Mike Orr of the Cromford Report pours over the real estate trends in our market. My Market Center Leader met with him this morning and wrote:
Many of the things that Mike mentioned are things that we have been evaluating weekly, such as the ability of our current market, to break the age old law of supply and demand. As we have reviewed previously, Mike also believes that the reason we are able to break this law is due to the distressed properties on the market, but he also cites the fear felt by some appraisers, who the lenders pointed a finger at when the bubble burst accusing them at that time of inflating values, to risk over valuing a property (even slightly), and therefore are instead under valuing them.Reviewing our ability to defy the laws of supply and demand, the chart below illustrates the rate of appreciation (or in most cases below, depreciation) that has taken place in our market, over the past two years. Most areas are not in the free fall that we were experiencing in 2009, but I find it curious that with the exception of Scottsdale and Paradise Valley, most municipalities are seeing a greater rate of decline at this point in 2011 than they did at this point in 2010. It’s possible that the tax credit that was offered through the first five months of 2010 could be the explanation, but again,inventory has fallen considerably, absorption is higher, and yet prices are declining slightly more quickly….
The good news is that in the past 90 days, foreclosed bank owned properties have increased their average price per square foot by $12 per square foot. Additionally, notices of trustee sale are down by 50% over the past two years, the mystery shadow inventory is down by 50%, and Mike believes that we are 75% to 80% through the overall distressed inventory. Additional good news is that short sales are seeing a 55%-60% success rate, versus a 15% success rate two years ago. Mike believes that it will not be long before we see stability, and then ultimately slight increases in pricing.
Listings Pending Sale are 12,227. That is an increase of 221 pending sales compared to last week, which is unusual for this time of year. Listings that are active with contingencies account for an additional 7,859 properties.
Current Conditions in the Phoenix Market: