Sunday Stats
December 21, 2008
photo credit to MiamiAmia, courtesy of StockExchange.
Click here to see the entire Sunday Stats series, and for historical perspective.
This week’s chart is a mess of red and green all over, not following any discernable trend. Kinda like the Valley’s real estate market now. Or maybe the stats chart is feeling Christmasy.
Sunday Stats
December 14, 2008
photo credit to MiamiAmia, via StockExchange.
Click here to see the entire Sunday Stats series, and for historical perspective.
Sunday Stats
November 23, 2008
photo credit to MiamiAmia, via StockExchange.
Click here to see the entire Sunday Stats series, and for historical perspective.
Fannie and Freddie Not To Blame
November 18, 2008
As a follow up to my October 4 post, I present the following chart created using Federal Reserve data.
This chart is a screen capture of the original which appeared on the Mark Thoma’s blog The Economist’s View. See the original chart and post accompanying it.
Thoma has waaaay more understanding of this than I do. He’s got the nifty cool graphs and charts to back up what I tried to say on October 4.
Namely, Fannie and Freddie did not cause the foreclosure crisis. As the chart shows, The Two F’s got out of subprime loans in 2002 before things got really crazy. Watch the pink line – see how it dips sharply at the sime time the dotted light blue line makes a jump shot? That’s Fannie and Freddie getting the heck out of dodge, because the loans the market started demanding felt way too risky. The light blue line is “asset-backed securities issuers,” namely entitities like the investment banks that have failed so spectacularly of late.
The Two F’s were still giving out some loans more risky than their standard fare. But as Thoma explains (and my personal experience proves) Fannie and Freddie largely did 30-year fixed rate loans. They weren’t doing the “exotic” liar loans that have caused so much pain.
Thoma says, “There is no excuse for the actions of the management of Fannie and Freddie, and I’m not trying to defend them or their choices, but the idea that Fannie and Freddie caused the general credit crisis is wrong.” (emphasis mine).
By the way, I’m still browsing through Thoma’s blog, trying to study up on all the intricacies he and his colleagues discuss about economics in general and the housing/financial crisis in particular. It’s not for bare beginners, but is an excellent resource if you’ve done some reading on the basics elsewhere. Check it out!
Sunday Stats (on Monday)
November 17, 2008
photo credit to MiamiAmia, via StockExchange.
Click here to see the entire Sunday Stats series, and for historical perspective.
I’ve added a new field this week, the Median Sold Price. This is the number at which half the sold home prices are higher than the stated median, and half the sold home prices are lower than the stated median.
To find the median, list all the sold prices in row from smallest to biggest. The number that’s exactly in the middle of the line is the median.
Median is much less volatile than average, and so more useful when comparing an already volatile housing market.
Think of it this way (big hat tip to Nobel prize winner and Princeton economist, Paul Krugman for this): if there are 50 people in your neighborhood bar and Bill Gates walks in, the average income of the people in the bar just skyrocketed. But the median income won’t have moved so much, because old Bill just gets added to the end of the line and counted as 1 in the string.
In any case, we’re still awash in red ink. Red represents a field that’s moved in a negative direction since last week. Negatives in our current market are: more inventory for sale, fewer homes going pending, fewer homes selling in the past 30 days, and/or a larger number for months of inventory.
I’m assuming we all want the housing market to get back to “normal” when I color code these charts. Normal is about 6 months of inventory on the market. We’re at 14. Not so healthy. Let’s see what next week brings.
Sunday Stats
November 9, 2008
photo credit to MiamiAmia, via StockExchange.
Click here to see the entire Sunday Stats series, and for historical perspective.
It’s encouraging to see a lot of green in the Pending numbers this week. I think of Pending’s as leading indicators.
On the other hand, this is the 3rd week in a row that the overall average months of inventory number has increased. Not good. It’s also the 3rd week of 4 in which I had to exclude ZIP code 85012 from the totals calculations, because the numbers there are so very, very bad.
Buyers, I’ll say it again: 85012 is an incredibly good ZIP code in which to go bargain hunting. Sellers there should be about ready to give away the farm by now. And once the Light Rail starts running in December, things should steadily improve there.
