This may come as news to a few of you, but not to those who are currently in the market, but.... after a very long pause, the Phoenix metro area housing market is hot.
Make that sizzling.
Here are some of the hot points:
The inventory of homes is reducing rapidly. There used to be a one-year+ inventory of homes in the metro area. That has dwindled, county wide, to just over five months. In some cities it's even lower. For the first time in 3.5 years we are not in a "buyer's market". We are in that equilibrium phase. For buyers in the south and southeast valley it's a different story. It's turning into a seller's market.
There is a return to multiple offers. Homes that are priced lower than others in the neighborhood are often receiving multiple offers. Three of my clients in the past month have submitted full price offers that have been rejected. In each case there was a multiple offer situation with buyers encouraged to submit "highest and best" offers. The most recent offer I sent in joined a list of 13 others.
New Home inventory is way down. Over the last few years it was possible to go into almost any new home development and pick out a home from a list of inventory homes. Now, the inventory is vastly reduced or non-existent in many areas. In such areas, buyers of new homes will do what had been done in previous years: order one to be built from the ground up.
The "low end" is hot. Homes that have hit the foreclosure market have been priced very low over the past couple years. Such homes allowed the first time home buyer and investor the opportunity to get in on deals that hadn't previously existed. Now, the prices of these homes are starting to climb. For the past three months there has been a trend reversal- home prices (on a cost per square foot basis) have been rising.
No one can predict the future.
However, for those who like to spot trends, it's undeniable. The signs one looks for are becoming easier to spot:
Homes are selling more quickly.
There are fewer to choose from.
Prices are beginning to rise.
Is it a full-bloom recovery or a momentary blip on the chart?
That's the question many are asking. As my clients are discovering- it's getting much harder to buy a home. "Low-ball" offers aren't working. Even full price offers are being rejected. So, if you're wanting to purchase a home in Arizona- it's time to jump in again. If the trend continues, it's going to be harder to find that bargain home.
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Chuck Willman is a real estate agent in the Phoenix metro area. 480.292.0600.
"Frenemy" (sometimes spelled "frienemy") is a portmanteau of "friend" and "enemy" which can refer to either an enemy disguised as a friend or to a partner who is simultaneously a competitor.
Source: Oxford English Dictionary online, draft entry, December 2008 (Via Wikipedia)
I read with interest Harry D'Elia's recent blog post about buying homes on the courthouse steps. Part of the interest is that I too purchase homes at that stage between pre-foreclosure and bank ownership. So, I wanted to see if he got it right. And... I think he did... any difference between his view and mine would be of minor opinion. I was most interested, however, in the reaction to his post. Some were curious and complimentary while others were cautious or dismissive. Whenever I see a reaction which borders on emotional I try to take a step back and see what it was that caused such a reaction. There tends to be one theme: self preservation.
No agent alive wants to lose a livelihood. Where we see threats to our preservation, we have a choice. We can investigate and find out how the challenge will affect us or we can dismiss such topics as so much hooey. I prefer to research and make sure I'm on the advantageous side of such threats. Sometimes I miss the boat and sometimes I get "lucky". I guess I don't want to be the person who looks back on a situation and says "I didn't see it coming."
No doubt about it- it is very possible for the average consumer to buy and sell a home using alternatives that have not previously existed. We can view progress as an encroaching enemy or as an agent's best new friend.
Which brings me to a philosophical question:What value does the real estate agent bring to the experience?
One of the best compliments I can receive is that I helped a buyer or seller do something they couldn't have done on their own. Or, in the very least, that I shortened the process and saved them in some way. Maybe I saved them time, or money or aggravation. In the least, we should be able to off-load a burden and make a difficult matter less challenging. At best, our knowledge and experience will be valuable.
What then is the biggest threat or opportunity to a real estate agent's livelihood? I think it's information.
The home buyer and seller has more tools than ever. At its most basic, the housing market is a database. Homes are listed with all of their classifications. You can go online to find price, size, location... all of the things that used to be in the black pouch of the real estate agent. Data is pervasive and very inexpensive. So... the agent is there to filter it out. Drawing on research and experience, and study provide insight that can help the buyer find the perfect fit... or to help the seller broadcast to the best candidate.
