Each month I take part in a monthly survey for Credit Suisse reviewing the current status of our real estate market. Below is the cover page for the national release and then below are their findings for the Phoenix market place. I hope you enjoy their findings and would be happy to post your comments. Please comment etc…
My attempt is to create a place sharing real time up dates to the real estate market.
Thanks…Jeff Cameron
08 October 2009 Americas/United States Equity Research Home building / MARKET WEIGHT Monthly Survey of Real Estate
The Flurry before the Lull
First-time buyers rush to take advantage of the tax credit; expecting
slowdown in October. Our September survey of real estate agents showed a slight increase in traffic (our buyer traffic index increased to 44.8 in September, from 44.5 in August). We think this was nearly completely tied to first-time buyers attempting to purchase a home before the expiration of the first-time buyer tax credit on November 30th. We now have significantly greater concern that this tax credit has pulled forward demand and that we will likely see a lull in buyer traffic over the next several months and leads us to expect risk to homebuilding stocks in the near-term.
Traffic from mid-October onward will be crucial. We think that traffic
trends from mid-October onward will likely indicate if demand will continue at current levels after the tax credit expires, or if demand has been pulled forward. We saw a sharp decline in low-end new home traffic in September, as buyers of to-be-built homes needed to start the purchase process before September in order to close on the home prior to the end of November. With existing homes, it was feasible to sign a contract through September (and possibly early October) and to still have the closing before the end of November. Thus, we think that it will be crucial to see what happens to existing home traffic from mid-October onward, as it will then generally be too late for a buyer of an existing home to take advantage of the tax credit.
Tax credit likely to be extended, but traffic will still suffer. We see a
significant chance that the tax credit will be extended, but even so, we think that demand will fall off, as we do not think that consumers assumed that the credit would be extended so that most first-time buyers contemplating a purchase planned so that closing could occur prior to November 30th.
Markets with strong traffic levels broaden out due to first-time buyers.
Our survey pointed to the highest levels of traffic in Ft Myers, Seattle, Los Angeles, Orlando, Washington, D.C., Minneapolis, and Las Vegas. Several of these markets (Ft Myers, Los Angeles, Orlando, Washington, D.C., and Las Vegas) are repeats from past months based on the tremendous affordability resulting from the sharp home price declines, but others (Seattle and Minneapolis) saw strong demand, as the first-time buyer tax credit increased the activity.
08 October 2009
Monthly Survey of Real Estate Agents 22
Phoenix, AZ – Falling Inventory Causes Bidding Wars
(11,549 single-family permits in 2008, 4thlargest market in the country) Low-priced opportunities pushing demand. Buyer traffic was in-line with expectations, as our traffic index fell to 53 in September from 55 in August (a reading above 50 indicates traffic exceeded agents’ expectations). Agents highlighted the approaching deadline of the first-time homebuyer tax credit in September’s traffic levels. According to one agent, “Buyers are trying to close ahead of the tax credit expiration.” Others mentioned that buyers think the market has reached bottom, led by “bargain prices” and attractive mortgage rates. Agents also highlighted the role of foreclosures in September. One agent commented, “This is a typically slow time of year, but it is more active now because of the bank-owned properties.” There were also reports of improved pricing, as agents saw “bidding wars in affordable price ranges,” led in part by investor demand and decreasing
inventory. Prices improve as inventory falls. Home prices were higher over the past 30 days, as our price index increased to 56 in September from 48 in August (any reading above 50 indicates sequentially higher prices). This is consistent with the better sales activity coupled with the lack of foreclosure inventory. Our home listings index increased to 71 in September from 62 in August (any reading above 50 indicates lower inventory levels). However, we think lenders may not currently be listing many foreclosures as they attempt
trial loan modifications and seek to control the flow of foreclosures in an effort to limit price declines. One agent warned of “shadow inventory” that could be coming to market in the upcoming months, and could reverse the positive September index readings. Comments from real estate agents:
“We believe there is a shadow inventory being held by banks.”
“We have had good activity due to the tax incentive for first time homebuyers, but the shortage of inventory and demand in the marketplace has caused bidding wars in the affordable price ranges.”
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