Arizona Real Estate Market Report

Arizona Real Estate Market Report

Below is my Real Estate Market Update compiled from Michael Orr’s ASU Monthly Housing Report, ARMLS STAT and Elliott Pollack Data. 
I hope you find this data and information valuable.

March Stats from ARMLS·        
Monthly Sales: March sales volume was 17.7% lower than last year, at 6,712 compared to 8,153. Month-over-month numbers were up 22.6 %.
·        New Inventory: In March 10,557 new listings were added compared to 9,699 last year at this time, a 8.8% increase.·        Inventory:  The total number of listings for sale was 44.4% higher in March of 2014 compared to March of 2013…29,939 compared to 20,729 last yr.·        Month’s Supply:  Currently we are at 4.46 months·        Average Days on Market:  83 days compared to 73 days in February.·        March median new list price was $220,000 which is a 15.9% increase year over year!·        March median sales price increased 11.6% to $187,000 year over year!·        Foreclosures pending dropped again in March to 4,983, falling 51% year over year!!·        Distressed sales total (short sales plus lender owned sales) 801 which represented 11.9% of total sales…down 63.3% year over year!! Sales Activity and WHERE are the Buyers?(from Tom Ruff / The Information Market compliment of the ARMLS Stat report) Even though our supply is what can best be described as typical, our demand is 25% below normal. Istill anticipate the imbalance we are seeing between supply and demand to exert downward pressureon pricing later this year. The ARMLS Pending Price Index for April projects the median priced homewill remain unchanged at $187,000. Last month we asked the question, where are the buyers? We like to look at large groups when itcomes to market influence and how they are formed. For example, a generational group could be babyboomers, the children of baby boomers or a large group created by economic realities.Over the past few years the rate of homeownership has declined and we’ve seen numerous storiesreferencing “a nation of renters.” These articles suggest a cultural shift has taken place where owninga home may no longer be the American dream. I disagree that the lack of buyers is due solely to generational trends but contend that the decline inhomeownership is the result of pure economics. Where are the buyers? My answer, they’re coming,but they still have some major challenges to overcome. The Boomerang Buyer…is lurking!!! Boomerang buyers are defined as potential home buyers who were previously displaced from theirhomes due to a foreclosure or short sale. At present, the vast majorities of these potential buyers areunable to return to the market due to credit and down payment requirements. From a statistical perspectivethese potential buyers might best be defined as “pent up demand,” or to steal from a previouslypopular phrase “shadow demand.” In a recently published article in The Arizona Republic entitled "Time frame for buyers on rebound"Catherine Reagor did a very nice job simplifying the time and down payment requirements these potential buyers face. FHA: Homebuyers can take out loans for up to $271,060 in Maricopa County. People who went throughforeclosures must wait three years and have a 3.5 percent down payment. Some borrowers who completedshort sales with special circumstances, such as a deed-in-lieu situation or problems with a loanmodification, are eligible for a loan within a year. Fannie Mae: Borrowers can obtain loans for up to $417,000 in the Valley. People who lost a house toforeclosure must wait seven years to qualify and put 10 percent down, unless there was a special circumstance.Former homeowners who completed short sales have to wait two years and have a 20 percentdown payment or four years and a 10 percent down payment. Freddie Mac: Borrowers can take out loans for up to $417,000 in the Valley. Borrowers with a foreclosureon their record must wait seven years unless there's a special circumstance, and then the wait isthree years. People who went through a short sale must wait four years. Veterans Administration: These mortgages have the biggest limit, $1 million. Borrowers with a foreclosureonly have to wait two years and don't need a down payment if the mortgage is less than$417,000. Eligible veterans who have done a short sale may not even have to wait to take out a VA backedloan. Thus far in 2014, 67% of the homes purchased have been financed. The percentage of loans based on the types mentioned in theRepublic article have stayed fairly consistent, with Freddie Mac and Fannie Mae accounting for 56% ofhome purchases financed, 28% obtained FHA financing and VA loans accounted for 6%. The largest majority of boomerang buyers will be able to return, seven years after a foreclosure and four years after a short sale.Under normal circumstances after 4 to 7 years a home owner would be able touse their existing equity towards the down payment of their next purchase…boomerang buyers haveno such luxury and most likely the biggest obstacle they will face will be accumulating the 10% downpayment. Looking ahead, it will be interesting to see just what impact boomerang buyers haveon our market, and for the agents who listed and sold short sales, if you haven’t already, it’s probablytime to revisit your contacts from 2009 and 2010.  Employment Growth / Wages of the new jobs coming to Arizona…will help drive our Housing Market!(Slides from economist Elliott Pollack)     

Brought to you by:
Chris Mahatadse Associate Broker
RE/MAX Professionals
Please visit my web sites at:   and

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Phone: 623-703-7445
Dated: April 14th 2014
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