There are some great hi-rise condos in this ZIP which offer a good potential for cash flow, if purchased as investments and you get a tenant. I have a ready-made list of downtown Phoenix hi-rises for sale – email or call me if you’d like to receive the list, and updates whenever they hit the MLS.
Email me to subscribe to this blog and get regular updates as they’re posted – Heather@NorthPhoenixAgent.com
Sunday Stats
November 2, 2008
photo credit to MiamiAmia, via StockExchange.
Click here to see the entire Sunday Stats series, and for historical perspective.
Well, this is the 2nd week in a row that we’ve moved in a ‘bad’ direction. As a recap, the “goal” if there is one in a real estate market, is balance. Most experts, forecasters and Realtors use 6 months’ inventory as a guideline for a balanced market.
)Months of inventory is a measure of how long it would take to sell every home currently for sale, if no more homes were listed for sale and if sales continued at the same pace. If there are 30,000 homes for sale and 5,000 sold in the past 30 days, you’re at 6 months’ inventory because 30,000 divided by 5,000 equals 6.)
We’re sitting at 12.63 months of inventory, double what’s “normal.”
ZIP code 85012 has been truly hammered by a combination of factors: Light Rail construction, generally aging homes, the overall bad real estate market and economy. The months of inventory number in this ZIP is so wildly out of line with the rest of the territory included in the chart that I’ve excluded it from the “average” numbers at the bottom of the chart.
Excluded from the average calculation they may be, but properties in this ZIP code represent an incredible buying opportunity. Sellers here are likely to be increasingly anxious to actually sell, prices have dropped dramatically in many areas and rents – while wobbling a bit – are often enough to make an investment property cash flow immediately.
Thinking about jumping into real estate investment? Call or email me. Lending guidelines are changing daily, and I’ll be happy to give you the up to date information so you can make an informed buying decision.
Want to receive the Sunday Stats by email? Call or email me and I’ll put you on the list.
October Month-End Stats
November 1, 2008
Click to enlarge; use browser “back” button to return.
Here are the end of month October numbers. I posted on the 24th of October that the mid-month numbers looked dismal (see bright yellow highlights: 5.94% sold in past 30 days, which was down over 50% from the mid-September number).
Then, I blamed it on the bad economic news – bailout after bailout after bailout – and on the waning days of the Presidential campaigns making people hold their breath.
Today, the numbers don’t look so awful – 9.54% sold in past 30 days, versus 11.16% sold in past 30 days back in mid-September.
Still, the wild stock market swings and accompanying news of layoffs, continued talk of recession and even the specter of deflation have taken a toll on the metro Phoenix market. Buyer demand dropped 15% since mid-September, while the inventory of homes for sale continues to rise, edging up 4% since September 22.
It’s almost certain that the number of homes for sale will continue increasing, since the number of foreclosure notices were up 71% in September, year-over-year. Most of those homes will end up for sale, either as short sales or bank owned properties.
In the world of simple economics, more stuff for sale and fewer buyers buying equals prices going down. Whether the continue price declines fuel more bargain hunters to buy Phoenix real estate is something only time can tell.
I’ll be back next month with more numbers. Mid-month if the stats warrant.
All About Mortgage Insurance
October 27, 2008
All about Private Mortgage Insurance (PMI) by one of my favorite lenders, Jeannie Bolger of Suburban Mortgage.
It’s not a pretty looking link, but it IS helpful. Trust and click.
Bad National News Further Slows Valley Market
October 24, 2008
The LA Times reports that Southern California residential real estate is selling faster and slipping prices continue to fuel the buying boom. While official September numbers showed the Valley following that trend (see below), a quick check of the Valley’s October numbers show that the credit crunch and ongoing bad economic news is slowing the Valley’s already struggling housing market.
Like most mainstream media reports, the Times relies on official numbers posted by organizations like the National Association of Realtors and Case-Shiller, and compares this year to last year. FlexMLS sales stats support the LA Times piece and show metro Phoenix prices down 30% in 2008 but the number of homes sold up by 46% through the end of September.
