It’s spring in Phoenix- that time of year when we celebrate an "improvement" in the housing market, whether the market is showing real improvement or not. According to Catherine Reagor in the Arizona Republic yesterday: [Hat tip CC!]
Existing-home sales climbed unexpectedly in February, as home buyers took advantage of low interest rates, falling home prices and foreclosure bargains.
The uptick in resales ended multiple-month losing streaks both nationally and in metro Phoenix and is prompting speculation that the housing market is close to hitting bottom.
If you want to see how close a market is to the "bottom" check out supply vs. demand. Several months [not merely a single data point] of lowering supply and rising demand would be the best possible indicator of a market that is improving. We need to be careful when evaluating a fall in inventory in the winter months, as homes are often taken off the market during the holidays, only to reappear in the spring. Cancelled and expired listings are likely to reappear, and therefore do not represent a diminished supply. Here’s what supply vs. demand looks like in Phoenix these days. [This is for single family and condo sales per ARMLS]
There is currently over 16 months of inventory on the market at the current rate of sales. With over 16 homes for sale per buyer, it is going to only be the aggressive seller that makes the sale–putting downward pressure on prices. It is highly unlikely, then, that prices are anywhere near the "bottom"
Reagor continues:
National figures for February show U.S. resales climbed 2.9 percent from January, according to the National Association of Realtors. Valley existing-home sales climbed 10 percent in February, according to figures released earlier this month from realty studies in the Morrison School at Arizona State University.
With the spring buying season under way, March resales in the Valley are on track to top February’s pace, according to an early count from Phoenix real-estate data firm Information Market.
"We are still bumping along the bottom, but the Valley’s housing market is starting to gain some traction," said Jim Sexton, president of Phoenix-based real-estate firm John Hall & Associates. "Sellers are getting more motivated. Prices are coming down, and there’s a lot of activity from first-time home buyers again."
He said foreclosure bargains are also beginning to attract real buyers instead of just speculators.
To get a real picture of what is going on with home sales in Phoenix, you need to take a look at the year-over-year sales:
It is easier to see on a YOY chart that an increase in sales from January to February is just part of the seasonal variation, and not necessarily indicative of an improving market. Obviously, February sales are at their lowest point in years.
To be fair, M concurs that we are seeing a lot of activity in March, and it is possible that March could be an improvement over last year. However, one data point does not a trend make. At the very least, It would take several months of a narrowing of the YOY sales numbers to conclude that sales are indeed rising. Given the inventory levels in Phoenix, though, it is unlikely that even a significant improvement in sales will result in an improvement in prices. Market conditions in Phoenix are in the cellar, and it will be a very slow climb out.
I can understand taking a bribe… it puts money in your pocket, and gas in your tank. And as long as it’s not too blatant, nobody cares much.
But holy smokes, Batman! Reagor once again risks public embarrassment and obloquy, at a minimum.
I mean really… I guess she feels that she has no reputation left to shred.
She has to be able to read a graph… right? Right?
Meanwhile up in Portland, the top headline news is the Case-Schiller numbers…”Portland Home Values Drop for the First Time”. They of course mean ‘the first time since 1987, when Portland was included in the CS numbers. It of course is NOT the first time.
I thought this far into the housing disaster, people would have stopped drinking the kool-aid.
There’s nothing more to say against Reagor’s reporting other than anybody that believes they are entering the housing market at a moment of opportunity deserves what they get. If you’re reading this Cathy, how about some reporting about how the builders here set up appraisers for loan qualifications. Oops, forgot, nobody at the Repugnant wants another Don Bolles experience.
We’ve hit bottom!
We’ve hit bottom!
LOL.
These (ahem) “experts” - experts whose livelihoods depend on an upturn! - probably don’t realize how foolish they look calling these false bottoms every few months.
I agree that prices still have a lot more to drop before the bottom even becomes near. Some bottom feeders are picking up some super bargains and handyman specials at the bottom of the price lists, but the average buyers are not yet coming into the mix.
I will be adventurous and call bottom….of integrity that is. I fear I may be early on my call.
Hi Twist,
Well, I’m in DC now… renting a $700k+ house for $2,500/mo and don’t own a stick of real estate for the first time since 1994. Since then I’ve owned/sold 20+ houses and read all sorts of books, courses, news articles, etc.
At this point, I hardly ever read the news articles because they are so predictable. They never consider the big picture and rarely scratch the surface of the truth. To keep expecting any more than that from these sources is just silly, it ain’t gonna happen.
Here in DC proper prices are slowly falling as inventory builds up, but the average joe is in deep denial. You see, it’s different here in DC. It doesn’t matter that the surrounding counties have huge foreclosure and inventory numbers because the law of supply v. demand has been repealed. Prices can not fall because there are too many high paid gov’t employees and contractors… at least that’s what they say when they don’t remember the late ’80s and early ’90s.
Many people speculate on what would have to happen for prices to really drop here… terrorism, riots, etc. They are way off. The biggest threat to the DC housing market, and the DC economy in general, is a balanced federal budget. In the absence of that, we’ll just have to let time chip away at the median price month-by-month until the rent v. buy decision takes more than 1/2 second to make.
Hope TX is treating you well!
Rebel,
My only comment to you is that my BiL lives 10-12 minutes south of National airport and has taken a hit of nearly 5-10% as per zillow.com. So the arrogance does not come across as genuine. All areas will experience decline if they had a rapid runup. So even if you you live in the utopia of Fairfax County you will see depreciation.
Nice post, Rebel!
My wife and I have ben tracking listings in Capitol Hill and Dupont since spring 2006. While not a scientific method, we’ve sen list prices come down 10-20% so far. We expect them to come down by a third overall, some time between late summer and next spring.
We rent in Silver Spring for $1150/month and are happy to be patient, getting stronger as the market gets weaker. We’ve been through 5 agents and have learned to tune them out, along with the wishful thinkers who say the DC market is immune to normal market forces.
Rebel-
I know what you mean on expectations from the MSM- It’s actually been a few months since I’ve posted the Phoenix listings vs sales graph because I end up thinking, “Twist old girl, you’ve tilted at this windmill enough.” Then I’ll read the comments in the Republic’s blog, or receive emails from readers and realize that there are people THAT ACTUALLY BELIEVE THE REPUBLIC’S STUFF.
So I strap on the old rusty armor and take another stab at them. : )
Twist or is it Quix(ote).
My father keeps asking me when I am getting back into housing and he must think I am a nut because I tell him the price reductions are only going to get worse. (Or better if you are one of us.)
Reporting for the National Association of Realtors, I’m Catherine Reager.
Reager never met a realtor she didn’t like. I always try to post the facts in the comments section below one of her articles. Most of the time it’s a cut and paste job from somewhere else. One would think she would do a little research first but sadly that isn’t the case.
I always post the truth under Ms. Reagor’s columns, and suffer attacks for it as well.
Home sales for march are running once again at about 70% of last years march numbers. Inventory is 56700 per mls here, and foreclosures will be about 2000 again in march, keeping the remarkable pace from January and February alive…
But here is the scary part: As of december last year, NTR (notice of trustee sales) had been at max 3500. January and February (March should t00) both saw 5000+. As foreclosure in AZ takes 90 days minimum from NTR date, and have been about 55 to 75% of the 3months prior NTR value, we could now see foreclosures suddenly pick up to 2500 - 3000.
This market is toast…