Arizona Real Estate Notebook

I can’t find this information on Elliott’s website but you can subscribe to his weekly newsletter here.

As for Arizona, in December, the unemployment rate remained at 8.7% compared to 8.5% nationally. The level of jobs in the state now stands 37,500 above a year ago (December). Greater Phoenix has created 28,600 jobs over the same period. While these numbers are weak by historic standards, they are a significant improvement over results from 2007 through 2010. Arizona retail sales were up 5.7% for the first 11 months of 2011 compared to the similar 2010 period. Maricopa retail sales were up 4.4% over the same period. According to R.L. Brown, December permits were 492 versus 383 a year ago. This brings the total for 2011 to 6,792 permits, or a 0.4% decline from 2010. 2011 should represent the bottom of the market for permits.

Sun City West 85375

Sun City West and it’s neighboring zip code immediately to the south, Surprise 85374, had pretty much identical costs per square foot of single family homes sold from 2000 to 2004. Today, however, the difference is about $25 per square foot.

That’s not so bad because in 2009 the difference was about $40 per square foot.

My conclusion is that, from 2009 on, those low prices in Surprise 85374 have been pulling down the median home price per square foot next door in Sun City West 85375.

I also expect that the median home price per square foot in Sun City West 85375 will continue to be pulled down until the prices in Sun City West 85375 gets closer to their traditional relationship to home prices in 85374 and surrounding areas.

Click on chart to see a larger version.

Tempe (ASU area) 85281

Looking at the historical data, the median price per square foot in Tempe 85281 (northern Tempe, including ASU) traditionally ran about $15 per square foot more than in Mesa 85201, the zip code next door.

Today the difference is running about $25 per square foot (in 2009 the difference was around $40 a square foot).

That historically large difference in prices makes me think that the median home price per square foot in Tempe 85281 is more likely to fall than in most zip codes in metro Phoenix.

Click on chart to see a larger version.

4 Bedrooms + 2.5 Baths + Heated Diving Pool + 2-Car Garage + Small Workshop

 
First home on the park to be listed in the MLS since 2009!

People love these homes on this neighborhood park so they don’t come up for sale very often. All new kitchen in 2006 including new cabinets, Silestone quartz countertops, Dacor gas cooktop and dual wall ovens. Home backs to “secret” park with tot lot, tennis courts, basketball court and ball field. Go to BacksToPark.com for the details.

See PRICE, PHOTOS and FLOOR PLAN at BacksToPark.com.

Quick Tour – Video

Phoenix Home Sales

Factoid: More than twice as many homes sold in metro Phoenix in December 2011 (6,661) than in December 2007 (3,161).

Phoenix Housing Inventory

The number of homes listed for sale in metro Phoenix (red line) fell in December and January. I had expected that the number of single family homes listed for sale in the Phoenix MLS would have increased in January as is common for January. The fact that the inventory fell rather than rose, suggests an incredibly tight supply situation this spring when supply usually tightens up and, therefore, rising median home prices in metro Phoenix.

Phoenix Home Prices

The Phoenix median home price (green line) increased $4,900 in November and $100 in December to $125,000. I had expected prices to increase seasonally in the spring but I didn’t expect prices to increase so much in November and December which are traditionally two of the weakest months for Phoenix home sales (along with January closings).

NOTE: This post was written in January 2012. If you stumble upon this post in the future please keep in mind that even though the chart may be up-to-date that the text here was written in January 2012. Hey, it’ll be easy and fun for you to see how far off I was in my view of the Phoenix real estate market.

Looking for a Phoenix area Real Estate Agent?

If you’re looking for a Realtor to help you buy a Phoenix area home, fill out this form. If you’re not looking for a home in my area of expertise, I can refer you to a Realtor I trust in your area. Thanks, John.

You can listen to my interview with Steve Goldstein of KJZZ radio this morning. Also on the program “Here and Now” was Mike Orr of The Cromford Report fame and now also ASU’s new director of the Center for Real Estate Theory and Practice in the W. P. Carey School of Business.

Is Real Estate Looking Up?
By: Steve Goldstein on 01/18/2012

Real estate experts Mike Orr, creator of the Cromford Report, and John Wake of the website Real Estate Notebook talk about improvements they’ve seen in Arizona’s housing market…and the state finally recovering from the popped bubble.

