Pendings, AWC Contracts UP; Active Listings Slide again.
Week of 5/5/08-5/11/08
Pending Sales: 7373 ( +368 from last week)
AWC Contracts: 1414 ( +82 from last week)
Total Cotnracts: 8787 ( +451 from last week)
Active listings: 54,329 ( -121 from last week)
Closed Escrows (5.5-5.11.08) 914 ( -713 from last week)
MTD Sales (ending 5.11.08) 1,336
First, I would like to say thank you to the couple hundred people who visited after finding my comment on the AZ Republic. I am not used to such an influx of visitors, so it was a little bit flattering to have that kind of traffic. Thank you for your kind emails. I do enjoy hearing from people, so please feel free to do contact me.
Ok, to the business at hand. We have been witnessing an increasingly strong resales recovery. The amount of new activity continues to climb, and the pendings have bounced back very quickly after a blowout sales number at the end of April. (Pendings decrease rapidly at the end of the month, as they close and become "sold".) We have reached a new high in total contracts. We may see 9000 next week. That will be a nice milestone, if we can hit it. The amount of sales went down for the week, but the first week of the month included the last days of April, so end of the month sales spike that figure. 914 is a good solid opening of the month; it will probably be the lowest weekly sales total of this month, with the possible exception of the current one. It is on pace to be a decent month. Active listings have continued to slide ever so slightly, but at least they are sliding. A little known thing occurred at the end of April, and that is that we crossed the One year of inventory line. With almost 5,000 sales in April, and 54,000 listings, if you annualize the sales, you will see that means there is now less than 12 months of inventory. That was not the case prior to April, as sales were too low and inventory too high to make that claim. It is a simple indicator, but I think relevant.
One other thing to be aware of. We are slipping into this 5000 sales a month range, which is helpful, and we may get to 6000 sometime this summer, but I think we all need to temper our enthusiasm and realize that this may be where we are going to be at for a while. Conditions are more difficult in the housing market, as buyers are going to have a more difficult time financing, and many people have no choice but to ask a higher price for their home than the market will bear. There are still only a limited number of homes on the market that are priced low enough for people's blunted enthusiam for buying, and until one of these two factors changes, we will have muted sales figures like this, instead of the 5 figure numbers of 2004-2006. This could be what our medium term potential is. It may get slightly better, but we simply are not going to go back to the velocity we had. I did just check today, and we are significantly ahead of last months pace by the same date. If that holds true to form, I will forecast that we have 5200 to 5400 sales in May. If you would like, leave a comment, and make your own prediction for total MLS sales.
So, we are still improving weekly, and hopefully we can continue to build on it.
Tuesday, May 13, 2008
Wednesday, May 7, 2008
2008 Sales Activity Chart
Click on the graph to see it larger.
I have created a graph to give us a visual of the trend of sales activity in 2008. This particular chart shows Pending and Active with Contingency Contracts, Weekly Sales, and Active Listings. I will make an attempt to add the other stats, but I haven't used this program in this manner before, so I am just getting started! I do think this is very instructive, however. We have had a substantial increase in sales activity this year. This next week should actually increase again, as midweek it already has climbed past 8500. We will see where it measures next tuesday. You can see quickly why the prices are struggling-look at the disparity of inventory to sales and contracts.
ABC Highlights Maricopa Housing Problems by Hitting Builders
Maricopa was highlighted by ABC's nightline tonight. It was a piece about Maricopa. They sensationalized the foreclosures at 1 in 95 homes in Arizona. That is slightly more than 1 percent. Not that bad, quite honestly. 1 in 10 homes is for sale in Maricopa, the way they said it, that includes builder homes as well....okay, that is higher than we would like, but not the end of the world for a smaller growing community. "Check my earlier post-Pinal resales rise at to 1685 homes." The prices have no doubt taken a hit, much as we have throughout the valley. This is really a hit piece on the builders, making them out to be at fault. Jay Butler's comments may have been gleaned over, but if I was a builder, I would think twice about subscribing to his services- I think he sells his abilities as an expert. He just sandbagged them, in my opinion. He accused the builders of selling mortgages, not homes.
Yes, lots of people have given back homes, because they were buying as investments, not as homes, and really had no ability to hold the home if they couldn't resell it. The town is still growing and builders do have a significant price advantage over the resales in some cases, as they can undercut easily a home that sold for $26o,000 that is probably worth 160,000 now. Let me tell you a story about my uncle. He bought a nice home in a fringe community and a year later his life situation changed, and he wanted to move back to a smaller home closer in. He was quite annoyed that the builder had IDENTICAL homes to his just down the road for the same price he paid a year and a half earlier. Another story for ABC about overbuilding in Maricopa? Another hapless buyer caught up in the Great Housing Bust of 2007-2008? No........
