I tend not to cover local market news at BloodhoundBlog, but this is big, and I expect it might be replicated across the country. I’ll be writing about it tomorrow for Saturday’s Republic, but it won’t be news-pages news for another ten days or so.
Here’s the news, in any case:
May was a very strong month for clearing bread-and-butter inventory in the Metropolitan Phoenix real estate market. We track sales of newer suburban tract homes, with records going back to January of 2004. May was the strongest month for those homes since May of 2007, with the best month before then being November of 2006.
Price are down, month over month, and not just a little, so May’s results no doubt reflect the sale of a lot of lender-owned properties. But inventories of these same homes are down 7% from April and over 14% from March. The implied absorption rate from May’s results is 5.2 months, down from 8.4 months for April.
The lender/title month ended on a Friday, so it will be Wednesday or Thursday before I’ll be willing to commit to solid numbers. As a matter of anecdotal evidence, I called yesterday about a very market-weary short sale. After months of no activity, three offers came in over the weekend. The seller multiple countered, with the current high-bid being $17,000 over list. We won’t know for sure for two or three months after the fact, but May or June could be the bottom of the market in Phoenix.
Technorati Tags: arizona, arizona real estate, phoenix, phoenix real estate, real estate, real estate marketing
Eileen Pettengill says:
Greg, we are seeing the same thing in Vegas.Hope that light at the end of the tunnel is not a train!
Eileen
June 3, 2008 — 8:27 am
Michael Fisher says:
I too have kept records going back even further in my market and have reached the same conclusion. Before an office meeting at the beginning of May, I reviewed my stats and conferred with several agents and made the bold announcement that we had reached the bottom! I now have a nearly complete picture of May and I feel even more confident in my proclamation. Unlike Greg who will go public in the Arizona Republic, I haven’t yet done the same with the Orange County Register. I know the bubbleheads will call us permabulls and shout us down but if we know the trend in our markets, we should all be as bold as Greg.
June 3, 2008 — 9:04 am
Eric says:
Greg,
Which prices do you think represent “the bottom”? The lender-owned prices being set in your previous post, or the normal prices we see right now?
I’m in the market to buy but have decided to wait another year and renew my lease, as the houses I’m looking at, still seem to be overpriced by a bit.
Do you see the lender owned homes selling for 100k less than comps likely to drag those other prices down to a more buyer-favorable number?
For my own selfish reasons, I’m hoping all of the lender-owned homes start selling like hotcakes at rock-bottom prices and buoy the current prices down to their level.
At least, I know that would be enough for me to cancel my lease mid-way through to buy a home rather than wait it out.
At the moment though, I still don’t see most sellers pricing their homes at prices that are designed to quickly move real estate *shrug*
Be interested in your opinion 🙂
June 3, 2008 — 10:22 am
Greg Swann says:
> Do you see the lender owned homes selling for 100k less than comps
I don’t see that happening at all, at least not at middle-class price points. In any case, a sale like that would be the comp for that floorplan, allowing for the cost of restoration.
That’s the point. If you’re a buyer, how much should you be willing to pay for a turn-key home? The cost of a lender-owned home plus the cost to restore it plus a convenience premium. You shouldn’t pay more than that, and your appraiser won’t let you anyway.
So how much can a turn-key home command? Not ask — command at Close of Escrow. That much and no more for now. Homes priced appropriately to the market, reflecting their relative condition, will sell. The rest won’t.
You might not be wrong to lease, but it might make sense to ask for a six month lease with a unilateral option to renew, month-to-month, for the following six months. I think we’re at the bottom, but it shouldn’t hurt you too much to wait long enough to make sure.
June 3, 2008 — 10:36 am
Eric says:
Thanks 🙂
And I agree.. I’d like to jump on it now, but while I see things softening, I don’t see a hard committal to re-price on the existing homes for sale. They’ve been on market for 2-3 months without any bites and seem content to sit for another 4-5 more months before thinking price could be the issue..
We have a pretty hefty inventory in my area and it will be nice to see them price themselves closer to the properties that are moving at a quick pace. Even the new home builders out here haven’t sold more than a dozen homes in the past year for their lots.
You know it’s bad when the SALES OFFICE is the house with the weed problem. Being on the south Gilbert/Chandler border, I’m looking forward to seeing all of these half-started projects finish. The bubble really hit them hard and they’ve stagnated over the past 1-2 years while dealing with financing problems =/
June 3, 2008 — 11:13 am