Paradise Valley REal News | A Does of Positive Press

Jobless claims down to 383,000 last week

2012-03-01T10:45:00.000-08:00

By Jason Philyaw • February 10, 2011 • 7:48am

Existing home sales jump 4.3% in January, inventory level dips

2012-03-01T10:43:00.000-08:00

By Kerri Panchuk

• February 22, 2012 • 9:19am

Existing home sales on all single-family homes, townhomes, condos and co-ops rose 4.3% during the month of January, making it the third sales increase in the past four months, the National Association of Realtors said Wednesday.

In January, home sales hit a seasonally adjusted annual rate of 4.57 million units, compared to a pace of 4.38 million units in December and 4.54 million units in the year-ago period.
As sales increased, inventory levels declined 0.4% from December with only 2.31 million existing homes on the market last month, representing a 6.1-month supply, down from the December inventory hold rate of 6.4 months.

“The broad inventory condition can be described as moving into a rough balance, not favoring buyers or sellers,” said Lawrence Yun, chief economist for NAR. “Foreclosure sales are moving swiftly with ready homebuyers and investors competing in nearly all markets. A government proposal to turn bank-owned properties into rentals on a large scale does not appear to be needed at this time."

NAR said buying power — driven by lower prices and cheap interest rates — are pulling more buyers into the market, creating a dose of optimism before the spring homebuying season.

NAR remains cautiously optimistic as the real estate industry heads into the warm-weather selling season.

Meanwhile, sales prices are down 2% from January 2011, with the median existing home-price hitting $154,700 last month. Distressed homes made up of short sales and foreclosures accounted for 35% of January sales, up from 32% in December.

NAR also highlighted the role of investors, with investment-related buyers purchasing 23% of homes sold in January. That's up from 21% in December.

First-time homebuyer activity also rose to 33% of all activity, compared to 29% a year ago and 31% in December, NAR said.

SOURCE: Housing Wire
kpanchuk@housingwire.com

Report: Home prices rising, foreclosures falling

2012-03-01T10:38:00.001-08:00

A new report from the W.P. Carey School of Business at Arizona State University finds that home prices are rising and foreclosures are declining in the Phoenix-area housing market.

Mike Orr, director of the Center for Real Estate Theory and Practice, said in a news release that the median price for all sales, including new-home sales, was $120,500 in January – an increase of about 6.5 percent from a year earlier.

In January, there were about 2,450 single-family home foreclosures in Maricopa and Pinal counties – a decrease of 49 percent from a year earlier.

According to the release, the market saw about 8,000 new- and existing-home sales in January – up from fewer than 7,500 last year. The peak buying season normally starts in February, so more sales are expected.

Read the full report at http://evtnow.com/2e2.

SOURCE: East Valley Tribune

Report: Upbeat findings for Arizona housing market

2012-03-01T10:33:00.001-08:00

by Catherine Reagor - Feb. 23, 2012 06:35 PM
The Arizona Republic | azcentral.com

Metro Phoenix home prices are up. Fewer inexpensive homes are for sale, and the number of pending foreclosures is down.

The positive housing-market update comes from Arizona State University's newest real-estate report.

It's the first monthly housing analysis from Mike Orr, who was recently named director of the Center for Real Estate Theory and Practice for ASU's W.P. Carey School of Business.

"Single-family home prices overall in the Phoenix area have been moving up since they reached a low point in September," Orr said in his debut monthly housing report.

"Also, looking forward, I expect a declining trend in foreclosures."

Orr also publishes a daily online analysis of Phoenix-area housing indicators called the "Cromford Report."

The median price of all home sales, including new homes, reached $120,500 in January of this year, Orr reports. That compares with $113,166 a year earlier.

The average price per square foot of Valley houses has climbed 3 percent since last year.

There were approximately 8,000 new and used homes sold in January, up from 7,500 in January 2011.
Orr said investors have snatched up the oversupply of homes for sale under $300,000.

"Many people think there's a glut of homes the banks are hiding somewhere, and that may be the case in other markets, but not here in the Phoenix area," he said.

"We've gone through so many foreclosures that the system has been working itself out for about five years."

In January, there were 2,450 single-family foreclosures in both Maricopa and Pinal counties, compared with 4,200 during January 2011, according to the ASU report.

The supply of homes listed for sale in metro Phoenix is down 42 percent from a year earlier.

SOURCE: Arizona Republic/AZCentral

Could Rising Rents Bump Up Home Sales?

2012-03-01T10:32:00.001-08:00

Daily Real Estate News | Friday, February 24, 2012

Home sales may get a boost from the rising prices occurring in the rental market, which is making it cheaper to own rather than rent in a growing number of cities.

“We might see a spring season better than the numbers are predicting," Jay Brinkmann, the Mortgage Bankers Association's chief economist, said during the an MBA conference in Florida this week.

The number of renters in the country increased during the housing crisis, while home ownership dropped to a 14-year low. But with rental costs rising nationwide, more renters may be lured to buying a home, particularly with home prices falling and mortgage rates hovering at record lows.

Mike Fratantoni, MBA’s vice president of economics and research, is forecasting home sales to increase 10 percent in 2013. An improving employment picture also is expected to have a positive impact on housing, MBA economists noted.

Still, "everything is going to be based overall where the economy goes," Brinkmann said. "This is going to be a slow year. There are a number of headwinds we're facing in terms of economic growth."

Source: Housing Wire

Paradise Valley Real Estate Market Update | January 25, 2012

2012-01-27T13:55:00.001-08:00

The Two Charts below show Average Sales Price per Sq. Ft. from 2002 – 2012 in all of Maricopa County (Graph 1) and Paradise Valley (Graph 2).

Although we were at the Top of the Market in 2005, there were NEGATIVE SIGNALS of the Leading Indicators (i.e. Inventory) that forecasted a drop in the market in 2006.

The Paradise Valley Market was not hit as hard as the whole of Maricopa County and according to the Leading Indicators (as outlined below), Paradise Valley is in recovery.

Good News!

LEADING MARKET INDICATORS THAT SHOW REAL ESTATE PRICES WILL RISE:

# 1 - 6 have to be in a favorable position for Prices to Rise.

1. Cromford Report Index - this shows Supply & Demand.

2. Days Inventory – 365 x (Active Listing Count) / Sales Per Year - This is the Average Number of Days it takes to sell the current inventory (based on Annual Sales)

3. Pending Listing Count - This is the number of Homes on the Market that have Offers and are due to close escrow. It is the best indicator of increased sales

4. Contract Ratio - 100 x (Pending Listings + AWC Listings (Home that has an offer but has a Contingency)/Active Listings - Contract Ratio of above 50% is a "HOT" market

5. Monthly Sales Volume – Level of Sales/Month

6. Listing Success Rate - # of properties listed vs. # of properties that are actually sold

Numbers 1 - 6 need to be FAVORABLE before prices rise (#7 & #8)

7. Pending $/SF

8. Sales $/SF

#1. LEADING INDICATOR: CROMFORD REPORT FOR ALL OF ARIZONA

**Michael Orr created the Cromford Index which measures Supply & Demand. It is adjusted seasonally and yearly.

An index of 100 = a balanced market
Above 100 = a Seller’s Market (More Buyers than Homes on the Market)
Below 100= Buyer’s Market (More homes on the market than Buyers)

Maricopa County has been in a Seller’s Market since January 2011 with a Cromford Index of 154…the highest it has been since 2005!

CROMFORD REPORT FOR PARADISE VALLEY:

In late June 2010, Paradise Valley became a Seller’s Market, just above the 100 index mark.

Generally it takes 12 - 18 months for prices to Rise after a Change in Supply & Demand, however, since prices went up so steeply and the Real Estate Market was so crazy, it may take a little longer.

The good news, prices in Paradise Valley have remained somewhat stable throughout 2011. And, the Average Annual Sales Price for Paradise Valley is at 2004 levels (with the Price/Sq. ft. at 2003 levels).

As of January 12, 2012, Supply (Inventory) has dropped to an extremely low level (81.6) and Demand has shot up to 125.6, giving Paradise Valley a Current Market Index of 153.9.

Low Supply, High Demand = Prices Increase.

AGAIN, GOOD NEWS!

#2. LEADING INDICATOR: DAYS INVENTORY MARICOPA COUNTY
Calculation: 365 x (Active Listing Count/Sales Per Year)

The graph below shows that the Number of Days it will take to sell all of the homes on the market has been decreasing since March 2011.

DAYS INVENTORY is at the same level it was in July 2006.

In Paradise Valley, Days Inventory was at it's lowest in August 2005....and prices hit their peak in February 2007.

So, we are moving in the right direction.

#3. LEADING INDICATOR: PENDING LISTING COUNT - PARADISE VALLEY

Below we are comparing Pending Listings from 2004 to 2011.

Currently, in Paradise Valley, 2010 and 2011 Pending Listings are at a higher level than in 2008 and 2009 and moving toward 2004 & 2005 levels.

#4. LEADING INDICATOR: CONTRACT RATIO – MARICOPA COUNTY

The Contract Ratio compares how many homes on the market receive offers VS. how many homes remain active.

The higher the number...the HOTTER the market.

A Normal Ratio is 30 - 40. Currently, the Arizona Market is at 95 and has been in a HOT MARKET since April 2011.

FYI - A group of approximately 200 Luxury Agents in Paradise Valley meet every two weeks to discuss the Real Estate Market and Tour Homes. It is apparent in the last year that sales in Paradise Valley and picked up considerably!

More good news!

5. LEADING INDICATOR: MONTHLY SALES VOLUME – PARADISE VALLEY

In May/June 2011, Sales Volume in Paradise Valley almost reached the same level as 2004/2005.

2006 to 2009 Sales were way below 2010, with 2009 dipping down to 6 Sales/month

It looks like 2012 is mirroring 2005 to date.

Because indicators #1 - #4 are favorable…we expect the Monthly Sales Volume to continue to rise.

#6. LEADING INDICATOR: LISTING SUCCESS RATE – MARICOPA COUNTY

This is the number of homes that are listed in the MLS that SELL.

For Maricopa County, at the beginning of 2008, only 1 in 4 homes sold that were listed. TODAY, 3 in 4 homes (approx. 75%) are selling. YIPPEE!

The historic norm is 65%!

For homes between $400,000 and $800,000, the Listing Success Rate is at approx. 55% rising from 12% in 2009.

For homes over $800,000, Listing Success Rate is currently at 44%, and continues to rise.

The Market is definitely on the mend!

CONCLUSION

The previous 6 Leading Indicators all point to a recovery in the Real Estate Market.

As indicated earlier, when there is a change in Supply and Demand…it takes approximately 12 – 18 months before prices start to rise.

The Chart below shows that List Price/ Sq. Ft. of Pending Listings has held steady in 2011. The Paradise Valley Market changed from a Buyers Market in June 2010...18 months ago.

All of the 6 Leading Indicators are FAVORABLE and we should start seeing prices rise in Paradise Valley in 2012.

So, if you are BUYING, BUY NOW.

Is Housing GLUT Over? Experts predict Housing Shortage by Spring

2012-01-23T07:41:00.000-08:00

East Valley Tribune, updated 1/18/2012 9:16:30 AM ET

Real estate experts predict the Valley’s years-long housing glut is reaching its end and, as early as this spring, could stun home buyers by transforming into a shortage.

