Chandler home with pool, near Intel, Chandler Regional Hospital, Fulton Ranch, Tumbleweed Park, Ocoillo golf courses

Instead of giving you the full blown statistical update this month, I thought I’d share some real life practical experience situations that have occurred to me recently.

First, let me give a mini version of the numbers.  Most numbers pretty much stayed the same from the November update, except the pricing numbers:

1. The number of homes sold in November was up 8% as compared to November 2010
2. Active listings (# of homes on the market) were down 50% as compared to November 2010
3. Then it’s no surprise, days inventory on the market were down almost 50% also
4. The Ave sales price per Sq Ft was up .09% from November 2010 BUT more importantly it is UP 6.5% from the low on September 15, 2011.  That is called appreciation.
5. The mix of Foreclosed, Short Sales and “Normal” homes available to sell continues to change. The foreclosed number is decreasing, while short sales and normal are a growing %. The breakdown of type of homes on the market is 9.1% Foreclosed, 52.4% normal and 38.5% short sale.
6. Homes currently under contract (Pending) have a higher price in all 3 categories: foreclosed, short sales and normal sales

In summary, the supply of homes available is continuing to go down, especially the foreclosures and the pricing of homes that have actually closed in November & December has been going up. The pricing of homes currently under contract (Pending) and should be closing in January and February has an even high price per sq ft. If you also add the increase in demand for starter priced homes because we are entering the winter visitor season, this all points to a projected upward trend in the market for the 1^st half of 2012.

Now on to the practical side of things let me share some examples that have occurred to me in the market place. I have had 3 short sale transaction fall apart (cancel) in the last 30 days. Let me give you a little background information on each:

1. I represented an investor buyer of a short sale home in Laveen. The original contract price was $60,000. This would have provided a good positive cash flow from the rental income with substantial upside appreciation. When we were about 5 months into the short sale process, the lender came back and said they thought the home should be priced at $65,000. The buyer increased their purchase price to $65K, so we thought we had an agreed upon price. At that point, the seller decided he wanted to apply for the Home Affordable Foreclosure Alternative (HAFA) program for short sellers. There is a $3000“relocation assistance” payable to the seller so it made sense. The lender had agreed to the short sale price but they had to re-process the short sale through the HAFA program. After 2 more months of paper work processing, the short sale bank came back and thought the house was really worth $74,000. My buyer had enough and cancelled the contract. Interesting enough, the market had probably gone up during that waiting processing time but in the buyer’s eyes, it didn’t make any sense. Unfortunately, when my investor buyer went back into the market to look for another home they were surprised to see there weren’t the same “great deals” out there like there were 7 months ago. See my summary above. PS: I talked to the listing agent and she received multiple offers above the banks $74,000 price. So it looks like the market has “gone up”. Remember the old adage, the market price is where ever you have a ready and willing Buyer and Seller (and bank) agreeing on a price. 
2. I represent the seller on another short sale in Laveen. We had it listed at $119,000 for over a month with no offers and very few showings. I dropped the price to $105,000 and got an offer for $102,000 within a week.  After a relative short 2 month short sale processing time period, the bank came back and said they thought the house was worth $117,000. The buyer wasn’t going to increase her purchase price. The bank came back with a lowered counter price of $111,000. The buyer said the house wasn’t worth that much (to her) and she cancelled the contract. I put it back on the market and within less than a week I received a contract for $112,000. Again, it looks like the market has gone up.
3. I have an investor buyer looking to purchase condos in Tempe because they would make great rentals with a positive cash flow and tax advantage, especially with the ASU rental demand. About 3 months ago, we found 2 units in the same complex, both short sales. We got both under contract in the $75,000 price range. This week, the bank (FHA) decided to go ahead and foreclose on one of the condos. They didn’t even come back and say they wanted more than the original $75,000. From talking to the listing agent she has started to see this happen more and more. Why? It sure flies counter to the government’s public policy and what you are hearing over and over from the banks…”we want to do everything possible to prevent foreclosures”. We had a very willing buyer (ready to pay more) and he didn’t even get the chance. I even tried to arrange for him to buy it at the foreclosure Trustee Sale but the bank set the minimum opening bid at $214,000. There is no way anybody would bid on it. So it guarantees the bank would get it back. I have talked to my buyer about purchasing it as a foreclosure, as soon as the bank puts it up for sale. I have had this happen before to a different buyer and he ended up purchasing it for a lower price. Banks… go figure.

In summary, the statistical numbers show the supply of homes is down and the pricing is increasing. My practical experience has been showing the same trend and unfortunately the banks know it and the pricing is going up during their short sale processing time.

