Phoenix: "Now Is The Time To Buy Real Estate". (Peoria: days on market, for sale)

[MN-Born-n-Raised]

I know there are many people who are going to disagree with this. See Now's The Time To Get Back Into Real Estate - Seeking Alpha

Phoenix area falls right in line with what John Talbott is talking about. I think we can agree that the Phoenix area prices were not going to fall forever.For those of you who have not heard of John Talbot, he has written several best sellers including:

1.) The Coming Crash in the Housing Market: 10 Things You Can Do Now to Protect Your Most Valuable Investments 2003.
2.) Sell Now: The End of the Housing Bubble (2006) where he predicted the global banking crisis.
3.) The Financial Epidemic That Is Sweeping the Global Economy ... and How to Protect Yourself from It (Wiley, 2008).

John is a considered a Perma-Bear and he is now recommending to get back into real estate. For those of you who were thinking about waiting to buy in the Phoenix area: "come on in, the water is warm!"

[Captain Bill]

Many astute buyers and investors have already seen the values we have in Phoenix Metro, and that the market along with the economy, has changed. Those who have recognized this have already been buying, while the others have chosen to ignore the trends and have been writing and reading the negative reports that were reporting data several months old.

It's good to see that some national writers have begun to see what has been happening in Phoenix and are reporting it.

As we've been mentioning in another thread the Average Sold Price per square foot has been increasing in Phoenix Metro since mid September, right in the middle of our slow season.

As of December 20, the average sale price per square foot was $85.22.
That number is 8.2% price increase since mid-September, a period of only 3 months.

From December 20, 2010, to December 20, 2011, the overall price increase per square foot has been 2.3%.

The data below can show why this price increase has finally come about.

• Supply has been Declining, and the
• Demand has been Increasing for around 30 months.
• Price lags Supply and Demand in real estate, but it appears as if it is now at a point where the inevitable price increase may be taking hold.

Pending Foreclosures--(the infamous Shadow Inventory):

• 41,251 on December 21, 2010
• 19,503 on December 21, 2011

Note that in 2002, which was in normal market times, the Pending Foreclosures were 9,061. So, from 41,503 last year, to 19,503 this year we've come a long way toward the normal rate of Pending Foreclosures.

Lender Owned Homes:

• 19,191 May 2011
• 9,917 Nov 25 2011
• 9,373 Dec 23, 2011

As the number of Pending Foreclosures declines, it's natural to expect the Foreclosed Homes, (Lender Owned) to decline.

New Listings:

• 9,973 Total added November 10 to December 18, 2010
• 7,371 Total added Nov 10, to Dec 18, 2011
• That is 26% lower than the same period 2010
• It's lower than any year since 2001

What we're seeing is that there are fewer homes being listed for sale in the market, and fewer of those listed are distressed homes. That probably means we can expect the prices to be higher because there will be more traditional homes sold.

Cromford Market Index

• 96.5 Dec 23, 2010
• 158.6 Dec 23, 2011

The Cromford Market Index is a short term forecast for the market balance.

• 100 indicates a Balanced Market
• Below 100 indicates a Buyers Market
• Above 100 indicates a Sellers Market

Cromford Demand Index:

• 130 Dec 23, 2010
• 127 Dec 23, 2011

The Cromford Demand Index provides a short term forecast for the Demand for homes.

• 100 indicates Demand is near Normal
• Below 100 is Less than usual Demand
• Above 100 is More than usual Demand

The numbers of 130 for Dec 23, 2010 and 127 for Dec 23, 2011 reflect what we've been seeing in Phoenix Metro for the full year, and that is a high demand, that has helped to reduce the inventory.

Cromford Supply Index:

• 134.6 Dec 23, 2010
• 80 Dec 23, 2011

The Cromford Supply Index is a short term forecast for the Supply of homes.

• 100 indicates close to a Normal Supply.
• Values above 100 indicate More than usual Supply.
• Values below 100 indicate Less than usual Supply than usual.

This is another measurement of just how Low our current Supply has fallen. The Supply appears to have fallen too low for our current Demand.

Days Inventory (Days on market for the homes that sold)
111 Dec 23, 2010
90 Dec 23, 2011

The Days Inventory has declined by 21 days during the one year period.

It seems that most all of the indicators have turned positive now. I do believe that we'll see some more traditional homes coming on the market starting around mid-January. People who have held their homes off the market will probably begin listing them again; but I don't expect there to be a flood of homes that will increase the supply above the demand.

This is not meant to be considered as advice for anyone to run out and buy a home. The decision to buy, sell or rent a home is a very personal decision that should only be made after considering all market factors plus all the personal financial factors.

[khuntrevor]

My townhouse grossed 30.03% for the year. Sure does beat the heck out of listening to Maria Bartiromo all morning.

