Stop with the bubble talk....it may flatten in some areas but this is NOT a 2005

As of April 8, days of inventory for Greater Phoenix (excluding UCB and CCBS listings) stood at 74.8, the lowest level since September 2013. 

However this one number fails to explain the huge disparity between the bottom and top ends of the market. Here are the days of inventory for various price ranges:

• under $100K - 49.9 days
• $100K - $200K - 33.4 days
• $200K - $300K - 54.6 days
• $300K - $400K - 86.9 days
• $400K - $500K - 128. 2 days
• $500K - $1M - 218.6 days
• $1M - $2M - 437.7 days
• over $2M - 882.4 days

It is the $100K to $200K price range that is most stressed by the lack of supply, and within that range the $125K to $150K price range has only 28.3 days of inventory. This is the lowest level since 2005.

The range between $500K and $600K has dropped from 230.8 to168.8 days over the last 12 months, making this sector much more favorable to sellers.

Meanwhile the range over $3M has 1230.5 days of supply, up from 1129.8 this time last year, so sellers outnumber buyers to a huge extent at this rarified price point.

In some parts of the valley, the market is so hot that a few people have been drawing parallels with 2005 and expressing fear of a bubble. While I agree that the Southeast Valley, Pinal County and parts of the Northwest Valley are much hotter than they have been for a while, the market is more akin to 2013 than 2005.

I think some people forget quite how ridiculous 2005 was. It was exactly 12 years ago that:

• Days of Inventory stood at 28 (currently 85)
• Months of supply was 0.9 (currently 2.8)
• Annual appreciation rate was 27.9% (currently 6.8%)
• Dollar volume was up 43.9% annually (currently up 14.6%)
• Listing success rate was 84.3% (currently 81.9%)
• Cromford® Supply Index was 41.4 (now 72.6)
• Cromford® Demand Index was 129.5 (now 106.1)
• Cromford® Market Index was 312.7 (now 146.1)
• Average percent of list for closed listings was 99.16% (currently 97.69%)
• New homes sales were 42,724 a year just in Maricopa County (currently 13,958)

The Greater Phoenix market has a long way to go before conditions get bubbly, and we should remember how few skeptics there were in 2005 that the market could ever go down. 

Now there are skeptics everywhere, which is a very good reason that another bubble is unlikely to develop. 

The next housing bubble is likely once everyone who experienced the last one has retired or passed away.

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To that last point regarding when the next bubble will occur. I would only add what Mike Orr has said before - 

• That there has never been more than one housing market crash in a generation; 
• That today, unlike 2005 (liar loans) is an equity market - the pendulum has swung to much more conservative banking regulations for getting a mortgage and most of the distressed properties from the crash were purchased by investors for cash; 
• And that there is essentially a housing shortage, as builders have not kept up with the population growth (because of the down turn).

These are good point to keep in mind, as these concerns will come up as the economy heats up.

To me the biggest heads-up is for millennials in particular to be aware that time is not on their side if home-ownership is something they desire. 

Interest rates pretty much have to rise (the end of 'artificially low' interest rates) and the consequence of that is that for every 1% interest rates go up on an 80% loan, buyers lose 10% borrowing power. Or put another way, homes essentially become 10% more expensive.