“For the first time since July 2005, the local resale housing market has posted year-over-year improvement. April had 5,585 recorded sales in contrast to 4,855 sales for a year ago”
The median home price however continued to fall from $220,000 in March to $210,000 in April. That is the lowest median home price since February 2005 which was $200,000. A year ago in April 2007 the Greater Phoenix median home price was $265,000.
Click below to read full press release from ASU.
[Read more →]
I’ve been showing homes for 6 days straight with 4 different clients. The results were one contract, one likely contract, and two will wait until next fall before pulling the trigger. It feels like 2005.
I’m starting to see some homes that really surprise me with how inexpensive they are. I haven’t seen many homes like that since 2004.
But that’s not the point of this post.
Make it hard to find the home.
When writing a description in the MLS first give the two major cross streets. Great. Standard. So far so good.
Then say something like “take first right onto…” Well, do I drive north, south, east or west from the intersection to find the street?
I ended up trying all four directions and eventually found the home on the last direction I tried.
I bet many Realtors gave up and didn’t find or show the home.
Oh yeah, list the home as being in the wrong subdivision just so it’s not too easy for Realtors to find and show the home.
That bank owned home hasn’t sold. Surprise, surprise.
If they can’t see it, they can’t buy it.
Well, international monetary traders are betting on the U.S. dollar appreciating against the euro. Don’t know their outlook regarding the Canadian dollar exchange rate.
Canadians planning to buy an Arizona home might want to consider getting their ducks in a row (that is getting their (Canadian) home equity line of credit completed) and putting some of the money they plan to use to buy an Arizona home into a U.S. dollar denominated account at their local Canadian bank to help hedge their exchange rate risk. [add your own punctuation]
Phoenix homes have depreciated 24% from their peak value in June 2006 according to my analysis of the Case-Shiller data.
From the August 2007 mortgage meltdown to this latest data for February 2008, prices fell 17%, or almost 3% per month.
And the fall continues to accelerate but at a decreasing rate according to the latest Case-Shiller numbers. From January to February prices fell 4.25%, slightly higher than the previous month which was 4.23%.
Last month I said, “Clearly, we’ll start to see the decline begin to decelerate in February or March.” Well, I was wrong about February. Let’s see about March.
As always, the Case-Shiller index obscures the large differences within metro Phoenix sub-markets. This website, ArizonaRealEstateNotebook.com, is the best I’ve seen for allowing you to look at real estate trends by zip code and to tease out trends within the metro Phoenix area.
ADDED: Forget everything I ever said about a soft landing.
I’ve had this graph for a while and was planning to do something fancy with it with video but I’ve been too busy with clients. My schedule is super charged the next week so I’m just going to do it the old fashioned way.
The median home price fell to $210,000 in March from $213,400 February. This during a time of year when prices often strengthen so draw your own conclusion.
It is certainly looking like the median home price may make most if not the entire correction by the end of 2008.
March sales were blah which foreshadows blah sales for all of 2008. It looks, however, like April will be relatively strong which is a silver lining.
The lower median home price has not yet affected sales as buyers’ expectations are that prices will decline further.
On the other hand, the lower median home price is starting to have an effect on the inventory of homes for sale as potential home sellers are a lot less enthusiastic about selling their homes when the median home price is $210,000 rather than when the median home price is $250,000.
The number of listings available for sale fell 0.5% from mid-March to mid-April. Last year listings increased 7% over the same month.
And so the supply correction begins.
The lower median home price is not increasing the number of homes sold yet but it is decreasing the number of homes for sale.
“MLS Listings” are measured at one point in time, usually the 15th day of the current month. “Median Price” of homes sold and the total number of home “MLS Sales” are for the entire preceding month.
San Diego foreclosures are a lot cheaper!
In San Diego County, California, “Single-family houses in foreclosure sold for a median price of $365,000, compared with a median of $500,000 for nonforeclosures. The 2005 peak in that category was $565,000.”
Throw in a study from a university professor.
In areas with no foreclosure sales, the median house price dropped 5.3 percent on average in the past year, as measured by price per square foot, Gin said. But for every 10 percent increase in the percentage of transactions that were foreclosures, the median price per square foot dropped an additional 3.6 percent.
