“Improving” and “market” in one sentence? Yep. Don’t take my word for it. Follow this series of posts, each dedicated to a single market indicator (in no particular order), and draw your own conclusion. Am I nuts? Am I right on? Let me know what you think by leaving a comment below.
It’s probably a good idea to get a few things out of the way upfront. First, I don’t do spin. I do try to be positive, but I try harder to be real, so you won’t find me making up stuff just to sound positive. Second, I’m a stat guy. That’s not to say that I don’t believe in hunches and gut feelings, but show me the numbers to back them up. Ya know? Third, who knows what tomorrow will bring? Most of us can’t predict the future, but we can talk about what’s been going on lately when it comes to homes in Bullhead City and ponder what it might mean going forward. Here we go.
Exhibit A: Inventory
Most of us were introduced to the laws of supply and demand back in high school or college. When one goes up, the other goes down. Makes sense, but actually watching it play out before our eyes is something different altogether.
Supply, for our purposes, is the inventory of homes for sale in Bullhead City. When the market was blistering hot, that inventory dipped all the way down to 212 homes before it started to grow:
The red area is the number of homes for sale. Even as inventory began to grow, home sales continued to increase for a full two years before peaking in March ’06. That’s when it got really ugly. Sales started to decline and inventory nearly doubled over the following six months. That bloated supply of nearly 1400 homes caused prices to plummet. Then banks stepped in and took many of those homes away, until they resurfaced later at much lower prices in the form of, you guessed it, foreclosures.
Here’s the other side of the graph.
Yes, there is still a lot of red compared to the puny count of 200 homes in the middle of the hottest market ever, but it’s come a along way from 1400. If you’re waiting for it get back to 200, you’re gonna be waiting for quite awhile.
Some more perspective.
The inventory worked its way down to 1069 homes in December of 2007 (the single worst month for sales in Bullhead City in at least a decade) then it essentially plateaued for a year. Just this past November there were still 1043 homes for sale. Not much of a dent.
However, three short months later, 15% of that inventory was gone. By the end of February it was down to 899 homes, and that number has since dropped to 832 as of today.
I think it’s safe to say that inventory is trending downward, but what does it mean? Is it proof that the real estate market in Bullhead City is improving? We’ll find out as we continue the series, but we do know that supply and demand have that inverse relationship, when one goes up the other goes down.
Next up, Exhibit B: Pending Sales
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