Posts filed under ‘Phoenix Real Estate Market’
ARMLS STAT 2011 Year In Review
STAT 2011 Year in Review focuses on the state of the Valley’s recovery over the last twelve months, placing the gains and losses over the year in perspective. Overall, the tale is positive.
SALES
Sales rebounded in 2011 enthusiastically, topping out at 101,436, the second highest total sales of the decade. It was surpassed only by 2005 with 104,725 sales, at the height of the real estate bubble. STAT and other conventional wisdom have focused on late mid 2002 and 2003 to mid 2004 as our last normal markets. Total sales for 2002, 2003 and 2004 were 67,950, 80,052 and 98,922 respectively, and 2011 compares favorably.
INVENTORY
Total new listings in 2011 (121,041) fell slightly below the 2002 figure of 125,738. Correcting itself from the decade high 173,363 after the housing bubble burst in 2006.
MONTHS SUPPLY OF INVENTORY (MSI)
The decade MSI pattern follows the Valley’s journey from its normal market (starting in 2002 to mid 2004) through the buying and selling frenzy of mid decade (late 2004 – early 2006) to the correction of the late decade (2007 – 2010). Average MSI in 2011, 3.81, more closely re-sembled the average MSI of 2003 (4.31), at the midpoint of our last normal market.
DAYS ON MARKET
Marketwide days on market (DOM), while not indicative of DOM in smaller market niches, is a measure of overall market health. In 2011 DOM started the year at 113 and continued on a downward trend to finish the year at 95.
FORECLOSURES PENDING
Foreclosures pending, which fuel the Valley’s foreclosure sales, reached their pinnacle in No-vember 2009 at 50,568, and finished 2011 at 19,979, 60.49% below the decade high. The av-erage foreclosures pending per year stubbornly held at 44,237 and 44,698 for 2009 and 2010. In 2011 it took an abrupt downward turn all year.
DISTRESSED SALES
Distressed properties as a percent of sales started the year at 70.2%. Despite a series of hic-cups in direction over the course of 2011, it crashed through the 60% barrier the last two months of the year, at 59.4% and 59.8% respectively. Not only did the percent drop 10.4% over 2011, but the short sale to foreclosure mix shifted by year end, to see short sales over- take foreclosures for the first time, albeit by a small amount.
PRICING
Pricing remains the last bastion of resistance to the Valley’s recovery. Both List and Sales median and average prices showed very little movement over the course of 2011, stagnating at the presumed bottom. Median List price started 2011 at $124,900 and finished the year not much higher at $129,900. Average List price followed the same pattern, starting at $204,300 in January and finishing in December at $200,200.
Sales pricing mimicked the same lackluster performance of List pricing. Median Sales price began with $110,000 and ended 2011 at $117,000, well below the median List price. Average Sales price in January was $157,000 and ended at $162,200. All four pricing metrics, List and Sales, took a full twelve months to go practically nowhere. On a positive note, given how long pricing has stalled, the Valley’s pricing has probably hit bottom. What is in dispute is how long it will stay there.
Pricing cannot correct itself until the forces of supply and demand equalize. Both List and Sales pricing are cur-rently unduly influenced by the large numbers of distressed properties that compete for buyers. The slowing of foreclosures pending, if continued at the current rate, should stabilize in 2012, leading to a gradual decline to normal levels of foreclosures in the active property pool. Likewise, growing lender appetite for short sales over foreclosure will also diminish foreclosure influence on pricing.
National predictions on home prices are a slow but steady upward climb in 2012. Given 2011’s underpinning metrics (inventory, sales, MSI and foreclosures pending), the Valley’s pricing is poised to gain traction in 2012.
UNEMPLOYMENT and JOB GROWTH
Phoenix Metro started the year with a 9.28 unemployment rate, with the rate’s overall trend line for 2011 downward. Preliminary figures for November are estimated at 7.7%3, a drop of 1.58% from January, wetting our appetite for the December’s final. Arizona ended 2011 as a top ten growth state, now adding jobs faster than the national average.
