Signs Pointing to an Arizona Housing Recovery
May 3, 2012
If you have been listening to the national media outlets recently, you have been hearing rumblings of the start of a housing recovery. What does this mean for us hear in Arizona?
Buyer Demand is Strong
|Tucson||Jan-Apr 2011||Jan-Apr 2012||Change|
|New Contracts Written||5,320||7,120||+34%|
|Phoenix||Jan-Apr 2011||Jan-Apr 2012||Change|
|New Contracts Written||35,621||30,441||-14%|
So you may be asking, Tucson sales are up but Phoenix is down? I thought the Phoenix market was very strong right now? The answer is addressed below, and it has to do with a shortage of listing inventory.
A Shortage of Listing Inventory
While buyer demand has increased, the amount of available listing inventory has gone down significantly – resulting in a lower Months Supply of Inventory (the amount of time it would take to sell the current inventory). The lower the number, the warmer the market. 6 months is considered a “balanced market”, anything under that gets into a seller’s market. Let’s take a look at where we stand now versus this time last year.
|Tucson||Apr 2011||Apr 2012||Change|
|Months of Inventory||5.5||4.2||-24%|
|Phoenix||Apr 2011||Apr 2012||Change|
|Months of Inventory||3.7||2.5||-32%|
In Phoenix, many parts of the market are experiencing multiple bids, bidding wars and homes selling in days, or even hours.
The Phoenix market has seen continued activity in luxury, with 365 luxury properties going under contract in the first quarter 2012, and Phoenix is down to 13.6 months of luxury inventory - one of the lowest levels in the last 2 years.
Upward Pressure Building on Prices
We have increasing demand from buyers and a shortage of inventory. Basic economics tells us that the factors should start impacting prices. Let’s take a look at the trends. Indeed, we are seeing a recent uptick in pricing in Tucson and a very clear upward trend in Phoenix.
Less Distressed Sales
One of the final indicators to look at is what percentage of homes sales are distressed, meaning they are bank owned properties or short sales.
|Tucson||Sept 2011||Apr 2012|
|% Distressed Sales||59.5%||43.4%|
|Phoenix||Sept 2011||Apr 2012|
|% Distressed Sales||59%||41.9%|
We can clearly see a significant decrease in the ratio of distressed sales in the marketplace as compared to last Fall, at its peak. Another sign of a recovering market.
This data all put together should help you get a picture of where the market is and is heading. The market in Arizona has bottomed already and is now in recovery – which creates an opportunity for both buyers and sellers alike.
These statistics are based on information obtained from the TARMLS and ARMLS using Brokermetrics software on 5/3/2012. Information is believed to be reliable, but not guaranteed.