Phoenix Area Real Estate Market Update

Is the Housing Boom in Phoenix Creating Another Bubble?

This past year marked a dramatic turnaround for the housing market in Metro Phoenix. Just two years ago prices were down 56 percent of their peak values of 2006 and 2007, and foreclosures plagued the city. Speculation was that banks were holding shadow inventory and were slowly releasing it, which made it uncertain how much inventory was available. Additionally, the U.S. was barely crawling out of a severe economic recession, so many were weary of putting money in real estate.

But seemingly overnight the housing market improved. Suddenly, the Phoenix area had limited inventories, while the number of foreclosures continued to be reduced.Banks claimed that their distressed sales had been flushed out. All of a sudden there was actually a shortage of housing. Prices have soared in Metro Phoenix this year, climbing nearly 30 percent over the past year based on a report from Arizona State University.

What caused this drastic turnaround nearly overnight?

The primary reason is the fundamental principal of economics: demand finally met supply. During the recession there was an excessive glut of housing on the market. Due to the weak economy people were afraid to buy, causing a high supply and low demand. However, banks worked through all the foreclosures and returned homes to the market. With additional sources of capital in the Phoenix area, investors are purchasing homes and creating new business models, which include rentals. Now, as the recovery continues, there is a major lack of supply in the Phoenix area.

A healthy month’s supply of homes is around five to six months; currently in Phoenix there is a two-month supply. The prices have risen rapidly in response to this lack of supply. Furthermore, the Phoenix area is attracting investors from all over the world. It has become a modern day gold rush. Large investment firms are investing large amounts of capital in purchasing vast quantities of homes, fixing them up, and then marketing them as rentals. For years they have been buying homes at auctions.

Over the last year Wall Street hedge funds with high levels of cash have been coming into the Phoenix area market and buying homes. Adding to this, new prospective homebuyers, families and individuals, have been rushing to purchase homes before it’s too late. They want to get in before prices go even higher and they are priced out of the markets they are interested in.

Finally, the population of Phoenix is continuing to increase. Earlier this year Forbes Magazine ranked the Phoenix area as the eighth-fastest growing city in the nation, behind Austin, Houston, Dallas, Raleigh, Salt Lake City, Seattle, and Provo. The population of Phoenix is forecast to increase 2.7 percent in 2013. Research shows that given this growth rate, homebuilders are not building enough homes to keep up with the increasing population.

A New Bubble?

While the increase in home prices comes as a huge relief after almost five years of a severe recession, people are worried if Phoenix is poised yet again for another housing recession. While it is human nature to worry about losing money again, based on the available data, Phoenix is not headed for another bubble.

Michael Orr, the Director, Center for Real Estate Theory and Practice at Arizona State University, described what is happening right now in Phoenix as “a fast bounce.”

“If prices can go down fast, they should be allowed to go up fast as well,” he said.

One of the primary reasons for the recession was investors pulling out of the market simultaneously and defaulting on their loans. This is not the case now, since the buyers represent large investment groups, which are backed by Wall Street in several cases. These groups have the holding power to stay in the market and are looking at the Phoenix market from a long-term perspective. Finally, these houses have been purchased with cash, making it impossible to default on any loan payments, forcing these investors to stay in the market for the long haul. Furthermore, investors are actually renting out the homes they are purchasing, thereby, not adding to the overextended supply pool.

Another huge contributing factor of the housing recession was banks that were extending loans at very low rates to people that otherwise would not have qualified. That is certainly not the case now. Banks are only providing financing to buyers that are well qualified and are typically not purchasing as an investment.

According to Michael Orr, “The idea that there is another bubble in the real estate market is absurd. We are just seeing a normal reaction to lack of supply. Prices are still below the long-term trend line and none of the conditions that define a bubble are currently in existence.” He also adds that bubbles rarely occur in the same market where they just burst.

There has also been an increase in employment, which is allowing people to re-enter the housing market. Furthermore, the Phoenix market is continuing to grow. Recently, Apple announced the opening of their new manufacturing facility in Mesa. Several other large companies are looking to relocate to Arizona as well due to the lower cost of real estate and labor.

The current market portends a promising future for growth in Phoenix. We have survived one of the worst real estate recessions of all times, and now we are moving into time of expansion for housing. In a state that sees sunlight 85 percent of the year, the future of Metro Phoenix’s housing market is just as bright.

