ARMLS STATS 12/28/2011

****ARMLS Inventory Slips into 18K's.****

Pending: 9,991 ( -353 from last week)

Pending Sfam: 8,720 (-321 from last week)

AWC: 6,950 ( -240 from last week)

AWC Sfam: 6,019 ( -212 from last week)

Active: 18,800 ( -263 from last week)

Active Sfam: 14,641 (-189 from last week)

Closed 12/20-12/26: 1,731 (-12 from last week)

Closed Sfam: 1,443 (-31 from last week)

Closings MTD: 5,820

Inventory has reached another important milestone, and has fallen into the 18,000s. This is the low water mark for inventory since 2005, at least. Inventory continues to fall, even as sales slow down as we reach the least active time of the year. The sales are actually much stronger this month than I expected them to be. Anything above 7000 is really considered to be an excellent December; it appears they could finish even stronger.

The new listings are still looking like they are decreasing, further pressuring supply, and the median price is rising again this month. It might not finish this way, but the price is up by $3,600 over November right now.

I am going to wrap it up with that; the interesting news is that inventory has slipped a long way, and we seem to be heading in the right direction. I will have more on this next week.

ARMLS STATS 12/20/2011

***Single Family Listings fall into 14K***

Overall listings barely 19K.

Prices may be rising sharply again this month

Pendings fall as holidays loom

Pending: 10,344 (-279 from last week)

Pending sfam: 9,041 (-229 from last week)

AWC: 7,190 (-123 from last week)

AWC Sfam: 6,231 (-98 from last week)

Active: 19,063 (-250 from last week)

Active Sfam: 14,830 ( -252 from last week)

Closed: 1,743 ( +349 from last week)

Closed Sfam: 1,474 ( +281 from last week)

We have reached a new milestone in the housing recovery for Metro Phoenix, and that is that single family homes inventory has fallen into the 14,000s. That is a significant note, as it shows not only are we at multiyear lows in inventory, going back to at least 2005, but that it gives us room for an upward blip should be we encounter difficulties from Europe. It also puts into question the idea that there is a massive shadow inventory lying in wait out there; we have been moving consistently downward in inventory levels for all of this year, we are now at a point where we could see violent price gains by April if we have a typical spring buying season. I have no doubt that this will be met by some investors making flip properties available, but many investors are going to be collecting excellent rent, so why get rid of a passive income gold mine? No, it appears we are pushing towards an inventory problem here, that can't possibly be met by builders alone, as the available land becomes too far out for people who work in Central Phoenix. We will see price increases, of that I have no doubt. It is too early to make predictions about this month, but we are already running substantially higher than last month on median prices; I am not sure that will hold up, so we will wait until the stats come in at the end of the month before I make the claim of rising prices again. If they are not already here, they will be by Spring, assuming a normal economic pattern.

We also saw pendings drop fairly sharply; not completely unexpected, as new buying activity the weeks before Christmas do tend to peter out. It appears that December will not be as active a month for buying as was last December. This December is going to look a lot like November of this year, with fairly soft sales in the 7000 range. Last year December proved to be an aberration with over 8200 sales, which seemed awfully high for what is supposed to be the middle of the dead zone for housing sales in Arizona.

New inventory coming on the market is obviously, light, as noted by the slide in overall inventory. We can expect an uptick in that come January, but even with that, we are in excellent position to see housing prices regain some lost value locally.

There is some good external news as well regarding housing; housing permits and new starts are improving, along with builder sentiment. This is positive news, as new construction leads to so many great things on the local level. New jobs, new revenue for local government, increased optimism from consumers who see new housing being constructed, and thus, better demand for housing.

The other interesting story is what builders are beginning to see. If they are feeling better about things, it won't be long until they figure out a way to get people financed, and into homes. We are definitely on a better track than we have been, and I think we will start feeling effects of that even in February, when buyers are out pursuing property. March is a big month for closings, and that activity has to start in February for that to happen. New construction is critical to a strong Arizona recovery, and we may be on the cusp of that happening. We are now only about a month away from the green pastures of the strong housing season in Arizona. It is something to be very excited about!

