My apologies to the e-mail readers for receiving more than one e-mail today but I have the poll working and want to give you a chance to have your opinion heard. We'll try these polls from time to time ... if it proves successful, I may use it to help me with my football picks this week in my wife's football pool.

Where will the Phoenix Market Go in 2007?

(c) Jonathan Dalton, 2006 / Jonathan Dalton's Arizona Homes

Fortune magazine has predicted a nearly 4% decline in real estate prices for the Phoenix metro area, ranking the Valley of the Sun near the bottom of the country's 100 largest real estate markets. There's no further explanation but I presume the logic behind the prediction is the continuing withdrawal of investors from the local market, combined with pressure from builders looking to offload their inventory.

We'll be running a reader's poll later today ... currently the poll software doesn't want to recognize any e-mail address as valid.

(c) Jonathan Dalton, 2006 / Jonathan Dalton's Arizona Homes

The supply of homes continued to fall over the past week, with sales for the past 30 days holding roughly steady if not slightly higher. I'm expecting to see the supply trend change within the first two weeks of the new year as owners prepare to put their homes on the market, either for the first time or after pulling them off the market for the holidays.

Phoenix Arizona Real Estate market stats through 12/26/06

CITY	SOLD 11/26-12/26	ACTIVE 12/26	Absorption Rate as of 12/26/06	Change	Buyer/Seller
Ahwatukee	19	83	4.37 months	-0.28	Seller
Anthem	38	567	14.92	-1.36	Buyer
Avondale	109	786	7.21	-0.04	Buyer
Buckeye	74	752	10.16	-1.89	Buyer
Carefree	3	94	31.33	-16.17	Buyer
Cave Creek	38	471	12.39	0.86	Buyer
Chandler	330	1,834	5.56	-0.48	Buyer/Neutral
Desert Hills	14	177	12.64	-1.20	Buyer
El Mirage	54	348	6.44	-0.20	Buyer
Fountain Hills	38	377	9.92	-0.43	Buyer
Gilbert	312	1,998	6.40	-0.37	Buyer
Glendale	251	1,773	7.06	-0.10	Buyer
Goodyear	110	948	8.62	-1.81	Buyer
Laveen	59	377	6.39	-0.29	Buyer
Litchfield Park	34	376	11.06	-1.61	Buyer
Maricopa	67	748	11.16	-1.84	Buyer
Mesa	432	2,689	6.22	-0.22	Buyer
Paradise Valley	24	255	10.63	-1.71	Buyer
Peoria	181	1,565	8.65	-0.23	Buyer
Phoenix	1,162	6,547	5.63	0.03	Buyer
Queen Creek	150	1,610	10.73	0.32	Buyer
Scottsdale	311	2,834	9.11	-0.49	Buyer
Sun City	74	595	8.04	-0.15	Buyer
Sun City West	46	509	11.07	-0.29	Buyer
Surprise	195	1,967	10.09	-0.04	Buyer
Tempe	97	375	3.87	-0.32	Seller
Tolleson	29	271	9.34	-0.69	Buyer
Waddell	14	100	7.14	0.77	Buyer
TOTAL	4,179	30,193	7.22	-0.26	Buyer

(c) Jonathan Dalton, 2006 / Jonathan Dalton's Arizona Homes

For those of you new to the blog, I've been tracking absorption rate for single-family homes in Maricopa County and the individual cities therein since July. Absorption rate is a fancier name for the supply of homes - divide the number of active listings by the number of sales in a set time period and you've got your supply.

In my case, I've been tracking the sales and the absorption rate with a 30-day rolling average to provide a supply based in months. As we have seen for the last three weeks, inventory among single-family homes continues to fall though it's increasingly obvious the drop is due less to heavier sales than the inevitability of listings going inactive (cancelled, expired or taken off the market) for the holidays. This week we also see a decrease in sales, which is normal for this time of year, leading to an increased county-wide absorption rate.

A five-month supply of homes is considered the baseline for a balanced market between buyers and sellers. As you can see, we're well above that baseline with an oversupply of homes, leaving us in a continued buyers' market.

The big question remains: what will happen after the first of the year? If the market is flooded suddenly with additional inventory then we will be right back where we've been. If inventory remains lower than it has been, the market may have a chance to gain some traction for the first time in a year.

Phoenix Arizona Real Estate market stats through 11/27

CITY	SOLD 10/13-11/13	ACTIVE 11/13	Absorption Rate as of 11/13/06	Change	Buyer/Seller
Ahwatukee	15	102	6.80 months	-0.13	Buyer
Anthem	37	637	17.22	-1.12	Buyer
Avondale	105	877	8.35	0.04	Buyer
Buckeye	65	789	12.14	0.86	Buyer
Carefree	4	93	23.25	-8.08	Buyer
Cave Creek	53	505	9.53	0.12	Buyer
Chandler	276	2,062	7.47	0.31	Buyer
Desert Hills	8	169	21.13	-4.02	Buyer
El Mirage	54	376	6.96	-0.04	Buyer
Fountain Hills	28	410	14.64	-2.44	Buyer
Gilbert	273	2,222	8.14	0.15	Buyer
Glendale	252	1,960	7.78	0.87	Buyer
Goodyear	81	1,026	12.67	0.97	Buyer
Laveen	63	383	6.08	1.05	Buyer
Litchfield Park	35	404	11.54	-0.52	Buyer
Maricopa	74	770	10.41	-0.13	Buyer
Mesa	412	2,879	6.99	0.17	Buyer
Paradise Valley	23	265	11.52	1.89	Buyer
Peoria	163	1,682	10.32	0.70	Buyer
Phoenix	1,141	7,031	6.16	0.18	Buyer
Queen Creek	175	1,773	10.13	0.13	Buyer
Scottsdale	299	3,046	10.19	0.85	Buyer
Sun City	65	605	9.31	0.64	Buyer
Sun City West	40	503	12.58	0.43	Buyer
Surprise	203	2,102	10.35	0.73	Buyer
Tempe	80	428	5.35	0.38	Neutral
Tolleson	38	290	7.63	1.19	Buyer
Waddell	13	95	7.31	-1.28	Buyer
TOTAL	3,933	32,570	8.28	0.37	Buyer

Data provided by ARMLS. Information is deemed reliable but not guaranteed


(c) Jonathan Dalton, 2006 / Jonathan Dalton's Arizona Homes

Phoenix's median home price declined .6% in the third quarter of 2006 from the same time period a year ago, according to the most recent numbers released by the National Association of Realtors. The third-quarter median price of $266,500 also was 2% lower than the second-quarter median price of $272,200.

While median home prices are not ideal by any stretch of the imagination, if your intent is looking at the larger trend what you're seeing is a very, very slight decline from last year's run-up, furthering many people's argument that a crash in the real estate market is not imminent. A decline, absolutely - it's already in progress - but a crash, doubtful.

David Nereah at NAR finally admitted much of the nation had become a buyers' market, though his final statement sounds far too much like what we heard through most of this year with a '6' at the end of the date instead of a '7'.

David Lereah, NAR’s chief economist, said market conditions are nearly the opposite of a year ago.  “Last year we had a record sales market and historically tight supplies of homes with buyers bidding over the asking price,” he said.  “With the market in full transition, buyers now have choices and sellers are more willing to negotiate – under these circumstances it’s no surprise that overall home prices are slightly below a year ago.  We expect this trend to continue in the months ahead, but we’ll see modest appreciation in most of the country in 2007.”

(c) Jonathan Dalton, 2006 / Jonathan Dalton's Arizona Homes