Here’s some of the latest commentary from The Cromford Report.
Supply
“We start 2012 with just 3.2 months of supply (active listings divided by December’s sales) for all areas and types. This is the lowest reading for any January in the last decade with the exception of January 2005, at the height of the bubble buying frenzy. This includes all the AWC (active with contingent contract) listings as part of active supply. Since many buyers are uninterested in bidding on homes that are already under contract, even if those contracts are contingent, we can argue that the effective supply position is lower still. If we take all the AWC listings out, then the months of supply falls to 2.2. For contrast, look at January 2008 when the reading was 15.2 months.  We are facing extreme shortage of homes available on the market and it’s not likely to change anytime soon.  We saw a 7% decline in supply over the last month, and a 42% drop over the last year.
A large part of the reduction in active inventory we are seeing is due to distressed homes going “Houdini” on us and disappearing at dramatic rates compared with January 2011. Comparing the counts of all active listings for distressed properties which are short sales, pre-foreclosures or are owned by HUD or lenders, and excluding AWC listings, Phoenix is down 78%, Mesa is down 77%, Scottsdale is down 71%, Glendale is down 81%, Gilbert is down 80% and Chandler is down 74%. Â Queen Creek (including San Tan Valley) is down 85% (wow!), Maricopa is down 85% (also wow!), Surprise is down 74%, Tempe is down 76% and Paradise Valley is down 67%. Remember we are only counting active listings without a contract (not AWC).
As of January 12, 2012 there are 97 HUD owned homes active in ARMLS database today for all across Maricopa county and parts of Pinal county. Last year on January 12 there were 1,114. That’s a 91% reduction over 12 months.”
Update January 25 – The number of active listings (excluding AWC) across all ARMLS areas and types is 18,175. That is the lowest total since October 2005.
Foreclosures
“A temporary rise in completed trustee sales saw 2,848 recorded in Maricopa County in December, an 11% increase over November. This rise is of no statistical significance and is due to the one-time bump in Countrywide loans that were noticed en-masse by Recontrust (a Bank of America subsidiary) in August. No doubt this increase will get plenty of comments in the media when it is reported elsewhere in a few weeks. The 15% drop in new notices of trustee sale is of more significance, 3,539 being the lowest number recorded in Maricopa County since November 2007. I wonder if that will get reported anywhere? If it does it will be a sign that sentiment is at last starting to improve to follow the technical market improvements that started 13 months ago in December 2010.
Pending foreclosures (foreclosures in the pipeline) for Maricopa County (all property types) have dropped again and are now below 19,000 for the first time since April 2008.”
My thoughts –  I’m skeptical about any large supply of future foreclosures or shadow inventory, because if it all starts with loan delinquencies (as being reported by banks to credit agencies like TransUnion) Arizona has seen some pretty dramatic changes in their loan delinquencies… which would explain the huge drop in REO’s/foreclosures we are seeing.  We were at 14% mortgage loan delinquency end of 2010, 7% end of 2011, and by end of 2012 expected to be 3.84%, pretty big drops and shaping up to the fastest improvement of any state.
Pricing
“Residential pricing for Maricopa County has increased sharply since hitting bottom in August 2011. The December median sales price across 7,806 sales was $129,214, up 5.9% from December 2010 and up 9.0% from August’s $118,500. This was partly fueled by signs of new life from the new home market. 737 new builds closed escrow in December, the highest monthly total since the tax-credit ended in the second quarter of 2010. If we focus on resales only, excluding the 737 new builds, then the median sales price comes in at $120,000 for December 2011. This is 4.3% higher than the $115,000 we recorded for December 2010 and 7.1% above the low point of $112,000 in August 2011. I suspect this improvement will get some coverage in the local media. By the way, if you re wondering why Maricopa County’s median sales price is higher than the ARMLS number, remember that about 12% to 15% of ARMLS sales are form Pinal County where prices are generally lower than Maricopa County.
The 5.7% rise in average $/SF over the 3.5 months since September 15 is not a pace that can be sustained without more positive public sentiment towards housing. However if that positive sentiment change does occur, it is possible that this could create a feedback loop generating another rapid rise in pricing. There is very little supply to meet any increased demand from ordinary owner occupiers.”
Demand
“We can safely conclude that demand remains strong, because not only do we have a good sales count, but our pending listing number count is the highest it has ever been for the beginning of January. When demand strengthens and supply falls with dramatic imbalances like this, the market gets tougher for buyers and better for sellers. ”
Here’s a good article I recently read by the Chief Investment Strategist at Schwab Bank which is a good read.
“As for housing’s impact on US GDP, 2011 was the first year since 2005 when residential investment was not a negative contributor to GDP. The consensus is for it to be neutral in 2012 and a positive contributor in 2013. But, the contrarian in me thinks we could be pleasantly surprised this year and see a positive contribution. Given where the expectations bar is presently set, it would be very pleasant indeed.”
Nationally things might start looking up very soon for the housing market, and I’d say Arizona is in an even better spot than the national market given current market activity and outlook, with us being nearly back to demand levels coupled with low supply seen during boom in AZ, while nationally we still have a long ways to go for that same level of activity seen.
