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.
The Phoenix Real Estate Guy was started by Jay Thompson, and I have a little blogging problem... he liked to say...
Jay – killer graphs!! What program are you using?
Grant – those are from The Cromford Reports (link is at bottom of post). Far as I know, they only work with our MLS.
Great post, we are seeing the same trends in the Tampa Bay market as inventory is on the decline.
The inventory is way down in Scottsdale. The best houses are selling fast. They used to sit on the market for half a year or more. I’ve had several clients come into town this month and by the time they get here a quarter of their list of favorite homes are already pending. It is a whole new ballgame in Scottsdale!
Not to be a wet blanket, but from today’s news:
‘”Processing and procedural delays are pushing foreclosures further and further out – we estimate that as many as 1 million foreclosure actions that should have taken place in 2011 will now happen in 2012, or perhaps even later,” said James J. Saccacio, chief executive of RealtyTrac, in a statement.’
So we are looking at an artificially small supply thanks to the robo-signing debacle, meaning every neighborhood is still a potential minefield of struggling homeowners. That being said, I’m glad to see the market becoming even a small bit healthier.
Most of my deals have multiple offers and are going to highest and best.
Great news but does this mean that the bottom has been reached?
In Southern Maine the market is also decreasing in inventory. It will be interesting to follow these trends.
For the last couple of years the news and market has gone from bad to worse. This positive trends is a piece of good news in the housing market that is most welcome. Where I’m at in California we don’t see this trend yet, so I’m looking forward to this “uneven” recovery in the housing market.