What is going on in Arizona? The total number of ACTIVE listings in the Valley is only just over 21,000. Last July that number was over 32,000 and around the same time back in 2009 there were about 43,000 listings on MLS.
Where are all the listings? What happened to our Buyer's Market?
*Foreclosures are down slightly from 2009.
*Many homeowners have already short sold their homes and now are renting.
*Homeowners used to move into a new home every 3-7, many within the same general vicinity. It seems homeowners are now choosing to stay put in their underwater homes, instead opting to add a room or remodel rather than take a loss or short sell.
One might conclude that supply and demand dictates that such little supply will surely create a buyer frenzy?
Will prices skyrocket again? .....not likely......
It is much more difficult to obtain conventional financing these days so the actual number of qualified buyers is lower than in recent years. With unemployment still very high there simply aren't as many buyers, period. FHA loan limits are going down (by 22% here in AZ) and interest rates will likely continue to rise knocking even more buyers out. In addition, about 1 in 5 borrowers are still in some stage of default. Foreclosures still represent 31% of existing transactions in the Phoenix Area, and though not as numerous as 2009 this is still dangerously high. Unless lending policies change, these homeowners will not be in the market to buy another home for at least a couple years.
In my opinion, it is the investors that have had the greatest positive impact keeping elevated inventory levels down. If you have tried to buy a home recently you probably have probably been outbid a few times by cash investors snatching up properties in the Phoenix area. Investors having been coming back to Phoenix since 2009 when prices became low enough to generate cash-flow properties with desired 8-15%/year ROI.
We are experiencing a market that is doing it's best to recover. We may see slight ups and downs over the next few years as the broader economy stabilizes. I don't think we will see a sharp rise in home prices due to these low listing numbers...if anything this has helped us on the road back to a normal housing market....(normal?...more like unpredictable as a Monsoon storm)