Here are some key up-to-the-minute Scottsdale real estate stats for May 5, 2014 as reported in the Arizona Regional Multiple Listing Service (ARMLS).
Criterion include all property types (homes, condos, patio homes, etc) in Scottsdale.
Active Listings and Listings taking backup offers: 3,860
Lowest List Price: $31,900
Average List Price: $855,655
Highest List Price: $32,000,000
Pending properties: 581
Lowest Pending Price: $28,400
Average Pending Price: $623,158
Highest Pending Price: $5,995,000
Average Days on Market (Actives, Under Contracts, and Pendings): 128
As soon as April’s month is audited, I’ll report that data here with some comparative data (month-over-month and year-over-year) to help show how Scottsdale real estate is performing over time.
In 2007, the Valley’s housing market began a long spiral collapse, followed by years of high supply and low demand, leading to a multi-year, very slow, very steady period of recovery.
About 19 months ago, people realized that the Phoenix real estate inventory, once as high as 60,000 available properties, had dwindled to well below 10,000 units. Indeed, we had shifted from a strong buyer’s market, to a rabid seller’s market, which is where we remain today.
One of the easiest statistics for people to relate to is price. Both “Average Sale Price” and “Median Sale Price” are helpful measures of a market’s affordability. When tracked over time, they can also show the relationship trend between supply and demand.
With increasing demand and historically low supply, the Greater Phoenix housing market has about recovered to where it was in June 2008, when the median price of all single family homes was $195,000. As of June 2013, the median sales price is $192,000, up from $185,000 the month prior.
Here’s a chart that illustrates Median home values from mid-2008 to mid-2013:
Not surprising, the Average Sale Price of a single family home has mirrored the graph above:
In July 2008, the Average Sale Price was $254,863. In June 2013, it was $250,965.
Though we experienced a small $2000 dip in the average sales price between May 2013 and June 2013, I expect appreciation to continue for as long as the inventory supply remains tight. Investment opportunities are still out there!
Election Day has come and gone and regardless of who you voted for, there will be consequences on the domestic housing market. This article is courtesy of Jed Kolko, Chief Economist at Trulia.com.
Refinancing, new mortgage regulations, and the mortgage interest deduction all won on Tuesday. But the best shot at more principal reductions might have been lost.
Throughout the 2012 presidential campaign, both candidates were short on specifics about their housing policy, to put it very kindly. They ignored housing in the debates and acted as if the housing crisis were over. Neither their actions nor their policy statements gave a clear idea of what they might do about housing. But what the candidates DIDN’T do or say helps draw out the differences between what housing policy will look like during Obama’s second term and what housing policy would have looked like with a Romney administration. Here’s what Obama’s re-election means for housing:
1. The refinancing push continues. The Obama Administration has made it easier for homeowners to refinance at today’s low mortgage rates and plans to make refinancing available to even more borrowers. Refinancing is economic stimulus since it gives homeowners with mortgages more spending money, but it doesn’t help most people on the verge of losing their homes. Although refinancing has been a priority for Obama, Romney made no mention of refinancing in his housing plan – despite strong support for refinancing from one of his economic advisors.
2. New mortgage regulations are coming. The Consumer Financial Protection Bureau, established by the Dodd-Frank Act, will set new mortgage standards by January 2013. These standards will define which mortgages are judged to be beyond a borrower’s ability to repay and would therefore trigger legal and financial implications for lenders. These standards, yet to be established, will need to strike a delicate balance between protecting consumers from high-risk loans and giving lenders the incentive to expand mortgage credit. Romney blamed Dodd-Frank for holding back mortgage lending, pledging to “repeal and replace” it. But with Obama’s re-election, Dodd-Frank–and the coming mortgage regulations–is a reality.
