 ( -503 from last week)
Closed 6/27-7/3 3,909
Closed Sfam: 3,372
CLOSED June 2011 : 11,067
Closed Sfam: 9,486
Shocker for June: Sales top 11,000. That is big, and yes, it is the biggest number that I can find going back to 2005. Its not likely that there were bigger sales months before 2005, so it is probably the biggest ever. That is incredible; in the midst of all the doom and gloom we have been hearing, there were more homes sold in June 2011 than any month, even the boom years. That is significant and in a month or so, we should hear the mainstream news pick up on that. Granted this is very temporary, as we are going to go into an off-sales month in July, as it is a big vacation month in Arizona, but we literally reached less than two months worth of inventory. Can you imagine that, coming from where we have been?
To temper the enthusiasm a bit, lets remember that we will not see the same sales figures for July; it will likely be quite a bit less, and we will probably see a similar number of new listings, so we could see inventory grow a bit going into the latter part of the year. I just can't tell the direction of that; I think if we continue to see 8000+ sales a month, we will be in pretty good shape. Inventory may go up a bit, but it is now so low, we can afford to see it rise; if it keeps falling, we will be out of inventory. Normally, that could lead to rapid price rise, but given the gloom, it might cause people to not buy for a while as they won't want to pay too much. That is a short term condition, because eventually family formation will still pressure available inventory. We will still recover, but it could then take longer. That is the pessimistic side.
Now, on the optimistic side of the ledger, people still forget we are a growing state: a destination state even for both industry, retirees, and fresh starters, and they demand housing. Right now, housing is being created very slowly, and while no doubt many of the for sale homes are being bought to fix and flip or fix and rent, as opposed to long term purchase, they are still being sold, and inventory is still low. This is a recipe for price increases, and despite unfavorable lending conditions (excepting low interest rates) we have a chance to come out of the housing mess that has been created in Arizona in the next six months.
The last lagging problem is pricing, obviously, but even the median price rose a bit in June from $108,500 to $110,225. That may not sound like a lot, but annualized, that would be a 19% increase. We will get some fits and starts on the median price for a while, but it has been pretty obvious that we have at the very least reached a bottom based on current economic conditions on that this year. The average price was up slightly as well, so we can possibly start to believe that we have now corrected our inventory fundamentals here enough for prices to start to rise. Banks will be pumping foreclosures into the market for the foreseeable future of course, but they as of now are not overwhelming the market.
The short term outlook for housing in Arizona is probably a slowdown in sales and pending sales for July from the lofty sales figures of second quarter, followed by a slight uptick in August and September. Inventory levels are likely to moderate with a slightly upward bias. We might be surprised though; new listing inventory has been trending down 15% all year from 2010 levels, and if that is the case, we might see inventory continue to fall slightly. I really do think it will rise a bit though, based on the theory that new inventory infusion will remain similar to last year, and combined with slower sales in 3rd quarter will allow inventory levels to drift upward.
It would be easy to dismiss the recent positive news as temporary, but the reality is that the sales number is not a fluke; we have had excellent sales going all the way back to March; we are off to a great start in 2011, and by most metrics, we are in a statistical dead heat with sales numbers from the boom year of 2005. Our inventory is also at historically low levels; although much tougher to divine, the word is that new home inventory is less than 10,000 in the state compared to the 45,000+ new home inventory just a few years ago. Combined with lower levels of existing inventory, we are in position to recover, if people have jobs, and if lenders will lend. Sales at current levels are sustainable, and inventory levels at current levels are not; that means price increases unless new inventory is created. We are in recovery; it may take time until optimism takes hold, but we are in recovery, and eventually even the most pessimistic of people will have to acknowledge that.
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