Phoenix Area Real Estate Blog » Market Update

Justin McHood Has Officially Lost His Mind

Justin McHood — Fri, 31 Jul 2009 15:54:19 +0000

I was having a conversation with one of my peers yesterday and I think I was called out on the carpet when he declared:

“Justin McHood has officially went crazy. No way, did I just hear that come out of your mouth!”

What did I say that made everyone think I was crazy?

I declared that I think friends are more important than money.

Keep in mind – I am in a field where money is everything. The people who I work with think about money, talk about money, try to show how smart they can be about money — anything and everything seems to be all about the money.

If I am in a money-driven, money-obsessed industry and I declare that “friends are more important than money” does it mean that I have “went soft” and am about to become a social worker?

No, it just means that tools like Facebook and Twitter have changed the way that I think about money and friends in the last year.

Now – before I go any further — I am NOT suggesting that having more friends on Facebook or followers on Twitter are more important than money. Not a chance.

But what I am suggesting by saying “friends are more important than money” some PR firms might also call “reputation management”. Translation: value money over friends and try to make an extra buck on someone and there is a good chance that all of your friends — and potential customers will hear about it.

Justin McHood Took My Money!

Justin McHood Is Awesome!

Both of those things can easily be said by people using the various social media tools out there – and both of them last forever, because Google doesn’t forget.

The smartest people in the RE.net space have figured this out – and have built in feedback tools on their sites for people either rant or rave about you.

What does this have to do with mortgages or real estate?

If you are thinking about working with a loan officer or a Realtor – do your homework first — see what their friends think about them.

Phoenix Real Estate Market Update – #32

Steve Belt — Mon, 01 Jun 2009 04:39:07 +0000

Across all of Maricopa County, there are currently 22,790 single family homes for sale, down by 1531 from 2 weeks ago. There are 10,094 sales currently pending, down by 712 from a week ago. And 8073 homes closed escrow in the last 30 days, up by 700 from a week ago. As a result, broader Maricopa County now has 2.8 months of inventory, based on this week’s numbers.

Let’s both take a second and look at those numbers again, because if you are like me, the numbers must look unreal. I know they look unreal to me. Ok, digested them? Or do you need another second or two?

A quick export to Excel, shows me that the median price paid for a single family home in Maricopa County was $130,000. That’s higher than the median price of $120,000 quoted by Jeff Butera via Case-Schiller as part of the news report I was interviewed for. The price discrepancy makes sense, if you believe we have entered a buyer’s market in which prices should be going up, coupled with the fact that even the most recent Case-Schiller number is from 2 months ago.

Now, let’s look at the 12 city by city breakdown. As you look at these, notice the months of inventory for most of the cities. Months of inventory hovering in the 2-3 months range indicating a STRONG buyer’s market. I’m going to start monitoring the median price and see if it edges up over the next few months, as this supply imbalance indicates that it should.

City	Homes For Sale	Sales Pending	Sold	Months of Inventory
Phoenix	5783 355	2961 244	2527 154	2.3
Scottsdale	3252 219	553 2	403 47	8.1
Mesa	1968 146	918 53	717 45	2.7
Chandler	1114 4	547 15	399 68	2.8
Glendale	1021 95	661 59	576 42	1.8
Goodyear	525 50	307 30	234 29	2.2
Tempe	385 41	143 10	107 27	3.6
Laveen	333 19	216 3	131 17	2.5
Cave Creek	415 17	66 0	57 3	7.3
Fountain Hills	353 28	69 3	56 8	6.3
Paradise Valley	543 6	25 6	21 9	25.9
Carefree	140 1	7 1	3 1	46.7

*All data comes via ARMLS, and is presumed to be reliable, but is not guaranteed. All numbers represent single family detached homes only. Condos, townhouses, timeshares, vacant land lots, and manufactured homes are not represented in these numbers. All sold properties were sold in the last 30 days.

The following trend indicators are relative to the previous week’s update:

Positive move upward Positive move downward

Negative move downward Negative move upward

Thinking of making an offer on that Phoenix house?

