Paul Martin, a Realtor with US Preferred Realty in Mesa, emailed me saying he believed the slight fall in inventory was due to high levels of expired and canceled listings and not due to increased sales. That is, that the fall in inventory was due to frustrated sellers who have given up on selling their homes.
My point wasn’t that sales increased but that new listings decreased.
You can see previous discussions here and here.
Which is it? Frustrated sellers or fewer new listings?
Click the link below to see how it shakes out.
For analysis of these graphs - CLICK HERE
What do you think?
13 responses so far ↓
1 Ken // Dec 2, 2006 at 3:33 pm
John:
In your experience how likely is it that a seller who take their home off the market will re-list it again within the next three-six month?
2 John L. Wake // Dec 2, 2006 at 5:07 pm
Ken,
I don’t know what the odds are.
Often a canceled listing agreement (or one that is allowed to expire) is because of a falling out between the seller and the listing agent. The seller will then re-list with a new agent right away.
I don’t know what percentage it is, but I know it’s very common.
In today’s market there is a larger than normal number of investors who have decided to try and rent a property because they couldn’t sell it at their price. So those rentals are out of the market, at least for a while.
A similar issue is the large number of recently bought (within a year or two) vacant homes. Those could easily hit the market if prices or selling times improved.
This winter/spring will be fasinating.
3 Cbass // Dec 2, 2006 at 6:46 pm
John,
It looks to me like the combination of canceled listings and the decline in new lists both have created the decline in inventory. That is my observation anyway.
Also you say that because inventory has dropped a little it appears to be in a decline or leveling off at least. Yet in your graph to the left there were numerous times on the red line when it declined a bit just to climb even higher (From Jan. 00 to Jan. 03). Why is this time different?
I hear a lot of talk about pulling your listing and bringing it back online in spring. So I am eagerly awaiting the spring bounce to see if it is truly that, or indeed as I suspect, it is really a flop. That is when all hell will break loose in my opinion.
Will it ever be possible to rectify the data on the mls listings line (red)? Can we maybe lengthen the sample as well by going back into the 90’s? Maybe even the 80’s?
I love graphs, pie charts, etc.. all good things
4 Ken // Dec 3, 2006 at 12:40 am
Cbass:
You present a good point. If the current decrease in inventory is seasonal and is still in the 50,000 plus range come next summer prices may begin to take a serious hit.
5 John L. Wake // Dec 3, 2006 at 10:21 am
I think the decrease in new listing is more than seasonal because it started in August.
Looking at the graph, the seasonal decrease in new listings is only marked in December.
Nevertheless, you are right about next summer. Right now, and I can change my mind after lunch, I expect the median price for Greater Phoenix to be up slightly until summer and then lower. The question for me is whether the price will be lower next autumn than it was this autumn.
6 John L. Wake // Dec 3, 2006 at 10:24 am
Cbass,
I’m doing some showings this afternoon. Let me get back to you on that.
7 Cbass // Dec 3, 2006 at 4:02 pm
No worries John, whenever if ever you get to it, I was just really curious to see some trend lines historically speaking.
Did you see C.R.s new article? She is a real riot! That got me wondering on a few things like how new spec homes are listed in the MLS. Are they all added, or do the builders just list say one per subdivision? There are a lot of FSBO too and I was curious how acurate our numbers really are. I am just guessing here but I think with the internet there are probably more FSBO out there now than at any time in Phx.’s history. When I glimpse through Craigs List I see a lot of “no agent” business going on. What do you think?
“As many as 40 percent of the contracts on all the new homes in the Valley during 2005 and early this year have fallen through. That translates to 25,000 spec homes, according to a new survey from housing analyst RL Brown.”
http://www.azcentral.com/arizonarepublic/business/articles/1203biz-catherine1203.html
8 Ken // Dec 3, 2006 at 7:33 pm
According to zip reality the Phx metro inventory was growing steadily until a month or so ago at which time it begin leveling off:
05/31: 47,187 06/30: 50,974 07/31: 52,662 08/31: 53,253 09/30: 54,731 10/31: 54,629 11/30: 53,264
I`m sure we`ll see sales activity come spring but we`ll also likely see some inventory increase as well. Nothing like this year but enough to keep the inventory resting around the 50,000 range.
So the big question for me is will prices continue to hold or begin to collapse another 10-15% under the weight of the heavy inventory.
9 John L. Wake // Dec 3, 2006 at 7:45 pm
So the big question for me is will prices continue to hold or begin to collapse another 10-15% under the weight of the heavy inventory.
That is the big question.
However, so far the metro Phoenix home median home price has only declined 3.7% so if your statement was “… collapse another 3-5%…” I would totally agree.
But can you use the word “collapse” and “3.7%” in the same sentence?
10 Ken // Dec 3, 2006 at 8:11 pm
Yes, collapse is too strong a word. Another 3% or 4% might be more accurate.
However if sellers who took their homes off the market in 2005 are still finding buyers hard to come by next year that 3.7% decrease may begin to seriously grow.
11 John L. Wake // Dec 3, 2006 at 8:24 pm
Yes. Or if you got 3-5% in 2007, 3-5% in 2008, 3-5% in 2009…
If we see significantly and consistently lower prices during the high season, Jan-Jun, when prices should be strongest, then Jul-Dec will be brutal.
I don’t expect that but that’s what weak prices during the high would suggest to me.
12 Ken // Dec 3, 2006 at 11:08 pm
O.k. thanks for the information.
Ken
13 Cbass // Dec 4, 2006 at 3:51 pm
This is what I am talking about, here is a snippet from Cali that I think will hold true for the valley…
“The number of homes pulled off the market over the past month has been very encouraging. The active inventory may drop down to 12,000 homes. HOWEVER, last year we started the year with 8,098 homes on the market. That’s almost 4,000 fewer homes than what is expected to begin 2007. With so many sellers pulling their homes off the market now only to place them right back on the market in the Spring, coupled with a number of new sellers who did not market their homes in 2006, the active inventory could climb to nearly 20,000 homes.”
http://blogs.ocregister.com/lansner/archives/2006/12/oc_home_inventory_in_seasonal.html
Leave a Comment