ARMLS STATS 9/27/2011

Sales in September not better than August

Pendings still rising slightly

Inventory rose for the first time all year

Washington battles weighing on September sales?

Median Price trending upward?

Pending: 12,038 ( +14 from last week)

Pending Sfam: 10,543 ( +24 from last week)

AWC: 7,778 ( +45 from last week)

AWC Sfam: 6,744 ( +37 from last week)

Active: 19,296 (+123 from last week)

Active Sfam: 15,136 ( +57 from last week)

Closed 9/19-9/25: 1,565 (-135 from last week)

Closed Sfam: 1,347 ( -95 from last week)

Listings to date in September: 7,895

Closings to date in September: 5,398

Median Price: $114,950 (+$5,950 from August)

This week was really a mixed bag in housing news. You had pendings holding up much better for the most part than expected throughout the summer and holding their gains, which forecasts future decent sales. You also are seeing a couple of trends in the pricing which are encouraging; the median price is showing a substantially higher level than what it was last month, and what it has been all year long, but that could change with the large influx of sales at the end of the month. It usually does, but it still seems likely we are going to log a strong uptick in median price.

The other stat that supports that notion is that median listing prices have also been rising, and the last month, has risen $10,000 per listing. That speaks to either the lower end inventory being cleaned out, or sellers are optimistic about what prices they can get for their homes. As in almost all things, its a mix of the two assuredly. The median listing price for most of the first half of the year was around $119,000; September's Median is $134,900. That is not really a fluke; July had bumped up to $122,500, then August rose to $124,000. Obvious improvements, but also notable as July was the first month that the median list price was equal to or higher than the previous year. July was the same, August was up $5K, and September right now is up $14,900 over last September. It will likely not finish that high, but its still a significant change. Third quarter might be noted as when things turned. Clearly, we have had a change, and seem to be headed in the right direction.

There is other evidence supporting Arizona's fundamentals. Retail sales have been surprisingly strong in Arizona, logging a 7.5% increase over last August. That is not insignificant, and as you can see by the article, it is also not an aberration. If people are willing to spend on cars, they will be willing to spend on homes, which is what we are seeing. Couple that with low interest rates, as well as low prices, and we have been able to maintain a solid level of housing sales throughout the summer months. However, lets take a look at the negative side.

For the first time that I can remember all year, the inventory level went up. It didn't go up a lot, but psychologically, the inventory level falling is what all of us in the inventory have prayed for for the last several years, so its unsettling. However, we have to assess that in the larger picture.

• Inventory was expected to start climbing in July.
• Inventory has reached a "barebones" level; its low enough to start encouraging certain sellers to want to list their homes because they are more optimistic they can sell it.
• This could be a blip, as it appears September sales were forecast by some of the fallout of the Washington bickering that started up in July.
• New resale inventory for September might reach the lowest level of the year, so a big move in inventory doesn't look particularly likely, as pending numbers are holding their own.

For these reasons, it seems like a significant rise in inventory is probably not that likely at this point. We may see some slight moves, but we are in the very bottom of the seasonal trough, so its not particularly significant.

The other downside is that September sales could end up being fairly weak compared to the last several months. They are often weaker in September, but we of course want to see a straight line up, don't we? Even though they might look weaker than the rest of the summer, it still appears they bill blow the doors off last September, so it might not be all that bad. I am still seeing that we will sell upwards of 7700 homes in September- not great, but a a 16% or better improvement over last September. Its really only half-bad news, and that is debatable. This might be as about as good as you could hope for.

The stat that really stands out, if it stands up, is the median pricing. If the median price makes that kind of move now, even when the market is at its seasonal cooling off period, what will it be like in February, March, April? The market fundamentals have mostly pointed to some price increases, for months, really, if you follow my blog, but they have stayed oddly low. I think that is mostly a matter of consumer sentiment, just like the divergence of what consumers are saying about the direction of the economy, and what they are actually doing, which is spending again, as evidenced by the retail numbers. Its the equivalent of saying: "This economy scares me, so I am saving my money and not doing anything." But when the friend points out the subject just bought a new car, he replies, yeah, but its a Small new car." The sentiment is things are still really bad, because for some people they are really bad, but for many, only the sentiment is bad, and the reality is that they are buying cars, trips, boats, and bikes....and houses.

