Residential Real Estate Bidding Wars Are Back

Home buyers are stunned to see the bidding wars for properties coming back.  I posted in my blog "You Heard it Here First" back in November that the numbers were stacking up for a boost in sales prices.  There were many buyers waiting on the sidelines to see a bottom and they have jumped in to the buyer 'pool' at the same, even as inventory levels continue to decline.  Sellers, seeing this, are holding back if they do not need to sell and that leaves very little existing inventory with prospective homeowners competing with investors. 

This is not just a local phenomenon here in the Phoenix/Scottsdale market but appears to have a widespread nation wide reach.  One index that measures the number of contracts signed to purchase previously owned homes rose in March  to its highest level in two years gaining to 12.8% from 4.1% according to the Wall Street Journal. 

My personal opinion is that this will not stop until rent rates to sales price ratios decline and investors start falling away.  However, that means that housing prices will be higher when that happens.  Most indices including the Case Shiller Index for the Phoenix are market indicate we are back at 2000 to 2001 pricing so we do have a little ways to go to reach long term trend lines.  The only thing to put restraint on the rapid appreciation is the employment picture, but even that is improving in our market.

Scottsdale to Add 4,400 acres to Preserve

The city of Scottsdale has announced that there are plans to add about 4.400 acres to the McDowell Sonoran Preserve.  This would bring the city to around the halfway point of a total goal of 34,000 acres in the McDowell Mountains and surrounding areas.

Time to buy in the Phoenix real estate market

With prices stabilizing and actually rising year over year, historically low interest rates, falling foreclosures, Fannie Mae & Freddi Mac contemplating renting foreclosed homes instead of selling them, and now the Fed mulling over how to help households repair their balance sheets, there has been no better time in over a generation to purchase residential real estate here in the Phoenix market. 

Inventory is low and getting lower, so at some point prices were bound to start rising.   And now they have.  MLS statistics indicate a year over year increase of 6.36% in median pricing.  Yes, you heard that correctly.  Median prices based on MLS stats increased 6.36% year over year in Arizona's largest market. 

The Wall Street Journal agrees.  In a recent column, Jack Hough went into great detail on this subject.  If you have been waiting for the bottom, it has come and gone.  Time to start looking.

Phoenix Area Foreclosure Rate Declines

According to CoreLogic as reported in the Phoenix Business Journal, foreclosure rates continue to decline to a 3.1 percent rate as of November 2011, down from 4.8 percent a year earlier. 

The Real Estate Market-Now What?

First we had a frothy real estate market and prices rose rapidly keeping some out of the market and forcing others to make bad purchasing and loan decisions.  Then we have had several years of falling prices, foreclosures, short sales, bankruptcies ect.  What in the world can happen next?

Answer: Can you believe a shortage of inventory?  Yes, real estate professionals all over the country are reporting a shortage of housing inventory as the number of homes on the market are plummeting.  Here in the greater Phoenix market, inventory is as low as it was at the peak of the frothy market.  At some point, this is going to effect pricing.  In fact, in some neighborhoods, it already has with price stabilization and some appreciation.  Listing prices are on the rise so it appears a struggle between buyers and sellers and don't forget the loan underwriters and appraisers. 

Phoenix Housing Prices Up In Latest Case Shiller Release

The Phoenix area housing composite was the only market in the 20 city index to record a month over month increase from October to November of 2011.  With inventory near all time lows, this trend is expected to continue with year over year numbers to be in positive territory in the next one or two releases of data.

Arizona up in population rankings

According to the Phoenix Business Journal, Arizona is poised to overtake Indiana and become the 15th most populous state.  Population was expected to hit 6,553,719.

Careful of what you wish for

In a recent article, the Arizona Republic pointed out that those who are thinking of doing strategic foreclosures or sympathize with those who do may be doing their own pocketbooks harm.  As we so often forget, most loans are sold off to FNMA or Freddie MAC, so any loses on those loans is now costing us, the taxpayer.  They would have absorbed the costs themselves in the past but the government has stepped in due to their insolvency and the burden of the loss has been place squarely on our shoulders. 

Now the two government sponsored entities are getting banks to pony up for losses due to faulty underwriting but that is a drop in the bucket.  It is hard not to sympathize with people who are 30-50% underwater because we see big businesses do it all the time.  There is a sentiment out there that "Wall Street got theirs, where is ours?"  I would never be one to judge someone for what they decide to do but keep in mind, it is not harming the Banks as much as you think.  As usual, it is coming to rest on the shoulders of we, the taxpayers.

Wealthiest Zip Codes in the Phoenix MSA

The numbers are in from the end of last year and according to the Phoenix Business Journal the five wealthiest zip codes were, in order:

85253 Paradise Valley with a median net worth of $808,289 and average new worth of $1,716,970
85262 Scottsdale with a median net worth of $804,999 and an average net worth of $1,728,889
85263 Rio Verde Foothills with a medium net worth of $705,209 and an average net worth of $1,571,223
85266 Scottsdale with a median net worth of $699,486 and an average net worth of $1,590,101
85255 Scottsdale with a medium net worth of $646,958 and an average net worth of $1,507,681

Pending Sales up 14.9% in the West

The National Association of Realtors released pending sales data today and the west region lead all others with a 14.9% monthly gain!  Overall, pending sales nation wide were up 7.3% from last month.  For those who wish to make a home purchase consider this.  The affordability index is the best in years, interest rates at or near record lows, and now others are starting to make their moves into the market.  All of this coupled with record low inventory levels and fewer properties going into foreclosure would indicated to me that the market is poised for a rebound.  As I posted in the past few days, our market in Phoenix was the only one of the 20 city composite to show an increase in month over month pricing.  There was an old saying, "Never fight the Fed".  One should also never fight market supply and demand fundamentals. 

Phoenix Prices rise according to Case-Shiller Index

Phoenix was the only city in the 20 city composite to post a month to month gain according to the Case-Shiller numbers released today.  Prices were up .3%.  Inventory is near all time lows so this comes as no surprise to those who follow the numbers.

Year Over Year Pricing Increases In Phoenix Market Predicted: You Heard It Here First

Don't be surprised if you start hearing of year over year real estate pricing increases in the greater Phoenix market really soon.  After falling up through around a year ago, prices have started to rebound and we are going to see year over year pricing increases starting this next month.  This may be the news that causes momentum to pick up in pricing because we have very low inventory levels, over 40% fewer MLS listings than one year ago.  That translates to a 3.7 month supply of housing area wide.  Closer in markets are experiencing an even tighter market with impressive month over month price appreciation.  Interviews with investors at Trustees sales auctions indicate that prices are being bid up there too with fix and flip margins being squeezed by an increasing measure.  Hopefully, once these stats are reported, lenders will start looking for reasons to make loans instead of reasons to reject, adding more momentum.  From what the author is reading, several other markets are in much the same status.  The media template of doom and gloom may have to be re-designed to show a more balanced and more positive viewpoint.  Hopefully, this protracted nightmare is coming to an end.  I, for one, am ready for it.