Courtesy of Barb Savoy-Pacella, ABR, CHMS
Do you ever get tired of hearing yourself say the same thing over and over?
A few years ago, the question that seemed to continually arise was regarding “shadow inventory,” otherwise known as homes already foreclosed upon by the lender that they were holding onto and the fear was that the lenders would release a glut of “shadow inventory” simultaneously, further collapsing the market. The theory was ridiculous on many levels – first and foremost, why would the lenders participate and be the catalyst in further crippling themselves - and often, although we were able to provide the data to support that the theory was incorrect, people choose to believe what they choose to believe. By the way, I would like to point out that with just 4.4% of the market consisting of foreclosures, the foreclosure crisis is coming to an end, and we’re still waiting for the shadow inventory tsunami.
Fast forward to 2013, and the continually arising question is whether or not the Phoenix market is experiencing another bubble, the aftermath of which will be steep pricing declines. We last discussed the “bubble” theory on April 17th, citing the Cromford Report’s Top 10 Reasons The Phoenix Market is not in a housing bubble.” I’m sure you can see me sitting in my office banging my head against the wall since none of the top 10 reasons has changed, so I decided to revisit my personal top 3:
1). Prices are being driven up by a chronic lack of supply, not by excess demand. Demand is close to normal. Bubbles always have excessive demand from foolish trend followers.
2). Most buyers are putting their own money in with cash or large deposits, not borrowing 100% of it from short sighted lenders as in 2004 and 2005. In case you had never given it much thought, cash cannot be foreclosed upon.
3). No bubble has ever occurred in the same market twice in the same generation. However after a recent bubble everyone is hyper-sensitive to every price increase and numerous false cries of “bubble” are par for the course.
Current Conditions in the Phoenix Market:
<!--[if !supportLists]-->· <!--[endif]-->There are 14,014 single family detached homes actively on the market, which is an increase of 667 listings from two weeks ago. This is a seasonally normal pattern for the Phoenix market.
<!--[if !supportLists]-->· <!--[endif]-->There are 17,621 total listing actively on the market, which includes condos, patio homes, and townhomes and is an increase of 776 listings when compared to two weeks ago.
<!--[if !supportLists]-->· <!--[endif]-->There are 8,236 listings pending sale, which is an increase of 213 pending sales from two weeks ago.
<!--[if !supportLists]-->· <!--[endif]-->There are 3,423 additional homes that have offers pending, but are short sales awaiting lender approval.
<!--[if !supportLists]-->· <!--[endif]-->3,153 homes have closed escrow in the past two weeks, which is a decrease of 708 closings from two weeks ago, and is slightly behind pace with the same two week period last year.
TO VIEW HOMES FOR SALE, AND FOR ADDITIONAL INFORMATION, VISIT WWW.PACELLAGROUP.COM
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