by MICHAEL BODEEN | May 14, 2014 | Mike's "Real State" of the Market
Well, there’s no doubt about it, we’re in a Buyer’s Market and for the short term it will continue, but it’s not all that bad.
First of all, the facts: home sales of all types in the Phoenix Metro area are at their lowest level since August of 2009 – almost 5 years ago, indicating a huge drop in demand.
Second, there are more homes on the market now than there have been since June of 2011 – almost 3 years ago. We currently have 30,506 homes listed for sale, which is up from only 20,061 one year ago – a 52% increase in just one year.
We currently have a 4.6 month supply of total inventory, which is not that bad historically, and probably close to what we had in the early 2000’s. When compared to last couple of years however, it does not look to snappy, since it the highest level since May of 2011. But consider this, when comparing the amount of inventory to February of 2008, you’d find that we had 20.4 months of supply. Essentially, when looking at the short term, it looks a little grim, but when you stand back and look at the history of Real Estate and what a normal market should look like… We can say we’re doing alight!
Third, homes that are in currently in escrow have dropped 30% when compared to this time last year. It went from 11,502 to just 8,022. Most of us agree that this is due mostly to the investors have left Arizona for other parts of the country. In a way, that’s okay as they were the bottom feeders anyway.
And lastly, there is a huge disparity between the average price per square foot ($177 PSF) of homes on the market now to the prices that others are actually selling at ($135). Clearly many of the homes listed will need to drop in price if they want to be competitive in this buyer’s market.
There is however positive news in our market! The amount of homes currently in foreclosure is at its lowest level in 7 years, that’s right March of 2007 to be more precise.
Also, mortgage rates continue to hold their own, which most predict will not last very long, especially if the macro economy continues to improve.
So buyers, it’s time to get off the fence. There’s a good supply and low mortgage rates! Give us a call. 602-689-3100.
by MICHAEL BODEEN | Apr 7, 2014 | Mike's "Real State" of the Market
From 2005 to 2008, folks in Phoenix were buying homes in mass. Home loans were easy. If you could fog a mirror or blink three times in a row you were in! What few people thought about back then was having to pay back the loan, because as you remember, home values were shooting through the roof! It was not in most anyone’s thought track until the band stopped playing and the market crashed.
As the market turned downward, many of these buyers realized that they could not afford their loan. To add to that burden, they learned that selling their home wouldn’t relieve them of the debt because they owed more than the home was now worth.
The downturn was sharp and prolonged. Within three years hundreds of thousands of homeowners were “upside down” in their mortgages. Many lost their home in foreclosure or sold at a “short sale.” Because of the rules imposed by Fannie Mae, Freddy Mac, FHA, etc., these homeowners would have to wait a set period of time, two to seven years, before they would again be allowed to obtain a new loan, and so of course they decided to rent.
As you know, property values began rising again in 2011, and these renters wanted to get back into homeownership. We call these folks “boomerang buyers.” Ironically enough, most of them are baby boomers and so I call them Boomerang Boomers, Boomer Boomerangs, or even Boomer squared. I digress. The point is, right now we are very much relying on them to float this current market since demand has dropped so low in general.
The hope is that in the next few years these boomerangers will be getting back into the market more and more. Heaven knows the millennials aren’t buying homes like we thought they would, so for now are hopes rest with boomer squared.
by MICHAEL BODEEN | Jan 22, 2014 | Mike's "Real State" of the Market
It’s settled then. I think. The Phoenix Metro real estate market that is. Phoenix is currently a balanced market!Actually to be more accurate, in the blink of an eye we have passed through a balanced market in December and are trending to a Buyer’s market.
I realize that may not sound all that exciting, but a balanced market, even just temporarily is cause for wonderment. It’s something we’ve not had for years – yes years – and has only occurred about 5 times in the past 11 years. Our last one was three years ago this month.
So Mike, exactly what is a balanced market and how do you support that declaration? A balanced market is where supply and demand meet and neither buyers or sellers have an inherent advantage. Take a look at this chart which indexes the balance of the market over the last 12 years. It is a basic computation of supply vs. demand and other factors where 100 indicate balance. Figures above 100 show a seller’s market where figures below 100 show a buyer’s market.
Our market had been above the “100” level for three years (See chart), firmly entrenched in a seller’s market. It has been trending to buyers since June, and if history is a solid gauge, it will stay a buyers’ market for a while. But history may not play out on this one.
The good news for sellers has been the torrid appreciation since the fall of 2011. This has enabled many sellers to “move up” and “move on.”
The good news for buyers is that price increases have now moderated, and with rare occasions, multiple offers are no longer a player in this market. Pending sales have decreased which will also slow sales and the rate of appreciation. Most “experts” believe the Phoenix metro market will have 6% appreciation for all of 2014.
The amount of foreclosures and short sales has diminished greatly. This is terrific news for everyone. Pending foreclosures are at their lowest level since 2006 and continue downward. Interest rates are still okay, even dropping recently, so the increase in home supply and decrease in demand “looks like” the solidification of a buyer’s market.
I say “looks like” because there is a new “wild card” out there which will bring the “boomerang” buyers back. We’ll be addressing this soon as it will potentially be a major real estate game changer in the Valley.
