M is feeling a bit smug on this one. He thought sales would be up year-over-year this summer, and it looks like he’s right. Unlike the reports done by Dr. Jay Butler of ASU’s Realty Studies, these figures are based on MLS sales, and do not include trustee sales. [Although Kudos to Butler for now separating those out.]
Here’s Doom’s unofficial figures for June, and may vary slightly from official MLS figures: [Thanks M!]
ALL MLS
Active 52,269
UC 8,313
Sold 5,699 5,439 June ‘07 +4.7% YOY
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QC and Maricopa only:
Active 2,565
UC 807
Sold 519 226 June ‘07 +129% YOY
It’s important to remember a couple of things. Even with a slight YOY improvement, these numbers remain below even 2001 numbers. [6164 homes sold June 2001] The market now is largely foreclosure driven- many, many of these sales are REOs or short sales, so the market continues to be especially difficult for resellers. M pointed out the difference between the old "owner occupied market" and a "foreclosure market". M had the following comment on price drops:
Actually, the median price drops are somewhat misleading. Back in ‘06, after the speculators left the market, both of us knew the median price numbers were not accounting for the changes for the quality of the homes sold. Owner-occupied were buying the nicest homes filled with upgrades, and not accounting for this masked the true drop in values. The same thing is happening now, in reverse. As REO’s increase in market share they’re overstating the true loss in value. As you know, the condition of these homes are horrible. Comparing a market dominating by sales of REOs to a market of premium homes can be very misleading.
The following describes most REOs:
-All need new carpet, tile is usually OK
-Need drywall repair and complete interior paint
-Need appliances
-Need ceiling fans
-Need new landscaping as the water’s been turned off
-Pools need replastering, drained pools crack when exposed to UV
-The need a complete cleaning!!!These homes also suffer from "deferred maintenance" and certainly demand no
premium for first impressions.This is the condition of the "average" foreclosure, and those that have been trashed and
gutted will need substantially more. Some REOs are in excellent condition, however.
The sales increases on the Valley’s edges showed the greatest improvement. With gas prices continuing to reach new heights however, it remains to be seen if sales in the outer reaches of the Valley are sustainable, or a "sucker’s rally" leading to a new wave of foreclosures.
There are those who will say that June may mark the beginning of a market "recovery" in Phoenix. I believe that tight lending and a large inventory will continue to depress sales and prices for sometime to come.
The rise in sales seems to be directly affected by the fact that 37.9% of all sales in the Phoenix area are foreclosure-type sales:
http://www.foreclosureexpert.info/2008/07/phoenix-area-sa.html
Here are some detailed foreclosure stats for 10 Phoenix area cities taken directly from the ARMLS:
http://www.foreclosureexpert.info/2008/07/foreclosures-sa.html
my count had the following numbers (subject to revisions as agents update)
June 2008 5700 sales. of those sales, 719 were short sales, and 1779 were Bank owned REO properties. My foreclosure watches for Tempe and Scottsdale showed increasing numbers of foreclosures on the mls.
“There are those who will say that June may mark the beginning of a market “recovery” in Phoenix.”
I guess it depends how we define “recovery.” If it’s soley ‘increased sales,’ then yes, maybe.
But (as others here have stated) if the increase in sales is REO driven then we have a liquidation led market. The “better” QC and Maricopa numbers appear to be a function of properties completing the foreclosure process (and driving down prices as they do).
Given the June NOTs just reported here I imagine there will be an “improving market” (in terms of sales numbers) in many parts of the Valley this fall and winter (barring a credit lock up) together with a continuing decline in sales values. In a way, QC and Maricopa may be leading foreclosure-effect-indicators for the rest of the Valley.
I still can’t believe June NOTs (after 20% attrition) are as high as June total sales. How can the market absorb all thess? Will Valley sales become 100% REO? (Of course, not.) Lower prices HAVE to be on the way. Maybe much lower.
I often wonder about my old house in Chandler. I sold it in 2004 to move up to Portland and I got lucky enough to have several investors create a bidding war around it. with the wholesale deflation of the RE market down there I often wonder if I could pick back up the same house for less than I sold it for. :Bonus I know it has not been lived in since I moved
My cousin the Phx fire chief told me his son was getting a great deal on a home in the downtown Encanto area for 170k or so. Well, it’ll hold its value better than most. After all, it’s downtown, not in an exurb. He may lose big bucks on the house, over time.. as long as he can stay employed, I imagine it’s ok.
What am I saying? He’s nuts, and he’s going to lose money.
Twist, will you post the tax revenue data for Arizona? It shows truly astounding drops … and it shows how fast the economy there is slowing.
No need to try and ‘time the market’ if you want to buy. Real estate markets, when depressed… stay depressed for years, not days or months. Even in the Encanto area.
In Portland, Oregon we still have people completely, totally in denial. I don’t even try anymore. I tell them, ‘go buy the d*** house, just don’t ask me about it!’
Maricopa county doesn’t use NOT’s we use NTR’s Notice of trustee sales, 90 days before the sale; we had over 7000 of them in june, to go with 3600 foreclosures and 5700 sales; it seems to me quite obvious, the market will continue dropping hard.
Bank owned homes are not that bad; I spent the last 2 days looking at dozens, 80percent are just as good as homes normally are, 10% a bit rundown, 10% pretty trashed. This article is implying they are significantly worse than normal homes, I can tell you as a fact that is not the case, surprising as it may seem.
Azrob-
Same thing, different abbreviation.
While the Maricopa County Recorder’s Office says “N/Tr Sale” for “Notice of Trustee Sales”, most folks are more familiar with the NOT abbreviation.
I agree that there are some lovely bank-owned properties. Not everyone trashes the place on the way out- homes range from awful to move-in ready.
I suspect the percentage of REOs in rough shape may depend on what price range, area, or if the homes were investor owned or not. I’ll check with M and see what he was looking at.
I just purchased a home this past June. I looked at approximately 50-60 houses mostly foreclosures. I have to say to get them sold many had new tile, carpet and paint. Now saying that I did see a LOT of them that had holes in the walls where you can tell someone had punched his/her fist. Also price had a lot to do with the condition of the home. At one home someone had poured concret down the toilet. Its a matter of looking and finding a GREAT deal not just a good deal.
“The “better” QC and Maricopa numbers appear to be a function of properties completing the foreclosure process (and driving down prices as they do).”
Absolutely correct. Those increased sales will massacre appraisals and even the often rosy Zestimates. This turns a tough re-finance into an impossibility, which adds to the walkaways when a refinance is the only option. Even many who were not serial HELOCers will walk away, as will many 2008 buyers as their “steals” turn into affordable houses.
“of the RE market down there I often wonder if I could pick back up the same house for less than I sold it for.”
If you have the model name/approximate square footage and subdivision, we can look up what is going on there.
I have been getting emails from people 100 and 200K underwater in maricopa, QC, etc. Now, as the crash works inwards, I expect the same from the farther flung parts of Chandler,Gilbert, Mesa, etc. Speaking with other realtors, older homes in foreclosure are often quite crappy, but newer ones usually look pretty nice.