Greater Phoenix Real Estate Statistics May 1,2009 (Mesa, Scottsdale: short sales, foreclosures, rental market)

[ivanabacowboy]

Of course March 2008 sales were pretty dismal in the grand scheme. But 68% more than dismal has to still be a positive. All things are relative...

I work in a bank in real estate. Obviously I cant post confidential internal information and figures. But will say this. Our foreclosure inventory is really starting to move across the board. Not quite "who opened the flood gates" yet but definitely "the stream is moving". Even our commercial foreclosure side (ie large land tracts developed or not, some with partially constructed homes, some totally undeveloped without infrastructure, some with fully completed homes-we didn't get very big into the true commercial aka retail, office, restaurant kind of real estate) is seeing the first signs of life. Our residential side on financing homeowners for sales is practically overwhelmed and doing record business.

Also again not being able to post exact numbers, but Bank's go into REO knowing that we are going to take a haircut to some degree. We haven't been taking as drastic of haircuts as we had contemplated in most situations.

Based on many conversations with folks in the business, I'm not calling a true bottom quite yet, but it is on the horizon. I call the true upswing when the new construction market starts breathing on its own again. Existing sales numbers will go up first as the REO clears out. REO and foreclosure notices will start to fall. When there is less REO to complete with, existing price points will start moving up. Once those price points move up a bit more, new construction will start to move (because it obviously cannot compete with REO pricing).

New construction however cannot move up very quickly because most of the builder community absolutely pillaged their land inventory when things turned. Permits are woefully dismal.

IMHO the first evidence of true upswing and that inventory across the board is finally back in line will come when when you start seeing large tracts of land sales really move in the builder community and permits start to increase. There is going to be a land grab period. It isn't quite there yet, but momentum is building. The builders (at least the ones who survived) who were able to hold onto their land inventory or those with any real cash left in their coffers are going to be sitting pretty in the near future. So when you start seeing land sales and permits increase-you will know we just passed the bottom. (Which of course the only way to call "bottom" is to start to call the "upswing".) Also look for Banks to be some of the recipients of the benefit when this move occurs: I can tell you some Bank's are holding onto some land parcels contemplating exactly this.

Captain Bill, just curious what you think happened to cause the much higher SF inventory in Scottsdale? Do you think it is predominantly a function of the higher median price? That folks will take that home at $105K in Queen Creek rather than paying $400K for it in Scottsdale?

Of course all just my opinion and you are welcome to not agree accordingly.

[FlyGuy_ca]

Ummmm Bill, I am sorry but it seems you cannot win. You are always great in your postings with the details and then someone asks for your opinion. And then whether or not you give it, someone else must blast you for your "agenda". Yes you are in the real estate market, but I find that your posting are usually neutral and if you have a opinion you say "....in my opinion...". You are not solicitating us for business, you are not telling us what we should do, you are giving us information (usually with the sources, unlike others) to do with what we like. Keep it up Bill as I would rather see your posting trying and looking at things in a positive light.

In regards to this thread I personally think that the market is much smarter than anyone of us. And that for myself this is a perfect time to buy. If you are happy with the home and the price, where is the issue? We are now closing on our second investment property in Glendale. The rental money not only pays the expenses but gives us positive cash flow. It is a physical appreciating asset (which banks like, at least ours does) which over time is going to gain value. And as we are in it for the long term how can you lose? Where is the down side?

[Captain Bill]

Originally Posted by movin'on

Thanks for this most comprehensive thread. What I take away from it is that I'll be in Scottsdale for a while. And prices are on the upswing, as are the number of homes that are not selling.

I was surprised that the price upticked in Scottsdale while the inventory is 14.3 months supply.

[Captain Bill]

Originally Posted by FlyGuy_ca

Ummmm Bill, I am sorry but it seems you cannot win. You are always great in your postings with the details and then someone asks for your opinion. And then whether or not you give it, someone else must blast you for your "agenda". Yes you are in the real estate market, but I find that your posting are usually neutral and if you have a opinion you say "....in my opinion...". You are not solicitating us for business, you are not telling us what we should do, you are giving us information (usually with the sources, unlike others) to do with what we like. Keep it up Bill as I would rather see your posting trying and looking at things in a positive light.

In regards to this thread I personally think that the market is much smarter than anyone of us. And that for myself this is a perfect time to buy. If you are happy with the home and the price, where is the issue? We are now closing on our second investment property in Glendale. The rental money not only pays the expenses but gives us positive cash flow. It is a physical appreciating asset (which banks like, at least ours does) which over time is going to gain value. And as we are in it for the long term how can you lose? Where is the down side?

