Arizona Homes., azrealestateangel, buy homes in Scottsdale, first time homebuyer, freerealestateinfoaz.com, grayhawk, Grayhawk community, HechtHomes, HechtHomes.com, Kelley Carter, Kelley Carter-Hecht, Kelley Hecht, Kelleyacarter, Phoenix real Estate, RE/MAX Fine Properties, real-estate, scottsdale real estate, Selling your home, what is my home worth, www.HechtHomes.com, www.kelleysellsazhomes.com
· Monthly Sales: May sales volume was 21.1 % lower than last year, at 7,445 compared to 9,436. Month-over-month numbers were down 2.8%.
· New Inventory: In May 9,815 new listings were added compared to 9,842 last year at this time, a minor 0.3% decrease.
· Inventory: The total number of listings for sale was 46.8% higher in May of 2014 compared to May of 2013…28,979 compared to 19,734 last yr.
· Month’s Supply: Currently we are at 3.89 months
· Average Days on Market: 83 days compared to 66 days in May of 2013.
· May median new list price was $225,000 which is a 12.6 % increase year over year!
· May median sales price increased 9.7% to $192,000 year over year!
· Foreclosures pending dropped again in May to 4,487, falling 49.2 % year over year!!
· Distressed sales total (short sales plus lender owned sales) 794 which represented 10.7% of total sales…down 61.7% year over year!! This means the distressed market has almost dried up and is cycling out. Great news for our communities and country.
The Outlook (from Michael J Orr, Director Center for Real Estate Theory and Practice W P Carey School of Business Arizona State University)
The most striking characteristics of the current market are the steep decline in demand for homes to purchase, coupled with a strong demand for homes to rent. We can see the decline in demand very clearly in the 16% drop in single family sales from April 2013 to April 2014.
With investors pulling back from the low end, the weak demand from first time home buyers comes into sharp focus. In the price range below $150,000 single family sales have fallen 37% in the last 12 months. Since January, supply has also dropping in this price range, and it is now a fast diminishing sector of the market.
When we examine the price ranges from $500,000 to $1,500,000, demand has clearly dropped compared with 2013. However there is more money being spent on homes over $1,500,000 than we have seen since 2007. Homes over $3,000,000 are seeing their best sales volumes since 2008. Sellers should not get over-excited, however, as the available supply at these levels is also quite high and buyers have plenty of alternatives.
The underlying key problem for entry-level and mid-range housing demand is a lack of household formation. This has been dropping for a long time due to a number of factors including unemployment, falling birth rates, lower net migration and greater home sharing especially among millennials. If household creation were to return to the normal long term average we would quickly have a housing shortage here in Greater Phoenix. Household creation usually starts with stronger demand for rentals, as adult children move out from their parents’ homes. This is typically followed in the second stage by stronger demand for homes to buy. Rental vacancies are unusually low and supply is tight.
The key issue for us is if and when overall demand for homes to buy will return to more normal levels for all property types. There are two main questions here:
1. How quickly will lenders lower their underwriting standards? The critical FICO level is 600-700 which is very typical for first time home buyers. This has not been sufficient to qualify for a loan for some time, but lenders are starting to consider changing these guideline.
2. Will those who could qualify under these new guidelines actually apply for loans? Currently mortgage applications are at the lowest level since 2000 according to the Mortgage Bankers Association. Many people in the age group 20-35 are not even considering home purchase at this point in their lives. Will they start to take the option seriously, given how beneficial it could be to their long term wealth? Can they assemble the down payment somehow, perhaps with help from their parents?
It would not take a huge change for demand to perk up. For example: more large lenders offering loans suitable for entry-level buyers with FICO scores of 620 and above; a greater degrees of forgiveness by loan underwriters for people who went through a foreclosure or short sale; 10% more millennials deciding to buy rather than rent.
There is plenty of pent-up demand which could emerge at any time.
The market remains unbalanced in favor of buyers and if demand does not pick up soon then the next likely alternative will be a fall in the supply as more sellers decide to wait for better times. If you have real estate related questions or are interested in purchasing or selling a home, I would love to assist you. Kelley Carter-Hecht 480-570-0220 http://www.Kelleysellsazhomes.com