MLS STATS 6/13/2012

Median Price up sharply in May

Inventory may have reached bottom

Prices may start bringing more Sellers into market


Pending:                          12,289                 ( -362 from 5/30)
Pending Sfam:                 10,674                 ( -347 from 5/30)

AWC:                             7,600                   ( -113 from 5/30)
AWC Sfam:                    6,616                   ( - 95 from 5/30)

Active:                           12,839                 ( +188 from 5/30)
Active Sfam:                    9,983                 ( +200 from 5/30)

Closed 5/28-6/3:            2,380
Closed Sfam:                 2,032

Closed May:                  8,434                 ( -14 from April 12)
                                                               ( -1,362 from May'11)

Median Price May:         $146,000           ( +$7500 from April'12; +$37,000 from May'11)

New Listings in May:          9,562

Sorry I missed last week; it couldn't be helped as myself have become fairly busy.  There is something different in the air in Arizona; people are feeling far more confident, you are seeing far more construction activity in new home subdivisions, and buyers appear to be pursuing homes in earnest; both investors, and owner occupants.

The May stats continue to show a pretty strong rebound for housing in the Phoenix area.  Prices are much stronger again; inventory, while perhaps bottoming, is still near record lows; closings, while lower than last year, are running about where they have been all year, as lack of inventory weighs on Buyers ability to purchase.

I do think we may see the stronger sales season that traditionally ends in June continue on into July and August, as buyers unable to complete transactions during the busiest times can now perhaps find something.  Some will be driven out of the purchase market by the higher prices as well, but I do think we will see good sales going on through the summer.

MLS STATS 5/30/2012

Median Price Still Rising

Pending sales overtake Active Listings
Sales in May will lag due to lack of inventory


Pending:                            12,651      ( -174 from last week)
Pending Sfam:                   11,021     (    -63 from last week)

AWC:                                 7,713      ( -50 from last week)
AWC Sfam:                        6,711       ( -22 from last week)

Active:                             12,648       ( -82 from last week)
Active Sfam:                      9,783       ( -110 from last week)

Closed 5/21-5/27:             1,805       ( -36 from last week)
Closed Sfam:                    1,535       ( -4 froml last week)

Median Price in May:         $146,900     (+8900 from April)


Prices continue to rise, but the lack of inventory is suppressing the overall number of sales.  Pending sales were higher than active again- its not so much that pending numbers are really high- they are not at their peak, but inventory has fallen substantially. 

May sales are going to finish around 8000 or so- quite a bit less than last year, but again, no inventory.  The key thing now is the price continues to rise.  It is hard to see inventory continuing to drop, however.  We are reaching a point of elasticity that I never thought we could get to in the first place, and it going substantially lower would be unlikely.  Builders will pick up production and prices would rise high enough where selleers would make their properties available.  I do think we will see good sales continue on during the summer.  I would be surprised if we see sales fall off this summer to far; there seems to be enough pent-up demand to keeep sales moving forward. 

End of the month stats are going to be far more interesting, so I am going to hang it up here.  Ill do a little more detailed info next week. 

MLS STATS 5.23.2012

Pendings Rise, Inventory Falls
Median Price rising again in May
Pending Sales surpass overall listings


Pendings:                        12,825   ( +166 from last week)
Pending Sfam:                11,165    ( +180 from last week)

AWC:                             7,763     ( -225 from last week)
AWC Sfam:                    6,733     ( -211 from last week)

Active:                           12,730    ( -148 from last week)
Active Sfam:                    9,893    ( -110 from last week)

Closed 5/14-5/20:           1,841    ( +438 from last week)
Closed Sfam:                  1,539     ( +361 from last week)

Median Price in May:  $145,000  ( up $7000 from April)

Ryness Index:  .87    ( a year ago this week: .5)

Stats are continuing to go in the right direction, with pendings rising and inventory falling, driving up the price.  New home sales also continue to be stronger, and more than likely they are stronger than this showing.  Still, it close to being double the previous year, so that means there is some excellent new home activity going on out there, and it is likely to get better as inventory continues to shrink and prices for resales continue to rise.

I am not going to list it here, but we did hear some good news anecdotally this week as well; there is some optimism in the market that we have turned a corner nationally as well, although Diana Glick from CNBC seems intent on tamping down any optimism, telling us that the home price gains aren't real.  Its not really that newsworthy for Arizona, but she does mention us.  There isn't much bad that can be said.

The actual sales numbers are going to be down from last year; we simply don't have the listings to support higher sales.  You might have also noticed that there are more pending sales than inventory; it is not the first time it has happened, but the last time it was a end of the month thing where they briefly passed before bouncing into normal position at the end of the month.  This is the first time it was recorded on a weekly post, so it is significant.  Even more significant:  single family inventory has fallen far below active inventory.  This is a very healthy demand market, with a strong indicator of price gains.

I will wait until the end of the month to do any additional commentary, but the numbers we might have thought shocking a few years ago are definitely here.

Pendings Flat
Actives Flat
Median price almost $145,000


Pending:                       12,659                ( -12 from last week)
Pending Sfam:              10,985                ( -10 from last week)

AWC:                           7,988                ( +98 from last week)
AWC Sfam:                  6,944                ( +86 from last week)

Active:                       12,878                 ( -6 from last week)
Active Sfam:              10,003                 ( +17 from last week)

Closed 5/7-5/13:         1,403                 ( -875 from last week)
closed single family:     1,178                 ( -739 from last week)

Median Price May:      $144,900           ( +$6900 from April)

Ryness Report Index:        .87               (Last week:  .82)

*SINGLE FAMILY LISTINGS FALL  BENEATH 10,000*

Pendings rise sharply

Median Price still rising

New home sales also continuing stronger trend

Pending:                   12,671                ( +494 from last week)

Pending Sfam:          10,995                ( +431 from last week)

AWC:                       7,890                ( +160 from last week)

AWC Sfam:              6,858                 ( +141 from last week)

Active:                     12,884                ( -27 from last week)

Active Sfam:              9,986                ( -83 from last week)

Closed 4/30-5/6:       2,278                ( +224 from last week)

Closed Sfam:            1,917                 ( +185 from last week)

Median Price:          $145,000            ( +$7000 from April)

Ryness Report New Home Index:   .82   (last year this week: .38)

I don't have much time to write today, but here are the stats.  The most notable, but perhaps not significant in its change from last week's numbers, is obviously the number of single family listings falling below 10,000.  That is amazing when you go back and look at how many listings, and how many decade overhang the naysayers were saying the inventory was.