Some experts are suggesting that Arizonans may face another wave of foreclosures soon, but Orr and Wake think that Arizona’s unique market has allowed the state to recover from the economic crisis slightly faster. The market is by no means completely recovered, but Orr says with increased demand over the past year Arizona should soon see prices catch up. Wake says flat is the new up, and prices hitting a plateau could mean the state is finally rebounding.

CLICK HERE to listen to the KJZZ radio interview about the Phoenix real estate.

Email me if you would like Robyn’s or Lonny’s contact info.

[I'm having fun experimenting with the new mobile video blogging capabilities. It'll be fun to see how I end up incorporating video into my websites.]

If you’re thinking about selling your Desert Ridge home, please consider interviewing Francie to be your real estate agent. Francie lives in Desert Ridge, knows Desert Ridge very well, of course, and Francie is very high energy and will work extremely hard for you.

In fact, in most parts of metro Phoenix I have real estate agent colleagues I trust. I recommend that you interview my colleagues first when looking for knowledgeable real estate agents. Give me a call at (480) 463-4475 to see if I or a colleague might be a good fit for your needs. Thank you.

[Okay, I gotta try increasing the exposure on the camera next time I shoot a video in this lighting.]

You’ll notice that last night the gremlins added a list of recent videos in the sidebar of this website.

The sidebar shows the 10 most recent Youtube videos that I’ve posted here.

If you’re a “visual learner” like I am, I think you’ll find this addition super useful.

On the home page, the list of 124 Phoenix area zip codes is now below the videos in the sidebar. On most other pages, the list of 124 Phoenix zip codes is at the bottom of the page.

Check some of the videos out!

I’m totally psyched about this! (I’m such a geek!)

My zip code graphs now all begin in January 2000. The 124 zip codes covered are listed in right-hand column or at the bottom of this page.

This is GREAT because it gives us 2+ more “normal” years of home-sale data to look at which gives us a much longer baseline of what “normal” looks like. I think you’ll find the graphs fascinating… if you’re a numbers person like me, anyway.

My zip code graphs used to start in August 2002 which was when I started buying raw data of every home sold in Maricopa county. Not only was mid-year 2002 a weird place to start, it was just before the Phoenix real estate boom really took off so we didn’t have a lot of baseline pre-boom years to compare with 2011 Phoenix area home sales and home prices.

Change Log

• Added homes sold from January 2000 through July 2002.
• Graphs are about 50% larger.
• I did a much better job of removing new homes from these resale home graphs.
• I make it more clear that data does NOT include homes purchased by business entities such as corporations, LLCs and trusts. The graphs look at the market from an individual home buyer’s point of view.
• Rearranged the order of the graphs.
• Updated the data point colors.
• Removed the graphs of individual homes sold in the previous month.

You’ll find no better way to understand the Phoenix real estate market in your zip code than to study your zip code graphs. Available Phoenix area zip codes are listed in the right-hand column or at the bottom of this page.

For my clients and the clients of my referral partners, I also have graphs where you can easily compare two zip codes to each other, you have two zip codes are on the same graph. The comparison graphs has been very valuable in forecasting which zip codes are more likely to see continued price declines. You can visually compare historical relationships between the median home prices in two zip codes to get insight into future median home price trends. If you are a current or past client and would like to see those comparison graphs, please let me know.

Email me your comments on the new graphs at john at johnwake dot com. Thanks!

From the Phoenix Business Journal.

Arizona Population Growth

Arizona added 90,000 residents between April 1, 2010, and July 1, 2011. That equates to a 1.42 percent growth rate. Both in raw numbers and percentage terms, Arizona ranked eighth for growth.

Arizona’s population as of July 1, stood at 6,482,505. It is the 15th most-populous state.

Population growth is obviously critically important to economic growth in Arizona, especially construction and real estate.

United States Population

The United States as a whole saw its population increase by 2.8 million over the 15-month period, to 311.6 million. Its growth of 0.92 percent between April 1, 2010, and July 1, 2011, was the lowest since the mid-1940s.