For example, in La Jolla, which had no foreclosure sales in the first quarter, the median price per square foot on 42 sales was $698, a figure 5.7 percent lower than a year ago. In National City, where nearly half of the 30 houses sold in the first three months of 2008 were foreclosures, the $268-per-square-foot price was down 32.7 percent over the past year.
Emphasis mine.
I’ve railed against liar’s loans here.
Now a professional writer at Slate explains liar’s loans and the mortgage meltdown better than I ever could.
The term is mortgage-industry slang for what’s more formally called a “stated income” mortgage—a mortgage that a lender gives without checking tax returns, employment history, or pretty much anything else. Many of the loans that are in trouble now, or will be in trouble soon, fall into this category.
In 2006 in some parts of the country, these loans made up as much as half of new mortgages, for both subprime borrowers and for homebuyers with high credit scores.
The organization had compared a sample of 100 stated income mortgage applications to IRS records.
More than 90 of the applications overstated the borrower’s income at least a little. More strikingly, more than three out of five overstated it by at least 50 percent.
Wow!
Shedlock analyzed one particular bundle of loans from Washington Mutual consisting of 1,765 mortgages from around May 2007, a total of $519 million in loans.
These were not “subprime” loans. The borrowers’ average credit score was 705, well within prime territory. This is a fairly typical package of loans for a mortgage-backed security, but one thing that does make it stand out is the proportion of these loans that didn’t ask for income documents: 88 percent.
* Eighteen percent of the loans are already in foreclosure—or have already been seized by Washington Mutual.
* One in four of this bundle of liar loans is already 60 days past due.
Remember, these are folks with good credit histories—and one in four of them is well on his way to losing his home, or has already lost it.
None of this could have happened without everyone’s willing participation.
Keep in mind that in some places (for instance, San Diego), half the people in the market were taking out stated income loans and so bidding up prices to points where almost any house became impossible to finance for someone who did not lie.
All emphasis added was mine.
From the Wall Street Journal;
“Yale University economist Robert Shiller, pioneer of Standard & Poor’s/Case-Shiller home-price index, said there’s a good chance housing prices will fall further than the 30% drop in the historic depression of the 1930s. Home prices nationwide already have dropped 15% since their peak in 2006, he said.”
I have a theory that areas that are the most over-priced will “correct” more quickly than other areas.
Below is a post I had published about 3 weeks ago in an U.S. housing stocks blog called “Seeking Alpha.”
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You drop a rock in water. The ripple is largest at the center and becomes weaker as it spreads out.
In the Reverse Ripple Theory of Metropolitan Home Price Corrections (you got a better name?), home prices in the outlying areas with a lot of new construction will tend to fall most and first (the splash), as it moves toward the center of the metro area, the ripple weakens and the fall in home prices is progressively less and later.
The “less” part is probably conventional wisdom among real estate geeks. The “later” part is probably not.
Buried in Appendix C of Global Insight/NationalCity’s September 2007 issue of “Home Prices in America,” I noticed an intriguing little table barely mentioned in the text, called “Past Price Corrections.” The table is now included in recent issues, as well.
The appendix showed 79 metro area home price corrections completed since 1985. Its great stuff for real estate geeks.
Don’t miss the last two notes in Appendix C.
That last note surprised me. The more a market is overvalued, the faster home prices tended to correct! That seemed counter-intuitive to me. Why would a more overvalued market correct sooner than a less overvalued market?
Anyway, let’s run with it. What if that effect occurred within a single overvalued metropolitan area as well within the history of U.S. home price corrections?
What if home prices in the most overvalued areas of metro Phoenix Arizona, my home, fell most and bottomed out first?
So, where were the most overvalued areas in metro Phoenix during the recent boom?
The conventional wisdom is that areas on the periphery with lots of new homes were more overvalued, at the peak, than other areas.
The periphery became more overvalued, in my opinion, because there was a bit of a pricing oligarchy in the new home areas. The homebuilders were the oligarchy.