There was also a mention as Phoenix shooting up the charts to be the second best housing recovery market in the country.  It has also jumped to number 5 in commercial construction spending, so there  really is some substance to this recovery, across a broad palette.  It is getting to be such that there are not particularly any good deals in residential real estate; the only market that hasn't had substantial price jumps yet is land; that too will come shortly, as is becomes more apparent the recovery is for real.  Land asset prices are still fractions of what they were, and more importantly, fractions of what they actually should be.  Prices are not going to return quickly to the 2005 level, obviously.  But with land in many cases being 10%-20% of those prices, there certainly is room for improvement- and profit.  Land only has to go back to 50% of 2005 values for someone to make 200%-300% return.  Take for example, land that in 2005 was $100K an acre.  That implies a home of $400K-$500K; obviously those areas are not going to see the price return to that number.  However, I have a specific example of homes in that area already being $200K-$250K right now.  That implies the value should be close to half of the 2005 price, right?  Well, yes it does, as the land component cost could be as high as $50,000, and the number would still work.  

What if I told you that kind of land was still available in places for $10,000-$15,000 per acre?  It is. For builders, they should be acquiring while its cheapest, as they would probably double the amount of money they make on the construction of the house with also receiving a profit on the land.   When builders become active again, you will see the prices pushed higher, as they make their money on the construction, not on the dirt.  If they make it on both, its a nice bonus.  

New home construction at the custom home level is only beginning to ramp up; we have not felt the effects of the small builders putting up spec homes yet, or even buying dirt to put up spec homes.  Just like in the home market, when investors realize the the inherent imbalance of prices with potential, prices will change. 

That's all I have time for today, but we have a lot of reason for optimism here locally.  Prices are being pushed sharply northward, and it doesn't look like a false start.    

ARMLS STATS 5/2/2012

***Listings Fall into 12,000's!***

Sales cross 8,400 in April
New listings fall again
Median Price up $28,000 from Last April

NEW HOME SALES INDEX:            .84  ( -.03 from last week)

Pending Sales:                           12, 183                    ( -839 from last week)
Pending Sfam:                           10,564                     ( -689 from last week)

AWC:                                        7,730                      ( -220 from last week)
AWC Sfam:                               6,717                      ( -199 from last week)

Active Listings:                        12,911                       ( -535 from last week)
Active Sfam:                            10,069                       ( -351 from last week)

Closed 4/23-4/29/2012:            2,054                       ( +90 from last week)
Closed Sfam:                             1,732                       ( +106 from last week)

Number of New Listings in April:       9,182              ( -2004 from April'11, -597 from March'12)

Median Sale Price in April:        $138,000                ( +$28,000 from April'11, +$8,100 from March'12)


Closings in April:                        8,429                     ( -1025 from April '11, (-466 from March'12)


 
Residential listings fell sharply this past week, falling below 13,000 for the first time that is probably documented.  I didn't think we would see that happen, nor did I think we would see single family listings flirt with four figures, as I think I mentioned previously.  Yet, here we are.  May is typically a very decent sales month, so we will probably see some more dips in the inventory level as pendings recover from the end of month sales.  At this point four years ago, there were 7,004 pending sales, compared to the 12,000+ today.  We are trailing pendings at this time from where we were last year, but as we have discussed many times, there is simply not enough inventory to support larger numbers of sales.  No matter how badly someone wants to buy a home, if they are outbid on one, they have to pursue another one, and it takes time.  If there is a very limited amount of inventory in a particular neighborhood, it will take even more time.  We are at about a 1.5 months worth of inventory, and that means there is very little to choose from.  So little, in fact, that there are reports of investors now making offers sight unseen.

Even with slightly lower sales, the market is starting to look much stronger.  More important than the sheer number of sales is the price level.  What is that doing?  Well, obviously it is up sharply- $28,000 year over year in April.  Its also up $8000 from March of this year.  March was up over $7000 from February, so we had a gain in excess of $15,000 in two months!  That should tell you what direction we are going right now.

I also looked at some other interesting stats today- checking into the Maricopa area with a very well respected information service, I see there are a total of 2 spec homes available in the Maricopa area.  Now, I take that with a grain of salt, as these things can be under-reported.  Whether it is 2 or 20, that is not very much considering what is going on right now.  We can read different things into that- for the last several years you could have said its because builders were not interested in putting up spec homes, but that is not what I hear any more.  Another factor might be that Maricopa home prices are still less than what a builder can put out there, but it has to be quickly catching up.  A smart builder would probably do well to get sticks in the ground, because by the time he's finished building it, prices will be catching right up to what he has to have for the property.  Inventory has fallen precipitously, even in Maricopa.  Its an area of opportunity for a builder.  Not enough?

I also wanted to share another article regarding the homebuilders.  They have been reporting stronger sales, and are feeling a bit more optimistic than in quite a while.  Here is an article discussing some of their recent activity, and more importantly, how one builder feels going forward.

I am a little beat today, so I am going to limit my comments here.  There is a lot to chew on in the stats, however, and if you are looking at these, and comparing them to previous years that you can find in my archives by year and month, you can get a great contrasting picture of the market recovery.

I am not going to weave my own narrative around these other stories today, but I think they are worth reading nonetheless.

