Friday, May 1, 2009
Tipping Point - Phoenix Housing Market 2009
Categories:Arizona Market Trends,Arizona Real Estate,Buyers,Chandler,East Valley Homes,Economy and Real Estate,Gilbert,Glendale,Glendale Real Estate,Maricopa County,Mesa,Mesa Real Estate,New Home Communities,Scottsdale,Sellers,Tiffany Cloud
The million dollar question for the last several years in the Phoenix Metropolitan area is "when will the housing market hit bottom?" This leads us to ask, "how does one define the 'bottom of the market'? " I am no statistician by any means, but you can only define "bottom" by looking backwards. One can't state that we are at the bottom now without knowing what will happen next month, the month after, etc. Usually when we talk about trends and defining trends in real estate, we want to see at least a four month consistency, or 'last quarter' type of stability. If March or April of 2009 is the bottom of the market price-wise, we won't know until mid to late summer. We can only look back to determine with any certainty what the data tells us in relation to the broader picture.
Having said that we are definitely at a tipping point in the greater-Phoenix housing market. Let's look at both ends of the supply and demand scale that impact our sales price.
Supply is the inventory of homes we have available for purchase. At our peak in October 2007 we had 58,334 homes available. To contrast this figure with the other market extreme of 2005/6 our inventory of homes was at a whopping 8,342 in April of 2005. (Normal inventory is about 32,000 active listings) Now let's look at the decrease in inventory over the last several months.
Now lets take a look at the demand side of the Phoenix housing market. Pending sales are our most current indicator of the demand for homes. While closed sales are arguably a more accurate indicator, because not every pending sale ends in a closed sale; closed sales again are looking backwards. Pending sales are a more immediate picture of current demand. So what do the pending sales in the Greater Phoenix housing market tell us?
As the above chart indicates, our pending sales are through the roof. This chart is 2 weeks old, our pending sales are even higher now at over 14,000 units. We are currently several thousands units above what our previous high was which happended to be in the 2005 market. I don't know that we could have any clearer indicator of demand except what agents and buyers are experiencing out in the trenches right now.
Here is what I have heard from other agents in the last week. "I Can't believe there were 18 offers on that house", "2 of the 5 properties I was going to show my buyer went under contract last night" "The listing agent told me not to bother to write on homes if I was going to 'low-ball' - thing is, we only came in $5,000 under asking price - the listing agent told us we were the lowest price offer he had of 6."
Thanks for reading.
Great post Tiffany! There is definitely change in the air in the Phoenix market...
Great information, I also I’m hearing the same about multiple offers and we are seeing on appraisals that many of the comps are showing sold after only a few days on the market All very good signs
Great post. In the last couple of months, I have had to wake up from the coma that was 2008 and start submitting muliple LSR's for properties -- weird.
Not that I am complaining of course.
But there is something strange about the sub $250k market here in the valley... it is *on fire*.
Nice use of the Cromford Reports. It's good to see you spreading the word out about this crazy market!blog comments powered by Disqus