ARMLS 8/30/2011

August'11 will beat August'10

Inventory Still Falling

Pending: 12,190 ( -79 from last week)

Pending Sfam: 10,630 ( -93 from last week)

AWC: 7,483 (-20 from last week)

AWC Sfam: 6,774 ( -43 from last week)

Active: 19,412 (-187 from last week)

Active Sfam: 15,310 (-123 from last week)

Closed 8/22-8/28: 1,885 (+47 from last week)

Closed sfam: 1,661 (+99 from last week)

Closed MTD: 6,851

It looks like August is going to be a good month for sales; this month has surpassed sales as of today; if tomorrow is a typical last day of the month, we will expect to blow past last year by a good 10%. I am not sure if it surpasses July, but it is pretty solid nonetheless. The pending numbers seem to be holding up as well. The new inventory numbers for August are saying down as well. It might cross into the 10,000, but it will be close. Our slow season isn't turning out to be that slow, frankly.

We are starting to see the effect of the slimmer inventory now. I have been looking for some rental properties for some clients, but it is getting difficult to find quality at a lower price. Certain areas are selling better than others; I don't think Maryvale will recover anytime soon, but hot areas are rebounding to some degree.

ARMLS STATS August 23, 2011

Inventory Still falling modestly, pendings higher again.
New inventory for July trending behind 2010.
Where is the backlog of homes?

Pending: 12,269 (+ 128 from last week)
Pending Sfam: 10,723 ( +141 from last week)

AWC: 7,863 (+11 from last week)
AWC Sfam: 6,817 ( +1 from last week)

Active: 19,599 (-103 from last week)
Active Sfam: 15,433 ( -137 from last week)

Closed: 1,838 (+310 from last week)
Closed sfam: 1,562 ( +251 from last week)

Closed MTD: 5,202

I will do commentary later...

ARMLS STATS 8/16/2011

Pendings Rise, Actives continue to drop
Sales are light in August so far

Pending: 12,141 ( +204 from last week)
Pending Sfam: 10,582 ( +148 from last week)

AWC: 7,852 ( +53 from last week)
AWC Sfam: 6,816 ( +56 from last week)

Active: 19,702 ( -134 from last week)
Active Sfam: 15,570 ( -128 from last week)

Closed 8/8-8/14/2011 1,528
Closed sfam: 1,311

MTD: 3,376

The closings were surprisingly light so far in August, but the pending sales are still climbing, albeit slowly. We are still in the slow summer period, so its not unexpected. Actually this is all pretty good news, as if we can keep inventory levels where they are through the summer and fall, it shows we have some stability.


Sales are slowing, but we are still going to be better than last August. I don't know if it will be as high as July though yet. It is encouraging to see that pendings are still rising, along with a falling inventory. I don't have a lot of time today, so I am going to wrap this up, but these stats show we are moving in the direction we want. Active single family inventory in the 15,500 range? That is incredible when put in perspective. Pricing was down in july, but it does look like we are going to be going in the right direction even on that. We might not finish much higher in August, but the median price is even trending higher.

I will be back next week with a better post!

chris

ARMLS STATS 8/9/2011

Pending Sales Rise, Inventory slightly lower
July closings at 8,549.
Would you rather be in inflated stocks, or already discounted Hard Assets?

Pending Sales: 11,937 ( +366 from last week)
Pending Sfam: 10,434 ( +312 from last week)

AWC: 7,799 ( +176 from last week)
AWC Sfam: 6,760 ( +168 from last week)

Active: 19,836 ( -195 from last week)
Active Sfam: 15,698 ( -219 from last week)

Closed 8/1-8/7 1,405
Closed Sfam: 1,205


Despite the drumbeat of negativity in the news, the real estate market here is so far still marching forward this summer, albeit with a few caveats. As we noticed last week, home sales were very strong in July, a typically weakened month in Phoenix. The median price was a little lower, which is puzzling, but not enough to be disturbing. It could simply amount to a lot of condominium sales which come in at lower prices. We are getting down now where there are only about 4000 listings of other than single family homes now, so that means condo sales must be occurring with great regularity as well. These are going to be lower than the median price and will probably drive the number down. It is difficult to measure that median number with any great degree of certainty what drives it.

Well, the elephant in the room is what is going to happen on Wall Street. The stock market swung back pretty strong today, but it doesn't mean the instability is over. The fact that globalism and multi-national companies is the source of financial viruses is now without question. The US needs to seriously think about how they want to encourage re-investment in America and our mostly strong system based on productive Americans, as opposed to through our taxing regime, encouraging our biggest most profitable countries to keep and invest their money overseas in banks and bonds that are now looking very suspect. I think the market falls a bit more, and I think another group of americans figures out that investing in Wall Street is a gamble in which you hope to be betting on the same company at the same time the giant players who can move the markets do so.

There is a silver lining to this, however. Gas prices may slip, and we might see, like we did after the fall of the market 10 years ago in 2001, that people will put their money into hard assets like real estate. This is always cyclical anyway, but financial contagion is a catalyst for a broad shift toward investment in that what we can see. I have no faith in the market at this point, given their exposure to other banks on the continent. Hard assets are at least that; you own them and prices can still go up or down, but you still have the asset. People can do no more with gold than they can with land, and you see people rushing to buy gold and driving it skyward. Of course, gold is more liquid than land, and that is what makes it more attractive now. Eventually builders will need land to increase housing units, as the country and especially Arizona grows. That is a no doubter, and land, if you want to think about it in Wall Street terms, is extremely over sold. I will give an example of this. I know of a piece of farmland in Pinal county for sale for about $5000 per acre. Right now, alfalfa is selling for a minimum of $250 a ton. In Arizona, an acre in Alfalfa can produce anywhere from 8-13 tons per acre. Even at the low side of things, the gross return on that for a farmer is a 2-3 year payback. Now, obviously, there are many expenses in there, but the return on investment is very quick, and that is traditionally a very high return on farmland, implying that the price of the land is very low, since the price has been coming down even though Alfalfa has shot up 200-250% in the last year. People have been wary of hard assets, and probably with good reason, but at current prices they are a very smart buy.

