How Does Price Range Affect Inventory in the Phoenix Housing Market?
June 17, 2009 by Kristin LaVanway · 4 Comments
| As of this morning, there is 4.1 months inventory of homes on the market in the Phoenix Metro area. A balanced market, where the Buyer and Seller have equal advantage, occurs at about 6 months inventory, so we are currently operating under a Seller’s advantage. But the price range you are shopping in plays a big role in the actual inventory of homes available to you. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| For those home buyers shopping below $100,000, you have about 1.6 months of inventory to choose from – a strong Seller’s market. But the news is actually worse when you take out the junk house that no one wants to buy. My guess is that you probably have less than one month’s inventory available if you take out those homes.
As the price increases, so does the inventory, but it remains tight until you hit about the $200K mark. The Buyer does not gain tha advantage until you reach about the $350K mark where you are looking at an inventory of about 6 months. Here are the details:
Data courtesy of Cromford Report™. Single family-detached dwelling types across Greater Phoenix are included. Only ARMLS transactions are included – for-sale-by-owner, auctions and other non-MLS transactions are not. Note how quickly inventory levels have shrunk since the first quarter of 2009. In the last 3 months, our inventory levels here in Phoenix have dropped by about 25% – from 50767 in March 2009 to our current level of 38493 listings. And the number of pending sales suggests that this trend will continue over the next 30-60 days. The market is changing in the Phoenix area. With such a competitive market, stay informed about the current market statistics to give yourself every advantage as you shop for your new home. |
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I am a Realtor in Gilbert, AZ, working with clients throughout the Phoenix Metro area. I am lucky to love what I do and appreciate the difference I can make in people's lives.
In a previous life, I was a rocket scientist - really! - but decided to step away from corporate America to be a Mom to my four boys. Found it hard to do bake sales, so I ran a small independent programming business instead.
Flash forward...I am now a single mom and I face many, many challenges everyday. I am living through the hardships that many are facing in this economy. These experiences have motivated me to help other people in my shoes.
I have recently been certified as a distressed property expert (CDPE) to allow me to better serve those who may be struggling with their finances and may be looking at a possible foreclosure. My goal is to help these folks evaluate all their options and choose the best course of action.
Hi Kristin,
I read your blog about Buyers market. Perhaps your numbers need to be augmented with numbers of houses which are FSBO and also those that are REO but not listed yet by the banks. I have notice that a lot of banks, Wells Fargo is one, are not even foreclosing on some houses. I am not sure why, but there is one I know about in Gilbert that it took the bank 2 years to foreclose after payments were stopped. I know of a couple in Ahwatukee that have even gone through the foreclosure sale and are not yet listed. Weird. Is it because they have too much inventory?
Glen
Good questions…I work with banks every day and a lot of what they do defies logic. There are two things I know for sure: Banks are motivated solely by their bottom line so they do what is best for the bank, AND most banks, especially the big ones, are woefully understaffed so their systems are inefficient and ineffective. There are plenty of examples of stories like those you describe that occur simply because no one was watching.
When I go out with a Buyer to look for homes, it is very clear that the market has contracted over the last few months, especially for homes priced below $250K. The reality supports the statistics. Most experts do expect that foreclosure listings will increase over the next few months as the foreclosure moratorium was lifted recently, but honestly, there is so much demand for these REO’s that it will take a huge influx to swing the market around. REOS account for 60% of sales in Phoenix but only 13% of the current inventory…because they are only on the market for a few days before being snapped up. Clearly there is room for a lot more REO listings. For example, there are currently 2805 Notice of Trustee Sales recorded for Gilbert. If everyone of those went on the market tomorrow as an REO, we would still only have a 6.3 months supply of homes on the market in Gilbert – which is a balanced market where neither the Seller or Buyer have the advantage.
Many factors affect the timing of foreclosures. I have worked on short sales where the Trustee Sale was postponed numerous times as we worked through the short sale process. Bankruptcies, personal situations, many things can trigger a postponement of the Trustee Sale. Only a small percentage of homes are sold at the Trustee Sale, the remainder of which go back to the bank. At that point, there are more issues that need to be resolved before that home can be sold. The home must be vacated, title must be cleared. Typically these homes are not sold by the bank directly but by a third party asset manager so that assignment must be made. And all this happens within understaffed departments.
I am sure the market will continue to correct itself as time goes on. The law of supply and demand is pretty powerful. I look forward to the day when banks are not involved in so many of our real estate transactions. I will need a lot less Excederin!
Pretty good post. I just found your site and wanted to say
that I have really enjoyed reading your posts. Anyway
I’ll be subscribing to your feed and I hope you post again soon!
I think i’ve seen this somewhere before…but it’s not bad at all