Another good historical 'lesson' we can take from the statistical market 'Extremes' we saw yesterday is how the Active Listings in Chart 1 exploded from a low in April of 2005 (8,342 active listings) to over 58,000 in October of 2007 - the consequence of the rise and fall in Demand from 2004 through 2007, shown in Chart 2.
Chart 1: Active Listings Long Term
Charts 2 and 3 below are also instructive, showing in Chart 2 how even as Sales per Month were plummeting, reaching their low point in January of 2008 of 2,517, Chart 3 shows Sales Prices continuing to rise for 18 months (that red line in Chart 3 shows prices continuing rising for 18 months, even as sales numbers were falling, just before the dramatic, but inevitable collapse of prices).
Historical 'lesson': Sales Prices are a lagging indicator.
Chart 2: Sales per Month Long Term:
Chart 3: Average Sales Price Long Term:
To this day we continue to measure current market prices against 'the peak' back in 2007 as a barometer of recovery.
You can see in Chart 3 how we've exceeded 'the peak' Valley-wide in 2020.
Actionable: It's an interesting exercise to see how your clients area of interest compares with the peak e.g. areas like Arcadia have far exceeded the peak, while other areas like North Scottsdale and Gilbert are riding at or just under the peak.
You can easily generate that data Statewide with your Collateral Analytics account - using the 5-year Forecast that not only shows today as compared with the historical trend, but gives us a 'bank grade' look ahead.
Discussion Point: These Long Term trend charts anchor us in the reality that in spite of the real estate crash in 2008, the consistent Demand evidenced in Sales relative to Supply of Actives continues to inform us of why we have AND WILL LIKELY CONTINUE TO HAVE steady, nation-leading appreciation.
This big picture helps provide a context for the current 'artificially induced pandemic pause' that ironically may produce an even greater surge of activity, as population preferences shift from density to our more horizontal spaces.
Money Point: As has been focused on multiple occasions recently, the Under Contract stat is our best near term predictor. We see it as not only a welcome sign of recovery and market resilience, which, btw, is today off only 10% year-over-year.
What we've been living through these past 8 weeks may amount to a blip in the long term radar - to the extent the Long Term trend of Demand exceeding Supply in Arizona continues.
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