It is the challenge to all agents to perform this service well enough to earn compensation.
There is a line in Harry's post in which he says, "It is true that there is a group of people that control the court house steps. So, they represent us in the bidding process." I'm sure he could explain this statement better than I- because it is his personal observation. It's also, integral to his value proposition. My interpretation is that there is a group of people at the courthouse steps who have something advantageous: they have access to detailed information. Further, they have access to money. They would not be able to exist unless they used both with efficiency.
In the housing market, and the current buying frenzy in Phoenix, we have one obvious fact before us. People want value. We want to live in the best possible home for the least possible money. Investors want to buy the lowest priced home to sell for the most possible profitability. It is that simple. We want more for less.
We'll encounter demanding clients who will want premium service for little compensation. We'll have clients who need some hand holding. And... we'll also find a few opportunities for which we are handsomely rewarded at a price that would appear to be beyond our contribution of energy. We'll also, quite often, work for free.
I realize that most of my readers are fellow agents. So, maybe I'm just blogging to a bunch of insiders here. Regardless... I want to finish with this- To my fellow agents: May you find success as a result of the many hours you spend becoming a more informed agent. And... with such diligence employed, may you see the process from the side of the persons who employ you. Finally... may you both find merit in that association.
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Chuck Willman is a real estate agent based in the Phoenix metro area. 480.292.0600 - Chuck@AZvest.com
I've received a few emails... and even a call or two, asking me what I've been up to lately.
I'm happy to report that, though my blogging output has been sparse, I'm doing very well and staying quite busy through a vastly improved real estate market here in the Phoenix metro area.
Here's the latest:
The market has "lost" several months of inventory. Last year the market had over 12 months of inventory- now there's just over five months. Whether this is a momentary blip, or the new trend, remains to be seen. However... if the trend holds, we no longer have a "buyer's market". We would be at equilibrium. If the inventory shrinks by a month, we'd actually have a "seller's market" for the first time in 3.5 years.
Homes are selling more quickly and more homes are finding buyers. The "days on market" rate is vastly reduced.
Multiple offers are back. I wondered when I'd ever see bidding wars again... well- they're here again.
Fix-n-Flips are possible. I've been involved in quite a few lately.
Cash Flow properties are much easier to find. It's perhaps the easiest thing to do these days- find low priced homes that can be rented with a significant spread between costs and rental income. The harder part is finding cash flow properties with a great deal of equity... but it can be done. This is our main focus.
Though homes are selling more quickly and inventory is greatly reduced, prices are still pretty flat. We can not call our current situation a "recovery" until prices begin to rise significantly.
These trends are all good things for the traditional real estate agent- especially one who works with investors.
What has kept me most busy though- is finding homes at the courthouse steps and flipping them. I've been working with a few groups who specialize in finding pre-foreclosure homes and selling them at wholesale prices. Very often, their pricing beats the bank. It's not uncommon to be able to purchase homes at $10k below the lowest bank owned home in the neighborhood.
Most of the properties we find have at least $20k in potential equity... that means they could be re-sold at prices well below the lowest cost home in a subdivision. For instance, we bought one home last Thursday that we're selling for $109k. It could be sold for $149k and would still be the lowest priced home in the neighborhood.
One may ask, why sell for so low? We have found that it's better to turn the properties quickly than to hold on to them... it's a time-value-of-money equation in which one computes the cost of money vs. buying and holding. Plus- we don't rent the properties... we only flip or fix-n-flip.
Most of our clients are looking for rental properties; others want to fix and flip... and a few want a primary residence. We tend to be able to find something to suit each of these needs.
In the past few months, we've been buying at a rate of one home per week... but last week we picked up two. Since such homes are usually bought at auction, we are unable to sell them via FHA. The FHA has imposed a "seasoning" rule- such homes can not be insured through FHA for 91 days. This is informally called the "anti-flipping rule." However, those who have cash, conventional or VA loans can close quickly. It's doubtful that any of the homes would be available for longer than a month- let alone three. Most are in contract within a week.
If you'd like to know more, feel free to contact me.
There are people that know, it seems, everything there is to know about social networking.
Then there are those who want to know more.