The crunch is expected to be more pronounced in the East Valley, where some subdivisions are approaching build-out and other builders are raising prices.

The prediction may seem outlandish given how gloomy real estate news has been for years, said Mike Orr, director of the Arizona State University Center for Real Estate Theory and Practice.

But a growing demand and shrinking supply has driven home prices up in recent months, he said. Orr thinks that’s gone unnoticed to people who will enter the market this spring, in what is typically the peak time for sales activity.

“They’re going to be surprised that it’s so hard to buy a house. They’ve been hearing for so long that there’s a glut of homes,” Orr said. “They’ll go out and find there’s not a lot to choose from and every time they bid, there’ll be three or four other offers.”

The shrinking supply is a mirror image of what happened in 2006, when there was a lag before the public realized the number of new homes had ballooned into a problem, Orr said.

About 58,000 homes were on the market by late 2007. The long-term average is about 33,000 homes listed at any given time.

That’s down to 25,000 now or 19,000 when accounting for homes that have deals pending, Orr said. The unusually short supply will continue to shrink.

“By the time we get to 2013, it’s quite likely that we’ll need a lot of new homes,” Orr said.

A short supply should trigger price jumps for existing homes this year, said Jim Belfiore, president of Belfiore Real Estate Consulting.

Prices went up 3.1 percent last year, but he argues they should have rose 20 percent in response to a 41 percent drop in real estate listings.

He expects that 20 percent jump will happen in 2012, starting with a 6 percent to 11 percent rise by March.

Belfiore’s company surveys each of the Valley’s 400 active subdivisions on a regular basis to gauge prices and sales activity. Belfiore predicts shortages will grow as 2012 goes on because 34 percent — or 136 subdivisions — will be sold out in a year.

Sales are especially strong in Queen Creek, where a jump in sales has allowed eight of 20 subdivisions to raise prices.

“The East Valley is a top performer,” Belfiore said. “In Gilbert, there are 58 subdivisions that are active today. It might be the most active submarket in the southwestern United States. Builders are pining for new lots. There’s a land shortage in Gilbert. Chandler is the same deal.”

The number of permits issued last year was a 40-year low, at about 7,000, Belfiore said. He expects that will grow to 10,400 this year, 15,800 in 2013 and 23,200 in 2014.

The construction should further boost the economy. Each new home creates 2.5 jobs for three months, Belfiore said.

Belfiore expects a strong 2012 because of falling unemployment, exceptionally low prices and record low interest rates. The market could be especially strong if employment gains continue and banks relax their lending standards, he said.

This year’s real estate market should be the best in five years, Orr said. It will take several years to resemble a normal market and any increases will be far short of what created the bubble, he said.

“I don’t think there will be the same speculation there was, but there might be a lot of people who do want to buy a house in the next two years, thinking, ‘If I don’t buy now, I might miss out,’” Orr said.

The number of foreclosures and short sales remains high but will be less of a factor in the market as time goes on, said Bob Bemis, CEO of the Arizona Regional Multiple Listing Service. Distressed homes are mostly the target of investors. Families tend to focus on new homes or traditional resales, he said.

The market showed signs of returning to health last year, he said. Median sale prices rose 6.5 percent to $117,000, and average sale prices were up 3.5 percent, to $162,000. He expects a burst of activity at some point in 2012.

Bemis said he expects potential buyers could dismiss a real estate professional’s rose-tinted predictions, given how they are known for saying there’s never been a better time to property. But he said skeptics should give weight to Orr, whose role at ASU divorces him from having any skin in the game.

“We’re very close on agreement on where we’re headed,” Bemis said. “It’s just a matter of degree.”

SOURCE: East Valley Tribune

2012: The year of a housing turnaround?

2012-01-22T08:12:00.000-08:00

Wednesday, January 18th, 2012, 10:54 am

Improved employment figures and record home affordability levels could spawn a minor housing recovery this year, analyst Mark Fleming said Wednesday in the CoreLogic (CLGX: 14.43 +4.72%) MarketPulse report.

Fleming says economic concerns peaked in the summer of 2011 when politicians were stuck wrangling over the nation's debt ceiling and the economy seemed poised for stagnation.

Fast-forward a few months, and Fleming says conditions are better, making way for a possible recovery in 2012. Fleming's more optimistic outlook is mirrored in the Freddie Mac U.S. Economic and Housing Market Outlook survey for the month of January.

The Freddie report says economic growth will strengthen by 2.1% in the first quarter of 2012, while mortgage rates will remain low at least through the beginning of the year. In addition, the Freddie Mac survey predicts home sales will grow another 2% to 5% from 2011.

Fleming with CoreLogic says several other developments could spur along housing demand. One of those being the number of households paying off debts — a factor that creates more liquidity and access to credit. Furthermore, households started adding home equity lines of credit in the third quarter of 2011, bringing in more access to cash flow and suggesting borrowers and lenders are more confident.

He believes 2012 is the right time for a housing price rebound with affordability levels putting a floor on the market, barring further price declines.

With this in mind, Fleming said analysts will be watching the market closely in search of positive signs during the spring and summer selling seasons.

His report noted that "most housing statistics basically moved sideways in the latter part of 2011. Builder sentiment is improving ever so slowly, but remains at very low levels. Housing starts are also increasing, driven mostly by multifamily starts."

Fleming points out that single-family housing starts and permits increased at an annual pace of 15% at the end of 2011. Meanwhile existing home sales trended upward, rising 12% when comparing November 2011 to January.

Write to Kerri Panchuk.

SOURCE: Housing Wire

Phoenix Housing Rises as Canada Buyers Seek 55% Desert Discount

2012-01-19T05:00:00.000-08:00

By Dan Levy and John Gittelsohn

Jan. 19 (Bloomberg) -- Bob Major returned to Phoenix in October in search of more bargains like the four empty houses he bought in 2010 at rock-bottom prices. The retired builder from Vancouver instead found real estate about 20 percent higher and stiff competition.

“There’s been an extreme turn,” Major, 66, said in an interview at a Chandler, Arizona, pizzeria, sitting beside his wife, Wendy. “We put bids on 30 properties and only got two.”

The Phoenix housing market, down 55 percent from peak values with more than two-thirds of borrowers owing more than their properties are worth, is starting to recover as demand grows and inventory shrinks. Sales rose in November for the 12th straight month on a year-over-year basis, and distressed real estate accounted for the smallest share of purchases since 2008, according to research firm DataQuick.

“The laws of supply and demand are finally taking hold,” said Jim Belfiore, president of Belfiore Real Estate Consulting LLC in Phoenix. “We’ve cleaned house. This market is poised to make a significant jump.”

Values may increase 9 percent this year in Phoenix, known as the “Valley of the Sun” for its desert climate and triple- digit summer temperatures, as homes in or near foreclosure are bought up, according to Clear Capital Inc.

Bank-owned property, which made up two-thirds of sales at the May 2009 market trough, now accounts for only one-third, said Alex Villacorta, director of research at the real estate data company in Truckee, California.

‘Pain Was Greater’

Pending foreclosures in Maricopa County, where Phoenix is located, tumbled by almost two-thirds in two years to 18,325 this month, according to Mike Orr, publisher of the Cromford Report, a local housing information service. In December, first- time foreclosure filings in Arizona fell 41 percent from the previous month to the lowest since 2007, data firm RealtyTrac Inc. said.

“The pain was greater here,” Orr said. “I think the reward for that is we’ll be out of the woods faster.”

Arizona’s bank-owned inventory has shrunk relative to other hard-hit housing states partly because courts don’t oversee property seizures, said Daren Blomquist, spokesman for Irvine, California-based RealtyTrac.

It takes an average of 125 days to complete a bank-owned home sale in Arizona, compared with 217 days in Florida, a “judicial state” with a foreclosure glut, according to the company. The U.S. average is 193 days.

The winnowing has boosted the average Phoenix property sale to $85 a square foot in December, up 7.6 percent from the market bottom in August, according to Orr, who is also the real estate center director at Arizona State University’s W.P. Carey School of Business. Prices are still down from a peak of $190 a square foot in June 2006, he said.

Only Gainer

“I never would have believed what Phoenix has gone through, but the data speaks for itself,” said Karl Case, co- founder of an S&P/Case-Shiller home-price index that showed the metropolitan area as the only gainer among its 20 members in October. “When prices fall that much and interest rates are this low, it’s got to be the case that the markets begin to clear.”

The upturn follows more than five years of decline, the worst housing bust in a city where home construction for new Arizona residents has been the path to economic growth, Phoenix Mayor Greg Stanton said in a telephone interview. Falling U.S. prices and bloated consumer debt have arrested mobility, trapping owners who can’t sell their homes, according to Orr.

Jobs Lost

Arizona lost about 324,000 jobs in three years -- about one-third in construction -- before employment bottomed in September 2010, U.S. Bureau of Labor Statistics data show. The state added about 45,000 jobs last year.

At that pace, it will take until 2015 to reach pre-bust levels, said Lee McPheters, director of Arizona State’s JPMorgan Chase Economic Outlook Center.

Even with fewer foreclosures and prices turning, Phoenix has the sixth-highest U.S. metropolitan rate of foreclosure filings per household, according to RealtyTrac. Phoenix led the 25 largest U.S. metropolitan areas with two-thirds of its mortgaged homes in negative equity at the end of the third quarter, Zillow Inc. said. Across the nation, 29 percent of all mortgaged homes were “underwater,” meaning the properties were worth less than their loan balances.

Buying Repossessed Homes

Steep discounts have lured investors such as American Residential Properties LLC, which used more than half of a $100 million fund to buy 800 Phoenix-area homes at an average price of $120,000, some down from as much as $400,000 five years ago, said Laurie Hawkes, president of the Phoenix-based company.

It’s now teaming with New York-based Ranieri Partners LLC on a proposal to buy repossessions from government mortgage companies Fannie Mae and Freddie Mac and manage the properties as rentals.

“Phoenix appears to be leading the nation in terms of major metropolitan areas that are recovering,” Hawkes said. “It’s considerably faster than many people thought.”

Bargain-hunting also attracted flocks of Canadians taking advantage of a 28 percent currency gain versus the U.S. dollar since March 2009 -- and winters with an average January high of 66 degrees Fahrenheit (19 degrees Celsius).

Canadians edged out Californians last year as the largest group of outside buyers, with 4.2 percent of purchases, Orr said.

“My clients are here in full force,” said Diane Olson, a Phoenix real estate agent who works with Canadian investors and winter-home seekers. The transplant from Winnipeg, Manitoba, where the temperature was minus 8 degrees Fahrenheit yesterday, has brokered more than 500 deals since 2008 with Canadian “snowbirds,” she said.

Six Arizona Months

Major, the retired Vancouver homebuilder, spent $400,000 for four properties during his 2010 investment foray, including a three-bedroom foreclosure that he fixed up as his own winter residence. He plans to spend six months a year in Arizona.

“There were so many listings the first time, you could really take your pick,” Major said at the pizza restaurant, where teenagers in shorts ate ice cream outside. “Now you can’t bargain nearly as much. The whole attitude is different.”

