Phoenix housing inventory rises as prices move higher
Phoenix Business Journal by Kristena Hansen, Reporter
Date: Wednesday, October 3, 2012, 2:19pm
After months of excruciatingly low inventory of existing homes for sale, metro Phoenix finally saw a notable rise in market supply during the last full month of summer — and at a faster pace than home prices.
Existing inventory throughout the Valley crept up by 3 percent in August from the previous month to just over 10,000 homes, according to the latest housing report released Wednesday by Arizona State University.
More than three-quarters of those homes for sale were priced above that month’s median single-family home price, or $150,000 — which is up only 1 percent from July.
Michael Orr, author of the report and housing expert at ASU’s W.P. Carey School of Business, said that the small price improvement shouldn’t negate the fact that August home prices were still up about 34 percent year-over-year.
“We’re experiencing a normal summer slowdown, and I expect prices to continue their advance as we move into cooler months,” Orr said.
The rise in home prices is one of the biggest reasons for the Valley’s slight bump in inventory in August, Orr said, because the more prices improve, the more people want to sell their homes.
Phoenix’s inventory in August was the equivalent of about a 27-day supply of homes for sale — a large increase from the Valley’s lowest point in May when there was only 15 days worth of supply.
However, Orr said the Valley still has a long way to go yet because supply is still well-below average for the past 10 years.
The scarcity of homes for sale also continues fostering a fiercely competitive environment among potential buyers, and to the disadvantage of traditional home buyers. Single-family properties — especially those listed under $150,000 — have routinely been attracting dozens of offers at one time, and the title is usually handed over to investors with cash-on-hand.
In fact, nearly 36 percent of all the homes sold throughout Maricopa County in August went to cash buyers — up from 28 percent a year earlier — as did more than half of sales below $150,000.
“Some large investment companies have been buying homes in bulk from other investment companies,” Orr said. “They are clearly frustrated by the difficulty of acquiring large numbers of homes through normal channels. Most of the properties are being used as rentals for tenants who have lost their former homes to foreclosure or through a short sale. In greater Phoenix, we have never seen so many single-family homes used as rental accommodation, and it will be interesting to see how elastic the demand is over the coming year.”