Foreclosures Down, Prices Up in Phoenix  (CBS News)

Bidding Wars catch buyers off-guard

Gilbert Tops Valley in New Home Sales

MLS STATS 4/25/2012

Pending Sales Hit 13K- high for the year.  

Listings fall again

Sales to be less than last April due to lack of acceptable inventory

Pending Sales:                                   13,022   ( +256 from last week)
Pending Sfam:                                   11,253   ( +217 from last week)

AWC:                                                7,950    ( -54 from last week)
AWC Sfam:                                       6,916     ( -48 from last week)

Active Listings:                                 13,446     ( -164 from last week)
Active Sfam:                                     10,420     ( -137 from last week)

Closed 4/16-4/22:                             1,964     ( +280 from last week)
Closed Sfam:                                     1,626     ( +228 from last week)

Listings This month:                            7,420


Median Price through April 24:           137,000   (+7,100 from March 2012, +27,000 from last April)

Ryness Report Index:     .87

Pending sales rose past 13,000 for the first time this year, as sales gear up for May and June.  Sales continue to show good strength in the Phoenix market.  Sales are trending less than last year, but the median price is up 24.5% from last April.  It is likely that we will continue to see rising prices for homes through the summer, at least.

Its also being noticed nationally.  This week, Case Shiller noted that Phoenix prices have risen 5 straight months, counter to the overall US market continuing to fall for the past six.  This is even more telling in that context; national weakness, yet Phoenix is improving rapidly.  Might we have our mojo back?

More evidence that the nation is taking note:  The economist for Zillow is forecasting Phoenix to lead the nation in price growth over the next year.  He is forecasting a growth of 6.5% from March 2012 to March 2013.  His guess is in fairly safe harbor, seeing as how we have gained 5.4% from March to April ((137,000-129,900) /129,900= 5.4% )

As I already noted, pending sales are still rising; they might peak out at just over 13,000, but that is a very strong indicator of good sales in the next few months.  We are starting to see that active listings is starting to hit a floor; it is still falling, but the principle of elasticity is coming into play, and you just can't expect the inventory numbers to continue to fall to zero.  The number of new listings should start to increase to meet the demand as prices rise high enough for discouraged sellers who can maybe make a buck or two at these higher prices.

The other release valve for this much stronger demand is in new home sales.  Sales were a little softer this past week in the index, but overall it is still much stronger than it has been in the past 5 years week over week. .87 looks pretty good compared to the past years. The last 5 readings for the index for this past week:

Wittmann Active Listings

2007:  .70  2008: .37  2009: .30 2010: .41 2011: .37

                       
New home sales are getting stronger, and as they do, the land market is also improving.  One of the areas that we follow a lot made some national news last week, when CNBC interviewed Michael Ripson of Ripson Homes, about his Sonoran Acres development in Wittmann/Surprise.  You can see the interview here.  Diana Olick, who covers real estate for CNBC, also wrote an article about the Phoenix housing market, in which she quoted Mike.  Here that article is.  

I think Ripson was being fairly truthful about the conditions, and not just being a salesman.  The number of homes in Wittmann that are available has fallen by about 80 percent over the last few years, and increased sharply in price, back to over $200,000 for a nice custom on an acre.  Here is a map representing the available listings in Wittmann of homes on an acre.  Not a deep bench of homes if you want an acre of land in a rural setting, and traditionally, that is a popular kind of home in this market.

We are following Ripson closely as wee have naturally had a lot of interest in the Sonoran Acres project over the last several years, as we have a lot of inventory of lots in the area.  We are fortunate that we have a lot less money into the lots that Ripson does, but we want him to be very successful there, as it will attract other builders to the area if they see him selling homes.  For what he paid for the lots, which I believe was around $80,000, he was looking at a price range in the $300,00+ plus range.  He has re-calibrated, and is now going to be selling starting at $200K, and he said traffic is good.  He also stated he would be putting up a few more spec homes on the property, so we wish him well.   He is having an open house at the subdivision site at 219th Avenue and Patton Road Thursday, April 26th, if you are interested, from 3pm-7PM.

That was not the only bit of interesting news on the land side this week.  There was a nice deal for the investor for a project in Pinal County, formerly called Silverado Ranch, near the San Tan Valley.  It was already approved for 1800+ lots on 556 acres.  It sold for a bargain at $3,100,000.  A year or so from now, we will look back in amazement that such a property was available for that price.  That is under $1700 per lot for this property!  Yet here it is.  Granted, you had to buy the whole thing, but it is a steal at that price.  They are likely to turn around and make ten times their investment back on that deal, maybe more if they wait it out for more than 5 years.

I know of nothing that good right now, but for the small investor, I do know of a couple of properties that I think are excellent bargains.  I am not going to give them away here, but contact me if you want something even $30-$50K for a property with good potential to rise in value over the next few years.  I know of a few that I have already checked into that I haven't found a home for yet that I think are really nice. That is not always going to be the case.  We are going to wake up one day, and there will be a land market again, and there will be no cheap deals to get into.  Right now, like housing was last summer, prices are very cheap as no one has yet realized that as Steve Forbes said, there is a housing shortage in this country.  Well, all indications are that nowhere is that more true than in Arizona.  He may have been off by one year, but he was right on the money, at least for Arizona.

MLS STATS 4/17/2012

Inventory dives again; weekly sales higher

Median price is still gaining

New home sales showing some strength

Pending Sales: 12,766 (+ 9 from last week)

Pending Sfam: 11,036 (+53 from last week)

AWC: 8,004 ( +68 from last week)

AWC Sfam: 6,964 ( +57 from last week)

Active: 13,610 ( -224 from last week)

Active Sfam: 10,557 ( -183 from last week)

Closed: 4/9-4/15 1,684 ( +245 from last week)

Closed Sfam: 1,398 ( +234 from last wek)

Median Price for April: $136,284 ( +$6,284 from March)

Ryness New Home Index: 1.06 ( .35 Same week in 2011)

New listings in April: 5,173

Housing stats continue to suggest a recovery in housing in Arizona. The inventory continues to fall as demand picks up, and it is pushing pricing higher. It is also pushing some buyers into new homes, and we are seeing a lot more strength in new home sales as well.

