Phoenix Real Estate Market Update (renting, house, buyers)

[Potential_Landlord]

Originally Posted by oldtrader

What needs to be looked at is the 12 month trends for the Valley Of The Sun. Prices changes over the past 12 months are shown here by area of the valley through August. A one month change is not really the trend.

REALTORS REPORT ENDED----Job gains now, while making up lost ground, simply have a long way to go. Employment and recovery are moving in the right direction but at an impossibly slow pace. Like the proverbial child who pesters, “Are we there yet?” our market responds, “Not yet.”

No doubt we are not there yet and that the y-o-y numbers are still disappointing. Reason for hope comes from a rising price trend in the traditionally week season right now. This certainly has not happened in a while (apart from exogenously and artifially induced homebuyer tax period). It is too early to tell if it is a fluke or a meaningful trend change, but it's better than nothing. In the end we have to see how we get through the entire slow season this winter price-wise. This will tell us a lot about what's coming. OK, I'm a big loser at timing the housing market admittedly, but I think we have seen the lows and are on the upswing again and the next year in its entirety will surprise many to the upside. If not we'll see the lows before the usual spring uptrend IMO.

[Captain Bill]

Three months ago bank owned properties were 39% of all Pending Listings in the Phoenix Metro Area.

Today they are less than 29% of all Pending listings.

• Last year at this time there were 20,000 bank owned homes.
• Today there are are 10,112
• It's expected that the number willfall below 10,000 this week.

Short sales and pre-foreclosure have increased from 34.6% to 41.4% during the last 3 months.

Traditional sales have increased from 26% to almost 30% and today they are greater than the lender owned properties.

Oldtrader downplayed the use of Median pricing, (which every reporting company uses as a standard) stating that the higher end homes skews the number up. That can happen. However, due to the quantity of lower priced home sales causing a larger dollar amount in the lower price ranges, the lower end actually skews the median price down.

Perhaps that can explain why the recent Price per Square foot is showing an increase while the Median price fell back recently.

The median price fell back from $115,000 (where it was two years ago) to $112,00 recently (during our slow season) while the Average Price Per Square Foot increased from $80.50 to $82.50 during the same period.

I'm certainly not trying to play one-upmanship with Oldtrader, it's just that here are the current facts. Some of the reports that show a large decline in prices in Phoenix are using the year over year figure comparing July 2011 with 2010, when the prices had run up to a higher price with the first time home buyers tax credit. Those articles ignore the fact that in April 2009 the median price here was $115,000 and we have essentially remained flat for two years.

During this 2 year period the demand has increased and the supply has decreased.

I'm currently working with a client trying to find a 600-750k range home with 3 car garage, approx 4,000 ft range with gas cook top. Nothing really special in amenities. Try finding that house and one will discover that there is not a large selection. We've looked in Gilbert, Mesa, Scottsdale and Fountain Hills. The selection is just not that great, and the prices are good.

We found one that was a keeper, and we learned that the seller had accepted an offer on the morning before we looked at the property. So we lost out.

[coorsleftfield]

Thank you Bill for continuing to post these kinds of market updates. It's much appreciated and helpful.

[sh9730]

Old,

A couple of things...first the OCTOBER data is out from MLS (www.armls.com) so you can see a little more recent information. I mainly pay attention to Pinal County and sales numbers are UP from September (724 in Oct vs 656 in September 2011 and 686 in October 2010), both median and average prices are also up about 3% month over month and year over year.

ALSO, the TOTAL listings is WAY down year over year...in Oct 2010, there 4107 active listings in Pinal County, in Oct 2011 there were 2285. This brings me to a point on your post. Yes, for the entire region, sales numbers are in a slight down trend for the last few months...but looking back at the 10 year history this is a normal seasonal trend. BUT, you have to remember that this year there are many FEWER listings than last year. In 2010 there had been approx 129,000 new listings in the entire region, on track to a total of 145,000 or so by years end. This year there has been 105,000 listings and likely wont go above 125K for the year...

So, it only makes sense that on a year over basis sales would be DOWN, but in fact that are considerably up from a year ago (7600 Oct over 2011 vs 6600 Oct 2010).

As I have continued to say....each market is local, but MY personal view is that we are bouncing along a bottom. I will also add that I too have noticed pretty dramatic per foot increases in asking prices for houses for sale here in Casa Grande, which is really the only thing I follow...and it was nice to see the increase in sales numbers AND pricing in Pinal County in this latest report.