THE 2011 FINAL TALLEY
In the 2011 “gaining momentum” column, STAT places unit sales, total inventory, marketwide MSI, falling DOM, declining foreclosures pending, distressed property’s falling % of sales, falling unemployment and job growth. In the stagnant “needs improvement” column, STAT cites all four pricing metrics: median and average List and Sales prices. In the loss column, STAT sees little that is moving in the wrong direction.
All in all, 2011 was a pretty good year on the road to recovery.
Source of Report and to review the full report, go to: ARMLS 2011 Year In Review
Market Summary For The Beginning of June 2011
It feels almost like the inverse of 2005.
In the second half of 2005, supply rose dramatically but no-one seemed to take any notice. There was a widely believed myth that prices could never go down. Between March 31, 2005 and June 30, 2006, active listings rose from 8,394 to 45,729 (up 445%) creating a huge glut of homes for sale. Yet average sales prices continued to rise throughout this period, up 28.6% from $146.98 to $189.05 per sq. ft. Meanwhile demand fell 16.5%, with sales per month dropping from 8,490 to 7,093. It was as if everyone believed the laws of supply and demand no longer applied. Of course we found out by 2007
that supply and demand really did matter and the bubble burst explosively in
2008 causing untold damage to the economy and family finances.
It’s a question of timing. Supply and demand do control pricing, but in real estate there is a very long time delay between cause and effect. That timing can be extended even further by sentiment. In 2005 sentiment was off-the-charts positive – “irrational exuberance” ruled the roost and caused people to make decisions that in hindsight look crazy. Not just homeowners and developers, but especially lenders and the investors who fueled the credit surplus. Those few of us who tried to warn people in early 2006 that prices would fall dramatically were treated a bit like Harold Camping predicting the end times.
The opposite seems to be happening now. Sentiment is very negative. Everyone seems convinced that prices can only fall further, yet demand is rising and supply has been falling like a rock dropped off a cliff for 6 months now. It comes down to one simple fact: people believe what they want to believe. The facts do not exert a significant influence.
Here at the Cromford Report, we only deal with facts and figures, not beliefs, so here is the market update.
Sales – We are currently recording 9,814 sales in May. This is up 3.5% over April and up 10% over May 2010. This is a very strong sales total because in May 2011 sales are not being boosted by the government bribe (sorry, tax credit) that applied in 2010 for buyers of owner-occupied homes.
Pending Sales – At 13,268 on June 1, pending sales are down 0.4% compared with May 1 but up 6.7% compared with June 1, 2010. Again an extremely strong indicator of demand. In 2010 demand fell sharply during the summer after the tax credit expired, but there is no sign so far that the same will happen in 2011.
Active Listings – At 31,346 on June 1, active listings are 9.4% below May 1 and 23.3% below June 1, 2010. Supply is clearly falling fast. However this understates the situation because a large proportion of the active listings already have a contract against them. In fact there were 7,737 AWC (active with contingent contract) listings as of June 1, 2.6% higher than the very high level we saw on June 1, 2010. If we exclude these AWC listings, we have only 23,609 active listings, down 12.7% in a month and down 28.8% compared with last year. This is almost 60% down from the peak of October 2007.
Supply Versus Demand
The average months supply (active listings divided by monthly sales rate) for
the period Jan 1, 2001 to June 1, 2011 is 5.9 months. Right now we have a 3.2
month supply. Yet we read everywhere that there is a “glut of foreclosed home on the market”. What we are reading may have been true in November
last year. It is not true now. In fact available supply is really even tighter than this. If we only count active listings that don’t have a contract the months supply number drops to just 2.4 months. Anyone who thinks this is a “glut” is not living in the real world. They should just ask anyone who is actually trying to buy a home right now. Competition is intense, and not just for bank-owned homes and trustee sales. It is also heating up for short sales and normal listings. If you are trying to buy a home that is at all desirable and is priced at market or below, expect multiple bids. If you are a seller, then you only need to price realistically and your home well sell quickly.
(All the above numeric information is for “all
areas & types” within ARMLS.)
Records Being Set
In Maricopa County, May saw the largest ever number of distressed homes disappear from inventory. Pending foreclosures fell by 3,394 homes while REO inventory fell by 971 residential properties.
