Entries from April 2008

Pending Sales - Phoenix, AZ

April 30th, 2008 · No Comments

April 30, 2008 update on the Phoenix metropolitan area real estate market:

When a house goes under contract in the Phoenix area MLS system, it is classified as either “pending” or “AWC.”  Pending status pretty much means “we’re under contract; leave us alone.”  Whereas “AWC” means Active With Contingency; the buyer might have his own house to sell or the financing is very shaky or back-up offers are invited; in this case, home showings are welcomed.

Pending listings (and AWC listings) feed the sales for the end of that month and the following month since most buyers need 30 days to close escrow.  Under most market conditions, you can subtract 900-1300 from the number of pending listings to get a very close estimate of the following month’s home sales.  For example, in Fall 2007, 4400 pendings led to 3440 sales.

A little history first:  The highest number of pending listings in all of 2006 was 8778 on May 9, 2006.  There were 7558 sales in May 2006 and 7207 sales in June 2006.  The highest number of pending listings in all of 2007 was 7651 on February 26, 2007.  There were 4947 sales in February 2007 and 5980 sales in March 2007.  After that, the number of pending listings went down throughout 2007.

Looking at the number of pending listings now in 2008, it appears that the market bottomed out in January 2008.  Pending listings have really picked up, week after week.  So imagine my excitement to see over 7000 pending listings (plus some 1300 AWC listings) in April.  This should translate to 5700-6000 sales for April 2008, which would create newspaper headlines.  The highest pending listing count in 2008 occurred on April 23rd at 7316.  Sales in the Phoenix area in March 2008 were 4291.  5700 sales would signal that the market had recovered.

But what’s going on?  Why are there only 4104 sales in April so far?  We only have one more day in April to boost the sales total.  Traditionally, the last day of the month produces 300-500 sales.  Sales totals of 4400-4600 will not be that significant from March 2008.  So where are the 5700 sales?

Well, it’s probably due to foreclosures and tightened financing standards.  The professional investors who swept into Phoenix in late 2004 and early 2005 have returned to Phoenix after a 3-year break.  These investors are snatching up foreclosure properties and putting them under pending status.  And then having to wait and wait and wait while banks get their documents and paperwork and title liens straightened out.  And “normal” buyers are having a tough time with loan approvals (appraisals with “declining market” designation requiring additional down payments, severe underwriting scrutiny).  30-day closings do not appear to be the norm.  Title companies are noticing an increase in cancelled escrows (buyers pulling out or buyers not qualifying or short sales that don’t go anywhere).

It will be interesting to see how May 2008 sales shake out.

Want to know how Phoenix compares to Las Vegas?  It seems that Las Vegas is doing better with pending sales than Phoenix.  But perhaps their numbers are due to extended escrow periods; successfully closings are being delayed.  Let’s look at Vegas numbers.  Currently there are 5450 pending listings (homes and condos) and 18,189 active listings (homes and condos) in Vegas.  That means 23% of all Las Vegas listings are under contract.  In Phoenix, there are 7112 pending, 1343 AWC listings, & 55,460 active listings.  That means only 13% of the Phoenix metro area listings are currently under contract.

The best part of these statistics is that there is action once again in the Phoenix and Vegas markets.  People are buying homes.  If not for the professional investors (who were scorned for buying homes in 2004 & 2005), there would be significantly fewer sales.  Investors are seeing the value of lower-priced foreclosure properties and removing them from the overall market.  We will see a dip in average home prices while this shakes out.  But eventually listing inventory will decline.  Supply and demand will then help home prices recover.  How long this will take is anyone’s guess.

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Tags: Real Estate Statistics · Real Estate News

Flowery Mess

April 30th, 2008 · 2 Comments

A floral explosion:  wallpaper border, bedspread, matching lamp shade, and matching drapes.  Old telephone on the wall.  And dolls.  Creepy.

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Tags: Staging · Bedroom · Window Coverings · Phoenix Homes · Ugly Décor · Wallpaper · Dolls · Bedspread

Ugly Orange Carpet

April 30th, 2008 · No Comments

Beautiful orange sculpted carpet.  Elegant silk scarf flanks the window.

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Tags: Carpet · Living Room · Window Coverings · Phoenix Homes

The Roof Leak House

April 30th, 2008 · No Comments

I showed this north Phoenix home to a client.  This is the addition to the house.  Notice how the roof is flat and sloped back toward the main house, evidenced by a lot of water damage inside.  How about the stupid exposed A/C venting into the addition.  Wanna bet the hot summer sun affects the cold air blowing past?

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Tags: Roof · Phoenix Homes · Repairs · Water Damage · Room Addition

Mirrored Closet Doors

April 30th, 2008 · No Comments

Awesome bedroom, eh?  Love the flowery wallpaper.

