by Justin Lombard
It’s clear from market stats that the red-hot Phoenix real estate market has cooled down to “merely mortal” levels. Inventory levels are rising, unit sales are dipping, and days on market is creeping upwards.
Many investors have set their sights on other markets that they believe hold more immediate upside potential and some of the “Canadian tide” has abated with currency rate fluctuations.
Interestingly, we haven’t seen the falling prices that one would expect to see when supply and demand curves shift. Indeed, much of the trailing 6 months includes the fall months, when holidays traditionally act to reduce real estate sales activity.
If we see the perennial spring and summer pickup, then I don’t expect to see much in the way of price corrections until the fall. In my opinion, prices won’t appreciate much either, though, as any positive effects on the market will be tainted by negative publicity from the media and some industry analysts.
With interest rate levels low, a strong rental market (for investors), and an unbeatable climate for snow birds, I don’t expect our market to decline significantly at any time in the foreseeable future.
Here are some charts to illustrate the state of the Greater Phoenix housing market:
The official sales stats for May have been released by the Arizona Regional Multiple Listing Service (ARMLS) and the trends are consistent with what one would expect to see (historically) for Phoenix real estate and Scottsdale real estate in terms of the seasonal sales cycle.
Here are a few key stats for 2008, as reported by ARMLS:
Listing Inventory (Houses + Condos)
Days on Market (DOM)
-January: 110 (single family)/117 (condo)
-February: 109 (single family)/104 (condo)
-March: 102 (SF)/118 (condo)
-April: 104 (SF)/113 (condo)
Median Sales Price (House + Condo)
I believe we’ll continue to see unit sales pick up through the summer into the fall and a corresponding small correction in days on market. Dropping prices from foreclosures, short sales, and increasingly-motivated (and realistic!) sellers will continue to stimulate demand and shorten the average market time. Eventually, this dynamic will give way to a healthy market.