ARMLS STATS 11/08/11

Pendings Jump, Inventory flat

Inventory likely not increasing enough to meet spring demand without driving prices

Pending: 10,836 ( +326 from last week)

Pending Sfam: 9,398 ( +256 from last week)

AWC: 7,598 ( +103 from last week)

AWC Sfam: 6,576 ( +83 from last week)

Active: 19,654 (+44 from last week)

Active Sfam: 15,440 ( +32 from last week)

Closed 10/31-11/6 1,941 (-60 from last week)

Closed Sfam: 1,616 ( -97 from last week)

Closed October (updated): 7,612 ( + 105 from earlier estimate)

Sales activity is rising in November, which is a bit unexpected but welcomed, while inventory continues to stay flat. November new inventory is also relatively flat, it appears, but we also will not expect blowout sales in November. We are in the doldrum months, but they are really not performing poorly. The sales figures are better than last year, and prices seem to have stabilized, although we would like to see some increases. Anecdotal evidence is pointing to a shortage of condo or starter property in some areas, as prices in several properties we have pursued for investors have jumped well above asking price. There is simply not the inventory that we have all become used to kicking around the last several years, and the sellers are starting to realize it. That doesn't mean we are going to have prices shooting skyward anytime soon, but the slack is being pulled out of the rope, so to speak. I believe that the spring buying season will do the heavy lifting on prices. We are simply not adding enough inventory to account for sales in those months, and if this trend stays until February, you will have serious competition for housing at that point. It could drive prices, or it could drive people holding inventory to place it on the market. If there is a lot of latent inventory out there, that could happen as well.

Pendings in October were slightly ahead of where they are now, but they are not far off. I would expect to see 7000+ sales in November, possibly down a bit from October. I would also expect we will see lower inventory coming on the market this month than last year. If December follows the trend of last year, when there were 8200+ sales, we could see inventory take a good hit then as well, as December is the poorest month of the year for new inventory; we could go into January with even tighter supply than we see now. Its still hard to tell, but that looks to be the case.

There is not much else to glean from this week's stats, other than October sales finishing above 7600 puts it a little closer to being a stronger month than I thought. 8000 would have been a big surprise for October, so 7600 is a good number.

So much about pricing depends on the lending industry's participation in it, and through mixed parts of government interference and caution, banks are being bottle necked from full participation in home lending.

ARMLS is forecasting a slight right in prices for November, based on pending info, and a sharp fall in December, also based on contracts signed. I don't know if I find that accurate, but we will see. I can't check those numbers, so I don't use them. There are a lot of contracts to be signed for December closings still to be done, so I doubt the median price is going to be fall as far as they forecast. Their sample of December sales is so small as to be useless at this point.