Contact me at any time for a complimentary price analysis of your home, or for any real estate related questions. I may be reached at 480-239-3023 or john.groves@azmoves.com. You may also visit my website at www.arizonafamilyrealestate.com.

Phoenix Real Estate Market Update - March, 2013

Phoenix Real Estate Market Update - March, 2013

The market continues to shift! We started 2013 with the lowest supply of listings coming on to the market. This has put pressure on pricing as supply is low. A new rumor has now been "the talk" - "Another Housing Bubble Approaches?". The mindset is that as prices move up we are re-experiencing a bubble like that seen in 2005, which could be followed by a crash similar to 2007. Let's look at the facts (courtesy of Phoenix real estate expert and trusted resource - Michael Orr of the Cromford Report):

"Most housing analysts use data to support their observations. Those analysts tend to agree that housing is becoming a bright spot in a broader though slow economic recovery. This is particularly true in the Phoenix area, where our economy is improving a little faster than most and the housing market has been improving much faster than any other in the country. However there are also large numbers of commentators who are NOT data driven, but rather tend to rely heavily on their personal theories, largely based on sentiment or political viewpoints. They tend to take one aspect of the market and amplify it out of proportion to derive their conclusions.

One example of this is an article by Lauren Lyster based on the views of David Stockman, who describes the current situation as "Housing Bubble 2.0". This is a ridiculous description of a market in which the median home price is lower than the median replacement construction cost, even excluding land values. The observations by David Stockman have only a tentative connection with reality. His logic is flawed because, unlike the real housing bubble in 2004-2006:

•      investors in 2012-2013 are not borrowing money to buy homes - they are    predominantly using cash

• investors are buying homes to rent out for several years, not to flip after a short term rise in price

•     we have a real housing shortage because new construction has been so low for the last 5 years while population continues to expand

•     the pool of home buyers is being fueled by younger buyers leaving their parents' homes at last

•     people need these homes to live in, they are not just trading commoditieslike they were during 2005

It is also not true that first time buyers and move-up buyers are missing. On the contrary; there is a strong presence of such buyers in the market. However they often find it difficult to qualify for loans and are frequently outbid by investors when trying to purchase homes.

In 2004 and 2005 the signs of a bubble were obvious but the vast majority of people chose to ignore them. In 2012 and 2013 the signs of a bubble are absent, but many people choose to "invent" them.

The key issue remains - where is the new supply coming from to keep pace with demand? January 2013 saw fewer new listings added to the MLS than in any January since that database was first built in 2000. The weaker sales rate in January disguised this effect but sales will not be weak from now on. The peak buying season is about to start and we simply have too few homes available."

We cannot argue on what Mr. Orr has to say. We only add, that it is a very easy (and perfect) time to be a seller. For Sellers sidelined from selling, it may be time to jump back in while competition is fierce for your home. For Buyer's who missed the market low, they should take heart in the fact that homes are still below replacement cost. In short, both sides can benefit NOW - which has been slow to arrive. Act now - call or email me anytime to discuss your options. I'm here to guide you all the way.

My very best to you for a continued bright and prosperous 2013. We all have much to be grateful for. Call or email me any time (480-239-3023 or john.groves@azmoves.com). I look forward to earning your business.

Phoenix Real Estate Market Update - December, 2012

After a sluggish summer, the Phoenix real estate market regained strength in the 4^th quarter. Supply continues to build, although still below average. Homes priced below $200,000 are moving quickly and we are still seeing multiple offers on these homes – edging prices up at this price point. The highest appreciation rates continue to occur in those places where prices fell the most in 2007-2009 - primarily the drive until you further qualify communities. In contrast, higher priced homes have shown only a small amount of appreciation with just a few posting double-digit improvements such as - Carefree at 11.7%, Desert Hills at 13.9% and Tempe at 11.0%

Increasing prices are luring “on the fence” Sellers - and even builders - back into the marketplace. At some point, increased prices will drive back the demand resulting in a balanced market. We do forecast spring of 2013 to be a very healthy market for both buying and selling. 

The best summary of the 2012 market is stated most perfectly by Michael Orr of the Cromford Report (a trusted and highly sought after source throughout the Arizona real estate community)

"The change in price over the last 12 months is clearly impressive. There are very few occasions in which the average price per sq. ft. rises by 25%. The only previous time I know of is May 2005 to March 2006 and that was at the height of the bubble. A rise of 2.7% in the single month of September would also normally be startling, but we have got used to big numbers. When the market eventually gets back to normal we should expect to see 2.7% for a whole year, not a single month.