There is also a fair amount of anecdotal evidence that new home sales are improving. There was an article about one of our favorite submarkets, the Wittmann area in Surprise, about a builder who is seeing things picking up at his acre lot subdivision. Ripson Homes has been sitting on a stalled subdivision there for quite a while, mostly because the price he needs to sell at was just too much higher than the market. He is seeing some activity now, and that is a great sign for the area. All of his homes are going for $200K or more. We like this area a lot, and I have a number of acre lots and 5 acre parcels in the area that are ideal for a builder. We also can offer seller carryback on a number of them. This is the easiest place for custom builders in this area; the land is relatively flat and accessible, and you are only a few minutes out from Surprise town center right down US 60. If you are interested in finding a lot in this area, we have a number of high quality properties that you can find here.

There are getting to be other articles about home construction in the valley too, in the much bigger business of production construction. Last weekend, we came across this article in the AZ Republic. It is fairly clear of the direction we are moving; the Ryness Report that I quoted up the page is showing a much better new home sales market than the previous 5 years. Its not even in the same ballpark, and its been consistent this year. Investors have been chasing housing, and they have been a big part of the inventory reduction, but now that inventory is gone, where do they go? Houses are still good value, but they are not available cheaply or readily any longer. I think that new foreclosures coming on the market are going to be pressured by people who want to buy a home. Condos are pretty well sold down- there are very few available. This was also forecast by the way, you can go back to my 11/1/11 entry, and I talked about the fact that since inventory didn't end up growing in October, we would have have some rapid price gains and fighting for inventory come March, and we certainly have. We have inventory shortage, and we have rising prices.

Where does that leave an investor? If you don't have pockets deep enough to buy an office building, which might be the other alternative, land is still looking like a relative bargain. We have not seen land being pressured by investors yet, so it is still at a traditionally very low price. It fell as much as 90% in some areas, and it is still languishing at or near those kind of prices. There is not as much for sale as there was earlier from banks, but there are still opportunities. If you are a small investor, and can find a lot with utilities, and it is less than 25 percent of what homes in the area are going for, its probably not a bad deal historically wise. That is a number that builders would readily pay to build a home on. Right now, that is relatively easy to find that and even much less, and as home prices continue to rise, those numbers only look better.

I don't want to tie a recovery in land too close to the housing recovery, but how can you not? We saw this happen last fall with condos- its going to happen with land as well- it might not be as sudden or immediate, but look; custom home builders haven't even started up yet. This article about Ripson Homes in Surprise is a brand new situation, as it wasn't possible until prices rose high enough to allow him to turn a profit. (He is in to those lots for $80,000 each as I recall) We have lots with well shares out there for under $34,000, with seller carryback! If he can build a home and turn a profit there, what can a builder do buying a lot for less than half the price do? See, we are underpricing the "real value" of those lots as well, and we could very well end up selling them at much higher prices when the market realizes that the economic value is closer to $50K-$60K- that is the price they can buy a full lot, build on it, and still make money.

I had a number of people that I talked to who weren't interested in buying condos when they there $25,000-$30,000 last fall- now however, you can't find anything for less than $60K for the same type of home in east Phoenix. Land is going to function similarly when people start seeing there is a demand for these kind of lots from small builders, like Ripson.

There are other areas less developed, like the Hidden Valley area of Maricopa, where land is frightfully inexpensive right now, if you can find something of quality. Maricopa is growing, and custom builders who deserted it 5 years ago will come back, and we will see that area rebound. Buying a 5 acre parcel for under $50K would be a bargain to a builder who was going to use it, just as a $30,000 condo was a steal for someone who would live in it-or rent it out, for that matter. For that $50,000, a builder would get 4 lots- that's $12,500 a lot. Put another $25K in for a well, and you have a building lot for under $20,000. If he can sell a new home for $125,000 on an acre and a quarter, and the recent new home sales figures seem to show that he can, he will make money on the land. Its a numbers game, and as prices increase, there is profit to be made for a builder.

As far as this week's stats go, you can see the inventory falling. In April we tend to reach a peak on pending sales, as April is usually slightly quieter than March is, before rebounding in May and June. It seems to be that way again, but the difference is prices will be driven upwards. We can expect prices to be driven upward through June, at least. Demand might fall, but so might the sky, so there is no point worrying about it. Right now, we have almost normal market demand, critically low market inventory, and below "real economic value" prices. That's a recipe for price increases. We also probably (i say probably because I can't prove it) have a strong influx of people. This only increases the pressure on housing. This is why we are seeing the new construction start to ramp up, which leads to pressure on land prices. Its all cyclical, and land has not had its rebound yet, and right now it probably doesn't take my expertise to point out a parcel of land you can make money on; most stuff is underpriced. I still would talk to a good land guy or gal though, because you don't want to end up buying something that doesn't work for you. For every good deal on land, there are half a dozen bad ones. Buy a good piece, even if it costs you a little bit more, because it will be the one buyers want first when they are looking.

If you are interested in hearing more about Land, contact me and I will tell you about my favorite places to acquire quality property.

ARMLS STATS 4/10/2012

Single Family Pendings now outnumber listings

Inventory Slides into 13,000's.

Median Price moving sharply higher again?

Pending: 12,757 ( +467 from last week)

Pendings sfam: 10,983 ( +393 from last week)

AWC: 7,936 ( +216 from last week)

AWC Single Fam: 6,907 ( +186 from last week)

Active: 13,834 ( -187 from last week)

Active Sfam: 10,740 ( -164 from last week)

Closed 4/2-4/8: 1,439 ( -1432 from last week)

Closed Sfam: 1,164 ( -1198 from last week)

Median Price for April*: $135,900 ( + $5900 from March'12)

*Through April 10th

I had a full post for you today; unfortunately it was accidentally erased, and I just don't have time to rewrite the whole thing, so this will be a very brief commentary this week.