A property similar to a house that Major bought for $85,000 in 2010 sold in October for about $102,000, he said.

Stanton, a Democratic former city councilman who was elected mayor in November, said Phoenix needs to move from a reliance on housing cycles toward more sustainable technology and health-care jobs.

His idea for a health and science development, to be built on 600 acres (240 hectares) northeast of downtown, was announced in his Jan. 3 inauguration speech. It has the support of the Mayo Clinic and Arizona State University, which would be partners in the project, Stanton said.

Phoenix Hit Hard

“Being disproportionately dependent on single-family homes is the reason why this recession hit Phoenix so hard,” said Stanton, himself the owner of an underwater house in central Phoenix that he purchased in April 2007.

The hoped-for employment shift may already be under way. Intel Corp. broke ground last year on a $5 billion plant in Chandler, about 20 miles (32 kilometers) southeast of downtown Phoenix, that will require “thousands” of temporary construction and permanent jobs, said Laura Anderson, a spokeswoman for the world’s largest semiconductor maker.

PayPal, an online payment service owned by EBay Inc., plans more hiring after adding 700 jobs in 2011, said Sara Gorman, a spokeswoman for the unit.

Phoenix had 30,000 of the state’s new positions in the 12 months through October, led by health care, transportation and warehousing jobs, McPheters said.

Health-Care Growth

The proposed campus is “very exciting” and would attract startup companies as well as international firms, said Wyatt Decker, chief executive officer of the Mayo Clinic’s Arizona branch in Phoenix, which employs 400 physicians and scientists and a total staff of 5,000. The state’s health-care sector has grown even during the real estate recession, he said.

“We’re all rowing in the same direction,” Decker said of policy makers such as Stanton and education and science executives.

Even homebuilding has revived. Single-family construction permits are expected to climb to 11,300 this year, up 66 percent from a 2010 low, according to the average estimate of 13 Phoenix market analysts surveyed by Arizona State University.

Meanwhile, investors like Major peck away at the real estate overhang. Time spent in his new $25,000 outdoor spa, the biggest cost of his foreclosure renovation, is a world away from frozen Canadian winters, he said.

“We like it at night before bed, when it’s warm and all the stars are out,” he said. “There’s an awful lot of rain and dullness in Vancouver from October to April. And it’s cold.”

--Editors: Daniel Taub, Christine Maurus

To contact the reporters on this story: Dan Levy in San Francisco at dlevy13@bloomberg.net; John Gittelsohn in Los Angeles at johngitt@bloomberg.net

To contact the editor responsible for this story: Daniel Taub at dtaub@bloomberg.net

SOURCE: Bloomberg Business Week

Rock Bottom: Housing May Have Already Hit It

2012-01-17T11:20:00.000-08:00

January 17, 2012

Liz Ann Sonders, Senior Vice President, Chief Investment Strategist, Charles Schwab & Co., Inc.

KEY POINTS:
A comprehensive (read: long) and chart-filled update on housing suggests the bottom may largely be in.
Pricing may have more downside and real mortgage rates need to decline further, but most other metrics are flashing green.
New themes: housing becoming "local" again, and for now, renting is trumping buying.

Housing: no longer ARMed and dangerous

I'm honored to be in my 10th year as Schwab's chief investment strategist, and over that time have written countless reports. One of the most widely read and quoted was my "Housing: ARMed and Dangerous" report in late 2006. It represented my broad thoughts on housing at that time, which were quite dour, as longer-time readers might remember. It was one of those times I wished I had been off-base with my concerns.

Fast-forward to 2012 and it's time for a fresh look at housing. My conviction level does not match that in 2006, but I do think the tide is turning for housing and that the bottom is largely in. That said, one of the key characteristics of housing going forward brings us back to one of its key characteristics historically, save for the bubble period: housing is becoming "local" again.

During the real-estate bubble's inflation and subsequent bursting, housing could be analyzed nationally and somewhat monolithically. The rising tide was lifting all (house) boats, and when the tide went out, it took everything with it. But what we're beginning to see is a broadening of conditions, with a widening spread between the have and have-not regions of the country. Another theme of the real-estate recovery is rent versus own, with a sharp bias recently toward the former.

There are many reasons for my budding optimism about housing:

Hedge-fund buying/homebuilders outperforming

Although a recovery in housing is by no means consensus yet, there have been some notable adherents to the view. A recent article in The Wall Street Journal chronicled a number of large hedge funds that are starting to "wager on housing." Hedge funds run by Caxton, SAC, Avenue, JHL and Blackstone have been upping their housing-related investments, while formerly bearish research firm Zelman now predicts a housing rebound, as does Goldman Sachs.

The stock market appears to agree, with homebuilding stocks—as measured by the S&P 500 homebuilding index—up 78% since the market's early-October 2011 lows (through Jan. 13, 2012). The fourth quarter of 2011's outperformance by homebuilders was the largest in a single quarter since the third quarter of 2008 (which occurred mostly before the Lehman Brothers meltdown in mid-September of that year).

NAHB index

Recently reported was the fourth consecutive increase in the National Association of Home Builders (NAHB) index, taking it nearly back to its pre-Lehman peak, and achieved without the "artificial" support of the homebuyer tax credit. As you can see in the chart below, the index is now signaling a much higher pace of home sales. Assuming the relationship between the two remains connected, we could see sales increase to a level not seen (without tax policy support) since the pre-Lehman days. Caveat: this would still be well below the boom peak of more than eight million.

Housing Index Signaling Higher Sales

Source: FactSet, NAHB, National Association of Realtors, US Census Bureau, as of January 2012.

Sales picking up/lending environment improving

As you can see in the chart below, sales of existing homes have already rebounded from their 2010 lows, while sales of new homes have leveled out over the past couple of years.

Existing Sales Rebounding

Source: FactSet, US Census Bureau, as of November 30, 2011.

And pending home sales have really accelerated, a key leading indicator for future activity. It's also encouraging that National Association of Realtors (NAR) data show that the bulk of the recent rise in existing home sales has been driven by first-time buyers. This strength is likely partly due to banks starting to lend a bit more freely.

Pending Home Sales Surging

Source: FactSet, NAR, as of November 30, 2011.

Construction activity rebounding

Construction has been trending higher, with both single-family and especially multi-family building permits up since early 2009. And, as you can see in the two charts below, housing starts appear to be bottoming for single-family homes and have started a sharp V-shaped recovery in multi-family units.

Rental Demand Driving Starts

Source: FactSet, US Census Bureau, as of November 30, 2011.

Overall, starts remain well below their peak, but the "law of small numbers" means the percentage increases are significant and will continue to be. Record-low mortgage rates, an improving jobs picture, greater credit access and rising demand for apartments are all driving starts. In large part due to the strength in housing, ISI recently upped its fourth-quarter 2011 gross domestic product (GDP) estimate from 3.0% to 4.0%.

As I noted in the introduction, the recent bias toward renting over owning has been a huge support for the multi-family sector of housing. The severity of the prior collapse in home sales and prices, coupled with a serious squeeze in mortgage loan access, have pushed many people toward renting instead of owning. In fact, nationally, the rental vacancy rate has dropped from a record high of 11.1% in the third quarter of 2009 to 9.8% in the third quarter of 2011. There remains downward momentum in this rate, which suggests the turn we've seen in multi-family units has legs going forward.

Renting hot now ... could drive buying later

The rent versus own is borne out in the data seen in the chart below. Not since the early 1980s has the number of renter-occupied units exceeded owner-occupied units. But don't equate rentals solely with multi-family housing. More than half of all rentals are in buildings with four or fewer units, including one-third that are single-family homes.

Renting Takes Over From Buying

Source: FactSet, US Census Bureau, as of September 30, 2011.

Why rent? Renting doesn't require a down payment, there's no need to qualify for a mortgage, it provides greater mobility and maintenance is pushed to the landlord. But vacancies are falling and rental rates are rising, so the rent over buy will not last in perpetuity.

Unquestionably, this can be seen as the slow fade in the "American Dream," which is sad in many ways. But when the ownership rate was peaking alongside the bubble's peak, it was artificially supported by absurd lending practices, bubble prices, limited-to-no down payments and questionable loan documentation. We're now erasing those excesses, and that's good for the long-term health of the housing market.

There are presently about four million potential foreclosures in the pipeline, with Ned Davis Research estimating another 2.5 million people losing their homes. That would take the homeownership rate back to 64%, in the range that prevailed from 1985 to 1994. No surprise is the fact that homeownership rates have fallen most precipitously in those states with the largest housing busts, and with younger households having taken the biggest hit.

A longer-term story about rent versus own is that rising rents will eventually push would-be buyers to purchase homes—a process could begin sooner than many expect.

Fading American Dream

Source: FactSet, US Census Bureau, as of September 30, 2011.

Some states strong again

Staying on the subject of states and local economics, we're seeing housing conditions revert back to the "old normal" when the spread of results around sales and pricing was wider and driven by the local economics, including of supply and demand.

Based on the Case-Shiller 20-City House Price data, there are five major cities now with rising prices: Denver, Washington DC, Charlotte, Tampa and San Diego. Bringing up the rear (in order from bad to less-bad) are Atlanta, Detroit, Minneapolis, Las Vegas and Chicago.

Looking forward, employment is a leading indicator for improvement in housing, and the top five states for job growth are Mississippi, Oregon, Nebraska, Tennessee and Alaska. Employment growth is weakest in Louisiana, Washington DC, Rhode Island, Utah and Washington (state).

In terms of equity, the five states with the lowest share of mortgages in negative equity are New York, North Dakota, Oklahoma, Alaska and Pennsylvania. The states with the highest share of mortgages in negative equity are Nevada, Arizona, Florida, Michigan and Georgia.

Finally, we can look at valuation of housing. According to Federal Housing Finance Agency (FHFA) data, which measures house prices to personal income per capita, the five most-undervalued states in terms of housing are Nevada, Arizona, Michigan, Georgia and California. The most overvalued in terms of housing are Washington DC, Alaska, Alabama, New York and Wyoming.

Inventories coming down

"Visible" inventory has fallen sharply, as you can see in the chart of months' supply of homes below. In fact, the drop has brought this measure back down to its 30-year average. Caveat: there remains a multitude of homes in "shadow" inventory (homes in foreclosure pipeline or vacant but not-for-sale).

Supply Plunging

Source: FactSet, NAR, US Census Bureau, as of November 30, 2011.

Mortgage rates low/housing affordability high

The continued decline in home prices and the drop in mortgage rates to record lows make the affordability environment quite exceptional. Freddie Mac's measure of the average 30-year fixed mortgage rate is now less than 4.0%. They'd be even lower were it not for an elevated spread over the 10-year Treasury yield, reflecting concerns about the eurozone debt crisis and its impact on the lending environment.

When combining record-low mortgage rates with flattish income growth and lower prices, you have record-high affordability, as you can see in the chart below. In fact, the burden of new mortgage debt has never been lower.

Record-Breaking Affordability

Source: FactSet, NAR, as of November 30, 2011.

According to Capital Economics, the monthly principal-and-interest payments on a mortgage used to buy the median-priced home with a 20% down payment were 12.8% of the median income in November 2011. To put this in historical perspective, that's down from nearly 40% in the early 1980s, when mortgage rates were in the double-digits.