People are doing the same thing with housing now; they speak poorly of the housing economy, but they are out buying in pretty good numbers, but the sentiment is still negative enough to have held prices down while fundamentals should have pushed prices long before now. We are seeing it in submarkets- Wittmann house prices have been up sharply. There wasn't a house selling there above $100,000 a few years ago- now it looks like a decent home on an acre there will be $150,000+, and you will have to fight for it. Same thing in certain other areas that we have tried to invest in. I am not going to forecast any price increases for fourth quarter, but I have a very positive outlook for the end of first quarter 2012. Second quarter could be a foodfight, if inventory stays at the level it is now. If we enter February with less than 18,000 single family homes, look out by April, because it will be tough to buy what you want without a bidding war.

Even though September is looking like a mixed bag, I am encouraged that it seems we bounced off the softness that the idiots in washington cost us with their debt haggling. The uncertainty at that point certainly was the cause of pendings sliding back to lower levels in the 11,000's in early September, and is the reason why we will experience weaker sales this month, and likely October as well. Pendings have recovered to a degree that tells me we will maintain the current course for the next few months, anyway. But, I will not be surprised if the cumulative effect of low inventory and strong demand pushes prices through this period anyway. I am not banking on it, but I won't be surprised either.

ARMLS STATS 9/21/11

August Sales Rise Nationally 7.7%

Pendings up slightly, actives down slightly

New September listings on pace for less than 9000?

Pending: 12,024 ( +23 from last week)

Pending Sfam: 10,519 ( +17 from last week)

AWC: 7,733 ( -87 from last week)

AWC Sfam: 6,707 (-69 from last week)

Active: 19,173 ( -34 from last week)

Active Sfam: 15,066 ( -20 from last week)

Closed: 9/12-9/18: 1700

Closed Sfam: 1,442

I apologize for not getting these out yesterday on the normal schedule; I was out of town.

September is not going to set any records for sales, but it looks like it will be okay. The pending numbers continue to hold up this summer compared to 2010, so the indications are that it sales are holding up pretty well. The fall is not a great time for sales until December, but we are holding up here. We are also seeing some substantially higher median listing price, which denotes people are either more confident in their pricing, or that there are fewer and fewer low priced properties coming on the market. That is the more likely reason. We are seeing that the condo market is absorbing inventory at these low prices, and there has been some news about luxury condo sales recovering locally. We also had the interesting headline this morning on CNBC about August home sales surprising. There was even another good bit of news (nationally) about the construction industry mending a bit. It was not about residential construction, but construction jobs of any kind would be most welcome. Its also an indicator of banks willingness to open up lending again, and that is crucially important to our recovery.

On the local front, new construction continues to be dogged by just how low the pricing for resale homes is. How do you sell a new condo for $100K when there are used condos for half of that price? Why would someone build a new custom home when you can buy a finished one for substantially less money? These are difficult obstructions for the market to overcome, and the primary reason that the new home construction business is so slow. These prices are assuredly under their economic value (meaning what is a reasonably expected rate of return for the asset class), and that condition will not last forever in a market. I have said it before, but if we get to the spring buying season without a reasonable uptick in inventory, buying a home at that time is going include a lot of bidding up prices for the best properties. We will be in a position of having half the inventory that we started this year's buying season with, and given the flow of 2011, that would mean we would drain ALL inventory off the market. Obviously, that will not happen, but what will happen is that as prices rise, more people will put their home on the market, thinking they can get a better price now. Builders who have some inventory ready may be able to sell specs to people who need a home now and don't feel like competing on buying a dozen properties before they are able to snag one with a blue sky offer.