The stats at the beginning of the month don't always tell you much, but what is interesting is that pending single family sales now have exceeded the number of single family homes available. Fascinating, considering where we were April 8th, 2008. (55,700 listings, 6270 pending sales) When you compare those ratios, you can see why we are not in the same predicament in Arizona as we were four years ago.

Secondly, the overall number of listings fell into the 13000's- I didn't expect to see us that low, but here we are. Pending sales are growing too, so it will be interesting to see if overall pendings exceed listings. Its not a ratio that really means anything, but when you look at that as a relationship to previous time periods, it shows how far we have come back.

Lastly, we are already showing a strong jump in the median price from last month, when it rose $7000. I actually expect it to be higher than a $5900 gain by the end of the month. It can't go up forever, but it has a little room to run, given the low level of inventory available.

I had a whole thing on the new housing market as well, but I am not going to re-do that this week. I am actually going to start doing these posts on wednesday in the future so I can pull in the new home sales reports, as they are gaining significant importance in our housing market again. The index is running at its highest point since the middle of 2005, which is excellent news. That doesn't mean as many new homes; there are less subdivisions open than at point, but the sales per subdivision is getting back to a much stronger level. I'll talk about that in a future post.

One last thing: I am starting to think we are out of the danger zone for the resale market; whatever wave of foreclosed homes that they are calling for again doesn't look capable of altering the market for very long. We are beginning a job creation mode in arizona, which construction always does, and diagnosing a well patient is not that interesting. I am going to turn the blog more in the direction of the land market, which is what I prefer to talk about anyway, and about issues and property. The opportunity going forward is in land investment, which has not recovered in pricing yet. There is tremendous opportunity to buy land as an investment now, and there will be demand for it from builders and developers again, as we continue to grow. This blog will become about land investment, which is the area I actually work in. The housing market is important, and we will keep an eye on it, but more important to me is working with investors who want to take advantage of the coming upcycle in an asset, that unlike housing is becoming, is still under-appreciated.

MLS STATS 4/3/2012

March Median Price Rises almost $7,000

March Sales Fall short of Last March; lack of inventory is culprit

New resale listings fall sharply from last year

Single Family inventory falls to 10,000's...

Pending: 12,290 ( -650 from last week)

Pending Single Fam: 10,590 ( -491 from last week)

AWC: 7,720 ( -171 from last week)

AWC Sfam: 6,721 ( -166 from last week)

Active: 14,021 ( -378 from last week)

Active Sfam: 10,904 ( -246 from last week)

Closed 3/26-4/1/12: 2,871 ( +1159 from last week)

Closed Sfam: 2,362 ( +944 from last week)

Closed March: 8,861 ( -1093 from March 11)

March Median Price: $129,900 ( +$6905 from Feb; +$119,900 from 3/11)

March Average Price: $180,688 ( +22942 from March'11, +14,337 from 2/12)

New listings in March: 9,545 ( -3007 from March'11)

Year to date listings: -20.8 % from last year

New listing Median price: March: $149,900 Up $5K from Feb'12, Up $32,000 from 3/11

There are a lot of statistics to go over this week, but it seems to indicate we are moving in a very good direction for housing. I still see obstacles to a full recovery, and I will touch on those, but by and large, we are moving ahead very well this year.

First off, the sheer numbers of homes sold did go down from March of last year. Fairly substantially too. This was not unexpected. Last year, we had over twice as many homes available, and at cheaper prices. This year, the shelves were very bare, and when you have so little inventory, and a lot of buyers, you are bound to lose out on sheer numbers. We have almost as many pending sales of homes as we have listings of homes now; we have fundamentally fallen into shortage of available properties. The number of sales is down, no doubt, but I would be a lot more concerned about it, except that the median price rose by almost $7000 since last month. To put that in perspective, it took the last six months of 2011 for the price to rise by $7000. That is an indication of solid demand, and lack of inventory. I have mentioned it before, but I do think we are going to tend to see less sales this year than last year, simply based on the smaller size of the market- less inventory, higher prices. There is also another outlet for this buying energy, of course, and that is new home sales. I might get to that a bit later.

One of the stats I don't look at very often is the average sale price. That is simply the total dollar value of the homes sold divided by the number of homes sold. The median is calculated for us, and it is weighted differently, utilizing the number of homes; and giving less weight to the high dollar figure homes that sell. It is less volatile and a lower number than the average. As we can see above the average has taken a sharp upward turn this month as well. Its a very good indication that either low priced inventory is already gone, which it is, and that higher priced homes are selling as well, since the average is pretty far above the median price. Both good strong indications of recovery.

Another interesting number from March is the new listings. It was markedly less than last year, and last year was a lot less than 2010. When you see so few new listings, we are going to have a draw down of inventory. We will likely fall into the 13,000 by the end of the day, and we are likely to see pending numbers push past inventory levels by the end of the month; it could be close, but it seems like it might happen. Pendings will likely rise again in the next few weeks, and inventory will fall, and the numbers will cross beams. It seems an awful long way from this, doesnt it?:

Pending Sales: 4205 ( +369 from last week)

Pending + AW/C 4933 ( +477 from last week)

Closed Escrows: 506 ( -159 from last week)

Active Listings: 55516 (+543 from last week)

Closed Month to Date (1/29/08) 2144

Yes, that January of 2008. 55K listings, only 4,205 pending sales. How far we have come fundamentally! It is very easy to see when you consider this is where we came from, why we won't be going back there. It would be virtually impossible to reach that level of inventory again, with so few sales. That was not even the peak of inventory! We just have turned the corner fundamentally, and while there is word of a coming wave of foreclosures again, it might not turn out to be much more than a pleasant roll of fresh inventory for desperate buyers here. Even if the market added 5,000 new listings at this point, we would still be undersupplied, and those most likely would be absorbed within the month. This article is a better description of what is happening in Arizona than the idea of an inventory swell.

