Are we seeing an increase in inventory? - Merrill's Market Madness #68

Hello everyone and welcome to a new edition of Merrill's Market Madness. I normally call this Merrill's Monday Market Madness but yesterday was Labor day so I decided to shoot the show today. Giving you an update on what's going on with the Phoenix housing market I'm trying to answer one of the most common questions we get which is you know are we in a bubble and our value is going to crash down and kind of look at a little bit at the trends and talk to you about where we expect it to go of course no one has a crystal ball but just doing our very best to look at the data and share that data with you. it's a little geeky and nerdy and if you hate numbers just know that the market's still hot now if you like numbers let's get into it.  Right now, in our MLS we have 7096 active listings 12 491 listings that are pending, 8466 listings that have closed in the past 30 days which gives us a month's supply of inventory number of 0.84.

Now I'm going to go ahead and share my screen here with you really quickly and I'm going to share as you know from previous episodes hopefully we track this every single day so every single day I look at how many are active, pending, and how many homes have sold in the past 30 days and we take the number of actives divided by the number of homes that have closed in the past 30 days and it gives us that MSI month supply of inventory number and so 0.84 as you can see we are you know approaching a one-month supply of inventory as you can see we hit kind of a low of 0.5 you know kind of sat in that level now and now we're in the 0.8 and they have even tapped 0.95 or something like that is the highest daily month supply of inventory number that we have had. So that's actually a really good thing you know the market has been so desperately low on inventory and we're finally seeing more sellers enter the market and the demand well I'm sorry not the demand the supply is increasing ever so slightly but I want to remind everybody that a balanced market would have a month supply of inventory of about five months so we are still very very far below even a balanced market and with inventory being this low we are still expecting prices to rise although maybe not as dramatically as we've seen over the past year with average pricing prices having increased by more than 30 percent but demand remains pretty stable.

So if you look at the total number of listings that have closed over a 30-day period it has dipped slightly but a lot of this is seasonal so you know we tend to see our biggest months or the months where we see the most homes close is historically in May and June and then by August and September it starts to slow down a little bit and it's a little bit seasonal and so I do expect that we'll probably see inventory continue to rise slightly and the total number of listings closing to fall slightly until we hit the spring of next year and then we'll probably head straight back into an absolute frenzy again unless we can somehow find an additional 20 000 listings to add to the market between now and then I don't you know not trying to get political but i did you know recently read the article about the supreme court overturning the kind of eviction moratorium I know the white house is moving to try to come up with other solutions but it is possible that we will see an increase in listings if you know there's a lot of landlords who maybe are sick of men they've been dealing with these rental properties and tenants have been paying and the values are way up so they may be deciding you know what i'm going to get these tenants out and I want out of the rental business and they're going to sell and hopefully we will see some increased inventory from that but it's unlikely to be enough to reach a balanced market again we need to add 20 30 000 active listings to reach a more more balanced market and so inventory is still desperately low and and I do expect the values will continue to rise but it'll probably be at a very slow pace through the rest of the year and then spring next year it will probably pick up and go crazy again  let me also just share the mortgage rates you know this is one of the things I really like to look at average you know average interest rates according to freddie mac, remain extremely low  2.87 on a 30-year fixed-rate mortgage so that helps with affordability right that is the one factor that I think could have a dramatically negative impact on the market.

When I say dramatically negative I don't mean a bubble crashing and home values plummeting I mean the market would experience a massive slowdown in terms of the number of homes closing and the number of buyers buying and the pace at which home prices are rising if rates suddenly went up to four percent it would have a big impact on affordability so as long as rates stay stable I think that the market will continue to uh continue to increase I wanted to kind of show you some numbers so I put together this little chart I realized not you know graphically it's very not very exciting but I wanted to look at a very typical typical home and every house is different so it's very hard to determine like what's what's a typical home but you know i just i picked these parameters doesn't really matter what the parameters are as long as you're staying consistent to see what the trend is so what i chose was single-family homes not in a 55-plus community, no pool, three to four bedroom, two to three bathroom, two-car garage, built after 1990, between 1400 and 2400 square feet ,under a 10 000 square foot, lot anywhere in maricopa or pinal county.

So those are the parameters that I used and looked at what the average price that home has done so far this year so in January the average sales price of that home was 325 269 and then as you can see it increased in February four percent then it increased three percent four percent three percent two and a half percent three and a half percent and then in august we did see a very very small increase of only 0.64 and that's why I say you know we went from 325 to 399 in just seven months it's a very fast uh very very fast rate of appreciation and I do think that throughout the rest of the fall and winter we'll see that really level off we'll probably see that you know best case scenario in my opinion by December the average price of a similar home will probably be maybe 4-10. 

So it's definitely going to slow down just because there's fewer buyers buying at this time of year but then next year with inventory being as low as it is I will expect to see a pretty sharp increase in values once again, as long as interest rates stay low because the market is just so desperately low on inventory and there's still a lot of demand i was working with several buyers over the weekend and let me see here i'm gonna stop sharing my screen here so you can see my face a little bit better working with several buyers over the weekend made made several offers and when one of the homes had 16 offers on it one and this was a house in the 700 000 range another house that we made an offer on with a different client in the in the mid 400s range it had eight offers another house and you know I mean most houses if they're priced appropriately are still getting multiple offers and are still really competitive what we're seeing sit is you know i get a lot of buyers talking to me well i'm starting to see a lot of price reductions or homes sitting on the market well those are typically homes that are either way overpriced or they they don't show very well well which is probably overpriced as well but you know, it's not the home that everyone is looking for maybe it's very unique but the really nice homes, the move-in-ready houses,,the ones that have got some decent updates and that are really clean that are priced appropriately we're still seeing a very high level of competition on those homes so i hope you found this information helpful if you have any questions or would like you know would you like me to touch on some stats or some numbers or some information that i didn't share in any of my videos or today's video please let me know i'd be happy to do the research and try to dig up the information that i can find for you thanks so much and have a great day!

What does this mean to you? If you're even a little bit interested in learning more about participating in the Phoenix housing market as a seller, buyer, or investor... you NEED to know this stuff! Or at least work with someone who is obsessed with the market stats. Reach out to me today so we can start working on making your real estate dreams a reality!