Active Listings Continue Their Decline
Pendings rise sharply as seasonal demand kicks in
Pending: 11,911 (+630 from last week)
Pending Sfam: 10,302 ( +542 from last week)
AWC: 7,582 ( +97 from last week)
AWC Sfam: 6,576 ( +6448 from last week)
Active: 17,097 ( -294 from last week)
Active Sfam: 13,339 ( -228 from last week)
Closed: 2/6-2/12/12: 1,274 ( -1203 from previous week)
Closed Sfam: 1,064 ( -1,027 from previous week)
Not much to report this week; drab middle of the month numbers. Perhaps of note is that we are very close to hitting another milestone in inventory, or lack therof. We are about to fall into the 16K's, a difficult position no doubt, with March on the way. If we have similar sales to last year, that would mean we would have approximately 1.6 months worth of inventory to begin March with. That is a a sellers' market, people. If we were to draw down 1500 to 2000 homes that month, what next? Entering April we would be in serious lack of inventory given the demand for the next several months. That said, given our still current shaky economy, I have no doubt it will have just as much effect on demand as it does on raising prices. If prices start to rise, we will lose disheartened buyers who don't like rising prices. It happens. Not everyone chases the dragon of rising prices. It will have some effect on total number of sales, and I don't think at this point I see us having more MLS sales than we did in 2011. There is no inventory available to allow that. We should see some stronger price gains this year; not really an insightful position, since its already happening, but as the lower priced inventory dries up, there will be less investment opportunities that investors find attractive, and they will not be buying. However, we are also going to see this build some confidence with regular buyers, which is a far healthier market condition.
I would expect February closings to be less than last year, but also show a good price gain over the same year. We are going to see some yawing in the median price for a bit; after a good month, we might see a slip, but probably followed by another increase. Interestingly, listing prices seem to be climbing at a rapid clip.
From the statistics I have seen, new home sales continue to show great strength over the last 4 years, and I think this will continue, due to general lack of inventory. Builders actually will have some price advantages in some submarkets eventually, as they are have likely picked up some finished lots at extremely reasonable numbers. We probably have not seen a lot of this kind of construction yet, but as prices rise for resale, it will become attractive for builders in place like Gilbert and Chandler, and perhaps Queen Creek, to open up subdivisions if there is a lack of lower priced inventory in those markets. We already know that the inventory is lacking, but prices might have a little climbing to do before builders are fully comfortable with competing against bank resales. We see it in other submarkets as well. Wittmann is a prime large lot custom home area in the west Valley, with prices and resales having risen to the point that builders could probably be making money out there, but we have yet to see the attempt. Land prices are still reasonable there, its an easy build for the most part, and sales have been strong out there, at pretty good price points, yet no new builders have taken the plunge. If I was a builder, it would be the first place I would go to reestablish, as it is not a steep investment to do one home, and chances are you will sell it before its completed. It might not be a homerun profit wise, but I fail to see where there is such a place for a builder in Arizona. I would be very happy with a decent profit on a relatively low cost and low risk build.
Not a particularly interesting week, so I am going to cut it off here. Enjoy your week.
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