Let’s talk about home sales trends, shall we? I hate to say I told you so (okay, maybe I don’t…), but According to Data Reporters Ryan Konig and Matt Dempsey at The Arizona Republic, the downtown Phoenix historic districts in 2012 saw a significant increase in median sales prices for single-family houses.

Which downtown Phoenix historic district areas  have seen the greatest increase between 2011 and 2012?

The Roosevelt District
Roughly surrounded by McDowell Rd and Fillmore St. Central Ave. and 7th Ave. in Phoenix. The shape of this district is like a perfect box.

Los Olivos Historic District
Located along Monte Vista Road between Third and Seventh streets

Villa Verde Historic District
Grand and 19th Aves. Encanto Blvd. and Monte Vista

Willo Neighborhood
This historic distric is located direct above the Roosevel Historic District. It’s roughly surrounded by Central and 7th Aves. McDowell and Thomas Rd.

So check this out. Those four histroic neighborhoods have seen a 25% to 34.9% increase in the median housing prices since 2011! Meanwhile, the east side of central, literally across the street, has seen how much incrase in home prices since 2011? Try zero.

The orange area is the sweet spot of this increase in prices for three of the historic neighborhoods: Willo, Los Olivos, and Roosevelt. Villa Verde is at the NW corner 19th ave/Grand ave.  It’s the same area I’ve been telling people for some time now not to ignore–“because there’s some good stuff going on there, stuff that’s going to explode in 2012″. Of course, I’ve been saying since late 2009 that CenPho is gearing up for a serious rebound.

So, I can’t read the future or anything. Don’t come asking me about which boxer to bet on. But I have a really good nose for where things are going in CenPho.

If you’re a buyer who wants to know about those cool little hidden places that my expertise tells me are going to do well, come talk to me. If you’re a seller, now is the time to think seriously about selling.

In future posts coming down the Get Your PHX pipline in 2013, I’m going to be tracking certain areas in Central Phoenix for you; for example, historic light-rail adjacent areas, and let you in on what’s happening to median home values  in these areas. It’s going to be an exciting year, 2013. Keep your ear to Get Your PHX and I’ll do my best to keep you in the know.

Kenneth “Ken” Clark
REALTOR(r)
At Your Service!
HomeSmart
(602) 456-9388
Ken@GetYourPHX.com

We found out in part 2 that While Prices Are Rising in Central Phoenix in 2012, they’ve risen most dramatically under $150,000. The high end properties of $800,000 and upwards have increased in price, but not nearly as dramatically. (Before I jump-in, I want to again recognize Mike Orr and Tina Tamboer for allowing me to share their work from the Cromford Report which is mixed in with my take that follows.)

The monthly average price per square foot in greater Phoenix in this chart to the left is very broad. Obviously, not every home is going to be at $100 per square foot, especially in central Phoenix.

Jump your eyes down to this little blue square in the center of the next chart, which will come up later.

 I’m going to be putting everything into the historical context of that square, which is Non-Distressed homes between 2005 and mid-2009 for Single Family Residences in Maricopa County.

In this next chart, below, which shows the price per square foot from 2001 to Aug 2012, try to ignore the $190 Close Encounters peak  and take a look at the far left line. That’s the 2001 price lines. They were basically at about $100/sf at that time. Again, this is for the greater Phoenix average per square foot.

Based on that, here’s my rule of thumb: “Did you buy your home around 2001 or 2002 or before that?” You’re probably going to be okay to sell now, because you’ve survived the worst of it. If you’re thinking, “Gosh, I could really sell my home now”, or if you know someone who’s thinking that, make sure you both take a look at your specific area, before making the leap.

I know. What a relief.

Do we want to get back to over $190 per square foot, to that place where the UFO’s are landing on our mountain of Devil’s Peak? Heck no, not anytime soon. What this long-term context tells you is we do have a little bit of ways to go still. This is a great way to look at this to tell whether people are potentially underwater or those who are likely to be okay.

Next up: Median Sales Price.

We’re back to the little blue square I mentioned earlier: people who are potentially undewater from the 2005 to mid 2009 range.

When you take this median sales price, for single-family homes, all the way across the board, you can see it’s pretty obvious that during those years, for those people who are non-distressed (which is when we saw the big bubble and crash) these are the people who have not sold yet.