For Maricopa County, May gave us the highest ever percentage of out-of-state buyers. 29.9% of sales went to non-Arizona residents. The average between January 1999 and May 2011 was 11.9%. The absolute count was also a record – 2,648 homes sold to out-of-state buyers. The average since Jan 1999 is 1,446.
For Maricopa County, May saw the highest ever number of foreclosures selling direct to third parties at the courthouse steps. The record set was 1,476, 33% of all the trustee sales.
Paradise Valley
Exceptionally strong market activity is occurring in Paradise Valley where sales are now averaging 52 per month compared with 31 last year at this time. Inventory is down to 319 from a peak of 581 in April 2009 when sales were averaging only 9 per month.
Prices
After a bump upwards between mid April and mid May, average sales price per sq. ft. is back down a little at the beginning of June. Although we are still some 2% to 3% above the market bottom in January and February this year, in most places prices have not yet responded to the huge changes in supply and demand. Why not? Please refer to what happened in 2005, but with everything upside down. The rules of supply and demand have not been lifted. Of course, you don’t have to believe me, but please don’t say I didn’t
warn you.
Every single city is showing a negative trend comparing last year with this year. However the picture is much more mixed when we compare this quarter with the one before it.
We can draw the following conclusions:
The recent $/SF trend is positive in cities with more expensive housing (over $70 per sq. ft), including Fountain Hills, Rio Verde, Carefree, Gold Canyon, New River, Tempe, Goodyear, Phoenix, Anthem, Paradise Valley, Litchfield Park, Scottsdale, Sun Lakes, Chandler.
Exceptions are Mesa, Gilbert, Peoria, Cave Creek and Sun City West, which are over $70 but still declining, if only slightly in some cases.
The recent $/SF tend is negative in cities with the cheapest housing (under $70 per sq. ft.) including Wittmann, Florence, Youngtown, Apache Junction, Arizona City, Avondale, Buckeye, Queen Creek, Tolleson, Waddell, Glendale, El Mirage, Maricopa, Sun City.
Exceptions are Surprise, Laveen, Casa Grande and Coolidge, where prices have risen since a quarter ago.
Contrasting Apache Junction with Gold Canyon, or Avondale with Litchfield Park, we can see that the recent pricing trend is significantly more positive in the higher priced neighboring city, despite huge falls in supply in the lower priced city.
Because the large cities Phoenix and Scottsdale dominate the market in dollar terms, their positive pricing trend is causing the overall market pricing trend to move higher. However, there are still a significant number of areas where sale pricing has yet to show a turn round. This includes major cities such as Mesa, Peoria and Gilbert.
The areas with the most negative pricing trend are either on the outer fringes, which get less attractive as gas prices rise (e.g. Buckeye, Florence, Wittmann, Apache Junction, Arizona City, Queen Creek, Cave Creek), or in the west valley where foreclosures have hit a larger percentage of the housing stock (e.g. Tolleson, Youngtown, Avondale).
Golf-oriented areas and cities that appeal to affluent retirees are tending to show the most positive trends in recent months, including Fountain Hills, Rio Verde, Carefree and Gold Canyon.
Anthem has the least negative annual price change (-1.7%), which reflects its unusually low supply level (currently only 1.8 months supply and 84 days inventory). Rio Verde and Paradise Valley are close behind with -2.2% and -2.6%. However Rio Verde still has an abundant supply while Paradise Valley’s active listings are at the lowest level since November 2007.
The greatest fall in pricing over the year is found in Youngtown (-18.1%), El Mirage (-17.1%), Tolleson (-16.3%) and Laveen (-15.7%) all cities which have suffered extremely high foreclosure rates between 2008 and 2010. The city of Maricopa is also down -15.5% over the year and has suffered a similar high foreclosure rate. However the foreclosure rates for all these areas are down a great deal from the peak of 2009.
The Cromford Report-Pricing Trends by Market Segment
Source: The Cromford Report because the information is too good not to pass on!
Don’t Believe the “Doom and Gloom” on Housing
For the first time since November 2005, the Cromford Supply Index™ has fallen below 100.
