Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
Below are some statistics that may be of value. It shows that sales are continuing to increase, inventory continues to decline, and prices are declining at a slower pace. This trend has been in place almost all year and is showing signs of the market flattening.
In order to have prices flatten we first need increased sales and reduced inventory. That has been happening all year, and now we're seeing prices begin to flatten.
I'm only reporting what the statistics show. This does not represent any forecast. Each individual must make his/her own forecast. However, it's very important to me as a realtor and an investor to know what is actually happening in my market place and the national market, as opposed to listening to doom and gloom reports, or cheer leader reports.
I sifted through 113 pages of statistics and took the time to write down a portion that gives a view of some major spots in the valley. If one needs more info, then these statistics are probably available to anyone at The Cromford Report. I get them from a separate source that subscribes to them.
Source: The Cromford Report
Phoenix Metro Area Single Family Detached Sales
September 2006.......2662
September 2007.......4589
September 2008.......5537
Median Price
Sept 07.......$157,000, price per square foot $157
Sept 08.......$252,000, price per square foot $109
Median Sales Price 2001 to Sept 2008
A trend line drawn from Jan 2001 to 2004 shows a normal growth pattern during that time from about $138,000 to about $160,000.
Continuing that trend line to September 2008 would indicate a median price today of about $190,000.
In June 2006, the median price peaked and $280,000 and then dropped to $174,750 in Sept 2008. That price is now below the trend line
REO's as a Percentage of Total Sales as of October 1,2008
El Mirage 75%
Gilbert 25%
Phoenix 42%
Queen Creek 40%
Surprise 40%
Tolleson 55%
Chandler 26%
Tempe 9%
Scottsdale 20%
Sales per Month Phoenix
July 2008... 1000, same as in July 2006
Oct 2008...1250 October 2007....1295
The trend line shows the current sales increasing and about to cross the 2007 declining sales line.
Scottsdale
Price per square foot began flattening out in May 2008 at $245/sf. In Aug it was $227/sf and in Sep increased to $233.
Mesa
Sales per Month continue to increase
Sept 2006...286
Sept 2007...450
Sept 2008...482
Days inventory dropped from peak of 352 in May 08 to 300 in Sept 08
Gilbert
Sales per Month continue to increase
Sept 2006...220
Sept 2007...290
Sept 2008...344
Gilbert Median Price
Sept 07... $149/sf....$290,000
Aug 08....$116/sf.....$230,000
Sep 08....$118/sf (an increase)
The larger drop was in Oct 07 and Dec 07 where it was $255,000 and had smaller declines since then.
Sales Pending and Sales Volumn have flattened in August and September
Gilbert Days Inventory/Sales Volumn Comparison
Sept 2007 Days Inventory 309.....Sales 196
Sept 2008 Days Inventory 233....Sales 350
The days inventory peaied in Mar 08 at 322, and has steadily declined.
Queen Creek Sales per Month
Sales per month for 2006,2007 and 2008 were all near the same in Feb.
Sales per month for 2008 climbed steeply to about 390 in June 2008 and has remained relatively flat and today is at 370 in Sep 08.
In Sept 2006 it was 142
In Sept 2007 it was 189
Queen Creek Median Price
The median price began to flatten in March 08
Sept 07...$200,000.. price per sq ft....$105
Mar 08....$153,000...price per sq ft.....$81
Sept 08...$140,000...price per sq ft.....$75.
July 08 price per sq ft....$75
Aug 08 price per sq ft....$76
Sep 08 price per sq ft....$75
Days inventory peaked at 462 in Feb 08
Continues to decline to 216 in Sept 08
Sales per month continue to increase from low of 128 per month in Jan 08 to 381 per month in Sept 08.
Sales by Price Category Greater Phoenix Single Family Detached
<$200k....60%
$200k - 300k....24%
$200k+...15%
"In order to have prices flatten we first need increased sales and reduced inventory. That has been happening all year, and now we're seeing prices begin to flatten."
And as we head towards Winter, sales will decrease and inventory will rise.
And REOs comprise a large percentage of sales. REOs beget more REOs as those new (more realistic) values become established sales and other borrowers capitulate.
Quote:
"I'm only reporting what the statistics show. This does not represent any forecast. Each individual must make his/her own forecast."
We are facing either very severe economic recession or depression due to the aftermath of a housing/lending bubble. Somehow, I fail to see that translate to anything other than further price drops in one of the top five bubble states (percentagewise), Arizona.
Quote:
"However, it's very important to me as a realtor and an investor to know what is actually happening in my market place and the national market, as opposed to listening to doom and gloom reports, or cheer leader reports."
I have another adjective for "gloom and doom reports." Accurate. When observers of the housing bubble forecast the obvious end result of any asset bubble, they were derided as doom and gloomers by Lawrence Yun and David Lereah of the National Association of Realtors. I wonder whose life is better now, the people who took their cues from this Arizona-based blog or those who followed the advice of the NAR and the AAR.
Looking at Gilbet market, price not coming down that much because only banks and lenders are cutting price big. Majority sellers who are private owners only cut price penny by penny. That is why price only drops a little rececently in the area. With more coming forclosures, price will drop at a larger percent.
Im sad we bought our 4 bedroom 2.5 bath living family dinning in Buckeye for $154,000 and the tax statement came in and claimed its value at $136,000 only 5 months later we lost $18,000 dollars in five months!!!!!
Im sad we bought our 4 bedroom 2.5 bath living family dinning in Buckeye for $154,000 and the tax statement came in and claimed its value at $136,000 only 5 months later we lost $18,000 dollars in five months!!!!!
