November was not a good month for the Tempe housing market. Even allowing for the seasonal fluctuations in the real estate market (November tends to be one of the slowest months for Real Estate sales) the supply of new listings continues at the same pace but the number of closed sales has dropped.

The period of time needed to clear the housing market inventory has gone from a low of seven months (May/June 2008) back up to the mid teens for Tempe and Maricopa County. We haven’t seen those market numbers since November 2007 when I announced that the real estate market had bottomed out. Could this be a new housing market bottom?

Now for the Good Housing Market News:

At a recent Real Estate economic forecast forum one presenter, Valley economist Elliot Pollack, opened his remarks about the market with the comment, “If you thought ’08 was bad, then ’09 will be terrible.”

There is a silver lining to this housing market cloud. Both for residential (now) and commercial (soon to follow), we are becoming one of the most affordable real estate markets in the country. So as soon as there is an economic turnaround, Phoenix and Tempe will be one of the first real estate markets companies will be looking for bargains in relocation both for their company facilities as well as housing for their employees. There will be great deals available in Tempe Real Estate.

This housing market optimism was echoed by a report quoted in the Arizona Republic, from national Real Estate economist Tim Sullivan, who indicated that, using seven criteria to track the Real Estate Market recovery for the Phoenix area, all points are positive.
These are the seven positive real estate market indicators:

1. Re-sales are below a 7-month supply (this one is out-of-date based on “by the numbers” above)
2. Home sales have stopped slowing
3. New home permits are falling
4. Mortgage applications are increasing
5. Interest rates are below 6%
6. Affordability has improved
7. Several home builders have gone away

So where is the real estate market recovery? What are we waiting for? Dare I say … Banks? Loans are still difficult to get, substantial down payments are required, and the processing of foreclosures is moving along at a snail’s pace?

Real Estate Recovery Now Tied to Job Recovery:

So for the housing market to recover, we may need to wait for the spring when the $121 million of federal funds arrives in Arizona to help with cleaning up the distressed neighborhoods from foreclosures and, more importantly, if and when the Obama stimulus package starts putting people back to work.

Dr. Jay Butler, Associate Professor of Real Estate at ASU, recently confirmed the impact of jobs on the Real Estate Market recovery. Putting people back to work will be the single most important factor that will slow the foreclosure rate and re-establish consumer confidence.  When we see the unemployment numbers start to drop that will be a signal and, when they get back below 4.5%, we will be in recovery mode.

In the meantime buyers have a large inventory to choose from and sellers are anxious to meet their demands. Conclusion: It is still a buyer’s market in Tempe Real Estate.

Posted on Thursday, December 11th, 2008 at 2:21 pm and is filed under Housing Market. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.