What does this mean? – It means that the supply of active listings for sale is now slightly lower than in a normal market. So the “glut of homes on the market” that we keep reading about in the news no longer exists.
If the index falls below 90 sometime in the next several weeks then we can conclude that supply has fallen well below normal and we will then have a shortage of homes on the market, That is not unlikely given how quickly supply has fallen since November 2010. The drop from 110 to below 100 took less than 6 weeks.
If we include Active with Contingent Contract (AWC) listings in our counts then the following changes have occurred since November 21:
All Areas & Types – down 30.1%
Greater Phoenix, all types – down 31.1%
Greater Phoenix, single family detached – down 31.4%
Greater Phoenix, townhouse – down 31.7%
Greater Phoenix, apartment style – down 32.2%
Greater Phoenix, mobile home – down 18.0%
The figures are even more startling if we exclude the AWC listings:
All Areas & Types – down 39.2%
Greater Phoenix, all types – down 40.7%
Greater Phoenix, single family detached – down 41.8%
Greater Phoenix, townhouse – down 41.7%
Greater Phoenix, apartment style – down 37.4%
Greater Phoenix, mobile home – down 20.2%
Market pricing has not yet reacted to this change in the balance between supply and demand. Pricing is always a trailing signal.
Source: The Cromford Report May 30, 2011
Stephanie Weiss Moves (480) 273.7472
FSBOs Vanish, Sellers Turn to Real Estate Pros
For-sale-by-owners are rare nowadays. In fact, the number of FSBOs dropped to record lows over the past year.
Unrepresented sellers make up just 11 percent of the market, down from 13 percent in 2009, according to the 2010 National Association of REALTORS® Profile of Home Buyers and Sellers.
With today’s more complex transactions–such as with short sales and foreclosures and frequent changes in mortgage lending–more sellers are finding comfort in the help of real estate professionals to guide them through the process.
FSBOs once were lured to try to sell themselves because they thought they could save on commission fees, but now sellers are realizing that if they don’t use an agent, it’ll likely cost them more in the long run, experts say.
“Selling by owner does not guarantee the seller will put 5 [percent] to 6 percent more in his or her pocket in trade for doing all the work and taking on potentially costly liabilities,” Margaret Woda, associate broker with Long & Foster in Crofton, Md., told The Washington Times. “On the contrary, prospective FSBO buyers have their eyes on that 5 percent to 6 percent as well. It’s more likely the buyer will win this negotiation in a buyer’s market with a huge price reduction–probably even larger than the saved commission.”
Some FSBO sellers also often make the mistake of listing their home at a higher price than the market warrants. But even if they do find a buyer for that price, unless it’s a cash purchase, the home has to be appraised and many deals can then fall apart.
Source: “Fewer Sellers Going Do-it-Yourself Route,” The Washington Times (Feb. 11, 2011)
Foreclosure Mess Is Easing
from AzCentral.com January 4, 2011:
Metro Phoenix’s foreclosure activity likely peaked in 2010.
The 2010 tally for pre-foreclosures, or notice of trustee sales, in the region is 79,637. That’s an 18 percent drop from 2009, when a record 97,141 were filed, according to Information Market, a real-estate analysis firm.
Foreclosures, known as trustee sales in Arizona, did tick up slightly in metro Phoenix to 49,808 from 47,992 in 2009. Last year’s foreclosure number is artificially low because of Bank of America’s two-month moratorium during October and November.
But the drop in pre-foreclosures is a positive sign for metro Phoenix’s housing market.
Pre-foreclosures have been dropping steadily since July. December’s count of 5,475 is the lowest level for notice of trustee sales in the region since March 2008.
Lenders typically file a notice to foreclose after a homeowner is at least three months behind on payments.
The span between the trustee-sale notice being filed and the trustee-sale foreclosure has lengthened to several months because of loan modifications and lender issues.
Housing experts believe foreclosures will climb during the next few months as BofA works through its moratorium backlog.
But that shouldn’t impact pre-foreclosures and could inflate foreclosures for only a few months.
To declare 2010 the peak for foreclosures, notice of trustee sales need to keep falling during the next few months, and then foreclosures must follow with similar declines this summer.
