It appears housing demand may be catching up with supply, at least for the moment. The supply of homes in Flagstaff has recently dropped to a 6.4 month supply (down from an 11-month supply this summer) and there have been almost 100 more sales here this year-to-date than last year-to-date. Housing supply is the number of months it would take to sell the current inventory based on the pace of recent sales and the National Association of Realtors considers a 6-month supply a balanced market, neither a buyer’s nor seller’s market.
Of course, it’s normal for inventory levels to fall as winter approaches, but the fact that they have fallen this far may indicate that the glut of homes is beginning to diminish. This is also the trend nationally as reported by the National Association of Realtors. Their latest economic report shows a mostly continuous decline of inventory recently, which could help to stabilize prices.
It does seem natural that as the prices have become more and more affordable and interest rates have continued to be low, buyer demand would eventually increase. Plus, according to the US Census, family formation and the number of households have continued to grow through this recession, further adding to the demand in housing.
So the question is, like a kid on a long and tiring trip, “are we there yet?” Have we hit the bottom of the market? Unfortunately, no one knows when we’ve hit bottom until we’re past it, and many economists suggest we’ll “bounce along the bottom” for quite some time, but it’s good to see that the fundamentals are improving.
Lawrence Yun, Chief Economist, National Association of Realtors. (October 21, 2011). Housing Inventory Falls in Winter. http://economistsoutlook.blogs.realtor.org/2011/10/21/housing-inventory-falls-in-winter/
US Census. (November 2011). HH-6, Average Population Per Household and Family: 1940 to Present. http://www.census.gov/population/socdemo/hh-fam/hh6.xls
Source for Statistics: Northern Arizona MLS, Flagstaff area sales of single family homes, townhomes, condos, and manufactured homes. Information based on listing data input by individual REALTORS®.