News Article From: 12-10-2010
Resale Sales Analysis
The October ARMLS1 Reports reported sales of 6,581, which is a decrease of 91 from September. On a seasonally adjusted basis sales were down 1,540 from October 2009. Sales have been below the level of one year ago for the past five months.
There are several different factors that interact to make up the current sales numbers. One of the most significant is the seasonal pattern clearly seen in the graph below. The winter months show the lowest sales volume, while the summer months are the highest in sales.
This basic pattern is true for each year displayed. Be cautious of any article that only compares one month to the prior month and does not reference the year prior number.
Additional factors are abnormal market conditions. Examples of these are:
- The investor/speculator craze in 2004 and 2005
- The credit crunch starting mid 2007
Therefore, a comparison of 2006 sales level with that of 2004/2005 just reflects a return to a more healthy market activity level. The further decline in the first half of 2007 is the beginning of a correction for the oversupply situation, which was created in 2004/2005. Then the credit crunch hit. Note that the last half of 2008 recovered to a level that is fairly comparable to the first half of 2007.
Over the last four years we have stated that sales similar to the 2002 and 2003 sales volume represented a normal sales level for the Phoenix metro area market with the then current interest rates and job growth. However, interest rates, job growth, population growth and consumer confidence are definitely not what they were when we made that statement. We now believe that the 2001 – 2002 level offers a better reference basis for a normal Phoenix market.
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1 (ARMLS) Arizona Regional Multiple Listing Service encompasses most of Maricopa and Pinal Counties.
Note: This report was prepared utilizing numbers from an adjusted August 2008 report published by ARMLS after the distribution of the August In-Depth Analysis Newsletter. In all cases the impact of these adjusted numbers is less than 1%.