ARMLS STATS 12/13/2011

Pending Sales: 10,623 ( +170 from last week)

Pending Sfam: 9,270 ( +135 from last week)

AWC: 7,313 (-24 from last week)

AWC Sfam: 6,329 ( -26 from last week)

Active: 19,313 (+21 from last week)

Active single fam: 15,082 (+1 from last week)

Closed: 1,394 (-947 from last week)

Closed Sfam: 1,193 (-795 from last week)

***NOVEMBER: 7,246 Sales***

Median & Average Price up in November

Sales are modest, but best November 2010

Overall Inventory falling toward 18K's; Single Family dropping to 14K's

New listings in November reach multi-year low

Pending: 10,453 ( -481 from last week)

Pending Sfam: 9,135 ( -382 from lat week)

AWC: 7,335 ( -187 from last week)

AWC Single Fam: 6,355 ( -160 from last week)

Active: 19,292 (-213 from last week)

Active Sfam: 15,081 ( -184 from last week)

Closed: 11/28-12/4: 2,341

Closed Sfam: 1,988

Closed November: 7,246 (+8.4% better than November 2010)

New listings in November: 8614 ( -2601 listings, or 23.2% less than Nov.'10)

Median Price: $115,000 (+$3000 from October, 2.7% increase)

( -$50 from November 2010)

Average Price: $160,091 ( November 2010: $158,695)

( October 2011: $153,289)

Sales were modest in November, but very positive regardless. November is traditionally a quiet month, so softer sales are not unexpected. The tally was over 8% better than the same period in 2010, so we are still looking at a strong improvement. They were a bit softer than increases logged by previous months however, if you are a dark lining in a silver cloud kind of observer.

Also up was the median price, which reached $115,000 for the first time all year long. The number had bounced between $109K and $112K most of the year, but we might be seeing a bit of a breakout here. Supporting that idea is the fact that the trend line in price year over year are crossing for the first time all year long, and possible in many years. Last November, median prices were still falling, and finished at $115,050. In a statistical tie with that, 2011's trend line has finally caught up with previous years. This implies that we are moving toward a healthier market. This is of some significance.

While the median is actually $50 short of last year, the average is actually higher, so what I can say now is that we are statistically better off than we were a year ago at this time for the first time since probably 2006. Better prices, better inventory numbers, fewer foreclosures. We have without a doubt, been heading in the right direction; now we can definitively say that we have reached a milestone.

The pending numbers are pretty run of the mill following the end of the month, so there is nothing too interesting there, but what is interesting was the relatively sharp drop in inventory. This is the lowest number of new listings since at least 2009, but likely the lowest since 2004 or sooner. December is typically even smaller, but I am not going to make a call on that as it would be purely speculation. Suffice to say, we are not building inventory, and this matter will raise its head in February and March when the house hunters come out to play.

I will speculate now however, that we will probably see some losses in sales year over year. There will not be the kind of discounted homes available to people that there were in 2011, and as such the investors may pull in their horns a bit. That's okay, because as of right now, there would not be the inventory to accommodate them. Take March for example. We currently have inventory of 19,000. In March of 2011, there were 9,957 sales. There were about a similar amount of listings, but please take into account there are also anywhere from 11,000 to 14000 pendings during this period, and AWC homes as well. There is no perfect way to measure the inventory burn, but in March of 2011 we were burning off 650-1000 per week. Perhaps it won't be that high; it cant be, its just not sustainable given inventory replacement figures. But even at half of that burn, there will be considerably less inventory available for what should be a strong buying season, given economic recovery and increased confidence. Safe to say, those are inflationary pressures for housing prices. We are experiencing it even now, but they will become even more magnified in the spring. Last year inventory started burning in February, but we had 34,000 listings on the market; almost double what we have now, so there was some slack still in the inventory. Where is that slack going to come from now?

It is hard to say if there will be an uptick in new listings; maybe there will be, but the pipeline from bank sales appears to be slowing. Short sales are nowhere near their peak either, so I don't a strong uptick if there is one. It is hard to imagine that the inventory will be this low, however. It is not sustainable, and it will drive prices up in this market. As mentioned earlier, it has already started to some degree, but the competition is nowhere near where it will when we reach February and March. Look for some solid if not spectacular pricing pressures by April.