There are no shortage of articles talking about housing recovering here. Here are a few, both local and national:

AZcentral

KTAR

CNBC- (Article mentions Arizona as a place to own property and land to counter inflation caused wealth destruction)

AZcentral- Southeast valley

AZcentral Prices heading up

These are just some examples of articles that are latching on to the idea that our market is headed in a good direction.

One of the fallouts of this turnaround in housing is this, however. For you investors who are going to start thinking about buying a house to rent it out, you may be getting in too late. The price of houses has risen dramatically in the last three months, and while still undervalued historically, there is not as much meat on the bones now. You also have two other problems: 1. Right now, there is little available inventory to buy, and you will likely have to compete very hard to acquire it, perhaps even overpaying enough that you will have to look at less acceptable rental terms. 2. When everyone decides to do something, it eventually becomes not such a great idea. If everyone is buying for the idea of renting a property out, eventually rents are going to fall when there become too many properties. It also fundamentally changes the consumers' mind to the point that they think owning a house becomes a good idea, and might go off and buy themselves. You have to buy right in order to make the rental work, but you also may want to sell that property eventually if renters become difficult to obtain. I think going forward, I am looking at condos and housing prices for investors as getting too high. That brings me to this:

• Vacant land is becoming a better investment than a home at this point. Prices have risen in housing, while land prices are still languishing pretty close to what you would call a bottom. If you can still buy an asset that was priced at the bottom, you are doing well. Throw in that property taxes are at a low ebb for the next several years, and that land has virtually now maintenance to speak of, and you have a low hold cost asset that will likely appreciate greatly as housing turns around and we return to a normal market. Prices are off as much as 90% for land in certain areas around the valley, and it is an incredible opportune time to buy. We can see housing recovery, but land prices are still where you would expect at the bottom of a recession. The right areas and parcels offer incredible values right now. Housing is still a fine deal, but you are beginning to reach what I would call full mid-term valuation for housing. Condo prices have doubled since October in Phoenix; single family home stocks have dried up, and risen closer to what its value to a wage earner is. It is still a little below, but it is rising fast. Without substantial wage increases, I think you will see houses get to the point where careful mortgage lending says a wage earner can afford. We are not at that point yet, but I do think we will see median prices top out in the short to mid term near $150,000. Builders have pricing power at that point to offer an alternative, which has long been the case in Arizona, so buying a home past that point as an investor is not to me, a great deal. It might still work, but the rewards are less, and the risk is higher. I think its very appropriate to say this: "if you are an investor, you should have bought last year." Land has the opportunity to rise rapidly as builders, including infill builders reach the point where they can build and make some money. If you are a small investor, if you can find infill land, or even some building lots with utilities, they are offering really good value right now. There are few custom or small builders who have made efforts to get started again, and this is an opportune time to acquire what they will want when they do. They might be looking for prices to rise just a bit further, or have a firm idea that prices are going to stay where they are before they get started, but they will get started again, and they will require lots to build on. We are already seeing it with the big builders, but the custom builders always follow eventually.

Watch inventory numbers closely over the next few months. I am curious if inventory can continue sliding, or if we will see pricing encourage people to sell their homes to meet demand over the next several months. By the end of June, the cycle will slow a bit, and I do think we will see inventories bounce back a bit after that point, but could we see price spikes over the next several months due to us falling perhaps into the single 000's for inventory? It could happen. It is not very scientific, but I have gone around to builder websites looking for spec inventory, and I have to say, it is very thin. The builders have not prepared for large demand, as up to this point, it hasn't existed. They are seeing more demand now, as a new home sales index has shown. There have only been three weeks since 2006 where the index has risen over 1.0; once in 2007, and the last two weeks. It has spent the last five years languishing between .25 and .50. The builders are seeing traffic, and more importantly, people who are actually buying again, and that is evidenced by the a traffic to sales ratio that has fallen from what was tpyically 24:1 to 10 to 12:1. That is a marked improvement, and has to make them more optimistic.

I carried on here longer than expected, but it is an exciting week for the housing market. We have turned a corner, and even though things are not perfect here, we are seeing job growth, and we are seeing prices stabilizing to the point that our greatest jobs producers, the Builders, are price competitive again, which will only enhance our recovery. We can look forward to better times, it seems.

Have a great week!

MLS STATS 3/27/2012

Inventory Slides; pendings still rising.

Median price forecasting strong gains in March

Active inventory heading to unseen levels

Pending: 12,940 ( +135 from last week)

Pending Sfam: 11,081 ( +121 from last week)

AWC: 7,891 ( +76 from last week)

AWC Sfam: 6,887 ( +64 from last week)

Active: 14,399 ( -529 from last week)

Active Sfam: 11,150 ( -424 from last week)

Closed 3/19-3/25: 1,712 ( -163 from last week)

Closed Sfam: 1,418 ( -166 from last week)

Median Price: $128,000 +$5000 from last month

I am not going to spend a lot of time analyzing this week; next weeks end of the month report will be far more informative. There are a couple of items worth noting, however.

Sales this March will be down fairly sharply from 2011. The likely culprit is just not enough inventory to sustain the demand. Having a concentration of houses in Paradise Valley doesn't necessarily help someone looking for a home in Gilbert, so many a purchase is being put off right now by buyers unable to find what they are looking for. The other reason I think March will be slower is that the last two days of the month are on a weekend, and this will push sales into April. Its just a calendar quirk, but it can have a large effect on closings- at least until next month's numbers show up. Its not really a concern; in terms of sales for the size of the market, we are less than half the size of the market a year ago, but with almost as many sales. Not really a sign of weakness; more of a sign of "someone find me a house that I don't have to compete with a dozen other offers on". March will be down a bit, but the other items we track are all going very well.