Thanks FlyGuy. Actually the poster who asked for advice was not wanting advice. She was just baiting me. She is constantly running down realtors and wanted to set me up.

I knew she was baiting me, so I decided to just laugh it off and follow up with a facitious reply based on her negative posts about realtors in other threads. She's ok, she just doesn't like realtors. I hope she didn't take offense at my humorous reply. (I'm just assuming the poster is a female. I don't know for sure.)

I've finally learned to let the personal attacks go by, and understand that the person attacking is seeing information that they don't want to see, and so they decide to shoot the messenger.

Because I get private emails from people telling me that they appreciate the stats, I'll continue to post them every month so that those who are interested will be able to have them. And I'll just roll with the punches from those that choose to attack or bait me.

Good luck with your investments. I've kept two of my rehab properties for rentals in the past 7 months. I'm hoping to keep two per year as rentals while the interest rates and prices are such that we can get positive cash flow.

[Steve-o]

I just read the other day that Phoenix was rated the absolute hardest-hit city regarding the housing market. THe report showed that some of the homes in the area had dropped 50% in value.

[Captain Bill]

Originally Posted by Steve-o

I just read the other day that Phoenix was rated the absolute hardest-hit city regarding the housing market. THe report showed that some of the homes in the area had dropped 50% in value.

The median price in the city of Phoenix has declined much more than 50%

Here are some Phoenix stats from 2001 to present:

Phoenix Single Family Residence Median Price

January 2001........$115,000
June 2007............$260,000
May 1, 2009.........$65,000

The numbers are different if you use the Phoenix Metropolitan area cities combined. So it helps to know whether a number that one is reading is for the city, or for the metropolitan area which includes all the cities within the area.

[Captain Bill]

Originally Posted by ivanabacowboy

Of course March 2008 sales were pretty dismal in the grand scheme. But 68% more than dismal has to still be a positive. All things are relative...

I work in a bank in real estate. Obviously I cant post confidential internal information and figures. But will say this. Our foreclosure inventory is really starting to move across the board. Not quite "who opened the flood gates" yet but definitely "the stream is moving". Even our commercial foreclosure side (ie large land tracts developed or not, some with partially constructed homes, some totally undeveloped without infrastructure, some with fully completed homes-we didn't get very big into the true commercial aka retail, office, restaurant kind of real estate) is seeing the first signs of life. Our residential side on financing homeowners for sales is practically overwhelmed and doing record business.

Also again not being able to post exact numbers, but Bank's go into REO knowing that we are going to take a haircut to some degree. We haven't been taking as drastic of haircuts as we had contemplated in most situations.

Based on many conversations with folks in the business, I'm not calling a true bottom quite yet, but it is on the horizon. I call the true upswing when the new construction market starts breathing on its own again. Existing sales numbers will go up first as the REO clears out. REO and foreclosure notices will start to fall. When there is less REO to complete with, existing price points will start moving up. Once those price points move up a bit more, new construction will start to move (because it obviously cannot compete with REO pricing).

New construction however cannot move up very quickly because most of the builder community absolutely pillaged their land inventory when things turned. Permits are woefully dismal.

IMHO the first evidence of true upswing and that inventory across the board is finally back in line will come when when you start seeing large tracts of land sales really move in the builder community and permits start to increase. There is going to be a land grab period. It isn't quite there yet, but momentum is building. The builders (at least the ones who survived) who were able to hold onto their land inventory or those with any real cash left in their coffers are going to be sitting pretty in the near future. So when you start seeing land sales and permits increase-you will know we just passed the bottom. (Which of course the only way to call "bottom" is to start to call the "upswing".) Also look for Banks to be some of the recipients of the benefit when this move occurs: I can tell you some Bank's are holding onto some land parcels contemplating exactly this.

Captain Bill, just curious what you think happened to cause the much higher SF inventory in Scottsdale? Do you think it is predominantly a function of the higher median price? That folks will take that home at $105K in Queen Creek rather than paying $400K for it in Scottsdale?

Of course all just my opinion and you are welcome to not agree accordingly.

Great information Ivanabacowboy. I hope you'll keep posting more information. The more information we can have, the better decisions we can all make in the future.

To answer your question, the majority of buyers today seem to be first time home buyers who have found the home prices to be within their reach, along with interest rates low enough so the mortgages are affordable.

