Sorry, it’s been a couple of months since my last update but I was waiting for more of a statistical trend to be confirmed. Ending October numbers were very similar to September’s. The bottom line is “Active” listings continue to go down and  pricing is inching its way up, especially in the under $175,000 price range in Chandler, Gilbert, Mesa and Tempe, AZ.

 

 

 

 

 

 

There are multiple reasons why:

1. Fewer foreclosures notices and fewer foreclosures taking place 
2. More short sales are being approved by the banks, in a shorter period 
3. Investors and 1^st time home buyers continue to buy. Out of staters and Canadians will be coming soon. A wave of previous short sale sellers will be eligible for buying. 
4. Local economy is ever so slowly starting to improve  

Fewer Foreclosures- In the last 6 months the number of Trustee’s Deed recorded in Maricopa County has gone down each month from May 4393, June 4073, July 3309, August 3568, September 2838, to October 2400. While August was higher than July on a per working day basis August was lower. Another indicator that this trend will continue is the decrease of the Notice of Trustee Sale which is sent 90 days in advance of the sale to the owner.

More Short Sales- It appears there are fewer foreclosures because the banks are coming to the realization it is better for them to do a short sale vs. forcing a foreclosure.  This is more favorable to the individual because it doesn’t hurt their credit as much. It is more favorable to the community since the short sale home owner continues to live in the house, causing less neighborhood blight.  It is more favorable to the real estate market in general because short sale homes do not depress the pricing like foreclosed homes end up doing.

Investor, Out of staters, Canadians and 1^st time Home Buyers, original short sale sellers – Traditional most of the country experiences a peak in real estate activities in the summer time when families like to move when children are not in school.  The Phoenix market with its sunshine is different. In Phoenix there is little move up market home buying going on right now. Most of the activity is in the under $175,000 price range. Out of staters and Canadians are not here in the summer time. Their buying period typically is November to May. I believe with the favorable Canadian dollar exchange rate, we will see another strong buying season from Canadians. The 1^st wave of short sale sellers will be eligible to get a FHA loan after waiting their 3 yr ineligible period. They are eager to take advantage of the great buying opportunity out there now.

 Local Economy-   Growth from employers in Chandler, Tempe, Gilbert and Mesa has occurred over the summer.  For example Intel is building a $5 Billion Fab expansion and the solar energy jobs in Goodyear, Tempe, Mesa, Surprise and Peoria. Another example of the economy improving is the local municipals sales tax revenue collection has been increasing. In other words, people are feeling better about the economy are spending more money.

In summary, I like how Michael Orr wrote in the Cromford Report on November 3, 2011, “We have emphasized many times that changes in the balance of supply versus demand take a long time to be reflected in changes to pricing. This is illustrated by the latest numbers. The supply increased and demand fell during October, yet pricing made the most positive move it has done for at least 15 months, driven by the large reduction in supply over the last 12 months:

• average active listing $/SF – up 2.3% to $139.98 per sq. ft.
• average pending listing $/SF – up 1.8% to $79.65 per sq. ft.
• average monthly sales $/SF – up 1.1% to $80.95 per sq. ft.”

 

In other words, the number of “Active” homes on the market (supply) has been going down, down, down and finally the pricing is starting to turn around. The pricing improvement is even more dramatically upward in the under $175,000 price range.

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