Barb Savoy-Pacella

Courtesy of Barb Savoy-Pacella, ABR, CHMS

Director of Business Development ~ Keller Williams Arizona Realty

www.PacellaGroup.com

I've always been a Carly Simon fan, but today, she might just be my hero. Several economists are predicting signs of recovery in the Phoenix market for 2011 and I just can't help hearing Carly Simon singing "Anticipation," every time I think about it.

The Phoenix Business Journal is reporting that Karl Gunterman, Professor of Real Estate Finance at ASU is predicting that "the Phoenix area housing market will improve in 2011." We have heard the same sentiments from other notable ASU economists, and also from a leader in forecasting the Phoenix housing market, Elliott Pollack.

It was reported in December that the median home price in Paradise Valley had remained stable for a full twelve month period. It is now being reported that the median price for townhomes and condominiums has also stabilized over the last several months.

The consensus among all reports seems to predict that we will continue to see moderate declines through the first and second quarter, and should expect signs of recovery beginning in the third quarter. The anticipation is causing me to feel like a child on Christmas Eve!

Current Conditions in the Phoenix Market:

• There are 30,588 single family detached listings currently in MLS. That is a decrease of 376 listings from last week, which is interesting since we normally see a swell in January.

• There are 37,445 total listings currently active in MLS, which includes condos, townhomes, patio homes and lofts.

For specific information regarding Phoenix real estate, contact us at www.PacellaGroup.com

Courtesy of Barb Savoy-Pacella, ABR, CHMS Director of Business Development, Keller Williams Arizona Realty ~ www.PacellaGroup.com

Being a data geek, I often look at levels of distress by City in the Cromford Report. Over the past two months, the level of distress has remained stable, or decreased slightly, in each of the major cities throughout the Valley.

As we know, the level of distress in a given area can have a direct correlation to price erosion. In other words, if a particular area has a high inventory of foreclosures and short sales, prices could be dropping. The exception would be an area where the months of supply of inventory is less than four, in which case it is a seller's market and sellers may be receiving multiple offers on their property, often for higher than the list price, in which case prices could be stable, or even increasing.

Another exception to the theory of the correlation between level of distress and price erosion would be in areas where the inventory is not necessarily saturated with distress, however, a high percentage of the homes that are selling are distressed and few traditional equity properties are selling.

The chart below illustrates that in cities like Anthem, the level of distressed inventory is balanced with the percentage of distressed sales. However, it is interesting to note that in the cities with lower levels of distressed inventory, such as Carefree, Cave Creek, Fountain Hills, Paradise Valley and Scottsdale, buyers are definitely seeking value, or a bargain, since the percentage of distressed sales is 15% or more higher than the percentage of distressed inventory. It's also interesting to note that over the past few years, those are also the areas of the Valley where the level of absorption is lowest and months of supply is highest.

Current Conditions in the Phoenix Market:

• There are 30,588 single family detached listings currently in MLS. That is an increase of 123 listings over last week, which is interesting since we normally see a larger swell in January.

• There are 37,445 total listings currently active in MLS, which includes condos, townhomes, patio homes and lofts.

For additional information regarding a specific community, or to receive an MLS portal, contact us at www.PacellaGroup.com

What has the new year brought to the Phoenix Housing Market?

Courtesy of Barb Savoy-Pacella, ABR, CHMS ~ Director Business Development ~ Keller Williams Arizona Realty. www.PacellaGroup.com

It is not unusual at this time of year to see a decrease in absorption. Often December is a quieter month for sales and pending sales, and the first business week following the New Year many owners who waited out the holidays to put their home on the market are ready to actively list their property.

As we've been observing, there are many things about our current market that are not typical. December was an active month for sales and pending sales, and although we've had a slight increase in inventory over the past week, we have yet to see anything dramatic.

As I have shared in the past, watching the absorption rate has become an obsession for me. I often recall the first time I really began observing absorption in late 2007 when each week, I would cross my fingers that absorption would rise over 5%. Although we have seen slight decreases in absorption, even our most challenging municipalities and price ranges have an absorption rate above 5%!

Absorption describes the percent of actively marketed properties that become pending sales, or how quickly we are moving through the available inventory.

Current Conditions in the Phoenix Market:
• There are 30,465 single family detached listings currently in MLS. That is an increase of 80 listings over last week, and the first time in eight weeks that we've seen an increase.

• There are 37,420 total listings currently active in MLS, which includes condos, townhomes, patio homes and lofts.

For information on specific neighborhoods, visit us at www.PacellaGroup.com

THE RELATIONSHIP OF DISTRESS ON PRICE EROSION IN PHOENIX

Courtesy of Barb Savoy-Pacella, ABR, CHMS ~ Keller Williams Arizona Realty ~ www.PacellaGroup.com

Once again, the Cromford Report illustrates that the level of distress in a specific geographic area has a direct relationship to price erosion and to absorption.

