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Phoenix Real Estate and Homes for Sale | Jonathan Dalton, Realty ONE Group – (602) 502-9693

Jonathan Dalton
REALTOR
ePro, SFR
602-502-9693

What Will the Bottom Look Like

What Will the Bottom Look Like

Jonathan Dalton, Phoenix Real Estate AgentLooking purely from the standpoint of a real estate agent, movements in prices in the real estate market mean remarkably little in and of themselves. Prices are indicative of supply and demand but I tend to look more at the raw supply and demand figures themselves.

One reason I track absorption rate is because inventory numbers (read: supply) are all but worthless if not balanced by demand. High inventory can be sustainable if there’s high demand to match. Notions of historical norms in inventory mean very little in a real estate market where thousands of new homes have been built, unless those numbers are put into the context of percentages. Which they aren’t.

Foreclosures, for example, are on the rise but still represent a very small percentage of the total homes in the market. They’re of great concern if it happens to you but statistically less than significant in the overall scheme.

Inventory right now has become a shell game of sorts, where the question isn’t how many homes are on the market but how they are categorized. When a short sale goes back to the bank and becomes a lender-owned home, is that really a bad thing in the larger picture? I say no. The home’s switched from almost impossible to sell to competitively priced in an instant, at least in most cases.

How does the bank determine the list price? By looking at the comparables at the start and aggressively adjusting the price until a buyer walked in with a contract.

Many buyers are looking first to bank-owned homes. Some insist on low-ball offers even in the face of competitive list prices. Some succeed. Some fail. But with every sale, that’s one more tick in the demand column. Enough such ticks and a trough begins to form followed by an eventual rise. One lender told me he saw 28 people come through a Saturday open house – primarily because the open house signs indicated the home was lender owned.

A market fueled by foreclosed homes isn’t necessarily the end of the world if it means that homes actually are selling. It’s when you have thousands of foreclosed homes for sale and none are selling that hope’s all but gone.

Two questions for you …

There currently are 39,000 single-family homes for sale in Maricopa County, give or take a hundred. How many of those are lender owned? Give me a percentage or a raw number, either way.

Second question …

When the real estate bottoms, what are you going to see swinging upward first – raw sales figures or home values? And do you expect a prolonged flattened trough or a relatively sharp “v” when it happens?

[tags]Phoenix real estate,  REO homes, foreclosures[/tags]

No Comments

  • Jeff Brown says:

    The sales will likely increase long before the prices begin to rise. I think.

    I think when the recovery is almost done, Phoenix will have lived up to its name. On that you can go to the bank.

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