[MN-Born-n-Raised]

Originally Posted by sh9730

Old,

A couple of things...first the OCTOBER data is out from MLS (www.armls.com) so you can see a little more recent information. I mainly pay attention to Pinal County and sales numbers are UP from September (724 in Oct vs 656 in September 2011 and 686 in October 2010), both median and average prices are also up about 3% month over month and year over year.

ALSO, the TOTAL listings is WAY down year over year...in Oct 2010, there 4107 active listings in Pinal County, in Oct 2011 there were 2285. This brings me to a point on your post. Yes, for the entire region, sales numbers are in a slight down trend for the last few months...but looking back at the 10 year history this is a normal seasonal trend. BUT, you have to remember that this year there are many FEWER listings than last year. In 2010 there had been approx 129,000 new listings in the entire region, on track to a total of 145,000 or so by years end. This year there has been 105,000 listings and likely wont go above 125K for the year...

So, it only makes sense that on a year over basis sales would be DOWN, but in fact that are considerably up from a year ago (7600 Oct over 2011 vs 6600 Oct 2010).

As I have continued to say....each market is local, but MY personal view is that we are bouncing along a bottom. I will also add that I too have noticed pretty dramatic per foot increases in asking prices for houses for sale here in Casa Grande, which is really the only thing I follow...and it was nice to see the increase in sales numbers AND pricing in Pinal County in this latest report.

We agree but don't expect a rebuttal from OldTrader: in one ear, out the other. In volatile markets you can make the numbers look anyway you want.

[Potential_Landlord]

Originally Posted by MN-Born-n-Raised

We agree but don't expect a rebuttal from OldTrader: in one ear, out the other. In volatile markets you can make the numbers look anyway you want.

Sure, but if you stick to one measurement the date is meaningful and will show you a trend with consistency. I think from now on we should all stick with the price/SF. This is the best measure as it eliminates distortions from changes to low or high end buying. For example, in recent years additional investor buying occurred at the low end (buy to rent), because the numbers for renting work out so much better at the low end. This distorts the median and average price. We should all stick to price/SF and derive our conclusions from there.

[Captain Bill]

Cromford Reports is reporting that during the past 30 days, prices have increased by:

• 0.8% REO
• 0.6% Traditional sales
• 0.4% Short Sales

With the decline in supply of REO's their prices have increased and that is apparently causing increases in the other sectors.

There is obviously a change in the mix away from cheap REO's to the more expensive short sales and traditional sales.

Cromford Reports had forecast a price increase for this 30 day period (they do one for each month at the middle of the month) and the increase came in at their high range of average price per square foot of $82.36.

They feel that the change in the mix of sales, along with what is happening with the Pending sales will cause another increase in price for the next 30 days of about 2.9%

One of my cash buyers just got an accepted contract in the 500k range in a community in Mesa. There were several homes in the community in the 500-700k range that had recently sold. The number of Realtor business cards that I saw at each of the homes (25) that we visited during a three day period indicates that there are a lot of people looking in these price ranges now.

One thing we can expect to happen now that some higher priced homes in areas like San Francisco are selling, is for those buyers to come here to buy a home and pay cash. They can sell their home in CA and buy the same home here for 1/3 of the price they sold their CA home for. I have a couple of clients who are doing just that.

[Captain Bill]

Mike Orr of the Cromford Report has replaced retired Jay Butler as director for the Center for Real Estate Theory and Practice at Arizona State University's W.P. Carey School of Business.

ASU hires analyst to help public understand industry - East Valley Tribune: Mesa

They decided to use an analyst for the position and felt that Mike Orr was the likely choice.

In the new position, Mike plans to develop reports for the public so the public can be more aware of what is happening in the real estate market. He is highly respected within the real estate industry for the large amount of factual data and balanced reporting that his Cromford Report produces. He will continue with the Cromford Report.

I personally don't think there is any better source of real estate data for the Phoenix Metro area than the Cromford Report, so I am on their web site every day. I'm very happy to see that Mike was chosen to fill the "Director for the Center for Real Estate Theory and Practice" position.

[Potential_Landlord]

Originally Posted by Captain Bill

Mike Orr of the Cromford Report has replaced retired Jay Butler as director for the Center for Real Estate Theory and Practice at Arizona State University's W.P. Carey School of Business.

Thanks for telling us - I hadn't caught it. Looking forward to finally some relevant RE reports from academia.
I must say even an optimist like me was positively surprised by what is going on in the economy and that can only mean positive things for RE. We had a lot of good economic news recently!
P-L

[MN-Born-n-Raised]

Originally Posted by Captain Bill

I personally don't think there is any better source of real estate data for the Phoenix Metro area than the Cromford Report, .....

Are you sure? An out of state RE prognosticator uses Zillow and Trulia.