What we have seen is the "coiled spring theory" in action. Supply became extremely low last year, but prices refused to react until the 4^th quarter of last year. Now prices have moved substantially higher, we are seeing signs of the market cooling. Supply is growing as Sellers start to take advantage of the higher prices achievable. Some Buyers have become discouraged by the amount of competition - along with higher prices - and have left the market, resulting in some softening of demand. Sales volumes though ARMLS (Arizona Multiple Listing Listing Service) are down. However, this is somewhat misleading because a large number of real estate transactions are happening outside of the MLS. Deals between investors, new homes sales, trustee sales, pocket listings and private sales add up to a significant volume which is missing from the MLS numbers but captured by the county records."

For the 3rd quarter, normal sales are now 59.5% of the market. The number of normal sales should continue to grow. Short sales have stabilized at 30.17% of the market (and we expect them to be a declining part of Phoenix area real estate sales for the next couple of years). Happily, REO/HUD (bank owned) sales are down to only 13.95% and have become almost irrelevant. On that note, you may recall last month I noted Bank of America suddenly shifting gears by taking back into their inventory REOs rather than selling them at auction to investors. After 5 weeks of this, it appears that they have stopped that program. We expect to see a small increase in REO (bank owned) listings as these homes go to market, but will have a negligible effect. The number of Notices of Trustee Sale in Maricopa County was 2,690, the lowest total since July 2007 over 5 years ago. This is all GOOD news. Our hope is that by the end of 2013 REOs will be back in the "normal" range.

As always, I am happy to provide you with a free market analysis of your home at any time. If you’re looking to purchase a home, NOW is absolutely the time to do so. I look forward to working you.

Cheers!

Phoenix-area homeowners see market on the rebound - November, 2012

For the past five years, tens of thousands of homeowners have been frozen in place, unable to sell their homes for a profit.

Now, there are signs a thaw is under way.

Sales by owners who are not facing foreclosure or a distressed sale are on the increase again, a trend that real-estate analysts and agents say points to a fuller housing-market recovery eagerly awaited but still in the early stages.

Also, foreclosures and short sales, which have dominated the market and dragged down metro Phoenix’s home prices since the crash, have been slowing steadily this year.

Profits made by regular sellers haven’t been huge so far, but they have risen with the region’s 35 percent increase in median home prices over the past year. More people who have owned their homes a long time find they can sell and make a satisfactory profit. More who bought near the height of the boom are no longer underwater, meaning they now owe less than what their house is worth.

In August, the median price of a regular home sale in metro Phoenix climbed slightly to $185,000, about $30,000 more than the median for all sales, according to new data from Arizona State University’s College of Business.

Last month, the number of regular resales, or homes sold by an owner without lender aid, was 81 percent higher than the same month a year earlier.

“The latest trend is normal sellers are back,” said Jim Sexton of the Phoenix office of RealtyOne Group. “We are going back to normal, with an owner occupant moving to another Valley house after selling a home for a profit.”

Jason and Kate Raber are part of that awakening market.

The couple paid $188,000 for a three-bedroom house in Chandler in 2004, right as the boom was beginning. The value of their home dropped during the crash but then began rising steadily during the last three years.

The Rabers, who didn’t have children when they bought the house and now have three, decided it was time to sell. They listed their home for $229,000 and sold it the next day for $232,000 at the end of September.

Their agent said the couple was surprised that the offers came in so high and so quickly and that they were able to sell their home for more than the asking price the next day.

The Rabers are buying a larger home in Chandler closer to their parents.

“The market has finally improved enough for many regular sellers to make a move,” Gluch said.

Getting ‘unlocked’

Since home values plummeted more than 50 percent during the crash, many Phoenix-area homeowners have been unable to move or refinance, particularly if they bought near the peak.

People who needed to sell and move for a job had to rely on their lender to approve a short sale, which allows borrowers to sell for less than they owe on their mortgage. Others who lost a job or saw their income fall often had no option but to stop payments and face foreclosure.

The area’s drop in values left almost 60 percent of homeowners underwater in 2009, according to CoreLogic, a national real-estate data company.

