Is it an encouraging harbinger or an errant blip?

Single-family Fountain Hills residences for sale dropped in the first half of 2010 to an inventory  level described “as short” by RE/MAX Sun Properties sales manager Mike Nabers.

“We need listings,” particularly homes priced between $300,000 and $350,000, said Nabers.

Realtor Erica West agrees that the town is experiencing the lowest number of single-family homes on the market since 2005 when buyers were “willing to pay just about anything to get a house.”

“While homeowners who don’t have to sell are waiting for better times to sell, buyers are having a harder time finding the home of their dreams,” said West.

The resale home season historically continues until August as buyers move to lock in a purchase before school resumes. Several factors could influence the market in coming months: elimination of the $8,000 federal income tax credit for qualified homebuyers, tight financing and additional foreclosures.

A year ago in early July, single- family homes on the market totaled around 344; two years ago for the same period, the inventory was as high as 520, according to Cromford Associates.

The Cromford Report tracks the history and current status of the residential resale market. On July 1, 323 single-family homes were reported as active listings.

For whatever reasons --- short sales, foreclosures and low mortgage rates for qualifying homebuyers --- homes in some price categories are selling. Nabers said his firm closed 254 sales in the first six months of 2010.

“If we hit our 2010 monthly average for closed sales in July, we will equal our sales total for all of 2009,” said Nabers.

The majority of RE/MAX Sun Properties sales (91) were under $300,000 (91 sales), followed by 71 sales from $300,001 to $599,000.

“I’ve heard agents talking about not being able to find a home in decent condition under $350, 000,” said Nabers. “The inventory is depleted.”

The latest Realty Studies report from the W.P. Carey School of Business at Arizona State University shows foreclosures accounted for 36 percent of the existing home market activity in June, up from 33 percent in May.

West said 60 percent of May home purchases were short sales (18) and eight foreclosures. The inventory of 143 homes priced between $100,000 and $500,000 numbered 143 of which 26 percent are distressed.

“Buyers who want a smooth, traditional transaction have fewer choices today. Distressed properties can take months to close and are sold ‘as is’,” explained West.

“I am sure there are more foreclosures coming but we have been in this down market for over two years. I think we have to be getting close to moving all the distressed property to new owners,” said Nabers.

After 32 years in the local real estate business, Nabers said he is experiencing his third, and worst, down market and is reluctant to make any predictions.

Homeowners who don’t have to sell are still waiting for the market to turn around, said Nabers.

Nearly 90 homes priced at $1 million or higher are listed for sale, said Nabers. MLS listings only show 16 homes in the $750,000 to $1 million category.

“For every million dollar home buyer, you have a hundred who can afford $250, 000,” said Nabers.

In previous housing downturns, pent-up demand responding to lower interest rates and supportive home prices drove the recovery, said Butler.

“The typical owner-occupant seems to lack the motivation to satisfy any pent-up demand. This lack of motivation can be attributed to several factors including anemic economic and job recovery, low consumer confidence, and stricter underwriting guidelines,” noted Butler.

Homeowners in the move-up market most likely have a home that is difficult to sell and see no reason to sell, said Butler.