Such was the lament in yesterday’s Arizona Republic, an article that gained national play through USA Today (Gannett News Service owns both.)
More than 100,000 houses stood vacant across metro Phoenix barely three years ago — roughly one of every 10. Today, it’s more like one out of every 100.
Where have all the empty houses gone? Abandoned properties pockmarked virtually every neighborhood in the region in 2010, when the housing crisis peaked.
It’s true that abandoned homes are becoming harder to find. And as an agent, I now actually have to double-check a listing before taking a buyer there because, unlike past years, there often is an occupant in the home.
Having said that, though, Catherine Reagor’s story is more than a little dated as it relates to the current market. And it also has some rather questionable figures for what would constitute a so-called normal market.
Just as too many houses for sale drove down home prices between 2009 and 2011, the lack of properties now sparks bidding wars. Tight inventory has been a key reason that the median home-sales price has risen 60 percent since early 2012.
Fewer than 18,000 houses are listed for sale in metro Phoenix. A comfortable number for a market of this size with more than 4.3 million people would be about 34,000, real-estate analysts say. Most properties are selling quickly and only are empty for a brief time before new occupants move in. Fewer than 10 percent of properties for sale are foreclosures.
First, there are fewer than 18,000 houses for sale in Metro Phoenix unless you lump detached homes in with everything else – condos, townhouses, lofts, manufactured homes, etc. The real number, as of the moment, is 12,847.
Second … well, let’s get this in here too …
Affordable existing houses — notably those under $200,000 — are in demand. In September 2009, more than 50,000 houses were listed for sale in the Phoenix area. Now, there are about 18,000, but that figure has been inching upward after dropping below 15,000 in July.
Inventory’s up more than 20 percent in the past two months and we’re on the verge of passing the 13,000 mark in detached homes for the first time since spring 2012. That’s not inching, folks. Inventory’s rising and quickly. And demand hasn’t followed, as evidenced by last August, which was the weakest we’ve seen in five years.
Let’s look at one other number that’s really bugging me …
Fewer than 18,000 houses are listed for sale in metro Phoenix. A comfortable number for a market of this size with more than 4.3 million people would be about 34,000, real-estate analysts say.
Inventory itself doesn’t mean much unless filtered against sales demand. A balanced market, where sellers and buyers are on even footing, comes with about 4 months of inventory on the market. The math’s simple – divide the number of homes by the sales in a given month and there’s your inventory figure (also commonly known as the absorption rate.)
Unless there are 8,000-plus properties selling, 34,000 is far from being a comfortable number for either buyers or sellers.
Sellers can’t get properties to move with extensive competition and buyers tend to become paralyzed by the wide array of choices. (There’s no urgency to buy “this” home when there are five others of the same floor plan with more likely on the way.)
One doesn’t have to delve far into the history books to see what this scenario looks like; in 2007 into January of 2008, monthly sales were abysmal and there was nearly a full year of inventory on the market.
Forget 34,000 … a better figure for a comfortable market, based on current sales volumes, is much closer to 20,000 in detached homes and 25,000 or so total properties available on the market (with a little wiggle room added in, since combining townhouses/condos/manufactured homes with detached homes is like comparing apples and oranges and a few other items in a fruit salad.)
Not that it’s all doom and gloom as inventory rises and appreciation slackens …
In 2011, the inventory of vacant houses began to fall, largely because investors snapped up more foreclosure homes. More than 150,000 houses across the region have been purchased by investors since 2009. Most of those are now rentals. Too many empty rental houses haven’t been a problem in the Valley so far. The number of homes leased by tenants continues to climb rapidly. Last month, a record 4,200 leases on houses were signed, according to the Arizona Regional Multiple Listing Service.
So what’s the lesson of all of this?
First, don’t stake your economic future on what you read in the Sunday newspaper. By the time you see an article about the real estate market, conditions already are far different than what’s being reported. Great article here, just three months too late.
Second, argue as long as you want about us humble real estate professionals having a vested, biased opinion of things, but many of us have a better grasp of what’s happening on the ground than those outside of the business.
Strictly from a business perspective, I don’t care if prices are going up and down as long as there’s activity in the market. One person’s good market can be another person’s bad market; buyers and sellers are approaching things from diametrically opposed positions.
And working for both buyers and sellers keeps a guy like me looking at things from as neutral a position as possible.
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Apropos of not much at all, take a look at some photos of homes for sale here in Glendale.
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