My Realtor friend, Jay Thompson, has a great post breaking down the metro Phoenix real estate market into bank-owned (foreclosed), short-sale (pre-foreclosure) and private-sale (normal).
The bank-owned market is currently tighter than the bark on a tree, only 1.5 months supply according to Jay’s chart.
The other two markets are not tight by any stretch.
Nevertheless, with such a tight supply of bank-owned properties, we will likely see the end to the free fall in home prices in metro Phoenix, Arizona. However, that doesn’t mean the median price for non-bank-owned homes won’t continue to fall.
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ken44 05.03.09 at 1:02 am
Yes, nice date. I was surprised to read 12,000 properties are currently listed as “short-sales” which means a lot more homes will be coming on the market soon enough. I guess much will depend if strong sales can continue to eat away at the onslaught of foreclosures. Unfortunately nobody really knows how many more homes the banks are getting ready to dump on the market.
azrob 05.03.09 at 11:23 am
well, here is a bit of info:
the number of homes in foreclosure INCREASED by more than 3000 in April. and over 4000 in March.
Today, about 45,000 homes have had an NTR filed and are in the process.
Now, to get this back down to a more manageable number, of about 10,000 we need to see what happens to 35000 homes. If half foreclose and drop onto the market, there goes that reduction of 5000 listed bank owned homes over the last three months…
I’d say its way the hell to early to call this one. I’m going to sit this little buying burst out, with my cash from selling all of my investment properties prebubble safely stashed…
Brian 05.03.09 at 2:49 pm
There must be some change in the pace of decline before the bottom is reached. We are still dropping at 5% a month with no change of rate in 12 months.
I would say it will be virtually impossible to hit the brakes between now (February sales data ) and June data that is out in August. I still think we will overshoot the January 2000 index of 100 by a good bit and could end up at mid 1990 price levels before the decline is over (index was 75.11 in January 1995, which is another 35% down from here).
Mike 05.09.09 at 9:04 am
It is nice to see that there are a few out there who look at the entire landscape before making a knee-jerk declaration. Hey, I would love to see the economy improve as quickly as the next guy, but I don’t see much there to support it yet. It often seems that many who view the economy, and more specifically, the real estate market, grasp on to any piece of positive, or “not as negative as before” news to try to call a bottom.
The reality is that this could very well be a “bear rally” amid a long term negative trend in housing prices. After the 3 month moratorium on foreclosures, there is no question that foreclosure numbers will increase rapidly in the short term. More expensive home prices are still dropping like a rock. Less expensive homes are selling quickly at severely reduced foreclosure prices. 9% of the country is unemployed, and that number will likely increase over the next year. April’s new job losses were not as big as March, but still over a half million people were new to the unemployment rolls. I haven’t seen a lot of real positive news in the economy other than a nice recovery by the stock market. Yes, the market is a “leading indicator”, but as one economist once quipped, “the stock market has predicted 12 of the last 3 recoveries”, meaning there is every bit as much likelihood it is a bear rally as it is a recovery.
I think Brian’s prediction of real estate prices dropping another 35% is not very likely. However, I would be very unwilling to call a “bottom” right now, and given the state of the economy, would not be surprised to see real estate prices lose another 10%.
The other factor to consider is that real estate prices are not going to magically spring back up after a bottom. The most likely scenario is that the market goes sideways for a few years as the economy gets on better footing. So, even if you think you know when the bottom occurs, there is no big rush to run out and buy.