by MICHAEL BODEEN | Jan 1, 2015 | Mike's "Real State" of the Market, Real Estate News
For sellers, the 2014 Phoenix Metro real estate market was a tough year. Not terrible or disastrous, but still not the greatest. It is however, in our opinion, a turning point.
For buyers, 2014 was (and still remains) a great year. Home values and mortgage rates stayed down, when most analysts expected both to rise, especially rates. Currently, mortgage rates are at an 18 month low!
For reasons we’ll explore, we’re expecting significant change ahead in 2015.
The greatest issue faced by sellers is the (still current) overarching lack of demand. There simply isn’t as many buyers looking for homes as experts had been anticipating. Why is this? There have been a number of reasons given and we aren’t at all sure which reasons bear the most weight, but here are the most common ones:
- Overly tight lending restrictions
- Generational differences in lifestyles (many more adults are living with roommates or family today than in the past)
- Large student loans keeping many from buying their first home
- Previous short sale or foreclosure defaults keeping buyers as renters (we call this the “penalty box”)
Fortunately, this lack of demand has not been totally disastrous. For one it has shown us that our market is healthy enough to remain balanced instead of tanking. Even after 12 months of relatively low sales valley-wide, prices have leveled, without much movement up or down. This is a huge plus for prospective buyers. Once demand begins to increase again, which we believe will happen by the 2nd quarter of 2015, prices will again rise.
As we have said before our current market is actually looking more traditional in a lot of senses. Foreclosures and short sales are back down to very low historical levels, the majority of current buyers are seeking owner occupied homes rather than investments, and national polls are showing that most people DO want to buy a home, but they are not yet ready.
On top of that we have good reasons to be positive going into 2015. Among them:
- There has been traction within the federal government to loosen their restrictions in light of the national lack of demand. For instance, Fannie Mae just recently have come up with a 3% cash down conventional loan for first time homebuyers. Not having this available really hurt the high 200K to mid 300k range this year.
- 2015 will be the first year where a large portion of folks who lost their homes to short sale or foreclosures in 2008 will be able to start buying again. There is great optimism that as these folks come out of the “penalty box” they will start to buy again.
- Interest rates may still remain very low thanks to reduced inflation, and thanks to cheap oil.
Though it has been a discouraging year for many sellers (especially in the 300-400k range), many of whom have had their homes on the market for much longer than we as Realtors generally anticipate, all in all I don’t think the Real Estate market is doing badly.
We also can’t be overly positive, as many from our cloth tend to be. To sell your home in the market still means being willing to be aggressive with your presentation (clean home, staged if possible, great photos), exposure (have the home advertised well on the MLS and other home finder websites), and pricing. If you are not willing to be competitive with your pricing then there is not much hope.
by JONATHAN BODEEN | Oct 31, 2014 | Mike's "Real State" of the Market, Real Estate News
Overall, the valley has taken a downturn in price over the last month. We have had a general imbalance in supply vs demand over the last year, but only now are we seeing the first downward price trends. That being said, not all areas are doing poorly. Sometimes we can get caught up in looking at the month to month. Phoenix is still doing better than this time last year. That cannot be said however, of every city here in the valley. Chandler and Tempe for example, are now less per sq. ft. then they were this time last year.
Time will tell if this is a little temporary dip, as is normal in a healthy and balanced market, or evidence of a longer lasting decline. We can get into a lot of trouble when we broadcast our opinions of the future, because of course we can’t guarantee anything. So take what I’m about to say with more than a few grains of salt. We expect prices to continue to dip over the next months, but not some sort of cataclysmic downturn like we had 5 years ago, just a gradual softening.
Hopefully demand will pick up in the spring in response to the improving job market and we will see an upward trend begin again. We know that people want to buy houses as much as they ever have, what they lack is ability and confidence. Only a little time can re-introduce some optimism into these potential buyers.
by MICHAEL BODEEN | Oct 13, 2014 | Bodeen Team Blog, Mike's "Real State" of the Market, North Scottsdale News, Real Estate News
When it comes to real estate trends nationally, Arizona often leads the nation statistically. We’ve seen this happen quite a bit this past decade, where in 2004 we started seeing Phoenix area homes get snatched up and home prices significantly escalate. We then watched the rest of the nation increase as well.
Market pricing peaked in August of 2005 followed by a steep decline which bottomed out in March of 2009. Foreclosures and Short Sales were the talk of the town. Investors poured into Arizona from all over to gobble up cheap homes. Flipping came to mean something much different than turning burgers.
Unfortunately, most all other states followed Arizona’s seismic downturn too. And that trend continues today. Amazingly, Arizona is now in the top five states with the lowest foreclosure sale notices. We’ve turned around, other states have not.
Previously, the rest of the nation had been watching Arizona’s prices rise and their values followed suit. Now, Arizona is falling and, in my opinion, we’ll now observe the rest of the nation’s values likewise dropping.
