I have been tracking two Real Estate numbers for all of Maricopa County that suggest that the Real Estate slump may have bottomed out in October of 2007.
The two numbers are
1. The total number of resale properties listed for sale each month and
2. The total number of properties sold.
These numbers can give us a ratio that help determine the absorption rate, namely, how long would it take at the current rate for the inventory on the market to be completely sold.
Since October 2006, the inventory in Maricopa County increased from 48,000 at a rate of about 1,000 a month. In October 2007, we reached a peak of 58,218 units for sale. However, that staggering number has been steadily dropping since October, and on December 31st, the inventory count slipped below 53,000. There is definitely a Holiday Lull factor to take into consideration, and there will be a slight correction of the numbers in January.
The changing number of monthly property sales also indicate that this past October may have been rock-bottom for the market slump. In October 2006, the number of sales per month was 5,500, and that rate has declined steadily until reaching a low of 3,061 sales per month in October 2007. Since then, the number of sales has slowly increased, with sales for December reaching 3,483. Again, numbers for January will allow us to get a better idea of whether this is a trend or a hiccup.
This decrease in inventory and the slight increase in the number of properties sold suggests that the absorption rate has dropped from close to 20 months to 15.
Another factor that has boosted the number of homes for sale is the number of forced sales, or foreclosures, being added to the inventory. Although not widely reported, the number of foreclosures in the month of November were down for the first time since April of 2006. This may have effected the noted drop in listings, and the subsequent "bargains" caused by the foreclosures may have increased sales. A drop in foreclosures will have a dramatic effect on the timeliness and strength of the markets recovery.
Stay tuned.... We will continue to track the inventory, sales and foreclosure rates to help you stay on top of the market trends.