Tiffany Cloud's Arizona Blog

musings from 35 yr AZ resident and Realtor®

Tipping Point – Arizona Housing Market

The million dollar question for the last several years in the Phoenix Metropolitan area is “when will the housing market hit bottom?”  This leads us to ask, “how does one define the ‘bottom of the market’? ” I am no statistician by any means, but you can only define “bottom” by looking backwards.  One can’t state that we are at the bottom now without knowing what will happen next month and the month after.  Usually when we talk about trends and defining trends in real estate, we want to see a four month consistency, or ‘last quarter’ type of stability.  If March or April of 2009  is the bottom of the market price-wise, we won’t know until mid to late summer.  We can only look back to determine with any certainty what the data tells us in relation to the broader picture.

Having said that we are definitely at a tipping point in the greater-Phoenix housing market.  Let’s look at both ends of the supply and demand  scale that impact our sales price.

Supply is the inventory of homes we have available for purchase.  At our peak in October 2007 we had 58,334 homes available.  To contrast this figure with the other market extreme of 2005/6 our inventory of homes was at a whopping 8,342 in April of 2005.   (Normal inventory is about 32,000 active listings) Now let’s look at the decrease in inventory over the last several months.

Phoenix Housing Market Decline First Quarter 2009

Phoenix Housing Market Decline First Quarter 2009

Now lets take a look at the supply side of the Phoenix housing market.  Pending sales is our most current indicator of the demand for homes.  While closed sales is arguably a more accurate indicator, because not every pending sale ends in a closed sale.  Closed sales again are looking backwards.  Pending sales are a more immediate picture of current demand.  So what do the pending sales in the Greater Phoenix housing market tell us?

Highest amount of Pending Home Sales than any other time in history in Phoenix Metro area

Highest amount of Pending Home Sales than any other time in history in Phoenix Metro area

As the above chart indicates, are pending sales are through the roof.  As this chart is 2 weeks old now, our pending sales are even higher now at over 14,000 units.  We are currently several thousands units above what are previous high in the 2005 market.  I don’t know that we could have any clearer indicator of demand except what agents and buyers are experiencing out in the trenches right now.

Here is what I have heard from other agents in the last week. “I Can’t believe their were 18 offers on that house”,  “2 of the 5 properties I was going to show my buyer went under contract last night”  “The listing agent told me not to bother to write on homes if I was going to ‘low-ball’ – thing is, we only came in $5,000 under asking price – the listing agent told us we were the lowest price offer he had of 6.”

Thanks for reading.

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May 1, 2009 Posted by | Uncategorized | Leave a comment