Tuesday, September 13, 2011

a Tale of Two Markets

Viewpoint 09/13/2011

a Tale of Two Markets

I haven't written many Viewpoints this year.  Not because I'm not following the market, and not because I don't enjoy writing, but because there haven't been many changes to write about.  We're already in September, and I haven't seen anything this year which is different from what I've written about over the last couple of years - how depressing...

Today I thought I'd share some thoughts on the current state of the market, as well as a few other interesting links.  Please read on.

Maricopa County Real Estate - A Tale of Two Markets

Links worth Reading

Evernote power tip

On a Personal Note

Maricopa County Real Estate - A Tale of Two Markets

It's definitely a seller's market out there.  Take a look at the current inventory level:

(all photos may be enlarged by clicking on them)

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12,491 Single Family homes for sale in Maricopa County.

Seems like a lot, until you compare that with the number of homes that have sold in the last 30 days (or are currently Pending Sale):

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15,264 Homes!  Holy Moly!

So, in 30 days, we'll put 15,265 homes into escrow, and there are currently 12,491 homes available for sale.  That means there's less than 1 month's inventory of homes available for sale!  Wow - that's a true seller's market.

And I'm not the only one seeing it.

Check out Dru Bloomfield, my friend & colleague, who wrote a post about a potential buyer trying to spread the word to would-be sellers out there that there aren't enough homes to buy.

Also see my broker & ultra blogger Jay Thompson, asking the mainstream media to mention some of the record sales numbers and other positives about the market, along with their usual doom & gloom stories.

Bottom Line - homes are flying off the shelves right now, often times with multiple offers and a bidding war among buyers (actual results for any given home &/or neighborhood may vary).  These are the sure signs of a seller's market.

It's definitely a buyer's market out there.  Take a look at the distressed activity and the sales prices from the charts below:

From my Distressed Activity post last month:

Occupancy of homes sold:

 

There are almost 3 times as many vacant homes selling as those which are occupied.  History, and common sense, tell us a seller with a vacant home will be more motivated to sell, and will most likely accept a lower sales price.  A 3 to 1 vacant home ratio is keeping prices low, which favors a buyer's market.

Type of Seller:

 

There are, and have been for the last couple of years, twice as many homes sold with some sort of bank-involvement than with traditional sellers who have equity in their home.  Again, we know banks are going to discount their homes more than traditional sellers want to.  So, the 2 to 1 bank-involved ratio works to keep prices low and favors the buyers.

From my Maricopa County Sales Charts post last month:

Average Price per Square Foot:

The average price per square foot is down 10% from last year, which was already much lower than the previous years.  It's lower than the previous bottom seen in January of this year, and it's trending downward over the last few months.  If this isn't a sure sign of a buyer's market, I don't know what is!

Next let's look at the foreclosure activity:

July 2011 Foreclosure Rate Heat Map:

Look at the foreclosure rate in these cities:

  • Laveen:  1 in every 22 homes is in some state of foreclosure
  • Queen Creek:  1 in every 37
  • Buckeye:  1 in every 50
  • Surprise:  1 in every 74
  • Gilbert:  1 in every 119
  • Peoria:  1 in every 173

There's no way the sellers can put upward pressure on prices when there are this many foreclosures.  And if there are this many foreclosures, with depressed pricing, in our suburbs, there's no way prices are going to trend significantly higher in the closer-in cities.  Score another point for a buyer's market.

The Tale of Two Markets

Ask any buyer out there, and it's a seller's market.  Not enough homes to choose from, homes are selling very quickly, the competition is fierce - it's just flat out difficult to buy a home right now.

Ask any seller out there, and it's a buyer's market.  Homes only get showing activity if they're priced very aggressively.  Even when competing against homes which aren't in as good shape - price higher to account for the higher quality, and risk sitting on the market while the other homes sell.  It's very difficult to sell your home right now, unless you're willing to compete heavily on price.

Personally, I've never seen such a two-headed market before.  And to be honest, I'm thankful for the number of investor-buyers out there who are absorbing the distressed activity as fast as they are.  If prices were higher, or interest rates were higher, or rents were lower..  If something changes and inventory starts to accumulate, we could be in for a world of hurt.  Fingers crossed we can keep moving forward until the eventual end of the bank-involved market, however long that takes.

Links Worth Reading

Inside and outside the industry, I found these links interesting.

Dru Bloomfield (mentioned twice in the same newsletter? – she had a great month of writing..!) found an inspection service which uses a special camera (infrared maybe?) to detect potential problems behind the walls.  Very cool.  Very useful.  Very James Bond. 

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Freshome.com published 30 Spectacular Infinity pools.  Summer's drawing to an end, but every one of these makes me want to jump in, relax, and find a cold beverage.  (while I eat my heart out!) 

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ZenHabits.net wrote The Amazing Power of Being Present.  A nice reminder of the need to, and some helpful hints for how to, slow down during a stressful, busy day.

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Economist Mish Shedlock wrote some Good news Bad news about foreclosures.  The news is better for states without judicial foreclosures, but bad news anywhere in the country is still an overall drag.

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Dilbert - we've all been there before!

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Evernote Power Tip - Linking to other notes

I’m an avid (evangelical?) user of Evernote.  One day soon I’ll write more about it, but for now I’ll just describe it like this:  Evernote is a place to remember and store EVERYTHING, and it’s always at your fingertips.  (and it’s FREE!)  I have it installed on my laptop, my desktop, my android phone, and an ipod touch, and all my notes are instantly available on every device.  Client notes, scanned pdf files, notes about the kids’ school and doctors, hotel confirmation numbers – everything – everywhere – easy.

If you haven’t used Evernote before, I suggest you check it out.  If you have, I thought you might like the following idea:

The newest version of Evernote’s Windows Desktop app (Version 4.5) allows you to link one note to another, and it’s really easy.  In the notes list, right-click on the note you want to link to (the destination note), and select Copy Note Link from the mouse menu that appears.  Then, in the note where you want the link, place your curser wherever you want the link, and hit paste.  (Edit => Paste, right click => paste, or ctrl + v  - they will all work).   You’ll see the title of the destination note in a hyperlink.  Easy peasy.

Here’s an example of where this would be useful.

Say you’re going on vacation, and you’ve done lots of research about where you’re going.  Maps, restaurants, entertainment and theme parks, hotel confirmation, whatever.

You can have one note called Vacation, which could serve as a table of contents, linking out to all your other research.  You might have one long note with lots of pictures & web clippings about things to do while you’re away.  You’ll have another note with hotel information.  You’ll have a third note with maps – screen clips, links to google maps, and directions.  Rental car confirmation.  A list of restaurants, with locations and menus clipped from the web.

Rather than trying to find the right note from your cell phone while you’re on the move, you can have one note easily accessible, with links to everything else you need.

Pretty cool feature.  I used to use this feature for my client files in OneNote; now that Evernote has it available I’ll probably start doing that as well.

On a Personal Note

I’ll call it a successful summer, all things considered.  (mostly considering the tough economic environment!)  The kids saw the beach (Santa Monica), the mountains (Pine, AZ), and the lake (Pleasant), and got to see plenty of family in between.  Plus a trip to the MLB All Star Weekend festivities.

Now we’re back in the school routine and heading full speed into fall.

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Your looking forward Realtor,

Chris Butterworth