Pendings do continue to rise; not particularly sharply, but they are rising. The available inventory is falling sharply, however, as we are nearing the 10k's for single family homes. We are only a month into the buying season, and the shelves are looking bare. We are hearing about some slipping prices nationally, but it is difficult to see that happening here. Phoenix was once again one of three cities to show rising prices; Miami and DC were the others. This is no fluke; they have been rising for months here, and given our low level of inventory, we can probably see prices extend gains for the next several months at least. One of the fundamental differences between Phoenix and other parts of the country is that our inventory has already been depleted, so structurally we should see our prices are rising.

There is also the fact that employment appears to be headed toward a strong recovery here in Arizona. There has been proof of this in both retail spending and the demand for workers in some career paths, according to this article at AZcentral.

We are seeing this lack of inventory have a strong effect on New Home Sales also. Last week again showed a very robust sales total, with the Ryness Report showing a reading last week of 1.1. That number might not mean much to anybody, but the only time in the last five years that the index has climbed over 1 was for 1 week back in 2007. There were three times as many new home sales last week as the same week last year. New home sales are getting better as a result of inventory, and New home construction has a gearing effect on job; new construction creates a lot of economic activity, and we can now expect to see a good strong number of new home sales occurring now that there is getting to be price parity with the thin market of resales.

Another item of note is that we do look like we are going to come in much lower for new listing inventory in March. There are not likely to be more sales than listings, but they are not going to be far off. Ultimately, I do think we fall into the 10,000's of listing inventory, as there are not enough listings coming on the market at this point in time to support the inventory levels. I do think we will start to see the law of elasticity start to show up though, and sinking below 10,000 might not happen, as prices will continue to rise, and the demand will be met by increased inventory. As prices rise, there will be homeowners who will no longer be underwater, and will be able to sell. Builders will start to crank up production, and I do believe that builders are going to eventually have some pricing advantages, as is normal for them, since they are on the fringes of the city. They have been pricing homes very low for the last couple of years; they may not have been making a lot of money, but now they may be doing enough volume where they can show some profit. I don't expect inventory to fall much lower than the mid-10K's for single family homes, nor past the 13,000's for overall residential.

I will cover more next week when sales for the month should be somewhat crystallized. I am curious about how the median and the average price finishes this week. If I was a builder right now, I would be seriously considering having some spec homes underway, because there are a number of buyers looking for a home right now who can't find one.

ARMLS Stats 3/20/2012

***Inventory Falls into 14,000's***

Median Price for March up $5,000 so far

Lack of inventory affecting sales?

New listing inventory continues to lag 2011

Pending: 12,755 ( +69 from last week)

Pending Sfam: 10,960 ( +42 from last week)

AWC: 7,815 ( +4 from last week)

AWC Sfam: 6,823 ( +3 from last week)

Active Listings: 14,928 ( -335 from last week)

Active Sfam: 11,574 ( -271 from last week)

Closed 3/12-3/18: 1,875 ( +305 from last week)

Closed Sfam: 1,584 ( +275 from last week)

Closed MTD: 4,382

Median Price for March: $128,000 (February '12: $123,000)

Inventory continues to fall as we continue into the busy season for home sales in Arizona. Inventory has now fallen into a level that I frankly don't think we have seen for decades here; there are not really any records further, but even in 2005 when demand was peaking, I don't recall seeing anything under 18,000 listings. If anyone has information different, I would love to see it, but I think we can safely say we are in unprecedented territory given the size of our market compared to 2005, and the low numbers of homes available. There is going to be a run up in prices, as competition for available homes heats up. We are only a month into the high demand season, and we have already seen fierce competition for available inventory.

Of course, there are many who are frustrated by how many offers are coming in on the best properties right now. With so little inventory available, buyers know they might have to fight to obtain a property, or wait until something else comes along. Many a ready buyer is not showing up in the stats because they have so far lost out. We are at less pendings than we were a year ago by a great number; about 600 less. That is a lot, and much of that can be blamed on inventory problems. There is not much to buy, and although buyers might be realizing this, we are not at a point where buyers will just put an offer on anything. This is not the mad rush of 2005 to get anything with a roof and a toilet; buyers are far more cautious. Consequently, I do think buying activity will be stretched out longer. There are a certain number of Buyers who will fail this month to acquire something, so they will be pushed into April, and perhaps be more aggressive on price than some of the newer buyers in the market; with the limited inventory available, the cycle is likely to be repeated with some ready buyers being pushed into competition in May, and so on. When the natural number of buyers slows down seasonally later in the summer, you might see those months sales' look almost as good as the high season of March-June, simply because there is a backlog of buyers who will finally be able to buy without the competition they are facing now. Of course, by then, the prices are likely to be much higher than they are today.

We are far enough into the month now to see that the median price rises from the early part of the month were no fluke. We currently have a $5000 median price increase from February. That is a substantial numbers; if that were to happen over twelves months, that would be close to a 50% increase from the starting price. I in no way expect prices to increase at 50% this year, but we are on pace for a 25% gain this year; that is the pace, not my prediction. I doubt it will continue to be that high. It is possible though; we have already gone up 6.6% for the year, and that is in a quarter comprised of two slow months; second quarter gains could be stronger yet.

I do think as prices increase, new home alternatives are going to look better to some buyers than trying to wrestle a single family home from other buyers. Prices are becoming more competitive, and we are seeing homebuilder sales- as well as builder confidence -tick up. Locally, our new home sales are staying in a much stronger range than we have seen since 2007. Nationally, the reports of permits rising and builder confidence holding to its best levels in 5 years, according to this story at CNBC.

