August 2010

 

A BUYER’S MARKET

 

The Phoenix residential real estate market is still a “BUYER’S MARKET”. 

 

Our definition of a “buyer’s market” is when an over-supply condition exists, causing supply to have a greater impact on the market than demand.  The characteristics of a buyer’s market are:

            - Inventory level is high

            - Demand is not keeping pace with the inventory level

            - Time-on-market is increasing or high

            - Sales price is decreasing

 

Below is the supply and demand evidence that supports the introductory BUYER’S MARKET sentence.

 

Supply

The reality of today’s market is that supply is still at an above normal level:

Resale listings are at an above the normal peak level.

New Home specs are at a level of that is only one half of last year.

 

 

 

Demand

The reality of today’s market is that demand (sales) has climbed substantially for each of the last four months..

 

 

 

Sales Price

The median resale sales price as reported by ARMLS dropped for twenty four-months straight until it turned up in May.

 

 

 

What does the future hold?

 

We believe that the pattern which is emerging in the new home market is an indication of where the real estate market as a whole is headed. 

 

Existing and Emerging Price Pattern in the New Home Market

Following are the events which have lead up to the current New Homes Motivated Seller market (BUYER’S MARKET). 

1.     Spec inventory level began a significant acceleration in October 2005 (400+ per month).

2.     Spec inventory level reached the bottom end of the normal range in November 2005 (1752).

3.     Spec inventory level reached the middle of the normal range in December 2005 (2218).

4.     Spec inventory level set a new record in January 2006 (2451).

5.     Spec level climbed to a record level and remained near level that until the end of 2007.

6.     Spec level has been falling continually since the beginning of 2008 and may shortly lead to a spec shortage.

 

 

 

What Can You Do for Your Client in the Current Market Situation?

We have got a suggestion on this:

- Use the powerful information in this article, our newsletter and In-Depth Analysis Newsletter to help them understand the realities of the current market and the direction in which it is likely headed.