Current Market Trends:
Locally, our largest cities, Phoenix and Mesa still have higher median prices currently compared to last year at this time. Phoenix one year ago had a median sales price of $179,000. Today, that median has increased to $190,000 – a 6% increase. Mesa, one year ago, was $179,950 compared to $198,500 today – an amazing 10% rise. Chandler ($255,000) and Tempe ($240,000) was a no gainer and a no loser, remaining the same. So as an owner of residential real estate, you just read the good news.
The current median sales price however for most other cities is down compared to one year ago. We have been watching this change trending over the past 6 months, and now it’s official. So, how have other cities fared this past year? Here’s a few:
Anthem: $246,000 vs $245,000. Less than 1% Price Drop.
Peoria: $230,255 vs $224,900. 2% Price Drop.
Fountain Hills: $391,950 vs $382,500. 2% Price Drop.
Scottsdale: $450,000 in 2013. $430,000 currently. 4% Price Drop.
Paradise Valley: $1,517,000 vs $1,362,000. 10% Price Drop.
So the market has changed over the past two months as previous stronger markets have weakened and a few of the weaker markets are improving.
Takeaway? Sellers, be realistic in pricing. Buyers, conditions for you continue to improve. Be ready.
by MICHAEL BODEEN | Sep 15, 2014 | Mike's "Real State" of the Market, Real Estate News
It’s still a mystery, really. The inventory of homes for sale continues to drop. The amount of new listings that popped up on the market has been the lowest since July 2001. Amazingly, demand is also still dropping! In July we had the fewest amount of sales since July of 2008. It is certainly a unique situation, though I can’t say it’s bad.
According to The Cromford Report, “this is quite unusual and shows us how extreme the shortage of new listings has become. New listings have been arriving at a rate which is lower than in any August we have seen since 2001. In the last four weeks we saw 15.6% fewer new listings than last year and 13.2% fewer than in August 2012, the previous low record holder.”
The short of it is that we are now on the cusp of a balanced market here in the valley. As some of our clients can tell you, the summer has not been an easy one for sellers. inventory of homes (supply) was high and demand was low. Many of the listings on the market have either expired or been cancelled. Because of this summer’s buyer’s market, most sellers are now too timid to put their homes up for sale, which is the main factor driving the low inventory.
Ironically, this has actually created a much more balanced market, one that is more favorable to sellers than it was even a few months ago. We are no longer in a buyer’s market, we are at the threshold of balance. But how long will the decrease in inventory last? Well, that’s any ones guess.
The vast consumer mindset always seems to be 3 to 6 months behind what is actually happening in Real Estate. Most people believe we are still in the buyer’s market and have no idea it’s actually a much better time to sell than it was even a month or two ago!
To prove my point, here are the basic MLS numbers for September 1, 2014 relative to September 1, 2013 for all areas & types:
- Active Listings (inventory): 23,296 versus 18,182 last year – up 28.1% – but down 2.5% from 23,900 last month
- Pending Listings: 5,951 versus 7,302 last year – down 18.5% – and down 2.1% from 6,079 last month
- Monthly Sales: 6,417 versus 7,187 last year – down 10.7% – and down 6.2% from 6,844 last month
- Monthly Average Sales Price per Sq. Ft: $126.10 versus $119.38 last year – up 5.6% – but down 0.4% from $126.60 last month
- Monthly Median Sales Price: $196,000 versus $182,000 last year – up 7.7% – but down 0.5% from $197,000 last month
Regards,
Mike Bodeen
![Our Traditional Market Returns]()
by MICHAEL BODEEN | Aug 5, 2014 | Mike's "Real State" of the Market, Real Estate News
The Phoenix Metro residential real estate market continues to slog along…supposedly. What’s interesting is that when we compare now with the past few years, the pace of the market has slowed because there are a lot less sales. Why are there a lot less sales? The main difference is that the investor gold rush has slowed. Now that the investor market has cooled its jets, what we’re left with is a “traditional” market.
So what does our traditional market look like? Fewer sales. Longer market times. Conservative annual appreciation rates. Oh, you mean like most of the rest of the country? As I’ve mentioned many times in the past, what most often has described the Phoenix and Scottsdale real estate market is radical, frenzied, hurried. Adjectives such as conservative, moderate, and subdued have seldom described this market, but this is where we currently find ourselves.
Much of the rest of the country is also in a lull and many cities are experiencing decreasing prices. We are currently through our 24 month price run up, and now in moderation mode, but NOT decreasing in value, in fact still slightly increasing.
The good news for Sellers is that even though demand has remained low over the last 6 months, creating a mild buyer’s market, the supply is quickly shrinking. Even in just the last 30 days we have seen a dramatic decrease in the amount of homes available. As I’ll explain more below, this is mainly due to a lack of new listings, probably sellers reticent to try selling in the recent buyer’s market. As a result, we are back in the balanced zone, though probably not for long. This is Arizona after all.
NEW PHOENIX-METRO LISTINGS AT 14 YEAR LOW
In a recent analysis of new listings hitting our market, Michael Orr of ASU and the Cromford Report has compared the first two weeks of July 2014, to the same two weeks for each of the previous 14 years going back to 2001, and states that new listings are at their “lowest” point since then. July 2014 registered 3568 new listings. When compared to previous years, the next lowest listing total was 4027 back in 2012. In 2001, for example, there were 4021 new listings. The high point of 6651 new listings was in 2006. So, if you’ve been considering selling your home, now might be an opportune time.
