Get ready for a wild ride as the market for homes for sale in Maricopa Arizona is changing rapidly. The inventory of subdivision homes jumped 12% in one week and is now approaching the 300 home level. I predicted an increase a few months back and admit that I took a conservative approach (as always) when I felt that the inventory would rise to 250 homes by the end of August. All bets are off now and I will dive into my indicators and explain as best I can just what is happening. Unless the trend changes (and I see no reason for it to do so), the market for homes for sale in Maricopa Arizona is quickly turning into a Buyers Market. Of course, considering the "run up" on values the past 6 months, even if values drop 10-20% over the next few months it will still be a good opportunity for Sellers also. I will definitely be watching things even more closely than before and running an number of different data spreadsheets. I will report on my findings so be sure to check back. Here are the details:
ACTIVE: 293, up from 261 Although the inventory has been steadily increasing since the end of April '12 when it bottomed out at around 130 homes, it has been doing so at much smaller increments (5-15) per week. Obviously, this week could be an anomaly but there are a few factors that tell me this may not be the case. First of all (foreclosures and short sales have remained relatively stable (read about those indicators below). Second, there continues to be a steady, if not increased, flow of homes through the Trustee Sales and investors continue to purchase them for "flip" homes. Last, but not least, many homeowners that may have been "on the fence" are opting to take advantage of the higher values of the past few months and are putting their homes on the market. I see nothing in the indicators, or historical data, that indicates that inventory will level off at least until the wave of seasonal buyers return. The full effect of that won't be felt until after the first of the year. Meanwhile, price decreases are becoming more common as owners scramble after the reduced buyer pool. The end result is that values have started a decline. Of particular concern (as viewed on the full spreadsheet at the bottom of the page) is that we did not experience an increase in inventory at the same time last year. How quickly values decline and where they level off remains to be seen and I will be posting a sepearte blog on how both Buyers and Sellers may want to take advantage of this opportunity. Be sure and check back.
ACTIVE SHORT SALES: 27, up from 21. Although this is large increase, the number may be skewed a bit as it has fluctuated in this range for the past 60 days. My main concern here is that if, in fact, this number remains realtively stable, it will support my conclusion that most of the inventory increase is coming from Trustee Sales and traditional sales. That being said, I expect an increase in this indicator as inventory rises as many buyers will no longer seek this alternative and instead offer on homes that can be closed quickly.
ACTIVE LENDER OWNED: 27, up from 23 This indicator has been slowly increasing over the past month or so. The lenders are still sitting on quite a bit of inventory (shadow inventory) and when they decide to release it could have a major impact on the housing market. Also of note is that some of the lenders have begun to place extremely high prices on their Trustee Auction homes to the point that investors are backing off and letting them go back to the bank. This is due to the higher sales prices of the past few months resulting in higher valuations by agents doing the BPO (Broker Price Opinion) for the lenders. This will most likley not change anytime soon and, in fact, a higher percentage of the Auction homes may end up back in the lenders' hands.
HUD Homes: 8, stable from 9 These government insured foreclosures fluctuate wildly but there oberall impact on the market is minimal.
AWC (short sales with offers): 159, down from 170 It appears that there has been a definite decline in the number of buyers making offers on short sales. Obviously they are pursuing other alternatives that do not require a long wait for approval. Even so, this is the lowest number in almost 2 years and since short sales will continue to happen, this could represent a buying opportunity for investors. On the flip side, a slow down in short sale buying acticity will only add to the increase in inventory and cause concern for Sleers.
PENDING: 249, stable from 247 When I first calculated the increase in inventory, I fully expected this number to be in decline. However, this indiactor shows that buyers are still out there and that the increase in inventory is not due to a decrease in buyers. However, they now have more inventory to choose from and, with owners beginning to reduce prices, will most likely be more "bargain minded" than in the past. The impact varies widely depending on such factors as subdivision, home type, price point, etc. and a detailed analysis of these different sectors is necessary to determine a true valuation for a home. For instance, the inventory of homes priced under $110,000 remains very small and almost non existant under $100,000. As a result, there is little valuation pressure on this market within a market.
CLOSED: 36, stable from 39 Closings remain on track although I expect a decline in the coming weeks as they are a reflection on Pending Sales, which decreased dramatically three weeks ago.
RENTALS: 175, up from 165 Rental inventory continues to grow in spite of a relatively steady flow of tenants, especially for this time of year. There is still less than two months inventory which is exceptional for almost any market. Investors just need to be a little more particular about the homes they are buying as income properties.
View the whole spreadsheet here Monthly home data