As the market tightened during the boom, homebuilders had the market power to increase prices in their areas more quickly than was possible in older areas where each home seller made an independent pricing decision.
When a homebuilder increased its list prices by say, $10,000, he increased the value of all the resale homes in the subdivision at the same time.
If, however, Joe Homeseller in the same subdivision increased his list price $10,000 - and the builder did not - it would have essentially no affect on the market.
In my view, prices in new home areas increased more than in other metro Phoenix areas with similarly tight markets because of the market power of the homebuilders to raise prices.
Since the peak, we have certainly seen median home prices on the periphery fall faster than in the interior of metro Phoenix.
The future will show us if these peripheral sub-markets will also tend to be the first areas to see median home prices bottom out and whether the interior sub-markets of metro Phoenix will tend to have less severe but slower home price corrections.
Hey, it’s just a theory.
The charts below compare 85086 in far north Phoenix, which includes Anthem, a newish master planned community of Del Webb (Pulte Homes), and 85051 in Phoenix, an area of homes built in the 1960s and 1970s. Charts show monthly medians for resale (not new), single family detached homes.
Obviously, the periphery (85086) started to fall first. The question is will it fall further and bottom out first?
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Here is the original article.
Later the theory was referred to in an article in the San Jose Mercury News.
While running an MLS listings report for Anthem last weekend, I was stunned by the high number of homes under contract in Anthem.
MLS Resale, Single Family Homes Under Contract to Buyers on April 26, 2008: 165
Not all of those homes under contract are going to close and not all of the ones that will close will close in May.
Nevertheless, for 85086 which includes Anthem it looks like May 2008 could very well have the highest number of sales for a single month since 2005.
3 reasons for the increase in homes sales in Anthem;
1) Spring is the strongest season for home sales.
2) Canadians are buying a lot of homes in Arizona and many Canadians look for newer, inexpensive homes on the outskirts of metro Phoenix in places like Anthem. In addition, it’s looking like Canadians may buy later in the season than most - that they tend to buy during their spring not ours. (This is really just a semi-educated guess.)
3) Look at what has happened to home prices in 85086 (Anthem).
The median home price in 85086 is now similar to mid-2004!
It looks like lower home prices are finally starting to cause resale home sales to increase in Anthem and in 85086 overall.
I don’t have charts for Pinal county zip codes so I looked in the MLS and found that Johnson Ranch currently has a 6 month inventory of homes. Six months is in the range of a normal amount of inventory of homes for sale.
In Johnson Ranch, the average sold price in the last three months (since January 26) was $151,675 and the average sold home had 2,133 square feet.
From a nice little bit about doom sayers (and cars).
Stanford economist Paul Ehrlichs 1968 book “The Population Bomb,” which opined that, “The battle to feed humanity is over. In the 1970s…hundreds of millions of people including Americans are going to starve to death.”
7716 S. Heather Drive, Tempe Arizona 85284
Offered at $225,000
I’m getting a tremendous amount of interest on this home because of the great price. Two Realtors have already told me their clients are seriously considering making offers.
$225,000 is a great price for 3 bedrooms and 1,738 square feet in Tempe!
Please compare to comps.
3 good sized bedrooms, attached 2-car garage, soaring vaulted ceiling and wood fireplace in living room, downstairs master bedroom with walk-in closet and extra large vanity, second bedroom has window seat and balcony, includes both a dining area and a breakfast room, fenced backyard for your dog.
New carpet throughout. Super clean.
A beautiful, green community with grassy common areas throughout. HOA maintains all front yards so neighborhood always goods great. Community pool, heated spa and tennis. Separate RV/boat parking available.
I just updated my charts in the Zip Code Real Estate Notebooks. See list of zip codes in the right-hand column.
The charts I updated for March were for most all zip codes in Maricopa County. Charts updated were;
In this article about jingle mail, one quote really got the commenters agitated.
“We paid $585,000. It was the peak of the market, but no one told us,” said Shaffer, a real-estate agent from Colorado.
Yeah, it’s hard for a real estate agent to play dumb about real estate transactions without being called on it.