However, it's not all good news for housing:

Real mortgage rates still too high

As noted above, mortgage rates are at record lows. But (and it's a big but), what matters more to prospective buyers is often the "real" mortgage rate. The real mortgage rate, seen in the chart below, is the nominal 30-year fixed rate minus the rate of appreciation/depreciation in home prices. On that basis, we probably need to see a greater drop to really stimulate demand.

Real Mortgage Rates Not Low Enough

Source: FactSet, Federal Reserve, NAR, as of November 30, 2011.

As you can see above, although we've come a long way from 22% real mortgage rates at the bottom of the housing market (when prices were imploding), we're nowhere near the bubble peak, when real mortgage rates were deep in negative territory (when prices were exploding).

Prices still falling

Unfortunately, the rate at which home prices have been falling accelerated toward the end of last year. However, that rate is unlikely to be sustained now that activity is improving. In fact, as seen in the chart below, with total home sales having rebounded and their tendency to lead prices, the likely path of least resistance for prices should soon turn up.

Home Prices Still Suffering

Source: FactSet, NAR, Standard and Poor's, US Census Bureau, as of November 30, 2011.

The year-end 2011 weakness in prices was probably a lagged response to the very weak economy and home sales in the first half of last year. Of course, since then the economy has staged a notable re-acceleration. The balance presently between supply and demand is consistent with prices stabilizing by about mid-year 2012, only about six months from now.

In terms of magnitude of possible additional price depreciation, it appears we're only less than 10% away from a pre-bubble average based on the FHFA Purchase-Only House Price Index.

One can also compare the prices of existing and new homes. As you can see in the final chart below, "used" (existing) homes have become extremely cheap relative to new homes. Presently, used homes are selling for less than three-quarters of the price of a new home, which is the widest gap since records have been kept (1968).

Cheaper to Buy "Used" versus New

Source: FactSet, NAR, US Census Bureau, as of November 30, 2011.

When foreclosures have moved further through the pipeline and the excess supply of existing homes finally recedes, prices will begin to move back to the cost of a replacement home. And remember, the excess inventory doesn't have to be completely eliminated; it just needs to recede toward normal levels. Ned Davis Research estimates that the excess supply will be largely absorbed between the end of this year and the beginning of 2014.

As for housing's impact on US GDP, 2011 was the first year since 2005 when residential investment was not a negative contributor to GDP. The consensus is for it to be neutral in 2012 and a positive contributor in 2013. But, the contrarian in me thinks we could be pleasantly surprised this year and see a positive contribution. Given where the expectations bar is presently set, it would be very pleasant indeed.

Important Disclosures

The information provided here is for general informational purposes only and should not be considered an individualized recommendation or personalized investment advice. The investment strategies mentioned here may not be suitable for everyone. Each investor needs to review an investment strategy for his or her own particular situation before making any investment decision.

All expressions of opinion are subject to change without notice in reaction to shifting market conditions. Data contained herein from third party providers is obtained from what are considered reliable sources. However, its accuracy, completeness or reliability cannot be guaranteed.

Examples provided are for illustrative purposes only and not intended to be reflective of results you can expect to achieve.

SOURCE:

What's in Store for the Housing Market in 2012?

2012-01-16T18:01:00.000-08:00

By Meg Handley | U.S.News & World Report LP – Wed, Dec 21, 2011 3:23 PM EST

It's been a pretty long ride down from the meteoric highs the housing market hit in the boom years. Who knew more than five years later, Americans would still be trying to shake off the one of the worst financial hangovers the country has ever known.

Millions of homes have been foreclosed on and millions more Americans have underwater mortgages, the lasting legacy of the housing bubble that grossly overinflated home values. Now, living in homes they can't sell, Americans today are "stuck." Stuck financially, stuck in their homes, and stuck wondering when things will get better.

Is 2012 the year the housing market turns around?

Of course, no one can say for sure, but plenty of economists say signals are pointing in the right direction.

"It has become increasingly apparent that the pieces for a housing rebound next year are beginning to fall into place," wrote Barclays Capital analyst Stephen Kim in a recent report.

Home sales pick up.

The end sum of all these factors is an expected uptick in existing and new home sales next year.

"There are so many improving factors that support home sales that we are calling for about a 5 percent increase in [existing] home sales in 2012 over 2011," Yun says.

New home sales should also see an even bigger bump between 10 and 15 percent, Yun says, because the inventory of new constructions is so low. "The builders will be ramping up production," he says.

Barclays analyst sees housing rebound coming in 2012

2011-12-12T07:38:00.001-08:00

Monday, December 5th, 2011, 11:34 am

Barclays Capital (BCS: 11.49 -4.17%) analyst Stephen Kim predicts a housing recovery buoyed by improving jobs numbers and the fact prices for nondistressed homes will have stabilized without government support.

"In the absence of a government homebuyer incentives, prices for non-distressed home sales have stabilized for almost a year," Kim said.

"This is the most important trend in the housing industry right now, and we are amazed at how little attention it has been getting from the media and the street.

This stability on the part of nondistressed prices has occurred despite a very high share of distressed activity and continued declines in overall prices."

Barclays said recent economic data — including higher job creation in November, housing starts and improved homebuyer traffic — point to some improvement potential in the sector.

In mid-2010, the federal homebuyer tax credit expired, leaving the housing market without training wheels for the first time since the 2008 economic meltdown. Yet, prices in some housing markets remained stable on the back end.

With its new outlook in the market, Barclays upgraded D.R. Horton's (DHI: 12.425 -1.86%) stock to buy and raised price targets for D.R. Horton, Lennar (LEN: 19.18 -2.34%), Toll Brothers (TOL: 20.22 -2.65%) and Meritage Homes (MTH: 22.26 -2.45%).

At the same time, the investment bank raised its 2012 earnings-per-share estimates for D.R. Horton, Lennar, Meritage Homes, Pulte (PHM: 6.14 -2.85%) and Toll Brothers, while lowering its estimates for KB Home (KBH: 7.64 -5.68%).

"Thus, the key to timing housing’s recovery depends primarily on when these first-time buyers decide it is safe to buy a house," Kim concluded.

Write to Kerri Panchuk.

SOURCE: Housing Wire

Shadow Inventory...ugh!

2011-12-01T11:27:00.000-08:00

The following Charts allow us to investigate the Number of Actual and Potential Lender Owned Homes in Maricopa County from November 2010 onwards.

This includes what is sometimes referred to as "Shadow Inventory".

The data is for the County of Maricopa and includes only single family property types (assessor land use codes 01 and 86).

There are five categories of homes and the number of homes in each category can be individually displayed or hidden depending on which part of the inventory you wish to analyze.

1. Pending Foreclosures - these are homes with an active Notice of Trustee Sale. Some of these will avoid foreclosure through loan modification, successful short sale or other means. If the trustee sale goes ahead then the property may be purchased by a third party and so avoid entering the REO inventory. Thus only a proportion of this inventory will end up in the hands of the lender or government equivalent (e.g. Fannie Mae, Freddie Mac, VA or HUD).

2. Unlisted REOs - these are properties which failed to sell at the trustee's auction and reverted to the beneficiary. These "REO" properties have not yet been listed for sale on ARMLS but are likely to be going through the lender's preparations for sale. Some may pass from one lender to another before being marketed.

3. Active REOs - these are owned by lenders and are actively being marketed for sale through the ARMLS system. They may or may not have a contingent contract.

4. Pending REO Sales - these are listed on ARMLS but already have a completed firm contract for sale and are awaiting their close of escrow.

5. Listed but Off Market - these are listed on ARMLS but are temporarily suspended from marketing for some reason.

PENDING FORECLOSURES - these are homes with an active Notice of Trustee Sale.

Myth: The banks are not completing the foreclosure process because they don't want foreclosures on their books..."

Fact: PENDING FORECLOSURES have dropped from 35,235 in November 2010 to under 20,000 in November 2011. A "normal" market would have approximately 8,000 Pending Foreclosures in the system at all times.

UNLISTED REOs - these are properties which failed to sell at the trustee's auction and reverted to the beneficiary.

Myth: SHADOW INVENTORY!!! Banks are holding all of these properties back and are doing to DUMP them onto the market in June 2011. Hello...it's now December 2011...where are they?

Fact: There is in fact a DECREASE in the homes that have gone to Auction, weren't purchased and now are owned by the Bank..but aren't listed in ARMLS. Where is the SHADOW INVENTORY??? Pre-Foreclosures are down, Unlisted Foreclosures are down....again, WHERE IS THE SHADOW INVENTORY?

ACTIVE REOs - these are owned by lenders and are actively being marketed for sale through the ARMLS system. They may or may not have a contingent contract.

FACT: Phoenix Bank-Owned Listings have fallen dramatically, from almost 7,000 in November 2010 to under 2,000 in November 2011.

PENDING REO SALES - these are listed on ARMLS but already have a completed firm contract for sale and are awaiting their close of escrow and LISTED BUT OFF THE MARKET - these are listed on ARMLS but are temporarily suspended from marketing for some reason.

FACT: Pending REO Sales are down because Bank Owned Properties (REOs) are DOWN.

BOTTOM LINE:

1. There is NO SHADOW INVENTORY.

2. Bank-Owned Listings in Phoenix will continue to fall. WHY? Because the number of homes in the earlier stages is falling.....

See "Have We Hit Bottom Yet? When will Prices Rise?" for a complete analysis of the Arizona Real Estate Market.

SOURCE: The Cromford Report, November 1, 2011

Nov. 15th | Cromford Report: Mid Month Pricing Update & Forecast

2011-11-15T10:36:00.000-08:00

Mid Month Pricing Update and Forecast

Each month about this time we look back at the previous month, analyze how pricing has behaved and report on how well our forecasting techniques performed. We also give a forecast for how pricing will move over the next 30 days.

For the monthly period ending November 14, we are currently recording a sales $/SF of $82.36 averaged for all areas and types.

This is 1.7% higher than the $80.99 we now measure for October 15.

Our forecast range was $79.06 to $82.26 with a mid-point of $80.67.

In a pattern similar to last month, this month the actual figure fell just above our forecast range by 10 cents.

Pricing (as measured by $/SF for all areas and types) hit bottom in the second half of August and again in the first half of September but has been moving steadily upwards since then.

We are now back at the level we last saw on July 3.

The current price level is 2.01% lower than last year on November 14.

On November 14 REO sales across Greater Phoenix (all types) averaged $62.95 per sq. ft. (up 0.8% from October 15).

Pre-foreclosures and short sales averaged $72.25 (up 0.4%) while normal sales averaged $104.56 (up 0.6%).

Normal sales gained market share, moving from 35.0% to 36.4% of sales, while REOs were the big losers, moving from 37.9% to 33.8%.

Short sales and pre-foreclosures advanced once again this month, moving from 27.1% to 29.8% - another record high.

It is clear that the age of the REO is in decline while short sales and pre-foreclosures are becoming ever more important.

As they become scarcer, REOs are getting more expensive. In addition the pricing for short sales and pre-foreclosures is no longer declining.