If you fit in either category... and kind find your way to Scottsdale Arizona in late April then this would be the place to be. Read what Calie Waterhouse has to say about it.
RE Bar Camp is an ad-hoc gathering born from the desire for people to share and learn in an open environment. It is an intense event with discussions, demos, and interaction from attendees. While we don't quite have a "firm" location, we do have a date. So, consider this post your invitation - kinda of a "Save The Date" announcement.
Jay Thompson, The Phoenix Real Estate Guy, explains “It’s an “unconference” with no set agenda. The agenda is built that day and often morphs through the camp as people gather, talk and share. It’s actually difficult to explain and really needs to be experienced. REALLY. The event is FREE to attend - You’ll even get a t-shirt and lunch. Better yet, you’ll walk away with your head stuffed full of ideas and your rolodex stuffed full of contacts to help you make your business better.”
Got Questions? Just ask! Have a topic suggestion? We're all ears!
The REBarCamp - Phoenix is sure to be an awesome time! I've even heard rumors that Beer with Bloggers (an evening get-together) is also in the works. Hope to see you there!
P.S. If you're planning on coming to REBarCamp-Phoenix on 4/23, plan on coming to the ARMLS Tech-Faire one day earlier on 4/22 - taking place at the Mesa Convention Center.
Why is it that new devolpments in the Phoenix metro area appear to cost a billion dollars?
That's the price tag that Gaylord Entertainment wants to spend in building a hotel and convention center in Phoenix's east valley city of Queen Creek.
That's also the price tag that has been floated for a Rock-n-Roll theme park near downtown Phoenix.
The park is said to be considered for a 22 acre section of land around Celebrity Theatre.
If you don't know, Celebrity Theatre, it's a local landmark that is known for its intimate setting. No seat is further than 75 feet from the stage.
It's also "in the round" meaning the stage rotates... so no one is stuck watching the performance from a permanent side or back view.
Details are sketchy so far... Channel 15's site states that this will be a multi-use venue that could include hotels, restaurants and housing and office space.
Also- Phoenix's mayor, Paul Johnson appears to be very willing to make this happen.
So... if anyone makes the statement, "I hear Phoenix knows how to Rock-n-roll" ... they may have a billion reasons to agree.
I'll keep you posted about this one.
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When not blogging about real estate development projects in Arizona, Chuck Willman performs real estate in and around the Phoenix metro area. www.AZvest.com.
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Illustration Credit: "Band Silhouette 8" by Ben Smith.
There was a summer where my mom took up part time employment. She made a deal with me: I'd make five dollars a day if I had the younger kids clean their rooms while I straightened up the other rooms and fed them lunch. After that we'd go to the city pool for a couple hours.
It was a great opportunity. I made a hundred dollars a month and didn't have to beg to go to the pool every day. I also, for the first time, developed a work routine. I found that I could do major cleaning (mopping, bathroom scrubbing, laundry) on alternative days and, by so doing, it made the 'tween day fix-ups much easier.
A major part of the routine was making lunch while listening to Paul Harvey's news and comments. Later, I discovered his "rest of the story" program. In this broadcast he'd tease you with a story told in a way that no one else could duplicate. In the end, you'd find out who he was talking about... and it would almost always be a surprise.
Paul Harvey passed away yesterday at the grand age of 90. He lived across town. Though I never met him, his influence in my life is significant. I can still see the surroundings of the kitchen and feel the pleasure that was mine as he joined me on my daily schedule.
Also, I have read each of his books... they're great, uplifting entertainment... each chapter is brief enough that you can feel enriched in a few moments or... more likely... feel unable to stop yourself until you've finished the book with haste.
Thank you Paul Harvey for bringing us the rest of the story for so very long.
Tips for those seeking a home or property in the Valley of the Sun. Also a source for Investments, First time Home Buying, Relocation & International Properties.
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Posted by 
In the wake of the announcement that President Obama would be presenting a plan to help struggling homeowners, many are asking this question:
Why is it that new devolpments in the Phoenix metro area appear to cost a billion dollars?
There was a summer where my mom took up part time employment. She made a deal with me: I'd make five dollars a day if I had the younger kids clean their rooms while I straightened up the other rooms and fed them lunch. After that we'd go to the city pool for a couple hours.
;)
;)