3. The mortgage interest deduction lives to fight another day.Romney proposed capping overall income tax itemized deductions at $25,000, which would have, in effect, reduced the mortgage interest deduction (which accounts for 35% of the value of total itemized deductions) even for many middle-income taxpayers. Obama, in contrast, is open to cutting the mortgage interest deduction only for the wealthy. Even if deeply cutting deductions finds bipartisan agreement in Congress–and it might–Obama is likely to resist gutting the mortgage interest deduction. Why? The ten states that benefit most from the mortgage-interest-deduction ALL voted for Obama on Tuesday (see table below). The average household in an Obama-voting state claims 66% more for the mortgage interest deduction than the average household in a Romney-voting state. If Obama takes a swing at the mortgage interest deduction, he’ll be hurting his supporters and putting his fellow Democrats in a tough political spot.
|States with the Most Mortgage Interest Deducted Per Household|
|#||State||Average Amount Deducted, $*|
|9||District Of Columbia||$4,581|
|* Average amount of mortgage interest deduction claimed per household. Includes households who do not itemize. National average = $3,343.|
4. A chance for principal reductions may have been lost. In his housing plan, Romney called for more “shared appreciation” loan modifications. This means that a borrower would get a reduction in their unpaid principal balance but would have to share some of the upside with whoever took the hit for the principal reduction if the home’s value appreciates. Shared-appreciation loan modifications reduce a borrower’s incentive to strategically fall behind on their payments in order to get a principal reduction. This “moral hazard” problem was one reason why many Republicans and the Federal Housing Finance Agency, which regulates Fannie Mae and Freddie Mac, resisted the Obama Administration’s call for more principal reductions earlier this year. Shared-appreciation loan modifications are an approach to principal reductions that Democrats, Republicans, and even a financial regulator could all learn to love. It would be a shame if this approach to keeping more people in their homes goes down in defeat.
Buying sprees by billion-dollar hedge funds and real-estate investment firms have investors owning nearly 20 percent, or one out of every five, of the region’s single-family houses and condominiums, according to an Arizona Republic analysis of recent sales data.
That’s double the number of rentals considered normal in metro Phoenix in 2000, according to housing-market analysts.
Although it is too soon to gauge the impact of such a large increase in rental properties, the jump in investor-owned properties has the potential to change the character of neighborhoods, influence the options available to other homebuyers and ultimately alter the trajectory of the region’s housing recovery.
Since 2009, deep-pocketed buyers have snapped up tens of thousands of houses in all-cash deals, helping to stanch the bleeding in metro Phoenix’s real-estate market. Their purchases have driven up the region’s median home price 40 percent in the past year and significantly cut the supply of houses for sale.
While real-estate analysts laud investors for buying when others wouldn’t, analysts also express concern about the potential impact of so many buying in such a short time.
In Avondale’s 85323 ZIP code in the West Valley, with many relatively new, affordable homes, 32 percent of the houses are investor-owned rentals. That’s one of the highest rates for single-family homes in metro Phoenix.
In several other West Valley neighborhoods, more than 30 percent of all homes are rentals. About 32 percent of houses and condos in north Glendale ZIP code 85301 are rentals.
But the trend isn’t limited to the West Valley. In the East Valley, 30 percent of all homes in central Mesa’s 85210 ZIP code are owned by investors. And large swaths of the Valley’s core include ZIP codes where 25 percent or more of all residential properties are investor-owned.
Market analysts worry about investors’ impact on traditional buyers, who are finding it extraordinarily difficult this year to close a deal. Sellers, especially those of distressed properties and of homes priced below $150,000, often take the simpler route, accepting bids from investors paying cash instead of from traditional buyers who need to get a mortgage. Bidding wars on the moderately priced houses are the norm, and investors usually win.
What investors plan to do with nearly 225,000 homes they own in metro Phoenix is the multibillion-dollar question. When a handful of major investors, who together have purchased more than 10,000 Phoenix-area homes this year, decide to buy, sell or hold, their decisions will affect the rest of the market. Now, the majority of investors are renovating and renting out the properties. But if the big companies decide to take their profit in five to seven years and move on, real-estate insiders worry that a flood of houses back on the market could send prices spiraling down again.
“Investors helped stabilize Phoenix’s housing market,” said Mark Stapp, director of real-estate development for Arizona State University’s W.P. Carey School of Business. “My concerns are that too many investors are treating Phoenix’s homes as a commodity, and not the area as a community.”
Investors have purchased more than 30 percent of all single-family houses and condominiums sold this year, and their purchases have grown to an even bigger percentage of all sales in the past few months.
The type of investor has shifted dramatically this year, from small and large local investors to billion-dollar funds based in New York and Los Angeles. A Republic analysis of purchases, provided by real-estate data firm Information Market, found that in some areas of metro Phoenix, the most active three or four investors own more than half of the rentals.
The most prolific homebuyers are New York-based Blackstone Real Estate, Los Angeles-based Colony Capital and Scottsdale-based American Residential Properties. Those groups alone have purchased more than 3,000 houses in the area so far this year.
Local investor and real-estate agent Julie Bieganski is selling a 2,000-square-foot south Phoenix house for $82,000. The day the house went on the market in early October, a real-estate agent representing Tempe-based Treehouse Group made her a full-cash offer to buy the house “as is” for cash and close within 30 days. Treehouse is buying homes for Blackstone and other investors.
“According to the contract, the buyer has purchased 1,400 houses in Maricopa County in the past 90 days and plans to own the home and rent it out for five to seven years,” she said.
The investor-buying frenzy in metro Phoenix began with smaller investors like Bieganski with the cash to pick up a couple of houses as foreclosures peaked more than two years ago. With auctions running all day in front of the Maricopa County Courthouse, large out-of-state buyers’ interest in the market grew. As foreclosures slowed, many of these investors turned to short sales. But those deals must be lender-approved and take longer to close. Now, the biggest and richest of the investors have stepped in, often purchasing foreclosure houses previously bought by those earlier investors. Still bullish on the Phoenix market even as prices rise, these big investors sometimes buy one home at a time — and often 50 to 100 homes at once.
Investors now own 225,000 homes, the same number of all homes typically found in a city the size of Glendale. Their profit-focused strategy is a key issue for everyone else with a stake in the housing market.
Because of the high demand for rental homes and relatively low prices to buy, most are making 5 to 10 percent annual returns on houses by leasing them to tenants. But investors don’t hold on to properties forever, and those that control hundreds or thousands of properties can have outsize impact. If too many big property-holders try to sell at the same time, it could lead to another drop in Valley home prices.
Large investors are guarded about strategies. Publicly traded companies such as Blackstone can’t talk about future plans because that violates shareholders’ rights. Many of the latest investors in the Phoenix market want to become publicly traded real-estate investment trusts to attract smaller investors looking to grab a stake in real estate.
Colony said it plans to keep most of its metro Phoenix homes as rentals for five to seven years. The company is planning to go public next year. “We started looking at investing in housing a year ago. There’s a real opportunity to renovate homes and lease them to people who need them,” said Justin Chang, principal of Colony Capital and acting CEO of Colony American Homes. “We like what we have bought in Phoenix and the value there.”
American Residential also has a long-term buy and hold strategy. “We are not in business to flip real estate. American Residential hasn’t sold one of the 1,000 houses it has purchased in Phoenix since 2008,” said Steve Schmitz, CEO and founder of the firm. “We are in the business of providing nice, clean housing to families.”
Mike Orr, who analyzes real-estate information for ASU’s W.P. Carey School of Business, is another market analyst with concerns about the investor influx. “We don’t know their plans. They don’t want their competitors to know their plans. But they clearly have a lot of money to spend.”
The rental market
In Avondale ZIP code 85323, Liz Moad, who said she has owned her home there for three years, pointed across the street and said, “This house has had four families move in and out in the last two years.”
Empty houses that had been foreclosed on and auctioned are now rentals, said Chris Sammons, who said he has owned his home there for five years.
“Definitely you don’t want to see them just sitting there empty,” Sammons said.
“Probably within the last month there’s been half a dozen different houses where the ‘for rent’ signs have come up.”
“I think eventually when the economy picks up more, you are going to have more people that will take the next step to actually owning their own home,” he said.
Renter demand so far has kept up with the number of investor-home purchases in metro Phoenix, mostly because there are now more potential tenants. In addition to the typical renter who can’t afford to purchase a home, and newcomers moving to Arizona from out of state, former homeowners who lost houses to foreclosure must rent to rebuild their credit. Then there are the prospective homebuyers who are getting outbid by investors. Finally, there is a new group of people who can afford to buy but choose to rent.
A record 3,500 leases a month for rental homes in the Valley were signed in June, July and August, according to the Arizona Regional Multiple Listing Service. Houses in the best locations often draw competing offers.
“We were astounded by the rental market here,” said Mara Lewis, who relocated to Phoenix from Wisconsin. “Not only the up-front fees, and the methods by which they had to be paid (cashier’s checks), but the rules for what a (rental) house has to have here is very lax. We had to purchase our own washer and dryer.”
She and her husband own rental properties in Wisconsin and chose to rent here instead of buying. Lewis leased through a real-estate agency and isn’t sure who owns the house.
Jennifer Taylor said she moved out of a north Phoenix condominium because most of the units in the building were owned by different investors, and the maintenance varied by condo, as did the type of tenant. “The neighbors were messy, and I always had my stuff vandalized,” said Taylor, who recently moved to a central Phoenix condo. “Now I know my landlord, and the issues I had since moving in were all fixed that same week.”
Forecast for future
Before the boom, investors owned 8 to 10 percent of metro Phoenix’s houses. The current rate of 18.2 percent is double that. The shift is so new that it’s difficult to predict what might happen.
Stapp said, “A valid concern is whether people will want to buy homes in neighborhoods where there are the most rentals. We don’t know yet.”
But market analysts offer some scenarios.
The best-case scenario is for investors to hold onto houses for at least a few years and slowly sell to regular buyers before home prices soar. It wouldn’t have too large of a negative impact on the market if one major investor sold all of its homes as long as other major investors continued to hold on and lease out their properties until the supply of houses stabilizes again, market analysts said. Then there’s the worst-case scenario: Home prices continue to climb, and all of the major investors want to lock in their return and try to sell at once.
“It was good when all of the investors came into metro Phoenix and bought when no one else was buying,” said Orr, an early investor himself. “But it might be time for investors to take a rest, and let regular buyers have a chance.”
Source: Arizona Republic. Includes information from data reporter Matthew Dempsey and 12 News reporter Melissa Blasius.
Below is a chart from the Arizona Regional Multiple Listing Service (ARMLS) highlighting and comparing Scottsdale real estate stats between August 2011 and August 2012.
Consistent with other areas of the Valley, inventory is down (37%), as are days on market (27%), reflecting the recovering real estate market in Scottsdale.
Meanwhile, as inventory has dropped, prices have risen. The average sold price of a Scottsdale house (single family residence) was up 7.4% year-over-year, and 11.3% among all property types combined.
(CLICK CHART TO ENLARGE)
Have questions about the Scottsdale real estate market?
Drop me a line anytime and I’d be happy to help!
The housing market continues to gather strength, and the biggest gains in price now appear to be among the least expensive homes, whose values fell the most in the downturn and have weighed against any would-be recovery.
Over all, the Standard & Poor’s Case-Shiller index showed an annual gain of 1.2 percent in the price of single-family homes across 20 cities in July, according to data released Tuesday. In addition, all 20 cities showed price increases from the previous month, the third monthly gain in a row, supporting the idea that the nation’s housing market has bottomed out and, some analysts said, contributing to an unexpected bump in consumer confidence.
Luxury homes lost less value in the housing crisis and began to rebound more quickly, but lower-price homes are catching up, rising slightly faster in value than homes in the middle and upper tiers, according to an analysis of the Case-Shiller data by Patrick Newport and Michelle Valverde of IHS Global Insight, a private research firm in Lexington, Mass.
The typical lower-price home rose at an annualized rate of 1 percent from June to July on a seasonally adjusted basis. The middle tier posted a one-month gain of 0.4 percent, and the highest tier inched up by 0.1 percent.
In the last three months, Mr. Newport said, the lowest tier has been rising in value more than twice as fast as the other two categories. For the least expensive homes, “prices just shot up too fast on the way up and then went down more sharply,” he said. “We’re seeing the correction from that.”
The price cutoffs for each tier vary widely depending on the city. The cutoff for the lowest tier ranges from $86,000 in Atlanta to $349,000 in San Francisco.
Other data supports the trend. According to a report from Zillow, a real estate Web site that divides homes into three price groups, the gap in price changes between the top and the bottom of the market is narrowing. “It’s less that the top tier is cooling than that the bottom tier is strengthening,” said Stan Humphries, chief economist at Zillow. “The bulk of the recovery is due to the changes in the bottom and middle tiers.”
Even in Las Vegas, where housing prices are still slightly down over the last year, lower-end homes have ticked up in value, which may be good news for sellers but can be a hurdle for buyers. Mark Graham, a youth pastor who has been looking for a house for his family there for months, said buying a home for less than $150,000 could be a challenge.
“Houses are going on the market and within a day have multiple offers already on them,” Mr. Graham said, adding that most of the offers were from investors who did not need financing. “It’s more or less a heartbreaking market, because you get your heart set on a house, and then someone walks in with cash.”
Not every market is showing improvement on the low end, according to Case-Shiller. Atlanta and Chicago are still lagging, but in places like Boston and San Diego, the bottom third of houses are doing better.
“The majority of the cities have been more like Boston and San Diego,” said Maureen Maitland, a vice president at S.& P. Dow Jones Indexes, which produces the Case-Shiller index.
In Phoenix, which has shown the strongest recovery in housing prices of the 20 cities surveyed, the lowest third — homes under $127,000 — gained 33.5 percent from July 2011 to July 2012, while the top tier — homes above $211,000 — posted an 11.5 percent increase in that period.
Prices have been bolstered by a decline in the number of foreclosure sales and strong interest from investors, who are buying low-price properties and converting them to rentals.
In the Sarasota, Fla., area, investor demand has driven up prices for lower-end homes, said Roxanne Moore, a real estate agent with Green Lion Realty there.
“Investors are finding properties that they used to be able to buy for $80,000 or $90,000 are now going for $100,000,” she said. In addition, after a long absence, first-time home buyers are beginning to trickle back in.
Over all, home values in the first seven months of the year rose 5.9 percent, the best year-to-date performance in seven years. Nevertheless, the broad housing market is still nearly 30 percent below its high in 2006.
In four cities — Atlanta, Chicago, Las Vegas and New York — prices are lower than they were a year ago. In New York, including the surrounding suburbs, prices increased 1.2 percent from June to July, but remain 2.6 percent lower than they were in July 2011. Prices at the low end of the market — houses below $271,000 — have dropped 3.9 percent in the last year, while high-end homes — $437,000 or more — have dropped 2.5 percent.
But in an optimistic sign, consumer confidence rose in September to its highest level since February, according to a report released Tuesday by the Conference Board, a private group.
The consumer confidence index reached 70.3 points, well above economists’ expectations of 63 and a significant improvement from the upwardly revised level of 61.3 in August. Some analysts attributed the bump to gains in the stock market, while others credited the improved outlook for housing.
Source: New York Times
Yesterday, Michael Orr at the W.P. Carey School of Business released his July 2012 Greater Phoenix Housing Report, which includes data from Maricopa and Pinal Counties.
The market continues to evolve and certain trends are clear. In the Greater Phoenix real estate market, we’re seeing increased investor activity (especially in the lower-priced outlying areas), fewer foreclosure completions, more short sales, rising prices (despite a tiny drop between June-July 2012), and continued tight supply.
Here are some of the more interesting highlights:
- Priced dipped slightly in both the single family and multi-family segments between June and July (Avg sales price down $6,000/Median down $1,000)
- Compared to July 2011, median prices are up 31% for single family homes and 17% for Phoenix area condos/townhouses
- Distressed inventory supply (short sales, foreclosures) is down 69% year-over-year
- Total supply of Phoenix real estate is down 26%
- New home sales in the Greater Phoenix area are up 58%
- “Normal” resales are up 68%
- Single family unit sales were down about 7.5% in July 2011 vs July 2012 (likely due to limited supply)
I want to make a comment about inventory supply. In the world of economics, most agree that an unemployment rate of around 4% is considered “full employment,” because there’s a certain number of people at any given time who will never work because they don’t want to or face some condition that prevents them from doing so.
I believe the housing market has a similar dynamic. I don’t pretend to know what a “zero housing level” looks like, I do believe there are a certain number of properties that will always be for sale. The specific properties themselves will change, but at any given time X percentage of “available” inventory is considered unsellable. Location, property condition, defects in title, silent marketing, unrealistic seller expectations, Realtors who neglect to update listing status in the MLS, etc., can all contribute to this condition.
I don’t see any options to change this dynamic because it’s tough (impossible?) to isolate the properties that fall into this category, but the implication to real estate buyers (and sellers!) is that your true competition is greater (or less, for sellers) than the inventory numbers might imply. When Phoenix real estate inventory dips to 10,000, perhaps 10% of that number is actually unsellable…
As further evidence that the Phoenix real estate market is in full recovery, many homebuilders are aggressively expanding their land holdings in anticipation of continued recovery.
As noted in the Arizona Republic, Taylor Morrison Homes of Arizona, for example, has already purchased 700 lots in 2012, has contracts on 1,000 more, and is seeking additional opportunities in Maricopa County.
The builder has communities under construction in the East Valley, but the current focus is on North Valley locations, such as Lone Mountain, Vistancia, Terramar, and parts of Scottsdale.
Charlie Enochs, Division President of Taylor Morrison Arizona, expects the builder to build twice as many homes in 2012 as it did in 2011.
Taylor Morrison isn’t alone. The City of Scottsdale recently reported a 52% increase in building permits issued over the previous fiscal year.
The uptick in construction activity is a function of resale inventory scarcity, frustration over short sale logistics and waiting periods, and aggressive incentives offered by homebuilders.
From my perspective, it’s refreshing to drive through new home subdivisions and see and hear the hustle and bustle of construction. For a few years, construction came to a virtual halt. In fact, in some parts of the Valley you can still see skeletons of subdivisions abandoned mid-build, victims of the housing bust and weak economy.
2009 – Home Builders Abandoned Communities
Today – New Home Construction is Back
Considering a new home in Phoenix or Scottsdale? I have helped many buyers save money by representing them on their new home purchases. In fact, purchasing a new home without dedicated Realtor representation can cost you big time!
For more information on how a Realtor can help you buy a new home, read this posting.
When it rains, it pours.
Though I’m not featured as prominently (or with a photo!) as I was in my recent interview with the Phoenix Business Journal, I was contacted out of the blue by The Globe and Mail (Toronto, ON) to comment on rising investor participation in the Greater Phoenix real estate market. Pleasant surprises like this are uncommon and I am privileged by the opportunity. I do not advertise in either publication, so this was truly “earned media coverage.”
Read the full article here or below. They saved the best comments for last…
In hard-hit cities like Phoenix, the home market rises
Foreclosures are down and bidding wars are back as U.S. real estate begins to bounce back in areas like Arizona, Miami and southern California
The Phoenix real estate market is suddenly experiencing something it hasn’t seen in years: Bidding wars.
Phoenix used to represent just about the worst of the U.S. housing market, with suburbs full of empty homes and foreclosures running so high that investors gathered like vultures at the county courthouse to snap up distressed properties.
But like its namesake, Phoenix’s housing market is rising. Foreclosures have dropped 20 per cent in the past year and the median house price has climbed about 25 per cent, making the city one of the hottest real estate markets in the U.S. But perhaps the most telling sign of a recovery is the return of heated bidding that has been a long time coming for agents like Maureen Porter.
“A good house in a good neighbourhood will go on the market for two days and they’ll already have five or 10 offers,” Ms. Porter said. “When I started my business [four years ago]there were around 56,000 homes for sale in Maricopa County [which includes Phoenix] Now there’s about 12,000 homes for sale.”
Ms. Porter said she recently took two clients from Vancouver to look at a 70-lot housing development in Goodyear, a community outside Phoenix.
“It was all dirt, there were maybe two homes built,” Ms. Porter recalled. “We walked into the presentation centre and everything but two lots were sold out.”
