For the 24 hours ending January 30th, 645 price cuts were taken among the active listings. This is by far the highest daily total since we started tracking price changes on January 1, 2013. It also looks likely that we will approach 3,000 price cuts for the week (Sunday through Saturday). This will rival our previous highest total, measured in the last week of October. Clearly sellers are under increasing pressure caused by a growing supply and much weaker demand than normal for the time of year. Houses are getting less showings, lower offers and the majority of sellers still believe they’re in the drivers seat as we clearly approach a normal market with a bias toward sellers.
Consistent with the theory that Phoenix is ahead of the rest of the country when it comes to real estate trends, the National Association of REALTORS® reported last week a significant decline in pending listings across the country. This was partly attributed to poor weather. However the weather in Phoenix has been typically gorgeous over the last few months so we cannot use that excuse locally. The Pending Home Sales Index is 16% lower for the west region compared with December 2012. For the west, the excuse was limited inventory. Mike Orr states, “that I regard that as a bogus reason. Inventory is less constrained in the west than it was over the last 2 years. The only thing that is constrained is bargain-priced inventory. There is plenty of inventory at market price. What we don’t have is much demand and although it is getting stronger as the weeks go by, it is getting stronger at a slower pace than normal for the time of year. I detect a tendency for commentators to look at the new numbers through rose-colored glasses and a lot of wishful thinking.”
All the data from ARMLS points to a market that is slipping further into buyer’s market territory. For example, active listings in Gilbert are up 72% over this time last year – the highest annual jump we have seen for any major city since 2006.
Comparing the days of inventory now with 12 months ago shows us which major cities have seen the greatest growth in single family supply versus demand:
- Peoria 109 versus 61 (up 79%)
- Glendale 91 versus 51 (up 78%)
- Gilbert 101 versus 59 (up 71%)
- Avondale 93 versus 59 (up 58%)
- Tempe 90 versus 57 (up 58%)
- Phoenix 102 versus 66 (up 55%)
- Chandler 85 versus 57 (up 49%)
- Mesa 100 versus 69 (up 45%)
- Scottsdale 180 versus 130 (up 38%)
- Goodyear 122 versus 96 (up 27%)
- Queen Creek 113 versus 94 (up 20%)
- Surprise 120 versus 101 (up 19%)
We can see that this is not related to new home supply. Avondale and Tempe have seen hardly any newly built homes come on the market over the last year and yet both have seen fairly large percentage increases in supply.
For those interested only in Scottsdale, active listings Feb 1, 2014 are 2436 vs Jan 1, 2014 at 2063. Months supply has increased to 9.8 vs 6.8 and DOM for solds 109 vs 96. The pending list $ per sq ft is $261 the highest in two years. Have prices particularly in the past 6 months moved up too quickly…absolutely!.
Need information on any of your investments? Then give Lorrie or me a call.
Joe & Lorrie