Hello!
First let me apologize for posting this late. The year end report will be out soon.
My name is Jeff Cameron with The Cameron Team at HomeSmart here Live from McDowell Mountain Ranch in north Scottsdale.
Thanks for tuning into my real estate market report! I will quickly review the numbers and then want to discuss the market and the economy quickly.
As of December 1, 2014, the numbers are below.
Active last yr/month Pending Closed PPSF Sold Months Supply
Metro Phx 19,862 +2% -2% 6,873 -7% +2% 4,182 -2% -18% $123 +4% 0% 4,555 +8% -4% 4.7 and 4.4
Scottsdale 2,166 +11% +3% 478 0% +10% 261 -18% -22% $205 +1% -2%
MMR 63 +26% -5% 16 -27% -11% 11 -21% -27% $239 +3% -4%
Tatum & Bell 25 +79% +4% 13 +9% -7% 8 +8% -7% $141 +-6% -8%
Here are the numbers. You can take a look at the change, but what are these numbers telling us????
- Active inventory of homes created a floor this year after doubling last year. Ranging from 19-21k homes for sale.
- Average home values rose 4%, but those of us paying attention know that values dropped this year. I see values dropping 5-15% depending on the area.
- Buyers are willing to Pay MORE than EVER for upgrades. Remember the Crazy 2005 market, a home nicely fixed up would set a new outrageous High price and then the home with no upgrades got more. Not today! Today I am seeing on average $2 for $1 of upgrades. Meaning a buyer is willing to pay for the remodeled home with $15k in renovation, while the same home(floor plan) sits on the market for $30k less.
- Although the market is calm and relatively balanced, home sales have been low for 15 months. The good news is year over year comparisons will be flat, versus negative.
Why isn’t our market improving more quickly?
- Over informed buyers. Buyers are REAL time into the market through the MLS. They see homes sitting. They see price reductions and values dropping. They are not motivated to get into the market and fear overpaying.
- SELLERS AND REALTORS. The market turned as Sellers began Over Pricing their homes in the summer of 2013. Then slowly dropping the price. Buyers get email alerts every time a seller lowers their price. They are being bombarded by these emails as sellers lower by meaningless amounts. A true reduction starts at 3% and goes to 5 or 10 depending on what the market is telling the Realtor and seller.
- JOBS and The Economy. The Arizona and Metro Phoenix economies are recovering more slowly than others. Job growth was 66k/53k year over year for AZ/Metro Phx and up 2.6%/2.9%. We need to jump start our economy here in the desert.
- Lenders! A little over a year ago FHA lowered their Max loan amount from $346k to $271k. Worse they increased the Mortgage Insurance to 1.25%. This was a STUPID move as the market was improving and good quality buyers were getting FHA loans, but now you only go FHA if forced. FHA is now the Sub Prime lender due to their HIGH MI.
- Lenders part 2. Lenders have added OverRides of additional requirements for borrowers. Borrowers are frustrated and shocked over the bullshit requested today. For example, a borrower was asked for written proof she was not paying child support for her 25 year old daughter, as they had different last names.
- Lenders part 3. After so many borrowers went through Hell to do a short sale, because the penalty was less than a foreclosure, Fannie Mae increased the Penalty on folks that did a short sale. Now, with less than 20% down, it must have been 4 years from the date of your short sale closing. Great timing! Are you trying to cause another down turn?
What cities have stronger rebound in their economies?
Austin, Seattle, Salt Lake City, Denver and Oklahoma city
They all have higher per capita income than Phoenix and all but the Okeys have higher percentage of college graduates. They also offer Better Education systems, Light Rail, Re-Development, Investment in infrastructure, and they don’t have the negative Politcal image Arizona has projected.
Some Quotes from Ronald J. Hansen, The Republic http://www.azcentral.com/story/money/business/2014/11/30/phoenix-economic-recovery/19691585/
The Phoenix area has had declining inflation-adjusted household income since 1999. Over the past decade, the region has underperformed on productivity and export growth, Muro said.
Barry Broome, president and CEO of the Greater Phoenix Economic Council, said the area remains hampered by a reputation for underfunded education and a national image of contentious politics.
During the recession, budget cuts meant universities trimmed the very programs the region needs to grow the most, he said.
“When we cut (higher) education, what we end up cutting is the advanced programs,” Broome said. “To us, it’s about getting the K-12 systems funded enough to where they can build (science, technology, engineering and math) and advanced placement programs, not reduce the system to a literacy program.”
Rather than going over all the number, I will post them on the screen. In a nut shell:
- Inventory is fairly flat compared to last year and down from last month. In 2012 and 2013, inventory grew by 50% each year, slowing the market.
- Home Sales are Historically down, but flat to last year. Sales all year have been soft.
- Average PPSF is up from last year, but home values dropped 5-10% this year overall. The average is up because of the product mix. The amount of sale under $150k is way down, while over $500k has risen.
- These patterns are very similar in Scottsdale and small neighborhoods like McDowell Mountain Ranch, where I live.
I a nut shell, 2014, was a slow real estate market with mild price declines. At the same time, buyers today want turn key and upgraded homes. They are willing to Pay for these upgrades and condition. We are seeing wild price swings based on upgrades and condition.
Homes priced correctly for their upgrades and condition are still selling rather quickly. Buyers are waiting for over priced homes to lower their price prior to making an offer.
It is so hard to understand how much over priced homes are hurting the market, if you are not a current active buyer. Imagine this. Your an active buyer and get emails on a daily basis from your Realtor
What do I believe will happen in 2015?
- The Economy will pick up and I believe 3-4% GDP. Partially due to low Gas prices. They are predicting Oil to stay low, $60-80, for as much as 5 years.
- Interest Rates will rise to 5% by year end.
- Home values Rise 3-5%
- New home construction will rise as builders have lowered prices to attract buyers.
We will still see dated homes being punished and nice homes selling for a handsome premium. That’s what I see, call me and we can discuss your market.
Jeff Cameron, HomeSmart 480-652-2004
480-652-2004