September 2007
- Median Price – $242,500
- Properties Sold in Month – 3,265
September 2008
- Median Price – $172,000
- Properties Sold in Month – 6,064
(These numbers are taken from the FlexMLS system used by Valley Realtors and represent all properties sold in which a Realtor used the MLS to affect the sale. Foreclosure auctions and private sales of all kinds are not included.)
Looking back at past months (as above) showed we were booming along, selling lots of properties each month and making headway towards a “normal” market. But looking forward to October’s to-date sales shows the nation’s bad economic news is depressing sales. While September sales were booming along in the Valley, the number of closed sales so far in October has plummeted.
Click chart to enlarge; “Back” button to return to story
Looking particularly at the two highlighted columns, you’ll see what I see. Sales through the 22nd of September totaled 5,796 properties, or 11.18% of the total inventory.
Sales through October 24th, have dropped roughly by half, to only 5.94% of the total inventory. A closer look at the MLS shows the median price has dropped again, to $167,000 (not shown in this chart).
This is bad news for the Valley’s ongoing housing health. For about 18 months now, one of our main problems has been too many houses for sale. Our saving grace has been that while new homes kept hitting the market (due in large part to increased foreclosure rates) we kept selling them.
Go back to the chart and look at the “Months of Inventory” and “Active Listings” columns over the entire year. The number of active listings held pretty steady all year, while our ever-increasing “sold” numbers kept chipping away at the months of inventory. That’s the sign of an improving market. Most experts accept 6 months’ inventory as a ‘balanced, normal’ market. We were getting there!
Apparently this month’s awful economic news (and possibly the national “holding of breath” waiting for the Presidential election to finally be over) has slowed real estate sales to a crawl.
Since the number of foreclosures isn’t expected to slow, the sinking sales volume could spell real trouble for Phoenix’s long term real estate market.
Sunday Stats
October 19, 2008
photo credit to MiamiAmia, via StockExchange.
Click here to see the entire Sunday Stats series, and for historical perspective.
Not much going on this week compared to the past 2 or 3 weeks. We’re in a holding pattern, which isn’t surprising given the current economic news. The future of the American economy is as clear as mud, and when consumers see mud they bury their heads in it and hope for something that looks and smells better in the future.
The one bright spot for sellers continues to be ZIP 85024. While 85027 has slowed a from it’s previous quick sales pace, it’s still a good place to be a seller. Inventory is selling, and quickly. Sellers don’t have to agree to every buyer demand. Of course, most of the properties sold here in the past few months have been lender owned, or at least priced at the low lender owned fire sale prices. A competitive price rules the day in these ZIPs. Listing priced even a smidge above the last sold comp will be sporting their sold signs till next holiday season.
The nice news is that ZIPs 85024 and 85027 are also good places to be buyers! There are lots of little condos and patio homes in these ZIPs that can be bought up for under $125,000 or so, fixed a bit (paint, carpet, good cleaning, minor repairs) and then rented for an immediate cash flow!
Interested in jumping into the real estate investing pond? These ZIPs are good for that. Most investor loans these days require at least 10% down, sometimes more like 20% or 30%. But for folks with decent credit, a bit of money put by, and an adventurous spirit can make a go of it. I forget who said it, but it’s true that you can make money buying real estate when there’s blood in the streets. The Motley Fool doesn’t have an investment strategy called “Contrarian” for no good reason:
“We simply attempt to be fearful when others are greedy
and to be greedy only when others are fearful.”
– Warren Buffett
Of all the Oracle of Omaha’s orations, this one holds a special place in Foolish investors’ hearts. When looking to bag a bargain, a panicked sell-off by jittery investors offers you a great chance to snap up stocks on the cheap.
Substitute “real estate” for “stocks” in the above quote from the Fool’s website, and you’ve got a recipe for getting rich slowly with real estate investments that pay you over the years.
The average sold price over the past 30 days in ZIPs 85024 and 85027, respectively, are $158,000 and $111,000. Want to drive an even harder bargain? Properties in ZIP 85012 have been selling like molasses in Alaska for months. With absorption rates in the triple digits, buyers can call all the shots, and with the average sold price in the past 30 days at a mere $84,933, it’s not even painful to come up with the down money.
