Phoenix Real Estate Market at a Glance – April 2015

Most Popular Charts on Phoenix Real Estate (?)

The most amazing thing this month is the three “Phoenix Real Estate Market at a Glance Charts” now have over 150,000 views, at least, according to Tableau. Wow!

I’ve been updating the charts every month but I haven’t even written a post about the charts here on this blog since last May!

I wonder where all the views are coming from. They’re not coming from this website. I’m getting 1/10th the number of visitors I used to get to this website so only a small part of those 150,000 views are coming from this website. Are people finding the charts directly on Tableau’s website? I wonder if people have embedded the charts on other websites? (Which is fine with me, my name is on the bottom of every chart.) I just wonder where all those views are coming from.

I only started publishing them using Tableau in 2012. Before that (2007-2012), I published the charts as static images (.jpg and .png) created in Excel.

Anyway, I’m very grateful the charts are useful to people.

Hey, tell your friends about the charts!

Back to the Phoenix Real Estate Market

See all three full-size charts here.

Explainer

I don’t have a good feel for what’s happening in the market.

I didn’t expect prices to increase as much in 2015 as in 2014 but through March the median home price increase is similar to last year’s.

Sales. The price increase is being driven by a “high” number of sales. Home sales in March were up 17% from March 2014. That’s a lot.

Lending standards have eased a bit. That’s gotta help a bit. Is that why sales are up?

Are people feeling more confident about their income?

Are more Millennials buying their first homes?

Is it just a one month fluke? Nah. The number of home sales has been higher every month this year versus last.

Inventory. The number of homes hitting the market each month is running less this year than last and that also helps keep inventory down and prices strong.

On the other hand, coming into 2014 we had huge upward momentum in home prices in Phoenix. The median price had increased over 50% the previous two years.

This year the market had a lot less upward momentum going in. Prices “only” increased 6% in 2014.

Conclusion. Last fall I thought the price increases this year would be lower than in 2014 and that was the conventional wisdom.

Now with tighter supplies of homes for sale being counterbalanced to some degree by less upward price momentum coming into 2015, I’ll say we’ll see price increases this year similar to last, in the 6% ballpark but with higher than 6% more likely than lower because of the tight inventory.

On the other hand, I’m a little worried that the inflation-adjusted price is getting too high. That’s bad for buyers and market stability.


What do you see? What’s happening around you? Please leave a comment.

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Phoenix home prices flat through January but…

Today Case-Shiller published their home price index through January, 2015.

You can see that Phoenix home prices have been pretty flat for over a year.

Case-Shiller March 2015

Tight Supplies

All the talk in the Phoenix real estate industry is the tight supply of homes and what that means for current and future home prices in metro Phoenix.

A quick tour of the inventory of homes for sale in Valley cities shows that, in general – and except for Paradise Valley, Scottsdale and Fountain Hills – the months supply of homes for sale is running lower than last year at this time.

This suggests to me that home prices in most areas of metro Phoenix will increase more this year than they did last year.

Future Prices

But I really won’t have a good handle on price trends for 2015 until I see the final numbers for March. March is the bellwether month, March sales and prices set the tone for April, May and sometimes June.

Is all the excitement just the usual high season rush or is it a change in the market?


What do you see in your neighborhood? Are prices moving up? Leave your comment below.

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Arizona property taxes are much lower than in California, Florida or Texas

Notice that property taxes are MUCH lower in Arizona than in Texas (very high), Florida (high) or California (high).

This is particularly important when you’re choosing where to retire when you’ll be on a fixed income.

But There’s More

In addition to high property taxes, be aware that California and Florida discriminate against new and vacation homeowners.

California Property Taxes: California property taxes are MUCH higher for new homeowners than for people who have owned their homes for awhile. Arizona doesn’t do that. You will pay pretty much the same in property taxes as your neighbors with homes of the same value. So not only do you get a LOT more home for your money in Arizona, you’ll pay a lot less every year in property taxes.

Florida Property Taxes: Like California, Florida has a two-tiered property tax system that hits newcomers and part-time residents harder than longer-term residents. In Arizona, we don’t do that. We treat part-time residents fairly so you will pay the same as your full-time resident neighbors with homes of the same value.

Texas Property Taxes: Crazy high!

Property Taxes Make a BIG Difference

Be sure to pencil in property taxes when estimating your cost of living in different retirement areas.


See Also

Compare Arizona taxes and California taxes
How high are Florida property taxes?
Residential Real Estate Tax Rates

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U.S. homeownership rate lowest since 1994 and headed down

The U.S. homeownership rate fell again in the fourth quarter of 2014 to its lowest point in over two decades. The latest 63.9 percent ownership rate is down from the bubble peak rate of 69.4 percent. A further drop is likely this year before finally settling down in the upcoming years.

Homeownership Programs = Total Failure

We’ve seen an unending string of programs to boost homeownership.

They’ve failed spectacularly if you judge their success by their stated idealistic goal of increasing homeownership in the United States. Clearly they’ve been a massive failure using their own homeownership goal.

