Market Headlines

Supply continues to fall, though rather more slowly in the ranges between $200,000 and $800,000.
Demand very strong below $200,000 but showing seasonal weakness above $200,000.
Average sales price per sq. ft. is stable below $300,000 and increasing above $300,000.
A change in the sales mix could adversely affect overall market average prices and medians.
Foreclosure activity declining and active REO inventory is at the lowest level for several years.

Homes under $100,000

Demand remains strong while supply is still declining. Prices now stable for 7 months.
Demand normally falls off during the summer but the demand in this price range is dominated by intense buying by investors who are only slightly affected by the seasons.
Active listings are now 7.8% below this time last year.
This supply continues to gradually shift away from REOs (down 15.7% in the last month) towards short sales and pre-foreclosures.

Homes Between $100,000 and $200,000

Supply down and demand fading slightly. Pricing remains very stable.
Having peaked in October, supply has fallen another 6.8% in the past month and is down 23.4% when compared with March.
Demand has faded a little, but this is in line with normal seasonal patterns.
REOs dropped to 38% of monthly sales while normal listings also fell to 38%. Short sales and pre-foreclosures increased from 21% to 24% of sales.

Homes Between $200,000 and $400,000

Buying interest falters a little although supply continues to decline. Pricing remains very stable.
The supply of single family homes dropped by another 4.1% between May 26 and June 26, and is now down 17.0% over the last three months and 29.2% over the last year.
Over the last month REO supply actually rose by 2.4% reversing an 8 month trend, while short sales and pre-foreclosures fell by 3.0% and normal listings fell 5.5%.

Homes Between $400,000 and $800,000

Supply falling but demand continues to weaken. Nevertheless sales prices remain on an upward trend.
Single family homes between $400,000 and $800,000 have experienced a 6.4% fall in active listings in the last month.
The sales volume strengthened slightly in June, with monthly sales up 7.0%.
REO supply didn’t change during June at 84 homes, but this is down 10.6% over the last 3 months.

Homes over $800,000

Demand weakens for the summer months but supply is down again. Sales prices continue to climb.
We see the first sign of the spring season turning to summer as pending sales start to fade.
The good news is that the supply of homes above $800,000 fell 8.5% in one month, 18.9% over three months and 29.2% since June 2010.
Active REOs rose 18.4% from 38 to 45 over the last month but these represent only 2.9% of total active listings.

There is a big debate going on (well less of a debate and more of a conundrum) about Phoenix home prices. Are they actually falling as many media outlets report or are they, on the contrary, rising? If you talk to leading economists from Robert Schiller (half of the Case/Schiller duo) to your local college economists you hear that home prices (everywhere- not just in Phoenix) are falling fast.  The Bears are telling of doomsday scenarios in which home prices fall for years to come amid dismal hiring reports and a lack of consumer confidence.

However, in the hour or so it took me to start my research and type the previous 3 sentences, my phone rang no less than 4 or 5 times with buyers/agents inquiring about prices and other info on my already under contract listings in the Phoenix area (we're talking about 3 separate listings, 2 of which are lender-owned, and the 3rd is a short sale).  One of those callers made an appointment to see the under-contract short sale home, OK with the fact at best he'd be able to make a back up offer on the 1BR/1BA condo in a nice part of Phoenix.  The out-of-town, 2nd homeowner said, "I keep hearing how bad the market is, but we put our 2 bedroom condo in Scottsdale on the market and got an offer in 3 days." He went on to say, "I've spent the last 5 days calling on other places because we want to downsize and I've called no less than 100 listings. Most were under contract- maybe 1 or 2 were actually available".

How can this info be so contrary? Well, the first rule of real estate is: Location, location, location. What happens to Phoenix home prices may not be the same for Los Angeles, New York, Chicago or Dallas.

In Phoenix, as I've posted in recent blogs, I've watched most of my listings this spring go in days for as much as $10K over asking (according to that buyer's agent "just in case, to avoid a multiple offer situation").  I had a listing in Tempe under contract for $1,000 below asking fall out due to the buyer's inabilty to obtain financing. Within a few days of the change in status, I had multiple full-price and 2 over asking offers.

Phoenix area home prices here appear to be rising slightly, or at the very least staying the same.  Over time, if you have an abundance of listings and those listings all start to sell. As buyers jump in to take advantage of "falling prices" or "falling rates" (Freddie Mac and multiple other news outlets are reporting today that the 30-year fixed mortgage rate is the lowest it's been for all of 2011 at 4.49%), when those listings go and there aren't many more available, simple economics says, prices will start rising.

I've been searching for investment properties for various clients over the last 6-12 mos and have many people say to me, "if you see a deal... (Phoenix area homes with a price typically under $100K) please send it my way". I really haven't seen an abundance in quite some time. And the ones I'm seeing are probably priced "appropriately" for the horrible condition and/or location.  We are clawing our way one scratch at a time for most "deals", and sweating every step until it closes. The remaining buyers I'm working with are seeing "falling" prices evaporate into thin are and start rising to be "ridiculously high" then watching with mouths wide open as those "ridculously high" priced listings go under contract and sell for full price...

The single best advice I can give to any buyer in Phoenix (or anywhere) trying to take advantage of falling home prices in this uncertain market is to target your ideal home and look at the SOLD prices today, but then ask for those same reports of what comparable home prices (again SOLD) were 3 mos. ago and compare those numbers (a trend).  Then make your own determination of whether home prices are falling or rising.  You have to be pretty realistic here.  If you really want to buy, you have to pay attention and know what your strategy is. If you have time, take it, but make sure you periodically check the data and see how it's changing so you can adjust your plans/goals accordingly.

