Phoenix Real Estate Market Trends February 2015

Phoenix Real Estate Market Trends Report
February 2015

downtown phoenix real estate market trendsWe are excited to announce we are seeing good signs of life in the Greater Phoenix real estate market. In this article we will talk about the market in general, share some thoughts from Michael Orr at ASU’s WP Carey School of Real Estate and drill down a bit into the downtown Phoenix market. BTW: Thanks to the hundreds of people who commented or sent us emails about being selected to represent the Phoenix real estate market on CNBC. It was our 3rd appearance on national TV and your support meant a lot.

As our readers know, we often turn to Michael Orr for up-to-date market insights. Orr did his masters work in mathematics at Oxford and has a great sense of both statistics and social factors that influence real estate market behavior. Below is a piece from his web site, The Cromford Report.

February 15 – Over the last week we have at last seen solid signs of a significant recovery in demand. We measure pending listings on every day of each month for the entire ARMLS residential database. On 15th of each month we publish summary charts.

  • In 2014, pending listings grew from 5,420 to 6,395, between January 15 and February 15, a jump of 18%
  • In 2015, pending listings grew from 5,047 to 6,689 between January 15 and February 15, a jump of 33%. This is a big deal, and can be seen in chart form here.
  • We have not seen such a large percentage increase between January 15 and February 15 since 2009 when investors started to snap up the low hanging REO fruit.

As usual the recovery is not spread evenly. We can identify the hottest areas by looking for

  • large increases in the contract ratio. (Contract ratio indicates how “hot” a market is. It specifically measures the number of completed sales contracts relative to the supply of active listings.)
  • large increases in the number of listings under contract.

Our first observation is that the price ranges $175,000 to $200,000 , $200,000 to $250,000, and $300,000 to $400,000 are the ones that are very hot and are seeing a large spike in listings going under contract. There were more normal listings under contract on February 14 than there were at any time during 2015 for these three price ranges.

Phoenix Real Estate Market Trends Report
Thoughts from the Urban Team

We are fortunate to work with lots of full time, highly skilled agents at Realty Executives. This allows us to share information and market awareness with some of the top minds in the business. What we are personally seeing and hearing from others matches Orr’s stats. New listings are definitely coming to market at higher rates than we’ve seen in several months. We regret that ARMLS has stopped providing the weekly lockbox activity report we used to get. Thus we can not quantify the fact that we are seeing an uptick in home buyers looking at properties. That said, a poll of agents in the downtown and central Phoenix region clearly showed an increase in buyer interest and desire to go out and look at places.

There are a number of factors that may be part of the rise in buyer demand. Here are a few we’d like to share:

  • Many people who lost their homes to short sale and foreclosure in years past can now qualify for financing. We expect to see a number of these folks choose ownership over renting.
  • New FHA loan guidelines have significantly lowered the cost of home ownership. If you applied for a loan in 2014, you may want to look at it again… the reduction is costs is significant.
  • Yucky weather in the mid-west and east make our 70 degree days even better. FYI… if you want to help kick start our market, post lots of good Arizona pics on Face Book so your east coast friends get jealous and decide to make the move to one of the most beautiful and diverse states in the union.

Downtown Phoenix Real Estate Market Trends Report

phoenix real estate market trends reportThe downtown sector is really heating up. Perhaps the Super Bowl activates showcased the region and spurred interest. We do know the numbers are pretty impressive and offer hope to many home sellers who were frustrated by a lack-luster 2014. Let’s talk a look at some stats and discuss them a bit. The data comes from ARMLS on 2/16/2105.

  • 155 Single Family homes on the market. Median asking price is $278,000.
  • 116 Condo/Loft style properties on the market. Median asking price is $223,000. (This does not include Portland on the Park as they are not on showing on MLS yet.)
  • 82 Single family homes are under contract at a median asking price of 230,000. 55 of these properties went into contract in February.
  • 30 Condo/Loft style properties are under contract with a median asking price of $150,000.

What do the numbers mean? We see a couple interesting trends in the data:

  • Approximately 1/3 of the homes available went under contract in the first half of February. This suggests only a six week supply exists in the downtown and midtown region. This is a VERY low number and could result in more demand than supply.
  • The median asking price of homes under contract ($230,000) is not too far off the median price of homes for sale. Condo/Lofts on the other hand are not as close. This indicates higher priced condos are not nearly as popular as lower priced ones. This could be largely due to financing problems. Let’s take a closer look at this issue.

Lenders make it harder to buy a condo than a home. There are a number of factors but it all comes down to risk. The riskier a loan is believed, the more you’ll pay for it is some form. Many of our condo communities do not qualify for FHA or VA loans so the 3-3.5% down payment option is not available. Thus, many buyers have to turn to conventional loan products and many of these require 20-30% down. Thus, lower priced condos are easier to buy unless you have a lot of cash for the down payment.

Phoenix Real Estate Market Trends Report
Conclusions

The cautious optimism we talked about last month is coming true. We expect a somewhat frisky real estate market from now until July. We do caution home sellers to be reasonable when pricing their places. Home buyers are still quite cautious and are looking for good value. Likewise, lenders are not throwing out big appraisal numbers. The buyer side of the equation is still on the cautious side of the equation.

Downtown Phoenix home seller may be a bit more aggressive in pricing. Note we wrote, home not condo/loft. As we’ve stated in the past, condo owners need to work with their HOA’s to get put on the FHA/VA approved  list. Doing so will open up many more buyer opportunities. In addition, scrutinize the books of your HOA and see if there are ways to bring HOA fees down while still maintaining the integrity of your community. HOA fees are part of the mortgage equation and affect a person’s ability to qualify for a loan.

We hope this info has been helpful. Let us know if you have any questions, want info about the value of your home or need someone who will be excited to represent you. Call us at 602-234-5777 or email Gene@UrbanTeamAZ.com.

The Urban Team
7600 N 16th St #100
Phoenix, AZ 85020
602-234-5777

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