Sitting in a room full of Realtors the other day, the topic quickly turned to “What’s selling?”. Often a conversation like this is quite subjective, so I thought I’d better do a little digging. Conveniently, ARMLS just published their quarterly publication of STATplus for the 1st Quarter of 2011.
Using data from that report, I compiled the following two charts.
Months Supply of Inventory (MSI) is one way to keep track of the health of the local real estate market. Typically, a Seller’s market exists when there is less than 5 months inventory, and a Buyer’s market comes into play when there is more than 7 months inventory. In the Phoenix area, the market for homes priced under $250,000 is pretty balanced and has improved from 2010. The market for homes priced between $250,000 and $500,000 is fairly healthy too. Once home prices get over $500K, the MSI jumps, and jumps significantly.
One thing you will notice is that the market is not improving consistently across all price ranges. Interestingly, there’s been an increase in the MSI for homes in the $250,000 to $500,000 range over the past year. The same is true for homes priced over $1.5M and up to $3M.
Several thoughts come to mind. FHA financing maxes out at $346K, so homes over that price are either purchased with conventional financing (with 20% or more down) or with cash. That could explain the blip for MSI in the lower price range. The other issue that will play with these numbers are falling home prices, bumping homes from one price range down to the next. That impact is tough and maybe impossible to measure.
The good news to sellers is that inventory continues to shrink by 14-26% in the majority of price ranges. Scarcity brings competition from a growing buyer pool.
Just last week, I had buyers ask me if they could write a contract sight unseen for a property new to the market, just so they could be sure to have a chance at it. And today, I got a contract for a new listing that I know the buyer has not seen yet. Crazy-making for sure, but the way the Phoenix real estate market is in the lower price ranges. And very contrary to what home buyers are reading in the press.
At the same time, not all price ranges are as competitive, so buyers shopping for homes over $750,000 still yield considerable power.
It’s an ever-changing market, with opportunities all around. It just depends on the price range as to who holds the advantage today.
For the full report, click here: ARMLS STATplus 1st Quarter 2011
More Greater Phoenix Market info:
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