Intrigued? Call or email me.
Yard Sale at Northtown Tomorrow
October 17, 2008
Neighborhood yard sale Saturday and Sunday Oct 18 & 19 at Northtown! Come early for the best stuff.
Northtown is an active adult community of about 200 or so homes at the northwest corner of Cave Creek road and Greenway road, south of Greenway Parkway. Today I met one of the homeowners named Bob, who used to serve on the HOA Board and gave me lots of helpful information about the neighborhood and the sale.
The community yard sale is held several times a year, always on the weekend before they’re scheduled for bulk trash pickup. Each neighbor who wants to participate sets up their wares in their yard and driveway. Anything that’s not sold is easily disposed of on the following weekend’s bulk trash day.
Northtown is full of well maintained, cute little homes with mature landscaping and pretty mountain views throughout the neighborhood. The average home is about 900 or 1100 square feet, 2 bedrooms and 1 or 2 baths. Sizes range from 660 square feet up to about 1400 square feet.
Some homes here are 1 bed, 1 bath, which seems (to me) like it’d be the perfect size for empty nesters truly looking to downsize, or have a little winter vacation spot of their own. Few homes have a private pool, but there is a heated community pool.
The homes were built in the early 1970′s and are mostly brick construction. Yards are smallish, averaging about 1/10th of an acre, or 4,500-5,500 square feet. Community rules state that at least 1 homeowner must be 55 years old or older, and no one living in the home can be 18 years old or younger.
Given today’s economic woes, pricing in Northtown is really attractive! There are 10 homes currently for sale ranging from $95,000 to $169,000 and recent sales prices are in the $100 to $130 per square foot range.
These are pics of the typical Northtown home:
Sunday Stats
October 12, 2008
photo credit to MiamiAmia, via StockExchange.
Click here to see the entire Sunday Stats series, and for historical perspective.
Busy, busy, busy. Our Canadian friends continue buying bargain-priced Valley real estate. I have time only to post the stats, but not for a thoughtful commentary. Here’s my un-thoughtful commentary for the week: it’s still VERY hard to find a Phoenix home, no more than 5 years old in a nice neighborhood, with a pool, at least 1500 square feet, 3 beds and 2 baths for under $200,000. Bubble bloggers and doomsayers take note!
Month End Stats, September
October 6, 2008
Click to enlarge chart; use Back button to return to post.
Well, we’re teetering. For months now the metro Phoenix market showed a small but significant improvement toward a balanced market every month. The past 2 months just sort of hang there, not improving or declining much. Ever the optimist, I believe it’s a temporary condition. We’ll go back to slow and steady monthly improvements before too long. The pragmatic side of me agrees with the optimist: it’s already pretty horrendous, historically speaking, so we can only go up from here, no?
Why the temporary setback in our march toward housing recovery? It’s probably a combination of factors, just like it was a perfect storm of bad economic news that led us to the recent $700B rescue bailout.
The number of foreclosure properties hitting the market each week continues to grow. The Business Journal reports we hit an all time high of 2,210 foreclosure notices issued in one week (in September). More inventory for sale is ‘bad’ when your goal is balance in the market.
Deals are harder to consummate lately. Sellers and buyers alike are nervous and stressed. I joke with friends and colleagues that I’m working 3 times as hard for 1/2 as much money. But that’s not really a joke; it’s reality.
We’re entering a season that’s typically slow. Fewer people want to be bothered selling their house or searching for a new one in the fall and winter. We’d rather watch football. Or election forecasting, if that’s your thing.
I’ve been told (but can’t find supporting data online) that Presidential election years are slower years for real estate sales. That just makes sense. Who want to take a $250,000 (or more) leap of faith when they’re waiting to see which way the tax policies will blow next year? My own theory on that is that it really doesn’t matter whether a D or an R sits in the White House next January. As long as regular folks know what they’re in for over the next 4 to 8 years, life on Main Street goes back to normal.
Here’s to normal! I’m looking forward to it.
