I owe you some music but the last couple of days have been bereft of real estate news, at least here on the blog and there’s something that I’ve been wanting to share since the start of the week.
Two days ago at the Arizona Regional MLS’ Technopalooza event, one of the speakers declared with what he said was 99% percent certainty that the Phoenix real estate market struck bottom on April 6. Okayfine.
While I think we’ve been heading that direction for a while, I’m not so certain we’re there. Talk to me in about a month after the lender moratoriums on foreclosure have ended and the backup of bank owned homes start hitting the market again. The Phoenix market has shown an ability to absorb this inventory with little trouble, but I’d be hard pressed to call the bottom without seeing the impact of these extra homes.
Another side debate has been whether the Phoenix market can be said to have recovered when most of the activity is taking place at the lowest price points. To me, there’s a bit of a trickle up effect … as the bank owned inventory falls, regular sellers will be able to sell and those with equity will be able to become the move up buyers that have all but vanished.
In any event, you’re not going to see an across-the-board recovery because we don’t have uniform inventory across the various price points. In fact, if you look at the middle maroon bars on the below chart, the Phoenix market has the bulk of its inventory either at the very bottom or the very top of the market with little in between.
The blue bars represent the percent of sales in a given price point over the past 30 days. The beige is the percentage of the active inventory within a given price point to sell over the past 30 days.
Increasingly smaller percentages of the active inventory sell as you move up in price, but I can’t really imagine this would come as a surprise to anyone. As prices increase, the size of the eligible pool of buyers decreases.
The one thing completely missing here in Phoenix is the reaction of prices to increased demand and decreased supply. Basic economics say the prices are supposed to rise in this circumstance but that’s yet to happen. And at least to my eye, it’s hard to say that it will happen until we know what happens in a week or two when we can gauge the impact of the end of the moratorium.
It could be as bad as the usual suspects predict, or it could have a minimal impact. After all, foreclosures have been coming to the market this entire time since the moratorium only was on owner-occupied properties … no vacant homes, no investment properties.
Did the Phoenix real estate market hit bottom April 6? We’ll know soon enough.
[tags]Phoenix real estate[/tags]