The days of standing on the sidelines and waiting for home prices to continue to fall in Arizona have come to an end. As of May 23 2011 there were about 24,772 single family and condo homes listed for sale in Phoenix Arizona. Since this time last year, the inventory of homes for sale has decreased by 23.0%.
The Valley’s troubled housing market is showing some signs of recovery with lower-priced homes leading the way, but a notable drop in inventory might be a misleading indicator, according to real estate observers.
Greater Phoenix has an inventory of less than 25,000 homes, down almost 25 percent from a year ago. That’s the encouraging news, yet the media hasn’t quite caught on. The rapid decline in home inventory deserves more attention.
At the current pace of sales, the complete, national home resale inventory will be sold in 5 months. This is three months faster than it was just 90 days ago, and it is falling fast, the 2-year home supply average of 9.0 months. This means there are more buyers in the market, and fewer homes from which they can choose. It has happened so quickly that home prices have not had a chance to correct. But they will.
Arizona home sales prices have been flat for 5 months straight. There has also been an up-tick in listing prices for homes being put on the market. While the media can only look at statistics and trends after the fact, those that work in the real estate industry have already seen the turn, as Troy Reeves predicted in March of this year.
The average days on market for a listed home has began a rapid descent as well. This shows that buyers are getting more aggressive and are starting to feel urgency when searching for a home.
As the supply of cheap homes shrinks and prices stabilize. Homeowners who had put off moving because they didn’t want to sell during the downturn grow confident that they can fetch a decent price. That prompts more buying and selling, then in turn prices rise even higher. Before the latest downturn housing prices had risen steadily for the last 30 years. A primary residence was considered the best investment one would ever make in their lives. If inventory levels and prices continue their steady march in the right direction, we are headed for many more years of housing prosperity.