Phoenix Employeers Are Lootking to Hire

It seems like news is released every day on the recovery here in the greater Phoenix/Scottsdale market. 

A recent Manpower Employment Outlook Survey indicated that 20 percent or 1 out of five employers were planing to hire in the second quarter.  This is up from 17 percent a year ago.

Mortgage Banking Revenues On the Rise

First quarter results are in and banks saw big gains in mortgage banking revenues and profits on the back of strong refinancing activity.  Part of this is due to the spreads between the mortgage rates and mortgage backed securities being twice their normal.  This is good for the banks to help them get on more sound financial footing but some would argue that mortgage rates, already below 4%, should fall even more.  With rates so low as they are, most would prefer the financial system get on more sound footing rather than have lower borrower rates which would have minimal effect on the monthly payment.

Arizona Top State for Startups

A recent Phoenix Business Journal Article revealed that Arizona is rated as the top state for entrepreneurial activity and Phoenix was rated as the third highest city in the nation.  This is according to the Kauffman Foundation research.

It revealed that 520 of every 100,000 adults stared new businesses last year, well above the 320 per 100,000 national average.

Vacation Home Sales On The Rise

According to the Wall Street Journal, sales of vacation homes are back on the rise.  After a decline of 56 percent between 2006 and 2010, sales were up 7 percent in 2011.  This is good news especially for the Arizona and Florida markets.

Phoenix Housing Inventory Plummets

According to an ASU report released at the end of March 2012, inventory levels have dropped 42 percent and foreclosure sales are down 52 percent from the prior year.  Foreclosures and short sales now only make up 20 percent of total sales.

Arizona Foreclosure Rate Falls

The Arizona mortgage delinquency rate fell to 6.35 percent in the first quarter of 2012, down from 8.23 percent during same same period last(2011) year.  This is according to the Mortgage Bankers Association.  The actual foreclosure rate was 3.57% compared to 4.81 percent a year prior.

What does this mean?  Fewer homes going to foreclosure lessens the inventory of homes for sale at a discount.  This in addition to falling inventories of traditional and short sales coupled with rising demand means upward pricing pressures are back.

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.