My pardons for how quiet it’s been but I’ve spent pretty much the past week (kidney) stoned and not much in the mood to write.
Since I’ve been gone, inventory has continued to soar. As of the moment, we’re at 13,844 detached homes for sale in Maricopa County – that’s an increase of 7 percent in just the past 11 days since my last stats post. And I’m not expecting that number to decrease for some time to come.
“I think we’ve got a little bit of a buyers’ strike going on,” (Michael) Orr, (director of real estate, at the W.P. Carey School of Business at Arizona State University) said on his weekly appearance on That Real Estate Show, Saturdays at 3 p.m., on News/Talk 92.3 KTAR.
“[Buyers are] fed up with not being taken seriously or given enough respect over the last few years. To them, prices seemed to have gone up very fast and interest rates, too,” he said. “They’re probably pretty fed up and want to sit on the fence for a bit.”
Two thoughts. First, buyers are nowhere near coherent enough as a group to collectively “strike” or for anything of that kind to be taking place. It’s a cute phrase and all, but that’s not what’s happening on the ground. Some buyers have dropped out because of shopping fatigure; others are priced out of the market or are spooked by rising interest rates. And, on top of that, sellers have been coming off the fence at just the wrong moment in time trying to sell.
Second, it’s interesting how Orr’s opinion of buyers’ feelings has changed in a couple of short months. From the Phoenix Business Journal on July 8:
“There has been much talk of rising interest rates and the negative effect this might have on demand,” Orr said. “… However, it’s almost certainly increasing buyers’ determination to purchase homes now, rather than later, when rates go even higher.”
From the same article …
“Without cheap foreclosures coming to the market – and with ordinary homeowners reluctant to sell because they’re either locked in by negative equity or waiting for prices to keep rising – the Phoenix-area housing market continues to struggle with a chronic shortage of homes available for sale that may last for years.”
Not that just shy of 14,000 detached homes in an area the size of New Jersey is any great shakes, but it does indicate that “chronic shortage” is disappearing in a matter of a couple of months, not weeks.
This isn’t to say “I told you so.” It’s just to say maybe the Wall Street Journal should have checked out a humble beagle owner when selecting its “guru” since, you know, I’m not the one rewriting my explanation to fit the state of the market.
Okay, so I am telling you that I told you so.
Anyway, as I’ve always said, inventory only tells half the tale; sales are the filter through which inventory can be deemed high or low or whatever term you like.
In September, there were 4,677 closed sales of detached homes in Maricopa County. That’s only about 200 homes fewer than sold in September of last year (albeit with significantly higher inventory) and it means we’re sitting with around three months of inventory available right now.
Four to five months of inventory represents a balanced market, where in theory buyers and sellers are on equal footing.
Bank owned homes and short sales remain a virtual non-factor. Only 246 of the sales were bank-owned, and 428 were short sales. The rest were plain old traditional sales, though that does include homes being sold by investors as well.
Median sales price, as per the Arizona Regional MLS (which will differ from other official numbers as everyone looks at something different) was about $211,000.
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So what does the fall hold? Probably not much different than we see now.
Faith in the economy likely won’t be too strong as the geniuses in Washington play chicken during this unnecessary shutdown (but thank goodness it’s not a game, as the Speaker said … hard to tell they actually knew that.) And interest rates likely will rise as the Fed tries to see how much line they can pull back in before the economic fish panics and pulls the hook.
Sellers are going to keep putting their homes on the market because, frankly, the majority of agents probably don’t know any more than what they see on the news about the state of the market and they’re still promising one-week sales in a slowing market. Okayfinethen.
Not that I would recommend not putting your home on the market if you’re ready to sell – 14,000 isn’t a terrible number as far as competing inventory, it’s just not as good as the 8,000 we had a few months ago. But just know it’s going to take some real marketing effort and some marketing time to get the house to sell.
And, as Mr. Cronkite would say, that’s the way it is on this Sunday, October 6.
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Been frustrated by an inability to purchase with a VA loan? Stop fretting and start dialing … call me, we’ll get you qualified and get you into great home like one of the ones below. Today, let’s take a look at some homes in Westwing in Peoria …
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