Predictions for the Greater Phoenix Real Estate Market

This is a portion of an article written by our broker, Jim Sexton in the Arizona Journal of Real Estate and Business for December.   The first half of the article deals with variables to be resolved post election by the president.   Jim’s predictions follow:

 “2012 will have around 90,000 sales reported by ARMLS, which will be a 10-12% drop from 2011 numbers, but the overall dollar volume of those sales will be up almost 6% from 2011.  The average price per square foot will be up over 13% for 2012.  Using these trends, I believe that the number of sales in 2013 will remain around 90,000, although if I could give a range it would be 85,000-95,000 sales for the year.  I think prices will continue to bounce back.  I don’t expect another 13% increase, but I see a price improvement in the 5-8% range.  I expect active inventory to rise from the current less than 3 month supply to the more balanced 3-4 month supply.  Both short sales and REOs

will continue to decrease.  Distressed properties made up 70% of the market 2 years ago, 65% 1 year ago and currently are at 41%.  Look for that downward trend to continue to under 30%, with REOs below 10% and short sales dropping to around 20%.  Also expect to seeArizona’s population continue to grow and the building industry inPhoenix‘rise from the ashes’.  Both will continue the positive steps we’ve seen to our economic recovery for the region.”

 Based on Jim’s experience, knowledge and his great batting average we are expecting that 2013 will be a successful and positive year for real estate in our Valley of the Sun.

 

 

Market Update – May

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If you read the real estate news in your newspaper, any day now you will be reading that the real estate market has turned!   UP for a change. 

The right numbers are positive and the right numbers are negative….what I mean is the Sales prices are up.

 Really good news is that the percent of sales to list price is  98.3%.    The “make a low ball offer” period is over.  The lender owned homes are selling with multiple offers, almost to the point of bidding wars.   The number of “conventional seller owned” homes are up.

The right negative numbers are for inventory. The number of lender owned and distressed properties is way down.   Our inventory is very low, actually 47% lower than it was first quarter last year! With a total number close to 13,000.  April’s closings were 8400 The month supply is rated at about 1.5 months !    There are 20,500 sales shown as pending and Active with Contingencies. 

The Active Adult 55+ market presently has 2131 homes for sale with 898 sold in April, another 920 pending  and a current supply of 2.3 months.

These numbers are being repeated in select cities across the country, not just the Phoenix Valley of the Sun. 

To make things even better in the real estate world, the interest rates for the conventional 30 year mortgage  are hovering around the 4% level.

 

April 2011 Market Conditions

Here is the April 2011 Market update from my broker at John Hall & Associates, Jim Sexton.

Risks to living in a 55+ community…

Risks to living in a 55+ community are not as has been recently reported, the risk is not having a surviving spouse less than 55 years old having to sell, but grandchildren!

  • A recent article in the Arizona Republic “ Homebuilders pin hopes on retiring Baby Boomers” mistakenly wrote that “ …if the husband died before the wife turned 55, she would most likely be forced to sell the home and would not be allowed to remain there alone.”

The surviving spouse if under 55 is covered by the HUD regulation of 80/20.  Only 80% of the residents need be 55 or more.  The remaining 20% is designed to cover the heirs. That 80% is carefully monitored and checked every 2 years.  To drop under that 80% is a fearful thing in these communities and puts them at risk for losing their Fair Housing exemption and turning overnight into a multigenerational community.

The true risk in purchasing a home in a 55+ community is grandchildren!   Two scenarios create the risk.  The first is today’s economy and high unemployment rate.   Adult children are moving home to Mom and Dad and bringing the grandchildren with them.   The fine print in the 55+ communities HOA’s is that NO ONE under 18 years old can reside for more than a limited number of days.   So Mom and Dad may have to move out of their 55+ resort community and into a multigenerational one! The second risk factor is again Grandchildren.  Adult children move out of state for one reason or another and take those grandchildren with them.  Grandma & Grandpa do not want them to be so far away and choose to leave their 55+ lifestyle and follow the grandchildren.

Is the New Home market picking up?

new-construction

The Arizona Republic today has an article about Signs of Life in the new construction home market.  Reading through the article the only real “news” is that the New Home Builders are buying up land again.  The article mentioned the amount of $90 million purchased recently.   This lets me know that the builders are seeing and expecting more home sales.

Hopefully they are correct, and the trend of confidence in the housing market continues.

REO/Short Sale/Normal – What’s really selling in the Phoenix area housing market

I was looking through the charts and statistics and came across these 2.  They offer an interesting view on what homes are selling, and how much of our housing market is really about the foreclosures.