Steve Belt — Tue, 19 May 2009 21:03:26 +0000

My friend, and fellow Realty Executives agent, Artur Ciesielski was noting the other day that he is seeing sales prices as much as 40% over their list price for homes in parts of the greater Phoenix area. This got me thinking once more about the frenzy of 2005, where it seemed as though every home that sold, sold for over list price. The big question back then wasn’t would it sell for the asking price, but how much over the asking price a home would sell for.

Naturally, I’m extremely curious how selling prices are relative to asking prices right now, in 2009, so I pulled some numbers. Wanting to look at the most active part of the real estate market, I decided to pull every sale of a single family home listed below $125,000 that has sold since 4/1/2009. That resulted in 5699 homes sales to consider.

So of those 5699, how many do you suppose sold for above asking price? I had my own guess, but what I found still surprised me. To get the most accurate picture possible, I pulled all of the data out of MLS and plopped it into a spreadsheet where I could do some crunching on it. Now, you might not believe this, but surprisingly, there are a number of data inaccuracies in the data that is within MLS. It’s rather easy, for example, to enter $599,000 when an agent intends to enter $59,900, as there aren’t any data entry police, watch-dogging the numbers. Since it as important to me to get the data at least somewhat accurate, I looked for the big outliers, and made corrections/adjustments to help clean up the most obvious of these data entry mistakes.

A couple of hours of scrubbing, and I think what I have is reasonably accurate. At least, without doing a complete comparison of MLS to tax record recordings.

What was your guess again for how many of the 5699 homes sold above asking price? 2118 would have been a very good guess. Over 1 in 3 homes are currently selling for more than their asking price right now. Or rather, they sold for more than their asking price at the time they went under contract. Not quite satisfied with that statistic, I looked at how many homes sold for above their original list price. Here, the number is less staggering, but still impressive, with 1288 homes selling for more than their original asking price. So, price reductions are still happening at the bottom end of the Phoenix real estate market, and these price reductions are resulting in encouraging buyers to make more aggressive offers.

Price Range	Homes Sold	# sold above asking price	# sold above original asking price	% above asking price	% above original asking price
below $125,000	5699	2118	1288	9%	11%

Looking at the homes that sold above asking price, I wanted to explore further just how much over asking price they sold. A few of the homes were priced somewhat auction style, with asking prices of $1 or $500. Including a list price like that into the calculations throws the numbers all out of whack, so these sales had to be ignored, or you get things like a home selling for 635000% of it’s asking price.

What I found, is for the 2118 homes that sold above asking price, on average, they sold for 9% above asking price. For the 1288 homes that sold above their original asking price, they sold for 11% above their that original asking price.

Throwing out the most extreme examples, a decent number did indeed sell for 20%, 30%, 40%, and even 50% above their list price, just as Artur was finding. It wasn’t a high percentage of homes, but it certainly was a good number of them. Overall, however, homes below $125,000 are now selling on average for 98% of their final asking price, but just 81% of their original asking price.

Have a question of your own about the current real estate market in Phoenix? Feel free to leave that comment below, hit my question form on the side, drop me an email, or give me a call. I’d love to explore what’s on your mind as well.

Phoenix Real Estate Market Update – #31

Steve Belt — Mon, 18 May 2009 02:30:42 +0000

I want to start off with the numbers today, then dig in a tiny bit deeper afterward. Across all of Maricopa County, there are currently 24,321 single family homes for sale, down by 981 from a week ago. There are 10,806 sales currently pending, down by 13 from a week ago. And 7373 homes closed escrow in the last 30 days, up by 361 from a week ago. As a result, broader Maricopa County now has 3.3 months of inventory, based on this week’s numbers.

So let’s look a little closer at these numbers, since they seem absolutely stunning, and find out just what is selling today. 748 homes were sold as a short sale, meaning the lender had to agree to less than a full pay off on the loan, rather than accept the reality the home was going into foreclosure. 4893 of the sales were bank owned homes (foreclosures). The remaining 1732 homes were “normal” sales, presumably not under duress.