It is clear that the overall price movement (up 1.7%) is more than twice the movement of each individual component (REO up 0.8%, normal up 0.6%, short sales up 0.4%).

This happens because of the change in the mix in favor of more expensive normal and short sales and away from the cheaper REOs.

On November 14 the pending listings for all areas & types showed an average list $/SF of $80.61, 3.0% above the reading for October 15 - so pending $/SF has moved upwards in a serious way for the first time in many months.

This is a very positive signal, especially when all three sales components are moving upwards at the same time.

Among pending listings we have a fast growing 30.5% normal, a sharply declining 28.3% REO and a steadily growing 41.2% in short sales and pre-foreclosures.

The average pricing for pending listings on November 14 in each category were: $110.40 normal, $67.21 short sales & pre-foreclosures and $62.64 for REOs.

Normal and REO are significantly higher but short sales and pre-foreclosures are lower than they were was last month.

Together with the changing mix this tells us we are likely to see a further rise in sales price per sq. ft. over the next month.

30-DAY FORECAST:

Our new mid-point forecast for the average monthly sales $/SF on December 14 is $84.79, which is 2.95% above the November 14 reading, and we have a 90% confidence that it will fall within ± 2% of this mid point, i.e. in the range $83.09 to $86.49.

A substantial change in the mix can still have a significant effect on the average price per sq. ft. and we are seeing considerable variation from day to day. However notice that even the lowest point in our forecast range is higher than today's reading.

It is now becoming very clear that our reading for September 15 - $78.54 per sq. ft. - will remain the low point over the near term.

The lowest monthly average sales price is $150,503 and was also set on September 15.

However the record low monthly median sales price is still standing at $107,000 and this was set nine months ago on February 24. Our current monthly median sales price is back up to $112,000, so median price changes have not followed the pattern of average prices or $/SF.

SOURCE: The Cromford Report, November 15, 2011

Phoenix Foreclosures at Lowest Percentage on Market Since Spring '09

2011-11-14T10:24:00.000-08:00

Phoenix Foreclosures at Lowest Percentage on Market Since Spring '09

Monday, November 14th, 2011, 3:48 pm

Foreclosures, as a percentage of the Phoenix metro housing market, reached their lowest level since April 2009, according to a report from the W. P. Carey School of Business at Arizona State University.

Foreclosures made up 26% of the existing-home transactions in the Greater Phoenix market in October, down from 29% in September, according to the report, released Monday.

Foreclosures made up 43% of the area’s single-family existing-home transactions in January, according to the report.

"Though the local housing market is beginning to produce some positive movement, the surrounding economic environment and anemic growth are still inhibiting consumer confidence," said Business Professor Emeritus Jay Butler.

"Just because we’re seeing a drop in foreclosures, that doesn’t mean we have a healthy housing market. Other types of activity and purchases are not increasing, in order to push us forward."

Butler also noted that the numbers only look at recorded foreclosures. “Many more foreclosures may be lingering in the pipeline just because more paperwork and rules are being followed in the process now,” he said.

October marked the lowest number of completed foreclosures in quite a while.

The market had 1,900 completed foreclosures in October, down from almost 2,300 in September.

There were almost 3,400 completed foreclosures in October 2010.

The last time the number of completed foreclosures dipped below 2,000 in a single month was back in February 2008.

Overall activity in the Phoenix-area housing market is also down.

The market had slightly more than 7,200 transactions in October, down from almost 8,000 transactions in September.

That’s partly due to the season as housing sales tend to slow down during the fall and winter months.

The median price for a single-family home resold (not new foreclosures) in the Phoenix market in October was $125,000, down from last October’s median of $135,000.

Write to Kerry Curry.

Follow her on Twitter @communicatorKLC.

SOURCE: http://www.housingwire.com/2011/11/14/phoenix-foreclosures-at-lowest-percentage-of-market-since-spring-09

Have we Hit Bottom Yet? When will Prices Rise?

2011-11-03T09:45:00.001-07:00

The two most common questions that all Real Estate Agents hear are:

"HAS THE ARIZONA REAL ESTATE MARKET HIT BOTTOM?"
and

"WHEN WILL PRICES START TO RISE?

NO ONE CAN PREDICT THE FUTURE....but we can take a look at Historical Data AND the Leading Indicators that help us to determine the state of the Arizona Real Estate Market.

Below is a Chart that shows THE PSYCHOLOGY OF A NORMAL REAL ESTATE CYCLE.

The next Chart shows how THE NORMAL REAL ESTATE CYCLE HAS CHANGED.

We had a DIP from 2010 - 2011, so we are in a bit of a pickle...instead of being in the "HOPE" area of the cycle, we digressed a bit. But read on..there is a light at the end of the tunnel!

The Chart below shows Average Sales Price per Sq. Ft. from January 2001 - August 24, 2011.

Although we were at the Top of the Market in 2005, in 2006 - there were NEGATIVE SIGNALS of the Leading Indicators (i.e. Increase in Inventory) that forecasted a drop in the market.

Right now - there are POSITIVE SIGNALS from the Leading Indicators outlined below.

LEADING MARKET INDICATORS THAT SHOW THE MARKET WILL GET BETTER:

**NOTE: # 1 - 6 have to be in a favorable position for Prices to Rise.

1. Cromford Report Index - this shows Supply & Demand.
2. Days Inventory - How long a home stays on the market before it is sold
3. Pending Listing Count - This is the number of Homes on the Market that have Offers and are due to close escrow. It is the best indicator of increased sales
4. Contract Ratio - 100 x (Pending Listings + AWC Listings (Home that has an offer but it is contingent on something)/Active Listings (contract ratio of above 50% is a "HOT" market)
5. Monthly Sales Volume Self-explanatory
6. Listing Success Rate - # of properties listed vs. # of properties that are actually sold
7. Pending $/SF
8. Sales $/SF

#1. CROMFORD REPORT FOR ALL OF ARIZONA - SUPPLY & DEMAND

**Michael Orr created the Cromford Index which measures Supply & Demand. It is adjusted seasonally and yearly.

SUPPLY & DEMAND: It's basic economics..when there are more Buyers (HIGH DEMAND) than Homes for Sale (LOW SUPPLY), PRICES RISE - SELLER'S MARKET.

When there are more Homes on the Market (HIGH SUPPLY) than BUYERS buying (LOW DEMAND), PRICES FALL - BUYER'S MARKET.

The Economy, Government, Interest Rates, the Ability to Secure A Loan, Emotions, Psychology of the Buyers/Sellers all affect Supply & Demand and therefore affect Price.

Each City/Area has a story..but overall, Arizona is in a SELLER'S MARKET.

THE GOOD NEWS: Supply is at 83% (LOW) and Demand is at 128% (HIGH) which computes to a Cromford Index of 154! It is at its highest since October 2005!

If we look at a more detailed Graph, we see that we have been in a SELLER'S MARKET since the beginning of 2011.

Prices don't start to rise for 12 - 15 months after there is a change in Supply & Demand. If we only look at Supply & Demand, prices will start to rise in January/February 2012.

NOTE: Prices dropped 12% in July 2010 because it was the end of the Buyer's Tax Credit.

#2. DAYS INVENTORY, - this is how many days it takes to sell a home. The calculation is: 365 x (Active Listing Count/Sales Per Year).

As we can see, the time it takes to Sell a Home has been decreasing at a very quick rate since October 2010...which coincides with the Cromford Report (Demand > Supply = Seller's Market).

#3. PENDING LISTING COUNT -

A good sign, Pending Listings are approximately 20% higher than 2010.

Below we are comparing Pending Listings of 2011 to 2004 & 2005 when the market was good...and 2007 & 2008 when the market was bad. Currently, we are way above 2004 & 2005...and sales in Arizona usually slow down during the hot summer months....but it looks like we are on a good trajectory.

#4. CONTRACT RATIO -

The Contract Ratio is how many homes on the market get offers vs. how many homes remain active.

The higher the number...the HOTTER the market.

A Normal Ratio is 30 - 40. Currently, the Arizona Market is at 95 and has been in a HOT market since March 2011. It doesn't SEEM like we are in a HOT market, right? It is because there was such a huge inventory of homes AND, most of the homes being purchased are at the lower end of price scale (i.e. foreclosures/short sales etc.). Again...it takes 12 - 15 months from the change in Supply & Demand (January 2011 is when we stepped into a Seller's Market without dipping back down to a Buyer's Market) for prices to increase.

#5. MONTHLY SALES VOLUME -

If we compare 2003 to 2007, we see that Sales Volume rose to record levels in 2004 & 2005 and dropped in 2006 & 2007.

Sales Volume was down at the beginning of 2008, but rose to 5,000 by the end of the year.

The beginning of 2009 and 2010...volume reached a high of 9500 and didn't drop below 6500 the rest of each year.

In 2011, we are at around the same volume as we were in 2004 & 2005. We dipped below 2004 levels during the summer...but all indicators say that we should hold steady.

#6. LISTING SUCCESS RATE - this is the number of homes that are listed by a Realtor and then Sell.

As you can see, in 2008, only 1 in 4 homes sold that were listed. TODAY, 3 in 4 homes (approx. 75%!) are selling.

The historic norm is 65%!

People "in the know" are Buying in Arizona. They know we have reached the bottom and prices will start to rise soon.

#7 PENDING PRICE/SQ. FT. - this allows us to forecast sales about 30 days ahead with reasonable accuracy.

WHAT? PENDING PRICES/SQ. FT. HAVEN'T RISEN AND IT LOOKS LIKE THEY ARE FALLING????

Let's RE-CAP:

1. There are More Buyers than Sellers. HIGH DEMAND + LOW INVENTORY = Seller's Market

2. The Number of Days it takes to sell a house is way down

3. Pending Listings are 20% higher than 2010

4. The Contract Ratio is at 95%....a hot market is above 50%!

5. Sales Per Month are at the same levels as 2004 & 2005

6. 3 out of 4 listings are selling compared to 1 out of 4 in 2008...

So why haven't prices risen?

It takes time for the market to recover...just as it took time from the top of the market...and negative indicators in 2006 - for prices to hit bottom. Again, most of the homes being purchased are the lower priced homes..plus the foreclosures and short sales need to be bought up.

Currently, there are approx. 4,500 foreclosures on the market and 8,000 Pending Foreclosure Sales. In a normal market, there are approximately 1,200 foreclosures at any one time....so we are not far off from Normal!

Prices are at the lowest level ever. Investors know this and are Buying up the market (35-42% of Buyers are CASH Buyers)....

All indicators say that the Arizona Real Estate Market is recovering and prices start to rise in early 2012, so if you are thinking of
BUYING... THE MESSAGE IS: BUY NOW!

All of the information presented above focuses on Maricopa County. Statistics are taken from The Cromford Report and the Arizona MLS.