This is not necessarily a bad thing; prices need to come up, and if this is the mechanism that shifts peoples' thinking, so be it. It could also happen that a lot of foreclosures may be coming available, and while I doubt there will be even a worst case scenario of 20% increase in the inventory levels over the next 3 months, that still amounts to very little. 20% would add 3 thousand extra homes to the single family market. A lot of Buyers' agents would tell you that they wish there were 3000 more homes on the market, because it is beginning to be slim pickings if you are a buyer. So if inventory increases by 3000 homes by January 1st, that would be just in time for the Spring Buying season, which will absorb 3000 homes in March Closings alone. When we go from 6K-7K closings a month to 9500-11000 for the next four months. The inventory wave does not appear to have sufficient legs to put these all out on the market in that short time frame. Regardless, I don't think that is going to happen; here's why.

I referenced in the title about inventory in September. Here are the facts. We have had a significant slowdown in the numbers of homes being listed all year. We are down about 17% from 2010. The trend all year is towards lower listing numbers; as a matter of fact, I went back to 2003, which is prior to any segment of the real estate boom years, and we are trending 6.3% less than that year. We have grown much larger as a city in that time, and despite the fact that our sales are 22.6% higher than 2003 sales, there is less inventory coming on the market. Most people will tell you that 2003 was a healthy time period for real estate in Arizona, but our inventory comparisons along with sales comparisons tell us that all things being equal, our inventory level is 30% below a historically healthy level. There is 22% higher sales, 6.3% less incoming inventory, so you have almost 30% higher inventory factor in 2003 than you do in 2011. I think that means that we can absorb a 30% increase in inventory and still be at the same levels as 2003. That is not bad. Of course, there is no evidence that we are going to see a 30% increase in inventory; as I said, the trend is lower, and right now, the trend in September could put us below 9000 listings this month, which would be the lowest total for a month for the year. So far, there are 5929 listings in September, through 20 days. That is about 296 a day. There are 10 days left in September, so an additional 2960 would be expected. That is a pace for 8889 for the month. I think it will finish a bit higher than that, but I don't have any evidence that more will be coming on the latter half of September than they normally do; listings tend to come on the market on a regular basis, as opposed to closings, which come as a rush at the end of the month.

It is difficult at this point to see where a big influx of inventory is really going to come from when by all appearances, it seems to be weakening. That can all change, I know, but my point is that the upside risk to higher inventory levels is very far below the dam wall at this point. The potential flood is not large enough at the current level of sales to matter much in the ARMLS region. I don't think there are too many experts out there who feel the next wave of foreclosures is going to be larger than the first wave of foreclosures; circumstances are simply different now.

MLS Stats 9/13/2011

Pendings Drive Back Over 12,000 This Week

Median Listing Price Rising?

New listing activity maintains lowered trajectory in August

Pending: 12,002 ( +417 from last week)

Pending Sfam: 10,502 ( +142 from last week)

AWC: 7,820 (+102 from last week)

AWC Sfam: 6,776 ( +101 from last week)

Active Listings: 19,207 ( -58 from last week)

Active Sfamily: 15,086 ( -71 from last week)

Closed 9/5-9/11: 1,139 ( -1,307 from last week)

Closed Sfam: 957 (-1,142 from last week)

New Listings in August: 10,241 (August 2010: 12,972

For the year: -16.7 % less than 2010

New Listings September: 3,367 ( September 2010: 12,841)

Sales 2011: +11.9 over 2010

Median list price August: 124,900 (August 2010 : 119,000)

