Semi Annual Real Estate Market Update for 7/31/2009
Well the year is almost gone. So the big question is: Is the Real Estate Marketing Heating up along with the thermometer, or are we just moving to a “Sizzle”?
According to the National Association of Realtors existing Home sales were up 3.6%. NAR chief economist, Lawrence Yun, observed that “The increase in sales occurred in all major regions of the country. We expect a gradual uptrend in sales to continue due to tax credit incentives.”
These are the National Statistics. However, in Wickenburg I’ve noticed that we tend to lag the Phoenix market, and we don’t experience the major swings in prices that the Phoenix Market has. Currently, our active listings (inventory) of single family homes is slowly decreasing. As of 7/13/09 we had 171 homes and just 3 months earlier we had 212 homes on the market. Unfortunately, our inventory is still high with 28.5 months supply of homes on the market. This does not bode well for prices which are continuing to decline. Our Average Monthly Sales Price was $410,889 as of 7/13/08, and has dropped to $236,000 as of 7/13/09! As you can see from the chart below, we have not had as many sales the first 6 months of 2009 as compared to 2008. However, foreclosures (F) are a higher % of the sales.
1st 6 Months: 2008 2009
0 - $400,000 54 (1 F) 45 (11 F)
$401,000 - $600,000 8 (0 F) 2 (0 F)
$601,000 - $1 Mil 7 (0 F) 4 (1 F)
Over $1 Mil 3 (0 F) 1
Totals 72 (1 F) 52 (12 F)
Now, a brief word on land sales: There have only been 7 land parcels that have sold in ALL OF Wickenburg since the first of the year compared to 17 for the same time period last year! (And we thought last year was bad!) Two factors contribute to this: 1) Land loans/Construction Loans are hard to get. 2) As home prices continue to fall. Buyers are finding that you can buy a home for less than what it would cost to buy the land and build.
It has been very difficult to not sound like a broken record of “not very good news”, lately, when talking to my Listing Clients and Prospective Listing Clients. And I apologize to all of them for having to keep bringing them updates that point to things possibly getting worse before they get better. However, I am committed to telling you all the truth, even if it means losing a listing…(and I HAVE lost several potential New listings in the last couple months.!!!). I’m afraid, after watching the trend this year, combined with some of the economic and political changes going on, I must say that I don’t see things getting better in the near future.
This past winter, I was stunned at how many Winter visitors came to Wickenburg, looked at prices, and declared, “I’m looking for the guy who’s hurting….I’m looking for the steal …. or….your prices are still too high….you haven’t hit bottom yet…I’ll wait till next year to buy…”
At the time, I responded, “Wickenburg is a niche market and we will never get to the level of pricing that the Valley is experiencing, primarily because of our demographics and the lack of a large number of “distressed properties and distressed Sellers…”
And while I still believe that is true, these last few months have seen the increase in number of Foreclosures in Wickenburg and surrounding areas, coupled with some Sellers who, for what ever personal reason, NEED TO SELL NOW! And in order to Sell Now, it often meant dropping the price, until a buyer presented themselves to get a real Bargain.
We witnessed that here in Vista Royale in the last few months, where several properties sold at Greatly Reduced List Prices……yes…REAL BARGAINS for this area. Many people lost much of their worth in the Stock Market, which adjusted their budgets. So if it was a Seller who had to sell because they didn’t want to have their capital tied up in a second home, or a buyer whose budget dropped because of less available funds, or the fact that trying to get a Jumbo Loan, (over $417,000), has become either non existent, or too expensive, the market here has shifted significantly…And the hardest hit segment is that over $400,000.
Unfortunately, that hits hardest right here in Vista Royale, and surrounding areas.
So while we are all optimistic for the coming Winter Season, there are many variables that we have never dealt with before: * The continued slump in National Unemployment; *The continued Federal Stimulus Packages; *The continued Lender changes in criteria and requirements; * The continued lack of willingness to lend, by the banks; *The continued flood of Foreclosures that are in the system, along with new ones that won’t get to the market for another year.
BUT ALAS…. here is my “Light At The End Of The Tunnel”: In order for a recovery to begin, you have to hit bottom! We MAY be seeing the formation of “The Bottom”.
In Phoenix, there are 8,000 to 10,000 homes selling A MONTH!!!!! Inventory is actually dropped from it’s high a year ago. And, YES, it’s all Foreclosures, but those HAVE to be gobbled up and cleared out so inventories can drop, and prices can start back up. Right now, every home in the Valley is getting as many as 30 offers within days of being on the market!!! There is a buying frenzy going on. In many cases, Buyers are having to go well ABOVE List Price to purchase a home!
While Wickenburg may be behind the real estate trends in Phoenix, and even though prices are down in Wickenburg, the inventory is also down. And just as I suspect that the current “formation of a bottom” is occurring in the Phoenix Market, let’s hope this is also the formation of the bottom for the Wickenburg Market…
We’ll Keep You Posted!! And if you know of anyone who is looking to buy, here or in the Phoenix area, we’d be happy to help them, because this is a GREAT time to BUY!!!