CANADIANS LOVE ARIZONA REAL ESTATE – CHINESE? NOT SO MUCH!
We’ve long known that Canadians love to buy real estate in Arizona. For a while last year, Canadians were the largest out of state buyers even surpassing Californians. With the booming economy of China, some have wondered if the Chinese will commence a buying spree in Arizona. Well, according to the National Association of Realtors, that is not likely in the near future. I quote from NAR:
There is little to no evidence of a large amount of buying from China in Arizona. It seems from all the evidence that the Chinese, many of whom are wealthy people looking to diversify where they keep their assets, are focused on the most expensive places to find housing, namely the fashionable areas of California. The median price paid by a Chinese buyer, according to NAR, is $523,148 for the
period April 2013 to March 2014. This is far higher than the buyers from other major countries and more than double the median for Canadians which was $212,500. When it comes to the Chinese buyer, our affordability seems to be a disadvantage. Canadians, however, appreciate a bargain and also our overdoses of sunshine.
2013 PROFILES OF HOME BUYERS AND SELLERS
So what do we know about the Buyers and Sellers of 2013? Who’s bought? How old were they? How much money did they make? What was the typical size of their home purchased? These and a multitude of other data are available to Realtors who opt to purchase it. Some of the findings include:
Characteristics of Home Buyers
– Typical buyer was 42 years old; 31 for the first time home buyer, and 52 for the repeat buyer
– 2012 Median income of buyers was $83,300. $64,400 for First Timers. $96,000 for repeats
– 66% of Home Buyers were married couples. The highest share since 2001
– Typical home purchased was 1900 SqFt in size, was built in 1992, and had 3 Bedrooms and 2 Baths
– 80% of home buyers purchased a detached single-family home
– 14% of recent buyers over the age of 50 bought a home in senior related housing
The Home Search Process
– The first step for 42% of Home Buyers was to look online for properties
– 14% looked online for information about the Home Buying Process
– The overall use of the internet for the buyer’s home search rose to 92% from last year
– The typical home buyer searched for 12 weeks and viewed 10 homes
– For more than half of buyers finding the right house was the most difficult step in the process
Home Sellers and Their Selling Experience
– Almost half of home sellers traded up to a larger size and higher priced home
– The typical seller has lived in their home for nine years, up from six years in 2007
– 88% of sellers were assisted by a real estate agent
– Recent sellers sold their homes for 97% of listed price. 47% reported they reduced the price at least once
– 13% of recent sellers had to delay selling due to their home’s value being less than their mortgage
THANK YOU!
A very special thanks to those of you who have recommended or referred me to others to help them in the home buying or selling process. Referrals are truly the lifeblood of our business and are the highest compliment we can receive. I personally meet with the client and handle their business. Jon handles the administrative, marketing, and follow through for which I’m grateful. It frees me up to do what I do best, which is to accomplish our client’s goals!
So, if you know of someone considering whether or not to make a real estate move, please let me know, or give them my direct line. I’d love the opportunity to help them anyway I can. 602-689-3100.
Mike Bodeen
by MICHAEL BODEEN | Jun 20, 2014 | Mike's "Real State" of the Market, Real Estate News
OK you number junkies, check this out!
Now, I can’t swear to it exactly, but I would have to say (nay, repeat) that the Phoenix Metro area has some, if not the best real estate reporting in the nation from a variety of credible and intelligent – and dare I add, accurate, sources. And these sources are mostly from the private sector including our own Arizona Republic, ASU School of Real Estate and Business including Michael Orr’s Cromford Report. There is really no excuse for anyone, least of all Realtors, to not be on top of what’s happening in the local real estate numbers game. The key for Professionals is to be able to honestly cherry pick this information for our clients in a quick and painless way so that you “catch the drift” of what’s happening in our market.
There is really no excuse for anyone, least of all Realtors,
to not be on top of what’s happening in the local real estate market.
Why is this important you ask? If you can have the best available information on any given matter, you can (should) proceed wisely to make decisions, or certainly to help point others to an honest and credible source for this direction. An example would be in our current Phoenix Metro area market, that has continued to slow since last August – some have used the word “stalled.”
The Full report is available on our weekly blog which goes out every Monday morning. We call it “Mike’s Monday Morning Market Snapshot.”
In a Nutshell, Here are the Highlights of the data for Phoenix Metro:
1) Monthly Sales are down 21% from this time last year
2) Total inventory of homes for sale is up 46% from last year
3) 3.90 Month Supply of Available Homes for Sale – No change from last month
4) Average sales price up 4% over last year. Median sales price up 9.7% year over year
5) Median Sales Price Forecast from Pending Price Index for next month: No change.
6) Foreclosures Pending: Down 49% from one year ago
7) Average Days on Market: 83 vs. 66 last year
8) Purchase Applications: Phoenix ranks 38th out of 50 states for new loan applications. (Note: Michael Orr stated, “We have just seen the highest percentage of sales financed by loans since November 2008.”
