The Greater Phoenix Home Sales From $350,000 to $600,000 And The Case of The Disappearing Inventory

March 27, 2009

Mid Luxury housing market in Phoenix and Scottsdale.

When you look at the chart below you'll probably wonder where has all the inventory gone. There is supposed to be so many homes on the market, so why has the active inventory of homes from $350,000 to $600,000 dropped by 42%? We'll answer that question later.

Just as with all price segments this one is down, just less then the lower starter area where sub-prime loans and funny money was prevalent. Though not riddled with odd loans this price range and anything above $300,000 for that matter has been hit hard for multiple reason: loans are more difficult to obtain, financing is more expensive and this segment is more prone to fluctuation based on the financing markets, more so then the starter home segment.

$350-$400,000	Mar-09	Mar-08	Mar-07
Active	1,681	2,908	3,262
Pending	178	268	404
Sold	125	169	310
1 Year Sales	2,339	2,986	4,708
Inventory (months)	13	17	11
Active $/SF	$141.00	$156.00	$168
Pending $/SF	$127.00	$147.00	$169
Sold $/SF	$130.00	$157.00	$168
Appreciation	-17%	-7%	0%
Sales Growth	-26%	-45%	-12%
Listing Success	35%	29%	39%
Contract Ratio	13.7	11.7	15.1
$400-$500,000
Active	2,128	3,560	3,903
Pending	213	271	493
Sold	128	163	318
1 Year Sales	2,287	3,348	4,894
Inventory (months)	16.60	21.80	12.3
Active $/SF	$159.00	$170.00	$180
Pending $/SF	$136.00	$163.00	$179
Sold $/SF	$143.00	$167.00	$181
Appreciation	-15%	-7%	1%
Sales Growth	-21%	-49%	-21%
Listing Success	30%	24%	36%
Contract Ratio	13.2	9.3	15
$500-$600,000
Active	1,379	2,397	2,447
Pending	87	145	275
Sold	70	99	174
1 Year Sales	1,1,47	1,883	2,751
Inventory (months)	19.7	24.4	14.2
Active $/SF	$187.00	$191.00	$198
Pending $/SF	$153.00	$184.00	$193
Sold $/SF	$168.00	$186.00	$194
Appreciation	-10%	-4%	0%
Sales Growth	-29%	-43%	-25%
Listing Success	28%	24%	32%
Contract Ratio	8.4	7.4	13.4

(ARMLS Data via The Cromford Report and Graphed by Artur Ciesielski)

Being a seller in this price range is not easy. The inventory is high compared to sales: 13-20 months: the contract ratio is low, that's the ratio of contracts under negotiation compared to active listing: listing success is low, that's the ratio of listing that sell compared to cancel or expire.

This puts buyers at an advantage if a sellers is serious about selling.

Let's answer that question that started this post. Why has the inventory dropped even though sales are down? Because prices have decreased across all price ranges the segment that used to be $350,000 to $600,000 is now somewhere around $230,000-$520,000 where there is more inventory.

In addition there have always been less homes active and sold as the price scale moved up and those homes, less of them, are now in this bracket. Notice though that as the scale moves up the price depreciation lessens.

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