Monday, October 08, 2012

Lawler: Discussion of recent jump in House Listings in Phoenix

by Bill McBride on 10/08/2012 04:49:00 PM

From economist Tom Lawler:

The Arizona Regional MLS reported that residential home sales by realtors in the Greater Phoenix, Arizona area totaled 6,478 in September, down 17.9% from last September’s pace. REO properties were just 12.9% (835) of last month’s sales, down from 37.1% (2,931) last September, while last month’s short-sales share was 27.0%, unchanged from a year ago. Active listings in September totaled 22,862, up 9.2% from August but down 15.2% from a year ago. The median home sales price last month was $150,000, up 30.5% from last September. Citing data from the Cromford Report, the ARMLS also reported that foreclosures pending in Maricopa County totaled 14,584 in September, down 38.1% from a year ago.

Phoenix Investor BuyingClick on graph for larger image.

Here is a chart showing active listings in the Greater Phoenix area (from ARMLS) from January 2002 through September 2012 (note: the ARMLS reports available to the public only show active listings “rightly defined” back to April 2005. The data from January 2002 through March 2005 in the chart below were derived from a chart from a realtor with direct access to ARMLS data).

One thing worth watching is the recent uptick in listings over the past few months – listings increased by 2.7% in both July and August, and jumped up by 9.2% last month. Over the past few years investor buying of residential properties on a low to no leverage basis with the intent to rent the properties out has been quite substantial.

Phoenix Inventory In the middle of last decade, in contrast, Phoenix saw a surge in highly-leveraged real estate investment purchases by folks looking to make a “quick” flip – see 2nd graph.

However, over the past year home prices in Phoenix have rebounded sharply. The very recent jump up in listings may reflect some investors’ desire to “cash out” of their real estate investments, especially given the recent (though late in the cycle) increase in the number of “big-money” investors looking for SF rental properties.

CR Note: the increase in inventory hasn't been huge, and it could be sellers "waiting for a better market". More listings seems like a normal response to a sharp increase in prices.

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