The Cromford Report analyzed the top 20 zip codes with the highest percentage trustee sales (foreclosures) throughout the Phoenix metro area. All 20 zip codes are in West Phoenix, with 85043 (47^th Avenue and McDowell) taking the number one position. The list also includes zip codes in the municipalities of Tolleson, El Mirage, Tonopah, Buckeye, Avondale, Laveen, Youngtown, and Surprise.

The Cromford Report also analyzed the top 20 zip codes with the greatest price erosion since the peak, and it's not surprising that the results were consistent in showing the relationship between trustee sales and price erosion since all 20 are in West Phoenix. The zip code of 85009 (35^th Avenue and Washington) took the number one position (85009 is at 17), and again the top 20 included zip codes in the municipalities of Tonopah, Avondale, Youngtown, Buckeye, and El Mirage.

Conversely, the top 20 zip codes with the lowest percentage of trustee sales encompass the Northeast Valley and the 65 and older communities. The fewest trustee sales occurred in 85375, which is Sun City West, and the list includes the municipalities zip codes in the municipalities of Fort McDowell, Scottsdale, Tempe, Carefree, Paradise Valley, and the 65 and older communities of Sun Lakes, and Sun City.

The top 20 zip codes for lowest percentage of price erosion since the peak is also consistent. Sun City West 85375 also took the top spot for least effect of price erosion and zip codes of other municipalities included most of Scottsdale, Tempe, and 85233 in Gilbert, 85249 in Chandler and the 65 and older community of Sun Lakes.

A few interesting exceptions are Rio Verde, which has the second lowest foreclosure rate in the valley, and yet has lost 61.4% of it's average price per square foot since the peak; and Surprise which ranked 9^th for foreclosures, but 48^th for price erosion.

Current Conditions in the Phoenix Market:
• There are 30,465 single family detached listings currently in MLS. That is a decrease of 329 listings over last week and the eighth week in a row of a decrease

• There are 37,369 total listings currently active in MLS, which includes condos, townhomes, patio homes and lofts.

For a full report by zip code, contact us at www.PacellaGroup.com

What is the Phoenix Real Estate Forecast?

One knows that they have officially entered dork-dom, when they're hanging around on New Year's Day, waiting to hear Elliott Pollack's radio broadcast.

If you're not familiar, Elliott Pollack is a local Phoenix Economist who has been forecasting, specifically on the Phoenix real estate market, since the 1960s. Pollack has long been considered a leading expert on the Phoenix market, and I knew when I began my career in real estate that I would need to listen carefully when Pollack spoke.

When the market first plunged as the lenders failed in mid 2007, the agents who had been in the Phoenix market for 20+ years claimed that they had been through the down cycles before and they would wait it out for the year or two that it would take before the market returned.

In January of 2008, I had an opportunity to attend a luncheon where Pollack was speaking. At the luncheon, he very somberly told a room full of Realtors and loan officers who were sure that they only had a year or so more to wait, that he did not anticipate seeing signs of recovery for nearly four years. He predicted that in mid 2011 we would begin to see relief. I remember at that moment thinking that he seemed like a very knowledgeable man, but being somewhat hopeful that perhaps he was experiencing an early form of senility, which of course has proven not to be the case.

Pollack's message today was very much the same. Since I'm fairly confident that you were not hanging around on New Year's Day waiting to hear from Pollack, I will share the highlights:

•· Job creation in the Phoenix metro area will improve in 2011. We lost 80,000 jobs in 2008, an additional 160,000 in 2009, and we created 24,000 jobs in 2010. Pollack anticipates that Phoenix will create approximately 50,000-60,000 new jobs in 2011.

•· Pollack believes that new construction permits will remain very slow over the next two years while the market really moves through existing inventory.

•· According to Pollack's data, 1 in 5 (or 20%) of single family detached homes in the Phoenix metro area is a rental. He believes that there are more families in rental homes than apartments (hint, hint ~ call your investors).

•· He believes that the job creation will help bring migration back to Arizona. In years past, approximately 120,000 people annually relocated to Arizona from other states. In 2010, the figure for relocation was approximately 40,000.

•· Pollack believes that the downfall to the Phoenix economy actually began 15 to 20 years ago when we began relying more on construction and tourism for the economy than competitive exports. He is hopeful that the creation of the Department of Commerce will help correct this mistake for the future of our economy.

•· Pollack believes that the Phoenix and Tucson housing markets and economies will return first in our state, which will then spur intrastate tourism and vacation homes, fueling the economies in cities such as Flagstaff and Sedona.

•· Pollack's final advice for 2011 is rather obvious; reduce debt and increase liquid assets.

Current Conditions in the Phoenix Market:

Current Conditions in the Phoenix Market:
• There are 30,794 single family detached listings currently in MLS. That is a decrease of 391 listings over last week and the seventh week in a row of a decrease

• There are 37,818 total listings currently active in MLS, which includes condos, townhomes, patio homes and lofts.