Pending sales in September are recovering from the dramatic drop that typically accompanies the end of the month sales. We are just never sure, given the economy, if the pendings will recover in any given month, but they have shown very good resiliency. My stats are a little spotty for the fourth quarter last year, but I did take a reading on September 21, 2010. There were 10,250 pendings that day; a number substantially less than our current figure. I would expect that pendings next week, which will match the same week as the 10,250 reading, will be higher yet. This means we are 15-20% ahead of last year's pace, and shows we are heading toward some recovery in housing in Arizona. Our inventory is exceptionally low in the MLS, despite what you hear in the news media. There are and will continue to be homes in arrears on payments, etc, but that will be the case for a long time to come. To start counting them as inventory or "pre-inventory" is ludicrous. All houses are potential inventory; I will give a good example. You have a home that is constantly running 60 days late on its payments; so someone publishes that somewhere, and adds it to the "shadow inventory". But, on the same block you have a family whose head of household got transferred to a great new job in San Diego, but will need to start next month. He's not upside down on his house, and not behind on payments, but he decides to put his home on the market that very day. Which of these situations is a better example of shadow inventory? You can answer that by saying which one become inventory, and which one dogs along being called shadow inventory for the next year until the owner caught up or refi-ed. My point is, every house is shadow inventory, even the paid for ones. Shadow inventory is a wildly inaccurate way to assess inventory. We have tens of thousands in supposed "shadow inventory" right now; but our actual inventory is down 16+% for the year, so what does the shadow inventory tell us? Not a darn thing, other than that this house might possibly find its way on the market in the next year. But then again, so will your 90 year old Aunt Hilda's the week after she falls down and needs to go to skilled care. No one was looking at that as shadow inventory, were they? Or how about the divorce that is just brewing because an athlete got caught with another woman? Do we count those? No, we don't. Right now, it seems like the only inventory there is is the bank -related inventory, and buyers will tell you that they are feeling like they don't have enough choices right now. You know why? Because there is barely more than 2 months worth of ACTUAL inventory. People who might normally be considered movers after several years are hunkering down and keeping their home if they can afford it, because they might have a hard time getting a mortgage, or selling the home doesn't benefit them enough financially to go pursue another house.

We aren't allowed to count sales as soon as a college graduate gets a hot shot job out of college; lets not start adding homes to inventory just because someone loses theirs. You can't buy a home that's in shadow inventory, so its not inventory.

What is encouraging is how buoyant demand has been this summer. I really thought we would experience a great fall-off after June, since that is the beginning of a seasonal slowdown. Certainly sales are less than the peak in June, but we saw strong sales through the dog days of July and August, and that is very encouraging. Our pending number continue to bounce back each month, portending strong sales for the next month. I keep saying this, but if we stay on this track until February, there will be a lot of fighting by buyers over the choicest properties on the market, since their really is no excess to meet the demand spike that occurs in the buying season. We have practically shaved more inventory since the beginning of the year than there is inventory, so where does that leave us when we go through the sustained demand months of February-June? Yup, buyers pushing prices up.

Sales this week obviously fall off after last week's, since they included end of the month numbers. I am a little bit concerned that we will hit some soft spots in sales though, since we have had to absorb some wicked rides in the stock market that can affect people's confidence. If September was a little soft, I would not be surprised, but the pending numbers are growing again, and if that is an indication, than we seem to be holding on to the same track.

Just a quick note about the Median List Price. It had been hanging around near $115K-119K for the better part of the last year, but we have seen it pop up to $123K, and now $124K+ in August; that means that the bottom is probably coming up on list prices. It is not a giant indicator, but it is a trend nevertheless. Happy to see it, along with a stabilized median sales price. It has been bouncing along on the same track for a significant time, and now that inventory has been largely cleaned up, I would expect that the trend will be higher rather than lower. It might not happen until Spring, but its going to happen.

Have a great week!

MLS Stats 9/13/2011

Pendings Drive Back Over 12,000 This Week

Median Listing Price Rising?