My opinion is that some of the home prices in Phoenix that are falling are primarily due to unrealistic sellers who are pressured to sell and have to get in line with the market .  The price isn't really "falling" if it was over-priced or priced incorrectly to begin with. Knowledge is your best tool and where you think you need help talk to a local Realtor who really actually can back up whatever they are saying with numbers- you don't have to look far. So whether prices are falling or going up, there is still opportunity, it might just be wearing a disguise.

Happy house hunting!

Per an article released by "HousingWire" on Friday 5/27/11, (http://www.housingwire.com/2011/05/27/fannie-mae-issuance-drops-to-lowest-level-since-january-2009?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed:+housingwire/uOVI+(HousingWire)&utm_content=Google+Reader), foreclosure starts are down significantly from over a year ago.  But the article goes on to say that in lieu of the number of foreclosures being down from a month or a year ago, they are still high compared to 2 years ago.

If you jump down a little bit further, the article highlights the fact that there are numerous headlines that pending sales for April are down. Mind you I haven't seen many articles account for the fact that April 2010 was the deadline for housing stimulus program ($8K tax credit for homeowners who closed by 4/30/10; that deadline was subsequently extended to 6/30/11 to allow time to process short sales and clogged lender processing pipelines).  That being said, will we see the same headlines for May and June also???

If you then skip to the bottom of the article, a few lines very thought provoking:

"The foreclosure pipeline remains bloated, according to the report. Loans in the 90-plus days of delinquency or in foreclosure outnumber monthly foreclosure sales by a factor of almost 50:1. The foreclosure and seriously delinquent inventory stands at more than 4.2 million homes, yet just 84,219 foreclosure sales occurred during the month of April.

The numbers suggest that lenders are still having trouble restarting the foreclosure process that came to a halt last fall amid robo-signing allegations."

If that is in fact the case and that these foreclosures will eventually make it back to the bank if they can't be successfully short sold or the mortgages modified. That would mean that locally in the Phoenix Metro area inventory could be released again, easing some of the pressure on the market for too many buyers competing for too few homes.  That would bring us closer to having a balanced market (neither buyer's, nor seller's market) and be a welcome relief to many buyers who are frustrated with seeing the same stale listings with prices that are not necessarily indicative of condition.  Pending sales may slow just a bit for the unbearably hot summer months, but if buyers who may be more inclined to delay or cancel summer vacations with the intention of scoring a great buy, that may not be the case.  Time will tell.

I received an interesting phone call yesterday from a well-respected colleague inquiring whether I had noticed any change in the number of listings in MLS.  "Yes!" was my response. "There are virtually no listings!".  We proceeded to have a 40min discussion about where all the listings went.

From his perspective, a search of MLS yielded about 24,000 active listings, a freakishly low number considering that around Jan 1, 2011, we were at about 40,000. (For the record, today, 5/27/11, my search of MLS yields 24,323 active listings). That's a decline of 40%!! For a market continually plagued by headlines like "Pending Home Sales Down" (CNBC 5/27/11), that's a bit tough to digest based on the stats I'm seeing.

So the question that resonates with most agents I've been speaking with is WHERE HAVE ALL THE LISTINGS GONE??? On the front page of the New York Time for 5/22/11 was the article "As Lenders Hold Homes in Foreclosure, Sales are Hurt". It essentially states that the biggest banks are holding onto something close to 900,000 homes, which is "almost twice as many as when the financial crisis began in 2007".  Per census data released in March 15% of homes are vacant.  What is the status of all of these homes?  With a red hot rental market and what appears to be, dare I say, a "falsely stabilizing" market, this is kind of a mystery- one that the more I asked were met with responses like, "Let me know what you find out..."

What does this mean for our housing market? For our economy? And beyond? I think it remains to be seen but I'm now starting to hear grumblings of everything from "Perhaps the banks are pooling these assets and spinning them off into billion-dollar investments to the highest bidder" to conspiracy theories about political agenda in the wake of the impending 2012 election year.

I know I will be inquiring with anyone I can think who might have some insight, but for now, if it truly means the market is absorbing the inventory that plagued us, GREAT! I'll bring out the champagne and start celebrating!  But nothing about the boom, bust and subsequent stagnant recovery has been as black and white and surely this won't be either...

Happy Memorial Day!!! Please remember our troops who fought and served our country so we could have a better place to live! :)

I never would have guessed this one, but I do frequently comment on how much of an urban sprawl the Valley of the Sun really is...

Phoenix-area population jumps a notch to No. 11 Read more: Phoenix-area population jumps a notch to No. 11 | Phoenix Business Journal

INVESTORS buying for CASH are a big chunk of buyers buying in this area. Rental rates of return are insane on the right deal. I have a listing in S. Phoenix for $59,900 that rents for ~$895/mo. If you paid cash, including taxes/hoa/insurance you'd recoup your initial investment in approx. 7yrs. Ask me how!

UNDER WATER ON YOUR MORTGAGE and want to get a better rate? If your loan is backed by Fannie Mae, my loan guy can refi for up to 125% of market value (i.e. multiply your home value by 1.25 to find your limit); 105% if backed by Freddie Mac. Contact me for details and I swear I'm not moonlighting as a loan officer... ;-)

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