ARIZONA REAL ESTATE CYCLE Phase 4 - Absorption
Stage 1: residential housing leading indicators show signs of improvement
Home sale, sale pending and average agent days on the market (ADOM) are important leading indicators for residential housing market. When you see a trend of improvement of these three indicators, you may say the market has already entered the absorption phase.
Not many people are able to buy, but they generally agree that it's a good time to buy. Quite often you can find properties selling at a deep discount. Finding investment properties with positive cash flows (given 20% down payment) is very possible. Bank owned properties are searched most by buyers and investors.
At the end of this stage, we also expect to see the followings:
- Smaller gap between the number of home sales and new listings
- Increase in home sale and sale pending
- Narrowed gap between asking price and sale price
- Slower downward movement in median price
- Drop in average agent days on the market (ADOM)
- In Arizona, we expect the ADOM to be between 40 and 60 days in a normal market condition.
Arizona bank owned homes
http://activerain.com/groups/arizonareos
Phoenix real estate news
http://activerain.com/blogs/phoenixnews
Stage 2: Market hits the bottom
In my definition, market hits the bottom is when median home price hits the bottom. Before this happens, you will notice less fluctuation in following trends: unemployment rate, population growth rate, new housing permit, median home price, and the number of foreclosures.
AZ unemployment rate:
http://ebr.eller.arizona.edu/indicators/curindic.aspx?series=az_unrsa
AZ housing permit
http://recenter.tamu.edu/Data/bps/sfs04a.htm
AZ quarterly population:
http://recenter.tamu.edu/data/pops/pops04.htm
Fed Funds Rate:
http://www.federalreserve.gov/fomc/fundsrate.htm
Phoenix median home price:
http://housingrdc.cme.com/
Arizona bank owned homes
http://activerain.com/groups/arizonareos
Phoenix real estate news
http://activerain.com/blogs/phoenixnews
There are also several real estate indexes we can watch to keep track with median home price.
S&P Case-Shiller Metro Area Home Price Indices
http://housingrdc.cme.com/
iShares Dow Jones US Real Estate index (IYR)
http://finance.google.com/finance?q=NYSE%3AIYR
The iShares Dow Jones US Real Estate fund (ETF)
http://finance.google.com/finance?q=ETF
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