Well folks, that was Surprise 1999, at Bell and Dysart. Buy a home in a new fringe area, expect to live in it a for while, because the builder has pricing power, and that means you shouldn't expect to sell for much more than you bought for in the first five years. By 2004, that house was worth double the $150K he built it for in 1999. But in 2001-2002, it was only worth what he paid for it.
Another thing, the national pending sales figures were supposedly down across the country. That may be, but check the stats, and Arizona's were up and getting stronger. As a matter of fact, we are currently sitting at 8586 pending and AWC contracts, a number that is higher than the end of April, prior to a large last week of pendings converting to sales of over 1200. We have recovered quite nicely from that in the last three days, don't you think? We are not in 2005 territory, but we seem to be getting better on a lot of fronts, so take this national news with a grain of salt, as they try to infect us with more negative sentiment. The truth is, Maricopa offers an incredible value in housing, including new and resales, and if it was doing so bad, builders wouldn't be opening up new subdivisions in east Maricopa.
ABC made mention of the fact that 1 in 5 was sold to an investor. How is that exactly the builder's fault? If someone has the money to buy, why shouldn't they be allowed to buy? They did curb investors in 2005, but it is fairly typical of the media to blame business first, and the consumer is faultless.
Regardless, Maricopa looks like it is doing pretty good. There are a lot of over priced homes for sale, but there are also a lot of reasonably priced homes for sale, and there seems to be a lot of commercial construction going in. It isn't perfect, but that is a nice community being built down there, and this was a character assassination of Maricopa.
This report reminded me a lot of those Jonathan Hunt pieces on Fox News that absolutely go over the top in trying to create news. Do you remember the "city paralyzed by fear of snipers" story he did on us a few years ago? It was ridiculous then, and this didn't seem to be much different.
Sorry, I had to spout off on this, because it completely misses what is really happening there-a town of a few thousand having grown to 40,000 people and looking like it will be just fine.
Yes, lots of people have given back homes, because they were buying as investments, not as homes, and really had no ability to hold the home if they couldn't resell it. The town is still growing and builders do have a significant price advantage over the resales in some cases, as they can undercut easily a home that sold for $26o,000 that is probably worth 160,000 now. Let me tell you a story about my uncle. He bought a nice home in a fringe community and a year later his life situation changed, and he wanted to move back to a smaller home closer in. He was quite annoyed that the builder had IDENTICAL homes to his just down the road for the same price he paid a year and a half earlier. Another story for ABC about overbuilding in Maricopa? Another hapless buyer caught up in the Great Housing Bust of 2007-2008? No........
Well folks, that was Surprise 1999, at Bell and Dysart. Buy a home in a new fringe area, expect to live in it a for while, because the builder has pricing power, and that means you shouldn't expect to sell for much more than you bought for in the first five years. By 2004, that house was worth double the $150K he built it for in 1999. But in 2001-2002, it was only worth what he paid for it.
Another thing, the national pending sales figures were supposedly down across the country. That may be, but check the stats, and Arizona's were up and getting stronger. As a matter of fact, we are currently sitting at 8586 pending and AWC contracts, a number that is higher than the end of April, prior to a large last week of pendings converting to sales of over 1200. We have recovered quite nicely from that in the last three days, don't you think? We are not in 2005 territory, but we seem to be getting better on a lot of fronts, so take this national news with a grain of salt, as they try to infect us with more negative sentiment. The truth is, Maricopa offers an incredible value in housing, including new and resales, and if it was doing so bad, builders wouldn't be opening up new subdivisions in east Maricopa.
ABC made mention of the fact that 1 in 5 was sold to an investor. How is that exactly the builder's fault? If someone has the money to buy, why shouldn't they be allowed to buy? They did curb investors in 2005, but it is fairly typical of the media to blame business first, and the consumer is faultless.
Regardless, Maricopa looks like it is doing pretty good. There are a lot of over priced homes for sale, but there are also a lot of reasonably priced homes for sale, and there seems to be a lot of commercial construction going in. It isn't perfect, but that is a nice community being built down there, and this was a character assassination of Maricopa.
This report reminded me a lot of those Jonathan Hunt pieces on Fox News that absolutely go over the top in trying to create news. Do you remember the "city paralyzed by fear of snipers" story he did on us a few years ago? It was ridiculous then, and this didn't seem to be much different.
Sorry, I had to spout off on this, because it completely misses what is really happening there-a town of a few thousand having grown to 40,000 people and looking like it will be just fine.
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