Federal foreclosure-aid programs helped some borrowers, but foreclosures still soared to 10,000 a month three years ago.

Demand from buyers, particularly investors purchasing foreclosures in metro Phoenix, has pushed prices up since last fall and allowed more homeowners to sell.

New data shows fewer than 30 percent of metro Phoenix homeowners are underwater.

Many homeowners want to be closer to jobs or schools but have had to wait for home values to rise so they could move.

Tom and April King wanted to sell their north Scottsdale home in the McDowell Mountain Ranch community last year and move closer to Tom’s job in Phoenix.

They bought the house in 2003 for $610,000. In March 2011, they tried to sell it for $650,000 and received an offer, but the appraisal came in at $620,000, so the deal fell through.

The Kings made some improvements, including new flooring. At the end of August, the couple re-listed their home for $670,000.

Their agent said the house attracted multiple offers and sold within days.

“As home prices and sales climb, homeowners are becoming unlocked in their houses,” he said. “People finally have the chance to move up or move down.”

Long-term owners

Some people, including empty-nesters, bought many years ago and have wanted to downsize or move up to a bigger home using their equity. However, many homeowners lost equity during the crash or spent it before the downturn via home-equity loans.

But now, as metro Phoenix home values are climbing, retirees or others who planned to be in their home for a while are taking steps to sell or are considering it.

For some long-term homeowners, selling now may be a bittersweet experience. On the one hand, they may be rewarded with more profit because they resisted the temptation to pull tons of cash out of their home in the bubble and gorge on furniture, cars and vacations — or jump from a modest home to a luxury home and get in over their heads.

On the other hand, their home now may sell for far less than it would have in 2006.

Then there are those who bought mid-crash but decided to hang on until the market bottomed out and started recovering.

Darin Kastning and Patrick Rizzo moved from their longtime home in Washington state to Gilbert four years ago to retire. The couple paid $160,000.

They got a great deal on their house and “fell in love with the desert.”

But Rizzo said they began to miss their families in Washington, yet they still decided to hold onto their house until they could make a “nice” profit. The couple closed on the sale of their Gilbert house last week. They sold the home for about $50,000 more than they paid, said their agent, Diane Brennan of Scottsdale-based Trillium Properties.

“The word is getting out that regular homeowners can sell,” said Brennan, who hosts the “That Real Estate Show” on KTAR radio. “Some people are already getting overly eager and overpricing.”

Hold or sell?

Now that home prices are steadily climbing, regular homeowners face a dilemma.

More can sell for a profit, but, if they can wait a few years, they might be able to make a bigger profit. There are predictions of soaring values again, so some wonder if it’s better to wait. Some are choosing to rent out their current homes because the market for tenants is strong.

Yet no one is sure how long prices will continue to climb and at what pace. Metro Phoenix’s huge group of investor homeowners is a wild card; if many of their homes go up for sale at once, prices could level off or deflate. In addition, anyone who waits to sell in an appreciating market and then buys in the same market may pay a higher price for the next home. Mortgage interest rates also can be unpredictable; historically, they are now at basement levels.

One option is to rent the house out and become a landlord, trying to buy time before selling. But that has its own complications, and an investor may need to hire a property-management firm to maintain the home and collect rent.

Instead, many regular homeowners are deciding to sell; as a result, the supply of homes is growing.

James Caylor didn’t think he would be able to sell his north Phoenix home in July when he found a better-paying job in Chicago. He considered renting it out but didn’t want the hassle of worrying about late rent payments or a tenant damaging the home.

Caylor put his house, which he bought in the mid-1990s, on the market for $170,000; almost double what he owed, and sold it within days. An investor bought the house and paid cash, so Caylor was able to close the deal fast and is looking to buy in Chicago.

Selling to investors

A record number of investors continue to buy metro Phoenix homes each month, despite rising prices. Since foreclosures have slowed, investors are now outbidding regular buyers for homes owned by regular owners. Most investors are looking for houses costing $100,000 to $200,000 that are less than 10 years old, such as Caylor’s home.

Caylor had no qualms about selling to an investor, and the deal went through easily because the investor paid cash. Caylor was glad since he had already moved out of state.

If prices continue to rise, fewer investors will buy because the houses will be too expensive to rent out for a profit. That will open the door for more regular homeowners as long as they can still afford the prices.