FROM MICHAEL ORR OF THE CROMFORD REPORT (AUGUST 16, 2011)

The Main Trends we currently see are:

* Banks have increased their asking prices for REOs (Lender Owned Properties) as they become scarcer

* Short Sales are getting cheaper and easier to close, though far fewer remain Active without an Offer

* Normal sales include a higher proportion of "flips" rather than owner occupier sales and therefore Average Prices are falling

* HUD homes are selling like hot cakes (which also brings pricing averages down)

So we shouldn't expect to see good news from pricing numbers for a while yet (i.e. January 2012). For those who would like some good news here is a selection:

* Pending Listing counts dipped after the Spring Peak but remain strong for the time of year

* Expiry and Cancellation rates are very low

* Active Listing Counts are moving sideways whereas they would normally be increasing at this time of year

* The Supply Versus the Annual Sales rate is lower than at any time in the recent past with the exception of the bubble years 2004 and 2005.

November 2nd | Cromford Report Market Summary for the Beginning of November

2011-11-02T10:42:00.000-07:00

November 2 - Market Summary for the Beginning of November

Market Summary for the Beginning of November

On the surface the preliminary numbers for October suggest it was quite similar to September. Looking at the ARMLS data across all areas and types we see the following:

Sales per Month: 7,556 in October - down 7% from September but up 16% from this time last year.

Active Listings (including AWC): 27,063 on November 1 - up 0.7% from October 1 but down 40% from this time last year.

Active Listings (excluding AWC): 19,578 on November 1 - up 1.3% from October 1 but down 50% from this time last year.

Pending Sales: 10,509 on November 1, down 3% from October 1, but up 9% compared with this time last year.

Listing Success Rate: 75.9% on November 1 - down slightly from 76.2% on October 1 but up significantly from 56.1% on November 1, 2010.

Contract Ratio: 91.9 on November 1, down from 95.1 on October 1 but up from 39.4 last year at this time.

Days Inventory: 98 on November 1, the same as October 1 butdramatically down from 184 at this time last year

Cromford Market Index™: 156.0 on November 1, down from 159.4 on October 1 and 87.9 on November 1, 2010.

Sales Price as a Percentage of List: 96.70% on November 1, almost the same as 96.84% on October 1 but up from 95.21% on November 1, 2010

Just like in October, we can see that all these numbers are far better than 12 months ago but most are not quite as good as the previous month.

Supply rose very slightly while demand declined slightly.

However the overall figures hide some spectacular difference between the geographic areas. For example, when it comes to active listings (including AWC), there was little overall change when averaged across all areas and types (up 0.7%), but the following cities increased their supply of single family detached homes far more than average:

Rio Verde (up 34%)
Fountain Hills (up 20%)
Gold Canyon (up 19%)
Sun City West (up 18%)
Sun City (up 15%)
Avondale (up 14%)
Waddell (up 12%)
Sun Lakes (up 10%)
Surprise (up 9%)
Anthem (up 7%)
Scottsdale (up 6%)

The following had significant falls in active single family detached listing counts:

Youngtown (down 5%)
Queen Creek (down 6%)
Tempe (down 8%)
Apache Junction (down 9%)
Tonopah (down 12%)
Laveen (down 13%)

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.

Again, the overall average numbers hide discrepancies between different segments of the market. The monthly average sales price $/SF movements for the different price ranges are:

Price Range	Oct 2011 Avg $/SF	Sep - Oct 2011	One Year Change	Lowest $/SF	Lowest Date	Current $/SF Relative to Lowest $/SF
Below $100,000	$44.67	UP 2.3%	UP 3.0%	$41.63	Feb 2011	UP 7.3%
Below $25,000	$20.10	UP 3.8%	UP 4.7%	$17.92	Aug 2010	UP 12.2%
$25,000 to $49,999	$30.36	DOWN 1.6%	UP 5.4%	$28.07	Sep 2010	UP 8.2%
$50,000 to $74,999	$43.59	UP 3.2%	UP 2.4%	$40.81	Mar 2011	UP 6.8%
$75,000 to $99,999	$51.32	UP 2.5%	UP 1.1%	$48.94	Dec 2010	UP 4.9%
$100,000 to $124,999	$60.64	DOWN 0.9%	DOWN 1.0%	$58.53	Jan 2011	UP 3.6%
$125,000 to $149,999	$69.73	UP 0.2%	UP 1.3%	$66.43	Jan 2011	UP 5.0%
$150,000 to $174,999	$76.05	DOWN 0.3%	UP 2.6%	$74.10	Oct 2010	UP 2.6%
$175,000 to $199,999	$82.39	DOWN 0.8%	DOWN 0.1%	$81.58	Mar 2011	UP 1.0%
$200,000 to $224,999	$88.48	UP 0.8%	UP 1.8%	$85.96	Feb 2011	UP 2.9%
$225,000 to $249,999	$92.90	DOWN 0.5%	DOWN 0.5%	$90.80	Aug 2011	UP 2.3%
$250,000 to $274,999	$98.98	UP 6.2%	UP 4.3%	$95.57	Jan 2011	UP 6.7%
$275,000 to $299,999	$101.81	DOWN 0.9%	DOWN 0.3%	$100.67	Jun 2011	UP 1.1%
$300,000 to $349,999	$114.05	UP 7.4%	UP 8.1%	$101.90	Feb 2009	UP 11.9%
$350,000 to $399,999	$116.00	DOWN 3.2%	DOWN 3.4%	$111.98	Jan 2009	UP 3.6%
$400,000 to $499,999	$132.77	UP 2.9%	UP 4.2%	$126.12	Mar 2009	UP 5.3%
$500,000 to $599,999	$149.22	UP 1.8%	UP 2.1%	$139.66	Sep 2010	UP 6.8%
$600,000 to $799,999	$168.75	UP 1.6%	UP 3.4%	$157.43	Aug 2010	UP 7.2%
$800,000 to $999,999	$188.48	DOWN 7.3%	UP 5.4%	$177.33	Sep 2010	UP 6.3%
$1,000,000 to $1,499,999	$241.31	UP 4.0%	UP 20.4%	$191.18	Sep 2010	UP 26.2%
$1,500,000 to $1,999,999	$234.11	DOWN 6.2%	UP 0.3%	$221.50	Nov 2010	UP 5.7%
$2,000,000 to $2,999,999	$326.34	UP 10.9%	UP 2.5%	$288.90	Jul 2010	UP 13.0%
$3,000,000 and Above	$385.24	DOWN 7.3%	UP 10.9%	$347.46	Oct 2010	UP 10.9%

We can see that there were no price ranges hitting new lows last month.

Below $150,000 recent pricing tends look healthy and on a strong upward trend.

Above this point the picture is rather mixed.

All but 5 ranges are showing price appreciation for the last 12 months.

So why does the overall market number not show price appreciation?

The reason is that the sales volume has decreased in the upper ranges so the more expensive homes make less contribution to the overall mix, driving the overall average down.

Maricopa County Foreclosures
New notices were down 4% to 4,354 in October.

Trustee sales were down 17% to 2,364 the lowest number since March 2008.

Sales to third parties were 1,125 leaving only 1,239 going back to the lenders - the lowest total since October 2007.

REO inventory is down to 10,451 almost exactly half of what it was 12 months ago.

Oct. 15: Arizona Real Estate Pricing Update and Forecast

2011-10-30T18:20:00.000-07:00

Market Summary for the Beginning of October

Sales volumes dropped in September while supply failed to decline for the first time since December 2010.

To compensate we saw positive pricing movement for the first time since the second quarter.

Looking into the ARMLS data across all areas and types we see the following:

Sales per Month: 7,832 in September - down 11% from August but up 17% from this time last year.

Active Listings (including AWC): 26,869 on October 1 - up 0.2% from September 1 but down 40% from this time last year.

Active Listings (excluding AWC): 19,327 on October 1 - up 0.6% from September 1 but down 50% from this time last year.

Pending Sales: 10,841 on October 1, down 5.8% from August 1, but up 12.4% compared with this time last year.

Listing Success Rate: 75.7% on October 1 - up from 74.5% on September 1 and up significantly from 56.9% on October 1, 2010.

Contract Ratio: 95.2 on October 1, down from 99.5 on September 1 but dramatically up from 40.0 last year at this time.

Days Inventory: 99 on October 1, the same as September 1 but dramatically down from 179 at this time last year

Cromford Market Index™: 159.3 on October 1, up from 155.6 on September 1 and 85.4 on October 1, 2010.

Sales Price as a Percentage of List: 96.70% on October 1, almost the same as 96.72% on September 1 but up from 95.43% on October 1, 2010

We can see that all these numbers are far better than 12 months ago but most are not as good as last month.

However the Cromford Report Index™ continued to improve. This is because this index is a seasonally adjusted measure and it is normal for inventory to increase between September and October.

In fact the inventory increased only 0.2%, far less than in an average year and causing most of the improvement in the index.

It is also normal for sales volume and pending listings to decline between September and October.

This year sales volumes fell faster than pending sales, which is partly due to the decline in REO listings. With fewer lender-owned and HUD properties available, last year's sales volume for REOs is no longer sustainable.

We now see demand in slight decline and expect to see the Cromford Market Index™ fall back from its recent highs as a result.

REOs are losing market share very quickly now. Fewer trustee sales are taking place.

There were 2,689 residential trustee sales in Maricopa County during September 2011, 44% fewer than the 4,808 of September 2010. In addition a larger percentage of these auctions are now won by third parties (42% in September 2011 versus 20% a year ago). So the quantity of homes reverting to the beneficiary is dropping extremely fast.

Only 1,280 single family homes went back to the lenders in Maricopa County in September 2011. This is the lowest total since November 2007. It is also 61% lower than the 3,289 that they received in September 2010. They are selling far more than this number through ARMLS each month and so the lenders' inventory is being rapidly depleted.

It is a clear sign of the strength and dominance of negative sentiment that this remarkable turn round is mostly overlooked. At the same time, a completely irrelevant increase in foreclosures between July and August (due entirely to August having 23 trustee sale days instead of July's 20) managed to make headlines in the local papers. When bad news is amplified like this and good news is ignored we know sentiment has swung too far.

For the housing doom fans who like foreclosures, September 2011 was a pretty dismal month.

There were a total of 4,544 new notices issued in Maricopa County of which 4,335 were residential. This is 39% lower than September 2010. This new number is actually slightly higher than April through July 2011, but 15% lower than last month and lower than every month prior to April until we get all the way back to December 2007.

The downward trend has slowed but remains in place. The bigger news is that there were only 2,840 trustee sales of all property types. This is 44% down from September 2010. This is also the lowest number since March 2008 (except for November 2010 when Bank of America completely halted its trustee sales).

Foreclosures are clearly well past their peak and the short sale is looking likely to overtake the foreclosure in the coming months as the primary mechanism to resolve homeowners' financial distress.

Pricing
After hitting a low point in late August and again in mid September, pricing is on a slight upward trend again.

The monthly median sales price has climbed from $107,000 on August 18 to $114,950 on October 3 (all areas & types).

That's a 7.4% increase in less than 7 weeks and illustrates how violently the monthly median sales price reacts when REOs start disappearing from the mix and increasing in price at the same time.

For Greater Phoenix REOs the monthly median sales price has jumped from $80,000 to $86,400 in the same period, an 8% increase. Pricing for short sales and foreclosures has not followed suit and neither have sales prices for normal sales. In fact pricing has been a little weaker at the higher price points cancelling out some of the gains at the bottom of the market.

