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Thursday, July 21, 2011
Sunday, July 10, 2011
Sales in June Top 2005 Boom!
Newest stats support our last blog that the Phoenix market is showing some positive signs!
Statistics from the Arizona Residential Multiple Listing Service show that sales in June surged to 11,125 or 13.4% a new monthly high. This tops any single month during the boom of 2005 and contributes to the reduction of current inventory. In addition, slowing of new inventory into the market affects current inventory and is seen as a positive and necessary recovery metric.
The total inventory trend line has been in decline since December! Inventory has dropped below 30,000 for the first time since June of 2008! Declines in inventory weigh in sellers' favor and can positively influence pricing. The MSI (months supply of inventory) has dropped to 2.62. Anything below 4 MSI signals the shift from a buyer's market to a seller's.
So why hasn't pricing begun to climb since other metrics are showing signs of recovery? Prices have remained flat and the prediction for the next few months is that prices will continue to remain flat as long as there are foreclosures and short sale properties that discount the market. The good news is that buyers can still find properties that are below market value but the clock is ticking.
Foreclosures have declined and more lenders are agreeing to short sales. Both types of distressed sales influence pricing and as long as they are still dominating some areas of the market, prices will not be able to increase. As short sales increase, it tells us that more lenders are willing to work out agreements with home owners to help them avoid foreclosures. As a result, foreclosures are in decline.
Positive metrics are welcome and necessary signs of recovery. Still, new listings and sales pricing remains anemic, with the prediction of little upward motion in the foreseeable future. This is clearly a disappointment. In Phoenix, as well as other metropolitan areas, prices for low-end homes, which made especially large gains during the housing boom, have now dropped much more sharply than those for high-end properties. The disproportionate number of low end properties in the sales mix continues to exert negative pressure on median and average pricing.
Experts have reported for some time that jobs and net migration are the keys to recovery. Unemployment in April fell to 8.15% from the January high of 9.28 in Maricopa and Pinal Counties. Jobs creation is moving positively but very slowly in the right direction. The US Bank 2011 Small Business Annual Survey, which in April and May surveyed small businesses in 11 select markets including Arizona, reported that 70% of small businesses expect the number of employees working for them to remain the same over the next 12 months, citing economic uncertainty as their biggest challenge.
The Valley's elusive pricing recovery rests on the supply and demand balance. Supply appears to be righting itself, as is demand in lower end housing. What is more problematic is the demand for higher end housing, which remains depressed. Recovery across all price segments will depend heavily on a combination of net migration and household formation. The complexity and combination of factors indicate that the path to total recovery will be long and the pace will be slow. But the statistics are beginning to turn and Phoenix real estate is predicted to be one of the markets that will prove to be an excellent investment!
Statistics from the Arizona Residential Multiple Listing Service show that sales in June surged to 11,125 or 13.4% a new monthly high. This tops any single month during the boom of 2005 and contributes to the reduction of current inventory. In addition, slowing of new inventory into the market affects current inventory and is seen as a positive and necessary recovery metric.
The total inventory trend line has been in decline since December! Inventory has dropped below 30,000 for the first time since June of 2008! Declines in inventory weigh in sellers' favor and can positively influence pricing. The MSI (months supply of inventory) has dropped to 2.62. Anything below 4 MSI signals the shift from a buyer's market to a seller's.
So why hasn't pricing begun to climb since other metrics are showing signs of recovery? Prices have remained flat and the prediction for the next few months is that prices will continue to remain flat as long as there are foreclosures and short sale properties that discount the market. The good news is that buyers can still find properties that are below market value but the clock is ticking.
Foreclosures have declined and more lenders are agreeing to short sales. Both types of distressed sales influence pricing and as long as they are still dominating some areas of the market, prices will not be able to increase. As short sales increase, it tells us that more lenders are willing to work out agreements with home owners to help them avoid foreclosures. As a result, foreclosures are in decline.
Positive metrics are welcome and necessary signs of recovery. Still, new listings and sales pricing remains anemic, with the prediction of little upward motion in the foreseeable future. This is clearly a disappointment. In Phoenix, as well as other metropolitan areas, prices for low-end homes, which made especially large gains during the housing boom, have now dropped much more sharply than those for high-end properties. The disproportionate number of low end properties in the sales mix continues to exert negative pressure on median and average pricing.
Experts have reported for some time that jobs and net migration are the keys to recovery. Unemployment in April fell to 8.15% from the January high of 9.28 in Maricopa and Pinal Counties. Jobs creation is moving positively but very slowly in the right direction. The US Bank 2011 Small Business Annual Survey, which in April and May surveyed small businesses in 11 select markets including Arizona, reported that 70% of small businesses expect the number of employees working for them to remain the same over the next 12 months, citing economic uncertainty as their biggest challenge.
The Valley's elusive pricing recovery rests on the supply and demand balance. Supply appears to be righting itself, as is demand in lower end housing. What is more problematic is the demand for higher end housing, which remains depressed. Recovery across all price segments will depend heavily on a combination of net migration and household formation. The complexity and combination of factors indicate that the path to total recovery will be long and the pace will be slow. But the statistics are beginning to turn and Phoenix real estate is predicted to be one of the markets that will prove to be an excellent investment!
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