From a price standpoint, 3840 homes sold below $100,000. Another 1588 sold between $100k and $200k. Then another 1323 homes sold between $200k and $350k. Only 622 homes sold for a price above $350k, which is roughly where the FHA loan limit currently stands.

Again, there simply cannot be any doubt that price and available financing are what is driving the Phoenix real estate market today. Now, let’s look at the 12 city by city breakdown.

City	Homes For Sale	Sales Pending	Sold	Months of Inventory
Phoenix	6138 265	3205 7	2373 48	2.6
Scottsdale	3471 91	551 26	356 30	9.8
Mesa	2114 86	971 4	672 45	3.1
Chandler	1118 113	562 2	331 32	3.4
Glendale	1116 82	720 7	534 34	2.1
Goodyear	575 18	337 7	205 10	2.8
Tempe	426 7	153 7	80 7	5.3
Laveen	352 6	219 0	114 4	3.1
Cave Creek	432 1	66 8	54 14	8
Fountain Hills	381 14	66 3	48 5	7.9
Paradise Valley	549 5	31 5	12 2	45.8
Carefree	141 4	8 0	4 2	35.3

The following trend indicators are relative to the previous week’s update:

Positive move upward Positive move downward

Negative move downward Negative move upward

More fun with Phoenix housing prices

Steve Belt — Thu, 14 May 2009 21:34:25 +0000

Ok, yesterday I had some extreme examples of irrational housing prices, so today, I wanted to come a little closer to center. A little closer to what the average home owner may be feeling is happening to the value of their own home. Again, with a couple of specific examples.

North Phoenix Example

This is a Brady floor plan, built by DR Horton in the Dynamite Mountain Ranch subdivision, which is found in North Phoenix, near I-17 & Happy Valley Road.

Sold: 1/29/2003 $199,885

Sold: 9/15/2006 $420,000

Sold: 4/17/2009 $210,000

Size: 2313 Square Feet, 3 bedroom, plus den, 2 bath, granite counters, maple cabinets, pool

DR Horton built this floor plan in a number of locations throughout the valley, but Dynamite Mountain Ranch is a personal favorite of mine (I manage a number of rental properties there, along with owning 2 rental properties there myself). The home’s layout results in a very practical and efficient use of space, with each room being large enough to breath in, yet no room being excessively large or tiny.

When this home sold last month, it was as a foreclosure. All of the appliances were still in the home along with the cabinets (not always the case with a foreclosure). The flooring was in good shape (mix of tile and carpet) and the walls were custom painted throughout, which was also in good shape. Oh, and I shouldn’t forget the pebble tec swimming pool with water feature in the back yard. Overall, this home was actually in better condition, than when it was purchased new (when considering the addition of the pool and painting).

North Scottsdale Example

This is another Brady model by DR Horton, but this time in the Scottsdale subdivision of Horseman’s Park near McDowell Mountain Ranch.

Sold: 5/23/2003 $338,729

Refinanced in 2005 & 2006

Sold: 3/26/2009 $385,000

Size: 2313 Square Feet, 3 bedroom, plus den, 2 bath, granite counters, maple cabinets

Once again, this home was in pretty good condition, without any glaring deficiencies like missing appliances and/or cabinets. As you can see, Scottsdale’s prices are higher than Phoenix for an equivalent home, but the price changes over the last 6 years are not much different.

Again, for this look at prices, I chose what I consider to be average homes for the area. These are not homes way on the outskirts of town, miles and miles from a freeway. These are both homes within a few minutes of major shopping and dining, freeways, employment centers, and entertainment venues.

(PS- McDowell Mountain Ranch currently has a woefully limited supply of quality homes for sale. If you are a home owner in McDowell Mountain Ranch, with a well cared for, move-in ready home, that is considering selling, you will find there is actually pretty strong demand for your home.)

Is there a point here?