The overall average price per sq. ft. is up only modestly. Having hit a decade low of $78.51 per sq. ft on September 15, we are now looking at $79.81 per sq. ft. for October 3, a bounce but not a very convincing one. The most encouraging sign is that the pending $/SF has finally started to change direction and is moving up again after trending downward for a prolonged 15 month period since May 2010. We wait with bated breath to see if it can keep this up throughout October.

Source: The Cromford Report, Oct. 15, 2011

Sellers Say Their Homes Are Worth More

2011-10-16T09:32:00.000-07:00

Daily Real Estate News | Friday, September 16, 2011

Seventy-five percent of home owners say their homes are worth more than the recommended listing price, according to real estate professionals recently surveyed by HomeGain.

On the other hand, 68 percent of home buyers say homes are overpriced.

However, home owners may be getting more realistic about falling home values.

Forty-five percent of home owners say they expect home values to decrease within the next six months, while 47 percent of real estate professionals say they expect values to also decrease within that time period.

HomeGain surveyed more than 500 real estate professionals and 2,200 home owners for its third quarter home values survey.

Top 5 States Where Home Prices Will Rise in the Next 6 Months

Real estate professionals surveyed were most optimistic about these housing markets to see a rise in home values in the next six months:

Arizona
Florida
Texas
California
Ohio

Top 5 States Where Home Prices Will Fall in the Next 6 Months
Real estate professionals surveyed expected these housing markets to see a drop in home values in the next six months:

New Jersey
Pennsylvania
North Carolina
Georgia
Virginia

Sources: “HomeGain Releases 3rd Quarter 2011 National Home Values Survey Results,” HomeGain (September 2011)

http://realtormag.realtor.org/daily-news/2011/09/16/sellers-say-their-homes-are-worth-more

It's Time to Buy That House

2011-10-15T09:25:00.000-07:00

U.S. house prices have plunged by nearly a third since 2006, and homeownership rates are falling at the fastest pace since the Great Depression.

The good news? Two key measures now suggest it's an excellent time to buy a house, either to live in for the long term or for investment income (but not for a quick flip).

First, the nation's ratio of house prices to yearly rents is nearly restored to its prebubble average.

Second, when mortgage rates are taken into consideration, houses are the most affordable they have been in decades.

Two of the silliest mantras during the real-estate bubble were that a house is the best investment you will ever make and that a renter "throws money down the drain."

Whether buying is a better deal than renting isn't a stagnant fact but a changing condition that depends on the relationship between prices and rents, the cost of financing and other factors.

But the math is turning in buyers' favor.

Stock-oriented folks can think of a house's price/rent ratio as akin to a stock's price/earnings ratio, in that it compares the cost of an asset with the money the asset is capable of generating.

For investors, a lower ratio suggests more income for the price.

For prospective homeowners, a lower ratio makes owning more attractive than renting, all else equal.

Nationwide, the ratio of home prices to yearly rents is 11.3, down from 18.5 at the peak of the bubble, according to Moody's Analytics. The average from 1989 to 2003 was about 10, so valuations aren't quite back to normal.

But for most home buyers, mortgage rates are a key determinant of their total costs.

Rates are so low now that houses in many markets look like bargains, even if price/rent ratios aren't hitting new lows. The 30-year mortgage rate rose to 4.12% this week from a record low of 3.94% last week, Freddie Mac said Thursday. (The rates assume 0.8% in prepaid interest, or "points.") The latest rate is still less than half the average since 1971.

As a result, house payments are more affordable than they have been in decades.

The National Association of Realtors Housing Affordability Index hit 183.7 in August, near its record high in data going back to 1970. The index's historic average is roughly 120.

A reading of 100 would mean that a median-income family with a 20% down payment can afford a mortgage on a median-price home. So today's buyers can afford handsome houses—but prudent ones might opt for moderate houses with skimpy payments.

For example, the median home in the greater Phoenix market, including houses, condos and co-ops, costs $121,700, according to Zillow.com. With a 20% down payment and a 4.12% mortgage rate, a buyer's monthly payment would be about $470. Rent for a comparable house would be more than $1,100 a month, according to data provided by Zillow.com.

Of course, all of this assumes mortgages are available—no given now that lending standards have tightened.

But long-term data on down payments and credit scores suggest conditions are more normal than many buyers think, according to Stan Humphries, chief economist at Zillow. "If you have good credit, a job and a down payment, you can get a mortgage," Mr. Humphries says. "There's more paperwork and scrutiny than five years ago, but things are pretty much like they were in the '80s and '90s."

Not all housing markets are bargains.

Mr. Humphries says Zillow has developed a new price/rent ratio that uses estimates for each individual property rather than city medians, to better reflect the choices facing typical buyers.

A fresh look at the numbers suggests Detroit and Miami are plenty cheap for buyers, with price/rent ratios of 5.6 and 7.7, respectively. New York and San Francisco are more expensive, with ratios of 17.6 and 17.2, respectively. The median ratio for 169 markets is 10.7.

For investors seeking income, one back-of-the-envelope way of seeing how these numbers stack up against yields for other assets is to divide 1 by the price/rent ratio, resulting in a rent "yield." The median market's rent yield is 9.3% and Detroit's is 17.9%.

Investors would then subtract for taxes, insurance, upkeep and other expenses—costs that vary widely. But suppose total costs were 4% of the purchase price. That would still leave a 5.3% rent yield in the typical market. With the 10-year Treasury yield at 2.2% and the Standard & Poor's 500-stock index carrying a dividend yield of 2.1%, rents for residential housing in many markets look attractive.

A few caveats are in order. First, not all transactions are average ones. Even in low-priced markets, buyers should shop carefully. Second, prices could fall further. Celia Chen, a senior director at Moody's Analytics, expects prices to drop 3% before bottoming early next year and rising slowly thereafter.

"If the economy slips back into recession, however, we could easily see a 10% drop," Ms. Chen says.

And property "flipping" can be dangerous even when prices are rising. That is because, absent a real-estate boom, house price gains simply aren't that exciting. Research by Yale economist Robert Shiller suggests houses more or less track the rate of inflation over long time periods.

Houses aren't the magic wealth creators they were made out to be during the bubble. But when prices are low, loans are cheap and plump investment yields are scarce, buyers should jump.

—Jack Hough is a columnist at SmartMoney.com. Email: jack.hough@dowjones.com

SOURCE:
http://online.wsj.com/article/SB10001424052970204774604576629443313035736.html

Luxury Real Estate Market Picks Up

2011-09-21T16:09:00.000-07:00

Daily Real Estate News | Wednesday, September 21, 2011

In luxury home markets, bidding wars are back and homes are selling quickly, serving as a stark contrast to everywhere else.

"Luxury is the best performing segment of the housing market right now," says Stan Humphries, Zillow.com’s chief economist.

Prices of $1 million-plus properties have risen 0.7 percent since February. Meanwhile, prices of homes under $1 million have fallen more than 1.5 percent, according to Zillow.

A rebound in Wall Street has helped fuel a thirst again for mansions in the Hamptons and on Long Island, as well as luxury co-ops in New York City, where closings are returning to 2007 levels. Also, a tech boom is driving sales in the luxury market in Silicon Valley, where twice as many homes have sold for $5 million or more this year than the year prior.

International buyers are a big part of the rebound in the luxury market, housing experts say. Foreign buyers purchased $82 billion worth of U.S. residential real estate last year--an increase from $66 billion in 2009. In Florida, foreign buyers now make up a third of all home purchases, up from 10 percent in 2007.

SOURCE: http://realtormag.realtor.org/daily-news/2011/09/21/luxury-real-estate-market-picks-up

Phoenix new home sales up 26 percent in August

2011-09-08T16:15:00.000-07:00

Phoenix Business Journal by Jan Buchholz

Date: Monday, September 19, 2011, 11:34am MST

New-home sales improved in August, according to the Phoenix Housing Market Letter produced by RL Brown Reports.

There were 632 new closings in August, compared with 500 in August 2010.

The numbers were down for the year to date, however: There were 4,186 new home closings from January through August, compared with 5,657 for the first eight months of 2010.

The same trends held true for building permits. They were up from 504 in August 2010 to 692 in August 2011, but for the year to date they were down from 5,170 to 4,612.

RL Brown also tracks resales, including homes not listed on the Arizona Regional Multiple Listing Service . Resales were up for both the month and the year to date.

There were 8,605 resales in August and 67,804 for the year to date, compared with 6,623 last August and 61,730 for the first eight months of 2010.

The median price for new-home sales in August was $210,244, compared with the median resale home price of $109,000.

As for the most active builders, Pulte closed escrow on 65 homes, including its Del Webb and Centex divisions. That was followed by D.R. Horton, with 62 closings, and Blandford Homes, with 47.
Other builders with strong sales included Shea Homes , Meritage Homes, Fulton Homes, Taylor Morrison, Lennar Home, K Hovnanian, Beazer Homes and Richmond American.

SOURCE: http://www.bizjournals.com/phoenix/news/2011/09/19/phoenix-new-home-sales-up-26-percent.html

September 1: Arizona Real Estate Market Summary

2011-09-01T10:00:00.000-07:00

Sales per Month: 8,734 in August - up nearly 3% from July and up 26.5% from this time last year.

Active Listings (including AWC): 26,820 on September 1 - down 3.5% from August 1 and down 37% from this time last year.

Active Listings (excluding AWC): 19,216 on September 1 - down 4.8% from August 1 and down 47% from this time last year.

Pending Sales: 11,508 on September 1, up 0.2% from August 1, and up 17% compared with this time last year.

Listing Success Rate: 74.4% on September 1 - almost the same as on August 1 and up significantly from 57.5% on September 1, 2010.

Contract Ratio: 99.5 on September 1, up from 94.5 on August 1 and 41.3 last year at this time.

Days Inventory: 99 on September 1, down from 105 on August 1 and 172 at this time last year

Cromford Market Index™: 155.6 on September 1, up from 151.5 on August 1 and 85.5 on September 1, 2010.

Sales Price as a Percentage of List: 96.79% on September 1, up from 96.55% on August 1 and 95.75% on September 1, 2010

Please don't waste time looking for negative signals among these numbers. There aren't any.

The numbers say the market is in very good shape with demand far outstripping supply.

However most potential homeowners (understandably) would disagree.

Normal home buyers tend to pay far more attention to their emotions than local housing market data. Most people are still experiencing too much fear to consider home ownership or upgrading, with an uncertain economy, poor employment statistics and the psychology of crowds discouraging them from taking advantage of the lowest pricing in over a decade, even with low interest rates as the icing on the cake. In addition we have some very real factors keeping pricing down.

Appraisals are almost universally conservative, often coming in lower than the buyer is willing to pay.

Lending is highly constrained by extremely cautious underwriting.

A large number of homeowners have negative equity putting a damper on their financial plans. In fact almost everything is the exact opposite of the first half of 2006, when the numbers indicated clearly that the market was headed for disaster but nobody paid any attention.

Then we could see appraisals supporting ever increasing prices, lending policies were more relaxed than ever and everybody seemed to believe that prices could only go up. Indeed they believed this right up to the point of collapse.

Now it seems to be popular to believe that prices will fall further.

Indeed with the current negative sentiment it is certainly possible they may fall a little further for a short while, especially if the upper end of the market stays quiet. However it is also inevitable that they will at some point increase from the current level and the market statistics indicate that this may be sooner than most people think.

