The Bipolar Nature of the Housing Market and Beyond

avatarthumbnail.jpgThis morning brought news that existing home sales rose 10.1 percent in October, which the National Association of Realtors quickly attributed to the now-extended deadline for the home buyers’ tax credit.

Sales activity nationally is at its highest point since February 2007, which means the nation’s catching up with the three-plus year highs in closed sales we’d been seeing locally in the Phoenix real estate market since the spring.

Is this good news? Probably. Does it impact those sellers who for whatever reason (okay, it’s probably the price) who haven’t been able to compete with foreclosures and short sales over the past several months? Not really.

This news came on the heels of last week’s report that new home starts and sales were down significantly. I can’t imagine this was a surprise to anyone, given the overbuilding that helped lead us to where we are today.

So was that report good or bad news? If you are a builder, bad. If you believe new home starts are a key component in getting the economy back on track, it’s probably bad. But if you’re a seller who doesn’t have to worry about competing with new homes, or if you’re a real estate agent with resale inventory to move, it’s a good thing. Admitting it, though, is like playing the Don’t Pass line at a craps table in Las Vegas – it’s the right thing to do, but no one likes you very much for playing the contrarian.

Taking a step back, do you feel any real connection to the economic news that continues to come out? The recession is past yet unemployment remains high. The housing market is showing signs of recovery yet values haven’t followed suit. The Dow Jones Industrial Average is at a 13-month high and many of us are searching in the cushions of our couch to help pay for those Chanukah and Christmas gifts.

What I’ve said forever about real estate now applies more than ever to the economy as a whole – everything is in the eye of the beholder. There’s no such thing as a good or bad real estate market, there’s just the market and different people who are in different circumstances are going to view it, well, differently.

Rising existing home sales could eventually cause all boats to rise if only because that could lead to a much-needed boost in confidence. Half of the economic issues we have today seem to be 80 percent mental – confidence could improve consumer spending, which then could spur companies to hire, though it’s hard to spend what you don’t have and any purchase seems almost to be a leap of faith.

Does anyone else feel similarly? I’d like to know.

[tags]Phoenix real estate[/tags]

Jonathan Dalton

Jonathan Dalton is a 40-plus-year resident of the Valley and has been helping folks buy and sell homes since 2004. He can be reached at 602-502-9693 or info at


  • Portland Real Estate 8 years ago

    Phoenix also got hit harder than other areas of the nation in that homes were built in larger than normal housing tracks all with cookie cutter homes. It makes them less energy efficient (as they did not spend time on quality or design), and generally these places are the first to see a financial crash as they have a much lower resale value than original value. Of course, Im trying to speculate on Phoenix from an Oregon point of view so I could be off on some points. -Tyler

  • BawldGuy 8 years ago

    Hey Jon — I’ve had a theory, based mostly upon my experience, intuition, and one empirical piece of evidence unearthed this year.

    Sellers listing their homes via traditional motivation, i.e. nothing’s wrong with their loan, and they have some sort of net equity, are slowly but surely becoming more attractive to serious buyers. I suspect this might be true cuz of buyer fatigue, what with having lost out on multiple homes due to short sale quagmires and REO ’23 offer Chinese fire drills’.

    When they find a bona fide seller, motivated to get into escrow, they’re in Heaven. I saw this phenomena in action first hand while selling a client’s rental home this spring. Sold in just 48 hours — at a price higher than comps showed for previous six months.

    My point is this — the buying public, (not to mention the battle fatigued agents) are tired of playing the new game, Real Estate eBay IRL. For them it equals a big FAIL for both time, and the attainment of their goal. They may be arriving at the point in the process where they’d rather get a home they love now, but at a slightly higher price, then fighting multiple losing battles for six months or more via short sales/REOs.

    Your thoughts?

  • Jonathan Dalton 8 years ago

    Some buyers get fatigued. The question then becomes whether they are willing to keep firing offers or if they just surrender. The latter isn’t the most logical course of action but it seems to happen.

    I’ve been working my buyers toward the back end of property flips, where the investor already has made the improvements on a once foreclosed home to make it livable. There may be a slight premium on these properties but they represent far more realistic opportunities to buy than the short sale/REO lunacy.

    The issue is so many people hear about all the extreme discounts their friends allegedly are getting (similar to the three-foot-long fish that jumped back into the lake before the picture could be taken) that they want to stick with the bank owneds and short sales.

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