Observations, and perhaps a surprise in the Phoenix data.

 

http://www.deptofnumbers.com/asking-prices/arizona/phoenix/

Well, Phoenix housing listed prices have been completely stable for two weeks. I count active inventory at 15931 today… so basically stable as well.

I have to admit, I am a bit surprised by this. Sales have come flying back, in my rolling 30 day count, I am now seeing 9000 give or take on the mix of business days/weekends in the count, whereas a january was around 6000. So, the entire mls has less than 2 months inventory, and in many price points, like single family homes within 25 miles of downtown, 3/2/2car garage, 150k to 200K, there is literally like 2.5 weeks inventory.

Meanwhile, foreclosure have plummeted, new filings are down 60% from last year. Even short sales are less numerous this year than last year.

Considering how fast prices had been rising, a couple of weeks of stable prices could just be statistical noise in the continuing uptrend. I wouldn’t expect price increases to stop with supply and demand still this out of whack.

So, I investigated further into what homes are being listed these days.

Analysis of the last 7 days listings:
short sales = 103
REO/HUD = 183
No special listing condition = 1618

So, I decided to look at the new non-distressed listings. I picked 10 random homes, not distressed:
1 flip
3 long flips (over one year between distressed sale and current listing, possibly investor, possibly owner occupied, I can’t necessarily tell which)
6 normal sales.

then, I decided to take a closer look at 150k to 250K, the starter home market in Phoenix.

I pulled 20 random non distressed homes:
1. short sale preforeclosure, owner/agent lying and not disclosing this fact in the appropriate part of the listing (hence it came up in my search)
2 new homes.
5 long flips
12 normal sales.

Obviously, 10 and 20 are too small of data sets to use as a survey, the error bound on statistics would be too high for any reliability, but it is a bit of a time consuming process, and I’m just trying to get a bit of preliminary data.

A couple of conclusions:

1. clearly, Phoenix prices have risen enough, that apparently a lot of people can now sell, who may have wished to sell for a while.

2. Even some people, investors or regular owners, who got smoking deals out of the crash in 2009, 2010, are going to sell now.

So, my conclusions from what I’m seeing, are that prices are likely to keep rising in the near to mid term, as supply and demand are still out of whack. But the market could be starting to enter a new phase. I’m not expecting the rapid price increases of the past year to continue, if i had to make a guess, i’d say about 10% more up generally through this selling season, with a possibility of more normal listings blunting the increases by late summer.

Obviously, with the volatility the Phoenix market has seen over the past 3 years, this an area by area phenomenon, and not all are going to act the same.

despite tremendous price rises in Phoenix, all data points to prices rising more…

Phoenix inventory just dropped under 17,600 this morning. with roughly 8000 sold in the past 30 days. this is a new low for this spring, and continuing a trend of 100 less homes for sale per week.

Considering that in a normal year (been a while since we’ve had normal around here) inventory typically rises from January to April by 10 or 15%, This continued drop in inventory signals that the market is going to stay tight, with prices increasing.

And, more inventory is definitely not coming from foreclosures any time soon: there are precisely 2381 scheduled foreclosures in the next 30 days. Even as recently as a year ago, we routinely had 5000 foreclosures scheduled in the up coming 30 day period. Using historical data, 1/3 of these will actually foreclose, 1/3 cancel and 1/3 delayed into the future. So we will be seeing 50% less foreclosures then last year at this time, a reduction of about 800 distressed properties per month, and given the greatly reduced pipeline of homes in foreclosure, and notices of future foreclosure, this trend is not changing this year.

So, we have tight inventory, and much less distressed inventory coming than last year. Until prices rise enough that regular home owners are enticed to sell, or buyers quit buying, prices are going to continue to rise. The sign of that change will be rising inventory, and slowing sales, such as 4 to 6 months worth of inventory on the market, a figure we are a hell of along ways away from today.

starter home analysis

Ok, so last night I did a little bit of digging into Phoenix area housing information:

First I pulled up all of the single family homes, 3 bedroon 1.75 baths, 2 car garage, built since 1970 inside the 101 and 202 loop roads. Basically, I wanted to look at starter homes, within commute distance of Phoenix, not either obvious junk, or homes 100 miles away.

I limited the price to under $200K.

There were 581 available.

Then, I changed the search to closed in the past 30 days. 909. What? we have 2/3 a month inventory of starter homes? that is ridiculously low!

My business partner has been trying to find such a home for his buyer for several weeks, and keeps telling me that “every non junk home gets multiple offers as soon as it hits the market.” Well, seeing this data, I can see why.

Prices are just going to keep rising in Phoenix, until such a day as the supply and demand change by a ton. A balanced market needs about 4 to 6 months inventory.