Hopefully the point here is obvious. Once again, I’m only showing a couple of homes, but these sales are very typical of subdivisions sales results throughout the central part of the valley, rather than the outlying areas. The majority of homes selling today are selling for prices approximately equal to their price back in 2003. Nearly all of the massive run up in valuation that was experienced in the 2004-2006 time period has at this point been wiped away.

Looking for a deal, when it comes to buying a home today? Take out your box of darts. Stand opposite a map of Phoenix and its surrounding suburbs. Put a blind fold on. Throw a dart at the map. Wherever it lands, that’s a good deal.

Phoenix Real Estate Market Update – Mothers Day Edition

Steve Belt — Mon, 11 May 2009 03:37:33 +0000

Happy Mothers Day!

I’m cutting straight to the chase today, it is Mothers Day after all. Across all of Maricopa County, there are currently 25,302 single family homes for sale, down by 4785 from a month ago. There are 10,819 sales currently pending, up by 748 from 2 weeks ago. And 7012 homes closed escrow in the last 30 days, up by 784 from 2 weeks ago. As a result, broader Maricopa County now has 3.6 months of inventory, based on this week’s numbers.

Lets look at the 11 city by city breakdown. I’ve added a Months of Inventory column. I’ll talk more about the meaning of months of inventory during this upcoming week.

City	Homes For Sale	Sales Pending	Sold	Months of Inventory
Phoenix	6403 1334	3198 135	2325 245	2.8
Scottsdale	3562 263	525 59	326 67	10.9
Mesa	2200 432	975 58	627 57	3.5
Chandler	1251 295	560 91	299 16	4.2
Glendale	1198 305	727 7	500 106	2.4
Goodyear	593 142	330 41	195 18	3.0
Tempe	419 75	160 60	73 10	5.7
Laveen	346 90	219 39	118 5	2.9
Cave Creek	433 38	74 13	40 7	10.8
Fountain Hills	395 51	69 3	43 3	9.2
Paradise Valley	554 15	26 9	14 3	36.6
Carefree	145 5	8 1	6 0	24.2

The following trend indicators are relative to the previous week’s update:

Positive move upward Positive move downward

Negative move downward Negative move upward

Phoenix Real Estate Market Price Breakdown

Steve Belt — Mon, 13 Apr 2009 17:03:03 +0000

The last couple of week’s real estate market updates have shown what appears to be the development of a seller’s market in the Phoenix area. But as I peal back the onion a bit, we can see how the price of the home is what is determining where the frenzy is actually occurring.

Price	Homes For Sale	Sales Pending	Sold	Months of Inventory
$0 – $100,000	5294	3643	2410	2.2
$100,001 – $200,000	8469	3757	2230	3.8
$200,001 – $300,000	5130	1449	894	5.7
$300,001 – $400,000	2830	573	326	8.7
$400,001 – $500,000	1740	261	160	10.9
$500,001 – $750,000	2359	211	119	19.8
$750,001 – $1,000,000	1378	85	32	43.0
$1,000,001 – $2,000,000	1729	70	35	49.4
$2,000,001 +	1158	23	22	52.6

The chart above makes it abundantly clear where the buying activity is happening in earnest. In fact, for homes priced below $100,000, that are close to move-in ready condition, (horror) stories of dozens of offers per listing are not uncommon. Now, it’s always been true that lower priced homes sell quicker, but the sudden and dramatic jump in inventory levels for homes above $500,000 simply cannot be ignored.

As I’ve written in the past, the reason higher priced homes are not selling like lower priced homes today relates most directly to financing. Jumbo loan rates are not quite as high, relative to conventional rates, as they were (the most recent quote I heard was 5.0%, which is reasonable). However, down payment requirements are still considerably stiffer for conventional and jumbo loans, often requiring 20% and 35% down payments for the conventional and jumbo jumbo borrower, respectively. Thus, for any loan amount over $346,250 (current FHA maximum for Maricopa County), the additional down payment requirements create a significant affordability imbalance, which today’s home buyers are far less willing to embrace.