The housing market is showing signs of life across the U.S., with existing home sales and the median price up about 10 per cent year-over-year, hitting levels not seen since the summer of 2010. Sales and prices have been rising steadily for months, proof that the long-suffering real estate sector may have finally turned the corner. Buyers are returning thanks to an improved employment picture, record-low mortgage rates and near-bottom prices.
Housing is a critical component to the U.S. economy and improvements in the sector usually lead to a boost in consumer confidence, employment and spending. All of which is good news for the Canadian economy, as well.
The real impact of the recovery can be seen in places like Phoenix, Miami and southern California, which were among the hardest hit during the recession. The supply of homes for sale has dropped in all three locations as banks move quickly to unload troubled properties, often through “short sales” where mortgage holders get permission from lenders to sell their property for less than the amount owed. Banks often prefer short sales to foreclosures because they are a faster way to deal with borrowers.
In Miami, the median price is up 15 per cent from a year ago and the occupancy rates in downtown condominiums is 94 per cent. Southern California has a four-month supply of homes for sale, roughly two months less than what is considered a healthy market, and foreclosure sales have reached a four-year low.
Phoenix offers some of the most dramatic evidence of the turnaround. This is a city where house prices fell by up to 50 per cent during the recession and people walked away from their homes in droves, leaving vast stretches of empty neighbourhoods. Today the number of homes listed for sale has dropped by 64 per cent in the last year and foreclosures have fallen by 20 per cent. The market has tightened up so much that prices are jumping 5 per cent each month and buyers are competing fiercely for just about anything that’s available.
“We’ve now got a fully fledged buying frenzy going on while people try to buy something before they miss the boat,” said Michael Orr, director of the Center for Real Estate Theory and Practice at Arizona State University.
Last week there were roughly 12,000 homes listed for sale across the city. That compared to more than 50,000 around the same time last year.
Despite the current boom, the market still has a long way to go. The median price is now about $135,000 (U.S.). That’s still well below the peak in 2006, when it reached $265,000, and it puts prices at about the same level as in 2000. And although the number of existing homes sold in April across the country rose to an annualized rate of 4.6 million, economists say a healthy U.S. housing market would see almost 6 million sales of existing homes a year.
Much of the activity is also being driven by outsiders, many from Canada, eager to snap up investments. In Phoenix, the number of “investor flips,” people who buy houses and then re-sell them quickly for a profit, has increased 31 per cent year-over-year, according to Mr. Orr.
But with prices rising quickly, good deals are harder to find. Three years ago, dozens of investors lined the steps of the courthouse in downtown Phoenix to bid on foreclosed properties, many going for well below $100,000. This week only a handful of bidders showed up for the auction and just four houses sold.
“The days of getting a property under $125,000 are slim to nil,” said Diane Olson, a real estate agent who caters largely to Canadians.
The question for many agents like Justin Lombard is whether this is a blip or a real recovery. He is cautiously optimistic.
“We’ve seen such steady progress in the way of inventory absorption that I’d be really surprised if we took a big backward step,” he said. “We hit bottom a long time ago. It’s just that a lot of people didn’t realize it because our bottom was so bad.”
Every now and then I have a media opportunity that’s too exciting not to share.
Recently, I was interviewed by the Phoenix Business Journal, complete with photo op. The Phoenix Business Journal is the leading business publication in the state with wide readership and I do not advertise in the Journal, so this was a great honor. Unfortunately, full online access to the story is limited to subscribers, so I can only include the preview.
Investors returning to Phoenix housing market, driving prices up
Real estate investors and short-term flippers are back in town — for better or worse — and once again they’re dominating the housing market for sales of less than $250,000.
Investors are buying those homes with cash, which is pushing up prices in the long-downtrodden local market, tightening inventories and squeezing out traditional home buyers.
Justin Lombard, owner of Stone House Realty of Arizona, says cash sales are starting to dominate the local housing market, preventing many buyers from finding homes.
“It’s very much like 2005 all over again at the entry-level segment,” said Justin Lombard, owner of Stone House Realty of Arizona in Phoenix.
Lombard said cash sales are starting to dominate the market for less expensive homes, as some sellers are looking specifically for …
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