The other factor, is that in each of those statistics above, roughly 30% of the listings and sales were short sale and or bank owned. With foreclosures and notice of future foreclosures plummeting by over 60% from last year, and inevitably rising values will end slow the short sales, those sources of new inventory are simply not going to exist much longer…

Just this afternoon, inventory dropped under 17,000 active sales here in Phoenix. While it isn’t dropping as fast as last spring, the fact that it is dropping makes a prediction of rising prices all this spring and summer that much more likely. 

February: data stays positive, prices will keep increasing.

Wow, another month of radical improvement in the Phoenix housing market!

February saw only approximately 1900 NTR (Notice of Trustee sales) filed. This marks the first month since the crash began with less than 2000 notices…

Meanwhile actual foreclosures came in at a low 1100, and cancellations came in at 1400

So, we end the month with 600 less homes in foreclosure than we started.

Compare this to a year ago, with over 2000 foreclosures, and 4000 notices.

 

Meanwhile, inventory continued to drop, from nearly 1800 recently, to 17130 today.

ALL data point to Phoenix home price appreciation continuing on into the summer, and until this data changes…

Observing The Phoenix Market, Spring and Summer 2013

There are two factors to pay attention to as we start 2013, the extreme drop in foreclosures, and which way inventory goes.

1. Foreclosures. This hasn’t really been in the news, at least not nearly enough for the importance it has on the future direction of Phoenix housing prices.

So far, through today, we’ve had approximately 1400 notices of foreclosure in January. We are on pace to have a 3rd month of barely over 2000 notices, when September was the first month in around six years that had less than 3000. This is a tremendous drop, so let’s think about the future impacts of this statistic.

After a home enters the foreclosure pipeline, in Arizona it takes a minimum of 3 months before it can be foreclosed on. In practice, it often takes a good deal longer than that as the banks very often delay the foreclosures repeatedly. Then, one of two final results can happen, the home is foreclosed on, and either goes back to the bank or to an investor at the auction, or the foreclosure is cancelled. It could be cancelled for one of two reasons: the homeowner catches up on the mortgage, or is offered a loan modification, or the home is short sold. Past data shows very close to half of filed foreclosures end up foreclosed half are cancelled. Of the cancelled ones, roughly half are sold as short sales. So, inevitably, 3/4 of the homes are going to wind up selling on the market, either as a short sale, a bank owned, or bought by an investor at the foreclosure market.

So why go into this much detail? Because, when you have 4000 notice of foreclosure filings a month, you can predict 3000 distressed homes coming on the market 3 to 12 months later. Now, as notice of foreclosure filings have dropped to just over 2000, we can expect roughly half as many distressed homes on the market the same time into the future. A drop of 1500 must sell homes a month, month after month, is going to be a very serious change to the supply side of the Phoenix market.

This effect has not really hit the market yet, due to the long time delays from the intial filing. But, unless foreclosure filings jump back up, as in immediately  this year will clearly have alot less of these listings.

2. Inventory. Two months ago, In December  I quantified what had been a very fast 50% rise in inventory in the Phoenix market. The rest of December reversed this trend, inventory dropped by a about 1000, then it started climbing in January. Right now, we stand at just under 18000 homes for sale, and 6500 sold through the trailing 30 day period. (Which includes Christmas and New years, so one would expect this to be slow 30 day period) Last year as spring unwound, inventory plummeted  all the way down to 12,000 and prices climbed steeply. If we see any signs of inventory dropping, price increases will be strong this entire buying season through the end of summer. In fact, unless inventory climbs quite a bit form today’s numbers, prices will climb anyways, but probably not as fast. Historically over the past 4 years , whenever inventory has been under 30,000 prices have been on a rising trend, and that has even counted markets with far more distressed properties than today.

So, at this point, the two future looking statistics we can measure ,one points to a quickly improving market, and one is good but bares watching to see which way it goes.

Inventory reverses trend and drops, foreclosures continue winding down…

Ya mon, I just got back from 8 days in Jamiaca!

time to update the Phoenix market for the new year and the title of our story is:

INVENTORY DROPPING!
At this very second, we have 17,173 homes in active status on the market, down roughly 1000 in just a month, and down 1500 from a couple months ago. This is a startling change, as inventory had been climbing, and I was fully expecting to see it climb up to 22000 or 23000 by spring.

Sales held up strong in December, at 7091. This means the entire market has 2.4 months inventory for sale, when a balanced market has more like 4 to 5 months inventory. Supply remains very tight relative to demand, and that points to continued price increases.

For an independent look at this type of data, I suggest. housingtracker.net.

The second characteristic of our Phoenix market is declining foreclosures. December saw roughly 2100 NTR (notice of trustee sales) filed. This is a new low for the past six years, and portends a very dramatic slow down in bank foreclosures. The month saw 1500 actual foreclosures (trust deed sales) and 1700 foreclosure sales cancelled. So, we ended December with 1100 less homes in foreclosure than we started the month. For an independent look at the foreclosure data, the following chart from foreclosureradar.com may be helpful: