Single Family Home listings fall to the 16K's
Inventory right at 21K, into the 20K's this week.
Pending sales rise- is there better than expected demand?
Pending: 12,397 ( +616 from last last week)
Pending Sfam: 10,823 ( +533 from last week)
AWC: 7,741 ( +223 from last week)
AWC Sfam: 6,684 ( +180 from last week)
Active: 21,051 ( -342 from last week)
Active Sfam: 16,755 ( -284 from last week)
Closed 7/4-7/10 1,228
Closed Sfam: 1,065
Inventory continues to be a top story in residential real estate, as inventory has now reached exceptionally low numbers given the size of our market. It has not translated into big price gains yet, but last month seemed to show that there is some progress on that front. While I think it is fair to say that much of the activity is investors, that is not all bad; they buy homes that are trashed and spruce them up, and make them available to buyers who may not have the expertise nor the money to buy and perform a fix up.
The amount of inventory coming on the market in June was also lower -again. We are down almost 15% from the number of listings last year, and while there is no guarantee that it will continue to trend lower, we have certainly fallen closer to a different kind of danger zone than inflated inventory- the danger of zone of too little inventory.
If this is truly the level of inventory, then we have reached now a point where we need to start feeling some optimism about the direction we are going, or resign ourselves to the fact that we are all permanently depressed by the economic situation, and no matter the news, nothing will re-invigorate the industry. If this is the level of inventory when we get to February next year, then there is going to be a big price spike by April. There is simply not enough slack in inventory to account for the demand boomlet that starts in the spring and continues through June. We started last February at 30,000+ homes. If we are at 20,000 homes in February, there are going to be some fights occurring over the homes available. Its just not enough inventory to see us through the brisk selling season. We have sold at near record levels this year for the last four months, and we are not even in a good economy yet. There are indications that the economy is getting better, especially in Arizona, with hiring picking up, and retail sales returning to normal levels. If we are in a stronger position economically by next February, we could see a run on homes. There will of course, be some incremental number of new listings added as some people realize they will be able to sell at a higher price than before and get out of their homes, but- people are funny. Once they realize that they may be able to sell their home at a higher price, they realize they will have to buy at a higher price, and maybe they won't be able to qualify as well as they have now. These things tend to balance out, so while some new listings will come about, others will choose not to sell because the home finally has rising value.
I think, barring the continuing idiocy of our leaders in Washington, that a stabilized economy for Arizona means that we will see a price spike in Second quarter next year. Write it down, because I am calling it right now. We might get it before that, if demand continues to accelerate in the dog days of summer, but I think it will be a stable market for some months forward. Median prices will likely stay flat as many of the homes being bought are in need of repair, which keeps the prices lower. As that works its way out of the system this fall, expect to see some better median numbers too.
I am a little bit surprised by the pending numbers rise going into July. I thought they would start to drop a bit. We are almost in the same league as 2009, when July finished with around 9000 sales. Of course, there were still 31,000 listings at that time, so 9000 sales is a strong number, given current inventory trends, and while I don't think we will finish that high, if we do, it will probably mean continued inventory reduction. If we continue to shadow 2009's sales pace through the summer and fall, I think we will be doing quite well by the time 2012 comes around, and we will see both price increases and more important to our economy, stronger builder activity as construction cranks up. Inventory did rise through the fall of 2009, so it wasn't all positive, and prices started to fall as a result, which was our double dip to where prices are today. Still, inventory is a different story now, so expect prices to rise with continued strong sales figures locally. We probably will receive some better activity going into the fall as well, so if July is good, expect August and September to be even better. If there is enough demand out there that just keeps inventory near its current state through the end of the year, then we will see a reason for optimism as the news turns towards bidding wars and families moving to the fringes to find affordable housing. If we have stronger than anticipated demand over the next several months, I think we will start to see price gains, as there simply is not the inventory to absorb strong demand. That will invite some people to sell which should equalize the market until we get the demand event that the inventory simply won't contain in the spring.
We are on the right footing it seems to finally exit the housing nightmare.
One last thing; here is a snapshot from the archive for stats on July 15, 2008. Click on the picture to enlarge it. The format was pretty barebones back then, but you can still see where we were inventory and sales wise. Obviously, we are in far superior position to this then we were back then. 52,000+ listings compared to 210,030 (its dropped since I started writing this post), pending sales are almost half of what they are today. Sales were scarcely 6,000. We are in a real estate recovery in Arizona, whether the naysayers wish to admit it or not. It may not be even for everyone, but it is recovering, and we will see that happen no later than March 2012.
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