On September 13, David Seiders, Chief Economist for the National Association of Homebuilders testified before the U.S. Senate Committee for Banking, Housing, and Urban Affairs. He stated that:
It’s likely that the bulk of the downswing in home sales and housing production will occur this year, with market activity stabilizing around mid-2007 and moving back up toward trend by late 2008.
Mr. Seider was speaking of national home sales. It would be assumed that recovery in "hot" markets such as Phoenix would not happen as quickly, making the future of the Phoenix market an interesting question. While crystal balls can get very fuzzy as they look further into the future, it is possible to look at historical trends and extrapolate to estimate future patterns. Changes in the economy, homebuilding construction, etc. may cause actual future conditions to vary widely from the estimate. Nevertheless, these estimates can be useful, so we will attempt to see if in fact we can expect the Phoenix market to "stabilize" in 2007.
A chart was made of sales and listings from the Arizona Multiple Listing Service for single family homes. Data is available on their site back to 2002. All of these years could be considered above historical average. The particularly large deviation from the norm in the 2004-2005 period makes it difficult to determine month-to-month changes. For that reason, rather than merely looking at month- to-month percentage change, an average of sales and an average of listings were determined for every year. Month-to-month changes were determined by taking the change in sales or listings from the month before, as a percentage of the average monthly sales or listings for that year.
Once the tables were generated, a comparison was done of ratios of listings to sales over the course of a year for each year considered. If these estimates are correct, ratios would be at historically high levels, which would indicate continued downward pressure on prices.