The mortgages are not as easy to get in the $400k range, and that range is also above the FHA limit of $346,250.

The conforming loan limit is still $417,000, so that helps to keep buyers away from above that range because of the higher mortgage rates.

Interestingly, the inventory for Scottsdale declined very rapidly from 23.7 months supply in February to 14.3 months supply today. That may partially explain the anomoly of increased pricing there with still a high inventory.

I didn't dig in to see what price ranges were selling most there, but I assume it's in the lower range. The average size of the houses sold in Scottsdale is about 2800 sf.

The other buying group is investors, and they (we) are focusing on homes in the price range that will move quickly in a declining market. The homes in the under $300, and especially the under $200k range are moving rather quickly to first time home buyers and landlord type investors.

Percentage of sales to investors for a few cities:
Valleywide .....20%
Phoenix..........50%
El Mirage........48%
Mesa.............19.4%
Scottsdale......12%
Surprise..........11.5%
Queen Creek....10%
Gilbert..............8%

The monthly foreclosure numbers haven't been published on Cromford Report as yet. When they do I'll post those.

[borborygmi]

Originally Posted by Ponderosa

Yeah right. Capt Bill is the only one on these threads that has any facts at all. He puts them out there and one can intrepret them as he wishes. The yoyo doomers go on personal attacks like this post and offer nothing in support but ignorant conjecture or political claptrap (like this post again). Why do you care? Are you just trying to help?

Facts, eh? depends on what one interprets as fact. When you skew numbers and only only post statistics that support your point without discussing where they came from, whether those are relevant or meaningful "facts" or not could be debated.

And remind me again, where in my post do I personally attack Captain Bill? So according to your response, I'm a "yoyo doomer" and offer nothing but "ignorant conjecture" with my post, but I'm the one guilty of a personal attack? Hey pot, this is kettle. I should ask you, what's the point you're trying to make?

I stand by my point that I made in another thread- the trend of falling home prices in Phoenix- and everywhere else- will flatten out and stabilize when one of two things happen:

1. the average listing prices of homes fall to the point that they approximate the price of the foreclosed homes the banks have for sale (you know, the ones that are actually selling, and comprising the majority of the increased sales numbers Bill posted);

2. The massive glut of unsold homes finally runs out, and supply once again approximates demand.

Now since we're not close to either one of those things, and are about to lose even more ground on both fronts when AZ loses 146,000 jobs this year alone- tell me, does it take a rocket scientist (let alone a RE agent or an economist) to figure out where this is heading? And tell me another thing- why would anyone with a 3-digit IQ voluntarily sign up to be a captive taxpayer in a state that already has the biggest budget shortfall in the union not named California- and that's before those massive job losses hit?

[ivanabacowboy]

Flyguy, more folks need your attitude! Especailly on that "if you have the money and like the home go for it" side (and of course also on the side that at least getting information to interpret from folks who have the statistics like Captain Bill is a good thing).

I find the investor statistic interesting but very high. Soaking up I suspect the foreclosure REO. Investors in part led us into this mess, maybe in part they aren't such bad guys and will lead us out. ;-)

Also one question I have for Capt Bill-not sure if you know. How do they determine that a sale is an "investor"-just if it isn't owner-occupied or is there a "box" to checkoff somewhere (I am more at the higher levels and not the paper pushing where I actually would see the sales forms) or by some language in the conveyance deed? Or they look if the last filing on the property was a foreclosure notice? Depending how they do it, those numbers may be a little skewed. Little industry secret: when Bank's take title to REO or accept a "deed in lieu of foreclosure" (basically they just give the property to the Bank and we dont have to mess with the formalities of the foreclosure process), title isn't going to be in the name of the Bank. We invent little separate LLC's (and then structure ownership of those LLCs as some far removed subisidiary of the big Bank).

FWIW, I still think Scottsdale is way overpriced. I know it is location, location, location. And maybe some premium is warranted. And it is true that some homes really do warrant $400K. But my sister and I were trolling recently one weekend afternoon and stopped at an open house in her neighborhood (Greenway/56ishsomething St area by Kierland). A sub-2000 sf home much in need of updating was still asking $350K. Still asking nearly $200/SF. That isn't like exactly recession pricing to me...

[Rubee]

Thanks for all the current info. I, like others on this forum, really appreciate hearing facts and statistics from people with first-hand knowledge in the industry in the local Phoenix area.

I find it ironic that the person who insists on posting on this thread just to argue, doesn't even live in Arizona, yet considers themself an expert on real estate in Phoenix.