I was in HomeSmart’s office in Mesa last week with a couple of clients from Canada after a day of home shopping. We were back in the conference room looking at the MLS on the huge flat screen monitor on the wall, checking out the comps to their favorite homes.
Their favorite home had five excellent and recent comparable solds. Three were priced very closely together on a cost per square foot basis. One home, however, was low priced and another was very high priced.
My clients were very curious about the very high priced home so we started looking at the differences between the homes. Nothing jumped out at me. Then it hit me and I said, “I think I got it.”
I checked and sure enough it turned out the same real estate agent represented both the buyer and the seller. I find that explains a lot of over-priced sales.
I imagine the unrepresented buyer walked into an open house, loved the home and wanted to make an offer. The seller’s agent may have even offered the buyer some money from his commission if she used him as her agent too.
The seller’s agent - who was now also the buyer’s agent - could not tell the poor buyer that the place was way over-priced because that would have betrayed his responsibility to the seller.
If that buyer had her own agent, I’m sure her agent would have been able to advise her on pricing and she could have paid $10,000’s less.
To this day, the buyer may still think she made a few thousand dollars and was very clever to use the seller’s agent to represent her. In fact, I believe she lost tens of thousands of dollars by using an agent that could not advise her on pricing.
TIP: When you see an home where you can’t explain a high sales price, check and see if the same agent represented both the buyer and the seller.
TIP: Most buyers should use their own real estate agent and not the seller’s real estate agent.
The conversion has been rocky for some, but once you get the hang of the new neighborhood-based, map-based Phoenix MLS system, you’ll like it, maybe love it.
A huge number of people have signed up to use the new system for free.
Got this great email this evening about the new Phoenix MLS system.
Hi John,
It works great now. Not sure what you did but it loaded perfectly. At first I wasn’t sure what to do but, once you get into it, it’s really an awesome tool. The only problem will be me spending too much time looking at the detail by listing when you do the mouse over. I really like how it breaks down the zone by neighborhood so you can look just where you want to look instead of having to see stuff in places you know you are not interested in.
I’m not a buyer anytime soon (as far as I know) but I sure like knowing what’s going on near my home.
Thanks again for sharing this awesome tool with “the rest of us”. It’s great to have access to see the market.
Best,
Kathleen Wattle
www.captivespirit.com
Kathleen, Thanks for taking the time to write me and for letting me put your email online. I really appreciate it. You made my day!
If anyone out there is having trouble getting the hang of the new Phoenix MLS system, please hang in there and feel free to email me with your questions.
John Wake
I recently added a super cool tool to this website that I’ve been using in-house for a few months, “Compare two zip codes.” You can find the link to the new tool in the right-hand column.
This unique tool, found nowhere else, is invaluable for learning the current differences between the real estate sub-markets of metro Phoenix, Arizona.
If you think the real estate market in your zip code is bad, try comparing it to 85086 Anthem, 85326 Buckeye or 85242 Town of Queen Creek. (I don’t have data for Pinal County - Town of Maricopa, Johnson Ranch/Queen Creek - where prices have likely fallen even lower.)
This tool is free to use… but it may be temporary.
Vote to keep this tool online and free by linking to the “Compare two zip codes” tool from your blog, web site, MySpace, etc.
I love this negotiating tip for home sellers from Bernice Ross in Inman News (subscription required).
2. Put pressure on buyers who are negotiating by doing a simultaneous price reduction. Whenever you issue a counteroffer with a lower price, ask the seller to reduce the list price. When the buyers realize that the seller is lowering the price, it places additional pressure on the buyers to take action.
This tip exposes something strange, but super common, about home seller psychology.
In a counter offer, a seller may offer to accept a price lower than his list price. Let’s assume the negotiations then fail and agreement couldn’t be reached with that buyer.
You would think that since the seller told one person he would accept a lower price that he would want to tell the whole world about his new lower price to generate more offers.
Sellers, however, often have this feeling; since their home was priced at $500,000 when the offer came in for $450,000, if they tell the whole world they would accept $475,000, the next offer will be for $425,000…
This is so true! Sellers really feel this way.
And it’s so wrong!
It is common to see that after a 4% to 5% price cut that a home getting no offers, except low-ball offers, will start getting realistic offers from serious buyers.