“There are lots of regular buyers out there waiting for a chance to buy,” said Mike Orr, publisher of the Cromford Report and real-estate analyst at ASU. “We will know the market is in a full recovery when regular owners can sell and regular buyers can afford those homes.”

Phoenix No. 4 in US for affordable housing

A median-income household can only afford a median-priced home in 14 of the nation’s 25 largest metropolitan areas

Atlanta, Detroit and Minneapolis-St. Paul are the most affordable cities, according to Interest.com’s first Home Affordability Study.

San Diego, New York and San Francisco are the least affordable.

With home prices down an average of 30% from their peak in 2006, and mortgage rates at record lows, there’s a lot of talk about how homes are more affordable now than they’ve been in decades.

In some places, that's true. But in many cities, it’s not.

Significant differences in median incomes, as well as critical costs such as property taxes and homeowners insurance, play a big role in determining whether the American dream of home ownership is truly within reach.

“Despite all of the talk about how homes are more affordable than they have been in decades, buying a home is still a big challenge for many American households,” says Mike Sante, managing editor of Interest.com.

“Dealing with rising expenses and stagnant wages is a struggle. Even after years of declining home prices and record-low mortgage rates, median-income households are unable to afford a median-priced home in nearly half of the metropolitan areas that we looked at.”

To get a clearer picture of how affordable housing really is, we created Interest.com’s Home Affordability Study. (Click here to see the results for all 25 cities.)

We wanted to know whether it was possible for a family making the median household income for each city to buy the median-priced home.

We gathered city-specific data on everything from median home prices and incomes, average property taxes and homeowners insurance premiums, as well as consumer debt and mortgage rates, from the most reliable sources we could find.

Data from the U.S. Census Bureau, National Association of Realtors, National Association of Insurance Commissioners and Experian, one of the three major credit reporting agencies, all contributed to the analysis.

We then used two of Interest.com’s online calculators to determine how much a family earning the median income in each city could afford to spend on a house and how much a family would have to earn to afford that city’s median priced home.

(You can use the same calculators to determine how much you can afford to borrow and how much you must make to afford any home.)

To make the results easy to understand, each city received an:

Affordability Grade, with a "C" indicating that someone making the median income can afford the median-priced home.

Paycheck Power Rating, which is the percent the median income exceeds or falls short of the income required for a median-priced home.

Cities With the Most Affordable Housing

City	Affordability Grade	Paycheck Power Rating
Detroit	A	45.32%
Atlanta	A	40.00%
Minneapolis-St. Paul	A-	32.20%
Phoenix	B+	23.67%
St. Louis	B+	23.49%

With all those factors taken into account, the Interest.com study reveals a far more complicated picture than the simple “housing is a bargain” view you’ll find in much of the media.

Atlanta, for example, sits atop our rankings largely by virtue of its relatively low home prices. Its median sales price of $103,200 is well below the average of $229,516 for the 25 largest cities.

“Atlanta has always been a deal as far as home prices go,” says Mitch Kaminer, who’s sold real estate there for 18 years and is currently president of the Atlanta Board of Realtors. “Labor is cheaper. Builders can build houses a lot cheaper than they can in other parts of the country.”

Highest Income Cities

City	Median Income
Washington, D.C.	$86,680
San Francisco	$71,975
Boston	$69,455
Baltimore	$65,463
Seattle	$64,085

But Atlanta also benefits from having lower than average property taxes and insurance costs, along with a slightly above average median income.

All this means Atlanta earns an affordability grade of “A” and the best Paycheck Power Rating in the study. Its median income exceeds the income needed to buy a median-priced home by a whopping 40%.

Detroit is the other city to earn an “A,” but it represents a special, and especially sad, case.

The city’s score comes from its rock-bottom average home price of $60,200 — a number that reflects a vast supply of abandoned homes, as many as 90,000 by some estimates.

Minneapolis-St. Paul, which earns a grade of "A-" and a Paycheck Power Rating of 32%, illustrates how criteria other than the home price can make a big difference in how accessible housing is in different markets.

The Twin Cities' median home price is $70,000 more than Atlanta’s, but the region’s median household income of $63,352 is roughly 20% higher, too, which helps to compensate for the price disparity.

Lowest Home Prices

City	Median Home Price
Detroit	$60,200
Atlanta	$103,200
St. Louis	$131,700
Pittsburgh	$132,000
Tampa	$144,300

“We have a pretty good local economy,” says David Arbit, research manager for the Minneapolis Area Association of Realtors, explaining the city’s affluence. “We’ve got relatively low unemployment and a lot of high-tech and finance jobs.”

