New Home Sales Index 9-26-07

A weekly new home sales index often used by people in the business reported today that home sales continue to be flat. I was surprised to learn that the index from the exact same period las year showed only slightly better numbers, however, so it that time of the year for slower sales. It is not an encouraging looking graph with the number of home sales sliding down from the early part of the year to near its lowest point (the low point may have been last week.) Still, it was barely better than last week's figures.

This doesn't tell us a whole lot other than the market is still in a state of flux from the subprime lending fiasco, and the psychological impact of the bubble deflating. Many people fear they can't obtain a mortgage, so they don't even try. I have friends who are capable of getting financing, but have it already it their minds that now is not a good time to try because they will get turned down. This is a very unfortunate by-product of the subprime mess. It is the continuing cause of this malaise in the market. If affordability remains an issue, I think we may see more people heading to the 40 and 50 year mortgages. I think the time is coming when those are more the standard than our current system. We'll see what happens, but I think it is likely.

chris

Home Sales Estimates Phoenix Metro 9-17-07 to 9-23-07

This is the third week of the Home Sales Estimates for Metro Phoenix, courtesy of ARMLS. These are the unfiltered numbers, and contain oddballs like timeshares and mobile homes. There are not a lot of them, but they do account for several thousand listings.

By the way, I am going to start releasing this on Tuesday, as there are always some agents who have not inputted their weekend sales by Monday, or Friday recordings, for that matter, so we will try using Tuesday. The weekly report is what you would expect to see: fairly flat. Sales in the middle months are typically lighter, as people generally coincide closings with the opportunity to move from their present location at the end of months. Obviously, it is financially efficient to not pay another month's rent if you can move into your newe home at the same time. Here are the weekly numbers from ARMLS:

Universal Pending Sales 9/23/07: 4255 ( +9 from Last Week)

Pending Sales + Active W/Contingency: 4751 (-3 from Last Week)

Sales Closed 9/17/07-9/23/07: 737

Active Homes: end of 9/23/07 57,228 (+472 From Last Week)

The numbers basically paint the same story we already know: resale home figures are fairly flat. There are still more homes coming onto the market however, which we don't need. There is some talk that some of these are now being turned into rentals, as owners resign themselves to the idea that they can't sell for enough, and are going to have to eat some of the mortgage for a while as the market shakes out. It is being built somewhat by the apartment community, as renting a home has become competive with apartment rentals, as desperate owners who wish to get something out of their empty house are cutting nice lease deals. It is circular effect, as these people who can rent cheap (for now) and require a house instead of an apartment, are placated and don't feel they have to buy a home at present. Vicious cycle, isn't it?

Home Sales Estimates Phoenix Metro 9/17/07

UPDATED

This is the second week of Housing Sales Estimates, using statistics from the ARMLS. There is no great change from last week, and we will need a much longer analysis period to determine where things are. It is clear though, that we are down almost a third in home sales since last year's figures for the same time period. Certainly, resales are suffering, but they are also the highest priced (relatively) housing product available now. New homes are relatively low-priced in many submarkets, compared to existing homes, and therefore resales could suffer.

Here is what I have found for the week of 9.10.2007-9.16.2007

Universal Pending Sales as of 9/17/07: 4246

Pending Sales + Active with Contingency: 4754

Sales Closed 9.10.07-9.16.07: 796***

Active Homes: 56,756**


*This only applies to reported sales as of 9/17/07 at noon, there will likely be more reported eventually.

**This number includes mobiles and likely timeshares, etc, so it must be taken with a grain of salt. It is simpler to include them and relate it to the total sales figures, then to sift through and pull sales that might be mobiles, etc. This is technically the most accurate statistic; it just includes listings and a few sales we are not really interested in.

***I had originally only searched for closings that happened during weekdays; apparently, many sales are reported by agents as closed on Saturday or Sunday as well, so there is a steep upward revision in the total closings for the week.

This is a mid-month week, and there are typically less closings during this mid-month week then at the end of the month.

http://www.justlandconsultants.com/

A housing news update...

There is a great article in the Arizona Republic about Southeast Valley Housing....good reading for anyone interested in the real estate market. It appears the sky may not be falling after all. We are still going through some rough times, but there appears to be some light at the end of the tunnel for Maricopa, and therefore Pinal County. It is encouraging to see home prices in Maricopa become affordable again.

Another article on MSN discusses the possibility of a rate cut at the meeting next week. Its going to be very interesting to see its effect on the real estate market. I don't know that it will turn a lot of renters into buyers or not, but I think its greatest effect will be psychological.

A sliver of Good News: Pinal County still Building at a pretty good clip.

An article in the East Valley Tribune notes that Pinal County is still building, especially Maricopa. It ranks as the #1 fastest growing county in the nation, with 16.6% growth rate.

Pinal County is going to continue to grow, as it will likely be the metro area's source for the most affordable housing prices. Many builders bought land at reasonable prices, and will continue to offer homes at prices that workers-even modestly compensated workers- will likely be able to afford.

Rising Rental Rates finally slowing...

Rental Rates in the Valley have crested apparently. An article in the East Valley Tribune talks about the rapid rise of apartment rents from 2005-2007, accelerating over 10% in that time period. Vacancy rates are now higher in the apartment project segment, as many investors have homes they are resigned to renting out, and quite a few condos as well. Rents are expected to rise 2.5%-3%.

