The number of Phoenix homes for sale is dropping. Rapidly.
The chart above shows that inventory of active listings has steadily declined since November 2010. Active listings in June were 30,614, down from 45,836 in November 2010 and well off the peak inventory of 58,195 in November 2007.
And at this moment in time, July 14, 2011, the number of active listings stands at 28,684.
Cromford (the supplier of this data) defines an “active listing” as a listing in the Multiple Listing Service marked either “Active” or “Active with a contingent offer”. If you remove those listings with contingent offers, the current number of active listings with no offer on them drops all the way down to 20,882.
Look at only single-family homes, and that number is further reduced to 16,620.
Inventory levels haven’t been this low since January 2006”¦
What do low listing inventory levels mean?
Recall your basic economics class discussions of the Law of Supply and Demand. Inventory (active listings””ie: homes for sale) is the supply in this equation. Assuming demand (that would be home sales in our case) is strong then in theory, lower supply with higher demand means prices should start to rise.
And demand is strong ”“ 11,128 homes were sold in June. That’s the highest point on the chart below that goes back to January 2001.
Now I’m not going to proclaim that home prices are about to rise. There are more factors in play than just supply and demand. But, what we do have here is a fundamental shift””over several months mind you, not just one blip in the data””that indicates home prices may well indeed be on the rise.
Ask any agent that is busy. Homes are getting harder to find. Multiple offers are not uncommon. Short sales and foreclosures are slowing. Yes, the Phoenix real estate market has a way to go before it recovers to a nice sustainable appreciation rate.
But I’d much rather have dropping inventory and rising sales than what we had back in November of 2007 while we were mired in one of the most horrific real estate markets in the country, and within recent history. Those days of absurdly high inventory combined with record low sales may just be well behind us.
Tables and charts from The Cromford Report using data from public records and data licensed from the Arizona Multiple Listing Service (ARMLS). Cromford Associates LLC, ARMLS and yours truly, Jay Thompson, expressly disclaim and make no representations or warranties of any kind ”“ express, implied or statutory ”“ as to the accuracy of the data, nor its merchantability or fitness for any particular purpose.
In other less legal-like words, if you use this data to make personal, business or investment decisions and something blows up, it’s not our fault and you can’t sue us.