Are they just uninformed people? Those who declare “The Bubble is coming! The Bubble is coming!”? We know we’re not in a bubble, based on the first four parts of this series, but where do the voices of doom come from?

I’ll tell you something: earlier this year, before I sat down and took a good hard look at the facts and figures, before I started laying the foundation for my market analysis briefing (upon which this series is based), before I did all, I’ve got a tell you I was worried that we were getting into minor-bubble land.

But Get Your PHX/Cromford Report team mate Tina Tamboer talked me off that ledge.

People are seeing agents listing properties at irrationally high prices. This doesn’t necessarily mean we are in a bubble. What it means is: agents are listing properties at irrationally high prices just because their clients want them to go fishing for a higher price.

Their buyers are telling them, “I want you to list it here, at this amount.”
Their agents may tell them, “Uh, that’s a little high for the comps.”
And the seller says, “No. I want to list it here.”

Agents advise, but can ultimately only do what they’re told. If a client wants to list it high, you list it high. Other people see that pricing, then they try to list it high, etc.

Remember I said in the summer things slowdown in terms of sales?

I’ve indicated in green lines, below, the first and second quarters between 2001 and 2013. Right now, we’re just hanging out close to our long-term average.

Which means what, exactly?

This year, watch for prices to go up for the first two quarters [like they always do]. People will be listing furiously. You still are not going to see the number of listings you saw during the bubble. When you get into the summer, at the beginning of that third-quarter, and all the way through the third quarter, you’re not going to see a slump, but a plateau.  ~ Tina Tamboer, Get Your Phx/Cromford Report

People go on vacation and fewer people list. Glance back to all those sections with the green lines. Note that regardless of the severity or abundance of sales, Q1 and Q2 sales always increase, followed by a plateau. So here’s the take away: if you are thinking of listing, it is better to list it and sell in the first two quarters.

Right now, we’re just at the beginning of the second quarter. You still have just shy of three full months. If you put a property on right now, chances are – unless you’re priced way above market – you’re going to get your house sold in a matter of weeks. If it’s a nice, clean property in central Phoenix and most parts of town, you’re going to sell pretty quickly.

Once you get to the summer, you might see activity slowdown, and prices fall back a little bit.

Do you really want to risk that?

When you get into the end of the year, what happens? Look back up to the chart again at Q4 over the years. You’ll see that end of the year home selling is not as good as beginning of the year. Why? Because in October, November and December, people are beginning to think about holidays, which is why sales slowdown at the end of the year. The conclusion is the same: the best time of the year to sell your home is in the first two quarters.

The first quarter of 2013 ended a week ago. You’ve got less than one quarter left.
If you’re thinking of getting your home out there, talk to me.
We’ll get it out there.

Please give me a call at 602-456-9388 or email me at ken@getyourphx.com

[megaphone man: Shrieking Tree ]

After the bubble comes the recovery. In part 3 of my series on why we’re not in a bubble, you saw how non-distressed homes are taking on a greater role in the market. The final bit of proof that we’re not in a bubble goes like this…

The chart below is from part 1 of our analysis. Recall that the little spike in 2009 (green box in Market Index below) where we saw people taking advantage of the First Time Home-buyer Tax Credit.

And then the banks brought a few more things like foreclosures and short sales on the market, as we were struggling to get out of that. There was a little dip their between 2009 and 2010 in prices and a shot back up. We had a lot of inventory on the market. These are normal home sales people who were up against distressed inventory so they had to bring their prices down.

Distressed only

When we look at distressed-only prices in this next chart, we still have this jump.

 

On the far right of this chart, on top of the horizontal blue line, is where normal (non-distressed) sales prices are at $202, 382.

If you draw back into the past, you run into this green box on the left. Look at where the price lands and to see that it’s not the same. Actually, before that, that price landed in late 2004. It’s a different measure, because the last time we saw the price going up, it was the last quarter of 2006 (the right side of the green box on the left).

The last time we saw prices like our non-distressed number of $202,382 going up was at the end of 2005. The conditions were much different –buyers paid very little down payment, they had little skin in the game, sellers could choose their appraisers and lenders were going mad.

The last time we saw them going down was at the end of 2008. In terms of price increase, distressed home sales still have 45% to go in order to get up to $202,382. But that’s probably not going to happen. Back at the worst of it, distressed homes sales had 102% to go to reach normal.

We’ve come a long way in terms of prices coming up on those distressed homes, so yes, if you can into a distressed home, that’s great, but there are very few of them around.

And this, dear friends, is why were not in a bubble:

• Distressed homes are still pulling prices down.
• Inventory might be tight, but it’s not as tight as you thought it was (we talked about this in part one).
• Distressed property inventory is really tight, but the normal property inventory is growing at a regular pace.
• Normal property prices are still relatively low compared to what we saw before the bubble.
• If those $202,382 prices for normal homes were in the same landscape where we saw the same conditions that were happening pre-bubble (like in the last chart we reviewed in part 2 “Return of the Equity Seller”, with things like 100% financing and the like, I’d say yeah, we’re in a bubble, and we might be really worried.
• We’d be way, way above our long term trend line (part 2) if that was happening.

Where do the voices decrying “We’re in a bubble!” come from?

What does the answer have to do with the coming summer?

That’s next week!

If you want to sell or buy, please give me a call at (602) 456-9388 or email ken@getyourphx.com. I can get it done!