ARMLS DATA 1/31/2012

***Inventory falls into 17K's***

***Single Family Inventory falls into 13K's***

Inventory Dropping Sharply; new listings for January under 10K

Buying Activity Rising as Pendings top 11K for 1st time in 2012

Prices rise in Phoenix, even according to Case-Schiller

Pending: 11,027 ( +271 from last week)

Pending Sfam: 9,563 ( +221 from last week)

AWC: 7,249 ( +93 from last week)

AWC Sfam: 6,271 ( +88 from last week)

Active: 17,778 ( -442 from last week)

Active Sfam: 13,888 ( -406 from last week)

Closed 1/23-1/29/12 1,549 ( +270 from last week)

Closed Sfam: 1,319 ( +260 from last week)

Median Price: $120,000

New listings in January: 9,393 (-25% from last January)

Housing data in Phoenix continues to impress, as most statistics continue to show recovery -oriented results. Inventory has now fallen into the 17,000's a far cry from the nearly 60,000 homes that were on the market at one point. Single family listings are now in the 13,000's as well. This shows tremendous improvement, even over last year. Even in the middle of last February, we still had 34,000+ listings available; we are going to go into March with no such buffer this year. This is being exacerbated by the relatively few listings coming on the market in January; normally the biggest month of the year for home listings. It is likely we will end up with less than 10,000 new listings; that is 2500 less than last January. We are not building inventory in January this year; inventory continues to be pressured.

It is not just inventory that is improving; we also see that home prices are making a move forward, as so far in January, prices have moved ahead of December by $3000. That may not sound like a lot, but the first half of last year, we were mired in a $110K range; now we are breaking out of that range pretty solidly, and I do expect that to go even higher as we get to the strong selling season. Median pricing is without a doubt getting stronger. Even the notoriously dour Case-Schiller index is showing price retracement everywhere- except for Phoenix.

There is more good news. Pending sales are coming back very well, showing some resiliency despite January being a typically slow month. We crossed over into the 11,000's, which is an indicator of relatively strong demand. Expect that number to grow into the latter part of February as well. I don't think this will be a huge year for sales; there simply is not the inventory levels to accommodate the kind of sales we saw last year, but I would expect sales to be very solid, and at higher prices as I already discussed. Demand seems to be quite solid heading into the traditional buying season in Phoenix.

Still, there is more good news: Ryness' New home sales report is showing a sharp uptick in its data as well. I would love to show you the graph, but its copyrighted. What I can tell you is that the index is streaking above the last 4 years through statistics like a Traffic to sales ratio that this past week improved from 25-1 in 2011 to 10-1 this same week this year. Raw sales went from 22 last year to 52 in the same week. The percentage of canceled new sales was cut in half. This is just a snapshot example of a relative short period, but there is a marked increase in builder activity which is a result no doubt of the difficulty people are having finding resales.

Compared to normal times, prices are so low that yes, this is still a buyer's market. But from an operating point of view; it is not. Buyers who don't wish to over bid on homes are not having an easy time finding property. There are very few listings available at this time, and its not going to get any better. This is benefiting builders, who may have some inventory, but are also not being victimized as much by low prices as they were. With prices moving up in resales, builder prices tend to come back into line, and this makes selling easier for them. We are reaching that point and I am sure the builders are ecstatic. It doesn't help with the hollowed out inventory of the inner part of the metro area, but you are going to see a lot of sales that are going to happen in the suburb ring around phoenix. It is a step toward a healthy market for the builders.

My advice to someone looking for a home is to look now; the prices are not going to be the same again in Phoenix. I think despite Case Schiller, that housing is moving in the right direction across the country as a whole, but probably no place more so than in Phoenix, which is breaking the curve even now. Two months from now, we will have some intense competition for available homes, and this could very well lead to a housing shortage that will make homebuilders think about building some more specs, in turn hiring more tradesman. This is going to happen. If you are looking for a condo or a home, don't dawdle on it; you could save yourself 10% by doing it now instead of waiting until June.

ARMLS STATS 1/24/2012

Pending Sales continue to Rebound

New listings off 25% from last January; inventory declining precipitously

Median Pricing up strongly over January 2011

Median Listing Price rising rapidly as well.

