Last night I was picking up my daughter at a neighbors house and they asked how business was going. “After all it’s a buyers’ market,” they said. Needless to say they were surprised to learn that’s not the case anymore. And this week’s absorption rate numbers confirm that fact.
Low-priced bank owned homes brought buyers out of the woodwork and exposed the latent buyers demand. When that inventory shrank, buyers turned their attention to non-bank owned homes. The result is an absorption rate of 6.45 months of inventory for non-bank owned, non-short sale homes.
(A balanced market actually has inventory in the 5 to 6 month range but after watching inventory fall by a half-month in the last week, it’s a safe leap to make.)
There are 12,440 non-bank owned, non-short sale single family detached homes for sale in Maricopa County and there were 1,928 closed sales the past 30 days.
Bank owned inventory fell to .74 months (4,274 closed sales and 3,157 active listings) and short sale inventory is at 6.10 months (874 closed sales and 5,330 listings.)
Overall, the Phoenix real estate market has 2.96 months of inventory available – 7,076 closed sales against 20,927 active listings.
Now for the part I’ll point to in two months, just as I can point to my April posts about the market improving significantly now that almost every other real estate agent in Phoenix is calling the bottom …
Will these inventory levels hold? For the short term, yes. But you’ll see them rising again by Labor Day just as happens every other year.
When is the next wave of foreclosures coming? No one seems to know. REO listing agents are carrying one-third to one-half as many listings as they once did and every assignment sends them to an elevated alert … at least until they learn there’s not three dozen more coming behind the one or two. Is it possible lenders have figured out the best way to hold value in their investment – and now that they own the home, it really is their investment – is to slow the pace and maintain a better supply-demand ratio?
About the supply-demand ratio … three weeks of inventory is terrible to work with. Too many buyers, two dozen offers on every property under $100,000, frustrated buyers, homes being bid up to where they won’t appraise. The list goes on.
What would be a better level, at least in Tobey and my eyes? About three months of bank owned inventory. Better selection, less competition for the same houses, more happy buyers and the stabilzation we’re seeing in prices still would hold. To get to three months of inventory we’d need about another 8,000 bank owned homes on the market. We won’t see that number without a flood of foreclosed homes hitting the market; even with the flood that was predicted by some two months ago, would we top that level? Hard to say.
As always, details from the various cities and towns in the Phoenix real estate market are below. And also as always, all data is from the Arizona Regional MLS and is deemed reliable but not guaranteed.
[tags]Phoenix real estate[/tags]