Minneapolis also enjoys lower than average property taxes, which can make a surprising difference when it comes to home affordability.

Home prices are just a little higher and income just a little lower in Milwaukee than in Minneapolis. But the Wisconsin city’s property taxes are nearly 47% higher.

Todd Berry, president of the Wisconsin Taxpayer Alliance, says the higher tax rate reflects how local government has long been funded in the state. “Ninety to 95% of all revenues comes from the property tax,” Berry explains. “We have no local income tax and only a small local option sales tax.”

As a result, Milwaukee earns a surprisingly low affordability grade of D+.

Cities With the Least Affordable Housing

City	Affordability Grade	Paycheck Power Rating
San Francisco	F	32.76%
New York	F	29.71%
San Diego	F	25.90%
Miami	D-	12.59%
Los Angeles	D-	12.52%

San Diego, San Francisco and New York, which all earn grades of "F," illustrate the forces that have kept housing in some urban centers out of the reach of most Americans, despite one of the biggest real estate crashes in modern history.

All are on the coasts, naturally constrained by physical and political boundaries, and all are largely “built out,” meaning there is little room for expansion.

“We’re obviously a coastal city, and we’re a border city and, in addition, to the north of us is (Marine) Camp Pendleton,” explains Donna Sanfilippo, president of the San Diego Association of Realtors. “East is the only way we can expand. Because of the constraints of our geography, we’ve pretty much built on all of our land.”

Lowest Income Cities

City	Median Income
Tampa	$43,832
Miami	$45,407
San Antonio	$48,699
Pittsburgh	$48,854
Detroit	$48,968

The international nature of these cities also means they attract wealthy real estate investors from outside the country. San Diego is a popular retirement destination. These factors disconnect the local housing market from the local incomes.

“We’re seeing a lot of cash deals — 27% of all multiple listing service deals in our recent figures. Investors are coming back into the market. We’re seeing foreign investment,” says Sanfilippo. “Right now, we have the lowest amount of inventory on the market we’ve seen since 2009.”

San Francisco and New York both have household incomes above the national average, but the bigger paychecks aren’t enough to compensate for home prices that are among the highest in the country. San Francisco tops the list with an average price of $552,600.

Homeowners are also burdened with significantly steeper property taxes. New York’s taxes are more than three times the national average.

In contrast, Washington, D.C., has home prices comparable to New York’s, but the region’s greater prosperity — median household income is the highest in the nation — and reasonable property taxes allow the D.C. metro area to skate by with a gentleman’s "C+."

Highest Home Prices

City	Median Home Price
San Francisco	$552,600
San Diego	$379,100
New York	$377,600
Washington, D.C.	$367,000
Boston	$362,100

In all cases with these failing students, the Paycheck Power Rating is deeply in the red. In San Francisco, for example, the median income leaves you nearly 33% percent short of the paycheck you would need to be able to afford a median-priced home.

In San Diego, where average wages are lower, the Paycheck Power Rating is nearly as bad at 26%.

“A lot of San Diego jobs are service jobs, related to tourism, and those salaries are about $24,000 a year, and that obviously does not support home ownership,” acknowledges Sanfilippo.

That's exactly what the Center for Housing Policy has found in its studies.

"In many communities there is a fundamental disconnect between the income families have and the costs of buying a home," says Jeffrey Lubell, executive director of the Washington-based think tank.

"Falling house prices haven't solved the problem," Lubell says. "They've helped, but they haven't solved it."

Indeed, Lubell warns that with property values starting to rise around much of the country, "if you can't afford a home now, it's not going to get better. This is as good as it gets."

For all of your residential real estate needs, please contact me at anytime at john.groves@azmoves.com or visit my website at www.arizonafamilyrealestate.com.

Phoenix Area Housing Market – UPDATE OCTOBER, 2012

The real estate market in the Phoenix area has been making (both local and national) headlines since 2004. Until the market fully returns to "normal" (not sure what “normal” really is at this point in time) we are no doubt destined to continue to be a focus market.

To start, let''s compare some numbers September 2012 with September 2011:

*Active listings with no offers - 14,405 versus 19,216 last year - down 25% but up 7% from August.

