Looks like we’ve hit the peak for listings coming onto the market. There may be some seasonality related to this, but I think overall the total number of listings are going to be dropping somewhat. Notice the momentum lines have crossed each other, and are slowing their downward trend, almost to a flat line. This could indicate an overall drop in listings for the upcoming year.
Looks like we’re in a downward trend here. There’s definitely some seasonal factors playing in to this chart, as we’re at the slowest time of the year to sell a house. Feb charts should give us some good indications for the upcoming year.
Median Sales price doesn’t seem to be dropping as drastically as it was previously. It’s still coming to a slowdown, sitting at an 8.1% drop from last year. I’m anxious to see Jan/Feb of 2008’s charts to give us a better idea of the upcoming year.
This is to be expected this time of year. Sitting at just above 100 days on market isn’t all that bad for the year end. However, notice the severe drop in the trend lines- this indicates a change is on the horizon. Since the trend is upward in direction, we can expect it to reverse and start giving us a lower Days on Market for the County.
As predicted earlier, absorption rates are declining now, which is surprising for the 4th Quarter of a year. Momentum lines are fairly flat, so predicting future direction is difficult.
Very odd results going on here. Obviously there’s a decline in the number of permits. However, check out the momentum readings. They’re in opposite directions (remember, one reads ‘faster’ than the other). Taking into consideration the overall directional trend of the data, I would think Building Permits will flat line over the next few months (meaning, remain steady) until the Summer.
Still climbing! There’s a ton more ARM’s adjusting now, and the difficulty in the mortgage market is helping defaults hit record highs. Less mortgage programs means less options for homeowners to refi out, or, buyer’s to purchase homes in foreclosure. We won’t see a slowdown or change in this until the Mortgage Industry turns things around.
Still sky rocketing here. I’m not surprised, as the Lender’s still haven’t figured out how to deal with all these foreclosures. You’ll notice, the momentum lines are slowing slightly- which, I expect a change in direction sometime in Summer 2008. I am guessing it’ll take the lenders that long to figure out how to work out Short Sales effectively.
We’re heading back to the baseline of Investor Activity. The average for our market, in other words. All the wannabe investors have run back to their IRAs and stocks- as they’re losing their homes to foreclosure now. All the guys who know what they’re doing (the smart ones!) are coming back into the market now, snagging all these great deals we have available to us. Momentum is coming to a plateau, which means it’ll remain steady for investor activity. No flood of new investors, and no loss of seasoned investors.
Still not the most exciting of charts- however, the faster Momentum line (the pink one) is just barely crossing over the zero line. With the politics going on right now, I believe we’ll continue to see interest rates drop until we get the mortgage markets back on track.
Well, if for some reason you haven’t heard by now, the New York Giants won the 2008 Super Bowl here in Glendale, AZ. The upset was at the expense of the New England Patriots’ near perfect season, and what a game it was. With only a few minutes left on the clock in the last quarter, the Patriots scored edging them ahead. I was certain that the game was over at that point, as I’m sure most everyone watching was. But WOW! What a comeback! Those Giants whipped out a lead in the remaining minutes, taking the Trophy home to the East Coast. I’m not a huge sports fan, however, this was probably one of the best games I’ve seen in quite some time. Either the Patriots lost their ‘mojo’ in the 2nd half, or the Giants really stepped it up. The Patriots offense was making many mistakes, and could barely hold off the Giants’ aggressive defensive line. What a victory for both teams! Now, let’s go do some deals…
Here’s an interesting presentation for you. If you don’t know who Elliot Pollack is, then you haven’t lived in AZ for very long. He’s a fairly large and well known Commercial Developer, especially here in the East Valley. He has put out some great data/presentations, as well as his outlook for 2008 and the Greater Phoenix area. Essentially, 2008 might see the bottom of the market- not much different than what we’re already seeing, prices may decline some, etc. However, he also agrees with the long term outlook for Arizona, that we remain strong for job and population growth. It’s a great market for building your net worth and retirement accounts!
Spend some time on his site, www.arizonaeconomy.com, there’s a TON of great info on there!
NOTICE! I have added 4 new charts and stats to the reports! The first thing you’ll notice are new charts for both ‘Average Sold Price‘ and ‘Median Sold Price‘ for Maricopa County. Next you’ll notice the ‘Average Days on Market‘ stats for homes on MLS. Last, you’ll see an ‘Investor Activity‘ chart. This is an exclusive chart ONLY to REI Pipeline.com! This works much like the Absorption Rate, but solely for the foreclosure sales. It tracks how much ‘activity’ is going on between the Notice of Foreclosure Sales and the actual Trustee’s Deeds being issued from those sales issued.