Pending: 10,756 ( +427 from last week)

Pending Sfam: 9,342 ( +348 from last week)

AWC: 7,157 ( +156 from last week)

AWC Single Fam: 6,183 ( +120 from last week)

Active: 18,220 ( -236 from last week)

Active Sfam: 14,294 ( -144 from last week)

Closed 1/16-1/22/12: 1,279 ( -69 from last week)

Closed sfam: 1,059 (-51 from last week)

Median Price YTD: $119,900

Listings YTD: 7,173 (-2,470 from same day last year)

Median Listing Price: $144,900 (up from $119,000 in Jnauary of 2011)

Sales are on pace to be off from January of 2011; not unexpected given the relative lack of inventory, especially at lower price levels, where inventory is quickly drying up. The lower number of sales will likely be modest, maybe 400 less or so less, but the median price is also going to be much higher. We can see that right now it is up about 9% from last year at the same time, and I would expect that to rise over the next several months; possibly a slight hiccup in February, but the overall trend is going to be higher. I do expect the raw number of sales to be lighter in 2012, as more people will be opting for new homes as prices rise for resale, and also just because there are not as many "too cheap to ignore" assets for investors to pursue. Phoenix is not done with the foreclosure market by a long way, but as a force inflicted on the housing market, its impact is going to become negligible in 2012. Even a wave of foreclosures now would only likely flatten the price increases that are coming based on a whole year's worth of inventory and listing data. We see it showing up even in the listing data; listing prices are 21% higher than they were a year ago; sellers are more optimistic, and the low priced stuff has already sold.

We are also seeing a strong rebound in Pending Sales in January; we are up another 4.1% from last week. That is a fairly significant increase, and if it foretells what is going to happen in the Spring Buying season, Buyers will need to be prepared to fight for the home they want. Right now, sale prices are still historically ridiculously low, and many homes are being bid up over asking price. I have written 8 offers in the last few months that have been lost to other buyers who wanted the property more. It is the nature of things right now, and competition is only going to get sharper in the next few months.

Another quick note on inventory: I would have expected all of January to build inventory, but we are instead seeing sharp reductions. If March is only a mediocre sales month at 90% of last year's sales, we will still see our market at less than 2 months worth of inventory. If we have a blowout month, which I don't expect due to this very lack of inventory, but let's just say it is up to the 10K in Sales, we will be dangerously low on inventory, and prices could jet quickly. Builders are unprepared for this, and we also have to realize that most construction occurs at the edges of town, which doesn't help the bulk of buying pressure. There will be some who are happy to move to the outer suburbs, but more likely prices will shoot up.

Expect inventory to keep falling; expect prices to continue rising, and a sea change in what people say about real estate in Arizona.

ARMLS Data 1/17/2012

Buyer activity on the Upswing As Pendings Up Sharply

Listing Activity down from January 2011

Median Price?

Inventory falls slightly, insufficient for March Demand.

Pending: 10,329 ( +356 from last week)

Pending Sfam: 8,994 ( +315 from last week)

AWC: 7,001 (+160 from last week)

AWC Sfam: 6,063 ( +122 from last week)

Active: 18,456 ( -65 from last week)

Active Sfam: 14,438 ( -75 from last week)

Closed 1/9/12-1/15/12: 1,348 ( +477 from last week)

Closed Sfam: 1,110 ( +373 from last week)

New inventory Jan'12: 4,987

Median Price so far this month: $120,000. Up $10K from January 2011

Up $3K from December 2011

Buyer activity looks to be recovering after the holiday hangover, as for the second straight week, we've had a substantial rise in pending sales. Inventory slipped just slightly, which is fine. I would have predicted inventory to rise as January is typically a heavy listing month. We are on a pace for less than 10,000 listings this month, which is substantially higher than December, but that is completely normal. If we are around 10,000 listings for January, that will be a significant decrease from January 2011, which saw over 12,500 listings come on the market.

I don't like to talk about Median price so early in the month, but it is also trending higher. It might not finish that high, but right now its cresting at $120,000 which is substantially higher than a year ago, and a good monthly jump from December and November. Three months is a trend, and we will have to see where it finishes. I don't expect January normally to be a time when prices are pressured upward, but the momentum is likely there, and there is simply a lot less of the lower priced inventory available.

January is typically the calm before the storm, but we are half way through now, and we can activity picking up; I don't think we will have the raw numbers we saw in 2011, because we simply don't have the inventory to accommodate sales, but we will see higher pricing for the sale we do have. We might see substantially higher sales prices due to so few homes being available. I am calling for substantially higher prices by the end of the year, and I expect that conservatively speaking we will see median pricing in the $130's by June. The cheaper inventory is just not there like it was. We are seeing excellent activity, however, and I do expect us to have some very positive news by April.