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November 20 - There have been 2,689 closed sales reported on ARMLS within Greater Phoenix during November so far. Last year as of November 19 there were 3,642. That's a fall of 26% and gives us some idea of how far demand has dropped in the last few months. Given that pending listings are a predictor of sales counts, and we see 6,330 now versus 9,914 on November 20, 2012, we don't see the sales numbers improving significantly any time soon. Some are blaming the government shutdown for the decline in demand, and that almost certainly depressed demand during October, but that is just one factor among several. Many of these factors many of longer duration than the shutdown.
Most worrying for the long term is the lack of millennial population movement in general, and to Phoenix in particular, that has been reported by the Census Bureau and the Brookings Institution. While Phoenix is doing well for in-migration of the older generations, and is in the number one spot for 55-plus movers, Phoenix doesn't even make the top 20 list for millennial destinations. This has negative implications for household formation and demand for entry-level homes.
Unlike older generations, millennials have not experienced the appreciation in home values that has created wealth in the past for vast numbers of baby boomers. Instead they have seen a lot of disruption, despair and foreclosures. It may take some time before they place the same value in home ownership that their parents did.
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