*Pending listings - 10,125 versus 11,508 last year - down 12% - and down 3% from August

*Monthly sales - 7,573 versus 8,470 last year - down 11% - and up 3% from August

*Monthly Average Sale Price per square foot - $97.45 versus $79.64 last year - up 23% - and down .7% from August

Greater Phoenix foreclosures (REO) are once again below 14% of the monthly sales total. At their peak in February 2009, they claimed a whopping 71% of the Phoenix area monthly real estate sales. The current 14% is now a minimal and hardly talked about number anymore. To put this in perspective, there were 12 times as many foreclosed homes available for sale in January 2009 as there are today. Short sales (not bank owned, rather homeowners selling – usually with bank approval – at a price lower than the current mortgage amount owed - comprised 30.4% of all sales in August. This figure appears to be now holding steady after an initial drop in the first quarter.

The only real shift in REO’s (bank owned homes) is in regards to Bank of America, who now appears to have changed their policies and are taking back homes rather than primarily selling them at auction to investors as they (and nearly all lenders) did. We now expect to see them re-enter the market as listings - no doubt to encourage higher prices as well as owner occupant purchasers. Even with BofA composing 25% of the foreclosure pipeline, the numbers still will not hugely impact our market supply.

Normal (traditional homeowner) sales continue to rise to 56.1% of sales. This demonstrates that “sidelined Sellers” are finally re-entering the market as prices are beginning to allow traditional Sellers to sell once again. This number will continue to improve as the distress sales drop. If you are considering selling your home, now is the time to do so!

The supply of available homes is increasing which is traditional for this time of year (when our winter visitors return) - but we are seeing more significant increases particularly in Queen Creek and Maricopa - the very epicenter of the “price crash”. The luxury market is seeing steady supply with some small areas decreasing in supply. The luxury market is always weaker in the summer so Sellers in that market should see some movement now that our cooler weather has arrived.

It will be interesting to see if builders respond quickly to the lowered supply of resale homes and begin adding to the supply through increased building. Their challenges remain finding vacant lots at competitive prices and qualified workers who vacated our crashing job market.

What does this mean to the homeowner? The increased values should encourage Sellers to begin to monitor values to see if they now can enter the marketplace again. A supply/demand analysis for your neighborhood gives thebest accuracy in a marketplace that is shifting, and as always, I am available to help you. Be wary of using county assessor valuations or online website estimates for determining value (i.e., Zillow); much of this data is extrapolated from unreliable and outdated sources. The Phoenix Metro real estate market has changed significantly in the last several months and old data – even as recent as 3-4 months ago – is stale and no longer valid in determining value.

I am always available and a trusted source to answer your questions – whether you are thinking of buying, selling, or leasing a home. Please call (480-239-3023) or email (john.groves@azmoves.com) me at anytime or visit my website: www.arizonfamilyrealestate.com.

Multiple Offers and a Shortage of Nice Homes!

There are some very interesting dynamics going on in the Phoenix Metro market. Inventory has been on a steady decline, and sales have been very active. Normally, supply and demand factors like the ones we are experiencing would be pushing prices up. While prices are still stubbornly remaining pretty flat, if a home is well priced, it is very common to see multiple offers and many buyers are finding they may need to offer full price or even higher in order to get their offers accepted.

Before going any further, it’s always good to remember that every market is different. Price and location will always cause differences. But the talk in the market right now is about the shortage of well priced nice homes to sell and the market seems to be changing.

So, who do you know who would like to sell their home?

Many people I run into tell me they would like to sell, but they don’t think they can. Others tell me they would like to change something about their home or they could see themselves wanting a different style of home in the next few years. With today’s market and interest rates, now is a great time to make those moves.

Is it a great time to sell for everyone? Everyone’s situation is different, but there are a surprising number of people who find out that now is a great time. Is now a great time to buy? Again, everyone’s situation is different, but WOW, there are some great opportunities.

Some think that they’ll wait until their current home recovers some or all of the value it may have lost. That’s one strategy. But if that is your plan, also factor in the cost of the next home and what may happen to interest rates.

With prices and interest rates where they are, the market has incredible opportunities for buyers and sellers who then become buyers. But now more than ever, doing your homework first is very important. If you or someone you know would like to explore how you might take advantage of the market, please give me a call (480-239-3023). We need more well priced homes to sell, and these opportunities won’t last forever.