Positive signs that the local housing market continues to recover

Les Stukenberg/The Daily Courier<br>Realtor/Broker Todd Klein points out where Haylie and Valarie Smith need to sign on a purchase contract for a new Prescott  Lakes home at the Keller Williams office in downtown Prescott.

Les Stukenberg/The Daily Courier<br>Realtor/Broker Todd Klein points out where Haylie and Valarie Smith need to sign on a purchase contract for a new Prescott Lakes home at the Keller Williams office in downtown Prescott.

Valarie Smith's search for a new home is coming to a head.

Smith recently sold a 4,000-square-foot home and began looking at existing homes, only a few of which she said had what she sought.

While Smith thought she was going to go through tons of homes, the fact is she didn't, settling on a new 1,900-square-foot home in the Prescott Lakes area.

"I don't want to look at 200 homes," she said. "For me that was a good thing," she said of the short length of time her search took.

Data from the Prescott Area Association of Realtors shows that Smith didn't have a glut of homes to look at.

The number of active listings and months of residential inventory on the market are both trending lower since the start of 2009.

The figures from Keller Williams Check Realty in Prescott show that there were 3,085 active listings on the market in 2009.

That number gradually fell to 2,598 homes the following January, and 2011 began with 1,938 homes.

This past December, the number of active listings sat at 1,543 homes, a dip of about 50 percent from January 2009.

The months of residential inventory are also on the decline.

In January 2009, the county had 26.83 months of existing home inventory on the market, meaning that it would take Realtors nearly 27 months, or more than two years, to sell those properties.

December 2011 figures show that the county had 6.77 months of residential inventory on the market.

"The six-month mark shows economists that we're a stable housing market," said Jorge Velasco, manager of the Keller Williams office in downtown Prescott.

Velasco acknowledged that the numbers don't reflect all price ranges.

"It's more of a seller's market on the lower price ranges and still a bit of a buyer's market on the higher ranges," he said.

Mike Orr, director of the Center for Real Estate Theory and Practice at the W.P. Carey School of business at Arizona State University, said that for most areas, a housing supply of four to six months is looked at as normal.

"It's good news for a market that's trying to recover as its supply gets back to its normal levels," he said.

Orr said markets with 26 or 27 months of residential inventory mean prices stay flat or fall because the market is flooded.

"If you're trying to get a market to correct, the first thing you have got to get rid of is the glut of over supply," he said.

Existing inventory in the Phoenix market is down around the three-month mark, according to Orr, who said inventory in Maricopa and Pinal counties is in an under-supply situation, and other Arizona communities are moving in that direction.

"What I'm seeing in the other counties is that they are probably a year or so behind in that same cycle," he said. "There's been a lot of improvement, but it's not improved by quite that much."

It's also a sign that the market is moving from a buyer's to a seller's market, according to Orr.

"For the sellers and for people who want the market to recover because they're worried about their own home value, you want inventory as low as possible so buyers will have to compete against themselves and bid prices up," he said.

On the active listings side of the coin, Orr said that dip reflects rising sales.

"The other thing I read into that is that demand is also stronger now than it was three years ago," he said.

Orr said putting the two pieces of data together is a sign that the local market is rebounding.

"Prescott is reverting to normal gradually and probably faster than most people realize," he said.