New listing activity maintains lowered trajectory in August

Pending: 12,002 ( +417 from last week)

Pending Sfam: 10,502 ( +142 from last week)

AWC: 7,820 (+102 from last week)

AWC Sfam: 6,776 ( +101 from last week)

Active Listings: 19,207 ( -58 from last week)

Active Sfamily: 15,086 ( -71 from last week)

Closed 9/5-9/11: 1,139 ( -1,307 from last week)

Closed Sfam: 957 (-1,142 from last week)

New Listings in August: 10,241 (August 2010: 12,972

For the year: -16.7 % less than 2010

New Listings September: 3,367 ( September 2010: 12,841)

Sales 2011: +11.9 over 2010

Median list price August: 124,900 (August 2010 : 119,000)

Pending sales in September are recovering from the dramatic drop that typically accompanies the end of the month sales. We are just never sure, given the economy, if the pendings will recover in any given month, but they have shown very good resiliency. My stats are a little spotty for the fourth quarter last year, but I did take a reading on September 21, 2010. There were 10,250 pendings that day; a number substantially less than our current figure. I would expect that pendings next week, which will match the same week as the 10,250 reading, will be higher yet. This means we are 15-20% ahead of last year's pace, and shows we are heading toward some recovery in housing in Arizona. Our inventory is exceptionally low in the MLS, despite what you hear in the news media. There are and will continue to be homes in arrears on payments, etc, but that will be the case for a long time to come. To start counting them as inventory or "pre-inventory" is ludicrous. All houses are potential inventory; I will give a good example. You have a home that is constantly running 60 days late on its payments; so someone publishes that somewhere, and adds it to the "shadow inventory". But, on the same block you have a family whose head of household got transferred to a great new job in San Diego, but will need to start next month. He's not upside down on his house, and not behind on payments, but he decides to put his home on the market that very day. Which of these situations is a better example of shadow inventory? You can answer that by saying which one become inventory, and which one dogs along being called shadow inventory for the next year until the owner caught up or refi-ed. My point is, every house is shadow inventory, even the paid for ones. Shadow inventory is a wildly inaccurate way to assess inventory. We have tens of thousands in supposed "shadow inventory" right now; but our actual inventory is down 16+% for the year, so what does the shadow inventory tell us? Not a darn thing, other than that this house might possibly find its way on the market in the next year. But then again, so will your 90 year old Aunt Hilda's the week after she falls down and needs to go to skilled care. No one was looking at that as shadow inventory, were they? Or how about the divorce that is just brewing because an athlete got caught with another woman? Do we count those? No, we don't. Right now, it seems like the only inventory there is is the bank -related inventory, and buyers will tell you that they are feeling like they don't have enough choices right now. You know why? Because there is barely more than 2 months worth of ACTUAL inventory. People who might normally be considered movers after several years are hunkering down and keeping their home if they can afford it, because they might have a hard time getting a mortgage, or selling the home doesn't benefit them enough financially to go pursue another house.

We aren't allowed to count sales as soon as a college graduate gets a hot shot job out of college; lets not start adding homes to inventory just because someone loses theirs. You can't buy a home that's in shadow inventory, so its not inventory.

What is encouraging is how buoyant demand has been this summer. I really thought we would experience a great fall-off after June, since that is the beginning of a seasonal slowdown. Certainly sales are less than the peak in June, but we saw strong sales through the dog days of July and August, and that is very encouraging. Our pending number continue to bounce back each month, portending strong sales for the next month. I keep saying this, but if we stay on this track until February, there will be a lot of fighting by buyers over the choicest properties on the market, since their really is no excess to meet the demand spike that occurs in the buying season. We have practically shaved more inventory since the beginning of the year than there is inventory, so where does that leave us when we go through the sustained demand months of February-June? Yup, buyers pushing prices up.

Sales this week obviously fall off after last week's, since they included end of the month numbers. I am a little bit concerned that we will hit some soft spots in sales though, since we have had to absorb some wicked rides in the stock market that can affect people's confidence. If September was a little soft, I would not be surprised, but the pending numbers are growing again, and if that is an indication, than we seem to be holding on to the same track.

