What is happening with our economy?
Everything I see shows the economy is growing. First, housing has been the big drag on the economy and the consumer. I believe housing has taken 1-1.5% of growth from the economy each of the past few years. But now, at least here in Arizona, they can’t build homes fast enough.
I thought the Federal Reserve was suppose to keep us out of the Boom Bust cycles of the 1800’s. It seems to have spread them out by decades but made them much more severe.
With construction, as times are good and demand is there homes and buildings are constructed. Then things start to peak and they over build. Next, construction is practically halted for years to absorb that excess inventory. However, construction is slow to stop and slow to start. Thus the overbuilding and now an inability to keep up with demand.
In 2011, 7,250 homes were built in metro Phoenix area. That is down from around 60,000 in 2006. Last year, it grew to nearly 12,000 but not nearly enough to handle the demand and thus values grew at 30%+ from August 2011 to June 2012 when looking at average price per square foot.
Housing will push the economy in 2013. It will start in Arizona and other states and move across the country as other states run their course through their own corrections.
Next, the economy is ready to swing up. It constantly goes up and down. Up and down. Just like a chart for a stock. In a perfect world it creates higher highs and higher lows as it moves forward through time. Our economy started contracting in 2007 with housing. The financial world realized in 2008 and markets bottomed in 2009. The economy has struggled to grow as the housing and financial crisis had to make its way through the system. Its time for the bad ass dog, US Economy to bark. It will do so in 2012.
Although politics will always be there, we have fought through a gazillion crisises and prevailed. We had TARP, QE1-3, Elections, Fiscal Cliff, Debt Ceiling, Taxes and still the Sequestration. None of these has been the back breaker for the economy. All they have done is give consumers and businesses a reason to sit on the sidelines and not invest in the economy. It is time to invest and they will or they will miss the next leg up.
I know they call this the jobless recovery. It has been a weak recovery. That is because the bottom happened, but problems still had to work their way through. There has been about 3.7 million jobs created since the worst part of this recession. Those people are spending money and helping to drive this economy. We could employ another 2.5 million in 2013. Again, helping the economy move forward.
Oil is another factor. I have been reading a lot about how the new processes to bring oil to the market in the US are about to change the market. Some say this will re-energize factories and manufacturing in the US. This could also help erase a great portion of our trade deficit, something no one ever talks about. Also, new supply would keep prices from rising too fast with economic growth.
For me, this paints a rosy picture for our economy. It shocks me how so many people are still seeing Doom and Gloom. 2013 will be a very good year as long as Polotics, Wars and Natural Disasters are limited…. Had to have my disclaimer.
Just My Opinion…JeffRCameron
The report below is from:
V.P. Business Development, Real Estate Analyst Grand Canyon Title Agency, Inc. FWilcox@GCTA.com 602-648-1230
2012 Ends on Higher Ground
The December 2012 median sales price per square foot ended with the highest sales price for a month of December since 2007. The number of jobs in both Greater Phoenix and Arizona in December 2012 were the highest for a month of December since December 2008. For the year of 2012 there were 11,852 single family building permits compared to 7,204 in 2011 for an increase of 65%, which likely means more new homes sales in 2013. See charts on pages five through eight for the number of single family building permits by city, the median sales price per square foot and the number of jobs.
While higher sales prices and more jobs are numbers we want up, some numbers we want down. Down are the number of foreclosure starts, properties foreclosed on, and lender owned sales. Foreclosure starts in December 2012 were 1,721 compared to 2,867 in December 2011 for a decrease of 40%. Foreclosure starts are down 74% when comparing December 2012 to December 2009 when there were 6,646. The number of foreclosed on properties at trustee’s sale auctions were down 38% in December 2012 compared to December 2011. And expectantly, with foreclosure starts and foreclosed on properties in decline, there is a natural reduction in the number of lender owned sales. Lender owned sales in December 2012 were 499 or down 83% compared to December 2010 when there were 2,945. See charts on page nine.
For a look at some causes of our real estate recession in Greater Phoenix go to page three and view the chart Job Losses Lead to Lender Owned Sales. In the chart, I combined job growth data with lender owned sales of single family properties. Loss of jobs evenutually led many households to lose their home to their lender. A lender owned sale is a property a lender foreclosed on, took title to, and then listed and sold. Page four shows historic sales of single family properties under $50,000. These inexpensive sales were the result of lender owned properties dumped into the market. This caused home values to plummet. Now the purchase of a good single family property under $50,000 is getting hard to find.
The December 2012 median price per square foot for single family properties dropped 2.1% from November 2012. This is the first drop in this price measurement after fifteen consecutive months of increases. Sales price charts on pagees seventeen through nineteen.
When comparing single family sales in 2012 to 2011, 27% of sales in 2012 were short sales compared to 23% in 2011. Lender owned sales were 14% of sales in 2012 compared to 37% in 2011. When comparing how single family properties were purchased, cash purchases were 41% both in 2012 and 2011. In 2012, 34% of purchases were with conventional loans compared to 30% in 2011. FHA insured loans made up 19% of purchases in 2012 compared to 24% in 2011. VA insured loans were 4% of sales in both 2011 and 2012. See charts on pages eleven through sixteen.
Page twenty shows single family listing trends and page twenty-one has information on the seminar Arizona Rising: Roads to Prosperity.. Wish you a good 2013!