Arizona Real Estate | Thomas Jambor

Arizona Residential Housing Market: Update Mar. 2012

thomasjambor — Tue, 20 Mar 2012 21:20:48 +0000

Racing through the 1st QTR of 2012 we are in the mist of exciting and unusual times in the Arizona Residential housing market! Competition from BUYERS in many valley markets heat up for an unbelievable low inventory of available homes! 2012 is the time to finish cleaning up our Arizona Housing Crisis mess and transition towards stability with slow growth in 2013.

Unfortunately I hear a number of Realtors saying “the market is back! the housing crisis is Over! Prices are rising!” Actually … it would be a No, Sorta, & Maybe. In fact, if you don’t know what REALLY is going on, you could get crunched by making a bad decision based on glossy top over assumptions. The Mortgage Forgiveness Debt Relief Act of 2007 expiring after 12/31/12 will play a big part of what happens. Here is what is really going on (and remember a number of Realtors will not agree nor even know the undercurrent as to what is happening) and of course is how I see it.

“Obama’s FY2013 budget proposal includes an extension of the Mortgage Forgiveness Debt Relief Act of 2007…In the Treasury’s Green Book, its summary explanation of the administration’s budget proposal, it calls for an extension of the tax break due to “the continued importance of facilitating home mortgage modifications.”

The administration is proposing an extension that would apply to any amounts forgiven before January 1st, 2015.”
(from DSNews… Please NOTE: this has not passed into law as of this date!)

Here are some factors defining the market:

42% in FEB. 2012 Number of Leases vs Purchase Sales (ARMLS Stat).

47% of all Sales in 2011 were CASH transactions (ARMLS Wave magazine Feb /Mar 2012). 2012 hit the ground running and now Cash Buyers might represent around 60% of Sales!

Read more: Phoenix-area homebuyers squeezed out by Investors

2011 ended up the second highest sales record of the decade (100,959), second only to 2005′s housing bubble pinnacle (104,725) (ARMLS Wave Magazine Feb/Mar2012). A great amount of these sales were focused on Distressed Properties.

Arizona FEBRUARY 2012 Unemployment rate holding at 8.3%

Arizona population is projected to increase by 1.5 percent in 2012 — far below the 3.3 percent population growth Arizona experienced in the boom. Read more about AZ Population Growth vs Housing impact: Arizona hurt by stagnant, declining population

Here are the right questions to ask and what to keep your eye on to make good Real Estate decisions:

WHO is buying and WHY are they buying it? The clear answer is 1st, INVESTORS looking for Rental returns on displaced homeowners who now have to rent. 2nd, would be out of state Buyers for second homes finding great values in a warm climate with a potential investment upside.

What to keep an eye on?Arizona Population Growth rate and the Arizona Unemployment rate are both very important factors to gauge how strong a long term sustainable home appreciation growth rate can be relied on. Playing tag with both experienced and novice Investors competing in the market creates some momentary spike in demand and pricing. Fortunately this also currently plays right into the goals of remaining Short Sale homeowners trying to beat the 2007 IRS Mortgage and Debt Forgiveness Act, scheduled to expire after 12/31/12. This act has protected MANY Short Sale and Strategic Defaults from huge tax implications on their Mortgage Loan Deficiencies. The expiration OR last minute extension of this Act will be a major factor for 2013. What will happen to Rent Rates around 2014 when the first serious wave of Renters (previous homeowners) start to qualify for Mortgage Loans again?

Summary:

2012 Investors are finding the numbers tightening along with selections. This is due to both low and sometimes dropping monthly Foreclosure numbers coupled with a Short Sale supply slowing. These two events should produce a solid market transition year in 2012, bringing about new dynamics not seen over the last 4 or 5 years! This also has lowered Distressed Property levels available within the Market, and thus pushing up prices in the areas especially below the $150K price point. Traditional upper end geographic markets are not seeing much of a demand or even significant relief on depressed property values. Always keep in mind, this is an Investor driven Market right now and a sudden change in demand can occur when the Investment & Price Metrics no longer provide the required return.

Graph:

The following graph has been updated and depicts, graphically, how big the MLS Supply vs Sales have changed. As I suggested in November 2011, the Arizona Residential Housing Market was developing into a Seller’s Market, it now IS a Seller’s Market.

MLS Listings Available vs Sales

Arizona Residential Housing Market: Update Feb. 2012

thomasjambor — Thu, 15 Mar 2012 02:30:24 +0000

Arizona is turning the corner, which I have always described as a typical Southwest style corner, being rounded and more Santa Fe style, so recovery will be a slow, progressive turn.