Fastest Growing States

1. Washington D.C. (2.7%)
2. Texas (2.1%)
3. Utah (1.9%)
4. Alaska (1.8%)
5. Colorado (1.7%)
6. North Dakota (1.7%)

John Talbott at Seeking Alpha;

I have been waiting for more than five years to offer this advice. It is now time in most cities across the country to buy a new home or refinance your existing home with thirty-year fixed rate mortgage debt. And this from the author of The Coming Crash in the Housing Market published in 2003 and my 2006 book, Sell Now! The End of the Housing Bubble. Let me explain why.

And by my calculations, in most cities across the country, real prices adjusted for inflation have just about come into line with where prices were in 1997, before all this crazy bank lending started, so there should be little additional downside risk by buying today.

Talbott talks about home prices being 50% to 65% of new home construction costs in many areas and he looks at home prices compared to median family income and rents. He says if inflation returns as he expects and you have 30-year mortgage payments locked in, you will do very well.

I’m not saying Talbott is an oracle, he could be a crank for all I know, but given his past books it’s an interesting change in outlook.

To get a feel for Talbott’s natural bias, he seems to pride himself on predicting financial crises, see Talbott’s Wikipedia entry.

1) Economic Answer. The banks may slow down a bit on the speed of foreclosing because they expect/hope their Phoenix homes will be worth more later.

2) Organizational Answer. The banks have created and staffed, over several painful years, a bank foreclosure bureaucracy and that bureaucracy will not want to slow things down and become smaller.

Probably both factors will come into play once home prices start increasing in metro Phoenix.

Phoenix home prices weren’t going to keep falling forever. Someday, they’ll start increasing again.

I think the median Phoenix home price will start increasing in the first half of next year but I’m not sure when that fact will become conventional wisdom, possibly not until 2013.

Standard Disclaimer: Just because the metro Phoenix median home price may increase in 2012 doesn’t mean the median price will increase in your zip code or that your home will appreciate.

From Mike Orr at The Cromford Report;

For the monthly period ending December 15, we are currently recording a sales $/SF of $84.47 averaged for all areas and types across the ARMLS database…

The current price level is 1.4% higher than last year on December 15. I probably need to say that again to let it sink in. The average price per square foot is now 1.4% higher than it was 12 months ago. This is what used to be known as “appreciation”. Today it is known as “that can’t be right”.

But it is.

“This is what used to be known as ‘appreciation’. Today it is known as ‘that can’t be right’.”

Well said, Mike.

So, the average Phoenix home price is essentially flat compared to last year at this time but flat looks like up from where we’ve been.

Dr. Jay Butler of Realty Studies at Arizona State University came out with his Phoenix area residential real estate sales and median home price numbers for November 2011.

Greater Phoenix – Median Home Price

(Single-family resale homes. Excludes repossessions but includes sales by banks after they repossess. ASU calls these “Traditional Sales”)

November 2011: $130,000
November 2010: $134,000

The median price is up strongly, $5,000, from October 2011 despite a strong seasonal tendency for the median price to drift lower this time of year.

For the Phoenix median home price to go against the seasonal trend and actually increase $5,000 in November shows demand is unusually strong for this time of year and the median home price for Greater Phoenix is almost certain to increase in 2012. We saw a similar counter-seasonality trend in late 2004.

According to Dr. Butler’s dataset, the median home price in Maricopa County bottomed out in April 2009 at $125,000 and rose 15% to peak at $144,000 in April and May 2010 before falling again to $125,000 in December 2010, January, March, April, September and October 2011. It sure looks like the metro Phoenix median home price was bouncing along its bottom at $125,000.

Last August I wrote “I strongly doubt we’ll ever see $125,000 again” but we did see $125,000 again for September and October 2011. Nevertheless, I still think as I wrote in August that the median Phoenix home price could quickly pop up to $144,000+ again by June 2012. Time will tell. (I’m assuming, of course, that the European sovereign debt crisis doesn’t cascade out of control and cause the U.S. stock market to tank.)

Greater Phoenix – Number of Homes Sold

(Single-family resale homes. Excludes repossessions but includes sales by banks after they repossess. ASU calls these “Traditional Sales”)

November 2011: 5,030
November 2010: 4,750

Phoenix home sales were 6% above last November.

Conclusion

For most parts of Maricopa County, if you’re thinking of buying a home, I would strongly suggest buying sooner rather than later.

Call me at (480) 463-4475 if you’re looking for a knowledgeable real estate agent. I or a colleague would be honored to help you.