They’re potentially underwater, we don’t know for sure, but they’re not considered distressed or late on their payments.

So what’s going to happen with all of those? Are they suddenly going to find themselves in the market? Say, a year from now, when the prices get a little bit better for some of those people?

That’s going to be something that you’re going to want to watch.

I love this next particular chart. This tells you how much growth we have and how much potential you have if you happen to be an investor.

The long-term timeline with just general growth, year over year, (taking into account population, prices) is going to keep up at a regular pace.

This is a kind of equilibrium with a pretty good number of houses for sale that people will want to buy. This long distance in this chart is great because however long it takes us to reach that point, there’s still the potential for you to either buy something as an investment, and get some return on that investment, or buy a home and know that you didn’t buy it above what it should be worth.

Next, let’s look at greater Phoenix wide and then we’ll drill down closer into some specific zip codes. This is encouraging stuff. Okay, so look at this section listed as under $200,000.

Look at the price and notice that price per square foot has gone up 33% since August 2011. That’s citywide.

Now hop down to the next chart and look at the similar thing for greater Phoenix, between $200,000 and $500,000.

Drill down between $200,000 and $300,000, for just these zip codes, look at this huge 14% growth!

This speaks to a premise  that I’ve been pushing for a very long time: in central Phoenix, especially around the light rail and historic neighborhoods, prices dropped the least and will come back the fastest.

This is something to keep in mind as density continues.

And $500,000 and $800,000, in the same areas in the same zip code?

Look at this 18% growth!

That’s from the lowest point to where we are right now, that’s a good place to stay.

$800,000-$1 million? See below: The growth is 5%. Again, that’s in the Camelback corridor area.

“Under Contract” homes is what this next chart is all about. We’ll end today’s brief on this. It offers a lot of insight.

If a house is under contract, you don’t know the price at which the house is under contract for. It’s private information. Let’s say you go to the multiple listing service and look at the sales price of the house and its $200,000. The next day, it says it’s “pending”. It still says $200,000 but that property could have a contract for $215,000 or $190,000. You just don’t know.

But MLS does because agents must report it

It’s in the system. They can’t tell you what it is. But they can report an aggregate.

So when you hear “Under contract. Legally average list price per square foot.” That means that on this date, 10/1/12, everything under contract was under contract for an average of $93.88 per square foot.

Those hosues aren’t going to close for 30 days, though. So, when you look at this chart and see that right now it’s $93.88 per square foot, that’s the amount that is going to be realized, most likely, in the market 30 or 40 days from now.

If you’re following this chart and you suddenly see this line turn a different direction, you have a very good indication that 30 days from now, that may be what the market is going to start to look like.

That’s as much of a crystal ball, as I think you are ever going to see.

The thing that’s impacting all of these numbers, especially in places like the Camelback corridor, and those other zip codes, is new-home sales recorded, as in “What are the homebuilders doing?”

Great Question. In part 4 of our Get Your Phx Market Briefing, we’ll find out that very thing…

In part 1, I ended with an argument I often hear from people after I describe what a “normal foreclosure market” looks like. There’s always going to be some percentage of people who should not have bought a house and now they’re upside down or late on payments.

The real interesting bit we can see is that there will still be some foreclosures and short sales coming on the market. The argument I hear some people say is:

All the banks were just holding onto their houses. They just hadn’t been listed yet. You’re not seeing them in the charts and graphs you’re using as evidence.

(Much of my briefing is based on Mike Orr’s Cromford Report. A huge thanks to Mike Orr and Tina Tamboer for allowing me to use their work at my presentation and share it here as well.)

To answer those naysayers, let’s look at the “REO” (which is another way of saying “foreclosed property”, not a band who heard it from a friend who heard it from a friend…). The REO then is where the bank has already repossessed the house and is putting it on the market directly. This chart below is REO and includes everything sold between 2007 and 2012. The big blue Pac-Man looking thing on this chart is sales sold through MLS; in other words, 131,000 homes.

(graph, above)
“Sold wholesale” means some big investor bought a bunch of homes at one time. According to the chart, there are only 961 in escrow. When people talk about where to find this mythical crop of homes held back by the bank, you would find them in “Not yet listed.” Well, that’s a whopping 3,047 –not what I would call a wave of foreclosures.