From the chart below you can see that steadily for the past 6 months the REO (bank owned properties) are about 15% of the active listings. The Short is for short sale listings running at about 35% and Normal, is a regular buyer and seller no bank involved is still 50% of the homes on the market.

active-listings

Compare the above chart with this one and you can see REO (bank owned property) sales dominate. Currently about 45%, down from 55% of all the sales are REO’s.

Normal transactions having 35% of the sales (back in Nov what was thought to be the end of the home buyer tax credit and people were looking to make the home purchase happen and not mess with the banks)

The Short Sales have increased from 15 to 23%.

monthly-sales

What does all that tell me, a few things?

1.       Bank owned homes sill offer the best value

2.        Banks are starting to approve short sales.  (it sure has taken a long time)

3.       With more short sale approvals, fewer homes are going to foreclosure

4.       And there is nothing like a home that has been loved and taken care of

Market Review of 2009

Well the numbers are not yet in for December, and they won’t be for a couple of weeks.  I have access to great statistics, they compile the numbers daily, weekly and monthly, and I get to share the details with you.

I started by checking out many, many different charts to look for what I believe is the best representation of our market currently and over this past year.  This chart, shows the annual appreciation based on monthly sales price per square foot.  I have 2002 and 2003 on this chart to show what a ‘normal’ year appreciation looked like.  In 2004, and 2005 we saw huge appreciation that is not typical of a normal market and then in 2006, 2007, and 2008 we saw the bubble pop.

Back in about April we started to see changes, the number of homes being purchased increased, the inventory started reducing, and the plummeting price drops slowed.  In a ‘normal’ market there is around a 6% increase to value each year.   In April we hit the low of 44% loss and as I write this we are sitting on average across the entire valley 12% loss.

OK so when your looking at losses, none are going to be good news.  But the dramatic change from earlier this year indicates to me, that we are moving toward  a normalized market.

Let me say again, that this is an over view of the entire Valley of the Sun, each smaller area may tell a different story and usually does

average-appreciation-comparison

Part of the story that needs to be told is the market by price.  A look at inventory broken down by price tells a great story.  In a ‘normal’ market there is about 6 months (180 days) worth of inventory.  Less and you have sellers market, more and you have a buyers market.

What is interesting is we have all 3 happening at the same time.  A price point of  $300-400k is our ‘normal’ market with about 6 months of inventory.  Prices higher are in the buyers market and lower are in a sellers market.

So depending on the price point you are purchasing in, you may find yourself in a bidding war, and some sales prices over asking.

inventory-by-price-6-month-marked

Inventory is down, pending closing up, all improvements

Here in the greater Phoenix area there is a lot of talk about the changing market.  Our outlying areas have seen the greatest recovery.  Well, let me rephrase that.  Those outer areas, prices have dropped to such a level that people are jumping in to purchase.

days-inventory

This chart is the current inventory, the number of homes currently on the market actively listed, divided by the number of homes that are closing.  Giving us an idea how long it would take at the current level to sell all of the homes available.  Back in April of 2008 there was a 420 day supply of homes.  That is a lot of homes, and not many people purchasing.

Move forward a little more than a year, and we have 209 day supply of homes.  Currently we have people buying homes, and fewer on the market.

active-listings-2

The first chart must be looked at comparing it to active listings.  Together they tell a better picture.  This is the chart of active listings.   I included the 2002 and 2003 data because they show a ‘normal’ market.

You can see the inventory levels rose and reached their highest point in late 2007, and remained high all through 2008.  The first part of 2009 we see the number of listings is reducing, currently at 41,197 active listings.

pending-listings

The last chart to compare is the pending listings.  Is this a fluke or going to last.  This chart is jagged, due to many closing at the end of the month.  You can see the current pending listings is high.  Due in part to lenders taking longer to approve buyers.

From this information we know there are lots of people purchasing homes.  The inventory levels are dropping,  and there are lots of homes pending and about to close.  At least for the next few months, the Phoenix market is moving!

State of the Phoenix Housing Market

The worst month for home sales in Maricopa County (the greater Phoenix area) was January 2008. There were a total of 2,912 homes that closed and sold. The lowest number in 8 years or more. From there the number of homes sold each month improved with our banner month in June. In June, 2008 (5,748 homes sold) we had more homes sold than June 2007 (5,438). That started a trend where month over month we have had more homes sold than in 2007. It has continued thru the rest of the year.

What does this mean? It means we have hit the lowest spot in our market and are starting to see recovery. Does this mean housing prices are headed up again? Not necessarily. We still have an inventory of 47,396 homes on the market, and 6,139 listings waiting to close. That is still a lot of competition.

There are currently 34,846 listings under 350k. This is important because it is the FHA loan limit. And the price point of most of the home sales. Of those properties priced under 350k, 10,231 are foreclosure properties. Just under 1/3. Foreclosures are driving the market and will continue to do so for a while.

The good news is our market is showing signs of recovery for the past 6 months.