Is the Real Estate Market Turning a Corner? (Phoenix, Prescott: for sale, loan)

[BriansPerspective]

Someone asked me in a private message whether I though the Prescott real estate market is turning a corner. Here are my thoughts:

I am cautiously optimistic about the market. We've already seen a rebound in values since the low in June of this year. In Prescott Valley Unit 19 for example, there were many homes sold under $100K in the first half of this year. We had an overpriced listing on the market for two years in Unit 19 that finally sold in October. Right now there are only 13 non-short-sales for sale in Unit 19. There are 17 if you include short sales. At peak supply there were 68 for sale. There are NO REOs for sale in Unit 19. The least expensive home for sale in Unit 19 right now is $130K.

If you combine all of the major subdivisions in PV, there is a two month supply of inventory. In several subdivisions, there is a one month supply of inventory. Across the entire Prescott area, there is less than a two month supply of REOs. In October, 68 REO site-built homes were sold and there are currently 113 REO site-built homes for sale.

In terms of volumes of sales, we are just below the average number of sales since 1998. The market is on track to close 2660 homes this year as compared to an average of 2780 per year from 1998 to 2011. So we are at 96% of the volume of sales of an average market.

Inventories are at an all time low. There are 1740 homes for sale right now as compared to 3278 at peak supply. That's almost half of the inventory at peak supply.

We have seen many instances of multiple offers on properties that are priced below market value. We have buyers waiting in the wings, waiting for a 'deal'. If they wait too long, they might miss their chance.

We have seen many instances of trustee sales selling for close to market value. This is an indication that the hard core investors believe that change is in the air.

We are starting to see instances of flipping where the seller bought an under-valued REO and put it back on the market a couple of months later.

In Granville, new homes are being built and sold. 19 new homes have been sold by the developer so far this year. Twelve of those were existing inventory, seven were new builds.

Notices of Trustee Sales have continued to decrease from a peak in June 2009 of 400 per month to just over 200 per month for all of Yavapai County, including Sedona, Cottonwood, Black Canyon City, etc., as well as the Prescott area. That is a 50% decline in Notices. Many of the notices are being cancelled through the owner becoming current on the debt, modifying their loan, or selling through a short sale.

So, I am optimistic that we are turning a corner, but I do not hold a crystal ball. We are also headed into the slow season. Typically, demand falls off a little during the holidays, but many sellers also take their homes off the market. Spring and summer of next year should be very telling.

[Burning Madolf]

Sorry Brian, whenever a realtor says "If they wait too long, they might miss their chance" I just start laughing.

[BriansPerspective]

Originally Posted by Burning Madolf

Sorry Brian, whenever a realtor says "If they wait too long, they might miss their chance" I just start laughing.

I understand. I almost tagged my post with, "Of course I'm just a REALTOR and everyone knows that according to a REALTOR, now is always the best time to buy or sell."

I'm just giving my informed opinion. You can take it or leave it.

[Fiddlehead]

I do think some of the most depressed areas will start to recover. However, it all depends upon how much inventory the banks are holding, and are going to drop on the market when things improve a little.

[Captain Bill]

Originally Posted by Burning Madolf

Sorry Brian, whenever a realtor says "If they wait too long, they might miss their chance" I just start laughing.

I read Brians post carefully and he did not say anything like "if they wait too long they might miss their chance"

It appeared to me that he offered "information" on the current state of the market as he knows it.

He also said:

"So, I am optimistic that we are turning a corner, but I do not hold a crystal ball"

Quite a difference from telling someone they may miss their chance.

[DellNec]

Thank you for that post. I hope what Brian says holds true and we stop declining. It's sad for many homeowners to see that the home they bought 2-3 years ago continues to depreciate every year. I thought $71 sqft was a great deal but I see homes going for $51 sqft today.

I will TRY and be optimistic in regards to the RE market. Time will tell but for sure we do NOT need any more major events in the US. Any type of financial collapse or even terrorism on US soil can throw everything back into chaos. We are at a very fragile time here in the USA.

Let's hope 2012 will be a better year overall for all Americans, including the RE market.

[BriansPerspective]

Originally Posted by Captain Bill

I read Brians post carefully and he did not say anything like "if they wait too long they might miss their chance"

It appeared to me that he offered "information" on the current state of the market as he knows it.

He also said:

"So, I am optimistic that we are turning a corner, but I do not hold a crystal ball"

Quite a difference from telling someone they may miss their chance.

Hi Captain. Thanks for the support For the record, I did say "We have buyers waiting in the wings, waiting for a 'deal'. If they wait too long, they might miss their chance." For exmaple, if someone has seen properties in Unit 19 selling for $80K, and they're waiting for another $80K property to come on the market in Unit 19, they might be waiting forever. A good deal is always relative to the market. If the market is indeed turning, then any reasonably well priced house bought today will have been a good deal six months from now. Of course if I'm wrong, then I'm wrong. As I said, I do not have a crystal ball.

[Burning Madolf]

Originally Posted by BriansPerspective

I understand. I almost tagged my post with, "Of course I'm just a REALTOR and everyone knows that according to a REALTOR, now is always the best time to buy or sell."

I'm just giving my informed opinion. You can take it or leave it.

All opinions are worth reading and using when making a decision. I was just laughing because over the years (pre, during, and post bubble) I've heard the "better hurry" mantra and now it just makes me smile. Maybe I'm now older and a little bit wiser.

I am definitely in the "shadow buyer" category: actively watching, ready to buy what I perceive as a value and I've seen some sellers coming back to reality as well as buyers making deals that some might say are bargains.

However, I am willing to bet (or not, really) that just as when the market got way overdone to the upside it will get overdone to the downside. One major reason, IMHO, is banks not taking on risk and are being very careful about appraisals. Buyers and sellers may like a price, but unless it's all cash then the banks still hold the purse strings.

[Captain Bill]

Originally Posted by BriansPerspective

Hi Captain. Thanks for the support For the record, I did say "We have buyers waiting in the wings, waiting for a 'deal'. If they wait too long, they might miss their chance." For exmaple, if someone has seen properties in Unit 19 selling for $80K, and they're waiting for another $80K property to come on the market in Unit 19, they might be waiting forever. A good deal is always relative to the market. If the market is indeed turning, then any reasonably well priced house bought today will have been a good deal six months from now. Of course if I'm wrong, then I'm wrong. As I said, I do not have a crystal ball.

It looks like I didn't read it as carefully as I should have because I missed that. But you are correct, and many buyers have been finding that out.

I'm in the Phoenix area and our market has been improving.

Also, here is some positive press from the AZ Republic about banks and short sales.

Banks in Arizona shift to short sales

[Captain Bill]

The Prescott market is different from Phoenix, but what is happening here in Phoenix may be indicative of what may happen in other major AZ cities.

Here are a couple of posts I made regarding the current Phoenix market:

Phoenix Real Estate Market Update (1)

Phoenix Real Estate Market Update(2)