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Be careful of the banker and realtor games. They are starting to list low and then getting people to bid them up. Let them sit for awhile. I won't play their games.
The problem is, that it is the good homes that are being listed low, and they will get bid up. If you don't bid on those, you won't have a chance of getting it.
The same thing is happening to my clients. When we find the right home that just came on the market at a great price, it gets multiple bids.
What one has to do is determine the current value of the home (in it's as is condition) and the maximum amount you're willing to pay for the home, and make the offer accordingly. If it gets accepted, you have your house. If you don't, then go to the next one.
It is the over priced, damaged homes that you let sit on the market.
I am glad to see these points on here. Maybe it's a good thing that people are all buying again. Investors will hopefully do what has been said and take the eyesores and fix them up not turn them in to slumhouses renting them out to crapy tenants. This is my only beef, if they are responsible landlords and keep the property nice I would like them. If not they tend to bring the value of a neighborhood down. We don't need slumlords, that's not good.
It's unfortunate that the press continues to use Sensational Reporting. It gives the general public a distorted view of what is actually happening.
What is happening is that the price points have gotten down to where people are buying.
I've said several times on the forum, that if the bottom fishers wait until the bottom is here, they won't know that the bottom has been here until it's past. Also, by the time people realize the bottom has passed, the really good deals (houses at good prices in great condition in great locations) will have been taken.
That is happening now. There will be good prices, but not that perfect house in the perfect location at the perfect price, and move-in ready.
I'm not saying this is the bottom because the prices in the Phoenix area continue to decline. However, the pendulum is swinging.
The investors have been buying all along. I've bought 3 homes in the past three months, and continue to look. Our goal is one per month in 2008 and 2 per month in 2009. These are homes that need to be cosmetically fixed up; houses that the normal buyer doesn't want, and we fix them up to make them attractive so they are no longer a blight on the community and we sell them at at discount to the end user who wants a home to be move-in ready.
Most of the competition for the homes on the mls is not coming from the investors. Most of it is coming from the regular end user buyer. They and their realtor are watching the mls and as soon as one comes on the market at a good price, the house gets flooded with viewers and offers. 95% of them are end user buyers. The other 5% are wanna-be investors who don't know how to buy wholesale houses.
The true investor does not look for investment homes on the mls.
So in summary, your competition for these homes are other buyers just like yourself, end user buyers looking for that bargain.
I am glad to see these points on here. Maybe it's a good thing that people are all buying again. Investors will hopefully do what has been said and take the eyesores and fix them up not turn them in to slumhouses renting them out to crapy tenants. This is my only beef, if they are responsible landlords and keep the property nice I would like them. If not they tend to bring the value of a neighborhood down. We don't need slumlords, that's not good.
The people having their houses repo'd will need to live somewhere. Their credit will be too poor to purchase another house, so they will have to move in with family or rent. The next 5-7 years are going to be a great time to be a landlord.
I also think we will see a sizable jump in hope sales in 5-7 years when the people who foreclosed are eligible to get credit again and want another house.
There is a pdf spread sheet attached below that shows the current statistics in the Phoenix Metropolitan Area (PMA) and in various sub markets, and at several price points.
There are many ways to look at where housing prices should be or can be, and many formulas for figuring that out.
However, my experience is that Supply is King. Supply and Demand, to me, is what controls prices. If there is a large supply, prices will decline. If there is a small supply, prices will increase.
Witness what some buyers have already discovered on this thread. It is not just that the banks are putting a lower price on the homes that is getting the multiple offers, it is also that these homes are in good condition and in good locations.
The prices on bank owned properties (REO) are set by the banks, not the realtors. The banks receive BPO's (Broker Price Opinions) from several BPO providers, and run these through all their other filters to determine a price. Then they tell the realtor what price to list at. I provide about 20 BPO's per week for banks.
Here's an explanation of what you'll find in my spread sheet and how to use it.
There are several sections. One that shows the entire Phoenix Metropolitan Area (PMA) (single family detached homes only). One that shows 2 zip codes in Mesa that are around the highway 60 and 210 area, which is good for commuting, and one for the Town of Gilbert, and one that narrows it down to the Val Vista Lakes community.
For inventory, 6 months of inventory is considered a balanced market. Less is a sellers market, and more is a buyers market.
Year over year numbers are historical and tell us what happened yesterday. It is insignificant to me in learning what today's market is doing as far as supply and demand.
Number of homes Sold in the past month tells us what is happening in the current market.
Pending Sales and Active with Contingency (all under contract) are an indicator of what is going to happen tomorrow. This is the number that tells us whether the sales are going to be declining or are picking up momentum.
