From the title, you might think I’m comparing two different geographic areas. In fact, I’m discussing the schizophrenic Phoenix housing market. M and I have been looking at MLS data for Phoenix and one thing is clear. Home sales have gotten better, and home sales have gotten worse. If that doesn’t make sense to you- check out this chart:
Look at the under $200K range. That’s where 77% of home sales were in March. There’s only a 2-5 month supply of homes in this price range. Note though, how the more expensive the home, the greater the relative supply. If you look at homes over $400K, there’s over a year’s worth of homes. Trying to sell a home in the millions? There’s at least a four year supply on the market. There is a much greater disparity now between different price ranges than we have seen traditionally.
Supply and demand are out of whack. There’s an excess of higher end housing on the market, and not enough to meet demand in the lower end.
This has to mean more pain for upper-end housing. More price drops, more foreclosures, more losses for banks.
Sales may be up in Phoenix, but prices can’t stabilize as long as there is an overhang of upper end supply putting downward pressure on prices.