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Credit Suisse – Real Estate Survey – SHARP LIFT TO BUYER CONFIDENCE

March 10, 2012 By Jeff Cameron

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More and more good news about the real estate market. Credit Suisse does a monthly survey of traffic, showing activity, prices, incentives and lending issues. We have finally turned a corner and are showing strong results in the Metro Phoenix Real Estate Market.

Below is the Case Shiller Home Price Indices. You can see how the market just blew up. Prices stretched way high and then fell like a rock. Now the market is bouncing in this over sold state. Values should have stayed on the trend line.

Most people would agree that we will now correct back to the trend line. If you were to draw a line along the trend that was in place for the years 1994 to 2004. Then extend that line out to 2012, the line would cross at the 180 mark. Today, prices are ranging from 80-110. It would be very logical to expect prices to climb back to 180 over the next 2-4 years.

What do you think? Post your opinions below!

 

Credit Suisse - Real Estate Survey - SHARP LIFT TO BUYER CONFIDENCE
■  February brings significant further improvement to buyer traffic:  Our
February Survey of Real Estate Agents showed our buyer traffic index at its
highest level since we started the survey in 2005. Continuing the trend from
January, we again saw significantly better homebuyer confidence in
February. This heightened confidence along with the record level of
affordability appears to be helping to stabilize home prices.
■  Traffic levels well ahead of expectations of agents:  Our buyer traffic
index increased reached 62.3 in February, up from 49.8 in January, and the
highest level since we started the survey in 2005. Readings above 50
indicating traffic above the expectations of agents. We have seen brief
improvement in traffic at other times in recent years (around the various
government tax credit programs), but see this sharp improvement occurring
without any such program, but benefiting from the tremendous affordability
and improving underlying employment  growth (and buyer confidence).
Weather likely helped to the early start of the Spring season, but the better
confidence suggests that this will be more sustained than simply a shift in
the timing of demand for the Spring season.
■  Pricing looks nearly stable for February:  Our pricing index improved in
February to 41.0, up from to 37.6 in January, and close to a stable level of
50. Our traffic index is based on contract activity, rather than closings,
making this a timely indicator. The last time our price index at this level was
at the end of the homebuyer tax credit in Spring 2010. The improved buyer
demand and limited quality inventory has helped to stabilize prices. We will
watch trends closely as more foreclosure supply comes onto the market in
the upcoming months.
■  Reduced time needed to sell homes points to positive future pricing
trends:  Our time to sell index moved up sharply to 55.9, up from 45.5 in
January. A time to sell index level above 50 points to a shortening time
needed to sell a home, and this is the first time we have seen a shortening
time since we started the survey. We view this as a particularly key measure
as it reflects the impact of both traffic and inventory, and generally is a good
predictor of future pricing trends.
Traffic Up in January; Confidence, Rates, and
Weather Bring Out Buyers
For those who may be unfamiliar with our survey, we center our indices around 50
so that readings above 50 indicate positive or improving trends and readings below
50 indicate negative or worsening trends. Please see page 5 for a full description of
our survey methodology.
February brings significant further improvement to buyer traffic:  Our February
Survey of Real Estate Agents showed our buyer traffic index at its highest level since we
started the survey in 2005. Continuing the trend from January, we again saw significantly
better homebuyer confidence in February.  This heightened confidence along with the
record level of affordability appears to be helping to stabilize home prices.
Traffic levels well ahead of expectations of agents: Our buyer traffic index increased
reached 62.3 in February, up from 49.8 in January, and the highest level since we started
the survey in 2005. Readings above 50 indicating traffic above the expectations of agents.
We have seen brief improvement in traffic at other times in recent years (around the
various government tax credit programs), but see this sharp improvement occurring
without any such program, but benefiting from the tremendous affordability and improving
underlying employment growth (and buyer confidence). Weather likely helped to the early
start of the Spring season, but the better confidence suggests that this will be more
sustained than simply a shift in the timing of demand for the Spring season.
Pricing looks nearly stable for February:  Our pricing index improved in February to
41.0, up from to 37.6 in January, and close to a stable level of 50. Our traffic index is
based on contract activity, rather than closings, making this a timely indicator. The last
time our price index at this level was at the end of the homebuyer tax credit in Spring
2010. The improved buyer demand and limited quality inventory has helped to stabilize
prices. We will watch trends closely as more foreclosure supply comes onto the market in
the upcoming months.
Reduced time needed to sell homes points to positive future pricing trends: Our time
to sell index moved up sharply to 55.9, up from 45.5 in January. A time to sell index level
above 50 points to a shortening time needed to sell a home, and this is the first time we
have seen a shortening time since we started the survey. We view this as a particularly
key measure as it reflects the impact of both traffic and inventory, and generally is a good
predictor of future pricing trends.
Phoenix, AZ – Traffic Remains Strong as Higher
Prices and Better Economy Creates Urgency
(7,259 single-family permits in 2010, 4th largest market in the country)
Traffic jumps on sentiment that prices are on the rise. Traffic increased in February,
as our buyer traffic index improved to 74 from 53 in January, coming in to exceed agents’
expectations for this time of year (readings above 50). Agents stressed that buyers felt the
market had reached its bottom and wanted to take advantage of affordability now before
it’s too late. One agent mentioned, “Traffic is way up. Buyers are afraid they will miss out
on deals unless they act now!” Another agent highlighted, “Buyers are realizing they might
need to buy now before prices start increasing at a faster rate.” This sentiment reflects the
more positive outlook we have seen in Phoenix in recent months. In addition to a better
outlook on housing, agents also noted that buyers have a better outlook on the general
economy as well, which only adds to the demand. One agent noted, “Buyers sense an
improvement in the economy.” Another added that snowbirds have been very active as
well.
Strong demand with shrinking inventory leads to higher prices in February. Agents
pointed to higher prices in February, as our home price index increased to 71 from 65 in
January, with readings above 50 pointing to sequentially higher prices. This marks the fifth
consecutive month of stable or higher pricing for the region. Inventories continued to fall in
February, despite being a month in which inventory typically rise. Our home listings index
came in at 79 (from 80 in January), with readings above 50 pointing to lower inventory
levels. Meanwhile, our time to sell index came in at 76 (unchanged from January), pointing
to a reduced time to sell (readings above 50). We view the lower inventory levels and
reduced time to sell as positive indicators for future pricing, though we remain concerned
about the potential shadow foreclosure inventory not currently held for sale.
Comments from real estate agents:
■ “Buyers think the market has bottomed and are coming back to shop. I have a lot
of snowbirds at my open houses too.”
■ “The market is definitely upbeat. Buyers feel that prices are finally rising.
Credit Suisse - Real Estate Survey - SHARP LIFT TO BUYER CONFIDENCE

Filed Under: Breaking NEWS!, How's The Market, Latest News, Market Report, Phoenix, Scottsdale Tagged With: Case Shiller, Credit Suisse, home values, how is the market, metro phoenix real estate market, scottsdale

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