Why Do I Need My LSR Now?
I have many people contact me to show a property and they assume I will jump in my car and meet them at the property, especially in this online world we all live in. First of all, not only is that not a “safe” thing to do from the Realtors perspective, but it doesn’t make any sense.
Most Realtors, before showing properties will require that a buyer looking for a home provide an LSR (Loan Status Report) which is basically a pre-qualification signed and completed by their lender stating that they have been approved for the loan, what that amount is, interest rate and whether they issued a GFE (Good Faith Estimate), etc. If a buyer is paying cash, they will need to produce a VoF (Verification of Funds) from their lending institution showing evidence that the buyer has the necessary funds to purchase the property. Additionally, if you as a buyer are really looking for a property that you are going to call home, doesn’t it make sense to sit down with the Realtor in their office to go over your specifications so that they can help you achieve your goal? Just because it looks good online, doesn’t mean it is and most Realtors know the neighborhoods they work very well.
Also, there is nothing worse that showing a buyer a home and then finding out they cannot buy that home they just saw and had to have. Not only is it a disappointment for the buyer but believe it or not, it makes the Realtor feel bad as well. A serious home buyer will get their LSR in advance of looking for properties so that when the buyer finds that dream home they must have, they can actually act on it.
There are very few deals, if any these days where a seller will accept a contract without evidence that the buyer is capable of purchasing that specific property, whether financing or paying cash and if financing, it’s actually required in the contract. When the buyer looks for a property and then gets the LSR, that can delay the buyer making an offer on the property and very possibly missing out on that deal.
The LSR also confirms that the buyer is ready, willing and able to look for properties and move forward. We as agents, believe it or not, do not like showing properties to a buyer for days and then find out they can’t qualify for a loan and that we’ve just wasted their time, our time, money, gas, etc. trying to find a home for a buyer that does not have the financial means to purchase.
You can obtain the LSR form online at: http://www.aaronline.com/documents/LSR.pdf
If you’re thinking of making a move, don’t hesitate to give me a call at 480.273.7472
StephanieWeissMoves@gmail.com
Search for properties at: http://StephanieWeissMoves.com
Active and Pending Listings for Metro Phoenix
This is an update of the total Phoenix Real Estate inventory through March 2010. If you click on Phoenix Metro Active & Pending Listing Statistics through March 2010, you’ll notice that that 36% of all pending transactions are in the under $100K price range and that absorption rate within that price range is almost 50%. Likewise, 26% of all pending transactions are in the $100-$150 range with an absorption rate of 44%. If you’re thinking of making a move, give me a call or send me an email.
StephanieWeissMoves@gmail.com
http://StephanieWeissMoves.com
The New Short Sale Seller Advisory
The new Short Sale Seller Advisory was designed to address some of the issues when deciding on a short sale and includes some of the following:
Before Proceeding with a Short Sale
Be Aware of Predatory “Rescue” Scams and Short Sale Fraud
Contact a Free HUD-Approved Housing Counselor or Contact Your Lender Directly
Free Services Available to Arizona Residents
Obtain Legal Advice
Obtain Tax Advice
The Consequences of Committing “Waste”
To obtain the form from the Arizona Association of Realtors, please click on the the following link:
http://www.aaronline.com/documents/ssseller_advisory.pdf
If you’re thinking of making a move, please give me a call.
http://StephanieWeissMoves.com/
480.273.7472
After the Loan Modification or Short Sale
Have you been involved in a loan modification or short sale within the last 3 years? As a consumer, would you go back to that “loan modifiation or short sale” lender (i.e the bigger banks such as Bank of America, Wells Fargo, etc) for a future loan or would you look to a different bank or lender? Do you care? The big difference could be whether your short sale or loan modification was successful. I think the general public may have a negative image of the large lenders and could possibly look elsewhere for loans down the road once they’re able. What’s your opinion? StephanieWeissMoves@gmail.com
Chandler AZ Real Estate
If you’re looking to buy or sell property in Chandler and would like more information on your neighborhood, please give me a call for an in depth analysis!
StephanieWeissMoves@gmail.com
480.273.7472
www.StephanieWeissMoves.com