Supply is down, but it’s also increasing.

This is a very interesting thing. Look at this next graph. If you look at December 2010 (far left) all the way into the future, you see a huge drop in supply. Homes being sold by Housing and Urban Development (HUD), the tiny sliver on top in gray, are few and far between and get a ton of offers when they come on the market.

(graph above)
The last two colors on the chart are short sales (light blue) and normal sales (darker blue).

You can see from this same graph that things are moving back up a little. Does that mean that we’re going to get back up to 35,000? No, because you’d have to have the same kind of event that put us into the recession to get back up to those numbers.

Let’s take that same thing, single family residential inventory, and look at the distressed sales.

It’s declined 77%.

That’s in terms of the active distressed listings. For those who don’t know, AWC means ‘Active With Contingencies’. Look at that chart again. See how it’s called “Distressed SFR Inventory (Excluding AWC)”? This means someone has an accepted offer on a short sale, but they’re waiting for their lender to say it’s okay to precede and close on that property. Let’s break it down a bit.

Look at the far right side of the same chart. There are 1,923 Active Distressed homes. It’s a huge decline. But this is the interesting part. Notice the top right corner of the graph, where it breaks down the percentages of the different price ranges listed.

Rather than do each price point, one at a time, let’s look at the combined total, the 81% of homes that are under $300,000. If you make another chart and take out the HUD homes, the REO’s, and the short sales, and compare those to where the normal sales have been…

…there’s basically no change since November 2011.

So what does this U-shaped area represent? I’m speculating here, but in my professional opinion, the normal sales coming back on the market comprise two types of sales: A) People who bought before 2003 or 2004 (so they are able to sell their house, get their money back, maybe make a little bit of money); or B) People who bought a house in 2008 or 2009—which was my advice to people at that time—and now they flipped it, or renovated it and put it back in the market. Those people are adding to the inventory.

The rebounding economy and stronger job numbers, plus incredibly cheap houses, are why–in this next graph–we went from a 3.7 month supply of homes to a one-month supply of homes. By “month supply of homes”, what is meant is that if you shut off the tap and prevented homes from being put on the market, how many months would it take to clear out what’s on there? In this case, it would take us one month to get from a 3.7 month supply of homes to a one-month supply of homes.

This is more drastic than, say, above $1 million homes, but all of this brings me to one point: single family homes that are affordable for most working families will continue to increase, in price and in value, in 2013. That’s even with the increase in inventory that we’ve seen here at the end of 2012.

Prices are rising. This is pretty obvious. You’ve probably heard it in the news. What wasn’t reported on the news, however, is that the rising prices in the last year are only happening at the low ends, under $150,000; far more than they’ve occurred at the high ends. Where’s my evidence? What do I draw from this conclusion? What should you conclude from it?

Stay tuned for Get Your PHX Market Briefing, part 3 where we’ll find out!

If you would like to be part of a future PHX Market Briefing, please contact me at 602-456-9388.

JUMP TO PART 3 OF THE MARKET BRIEFING HERE.

If you owe a debt to someone and they cancel or forgive that debt, the canceled amount may be taxable. Same goes for mortgage debts. Hence, the creation in 2007 of the Mortgage Debt Forgiveness Relief Act. The IRS explains the concept surprisingly well. This act expires in 96 days, the end of this year, after the holidays; much sooner than you realize.

People have been opining this whole year about the possible extension of the $1 billion mortgage debt forgiveness relief provision at the end of the year. I’ve been hearing the following:

“Should I short sell before the end of the year?”

“Can I count on the hopeful January 1 extension?”

“The $1 billion mortgage debt relief provision allows me to avoid paying taxes on mortgage debt forgiven by my lender, but it expires at the end of the year! My chance to short sell and still seek tax relief is disappearing quickly!”

“But I hear these holiday months aren’t as slow as one might think. Oh, no! I’m almost out of time to avoid the tax repercussions of selling my home short!”

Let’s be clear on what the act does.

The 2007 Mortgage Debt Relief Act allows taxpayers to exclude up to $2 million of forgiven debt on their principal residence in calendar years 2007 through 2012. With one caveat: The discharge of debt must be directly related to the decline in the residence’s value or in the financial condition of the taxpayer.

