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A Shortage of Housing Inventory?

June 4, 2012

Yes, the numbers are clear – we have a shortage of listing inventory in both Phoenix and Tucson metros. Hard to imagine after the big hit Arizona housing took over the last 6 years, but it’s true. Buyers have gobbled up homes, fueled by very attractive prices, low interest rates, high affordability and investor driven opportunities. Demand has just outpaced supply.

Probably the best measure to understand the balance of supply and demand is “Months of Inventory”. Basically, this statistic tells us how long it would take to sell the current inventory of homes for sale at the current sales rate, if no more houses came on the market. It is widely held that around 6 months is considered a balanced Months of Inventory number. Anything above that is a buyer’s market, and below that is a seller’s market. So let’s see how we stand with Months of Inventory.

Phoenix

Active Listings

Closed Sales

Months of Inventory

20,177

8,406

2.4

Tucson

Active Listings

Closed Sales

Months of Inventory

3,582

1,293

2.8

Based on these numbers, both Phoenix and Tucson can be considered to be a seller’s market. That being said, there are going to be variations based on specific areas in town and price points - that is why it’s always good to talk to a knowledgeable local sales associate like me.

The Impact? Prices Going Up

What impact does this shortage of inventory have on the market? We should expect prices to go up, with higher demand on a shrinking supply of homes for sale. Let’s take a look at how prices have changed just from this January.

Phoenix – Median Sales Price (Closed Sales)

January 2012

$120,000

May 2012

$145,000

20.8% Increase

 

Tucson – Median Sales Price (Closed Sales)

January 2012

$125,500

May 2012

$140,000

11.6% Increase

 

Conclusion

The Arizona housing market has changed fast. For potential sellers, this may be a good opportunity to list your home while demand is high and buyers are seeking new inventory. Multiple offer scenarios are now more common. It is important to keep yourself up to date on the latest market trends. Subscribe to receive the Housing Report from my website or contact me to get the latest information.

These statistics are based on information obtained from the TARMLS and ARMLS using Brokermetrics software on 6/4/2012. Information is believed to be reliable, but not guaranteed.

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