Housing this week shows we are probably leveling off in our inventory reduction for the rest of the summer, or even the rest of the year, but as long as it doesn't start rising precipitously over the next 4 months, we will be going into the first quarter buying season in excellent position. I had high hopes for buying demand for the rest of the summer; now with this last bit of nonsense in the stock market, we might see some marginal demand destruction if people get spooked. Hopefully this settles down immediately and everyone can get back to business.

One interesting stat for the week was that inventory for single family homes, as both a percentage and even the raw number, fell faster than overall inventory. I don't know if there was a raft of condos that came on the market, but I am assuming that was probably the case. It just could be that single family purchasing is recovering to the point where it is growing faster than overall demand. It doesn't happen often, so it was kind of interesting. Stronger single family home demand signifies to me a stronger market, as families buying homes is the backbone of the industry.

EDIT: Stocks have slid back into the negative. Trust in hard assets; farmland or energy land if you can get it.

ARMLS STATS, August 2, 2011

***Single Family listings fall into 15K's***
July sales surprisingly strong, finishes at 8,521
Number of new listings dives: 26.4% less than July '10
Listing activity falling further behind 2010, now running 15.4% deficit
*First time this year less than 10,000 new listings for a month*


Pending: 11,571 ( -733 from last week)
Pending Sfam: 10,122 ( -643 from last week)

AWC: 7,623 ( -126 from last week)
AWC Sfam: 6,592 ( -108 from last week)

Active: 20,031 ( -564 from last week)
Active Sfam: 15,917 ( -454 from last week)

CLOSED 7.25-7/31: 2,847 ( +968 from last week)
Closed Sfam: 2,457 ( +831 from last week)

Closed July: 8,521 (+ 23.4% from July '2010)

New listings in July: 9,231 ( -3,308 from last year, -1409 from June)


Despite everything we hear everywhere, it seems our July figures are reinforcing the idea we are on the right track in Arizona. 8500 sales in July is more than acceptable; it turned out to be a really good month. Throw in that there was another fall off in listing activity, and you encounter again some serious inventory burn. Prices are still flat, but for the first time in July, listing prices are higher than the previous year; it shows something about either seller optimism, or the fact that the low priced stuff is being diminished, and future activity will live in a higher price range.

I don't want to gloss over the fact that there are now only 15K listing left in the Single Family inventory in the MLS; there were actually 7,349 closings of Single Family homes, so we are talking about a bit more than a two month supply, and falling. July is traditionally an off month in Arizona, due to vacations and general miserableness of the weather causing people to seek refuge elsewhere. But strong sales, especially given the limited and falling trend of inventory, and one could say we are in a much better inventory position than we could hope for. Obviously, people are buying homes, and for this, I am grateful.

It is also worth noting that we are reaching a milestone on overall listings as well, even though as of press time, it didn't happen. We will be under 20,000 listings this week in the MLS, and I don't know how anyone can continue to ignore the fact that we have reached acceptable levels of inventory. We are at just about two months, and I think most sellers will tell you that if they only need to wait two months to sell their homes, they would be pleased. That is what this inventory number tells us. We sometime can expect August to be similar but maybe even slightly better than July, but if we are in similar ballparks, we will be doing very well. We have cut another 1000 off the inventory in July, a month I expected it to build, and while it may start building for the rest of this year, the fact that the inventory build won't even start until the end of august means that there will be less inventory to start the 2012 sales season with. If we have a decent August, we may not see any inventory build.

To expand on the inventory trend, as I mentioned it is running at a 15% deficit from last year. And the recent months have even been a bigger fall. It could be that inventory is really receding here finally, because it is on a 7 month trend, and even some pretty sharp rises will not change the overall picture. July's number being 26% less is astounding. That is 3300 fewer homes came on the market, and there were 1600+ more sales. For a typically poor month that usually sees inventory build, you can see why its still falling. Economic uncertainty continues in the US, however, and there is no way to say that the trend will continue.

I would like to get some stats from builders to see how they are doing, but given that resale purchasing is strong even with the tight lending standards now faced by buyers, I would think they are at least doing better. The last figures I saw showed some definite upward trends in traffic and actual sales compared to what inventory is available. Builders are still being very cautious, but I am seeing some signs of life, so I do think they are probably seeing enough activity to give them a little hope. Their as-built inventory is very low right now, and they will need some strong buying activity to get them started on high volume spec construction. I did see this morning a DR Horton subdivision with a number of homes under construction up on Dynamite in the 50's streets. I don't see this subdivision listed on their website yet, so it must be fairly new. They had multiple homes under construction, and this is not a low end area. I am always happy to see new subdivision.

If we can continue on the path that we are on, we are going to find ourselves in excellent condition by next February when the buying season is upon us- it might even be sooner given the trend lines, but it doesn't pay to be too optimistic right now, people are still so negative on housing that they just skewer you for disputing the gloom.

Pricing continues to be troublesome, as there was a price drop in July; it is likely an aberration, however, as the laws of economics will not let that continue for long. It just can't work that way. On the positive aspect of price, The overall dollar figures sold in July was nearly $100,000,000 higher than last year; we have only been higher in that category four months this year, and that was by far the best performance.

Another positive month, and a very good week that continues the trend of a market returning to health.