![Change Afoot for Phoenix]()
by MICHAEL BODEEN | Dec 26, 2013 | Mike's "Real State" of the Market
November’s sales data is still being digested, but it appears there is a change afoot in our residential market. Of course the market changes every month, but we think there is a defining trend taking place that is now favoring buyers. Here’s the numbers (with the aid of the Cromford Report):
- Active Listings: 24,043 vs 18,122 last year at this time – up 32.7% – and up 3.1% from last month
- Under Contract listings: Down 37.8% – 8739 vs 14,060 last year – and down 1.1% from last month
- Monthly sales compared to last year: Down 23.8% – and down 15.9% from last month
- Monthly Average Sales Price per SqFt: Up 16.4% ($123 vs $106 last year) Down 0.9% from last month
- Monthly Median Sales Price: Up 18.3% ($183K vs $155K last year) Down 0.8% from last mont
According to the Cromford Report, Pending listings (homes under contract) have stabilized, suggesting that the demand for homes isn’t dropping any lower. Another complicating factor is that November had only 18 working days compared to December which has 21, so there were 3 less days of the month that folks were doing business. This could mean that we are just seeing unusually low numbers for monthly totals, which could be turned around in December. Michael Orr of ASU and founder of the Cromford report expects sales prices to stabilize in the area between $125 and $130 per square foot.
What does this all mean? Basically that although there are more homes on the market than there are people willing to buy them, it’s not necessarily an indicator of values continuing to drop, but just a balancing. Sowhy the drop in demand and the increase in supply? Well there are a few reasons. One is that home values overall have increased to the point where the investor crowd has all but backed out of the market. The second factor is seasonal. In a healthy market, buyers tend to cool their heels a little bit during the holiday season.
Also on the forefront, I am predicting a slight renewal of the short sale and foreclosure industry here in the Valley. Last month we talked about how the amount of distressed properties (short sales and foreclosures) on the market has been waning heavily. This was because the investor crowd was buying up foreclosures and short sales left and right. Why are short sales and foreclosures coming back? Well while the recent price increases have gotten many home owners out from under water, there are many homes (particularly ones purchased in 08) that are still very upside down!
Now with prices stabilizing this last November, many people will have to decide what steps to take next. For many, this will mean a short sale or foreclosure. That is why I believe we’re not completely out of the water yet, and it may yet be a while before our market goes back to “normal.” We have certainly come a long way from 2011 at the lowest point however, and we are on the mend. Or at least, so it would seem.
Finally, if you or someone you know is thinking about their next real estate move, we can help. With more than 35 years professional experience, Mike will advise you as to what’s best for you personally. Remember, there is no “one size fits all.” When you hear or read that now is a good time to buy or sell, that is a marketing generalization that may or may not apply to you. Mike will take the time to sit down and counsel you after learning about where you’re at. And of course, there is no cost or obligation! 602.689.3100
by MICHAEL BODEEN | Nov 25, 2013 | Mike's "Real State" of the Market
In December 2009, the Phoenix Metro area had over 50,000 foreclosures pending, no doubt more than at any time in our history. These properties were in the pipeline to be sold off at a Trustees Sale by the counties. According to an article recently in the AZ Republic, in 2011 more than 1500 houses per month were being auctioned off. Today that number is down to just 100 per month!
Back then as many as 100 bidders could show up on any given day to bid on properties. Today, there is just a handful. Major corporate investors have snapped up (literally) thousands of properties, most holding them as rental investments. Fix and Flips have been very popular as well, which has helped to turn neighborhoods around in value and look.
Is the foreclosure market done? The best we can say with certainty is that it’s done for now. Certainly we’re trending well towards that goal for our communities, but there are many thousands of homeowners who are still “underwater,” owing more on their homes then the house is worth. Any major negative change in our market could start the process over again.
Fortunately, as values have continued to rise, many folks have been able to sell or refinance their homes. There are also government programs that can still help folks who find themselves stuck. If you or someone you know falls into this category, give me a call. I can help! (602) 689 – 3100
by MICHAEL BODEEN | Oct 21, 2013 | Mike's "Real State" of the Market
We have more good news locally and nationally real estate-wise. For once in perhaps decades, we can say that the current state of the Phoenix metropolitan real estate market is bordering on healthy. Supply and demand are almost perfectly aligned, interest rates remain low, foreclosures are waning, and home values are still moving up. Well this last part may not be great news for buyers, but perhaps it can be their encouragement to move forward. Also today, the government agreed to give our country a reprieve for a few months until the next fiscal crisis comes around the corner.
First off, I want to thank Michael Orr of ASU and author of the Cromford report that I subscribe to for his nationally cutting edge statistics unmatched anywhere – at least that I’m aware of. Michael reports the following:
$121.32 is the sales $/SF averaged for all areas and types across the ARMLS (our Multiple Listing Service) database – This is 1.9% higher than was reported one month ago.
REO (Bank Owned) sales lost market share from 9.0% to 7.5% since last month. Remember, it wasn’t too long ago that 2/3 of all home sales in Arizona were either REO or Short Sales. This is a terrific turnaround.
Normal (non-distressed) sales now account for more than 85% of all sales. Short sale and REO sales for the most part are having no effect on our market pricing or movement.
The average price for “Pending” as of October 15th for normal properties is $134 PSF. This will be another monthly increase before values begin to taper off.
Orr reports that market balance between supply and demand will be reached in the first half of November. “Unless things change, the buyer will have the advantage from December on until normal conditions are restored. If demand drops so low as to be below the supply, as is increasingly likely, then any sales price increases will be based on momentum alone and not market fundamentals.”
Well things did change governmentally, which is at least temporarily good news. We can now honestly say it’s a good time to buy AND sell.
If you’re thinking of buying or selling, and perhaps you’re not sure which way to go, give me a call. My 35+ years of counsel and experience will help!
