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Valley Real Estate Market Update Newsletter
Here you'll find my monthly newsletter detailing price and sales trends in the Metropolitan Phoenix area, along with my predictions of things to come in the market.
September 2008
Inventory (supply) is down slightly: 52,600 this month, down from 53,400 last month. That means that sales are exceeding the number of new homes coming on the market. Considering all the foreclosures that are being dumped by the banks (representing a high percentage of sales) that is really a good sign.Sales (demand) are almost the same: 5900 this month versus 6000 last month.Pendings (sales that will close in the next 30 days) are also the same: 6750 from 6800. If we allow for seasonal adjustments then we saw yet another rise in the number of sales and a small drop in the inventory.
August 2008
The Real Estate Market Continues to Recover
By The Numbers:
Inventory (supply) down: For the fifth straight month, total inventory has dropped. We are still in the 50,000s and although this is still high, the trend is down.
Sales (demand) up: Closed sales for June are above 6,000 and are double what they were per month during the slump in 2007.
Forecast: Pending sales for August are still around 7,000, so it is safe to conclude that the downward trend will continue.
The absorption rate (time to clear out the current inventory) has dropped to 9 months from over 20 months in 2007.
The last time we saw a similar rate was in the Spring of 2007. We are approaching normalcy.
Conclusion: The Market Continues to Gain Momentum.
On October 1, FHA down payment requirements will increase from 3% to 3.5% and the grant money that helps first-time home buyers with their down payment goes away. Please keep in mind that some mortgage companies are already eliminating down payment assistance: One of our preferred mortgage brokers has indicated that borrowers need to seek down payment assistance by no later than the end of August.
We can expect to see a rush of new buyers jumping into the market at the lower end prior to the October 1 deadline.… Stay tuned as we will be watching the numbers for August and September very closely.
Foreclosures:
Foreclosures spiked dramatically in June indicating that there will be a flood of bank-owned properties coming on the market. But, even more dramatic is the number of pre-foreclosures:
According to Realty Trac, the number of pre-foreclosures is 12 in the entire Valley (down from 48 in June and several thousand in May). If this trend continues there is no question that the foreclosure market is about to slow down dramatically.
As soon as the last batch of foreclosures is snapped up by investors and bargain hunters, the window will truly be closing and all those fence-sitters will jump in (possibly too late to take advantage of the real bargains) and start driving prices up again.
Prices and Market Recovery:
If home prices had risen at a normal, steady rate since 2000, the average home will be valued at about that price in September. The market has corrected back to normal levels.
35% of sales in July were foreclosures and averaged a mere $150,000 apiece. While foreclosures may have brought the “average price” down, by the time these averages go up, the market will have already turned three or four months earlier. The supply and demand numbers are driving the activity.
Pre-foreclosures have been drying up for the past two months. The FHA down payment increase and buyer assistance programs will be disappearing by October 1.
These three major factors could be the catalyst to ignite a dramatic and rapid market recovery: Not a matter of “if” but rather a matter of “when.”
July 2008: The Real Estate Market Continues To Recover
June 2008: The Window of Opportunity is Starting To Close- Don't Miss Out
May 2008: The Market Has Turned- Time to Get Off the Fence
July 2007: The Great Tempe Market Explosion
June 2007: Tempe Unscathed by Foreclosure Fallout?
May 2007: Deciphering the Foreclosure Hype
April 2007: Home Buyers of the World: Unite!
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