"Are Things Looking Up?"
Howdy y'all! I hope your having a great summer and your A/C is working well! Above is the most common question I get these days. (And Thank You all or asking!) My most common answer is, "Yes and No"!
Here's how things seem to be playing out. The trend from last newsletter is continuing! Overall Number of Sales in Wickenburg are UP from last quarter and last year! BUT Sales Prices are DOWN from the List Price. In fact, over 10% down. Here are the Statistics for all of Wickenburg:
Price Range # of Homes Sold # of Homes Sold Current Active
4/1 - 6/30/2008 4/1 - 6/30/2007 Listings
0-$400,000 30 20 127
$400,001-$1Mill 7 14 72
Over $1Mill 0 0 18 Total 37 34 217
The news here, is that the number of Homes For Sale is DOWN from last Quarter's number of 239! If inventory stays low, and our increased Sales continue, we could be seeing the formation of the "Beginning of the Bottom"!
I mentioned a "beginning of the bottom" in our last talk, and I believe that is what's happening. The savvy buyers are coming out for several reasons:
1) The Media has convinced them that "every Seller is Distressed". So they are throwing out offers to
see which ones really are.
2) They are not making any money in the Stock Market (it's flat).
3) Interest Rates are now creeping up almost daily! So any savings they may get by waiting, will be
offset by Higher Interest Rates. (Cash Buyers often have the cash to purchase, but choose to use
some form of Loan to Leverage their money)
4) The Foreign currencies are stronger than our Dollar. Our Canadian friends are enjoying a 30%
discount by buying in America, while our European friends have a whopping 50% discount off
their currency!
All of this is bringing the Buyer/Investors out. I believe that this is the beginning of a formation of the Bottom. The tricky part is "how long will it take to build the bottom and then start back up? With Inventories remaining high, and more projects on the boards, just waiting to open up, (Wickenburg Ranch, Hermosa Ranch, etc.) the Supply side of this equation is not going to reduce anytime soon. That's why I still think we are not out of the woods, and will not be for the rest of this year....and likely, well into next year. And folks...you can NOT rule out the possibility of longer than that! Even when things turn around, I don't expect anything like the spike we saw in 2005. Instead, look for a more normal appreciation. Real Estate historically is a 5-10% annual appreciation.
P.S. We have just seen the first "SHORT SALE" in Wickenburg. A "SHORT SALE" is when a home is being sold for less than what they owe on it! Phoenix is flooded with them. These transactions are tricky. The lender has to approve the sale and they are often very long, drawn out transactions, and can be very frustrating for the Buyer. I will keep an eye on these and report if there is an increase, in our next newsletter.