Vacancy rates are higher than healthy now for apartments, but I think people are definitely exercising their choices, and many are beneifitting from renting a Single Family Residence at a very reasonable cost. Its part of the cycle. The hidden factor of this is that it may draw and keep some homes off the market that would have otherwise been clogging the MLS as well. I have a home I am considering just renting out a home I have as well, as it is in central phoenix, and would probably still command a good rental rate. Central Phoenix has so far been fairly insulated from any real nasty valuation slides.

Chris

Home Sales Estimates-pendings 9/10/07

I am going to try to post weekly pending sales figures. This number, when viewed over time, does give us an idea of relative strength and likely sales numbers in the the next month. The number doesn't track perfectly, as some pendings will take more than 30 days to close, but there is a close correlation between pendings and monthly sales. I will try to track the accuracy of this over time. If we add the active with contingency statistic, it goes up, as many of these will soon turn to pending, but some will likely be pushed beyond the current month, so the number will usually be higher than the actual monthly sales figure. So as of 9/10/07:

pending: 4299 total homes
pending + AW/C: 4823 Total Homes

These numbers do include all condos, townhomes, SF Residences.

Arizona's subprime delinquency rate has risen, although it is certainly not as bad as some other boom states. The Arizona Republic's real estate writer, Catherine Reagor, has reported.

We have so far seemed to weather the downturn pretty well, with fallout being somewhat limited so far. It is nothing but expected that a certain percentage of subprime loans will default, that is why they are call subprime! Any lender that hasn't already calculated some percentage of that into their business model is lying. They know there will be defaults. There is going to be some pain no doubt, but if we get an interest rate cut, it will likely do wonders for the psyches of many people. Right now, it seems like so many people are paralyzed in fear, as not only do they think prices are going to slide, but also that they cannot get financing. I get more emails from lenders soliciting real estate agents to bring their deals to them now then at any time I can remember. It is really difficult to understand where the truth lies, and that is holding many people from applying for a mortgage. I have been told by industry professionals that while you can't smile and sign like you did during the last few years, if you deserve to get a loan, you typically can, on conforming loans. I have received advertising for jumbo loan financing up to 95% LTV just today, which I had heard had disappeared. Anyone with any insight on the mortgage business, feel free to comment here on what you know. Thanks!

chris

Home Sales in August

ARMLS reported sales of 4360 resale homes closed during the month of August in metro phoenix. It is not great numbers by any means, but I had some concern that there would be a lot of deals cancelled because of Jumbo loan sources drying up. The numbers are mediocre, but it was still good to see them stay over 4000 sales. I did some statistical modeling for september, and it looks like we may see about the same number, but possibly a little more. The AW/C numbers are not tested enough to tell if they will contribute to the current month totals, but over time we can get a better idea. I am hoping for a little bump in September. The mortgage mess is just one more psychological hurdle for buyers.

The Ryness report showed a little more disturbing trend last week; metro new home sales in Maricopa county showed a high percentage of cancellation; it makes sense in that core city new homes are typically more expensive than outlying areas, and jumbo loan financing availability has been a casualty of the mortgage crisis. The positive news was that Pinal Sales were okay, with relatively few cancellations. When homes are $130K-$200K, they are on average going to be more conforming type loans so they might not have as much trouble as the $400K plus market you see in chandler, Phoenix, and scottsdale. I do think that Pinal county and West Valley new homes are going to make resale homesellers miserable for a while, as there seems to be quite a disparity in the pricing in favor of buying a new home. I am thinking about selling my central phoenix home, and buying one in maricopa myself. As much time as I spend down there, it seems like a relative bargain.

One of my favorite areas in the metro phoenix area still seems to be doing well, and that is the little area commonly thought of as Hidden Valley southwest of Maricopa. It seems there are still many new custom homes going up in the area. It is odd to see the disparity in the asking prices of individual lots, as you will see pricing anywhere from $35K per acre to $70K an acre, and some even higher. There has to be opportunity for investors in there somewhere. Century Road is going to be a beautiful rural drive, with lovely views of the mountains to the west and south, and many nice homes going up in that corridor. Another pretty area is south of Stanfield, called high chaparral ranch. There are not a lot of small parcels available in here yet, but the area has stunning views and great landscape, right at the edge of Table Top Mountain Preserve, and you can see Casa Grande quite clearly, as the land sits a little higher. It is going to be a custom home area eventually.

I would appreciate any comments.


Best Prices on the Web - JustBlinds.com

Welcome, its about time I did this.

I have wanted to do a blog for my real estate website for a long time. I think it is important that there is a forum for people to make anonymous contacts, as it gives more people an opportunity to ask questions of people in the business that they might not normally ask, and also find information in a less formal, neutral setting. If you feel like spilling the beans about real estate news, deals, or other juicy bits of information, I am all ears. The most interesting aspect of this business is finding out about deal you didn't know were in the works. Lots of people who are in the business are "land junkies", and we live for analyzing the deals. Those kinds of secrets are most welcome here. So come on in and spill it. I won't give away sources, but I will publish it. So if it can be traced back to you, and you don't want it to, don't tell me here. send it to my email at chris@justlandconsultants.com, and that will be between you and me.

As a start I have put up the two polls, as I am most interested in both of those questions. I look forward to some great exchange of information!

chris just