1. RENTALS DISAPPEARING!! The trend I noticed in the past two posts has continued unabated, and if it continues, will soon have a dramatic effect on the Phoenix housing market.
Yesterday, we dropped under 6000 active rentals on the mls. This down some 20% since this time last year, and for comparison, we had 9500 homes for rent in October. Total leases signed in the past 30 days is 4000, an increase of 10% over the same period last year.
Demand up, supply down, and prices will rise. Already, well prices rentals are going quickly off the market, if active listings continues to drop, we will see serious rental increase.
The irony, is that so many potential buyers in the past year, dismayed by how phoenix prices have bounced off of the crashes, floor, decided to rent. “Why buy, if you can rent for about the same price?” Well, how does that logic work, if you see your rent start to go up at the end of your lease? Phoenix rental rates are actually quite low, and have not seriously increased in nearly 15 years, so they could go up by some very real percentages, and still it wouldn’t really cause a surge in construction. But, it will be push to housing prices, slowly over time, likely somewhat offsetting the slowdown our recent interest rate hikes have caused.
On the sales price front, the “lull” or plateau I predicted in August of last year is still in effect. Price increases have been slim to none since then, and inventory has indeed increased, while buying has slowed. The mirror opposite of what we are seeing on the rental side. However, it has not been too dramatic to cause me to predict any real market price drops. We have 26,000 homes for sale, and sales are around 5000 in the rolling 30 day window. So, 5.x months inventory. Sales inevitably pick up in the late spring and summer, so I don’t see this inventory level hurting the market, unless it increase dramatically. If we cross into the 30K inventory range, and stay there past August, prices could possibly come down, if inventory drops, prices will increase. We are at the balance point more or less today, so it will take more data and time to see which way things go.
Those who know me for years, Know I was one of the first to predict the crash, and I saw the bounce back coming. (I sold 4 of my homes before the crash, and then bought 13 across the bottom) Don’t take my predictions on our rental market lightly! I don’t have a crystal ball, but my data analysis has not steered me wrong yet!