Phoenix Leads Home Price Increases

In a recent article in the Phoenix Business Journal, it was reported that home values in both the metro Phoenix and Arizona markets eclipsed the rest of the nation once again in June......by a long shot. 

Core Logic reported on August 7 that Phoenix area home values, including distressed sales, surged nearly 17 percent year-over-year in June----the highest percentage of any metropolitan area in the nation.  In second place was Houston at 4.5% and then Washington DC Market at 3.3%. 

Statewide, the number was 13.8% eclipsing Idaho at 10.4% and South Dakota at 10.1%.  This compares to Nationwide numbers of 2.5% year over year and 1.3% up from May.  The good news is that only 4 states showed year over year declines.

More and more evidence is pointing to a sustainable housing recovery. 

Phoenix Number 5 For Income Growth

On Numbers published a new study recently that shows that only four regions experienced greater income growth from 1970 to 2010.  Personal income in the area was $4.3b in 1970 ad $152.8b in 2010.  That is an annual growth rate of 9.35%.

We The Taxpayer Made a Profit on Mortgage Debt

Will miracles never cease?  In a surprising announcement, the Treasury Department recently reported a 25 billion dollar profit on the mortgage bonds purchased at the height of the financial meltdown.  Treasury had spent $225 billion on purchase over 16 months before it began selling the securities last year.  While this may be bad news for purists, it would suggest the government can unwind a rescue package without roiling the markets.  I think that no matter where your philosophy is on this matter, we all pray we do not have to ever see this tool being used again in the future.  However, it appears to be another arrow in the quiver should the need arise.  Now if Fannie and Freddie can ever get us paid back that would be even better news!

Phoenix Prices Gain as Foreclosure Resales Dwindle: DataQuick by Esther Cho

The following article is by Esther Cho regarding the Phoenix real estate market.

After being known as one of the hardest-hit cities, Phoenix has been gaining recognition for its rapidly rising prices.

Dataquick reported the median sale price of a home in the Phoenix metro area in June rose for the seventh month in a row to $152,000, the highest level since late 2008. The figure is a 23.1 percent yearly increase from $123,500 in June 2011. In May 2012, the median sale price was $150,000.

DataQuick, which tracks real estate trends nationally via public property records, still found that June’s median sale price was 42.4 percent below the all-time peak of $264,100 in June 2006, but 28.4 percent higher than the median’s post-peak low of $118,347 in August 2011.

DataQuick explained one of the reasons behind the boost in the median sale price is the area’s mid- to high-end markets have represented a larger share of total sales.

In June, 34.1 percent of all sales were for homes priced above $200,000, compared with 25.6 percent a year ago.

Additionally, the portion of foreclosure sales has been diminishing. According to DataQuick, foreclosure resales, defined as homes that were foreclosed on in the prior 12 months, fell to 21.2 percent of the resale market in June. The figure is the lowest level since January 2008, when foreclosure resales accounted for 18.6 percent of the resale market.

In May, the foreclosure resale level was 24.3 percent and 49.6 percent a year ago. In March 2009, foreclosure resales hit a high-point at 66.2 percent.

The Phoenix area lost 2,087 properties in June to foreclosure, which is a 13.6 percent decrease from May and a 56.5 percent drop from a year ago.

The number of homes lost to foreclosure between January and June numbered 14,591, down 54.1 percent from the same period in 2011.

While the metro has taken a break from foreclosures, downward pressure on home prices is inevitable if the backlog of foreclosures held by lenders are released into the market.

Short sales increased month-over-month, accounting for 13.7 percent of resale activity compared to 12.6 percent in May. Short sales were down compared to last year’s 14.2 percent.

With 9,556 properties (home and condos) sold in June, Phoenix experienced a decline in sales activity from the month and year before, when properties sold numbered 9,896 and 10,425, respectively.

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.