So if you are a buyer, is it better to go after either foreclosures or normal sales and get in on the appreciation vs. waiting for the short sale bank just to raise the price or foreclose on a home you have a contract on and then you have to start all over at a higher price level? 

Give me a call or email me to discuss your specific circumstances, so we can develop a strategy that best fits your situation.

I can’t believe it’s been over 2 months since my last update when I mentioned there were fewer homes on the market, fewer pre-foreclosures notices being sent to delinquent home owners and fewer actual foreclosures taken place along with prices stabilizing or even inching up a little in some price ranges.

The good news in 2 months, not much has changed.  After having a record breaking number of homes sold in June there was still plenty of positive news in July.

1. The number sold homes in July 2011 (8,522) was up 23.3% as compared with July 2010
2. “Active” homes for sale on August 1, 2011 were 27.787, down 34.6% from 8/1/2010 and down 3.6% from June 2010
3. Pre-foreclosure (or 90 day Notices of Trustee Sales) continued to go down in July to 4,015 as compared to June  4,262 and July 2010 7,802
4. Homes actually foreclosed on by the banks also went down in July to 3,176 compared to 3,887 in July. This has been the trend.   
5.  Homes under $100K had dramatic sales growth in number of homes sold, while the $200-400K range and the very top end over $3 million were down significantly.
6. So when the media talks about averages, it looks like the average sale price has gone down but in reality in those price ranges where the number of homes sold has increase the pricing has been increasing.
7. New home sales are making a resurgence. Permits taken out by builders have been increasing. Since their time of construction is 4-6 months out, their view point of the home market is longer term thinking than what is taking place today. 

Personally, I had 2 out of state buyers looking for a 2^nd home for their winter stay; make offers on homes under $130K only to get back a multiple counter offer and my buyers lost out because they didn’t go high enough ABOVE the list price. 

I had 2 other buyers be successful in getting homes they wanted. Both homes were investor fixed up homes, not foreclosed or short sale homes with repair issues. They were listed in the $175-235K range. On both, we originally offered $12-18K less than what they were listed for.  But there was no budging on the list sales price from these sellers. They knew they could command top dollar because; they had a lot of viewings of their respective properties, other homes in the neighborhoods were selling above their listed price and they looked great because they had been rehabbed. Both homes “appraised” for the price we contracted for and these homes should close in August.

Where does the market go from here? Nobody knows but the laws of supply and demand usually dictate.  When supply goes down and demand stays the same, then pricing will go up.

Feel free to write back or email questions to Steve@SteveRook.Net

For those of us who live in the Phoenix metropolitan area, excitement is in the air!  It is the first of September, which means our reason for living here is just around the corner…patio living, walks in the neighborhood and cool evenings are on the way! 

A new season means it is time to do yet another analysis of the real estate market in the greater Phoenix area. This includes cities in the east valley such as Chandler, Gilbert, Mesa, Scottsdale and Tempe as well as cities in the west valley such as Avondale, Buckeye, Glendale, Goodyear, Peoria, and Surprise. There are pockets of continuous growth while there are many areas that are still experiencing some ups and downs.  Like other cities in the United States, the Phoenix real estate market got a “shot in the arm” when some buyers were able to take advantage of the temporary First Time Home Buyer Tax Credit.  As nice as that was for many, it inflated the recovery of the real estate market, so one must keep this in mind while reading journals, newspapers and blogs that report August sales numbers. 

There is one segment of the real estate market that seems to be leading the recovery.  Even though the 55+ communities such as Sun Lakes, Sun Bird, Springfield and Del Webb Solera have experienced minor price decline since 2007, in 2010, they have been showing a steady increase in value.  For example, per the Cromford Report, Sun Lakes, located south of Chandler, has seen an increase in the average sale price of $232,616 in November of 2009 to $244,756 in July of 2010.  See chart below.  In partial, this is due to the fact there are fewer short sales and foreclosed homes in the 55+ communities.  These areas also continue to draw from those who want to live in a warmer climate during the fall, winter and spring. 

Many of my clients, who are still working, are not ready to retire, yet are taking advantage of these low prices in the market, as compared to just four years ago.  Knowing these prices may never be this low again, they are acquiring properties for their future.  I have several clients who are renting their Arizona property until they retire and spend their winters here.  With our sought-after winter sunshine, the 55+ communities are in demand for fall, winter and spring rentals.  As the Baby Boomer generation continues to mature, the demand for these communities will always be present.

If you are interested in finding out more about how to take advantage of this market, please contact me at (480)688-3612.  You can also start your no obligation search by clicking on Search Homes and fill in your criteria. If you want to see specific homes in Sun Lakes expand the plus symbol next to SE Valley, scroll down to Sun Lakes and fill in the rest of your home features.

I look forward to helping you with any of your real estate needs.