When demand is well above normal and supply is well below normal, prices cannot fall indefinitely.

In the past the laws of supply and demand have only been ignored for about 18 months at maximum. Then we have seen them cut in with a vengeance. We have gone 9 months so far with the market indicators and pricing going in opposite directions.

SOURCE: The Cromford Report

Paradise Valley named a Top-Earning Town in America

2011-08-16T09:17:00.000-07:00

PARADISE VALLEY - Paradise Valley has been named one of the top-earning towns in America, according to CNN Money.

The town ranks No. 11 out of 25, with a median family income of $195,637 and a median home price of $1.185 million.

According to CNN Money, Paradise Valley is known for its residents, resorts and zoning codes, because they "...are strictly enforced to maintain quiet serenity and unspoiled views of local vistas including Camelback and Mummy Mountains and Indian Bend Wash."

11. Paradise Valley, AZ

Population: 15,050

Median family income: $195,637

Median home price: $1,185,000

This Sonoran Desert town is known for R&R -- residents and resort dwellers. Its zoning codes are strictly enforced to maintain quiet serenity and unspoiled views of local vistas including Camelback and Mummy Mountains and Indian Bend Wash.

Nine tony resorts provide luxury accommodations for visitors. Out-of-towners can even train for triathlons under the supervision of Olympians at the Sanctuary on Camelback Mountain. Spa treatments, plush rooms and stunning natural surroundings help restore weary muscles and spirits at the end of the day.

Residents have captured some prime real estate of their own. A 13,000 square-foot private estate on Mummy Mountain with a citrus grove and panoramic views can cost more than $20 million.

Paradise Valley stats

	City stats	Best places avg.
Median family income (per year)	$195,637	$99,975
Job growth % (2000-2010)*	13.93%	24.63%
See jobs near Paradise Valley
Median home price	$1,185,000	$265,929
See Paradise Valley homes for sale
Test scores reading (% above/below state average)	26.3%	25.1%
Test scores math (% above/below average)	42.0%	24.7%
Personal crime incidents (per 1,000)	1	1
Property crime incidents (per 1,000)	22	16
Restaurants (within 15 miles)	4,888	2,758
High temp in July ° F	104.2°	84.1°
Low temp in Jan ° F	39.2°	20.9°
Median age	44.3	36.35

Financial	City stats	Best places avg.
Median family income (per year)	$195,637	$99,975
Family purchasing power (annual, cost-of-living adjusted)	$194,470	$95,706
State sales tax	5.60%	5.75%
State income tax rate (highest bracket)	4.54%^I	7.37%
State income tax rate (lowest bracket)	2.59%^I	3.13%
Auto insurance premiums (Average price quotes, for the state)	$1,454	$1,687
Job growth % (2000-2010)*	13.93%	24.63%

Housing
Median home price	$1,185,000	$265,929
Average property taxes	N.A.	$4,083

Education
Colleges, universities and professional schools (within 30 miles)	20	28
Test scores reading (% above/below state average)	26.3%	25.1%
Test scores math (% above/below average)	42.0%	24.7%
% students attending public/private schools (located within town limits)	58.1/41.9	92.1/7.9
Quality of life
Air quality index* (% of days AQI ranked as good)	27.0%	78.5%
Personal crime incidents (per 1,000)	1	1
Property crime incidents (per 1,000)	22	16
Median commute time (in minutes)	19.9	23.3
% population with commute 45 mins. or longer	5.4%	15.4%
% population walk or bike to work	2.0%	2.6%
Leisure and culture
Movie theaters (within 15 miles)	61	30
Restaurants (within 15 miles)	4,888	2,758
Bars (within 15 miles)	376	208
Public golf courses (within 30 miles)	246	165
Libraries (within 15 miles)	67	74
Museums (accredited by AAM; within 30 miles)	0	10
Ski resorts (within 100 miles)	0	16
Arts funding (Dollars per person of state funds spent on arts)	0.1	1.2
Weather
Annual rainfall (inches)	7.78	39.07
% clear days in the area	58	27
High temp in July ° F	104.2°	84.1°
Low temp in Jan ° F	39.2°	20.9°
Meet the neighbors
Median age	44.3	36.35
Completed at least some college (% of residents)	90.4%	74.5%
Married %	71.3%	61.5%
Divorced %	4.9%	7.6%
Racial diversity index (100 is national average; higher numbers indicate greater diversity)	28.7	71.0

See all

More financial, housing, school, quality of life stats

From the September 2011 issue

Notes: *County data

(I) Income tax notes:
For joint returns, taxes are twice the tax on half the couple's income.

(II) Sales tax notes:
Arizona has no sales tax but does have a 5.6% GRT called the transaction privilege tax.

SOURCES:

http://www.abc15.com/dpp/news/region_northeast_valley/paradise_valley/paradise-valley-one-of-top-earning-towns-in-america#ixzz1cHZX6tBG

http://money.cnn.com/galleries/2011/moneymag/1108/gallery.best_places_top_earning_towns.moneymag/11.html

Phoenix foreclosure rates drop

2011-08-08T16:18:00.000-07:00

Phoenix Business Journal by DiAngelea Millar
Date: Thursday, September 8, 2011, 11:25am MST

Phoenix-area foreclosure rates decreased from June of 2010 to June of this year, according to new data from CoreLogic.

CoreLogic measures foreclosure rates by the current number of loans in the foreclosure process. The rate of foreclosures in the Phoenix-Mesa-Glendale area for outstanding mortgage loans is 3.59 percent. That’s down from 4.25 percent in June 2010.

The mortgage delinquency rate for the area has also decreased, from 12.6 percent in June 2010 to 9 percent in June 2011. CoreLogic measures this rate by calculating the percentage of loans that are more than 90 days delinquent.

Foreclosures in the Phoenix area are higher than the national rate, which is 3.46 percent.

SOURCE:
http://www.bizjournals.com/phoenix/news/2011/09/08/phoenix-foreclosure-rates-drop.html

Cashing in on rental property

2011-08-02T16:25:00.000-07:00

By Jeff Wallach @Money September 2, 2011: 6:07 AM ET

(MONEY Magazine) -- Most of the news lately about real estate has been dismal: Home prices are swooning, foreclosures ballooning.
There is, however, one bright spot: the rental market, where demand is up and rents are rising. That's partly because those foreclosures have turned more than 4 million former homeowners into renters, but also because many other prospective homeowners, worried about losing their jobs or housing prices falling a lot further still, are reluctant to buy now.

As with many investments, the best time to get in is when most others are sitting on the sidelines. To figure out whether you can benefit by investing in rental property, here's what you need to know.

THE CASE FOR BUYING NOW

Many factors make this a great time to invest. Mortgage rates are at a 40-year low, and homes in many areas are ultra-cheap. Meanwhile, demand for rentals has risen in more than 500 cities, according to recent Census data. That, in turn, has enabled landlords to charge more. Hotpads.com, a real estate research firm, reports that rents nationwide jumped 11.6% in 2010, to $1,320 a month.
You'll need that rental income to tide you over until home prices bounce back; in fact, the typical investor today plans to hold for 10 years, according to a survey by the National Association of Realtors.

If you can hang on that long, you've got a good shot at solid gains, especially if you're financing the home purchase. "Whereas leverage is dangerous when buying stocks, it can be a good long-term strategy with real estate," notes real estate investor and Columbia University adjunct finance professor Marshall Sonenshine.
The big catch: "Can you afford to hold the property that long and not need the equity for your kid's college fund?" says Sonenshine. Or whatever other pressing need might crop up.
You'll also face some tough financing rules. Most banks now require a down payment of at least 20% to 25% and evidence you have enough cash to cover six months' worth of mortgage, tax, and insurance payments.

HOW TO FIND A GOOD DEAL

Investment real estate is like produce: It's best bought locally. "Buy something you can get to in 10 minutes," says Seattle real estate investor Bill Snyder.
Familiarity with the neighborhood also limits nasty surprises like a noisy bar or a nearby development competing for renters.
Work with a local realtor who has experience with rentals and can help you assess how attractive a given home will be to tenants.

And while prices on multifamily dwellings haven't dropped as much as they have on single-family homes, don't ignore plexes: Intake from a few rents instead of just one will boost your cash flow; a single vacancy won't hurt as much; and you could benefit from economies of scale for things like appliances and painting. But stick to buildings with four units or fewer to avoid stricter financing requirements, such as a bigger down payment and higher mortgage rates.
Once you've identified candidates, crunch the numbers. The goal: to make sure your rental income will at least cover your loan payments, plus a 20% cushion to handle repairs, vacancies, and property management.
To figure out what you'll garner in rent, ask sellers for recent leases, says Snyder, and double-check their numbers by perusing sites like Rentometer and Craigslist for similar rentals in the neighborhood.
Assume your mortgage rate will be at least a half-point higher than rates on owner-occupied properties. Factor in insurance and property taxes, and bank on a 5% vacancy rate. Otherwise, "one empty month can kill you," says Ellie Berlin, a broker with Houlihan Lawrence in Larchmont, N.Y.

KNOW WHAT YOU'RE IN FOR

Brush up on your people skills: Owning rentals also means responding to tenant complaints, like the 2 a.m. phone call about a broken toilet. Want to palm off the grunt work? You can hire a handyman (around $45 an hour) or a management company (8% to 10% of monthly income plus a half-month's rent for filling vacancies), but the luxury will eat into cash flow.
To find your own tenants, creative ads on Craigslist are your best bet. Run credit and reference checks (National Tenant Network, at ntnonline.com, can help). And invest in small touches to make your place stand out, such as cool lighting fixtures or antique door hardware. Those will pay off when it's time to sell too.

SOURCE:
http://money.cnn.com/2011/08/30/real_estate/rental_property_investing.moneymag/index.htm

10 best cities to buy a rental property

Las Vegas has long been a Mecca for gamblers, but now it's the go-to place for real estate investors who want to clean up on rental properties.

Nationwide, the opportunities for this kind of investing haven't been this good in years. Not only are home prices way down but interest rates are near all-time lows and rents are climbing.

In May, according to the National Association of Realtors, 19% of home purchases were for investment, up from 17% in 2010.

Nowhere are potential profits better than in Las Vegas, according to a new survey by Local Market Monitor, a North Carolina-based firm that specializes in forecasting real estate prices. Local Market Monitor put together the survey for HomeVestors, a franchise real estate investing company. The survey ranked 316 markets by estimated returns on investment in single-family home rental properties.

"Overall, the highest ratings are in markets where home prices have fallen substantially," said Ingo Winzer, founder of Local Market Monitor. "Home prices in these markets are also below average, so empty homes are easily turned into competitive rental properties."

The cities were ranked by estimated future returns compared with the projected national average return. According to Local Market Monitor's data, for example, investors in Las Vegas who rent out the properties they buy now will have a 4.7% higher return than the 5.3% national average.

The potential for profits has to be high for investors to enter into this risky market: Winzer expects home values to fall another 7% over the next three years.

Here are the top 10 markets ranked highest in investment return.

Http://money.cnn.com/galleries/2011/real_estate/1107/gallery.best_investment_markets/?iid=EL