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Here’s the family room with popcorn ceiling.  And no floor covering, which means buyers cannot use FHA financing on this house.  FHA rules state homes must not have bare floors (unless it’s professionally finished concrete).

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And the green algae swimming pool.

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Tags: Flooring · Family Room · Pool & Spa · Bedroom · Phoenix Homes · Wallpaper · Ceiling

No Trespassing

April 30th, 2008 · No Comments

A complete waste of a large front yard.  Putting the fence up close to the house makes the property look like a prison.  No landscaping lowers the curb appeal even more.

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Tags: Landscaping · Curb Appeal · Phoenix Homes · Fence or Wall

Seller Incentives To Buyers - Gas Cards?

April 29th, 2008 · No Comments

How do you entice a buyer to see your house for sale?  Price?  Condition?  Location?

Price is paramount.  It is the #1 consideration for buyers right now.  As a seller, you could offer incentives to the buyer like closing cost assistance, but buyers will ask for it anyway.  You could offer a commission bonus to the buyer’s agent, but that doesn’t seem to work much anymore; overpriced listings with commission bonuses still remain on the market after 6 months, 9 months, and more.

Condition is also important, hence the purpose of this blog.  Buyers choose homes based on emotions; is there a wow factor, does the house speak to them, does it have a homey feel, can they picture their furniture fitting in, can they see themselves living there?  If the house is cluttered or has odd furniture or visual distractions, buyers cannot imagine living there.

Location is lower on the ladder.  Price and condition can sway any buyer to live elsewhere.  Of course, this can be switched around (e.g., a prestigious location can sway any buyer to spend more).  But price and condition are higher in today’s market.

With gas prices rising, buyers are increasingly concerned about long commutes.  Outlying cities in the Phoenix metro area will have a harder time convincing buyers to make the drive.

How can buyers be enticed to visit these houses?  With gas cards? 

Today’s MSNBC.com article shows that today’s consumers are more concerned about gas prices than jobs or health care.

What if the $600 stimulus tax rebate checks were called “gas subsidy” checks instead?  Would people worry less about gas prices and be more apt to buy homes in the far suburbs?

Let’s say gas prices went up 50 cents in the past year and might go up another 25 cents.  That’s 75 cents per gallon in the past year.  What if the $600 tax rebate check was used to subsidize gas prices?  Would a buyer be less stressed moving to the suburbs if they thought gas prices would remain at last year’s prices?  Take the $600 check and divide by 75 cents to create an imaginary subsidy.  That’s 800 gallons of gas subsidized at last year’s prices.  Divide that by 52 weeks and you get 15.38 gallons per week.  That’s a full tank of gas per week for a year at last year’s prices.  Sounds better, doesn’t it?  If price and condition are great, location might not be so bad.

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Tags: Real Estate News

Average Price Per Square Foot - Phoenix, AZ Homes

April 29th, 2008 · 1 Comment

What is the average price per square foot of homes sold in the Phoenix metro area?  I paid $50 per square foot for my house back in 1995.  By 2002, people were paying $100 per square foot.  Prices really took off in 2005 and peaked in May 2006 at $189 per square foot and have declined since.  Average sales price per square foot in Phoenix in March 2008 was $147, the same as three years ago in March 2005.

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The statistics presented here are for all types of housing sold in the MLS system, including single detached homes, condos, townhouses, and manufactured housing.

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Tags: Real Estate Statistics · Real Estate News

Ugly Couches

April 29th, 2008 · 1 Comment

Blast from the past in this Phoenix living room.  1970s furnishings?  Old TV set.  Delightful couch.

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Check out this ugly couch for Bullhead City, Arizona, complete with built-in mirrors!  It was an award-winning couch in 2003 at the annual Ugly Couch contest.  Check out the UglyCouches website for almost 100 photos of the world’s ugliest couches.  It’s a lot of fun.  There’s still time to enter for the 2008 contest.  If the first link doesn’t work, use this one but it does have a pop-up.

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Here’s another view of the 2003 Ugly Couches winner.  It’s massively huge!

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Tags: Living Room · Phoenix Homes · Ugly Couches/Chairs

The Ultimate Man Cave

April 29th, 2008 · 1 Comment

It’s trendy to take a fully-functioning 2-car garage and convert it to a man cave (a place for the man of the house to escape).  Since 91% of home buying decisions are made by a woman, this man cave might need to become a garage again when selling.

However, it is one heck of a man cave.  Pool table, beer bottles all over, a full refrigerator (add a keg and a tap and it becomes a kegerator), a microwave, a TV, a stereo, a beer company light.  And either a lot of photos of fishin’ trips or lots of beer bottle labels glued to the walls.

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Tags: Garage or Carport · Clutter · Phoenix Homes