IN-DEPTH ANALYSIS
October 2008
September ARMLS Reports
Resale Listings
The listing count reported in the September Arizona Regional Multiple Listing Service (ARMLS)1 Reports, which were released on October 16th, was 54,427—up 858 listings from the August reports. The listing quantity declined in April through July, and has now returned to approximately the same level as April 2007. With the exception of December 2007, the listing count has been fairly flat for the last twelve months. This current level, however, is substantially above the record level of listings prior to January 2005 which was 30,046 listings in February 2003.
Resale Sales
ARMLS-reported sales for August rose about 9% from the August sales figure with an increase of 519. On an annually adjusted basis sales were up 2,758 or over 80% from September 2007. This is the fourth month that there has been an increase in sales over the same month in the prior year since September 2005. September’s sales quantity is typically a little higher than August’s and seems to be following the normal calendar cycle. In this normal calendar cycle, sales tend to be highest in the summer and then gradually taper off over the next few months before resuming the climb during the first quarter of each year. The winter months are consistently the lowest in sales.
A Two Year Perspective
The graph below displays the same data as above, but focuses on only the most recent 24 months.
Adjusted Monthly Sales Trend
Sales, when compared to one year ago, rose for the fourth time since September 2005. This increase of 2,578 is illustrated in the chart below.
The chart is divided into market condition segments by comparing current sales activity to the sales activity during the same month in the previous year. Orange reflects relatively normal conditions; Green shows higher than average sales; and Red indicates slowing market activity.
Analysis of these figures clearly shows the following:
1. Prior to thirty-four months ago, sales increased every month for the past four years when compared to that month in the year prior (from orange to green, then back to orange).
2. The thirty-four most current months (red) clearly demonstrate that the hot market of March 2004 – September 2005 has totally disappeared.
3. The collective increase in sales for the past forty months (orange and red) has been at a substantially slower rate than during the preceding thirteen months (green).
Our Assessment of the Resale Market
Supply and demand are interrelated variables in the Real Estate Market. Currently both of these variables are driving the market. Up until two years ago, demand was the primary driver. Then for the past two years supply was the primary driver. In the last few months demand has also fallen off substantially from what we had considered the norm - a pace similar to 2002 and 2003.
Because of the prolonged over-supply situation, appreciation in resale housing prices has totally disappeared. The market has now entered a phase where we are seeing an overall price level decline. A significant price adjustment will be necessary to realign the supply and demand variable. It is difficult to tell how long that will take.
