When will Prices Rise? Phoenix Real Estate Market Report – Credit Suisse – August 2011
I listed and sold a home this last week. We had several offers and sold it for Full Price with my “Premiere Home Launch System.” Some might ask, why didn’t you price it higher? My seller wanted to price higher, but after a review of the comparable sales, it was determined this was the right price. The buyers knew there were other offers and offerred based on that fact.
By the way, with about 40 home sales closed for 2011 by me and my team, we have experienced multiple offers and bidding wars on about 65% or 2/3 of the home sales.
I showed 3 of my buyers since last Thursday. I called and emailed all the agents to find out if the home was Truly Available or really under contract. I was lucky to get a 25% response after several days.
My first time home buyers in Anthem found 3 homes they would happily call their own. As I began writing offers, calling or emailing again to notify the offer was coming and try to confirm they were available, I found them all to be sold. It was terribly disappointing. My other 2 buyers experienced similar situations. There were homes they just had no interest in due to condition or location. There were always homes they liked, but we found them all to be under contract, yet showing as Available in the MLS.
When will prices rise? Honestly with the political bull shit going on in DC, who knows what affect that will have on the housing market. However, will inventories at down 50% year to date in the metro Phoenix real estate market, prices have to rise soon. But will appraisers let them? Yes, is the answer. The question is how long will it take for appraisers to learn what is happening in the market.
We are headed into the off season and the holidays. Typically a slower selling season. However, last year the holidays were on fire in the Metro Phoenix Real Estate Market. Will the Phoenix real estate market stay hot this year? I believe so. There are so many buyers, PENT UP DEMAND, as any livable home is listed for sale at a reasonable price, it will sell. Values will begin to increase.
What about the economy and stock market? Those are important. But people are moving to Arizona again. We need 35,000 – 40,000 New homes built annually to keep up with the population growth. All the vacant homes left from investors and the financial crisis have been filling that need as home building is down to 10,000 a year for the last couple of years. Now, most Foreclosures and Short Sales have families in them or vacating them very recently. They need to rent a home. People that have been renting are now becoming eligible to buy a home or really I mean qualify to get a loan again. Remember 2 years after a Short Sale and 3 years after a Foreclosure or Bankruptcy. This recession is so long that the first hurt are now able to buy again. Of course they need a job and to have cleaned their credit up.
So, here is the Real Estate Report from Credit Suisse for August 2011:
Phoenix, AZ – Inventory Drops and Buyers Find Urgency (7,259 single-family permits in 2010, 4th largest market in the country)
Traffic remains healthy on attractive deals. Buyer traffic met agents’ expectations again in July, as our traffic index came in at 50 (from 46 in June), in-line with a neutral reading (readings of 50 point to traffic in-line with agents’ expectations). Agents noted that a combination of low inventory and consistent demand from investors drove traffic in July. One agent mentioned, “There are an unbelievable number of cash buyers in the market right now. Canadian investors are also flooding the market.” Another agent highlighted, “Inventory is way down and its driving buyers to get excited about what is available.” Agents indicated that the inventory was shrinking for the lower priced homes, which is where they also saw the greatest activity. Buyers were said to be willing to close on properties, so long as they were priced appropriately. One agent said, “Homes are flying off the market if they are priced correctly.” Though some agents did comment that there were buyers hesitant to make a move, expecting additional foreclosures to come to market, these buyers were offset by those who were “tired of waiting” and wanted to act.
Prices stable on lower inventory and reduced time to sell. Agents indicated that prices were stable in July, as our home price index came in at 51 (from 39 in June) in-line with a neutral reading, pointing to sequentially unchanged home prices (readings of 50). Inventory levels continued to trend much lower, reflecting agents’ commentary. Our home listings index came in at 82, up from 76 in June, well above a neutral reading of 50, pointing to lower inventory levels over the past month. In addition, our time to sell index pointed to a reduced time to sell as it came in at 66 in July (from 67 in June), above a neutral reading of 50, pointing to a reduced time to sell. We view the lower inventories and reduced time to sell as positives for the region, though we remain concerned over the potential level of foreclosures in backlog.
Comments from real estate agents:
■ “Inventory is way down and we are seeing multiple offers on homes.”
■ “There is a perception in the market that we’ve reached the bottom.”
05 August 2011 Americas/United States Equity Research Homebuilding / MARKET WEIGHT
Monthly Survey of Real Estate Agents
CHANNEL CHECK
Opposing Trends: Affordability and Fear
■ Some buyers recognize affordability, others remain handcuffed by economic uncertainty: Our Monthly Survey of Real Estate Agents pointed to a slight pick-up in buyer traffic in July, although traffic remains at relatively low levels. Importantly, there were strong, opposing forces in the market. Some buyers chose to make a move based on the combination of affordability – resulting from low mortgage rates and home prices, along with long-delayed needs for more space. There were also many prospective buyers who decided not to move based on concerns about the economy and confidence in their employment prospects. We will watch the trends in August very closely, as we worry that the hesitation from the economic environment may gain steam and outweigh the benefits from affordability. In addition to those buying to occupy the homes, we continued to see significant interest from investors in the distress-heavy markets.
■ Slight increase in buyer traffic in July, despite challenging environment: Our traffic index increased by 3.0 points to 31.9 in July from 28.8 in June. This is still a fairly low level for traffic, but is the first increase in our traffic index in five months. The real question for August – and for the Fall – is whether the traffic can be sustained given the increased economic anxiety – both domestic and international, and the weakness in the financial markets. It appears that the fears about the economy have supplanted prior fears of “buying too early,” before prices have fully bottomed. Agents continued to note difficult lending standards and challenges with appraisals. We will watch carefully to see if the more challenging financial markets will lead to less availability of jumbo or non-agency mortgages, but expect continued liquidity for agency mortgages.
■ Continued downward pressure on home prices: Our home price index was essentially unchanged at 29.4 in July, down slightly from 29.7 in June. However, readings below 50 point to declining prices so this sub-30 level reflects pressure across most markets. We continued to see reasonably stable pricing trends in many markets with heavy foreclosure activity, as prices have reached levels at which investors are interested (Phoenix and many Florida markets). We also saw more stability in Dallas and Houston. Overall, though, July was a month of price pressure in most markets.
■ Mixed trends in Texas markets, some improvement in Florida: Among markets, we saw improvement in traffic in Dallas and Houston, but a sharp decline in San Antonio, and stability at a weak level in Austin. We also noticed modest improvement in several Florida markets (Jacksonville, Orlando, and Tampa).
When will Prices Rise? Phoenix Real Estate Market Report – Credit Suisse – August 2011
By Jeff Cameron Realtor
MRW Homes
Scottsdale Arizona
jeff@thecameronteam.com
ArizonaBankdeals.com
480-502-7699
480-652-2004