Don't worry, the tax statement is always lower like that, it doesn't mean your "sale" value went down, although, the front page of the news paper yesterday said they fell again. So, it may have gone down a bit but not as much as your tax statement says.
Another bit of statistical information for those interested:
In June 2003 (All Residential) Sales to Investors were 275 per month.
It rose fairly steeply to June 2005 at 3002 sales per month.
Then it declined at about the same steep angle to a bottom in Jan 2008 of 505 sales per month.
It flattend out with a gradual rise to 585 per month in October.
Today the investors are performing an important function, in my opinion. They are different from most of the investors in the 2003 to 2005 era who were just buying and selling to take advantage of the rapidly increasing prices.
The vast majority were Speculators, not Investors.
Today the investors are buying the foreclosed properties, fixing them up and selling them to retail buyers at discounted prices from market value.
(Everyone wants a bargain price, but most retail buyers don't want, and don't know how, to work with a fixer upper.)
Investors are also buying pre-foreclosure properties from distressed sellers to prevent them from going through the short sale process or foreclosure, which badly damages their credit. The investors are able to help them get out with their credit rating in tact.
Also in the REO end of the business, investors are buying them and fixing them up, and again selling to the retail buyer at a discount to market value.
These are properties that would not sell if it were not for the investors, and they would remain a blight on the communities where they sit deteriorating.
I changed my business model to get back into investing (I was a rehabber in the late 70's) Now I buy houses from several sources and either wholesale them to a rehabber, or rehab the property myself and sell it retail at a discount. With a partner we've done 6 deals in the past few months. We currently have one retail property listed at $375k that's comp'd at over $400k in Chandler, and a wholesale property in Mesa that we're selling for $42k that comps (after repair value) around $89-100k.
All of the properties that we've bought and fixed are in good communities and their condidition was hurting the neighborhood. Each time we began fixing one up, we did the front yard first, and somee neighbors always come by express how happy they are that someone is finally doing something to that house.
Looking at Gilbet market, price not coming down that much because only banks and lenders are cutting price big. Majority sellers who are private owners only cut price penny by penny. That is why price only drops a little rececently in the area. With more coming forclosures, price will drop at a larger percent.
NiceJohn, maybe this will help you.
Take a baseline of January 2001 when the Median price of a home in Gilbert was $157,000.
Then go out 3 years to December 2003. There was a steady 5.66% per year increase in prices from the January 2001 price of $157,000 to December 2003 price of $187,000.
Then the Gilbert prices increased dramatically to $335,000 in January 2006 when it flattened out at the top and then began the equally steep decline to a price of $230,000 in Oct 2008.
Now go back to Jan 2001 with the price of $157,000 and compute an annual growth of 5.66% for 8 years. That same steady 5.66 growth for 8 years shows the current median price would be $249,000.
So, at the current median price of $230,000, Gilbert is showing below that extended 5.66% trend line of $249,000.
In stock market terms that would indicate an Oversold market. Consequenty, since Gilbert is one of the desired valley communities and is almost 100% built out, I would not expect sellers to lower their prices much more.
There is the uncertainty of the economy. However, as everyone knows, fear creates selling panic in the stock market and it gets oversold. Then the smart ones begin buying up the stocks at bargain prices. The same thing holds true in the real estate market.
There are many people looking for properties today to buy and rent because the prices are back to the normal 5.6 growth trend rate. They do the math and see the value.
I'm not saying that prices will not go down further, but the facts are that that according to a reasonable annual increase as established by the steady 3 year 2001-2003 trend line, the Gilbert real estate market is over sold.
And there are plenty of bargains to be had in Gilbert. I've found bargains for my buyer and investor clients, and for my own investing account.
The investors that were watching statistics like this from October 2005 to August 2006 where the maket was clearly topping out and giving an indication that the market was going to reverse, were able to get out without getting hurt. Those who paid no attention to the statistics got hurt badly, along with the average homeowner who would not be watching these types of statistics.
The same is true on a bottom. The market trends give a pretty good indication when it's topping or bottoming (a process that can take around a year as it did at the top).
So my recommendation is that people pay attention to the statistics in the nation, in the metropolitan area and in the local area of interest. Also, factor in the economy, and how the programs the government put in place will affect the economy, and how soon those changes may take effect. By utilizing all of that information one can make an educated buy/sell decision.
The statistics that I use are from the MLS and also from a paid subscription service from the Cromford Report which is available to anyone at a reasonable monthly fee.
"So, at the current median price of $230,000, Gilbert is showing below that extended 5.66% trend line of $249,000. "
Quote:
"I'm not saying that prices will not go down further, but the facts are that that according to a reasonable annual increase as established by the steady 3 year 2001-2003 trend line, the Gilbert real estate market is over sold."
Accepting 2001-2003 as a precedent-setting price period is a theory, not a fact. The housing bubble pre-dates 2003. No, I am not saying that the wild days of 40% price hikes were taking place that early in Arizona. But the market distorting lowering of the federal funds rate 11 times (from 6.5% to 1.75%) did take place in 2001. The value of financed assets was already distorted at that point. The distortion simply continued to grow. Gilbert, Arizona is not "oversold."
Please register to post and access all features of our very popular forum. It is free and quick. Over $68,000 in prizes has already been given out to active posters on our forum. Additional giveaways are planned.
Detailed information about all U.S. cities, counties, and zip codes on our site: City-data.com.
Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