[ReadyFreddy]

It's good to see that some national writers have begun to see what has been happening in Phoenix and are reporting it.

I think he was writing about the national market. Not that it's not also heartening.

I wonder if more people are holding their homes to list after the holidays or in spring for family/school reasons. I guess that wouldn't explain the 26% fewer new listings than this time last year, unless these trends are newly popular. Which I doubt, though I hadn't heard much about them until this year.

I do hope this is the bottom of the market as I just bought something and have yet to sell the other house. I'd like to wait a little while.

[**Sandy**]

My family and I are moving to the Phoenix area in the next few months and should be there for sure my May 1, 2012. We would like to really learn the area before buying and know the areas that would fit us already but likely would buy until 2013. With that said - and I do know that you guys dont have a crystal ball but how much would the market change, - if a home in Peoria is selling currently for $250 will it go up $100k in the next 15 months or so?

[azdr0710]

Originally Posted by **Sandy**

if a home in Peoria is selling currently for $250 will it go up $100k in the next 15 months or so?

you're right, nobody has a crystal ball, even this John Talbott guy.....

but most here can safely predict that your Peoria place will very, very definitely not go up by 100K in 15 months!!....

buy to live in a place, not as an investment!

[rjrcm]

Originally Posted by **Sandy**

... if a home in Peoria is selling currently for $250 will it go up $100k in the next 15 months or so?

I doubt you'll find anywhere where the price will go up 40% in 15 months. No crystal ball needed.

[ReadyFreddy]

No, don't worry about that! If recovery is under way here, I think it'll be slow. More like normal growth rates. No more hyper growth!

My sister is an appraiser here and she says they are under so much pressure to NOT appraise things higher than the comps she thinks they're keeping the Phoenix market down. Interesting, given their history. It used to be that they had every incentive to over-appraise. It was 'If you can get me $400k for this house, you get the appraisal order. If not, you don't.'

[MN-Born-n-Raised]

Originally Posted by azdr0710

you're right, nobody has a crystal ball, even this John Talbott guy.....

Thanks for sharing the obvious fact that nobody has a crystal ball. Economists look at the indicators and predict accordingly. Nearly all of the economists were way off. But Mr. Talbott was one of the few that got it right. He predicted the housing bubble in 2003, predicted the global banking crisis in 2006, etc.

His point is simple. Based off of the numbers, many markets are at the bottom, near the bottom, and on their way back up to some level or another. For YEARS he was saying stay away from housing and in 2006, he wrote a book basically saying dump your home while other "experts" said the correction would be 10%. If people in Phoenix listened to him, their net worth would be tens of thousands of dollars higher.

See PHOENIX, AZ Real Estate Market Report for December 25 2011 and look at the cost per square foot. I realize this is asking prices but my "crystal ball" predicts that the sale prices will rise a good 10% in the next 6 months. The economy simply needs to under perform the way it has been recently and Phoenix (not all price points and not all neighborhoods) will go up.

[MN-Born-n-Raised]

Originally Posted by **Sandy**

My family and I are moving to the Phoenix area in the next few months and should be there for sure my May 1, 2012. We would like to really learn the area before buying and know the areas that would fit us already but likely would buy until 2013. With that said - and I do know that you guys dont have a crystal ball but how much would the market change, - if a home in Peoria is selling currently for $250 will it go up $100k in the next 15 months or so?

To understand how undervalued your Peoria area is, look at the cost to rebuild. For instance in Marley Park located in Surprise where I bought, a 2000 sq foot home that sold for $300K in 2006 are short selling around $130K. While that sounds like an amazing deal, brand new 2000 sq foot homes are selling for about $170K. Over 20 new homes have sold since early summer and 20 more are being built. What this should tell you is new pricing will hold down large appreciation in the coming months. Also, new housing is getting close enough so that people will pay more to get what they want.

In any given neighborhood, a higher priced home will have fewer buyers. So that $120K market is red hot in Surprise but it is extremely slow in the $250K value. In the nicer Peoria developments, $250K is closer to the average. See PEORIA, AZ Real Estate Market Report for December 25 2011 . I'll bet you might see a $10 per square foot change from "bottom" to this coming Spring on the average home (less appreciation on a $250K home). 2013 is too far out for anyone to accurately predict.

While I too would be shocked for a home in Peoria to rise $100K in 15 months, All things being equal, I have always predicted that a nice jump once the 1st and 2nd round of distressed sellers re-enter the market. Meaning, it takes 5-7 years for peoples credit to heal after a distressed sale. There are thousands of current renters that would love to re-own at this lower price point. 2013 will have some of the 1st round defaulters coming back into the mix. 2008 was a banner year for defaults. Therefore, add 5 to 7 years on top of that date and I predict Phoenix to gain sales momentum around that time line. To some degree, it will be improbable for any large appreciation to happen until the defaulters re-buy in masses.