The Pending Sales to Sold ratio tells us whether we are in a balanced market, or increasing or declining. A ratio of one property under contract to one property sold is a balanced market. Less than one is a weakening market, and more than one is showing that the market is gaining momentum.
I've broken the market segments down into price points.
For the PMA you'll see that the months supply of inventory is 8.38 which is still a buyers market.
However, the Pending/Sales ratio is 1.52, which indicates the market is gaining momentum.
By looking at the various price points you'll see that the largest sales and the largest momentum is in the <200k price range. The 6.31 months inventory is almost a balanced market, and the 1.66 Pending/Sold ratio is greater than 1, indicating increased momentum. This is the price point where most of the multiple offers that I'm experiencing are occuring.
Look on across and see that the higher priced homes are all selling very slowly, with the >1mil properties having a 39 month supply. However, everyone of the price points are showing momentum.
I've been watching this trend develop all year, and now others are beginning to feel the results of it.
When the months supply of inventory in various price points drops below 6 months, then I would expect to see price stabilization in those particular price point markets.
You can check out the other areas that I've listed. I've listed these because they are of particular interest to me.
If one looks at the numbers for Maricopa, Surprise and Queen Creek, they will probably be quite different. I don't market those areas so I couldn't take the time to do them. It's quite time consuming to gather all this data. I've double checked my numbers but do not guarantee that I haven't made errors. However, I don't see any glaring discrepancies.
What happened in the last boom years, in my opinion, is that developers were wanting to build large developments to take advantage of the boom time, and so they went to the very outskirts of the PMA where there was plenty of development space. The only reason buyers went to those outlying areas is because that is where the new available homes were. It was too difficult to find a home to buy closer in.
The homes were built long before the infrastructure began, so that makes for a great inconvenience. That's ok, if there are no other places to buy and live.
However, now that the prices have fallen and there are still plenty of homes to buy closer in where the infrastructure is in place, and the commute is shorter, fewer people want to buy in the outlying areas unless they work fairly close.
In my opinion that will make those areas recover much slower. Add to that equation the rising gas prices, with people beginning to buy bicycles, motorcycles, and looking to buy closer in to lower the commute costs.
To summarize, what I'm showing is the factual data where we can see what the market is doing today, and what it appears it will be doing tomorrow. I am not forecasting anything because there are too many variables in our economy. Any occurence in our economy could change the trends we're seeing develop.
Also, remember that the trends can be different in each zip code within the PMA, and even within communities.
The months supply of inventory that you typically read or see, is the entire PMA, and the entire price range including the <200k homes and the >1mil homes. This can be very misleading, and causes people to wonder why they're facing multiple offers for the homes they're interested in.
To learn what the supply and the momentum is for the price point and area you're interested in buying or selling, you must break the research down to that specific area and price point. Your realtor can do that for you.
It seems that every house we are interested in buying they already are in the process of closing or have tons of offers.. with all these houses for sale, it seems there are just as many buyers. We looked at a house that has only been on the market for 2 days and it already has 11 offers, 2 of which are more than the asking price.. this is just stressing me out!
I'm glad you posted this because this is something I've been saying for months now when people just acted like it was going to be a buyers market everywhere. It all comes down to demand. The neighborhoods that were very much in demand are still in demand regardless of the local economy. I know people looking for homes in DC Ranch, the 24th street area in the Ahwautukee foothillms focusing on foothills country club, Tuscany in Chandler, Sun Lakes gated communities in Ocotillo, Warner Ranch, Arrowhead area around 59th avenue and 101, Alisanos in Tempe etc. and they are not finding bargains in these neighborhoods. In fact the bidding has gotten even more competitive in those areas.
Most people recognize a good thing when they see it. Therefore, they make an offer. Seems pretty straight forward to me. Investors usually buy the junk because they are willing to take the risk and work and hope to make money off buying below value. A regular end buyer isn't going to do that. A true investor isn't buying a home at market value, hoping it will appreciate. They buy below market, fix it, and rent or sell at market value. Its those speculators that helped throw things out of whack a couple years ago because they bought at market, then it tanked.
The sellers are finally pricing homes at what the market demands(and not destroying them) and people are buying. Plus I think a lot of end buyers are using foreclosures and shortsales when looking, much more so than traditionally in the past.
It is actually a knife-catcher's market since house prices in Arizona are still rapidly declining.
Does anyone really think that the largest housing bubble in American history will be followed by a short bust? Does anyone really think that a recession, credit contraction, rising unemployment, and dropping in-migration will lead to price stability? Canadians will not undo years of overbuilding and overlending.
But I guess that some should go for it. Someone has to set the new declining comps.
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Well:
What's Happening in the Phoenix RE Market