Just a quick note about the Median List Price. It had been hanging around near $115K-119K for the better part of the last year, but we have seen it pop up to $123K, and now $124K+ in August; that means that the bottom is probably coming up on list prices. It is not a giant indicator, but it is a trend nevertheless. Happy to see it, along with a stabilized median sales price. It has been bouncing along on the same track for a significant time, and now that inventory has been largely cleaned up, I would expect that the trend will be higher rather than lower. It might not happen until Spring, but its going to happen.

Have a great week!

ARMLS STATS Sept 6, 2011

***August Sales beat Aug.2010, July 2010 Handily***

Active Listings still falling, new inventory still lagging 2010

Median Prices basically flat, but up slightly

Pending: 11,585 ( -305 from last week)

Pending Sfam: 10,360 ( -270 from last week)

AWC: 7,718 ( N/A)

AWC Sfam: 6,675 ( N/A)

Closed: 8/29-9/4/2011: 2,446

Closed Sfam: 2,099

Active: 19,265 ( -147 from last week)

Active Sfam: 15,157 (-153 from last week)

AUGUST SALES: 8,815 ( +1852 from August 2010)

AUGUST MLS HOUSING STATS

A quick report on the month of August initial MLS SALES and INVENTORY numbers:

Residential Sales in August 2011: 8730 (Single Family residences and Condos)

Residential Sales in August 2010: 6,963

Change: up +25.4

Residential Sales July 2010: 8,493

Active residential Listings: 19,278 (Single Family residence only inventory 15,181)

September 22 2010* 38,804

*I don't have the stats from the exact week. (I have to apologize here; I took a hiatus last fall doing the stats, so I have a big gap in the weekly pending and active numbers starting in September that last until February this year. I am sorry.)

New Inventory on the Market in August 2011: 10,101

New inventory on the market in August 2010: 12,972

Difference: 2,871 (-22.1 %)

As we can see, new (resale) inventory is also much lower. When sales are up 25% and new inventory is down 22%, you can see why we have been burning inventory all year long. If you go back and read through the stats for 2011, you will see a steady reduction in inventory all year long. We are now

As we can see, the inventory and production numbers have been very good in the Arizona Regional Multiple Listing Area. We have slashed inventory in half from last September, and it appears that maybe the median price slide has been stabilized as well. A good deal of how low that is is the result of rebounding condo sales, at very low prices, since banks are loathe to loan money on them. We have seen homes that once kissed around the $175K mark go for $25,000. Its inevitable that the median price will be dragged down by this, which is why I think the sliding inventory numbers are the most important aspect. I have said it several times in back posts, but if we continue to sell homes through this slow period at the rate that we are, inventory is going to be about where it is coming February when a purchasing spike occurs. If we get to February and we have normal seasonal demand, I see no direction but for prices to rise through the strong demand period that runs from February through June. Inventory is just not there to absorb the demand.

These numbers do a shift around a bit for the next few days, but it still shows a very solid month of August for sales. I had some expectations that perhaps August was going to fall significantly below July's numbers, but we seem to have outperformed. I do think Arizona fundamentals for sales growth are better than some places: we probably still have an influx of people and jobs, even if they aren't terribly high paying jobs; and home prices are reasonably affordable for people. We may also see the "rent effect" start to hit Arizona, with rents going higher, some people will start opting for the purchase of a home, even if they are still tentative, since the cost of renting is blowing past the cost of buying right now. I do think fundamentally that Arizona is recovering, and that even this wave of foreclosure sales they keep talking about comes to fruition, we have reached such a low level of inventory that it would be difficult to see this swamping the boat again. Demand has returned, inventory is low and getting lower, and prices will eventually be forced upward, or builders will start building to meet demand.

Well, I promised I wouldn't go into an in-depth analysis, so I am going to give it a rest here. I am moderately optimistic about the housing market given another strong month when weakness might have been expected. Its surely better on all fronts than 2010, and we have now reduced inventory to very manageable levels. There is still a crisis of confidence out there over the economy, but there is no doubt that real estate is stabilizing.