The ‘Investor Activity Chart’ can be interpreted in various ways. Some might look at it as a measure of how many investors are out there picking up deals BEFORE they go to the foreclosure sale auction at the courthouse steps. This would also indicate the home owner’s ability to save their home on their own (either by filing Bankruptcy, working it out with the bank and bringing their loans current, selling it either with a Realtor® or to a private investor, etc). Conversely, some might look at it as a measure of how much activity is going on at the foreclosure auction. I anticipate adding in an ‘REO’ variable to the stats here very soon- this will tell us how well the banks are responding to the market, and will most certainly be the slowest trailing indicator out of the bunch. More to come on that later…
If you notice the movements in the Investor Activity Chart and it’s indicators, you’ll see some interesting data around the time of our boom/bust, which leads me to believe the effectiveness of this indicator.
Only REI Pipeline.com brings you the most accurate and effective data for investing in our market! If you like what you see, please feel free to post a comment below!
We’re still 25% more than the same month last year, however, it is a 2.5% DECREASE from last month. This is to be expected as seller’s take their homes off the market for the Holiday season. Notice how the divergence in the indicators took place at the beginning of this year. That CAN mean a change in direction of the overall trend. We just might start seeing an overall decrease in listings coming into the beginning of 2008. The indicators have moved closely to the baseline, showing a much lower ‘momentum’ than previous months, and is continuing to slow down. That’s a great sign for our market. Let’s keep a close eye on this one.
No shocker here. 3.9% decrease from last month- again, an expected slowing for the holiday season. The EMA indicator is still pointed downward, signaling even less sales in the near future. I anticipate this to level out and possibly start picking back up in Feb/Mar of 2008, our high sales season.
Obviously we’re seeing the standard decrease in permits issued for this time of year. However, this is a 38% decrease from last year’s numbers. No surprise here, the builders are holding back until they dump some of the inventory they have sitting around. Interesting point- notice the divergence going on in the indicators. Seems as if they are disagreeing with each other. Typically, this can indicate a reversal of direction in the overall trendline. It will be interesting to see what happens in the upcoming 3-4 months. I’m going to be watching this one closely.
Interest Rates
Not much change from last month. There’s a ton of talk going on within the political world, and with Bush’s new plans on the horizon, we could see some interesting movements here in the future. Again, we have some slight divergence here- notice how the EMA line has already leveled itself out, while the Momentum line has crossed the baseline. I’m hoping in the next month or so all three indicators will start heading for, or, crossing over the baseline in a downward direction. This will reinforce a great buying signal.
According to Jonathon Dalton, and his data from Arizona Regional MLS, Gilbert, AZ currently has the fastest absorption rate (11.61 Months) compared to other Maricopa County cities. When you look at Chandler, Tempe, and Mesa- there’s no arguing why I focus my investing in the East Valley. Here’s Dalton’s table.
I came across a great blog post today by Stewart Hsu, talking about the latest Population Growth Projections for the US. This first image is a map of the US with Growth Rate Projections for 2007 - 2012 (source: CCIM, stdbonline.com). At the very top of the list is Arizona, Nevada and Florida.
The next image is data Hsu assembled from the US Census Bureau data showing Growth Projections to the year 2030. Arizona tops the list with a 209% change, beating out Florida (179%), Texas (160%), and North Carolina (152%). What’s interesting to me is that Arizona’s projected growth rate of 209% far outweighs the entire United States’ Growth Rate of only 129%.
What’s that mean for investors? Stability, security, comfort of knowing that a long term Real Estate Investment here in Arizona is safe. Let’s say you bought the cookie cutter, All-american house here in Arizona- 4bed, 2bath, 2300sf home. It’s worth $265,000 (median price range), but you got it in foreclosure for a decent discount. Let’s say you paid $225,000. Assuming an average appreciation rate of 5% (pretty standard here)- in 13 years your property will be worth $499,697. Assuming you didn’t pay down the principle at all, you’d have $274,697 in equity alone. Now, don’t forget about the tax benefits of owning rental property, as well as any principle you’ll pay down during that time. TALK ABOUT A GREAT TIME TO INVEST! And, with the fastest growth rate in the Country- you’ll have no problems selling your cookie-cutter property. My personal belief is that Arizona will also see a significant increase in appreciation rates as well, thus boosting your overall ROI.
