Because the housing recovery was predicted by most economists long before now, I decided over a year ago I would not pass on their rosy forecasts again. Having been suckered in, not once, but twice, I said, no more crystal ball gazing, we want proof in numbers.
Well, I’m happy to report, they are beginning to show up. While some say we are comparing apples to oranges when comparing site-built to factory-built, numbers say otherwise. In Arizona we have traditionally held our own market share of all new housing starts. We have actually increased our share in the past 2 years to 8%, surpassing many other western states.
Some things I learned at a real estate class just this week – in Maricopa County there are only 11,000 active listings for new and pre-owned homes. This compares to the average of 28,000 to 33,000 in recent months. The median price increase LAST MONTH was an astounding 20%.
According to experts the majority of homes being sold today are either below $150,000 or above $600,000 with mild activity in between. For homes in the lower price range it is typical to have 5 buyers bidding on the same home, driving the price upward. While this is Maricopa County and not the entire State, we are beginning to see movement upwards in other markets as well.
One more impressive stat – job growth. In 2010 Arizona was ranked 49th out of 50 states. As of March of this year, Arizona has moved up to #8, adding 47,000 jobs in the past 12 months.
Many have talked of a “shadow inventory” (me included) which would be another wave of foreclosures because of adjustments to variable rates. Experts are now saying the banks have gained so much experience in the past 5 years that they have programs in place to diffuse massive foreclosures. The shadow inventory is now widely being dispelled, resulting is another significant help in our recovery.
Back to the activity in homes priced under $150,000. There are so many multiple bids on bank owned properties that prospective first time homebuyers are bidding on as many as 5 homes at a time. Where do these customers go after being frustrated repeatedly? Hopefully, OUR WAY!
The latest Maricopa County stats on R.E. sales reflect 57% normal transactions, 25% bank owned, and 18% trustee sales. These percentages have done a complete reversal, all in our favor. The more normal transactions, the quicker our recovery.
Michael Orr, Director of ASU’s Center for Real Estate Theory & Practice, said “the housing market is a completely different situation than it was this time last year. Not only have we improved, but we have improved faster than any other state in the nation.” Foreclosures are down and available inventory is also down. Based on the current number of listings there is only a 1.6 month supply of homes. Do any of you remember when we had well over a 4-year supply? Underwater mortgages still exist for those that purchased during the bubble years. For those that purchased before 2004 however, the mortgages are beginning to move into positive territory.
Homebuilder sales are up as well with 2 distinct changes from the past. The footprint is considerably smaller (meaning both the home size as well as the lot) and they tout energy efficiency (to establish a marketing edge vs. older homes.) Our industry marketing efforts need to also emphasize energy efficiency and highlight the value of increased square footage and a larger lot (hopefully).
Bank-owned homes are losing their hold on the market as evidenced by the numbers. As they diminish, the related appraisal issues will eventually go away. We still need more active lender involvement to offset the many that shunned us, even after we made the necessary changes. As lenders become healthier, and they are, we will see more competition for our buyers. While we have a long way to go, we now have solid stats that show us we have every right to be optimistic about our industry’s future.