The Mortgage Forgiveness Debt Relief Act was originally going to expire at the end of 2010, but lawmakers decided to extend it until the end of 2012. If it does expire, anyone who receives mortgage forgiveness on day one of 2013, or after that, will have to face paying income tax on a forgiven debt.

Isn’t it in the President’s budget?
Didn’t it pass the committee level in the Senate?

Yes/But… We don’t know the outcome of the election in November and nothing is moving in Congress for the next 6 weeks. This time bomb very likely won’t be voted on before the end of the year, what with their attention consumed with the nation’s budget crisis.

Furthermore, given that it takes 3 to 6 months to close on a short sale…Are you really willing to take the risk that the act will be extended?

What’s the bottom line?

List now and be more certain that you will avoid that tax liability. I strongly advise you consult with a tax attorney!

[referee photo: compujeremy] [house photo: surprise truck]

As the summer begins to tease us with signs of fading out–the sky is overcast and the rain is supposed to continue for the next week or so, I find myself thinking about the end of the year. Specifically, I think about how the older realtors always talk about the “slow months” –November through January.

Now, I’m no old hand, but I’m not that new and I can tell you that last Halloween through New Year’s was all work for me in the real estate business.

As the story goes, people stop buying or selling houses because the holidays just creep up on them and they get distracted. The common wisdom says that the market slows down after the summer and then maybe you may be able to negotiate a better deal during the holidays and Christmas. But that has not been the case the last two years.

If you look at previous years (see below), you will see that this is generally true; especially around Thanksgiving. In the first chart below you will see the last nine years. Some of them drop off drastically, but come back around February. In the second chart you will see 2004 and 2005 compared to 2010 and 2011. In ’10 and ’11 there was a little drop around November, but then we just picked right up again.

In other words, don’t assume that the end of the year is going to be slow!

The take away?

First: Don’t assume the end of the year is going to be slow. Whether you are selling or buying, take advantage of the active market.

Second, it’s been hectic the last two years. We have every reason to believe it’s going to be hectic this year, too.

And by the way, if you’re thinking to short sale, you’re running out of time if you want to avoid the tax repercussions of selling your home short. Please see this article and learn how the Mortgage Forgiveness Debt Relief Act allows you to avoid paying taxes on mortgage debt forgiven by your lender. This act runs out at the end of this year.

For those looking to relieve some pressure from the uncertainty of when to swing their buy-it-now bat and make contact with the house-ball, the number of listings  are creeping up again, wouldn’t you know it. (See the brown line in the “Monthly Average Sales Price” chart below).

Why is that, you ask?

I see it more and more everyday. The housing inventory in Phoenix is shrinking and buyers are looking to make offers and get approved as quickly as possible. But for new or first time home buyers the steps to approval can be foreign and slow down the process, which is the last thing you want in this market.

But have no fear! Jeannie’s here!

It’s important as a home buyer to get pre-approval to expedite the process. In short: you want to have a pre-approval letter in hand before you even step foot in a potential home.

Now don’t get confused between pre-qualification and pre-approval.

A mortgage loan pre-qualification is simply an estimate of how much house you can afford and how much money a lender would be willing to loan you. This can be done over the phone in 10-15 minutes by providing information on your income, assets, debts, and a potential down payment amount.

A pre-approval takes more time, but can be just as easy. Getting pre-approved means that you have a tentative commitment from a specific lender for mortgage funding. You provide a home loan lender  with all that fun financial information you probably keep in a drawer in your house (tax returns, pay stubs, assets, debts, etc.) They will run a credit check and work to verify all your employment and financial information. Jeannie can take care of this with you in about an hour in her office.

In the house-buying process, the benefit of being pre-qualified or pre-approved is twofold. Not only do you have the added comfort of knowing what you can afford, the seller may also accept your offer over another if you are pre-approved and the other party is not.

So what are you waiting for?! Please call Jeannie Bolger, Sr. Loan Officer for more information.

Or call me for more information about the market: 602-456-9388.

Over the last couple weeks I’ve seen the same thing happen over and over: houses on the market are in bidding wars within HOURS of coming on the market and they are getting offers well above asking price.

There is a very simple reason this is happening: inventory in Maricopa County has dropped by more than half since January of last year.

