Every month I compile Residential Housing Statistics for Maricopa County, AZ. The numbers are gathered from a variety of sources, listed below. I include a couple of indicators on the charts, which give me ’signals’ as to what the market is doing, or possibly going to do. These are similar to some of the indicators Day Traders and Stock Brokers use with their market charts. Each chart gives different information, or signs of what state the Real Estate market is in here in Arizona. While some of them are considered to be ‘Leading Indicators’ (Building Permits, Interest Rates), some are considered as ‘Current Indicators’ (Active Listings, MLS Solds, Absorption Rates), the remaining are considered to be ‘Trailing Indicators’ (Mortgage Defaults, Trustee’s Deeds, and coming soon- REOs). How To Read the Charts There are 3 lines on each chart. The raw data (Red line) is exactly that- the real numbers used in the chart. It correlates to the secondary Y-axis on the right hand side. This will tell you the chart’s exact numbers for a specific time period. The Momentum Reading Indicator (Blue line) considers each current month’s data, and the same month’s data in previous years to determine an amount of ‘momentum’ for that chart. It tells you the strength of momentum behind the current chart’s trend or direction of travel. The EMA Momentum Reading Indicator (Pink line) is the same as the blue line, except that it puts a heavier emphasis on the most recent month’s data, a little less emphasis on last year’s, and so on, and so on. So essentially, what happened this year and last year will effect the momentum more than what happened 5 years ago. Overall, the blue line can give you a little faster reading than the raw data, and the pink line can give you an even faster reading than the blue line. If you’re familiar with trading the stock market, these indicators will make much more sense to you. Each chart has a baseline from the left side Y-axis at ‘zero’. This is considered to be a ‘tipping point’ of sorts to show a possible change in the direction of the market. An indicator crossing the baseline in an upward direction may indicate a good trend on one chart (for instance, Solds), while crossing it in the same direction on a different chart may indicate an opposite response (for example, Interest Rates). Due to the nature of the indicators, they tend to ’sway’ a bit after a large surge in any direction, as compared to a market with slow/steady results. The key here is to pay attention to the direction of travel for each indicator, as well as at what point they cross the baseline. If you look at the time around 2002-2004, most of the charts will have seen a cross in the baseline in a specific direction. This would say that it’s a great time to buy property. Look again at the period of 2005-2007- the indicators on most charts would have crossed back over the baseline, indicating a time to sell your property. If you have 3+ charts telling you one signal, you might want to perk up and start listening. Keep in mind that the indicators are swayed pretty drastically right now as our market recovers from the boom/sell off we’ve had in the last 2 years. They still work, you just have to take into consideration what they’re reading, and adjust accordingly to your interpretation. Having such a strong movement for sales before our boom years, and then such a fall off shortly after will yield a really strong drop in momentum in the 2 indicators. As is common in trading the stock market, sometimes when an indicator is moving in a separate direction than the raw data (divergence), it could mean there’s a reversal in direction coming soon. If there’s a way to ‘predict’ the movement in the market, this is it.
NOTICE! I have added 4 new charts and stats to the reports! The first thing you’ll notice are new charts for both ‘Average Sold Price‘ and ‘Median Sold Price‘ for Maricopa County. Next you’ll notice the ‘Average Days on Market‘ stats for homes on MLS. Last, you’ll see an ‘Investor Activity‘ chart. This is an exclusive chart ONLY to REI Pipeline.com! This works much like the Absorption Rate, but solely for the foreclosure sales. It tracks how much ‘activity’ is going on between the Notice of Foreclosure Sales and the actual Trustee’s Deeds being issued from those sales issued. The ‘Investor Activity Chart’ can be interpreted in various ways. Some might look at it as a measure of how many investors are out there picking up deals BEFORE they go to the foreclosure sale auction at the courthouse steps. This would also indicate the home owner’s ability to save their home on their own (either by filing Bankruptcy, working it out with the bank and bringing their loans current, selling it either with a Realtor® or to a private investor, etc). Conversely, some might look at it as a measure of how much activity is going on at the foreclosure auction. I anticipate adding in an ‘REO’ variable to the stats here very soon- this will tell us how well the banks are responding to the market, and will most certainly be the slowest trailing indicator out of the bunch. More to come on that later… If you notice the movements in the Investor Activity Chart and it’s indicators, you’ll see some interesting data around the time of our boom/bust, which leads me to believe the effectiveness of this indicator. Only REI Pipeline.com brings you the most accurate and effective data for investing in our market! If you like what you see, please feel free to post a comment below!
Sources: Arizona Regional Multiple Listing Service Maricopa County Recorder Federal Reserve Bank of St Louis US Census Bureau
