Friday, October 5, 2007

Maricopa County Market Analysis

One of the sets of data that I pull every week is the 1 month rolling sold data for Maricopa County single-family dwellings. From these numbers, as well as some other sets of data that I pull on a weekly basis, I am able to make some calculations and compute the "absorption rate" or month's worth of inventory. I wish our MLS system allowed us to go back to specific point in the past to pull "Active" listing numbers but they don't, so the analysis of this data will begin on 3/15 of this year. But it will show you a pretty good visual picture of what we're seeing happen in our real estate market.

Since March of 2007 the 1 month rolling sold numbers have been decreasing fairly consistently. There have been a few weeks mixed in that were an increase over the week prior, but as you can see we've been pretty well entrenched in a downward trend. Correspondingly, the absorption rate, or month's worth of inventory, has been going in the absolute opposite direction. The two plot lines appear to almost be a mirror image of each other. And for the most part it is, but there are some variables involved such as the number of new listings that come onto the market within the week, or on the flip side, the number of homeowners that decide to take their home off the market by either cancelling their listing or letting their listing expire that effect the numbers.

So as you can see, the rolling 1 month numbers range from a high of about 4,400 in April, to a low of about 2,800 in September. As for the absorption rate we see a range of about 9 months in April to just over 14 months in September. This last week has seen a 7.29% increase in the 1 month rolling sold numbers to 3,019 and subsequently a 9.3% decrease in the absorption rate to 13.28 months. It's a small step in the right direction, but not nearly enough for me to say that we've turned the corner in the market. I am waiting to see several weeks of consistent increases in the sold numbers and therefore the related decrease in the absorption rate before I make the claim that the market appears to be headed in the right direction. I've got my fingers crossed, but I'll believe it only when I see it.

-Steve Nicks

[tags] Phoenix real estate, Desert Ridge real estate, market analysis, absorption rate [/tags]