This graph should make this very clear. This is terrible news if you are a buyer, but great news if you are listing a property.

This situation is going to last until one or two things happen: (1) Home builders start building more homes and/or (2) people who have been waiting to list their homes put them on the market.

Either way, prices are getting ready to move up. I feel bad for the people last year who told me things like, “it is clear that the market is going to drop again in 2012 because (insert economic theory here).” We agents knew prices were going to go up in 2012 because we’ve been watching this data for a very long time.

Here’s another way to look at it. The “Days Inventory” is going down quickly, too. Another way to see this is if we took the number of houses in the inventory today and divided it by the number of sales every day, how many days would it take until there were zero properties lest to sell. This tells you how quickly things are selling. If you want to break that down further by price, it really tells you a story.

See those charts below. For now, if you are thinking of buying a home be ready to be aggressive in your offers. Give me a call at 602-456-9388 and I can give you more information. Interest rates are still at a historic low. You definitely don’t want to wait until BOTH interest rates AND prices are higher!

Source: The Cromford Report (www.cromfordreport.com)

Active Listings in 2011 and 2012

You probably know about our up-coming second annual open air holiday market, the Phoestivus market.  You know about it, especially if you are a vendor or own a food truck.

Well, this year, it wil be expanded to 2 nights: December 14th and December 21st.

Here is the information for vendors from our planning committee vendor point person, Monika Woolsey.

WHO:  Local creators of arts, crafts, and foods!

 WHAT: Second Annual Phoestivus (New this year!  Pheats of Strength, Airing of Grievances, and a Phoestivus Pole!)

 WHERE:  Downtown Phoenix Public Market

 WHEN:  December 14 and 21, 4 to 8 pm

 WHY:  Because we’re all just super cool and want to celebrate that. 🙂

HOW:  Please visit this link to apply to be a vendor.  If you are not a regular vendor, the annual fee does not apply.http://foodconnect.org/phxmarket/?page_id=7212  Please note, if you are on this email list you’re getting first dibs at available spaces.  Please, if this event is important to you, submit your application ASAP.  I’m sending a general call for vendors this coming weekend.

We’re encouraging all vendors to be phoestive with their booths as well as having wares to sell.  Decorations of all kinds are encouraged!

A special note:  The Clarendon Hotel will be offering a special Phoestivus room rate for all of December.  We hope for those vendors coming in from a distance, this might be a nice evening for you to stay in town and kick back, instead of hurrying home.  More details later!

You will eventually be connecting with myself and Troy Benjamin as the vendor coordinators but until we receive word from the Downtown Market that you’re on the official list, we are officially out of the loop.  So be sure to get  your application in!

Monika Woolsey

Phoestivus Committee

Well, its market analysis time again. That’s right, gear up because I’m going to throw some wonky charts at you. Don’t be too intimidated. I promise to be gentle.
It’s short and sweet, really. The number of pending foreclosures continues to go down. The entire pie is shrinking, leaving an increasing percentage of the pie as short sale homes. So let’s get down to business and see what I’m really talking about.

“REO” you’re probably wondering what does that mean? Simply just a fancy term for a foreclosed property.
“AWC” simply means Active with Contingencies. In other words it is simply a short sale home. The buyer has already agreed upon the price yet, their waiting on the bank for the final decision.Have you noticed a trend yet? All of the categories are shrinking therefore the inventory of homes, are going down.
What’s going to happen next you ask? The prices start to go up because scarcity creates demand.

The numbers of pending foreclosures are taking a dive and it doesn’t look pretty.
Have you heard about the new wave foreclosures based on nation-wide estimates of how many people are slacking on their house payment? This is completely misleading for three reasons:

1.   Nation-wide averages are not Arizona.
2. It is easy to double count those people who are late, but not in foreclosures and those who are late and in foreclosures.
3. Finally, the banks will not sell more properties than the market will bear. Hello everyone.  They want the prices to go up, not down.

Heck, if the banks are sitting on a bunch of homes. Please let them out! My clients who are on their 6^th offer after being beat out by cash buyers would love to see some more homes in their horizon!
What does all of this mean for you? It means that the market is becoming more competitive and the days of low-balling on prices are long gone.

If you have more questions about the market, please contact me at  (602) 456-9388