Monthly Market Update
(Published on - 3/2/2015 9:29:33 PM)
Written by Mackey Martin
This is the time of the year when I watch the real estate market to see how it will reveal itself. From the first of February to mid-March I wait in full anticipation for the market to make it's big announcement. You might say this is like Ground Hog day and we are hoping he won't see his shadow so that this market can take off and give us some insights to 2015. This watching of the market is similar to how my husband use to track politics. . .he also could give you an opinion who to watch for the teams to watch for the World Series, Super Bowl. Sports has always played a role in our family system but whoever you are you watch those things that have meaning to you. The typical person today watches their liquid assets and they now track the value of their largest fixed asset their home. You might comment right now that you don't own a house but the reality is that each of us either owns a home or has a family member or friend that is vested in real estate and we all wait with great anticipation for a strong, healthy year to appear. In my career I have never seen that if February and March are flat that the year is historic in recordings or growth; however I have seen an active February and March and watch equity and recordings hit highs from a comparison stand point.
Watch below as you will see that the market is raising it's head the first part of February and showing us that this year may yet become a definitive marker year for the Phoenix market.
Also note the housing formations and the complete turnaround in this data. This has been a huge concern over the past couple of years, but with the new Census data, presto, shazam we topped two million in December, 2014 which is the highest since 2005.
What does this mean to you and me? One would anticipate that housing prices will continue up. Our numbers held well in 2014 and now would be the time to purchase if you are sitting on the fence. The market is still very much behind the 2005-2006 market(s) and we can see that there is another 30-40% growth (dependent on area of the Phoenix metroplex) still to come.
February 1 - The initial sales total for January was unimpressive - 4,790 for all areas & types across ARMLS, which compares unfavorably (1.7% down) with January 2014 when we saw 4,862. However I see a few slightly more encouraging signs in the leading indicators:
pending listing counts 5,631 versus 5,723
under contract counts 8,776 versus 8,595
contract ratio 36.64 versus 33.65
January 31 - The local housing market might be pretty quiet right now, but we are seeing dramatic action in the numbers just released by the Census Bureau. Household formation shot through the roof during the fourth quarter. THIS IS BIG NEWS, despite there being little reporting of it in the media at large.
The annual household formation numbers for the fourth quarter were as follows:
October 2014 = 1,435,000
November 2014 = 1,618,000
December 2014 = 2,001,000
These are colossal numbers, especially compared with 12 months ago:
October 2013 = -110,000
November 2013 = 103,000
December 2013 = -205,000
The December number of just over 2 million is the highest we have seen since June 2005, almost 10 years ago and at the height of the housing bubble.
At the moment this household formation rate is translating into demand for rentals, but in every up cycle this is the first stage and it is usually followed by an upturn in demand for homes to buy. Household formation is usually a leading indicator of both upturns and downturns in the housing market, especially when examined as a 12-month rolling average.