The spring season is in full swing now, which normally means demand should be strong and supply should be falling fast. Neither of those quite describes the current situation.
Demand is indeed getting stronger, but from the unusually weak level at the start of March, it has a long way to go before it could be described as normal, never mind strong. Supply is levelling off and we probably saw the first half-year peak for total active listings on March 29. We saw a lot of listing cancellations in March - the highest number since August 2011. As a result we started April with fewer active listings than we ended with in March. However, cancelled listings have a habit of coming back as new listings.
The overall picture for supply, when adjusted for seasonality, is that it is still growing. It is definitely shrinking for all price ranges under $200,000, but it is also still expanding for all price ranges between $200,000 and $1,000,000. The mid-range buyer's choices are increasing, which is very unusual for the spring. New listings are arriving at a 10% faster rate than in 2013 and they are sticking around longer before they go under contract. Right now we have nearly 30,000 active listings in MLS, close to a normal number for our population.
The buyers we do have are mostly taking their time and showing little sense of urgency.
The good news is that sales are picking up as they should between February and April and average and median sales prices are moving higher as the volume mix shifts towards higher end homes and away from entry level homes. This doesn't mean that home values are increasing. These are not moving much. It is just that higher end homes are a higher percentage of completed sales (driving the average up) and the cheapest home sales are getting scarcer (driving the median up).
Demand has been shrinking while supply has been growing since last July. Demand is 25% below normal! Thus the overall balance has remained distinctly in favor of buyers and there has been no discernible improvement for sellers.
Comparison of statistics from 2001-2002 to the present shows us that people are moving much less than they used to and the current market is much more influenced by renters than buyers compared with the start of the century. Our largest population is the Millennials (sorry Boomers!) and they have chosen to be renters for a while. That is why we are seeing so many apartments being built in the Valley.
For Greater Phoenix in March we had 109 sales of homes priced over $1,000,000. This is the highest March number for million dollar homes since 2008. For homes priced at or below $1,000,000 we had 6,503 sales which is the lowest March number since 2008. This divergence between luxury home sales and the rest of the market is quite striking. However, there are still plenty of homes over $1,000,000 for sale so supply is not an issue.
The last interesting statistic that has emerged is that if we look back at where the market in Phoenix sat in 2003 (average price across all price points) and removed the spike in 2005-2007 as well as the dramatic decline from 2009-2011, the Phoenix market is exactly where it should be in pricing! And that is rather amazing!
The good news for sellers is that thousands of folks that were forced into foreclosure or short sales are now becoming eligible as potential home buyers. The numbers are creeping up this year and will hit their peak in 2015-2017 as nearly 45,000 buyers each year can come back to buy!
There is always a light at the end of the tunnel and Arizona has traditionally led the way through for the rest of the country. We have every reason to believe it will happen again! If you are planning to sell your home now, condition and pricing are key factors in drawing the buyers. If it looks great and is priced right, it will sell! If you have been waiting to buy, this is your market!
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