If you’re interested in picking up some foreclosures or other rental property, please contact me asap.
Here’s another article that expresses my same thoughts. What a wonderful market to be flipping houses! Now, if you’re a newbie to the market, you have to make sure to stay on top of your numbers. Plan on fixing up the property to be the nicest in the area, for the cheapest price. Which means, plan on listing it BELOW MARKET VALUE to have a chance at selling. It can be done, I’m doing it, as well as many of my clients.
Here’s an excerpt-
So how do we make money? The short answer is that we need to return to value investing. Gone are the days of buy high and sell higher, the music has definitely stopped in that game. A value investor will make his money when he buys, he doesn’t acquire property in the expectation that the price is going to appreciate. Making your money when you buy simply means that you buy a property that has a lot of potential equity. To do this you need to locate a motivated seller, someone trying to dispose of a distressed property will usually be highly motivated in this market.
Stay tuned as I will be posting details of deals I am doing, or, am passing over to some of my clients for big profits…
Stop the Presses! The Winter Rainy Season is Over! After a 2-day downpour here in Arizona, you’d think we would’ve all washed away based on the news reports What a great and groovy day! No rain, my birthday celebration- life just can’t get any better than this. This oughtta sum it all up…
I know it’s your guilty pleasure. It’s ok, we all watch them too. It seems like you can’t turn on 2nd Tier Cable Channels anymore without seeing someone flipping a house. Whenever I tell someone I’m an investor, their first response is ‘oh, kinda like that one tv show’. Yeah, kinda like that. HA! To this date, I’ve only seen 2 episodes that were filmed here in AZ- and those were during our boom. If you pay close enough attention to those shows, you’ll notice that the majority of them are filmed in either California during a rising market, or in the mid-west. Let’s talk about these 2 sceanarios…
Yes, in California when their market is rising, it was somewhat easy to find a deal for $500k, throw money at it, let’s say oh, $120,000, and sell the thing for $900k. Not a problem. Kinda like buying a home here in AZ during our boom and flipping it for $50k higher a week later. What cracks me up is that the beginner investors act soo surprised when their REALTOR® tells them how much their flip is now worth. - DIDN’T THEY KNOW THAT BEFORE THEY PUT MONEY INTO THE THING? Oh, how nice it must be to live in the promise land. I would guess that if you talk to any California investor during their down cycle, they would paint you a different picture. Funny how the networks don’t air episodes in those times, huh?
Let’s look at the mid-west. Ahhh- the beauty of picking up a home for $40k, throwing $20-30k into it, and selling it for $250,000+. Well, believe me, it’s never as easy as they make it look on tv. You’re cramming months worth of hard work into 42 minutes of air time- they’re bound to skip a few details. I’m not saying it can’t be done, there’s just a ton of details left out of the process.
One thing’s for sure- you can’t pick up a house for $40k, throw $20-30k into it and sell it for $250-300k+. At least, not in this market. The mid-west doesn’t have subdivisions like we do here, and subdivisions dictate your comps and values. I always wonder who is buying a $300k house right smack in the middle of $40k dumps? That just doesn’t happen here in AZ. If you pay attention to the shows now, they quickly end the show with their ‘Potential Profit’ if they sell the house for the projected amount. There’s no discussion of holding costs, closing costs, employee costs, etc. 2 years ago we knew how many days it took to sell, the final sales price, closing costs, Agent’s commissions and net profits. Now we’re swept away with ‘potential profits’ and ‘what-if’ scenarios as the closing credits are rolling across the screen. Funny how things change right under our noses. It’s still pretty glamorous when you don’t notice the little details, huh? Read the rest of this entry »
Glendale, AZ. The upset was at the expense of the New England Patriots’ near perfect season, and what a game it was. With only a few minutes left on the clock in the last quarter, the Patriots scored edging them ahead. I was certain that the game was over at that point, as I’m sure most everyone watching was. But WOW! What a comeback! Those Giants whipped out a lead in the remaining minutes, taking the Trophy home to the East Coast. I’m not a huge sports fan, however, this was probably one of the best games I’ve seen in quite some time. Either the Patriots lost their ‘mojo’ in the 2nd half, or the Giants really stepped it up. The Patriots offense was making many mistakes, and could barely hold off the Giants’ aggressive defensive line. What a victory for both teams! Now, let’s go do some deals…
What a great and groovy day! No rain, my birthday celebration- life just can’t get any better than this. This oughtta sum it all up… 