One of the hot topics and question we recently hear from Arizona Homeowners who are upside down on their mortgage (Distressed Property Owners), is “will the new Federal Government plan of HARP, (another loan modification program) give me relief?” Well, let’s see …. I think our government is on revision HARP 2.0 now? So you can see how well this new version of government assistance was thought out. Perhaps the best summary I have recently encountered came from Robert Robb a columnist who appears in the Arizona Republic.

“O’bama wants the federal government to guarantee refinanced mortgages for underwater homeowners who do not have a federal guarantee. Refinancing won’t change the fact that these homeowners owe more than their homes are worth. But it would put tax payers on the hook if they strategically default. Taxpayers have already paid $150 billion to make good on federal mortgage guarantees. Dramatically expanding taxpayer exposure to the housing market hardly seems prudent. It would dramatically reduce the incentive of lenders to reduce principle either in renegotiated mortgage of a short sale. Why do that, if the government is guaranteeing the whole enchilada?

The federal government has already screwed up the housing market more than enough. It should quit while it is behind.” Robert Robb. 02/0512 Arizona Republic.

We are not a little upside down in Arizona….we are a LOT upside down! So if your severely upside down home is something you will never move from, keep forever, to love and cherish ….. (I have heard this said somewhere before…hmmm) then by all means, seek a loan modification.

But if you, or someone you know, is struggling with a severely upside down mortgage situation and stressing about the financial impacts, please contact me immediately as time is rapidly running out on the Mortgage and Debt Relief Act of 2007 that ends December 31st, 2012!

Now let’s hear the good news that I have been talking about in my Newsletters since mid 2011. Here are the latest key components showing we are pulling out of the last 5 years of Arizona residential housing mess and finally into the slow gaining recovery territory.

Market Summary for the Beginning of February

(abridged and notated from the Cromford Report)

Comparing January 2012 to January 2011, we have so very noteworthy results and continued trend from 2011.

Monthly Sales: 6,451 versus 6,522 down 1.1%
Monthly Average Sales Price per Sq. Ft.: $85.04 versus $81.65 – up 4.2%
Active Listings (ALL): 24,762 versus 42,522 last year – down 42%

As we have noted for several months, we have a confirmed market price bottom during the third quarter of 2011 and we are now a comfortable 8% above that low point when measured by average $/SF, and 12% above when measured by monthly median sales price. Where will pricing go from here? The average $/SF for pending listings on Feb 1 is $83.82. We have to go back to December 2010 to find a figure higher than this, so we conclude that the upward trend that started in the second half of September will stay in place at least for the next month. Although we cannot say for certain what will happen to pricing from March onwards, the unusually low supply for homes below $500,000 suggests the upward trend is more likely to accelerate than slow down. There are no factors suggesting a price decline that we can currently see. Above $500,000 the outlook is not so clear, as demand remains relatively weak while supply has increased markedly over the last month, especially over $3,000,000. Much will depend on seller sentiment and patience.

With annual appreciation now in positive territory it is useful to examine which cities are looking strongest from that perspective. Here’s a ranking table which shows the change in monthly average sales $/SF between January 2011 and January 2012 for single family detached homes:

Apache Junction – up 17.5%
Casa Grande – up 13.8%
Arizona City – up 12.8%
Queen Creek / San Tan Valley – up 12.4%
Phoenix – up 11.8%
El Mirage – up 12.4%
Gold Canyon – up 10.3%
Glendale – up 10.0%
Maricopa – up 8.3%
Litchfield Park – up 6.5%
Goodyear – up 6.2%
Fountain Hills – up 6.0%
Tolleson – up 4.9%
Surprise – up 4.4%
Laveen – up 4.3%
Gilbert – up 4.0%
Buckeye – up 3.4%
Paradise Valley – up 3.3%
Avondale – up 2.6%
Mesa – up 2.2%
Peoria – up 2.0%
Chandler – up 1.3%
Tempe – up 0.9%
Cave Creek – up 0.1%
Scottsdale – down 0.3%
Sun Lakes – down 3.9%
Sun City – down 3.9%
Anthem – down 6.6%
Sun City West – down 7.8

A clear pattern emerges. Most of those areas hardest hit by prices collapsing between 2005 and 2010 are the ones that have moved upwards significantly over the last 12 months. Pinal County is strongly represented in this group, along with the West Valley. The luxury sector, represented by Scottsdale, Paradise Valley and Cave Creek have not moved very much in price over the last 12 months.Foreclosures continue to decline, but the comparison between December 2011 and January 2012 shows only a modest change:

New Notices of Trustee Sale: 3,483 versus 3,539 in December- down 1.6%
Trustee Sales: 2,677 versus 2,848 in December – down 6.0%

To put the current levels of foreclosure in context we need to compare January 2012 to January 2011:

New Notices of Trustee Sale: 3,483 versus 6,784 – down 48.7%
Trustee Sales: 2,677 versus 4,523 – down 40.8%

Anyone attempting to buy a residential property in Greater Phoenix for less than $500,000 is currently finding relatively little choice and very strong competition from other buyers. This is particularly true for those buyers who need financing, who are often losing out to the large number of cash purchasers unless they are willing to bid significantly higher. Selling however, is relatively easy, in a market where pricing is moving up and supply is very tight. The primary requirement to ensure a quick sale is that the property is priced correctly to the market.

Summary:

Supply is down dramatically year over year while demand is roughly the same. Pricing is clearly up over last year at this time. CAUTION: my take on this is that it is currently Investor driven due to healthy Rental Returns at this time. This should not be confused with a Traditional appreciating market due to job growth and population increase, which is very gradually improving, but needs to be much better for a traditional sustained appreciation. Most experts still agree that holding out for a correction of severe upside down homes in Arizona to right it self in the near future, just is not going to happen.

Getting Your Listings Seen

thomasjambor — Wed, 14 Mar 2012 23:49:33 +0000

03/09/12- Workshop on the benefits and uses of the ePropertySites system for marketing home listings on the internet and Social Media. Posting to all relevant Social Media including Google, Craigs List, etc. with minimal input and usually 1 click! Creating a single website for each listing and then expanding its touch for better SEO on Google searches.

Twitter / Hootsuite Workshop

thomasjambor — Wed, 14 Mar 2012 23:39:56 +0000

03/06/12- A workshop to review basic Twitter features, then the rich features of HootSuite and it’s integration with Twitter and FB with regards to Social Media. Using Hootsuite as a Dashboard to provide a primary single Social Media Marketing, update, and integration platform for postings & news streams was detailed. With HootSuite, you can monitor keywords, manage multiple Twitter, Facebook, LinkedIn, Foursquare, Ping.fm and WordPress profiles.

Facilitating a Short Sale Update

thomasjambor — Wed, 14 Mar 2012 22:08:02 +0000

02/23/12- Overview and update on the Short Sale market with emphasis on recent changes and future direction.

Word Press Basics

thomasjambor — Wed, 14 Mar 2012 22:02:44 +0000

02/23/12- General overview course on the basic functions of using a Word Press blog and recent changes in Word Press.

Mobile YouTube Postings by iPad & iPhone

thomasjambor — Wed, 14 Mar 2012 21:55:55 +0000

02/16/12- Workshop conducted by Shad Prock: This iPad & iPhone based video workshop covered the use of Video from Apple devices with the best APPS to use for Video Marketing of Property listings using YouTube and other shared video & social media marketing outlets. Also discussed and reviewed where the use of Video for Buyer & Seller education about various topics such as Short Sales, Modification, Marketing presentations, and general Market Updates.

iPad for the Real Estate Professional #5

thomasjambor — Wed, 14 Mar 2012 21:47:03 +0000

02/09/12- Workshop by Shad Prock: This workshop focused on the various CRM data base type APPS currently available for iPad and Mobile use. The data base management APPS such as Daylite & Bento were previewed and evaluated. Keeping available Client and transaction status rapidly updated by Mobile use is readily becoming easier to use and quicker to respond to requests involving this data.

iPad for the Real Estate Professionsl #4

thomasjambor — Wed, 14 Mar 2012 21:35:06 +0000

01/12/12- Workshop conducted by Shad Prock: This series of the 6 part series iPad workshops, studies the utilization of iPad and iPhone devices in advanced Professional Real Estate applications. This #4 course focuses on presentations and applications of Keynote & Pages Apps with their integration between the iPhone & iPad.

Cloud CMA

thomasjambor — Wed, 14 Mar 2012 21:12:54 +0000

01/11 /12- Overview and use of the Cloud CMA application (I currently use this in my practice) for developing accurate and timely comparative market analysis reports used in Seller Client presentations and especially for Short Sale evaluations (CMAs) to Lenders as a validation of a good Short Sale offer. I also use Cloud CMA to assist my Buyer & Investor Clients in making intelligent and informed Offers on Properties. Cloud CMA allows me to quickly gauge the current and updated picture of a specific Market and valuation of a specific property.