However, they have been spectacularly successful if you take a more realistic, political view of their goals. The programs have pumped billions of dollars into housing organizations and despite their terrible track record on homeownership the money continues to flow because the real goal is to simply fund the housing organizations.

Best Explanation of Banking/Housing Crisis

Columbia economics professor Charles Calomiris’ book, “Fragile by Design,” does a great job of explaining the political bargain that created this fragile banking system that has led to tremendous home price instability that has decimated the net worth of low and moderate income homeowners.

The current system promoting U.S. homeownership has been responsible for wiping out the net worth of many low and moderate income families.

How would you have liked to have scrimped and saved for years on low wages to buy your family a home and then to have the home lose 80% of its value in the real estate bust?

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I got quoted in the “The Home Story”!

Check it out!

THE ‘BORING’ HOUSING MARKET IN PHOENIX AND THE EXCITING SUPER BOWL — IT’S A GOOD THING by D.E.Rosen.

The Money Quotes

“Now the real drama will be found on the gridiron Sunday, when the Seattle Seahawks battle the New England Patriots, and not in its housing market. If anything, things are “balanced,” says John Wake, a real estate agent for HomeSmart in Phoenix who also runs the Arizona Real Estate Notebook site.”

And,

“Then home prices rebounded in 2012 (median prices increased by 17 percent from the year before), and inventory shrunk from 60,000 homes listed for sale down to 17,000 homes.

Today, after years of manic activity, things are “boring.”

“Boring is good, very good,” says Wake. “The number of homes being sold is kind of low, but so is the number of homes hitting the market,” he adds.”


Your comments are welcome!

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Divorce and selling the house

Here’s a useful post about appraisals and divorce. It’s short. Read the whole thing.

“In some situations there may only be one value needed, which is as of the current date or date of the filing of the divorce, and in other instances two values may be needed. Two values may be needed if the home was owned by one of the parties before the marriage occurred, and if there has been a significant change in the value of the property since the marriage.”

You also sometimes see that when you’ve inherited an income property in the past and now need to determine the basis for taxes.

In both cases you hire an appraiser to determine the value of the property at some point in the past.

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John’s wrong! My $200k home is worth $280K today!

Here’s a follow up to yesterday’s post, “↑90%   ↓60%   ↑40%   →0%”.

If you think, “John’s crazy! I paid $200,000 for my house in 2000 and it’s worth $280,000 today. It’s appreciated a helluva lot!,” I’ve got bad news for you.

Total inflation from 2000 to today has been 40%.

$200,000 in 2000 is worth $280,000 in 2015, after inflation.

This fits nicely with super long terms studies from economists Case and Shiller themselves that found real U.S. home prices have generally only appreciated 0.4% or 0.7% a year depending on how they cut the data. Ten years ago their studies seemed completely silly, that times had changed, this time was different. Today, their studies don’t seem so out of touch.

It’s been a wild ride but real (inflation-adjusted) home prices in metro Phoenix are where they were back in 2001.

Inflation-Adjusted Case-Shiller Phoenix Red Line

And if you go back 25 years to January 1989 (the oldest data Case-Shiller has for Phoenix), real Phoenix home prices have only increased a grand total of 10%, or 0.4% per year on average.

[To be fair, I should point out that 1989 was probably the top of the “Savings and Loan” real estate boom of the late 1980’s. That boom was mainly in commercial real estate but it did have an impact on residential real estate prices.]


Your comments are very welcome!

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Phoenix home prices – Up 90%, down 60%, rebound 40%, flat

↑90%    ↓60%    ↑40%    →0%

Since January 2000, metro Phoenix real, inflation-adjusted home prices have;

  • Boomed up 90%,
  • Busted down 60%,
  • Rebounded up 40%, and
  • Been flat for a year.

Boom, Bust, Rebound, Stability

Over those 15 years, metro Phoenix real, inflation-adjusted home prices have increased a grand total of 5%.

Case-Shiller Phoenix Real

It’s been one hell of a round trip.


Your comments are welcome!

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Inflation-Adjusted Case-Shiller for Phoenix

I just added an interactive chart of the real (inflation-adjusted) Case-Shiller Home Price Index for 20 cities including, of course, Phoenix.

Inflation-Adjusted Case-Shiller Phoenix

The Story of Us

To me, that graph tells an absolutely amazing story of greed, fear and the utter failure of a market system.

What I remember the most is the tremendous pain it caused so many people who lost their homes and sometimes their life savings too.

Now, all that’s in the past and it will stay in the past for the next few years until people forget the pain and slowly, slowly remove the few safeguards put in place after the last bust and we begin another boom cycle.

Real Phoenix home prices have been flat for over 12 months and will probably remain flat or with slight real appreciation for the foreseeable future.

A boring real estate market is a good real estate market but there’s no money in boring. Eventually, the promoters saying, “This time is different” will take over the public imagination again and so it begins.

But right now – thank goodness – we’ve already paid the price for past excesses and we have a stable real estate market in Phoenix.

Long Live the Boring Market!

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