We are seeing that new listing inventory is continuing to be rather light. 2011 was already a light year for listings, and we are lagging it by nearly 20%. March is the second biggest listing month of the year, and we are so far sticking with that trend of running about 20% behind last year's figures. We don't have as many homes going pending this year, but given the level of inventory being less than half of what was available last year, pending inventory makes up a much larger share of the market. Pending inventory is getting very close to being as high as active listings. That is a Sellers Market, people. There is no way around that. Prices aren't going to 2005 levels overnight, or maybe in the next 10 years, but they are going up, and whatever glut of homes that could possibly show up, maybe even if it were 5000-10000 homes; would be pretty welcome on the market right now, we are so low on inventory. However, that "overhang" doesn't exist it has not raised its head for the last two years, even when inventory has cratered. If the banks have it, where is it? Most banks are putting homes on the market as quickly as they get them, as they are selling. What is available is sold at auction, or is quickly sold on the MLS as part of the normal supply of inventory. If there is "excess" inventory, it is having no effect on the market. Here is a little tidbit about lender inventory. of the 7312 closings in February, only 1575 were listing as lender/reo sales. Of the current inventory of 14,9XX, there are approximately 1366 Lender/REO/HUD listings. There are still a number of short sales out there, without a doubt, but, lets start to get real about this; the wave of foreclosures that happened already happened; it happened two years ago in the summer of 2010, when inventory rose sharply, and prices finally capitulated when condo prices cratered in the later months and early 2011. That has changed, and lender owned, while still a substantial part of the market, is no longer the dominant force in the market. There will be lender owned filtering on the market for quite a while, no doubt, but its not going to be the driving force of the market in Arizona going forward. It looks like a spent force.

Now, that being said, I still worry about gas prices affecting people on the fringes; more than 1 sale will be lost when the buyer decides that driving from a suburb to their job in town is not worth the extra gas. It could affect in other ways though; inner city could lose jobs to suburbs, as companies try to reach their worker bases better. You will see commercial and industrial "pods" show up in the Mesas, Queen Creeks, and Surprises of the metro area. I do worry about the short term affecting new home construction, however. Those builders are mostly on the fringes, and even with the low prices they are able to produce at, its still a tough sell to someone who would have to drive into downtown or even uptown Phoenix for a job. Maricopa is only 45 minutes from Camelback and Highland on the 51, but not at 7-9 in the morning when there is a crush of cars all doing the same thing.

I do think that sales in March are going to finish substantially less than last year, but it won't be for a lack of demand, it will be a lack of supply. We are going to see a sharp uptick in the median, and I will hold back the average price until the end of the month, as well as the new listing price. It is very interesting.

ARMLS STATS 3/13/2012

***SINGLE FAMILY LISTINGS UNDER 12K***

Pendings Rebounding rapidly

Resale inventory additions are tepid at best

Phoenix real estate market starting to make news

Pending: 12,686 ( +458 from last week)

Pending Sfam: 10,918 ( +379 from last week)

AWC: 7,811 ( +213 from last week)

AWC Single Fam: 6,826 ( +193 from last week)

Active: 15,263 ( -557 from last week)

Active Sfamily: 11,845 ( -444 from last week)

Closed: 3/5-3/11/12: 1,570 ( -858 from last week)

Closed Sfam: 1,309 ( -738 from last week)

Inventory continues to crater in the Arizona Regional Multiple Listing Service; single family homes have now fallen under 12,000. That is a a very thin available selection for a market of this size. Four years ago at this time, there were 44,000 single family homes on the market. Even the overall market of 15,283 is tiny compared to relative demand, and we are seeing it now I think show up as affecting pending sales; there simply is not enough supply to feed the demand. Last year at this time there were about 500 more pendings at this time; I think there are a lot of people who haven't been able to buy the home they wanted yet, and that is going to slow the sales numbers for March. At some point, this was going to happen. Last year there were twice as many homes, and buyers could choose; this year there are dogfights to buy the best available property. There are a lot of dogs barking up the same tree right now, and all but one will have wasted their time on that property. It does delay buyers. I think we will finish with less sales in March than last year, possibly by quite a number. However, the result of this solid demand is prices are going to keep rising.

This level of inventory is going to start affecting homebuilders; if they can put out a decent priced home now, they are in the running for a buyer, even if they are priced a bit higher. The median continues to climb, which means new builds are getting more competitively priced, and this should be a huge boon to builders. Arizona seems to be in excellent position to make a return to a good healthy real estate market this year; land may not recover right away, but housing is going all in the right direction.

One note regarding the pendings: even if they are lower, the AWC field is higher than last year, and this speaks to short sales. Short Sales are happening faster now; the increase in AWC can be attributed to this, and AWC do feed the pendings and also closings somewhat under the radar as some spend very little time if any under pending, depending on the agent, and or the banks short sale procedure. We could end up with as many sales in March as we did last year; we have been doing that very thing so far this year with lower pending numbers throughout January and February as there were last year.

New listing activity continues to fall as well; its running about 20% behind last year. These combinations make it easy to see why we would have this dearth of inventory.

We are too early in the month to make a call on the median price, but so far we are seeing stronger numbers than February, and strikingly stronger than March 2011; about 15% higher. I will discuss that more later in the month when the numbers are solidified a bit more.

I do want to address a few things we are seeing about Phoenix real estate; I have been calling this since the fall of last year when it became apparent that inventory was not growing despite the seasonal slowdown: we were going to have this little boomlet due to lack of inventory. We are now seeing this reported in local and national news publications. Here is an article in the AZ Central about buyers being squeezed out by investors. (I thought it was settled science that we had a housing glut?) Of course, this implies optimism if you look at it broadly although the article is more a hit piece on investors than it is reporting the real story that hmm, we might have a recovering housing market.

The Wall Street Journal also leads with a Phoenix real estate turnaround story. You will have to have a subscription to read the whole article, but you get the gist from the lead of the story. This is happening here, and it is happening because the excess inventory has burned off and what remains is what made Phoenix a destination for so many people before: relatively low priced high quality housing, a welcoming business friendly economy, and an incredible climate. We are not healthy yet, but the fever seems to have broken, and the patient is upright again. The next stage is whether this lack of resale inventory results in New homes being built and bought. Construction is a great jobs engine, and it is some of the medicine that Arizona needs right now to bring us back to full speed.