The LA Times reports that Southern California residential real estate is selling faster and slipping prices continue to fuel the buying boom. While official September numbers showed the Valley following that trend (see below), a quick check of the Valley's October numbers show that the credit crunch and ongoing bad economic news is slowing the Valley's already struggling housing market.
Like most mainstream media reports, the Times relies on official numbers posted by organizations like the National Association of Realtors and Case-Shiller, and compares this year to last year. FlexMLS sales stats support the LA Times piece and show metro Phoenix prices down 30% in 2008 but the number of homes sold up by 46% through the end of September.
- Median Price - $242,500
- Properties Sold in Month - 3,265
- Median Price - $172,000
- Properties Sold in Month - 6,064
(These numbers are taken from the FlexMLS system used by Valley Realtors and represent all properties sold in which a Realtor used the MLS to affect the sale. Foreclosure auctions and private sales of all kinds are not included.)
Looking back at past months (as above) showed we were booming along, selling lots of properties each month and making headway towards a "normal" market. But looking forward to October's to-date sales shows the nation's bad economic news is depressing sales. While September sales were booming along in the Valley, the number of closed sales so far in October has plummeted.
Looking particularly at the two highlighted columns, you'll see what I see. Sales through the 22nd of September totaled 5,796 properties, or 11.18% of the total inventory.
Sales through October 24th, have dropped roughly by half, to only 5.94% of the total inventory. A closer look at the MLS shows the median price has dropped again, to $167,000 (not shown in this chart).
This is bad news for the Valley's ongoing housing health. For about 18 months now, one of our main problems has been too many houses for sale. Our saving grace has been that while new homes kept hitting the market (due in large part to increased foreclosure rates) we kept selling them.
Go back to the chart and look at the "Months of Inventory" and "Active Listings" columns over the entire year. The number of active listings held pretty steady all year, while our ever-increasing "sold" numbers kept chipping away at the months of inventory. That's the sign of an improving market. Most experts accept 6 months' inventory as a 'balanced, normal' market. We were getting there!
Apparently this month's awful economic news (and possibly the national "holding of breath" waiting for the Presidential election to finally be over) has slowed real estate sales to a crawl.
Since the number of foreclosures isn't expected to slow, the sinking sales volume could spell real trouble for Phoenix's long term real estate market.