A seller should put himself in a buyer’s shoes.
The buyer has seen tons of good homes and is even having trouble deciding which home is best. He has a huge selection to choose from.
Let’s say the buyer ends up with 2 favorites. One is priced at market and the other is overpriced by 4% to 5%.
Mr. Seller, which home do you think Mr. Buyer will put an offer on?
If a seller proposes a new price in a counter offer he should tell the world what his new price is.
Even better, the seller should lower the price in the MLS at the same time he proposes it in a counter offer.
If the seller is near market price - and the buyer is smart enough to know it - the lowered MLS price should give the buyer a little bit of fear about losing the home and a little bit of urgency about reaching an agreement.
In today’s market, the number one thing buyers lack is urgency.
March is typically an indicator for the coming resale home season, and with 4,335 recorded sales it’s showing signs of a continuing weak market. Even though it is an improvement over the 3,750 sales of February, it is significantly below last year’s 5,385 sales and is the lowest March since 1996, with 3,270 sales.
Hmmm. I was thinking 2007 would be the low for the number of home sales. Now it’s looking more and more like it will be 2008.
Unfortunately, there is increasing data, such as job losses and layoffs, that the economy is now weakening and will add further stress for the housing markets
Jay has the median home price for Greater Phoenix at $220,000 for March 2008, the same as the month before. Last year it was $265,470 for March.
Click below to read full press release from ASU.
[Read more →]
What surprised me most about this chart of home prices in several countries was that the United States experience was far from the worst.
The Arizona Department of Real Estate has ordered the founder of property-management company Gorenter.com to stop doing real-estate business in the state.
The cease-and-desist order released Thursday alleges Mark Bosworth engaged in a real-estate business without being licensed to do so. The state agency cites a January $17.4 million civil judgment against Bosworth and his wife, Lisa, filed in Maricopa County Superior Court. The judgment, on behalf of TEM Holdings, found that Bosworth and his company, Property Masters of America violated sales agreements, submitted fraudulent invoices on rental properties and stole appliances and deposits from rental properties. Included in the $17 million judgment, were punitive damages of more than $12 million.
The Department of Real Estate has 19 open investigations into Gorenter.com, which is licensed with the department.
One of Mark Bosworth’s companies wrote the most exploitative lease-purchase agreement I’ve ever seen.
John Burns an economic consultant to home builders produced a neat little video on housing cycles. He is talking to home builders but much of what he says applies to resale homes.
His intro is pretty honest for a consultant to homebuilders.
Over the next few years record numbers of home builders, land developers and homeowners will file for bankruptcy or lose their assets to the bank.
This is a cool new neighborhood based, map based Phoenix MLS system that I just added.
It’s a great system for serious home buyers who have settled in on a specific area of town to buy an Arizona home.
It’s also excellent for home sellers who want to monitor the local competition.
In addition, I can include information that the Phoenix MLS does not allow me to put online, for example, the description of the home from the seller’s Realtor. The Realtor’s description is super valuable - you can see if it’s bank owned, a short sale, a fixer-upper, recently remodeled, or whatever special features the Realtor thought important to mention. I can’t put the listing Realtor’s description online… but I can send it to you in an email.
And it has this amazingly helpful video tutorial, if I do say so myself.
Check it out and tell me what you think.
Pick Your Neighborhood and Sign Up for Phoenix MLS Listings
P.S. If you don’t know what neighborhoods you are interested in, try my FastArizonaHomes.com. It’s just that, a fast and easy way to browse Arizona homes for sale on the Phoenix MLS.
The Orange County (California) Register has an excellent real estate blog called Lansner on Real Estate.
Stephen Scarborough, abruptly “retired” as Standard Pacific’s CEO last week, received a severance deal of $1.25 million in cash, plus 42,000 shares of restricted stock and accelerated options on 280,000 shares.
The deal with the Irvine-based home builder also included a non-disclosure agreement that said: “Executive shall not disparage the Company, its officers, directors, employees, agents, subsidiaries or affiliates” or give away any trade secrets, although he is free to testify in court if called to do so.