A few specific financing examples help make the price/demand curve picture above crystal clear:

Home Price	Financing Type	Down Payment	Interest Rate	Monthly Payment
$150,000	FHA	$5250.00	5.0%	$777 (PI Only)
$250,000	FHA	$8750.00	5.0%	$1295 (PI Only)
$350,000	FHA	$12,250.00	5.0%	$1813 (PI Only)
$500,000	Conventional	$100,000.00	4.75%	$2087 (PI Only)
$600,000	Jumbo	$210,000.00	5.0%	$2093 (PI Only)
$1,000,000	Jumbo	$350,000	5.0%	$3489 (PI Only)

As you can see, for homes priced between $350,000 – $600,000, the monthly payment difference isn’t that great (though the tax/insurance impact would widen this gap). The big difference is in the down payment requirement, which jumps from $12k to $210k.

Most buyers get their down payment from one of two places:

Savings
Equity from the sale of the current home

Saving $12k isn’t necessarily difficult for those with the motivation to do so, but saving $210k probably means the buyer will need to divest of another type of long term asset, for example, stocks. And as we all know, the stock market has been hit very hard the last 12 months, so buyers that perhaps would sell stocks to buy a house, have significantly less savings to do that with.

And then there’s equity in the current home. For a home seller in the Phoenix area, if that home was purchased more recently than 5 years ago, there is not likely to be a substantial amount (if any) equity. Valley wide, current housing prices are very close to 2004 levels, depending on where in the Valley, and how good a deal was had at the time the home was purchased. A home sale that could generate $210k in equity was likely purchased a very long time ago.

Thus it is the down payment requirement that is primarily stagnating the higher end market. For loan amounts above $750,000, I don’t actually know any lenders that are lending. Homes in the luxury and ultra-luxury market (any home above $1,000,000) are now being purchased almost exclusively by the cash buyer.

Phoenix Real Estate Market Update – Easter Edition

Steve Belt — Sun, 12 Apr 2009 19:36:23 +0000

Happy Easter!

I’m cutting straight to the chase today, it is Easter after all. Across all of Maricopa County, there are currently 30,087 single family homes for sale, down by 1297 from 2 weeks ago. There are 10,071 sales currently pending, up by 913 from 2 weeks ago. And 6228 homes closed escrow in the last 30 days, up by 28 from 2 weeks ago. As a result, broader Maricopa County now has 4.8 months of inventory, based on this week’s numbers.

Lets look at the 11 city by city breakdown. I’ve added a Months of Inventory column. I’ll talk more about the meaning of months of inventory during this upcoming week.

City	Homes For Sale	Sales Pending	Sold	Months of Inventory
Phoenix	7737 434	3063 304	2080 5	3.7
Scottsdale	3825 76	466 34	259 5	14.8
Mesa	2632 60	917 60	570 0	4.6
Chandler	1546 40	469 39	283 0	5.5
Glendale	1503 94	720 80	394 12	3.8
Goodyear	735 54	289 21	177 7	4.2
Tempe	494 1	100 9	63 3	7.8
Laveen	436 9	180 3	123 2	3.5
Cave Creek	471 7	61 13	33 4	14.3
Fountain Hills	446 10	66 16	40 1	11.2
Paradise Valley	569 10	17 5	11 5	51.7
Carefree	150 0	9 1	6 1	25.0

The following trend indicators are relative to the previous week’s update:

Positive move upward Positive move downward

Negative move downward Negative move upward

Phoenix Real Estate Market Update – #28

Steve Belt — Sun, 05 Apr 2009 21:44:13 +0000

As I write this, the Phoenix Suns are being handily beaten by the Dallas Mavericks. The game isn’t over, but with the Mavs ahead by 20, well into the third quarter, it’s not looking good for the Suns. A loss to the Mavs will almost certainly mean the Suns are out of the playoffs, as they will be 4 games behind Dallas with just 5 games remaining to be played. This was an awkward year for the Suns, as they rarely seemed in synch player to coach to front office. The injury to Amare Stoudemire, sealing the team’s fate. It’s too bad, too, as Shaquille O’Neill is really playing well of late.

In the real estate world, across all of Maricopa County, there are currently 31,384 single family homes for sale, down by 2397 from 2 weeks ago. There are 9158 sales currently pending, up by 616 from 2 weeks ago. And 6200 homes closed escrow in the last 30 days, up by 1047 from 2 weeks ago. As a result, broader Maricopa County now has 5.1 months of inventory, based on this week’s numbers.

Buying activity in the Phoenix area is now approaching the volume in which price stabilization is likely to be occurring. It’s too early to tell for certain, but in all likelihood, the near free fall of housing prices is probably finding a landing point right now. How long will this pace of activity last? Will prices bounce or rebound a bit? Those are anyone’s guesses. But a significant correction appears to be in hand.

City	Homes For Sale	Sales Pending	Sold
Phoenix	8171 716	2759 99	2075 384
Scottsdale	3901 87	432 52	254 35
Mesa	2692 244	857 60	570 98
Chandler	1586 78	430 34	283 45
Glendale	1597 160	640 50	382 64
Goodyear	789 84	268 4	184 38
Tempe	495 21	91 13	60 12
Laveen	445 45	183 8	121 26
Cave Creek	484 26	48 11	37 3
Fountain Hills	456 33	50 9	41 5
Paradise Valley	579 4	22 10	6 4
Carefree	150 2	10 1	5 1

The following trend indicators are relative to the previous week’s update:

Positive move upward Positive move downward

Negative move downward Negative move upward .

Phoenix Real Estate Market Update – #27

Steve Belt — Mon, 23 Mar 2009 01:14:38 +0000

I’m sure many of you are saddened, like me, by the loss of ASU at the hands of Syracuse today in the NCAA men’s basketball tournament. ASU was a #6 seed, beating the Temple Owls in their first round game on Friday. They led that game the entire way, winning in fairly convincing fashion. But today against Syracuse, they were rarely able to gain any momentum, with the Orangemen beating ASU in a manner similar to ASU’s Friday win, fairly convincingly.

Personally, I was quite pleased to see ASU win a game in the tourney. To show they belonged. And while they couldn’t beat Syracuse today, they didn’t embarrass themselves either. I look forward to ASU being tournament bound next year as well, and am grateful for the job Herb Sendek has done with the men’s team. Not since the scandal-laiden years of Bill Frieder, has the men’s basketball program at ASU has been relevant on a national basis, but looking at what we have now, that’s what I’d say Coach Sendek has accomplished. Thank you, and great job men.

Getting to the market update, across all of Maricopa County, there are currently 33,781 single family homes for sale, down by 595 from 2 weeks ago. There are 8542 sales currently pending, up by 826 from 2 weeks ago. And 5157 homes closed escrow in the last 30 days, up by 606 from 2 weeks ago. As a result, broader Maricopa County now has 6.6 months of inventory, based on this week’s numbers.

As you can see, with months of inventory getting very close to the magical 6 month market, greater Maricopa County is close to a balanced market, where price could or should stabilize. It will be interesting to see if that does indeed happen, but the data is there to finally support a price stabilization throughout much of the greater Phoenix area.

City	Homes For Sale	Sales Pending	Sold
Phoenix	8887 229	2660 286	1691 176
Scottsdale	3988 24	380 65	219 3
Mesa	2936 74	797 56	472 57
Chandler	1664 21	396 44	238 34
Glendale	1757 9	590 58	318 34
Goodyear	873 2	264 29	146 17
Tempe	516 14	78 13	48 8
Laveen	490 11	175 22	95 16
Cave Creek	510 8	37 9	34 1
Fountain Hills	489 16	41 8	36 7
Paradise Valley	575 13	12 1	10 1
Carefree	152 5	11 2	6 2

The following trend indicators are relative to the previous week’s update:

Positive move upward Positive move downward

Negative move downward Negative move upward .