Phoenix Real Estate - 2011 - An Important Transition Year

                                                                  By    
      
                                            David Elton, Elton Realty, LLC

Judging from the non-stop rants of doom and gloom droning from the media you would think no one wants to own a home anymore and those that still do are in the process of mailing their keys back to the bank.  While housing and the economy at large certainly have a long way to go, by all accounts, 2011 was actually an important transition year for Phoenix Residential Real Estate and most current signs, largely out of the page 1 headlines, portend an uptick for 2012 along with significant opportunity to capitalize on distressed assets.  Consider the following:

                       

1.  Median Home Prices in Phoenix MLS Actually Rose Over 5%.

Many sources, such as Case-Schiller, had median home prices dropping 5% or more, yet whenever I took clients to look at 100k to 150k homes, I ran into multiple offers so I decided to run my own search.  The Average closed sale in our MLS for the first 60 days in 2011 - $156,122, the last 60 days - $164,298 - up 5.24%.  (This, of course, does not include trustee sales, or for sale by owners).    As a companion to this – Active MLS inventory is at one-year lows.  From over 37,000 homes on the market last December we are down to approx 18.6K - a 50% haircut (only 3.2 month supply vs 6.6 months a year ago).  This indicates a market bottom being tested and likely set to move higher.

2.  Canadian Investment Caches Capitalize on Opportunities.

According to The Cromford Report, a leading Phoenix area industry research database, estimates indicate our market to be driven 40 to 50% by the almighty investor.  An October 2011 Wall St. Journal story confirmed a whopping 23% of our nationwide foreign market to Canadians (up 11% from 2007).  Director of the Living Well Homes Investment Fund, Germain Villeneuve from Montreal, has a cool 50 million to spend in the Valley of the Sun.  Since October, Mr. Villeneuve has gobbled up 110 houses and two apartment buildings.  He is one of many.  In short, the Smart Money is betting big on a housing recovery in Phoenix.

3.   Interest Rates Hovered Around 4%.

Who knows where interest rates will land in 2012.   Many pundits believed given the economic/debt turmoil rates would rise in 2011.  That didn’t happen.  Logic indicates however that any spike in inflation as from increased food, energy or commodity prices and/or compounded debt troubles home or abroad, or strains to pay the interest on our burgeoning National debt, would cause the Fed to raise rates to help keep up with said interest payments.   

What potential buyers need to think about is that a bounce in rates from just 4 to 5% equates to about $15,000 in buying power on a $150,000 home (with 20% down) or about 30K on a 300,000 home.  That could mean the difference in getting into a preferred school district, neighborhood or golf community.

4.  Unemployment Fell In Phoenix Ahead of the National Average

Buoyed by the continued influx of technology jobs, Phoenix area unemployment fell to 8.2% in September vs 9% from a year ago and under the National Average of 9%. 

5.  Nationwide Housing Starts Up 24% vs Same Time Last Year.

According to data provided by US Dept of Commerce, November checked in at an annual rate of 685,000, up 9.3 percent from October 2011, and up 24.3 percent from October 2010.  Granted much of the increase came in the multi-family space, but any increase is a positive.  That means more jobs, more expansion in peripheral industries and ultimately and most importantly, more consumer confidence.

                                    Five Ideas For Your Consideration in 2012

1.   Check Out DC Ranch

DC Ranch is perhaps Scottsdale’s most desirable upscale master planned community.  Much of DC was built in 2003 to 2007 (during the bubble) so there are plenty of incredible short sale and bank owned bargains popping up.   Area features Spanish-Mediterranean architecture with homes of all shapes and sizes.  Plus, there are plenty of restaurants, shops and recreation for kids and adults. 

2.    Lock-N-Leave Golf Options Abound. 

Many of our out-of-state clients want golf course communities.   A few of my favorites that feature condo/townhome or single family living and great bargains:  Firerock Country Club, Fountain Hills, Starfire Country Club, Scottsdale,  Las Sendas Country Club, Mesa, Troon, North Scottsdale.  Sunridge Canyon, Fountain Hills.  Grayhawk, North Scottsdale. Eagle Mountain, Scottsdale/Fountain Hills, Camelback Country Club, Paradise Valley, AZ

3.   Upscale Vertical Living Bargains In Scottsdale. 

For those looking for upscale living with the conveniences of a fine hotel, there are myriad of luxurious amenity driven vertical living (typically 4+ stories) options throughout the Scottsdale/Phoenix area.  Some units built in the mid-2000’s, at the height of the market, can be had for incredible values through the short sale or bank owned process.  These complexes are centrally located, typically feature concierge, 24 hour guard gate, wine cellar, pool/spa/steam room/fitness center/outdoor grills/business center, recreation center and more and are walking distance to restaurants, retail and theaters.  Optima at Camelview and Landmark Towers, Scottsdale are two favorites definitely worth considering.

4.   Outlying Areas Provide Opportunities Galore and Rising Rents. 

Pricing has been under pressure in these areas for some time.  Lately, however, we have seen prices not only stabilize, but actually uptick.  Investors continue to drive the market in these areas scooping up multiple properties at a time.  The other big difference from 1 year ago is the increase in rents.  That, coupled with 4.5% investor loans, and make bottom lines that much more attractive.

5.    Short Sales Can Reward Patient Buyers

The short sale seller is usually fighting the clock.   Chances are he/she stopped mortgage payments and face a looming foreclosure date.  The only way Realtors can postpone that date is to get a ‘reasonable’ offer to the bank.  That, in turn, leads to the distressed pricing common in short sales.  Hence some great values for Buyers.  For more on short sales including tips for buyers and sellers please visit eltonrealty.com and click on SHORT SALES or call me direct: 480-226-3711

VALUE PICK OF THE WEEK

3+ 2.5, 2600+ sq. ft. 2 car garage turn-key townhome in guard-gated Eagle Mountain golf community * Open great room floor plan with gas fireplace * Large master bedroom located on lower level with no steps from garage * Eat-in kitchen with island and dining alcove * Walk to heated, community pool/spa and Eagle Mountain clubhouse for breakfast or lunch.  Call me direct for more information on this or any other property. 480-226-3711

David Elton is a licensed Realtor in Arizona with Elton Realty, LLC, a Scottsdale based 2^nd generation full service real estate company serving the Phoenix metro area since 1986.  You can listen live to ‘The Elton Realty’ show on KFNX 1100 AM Wednesdays at noon or stream it at kfnx1100.com.  To listen to past shows please visit  - eltonrealty.com.

Questions and feedback regarding this column are greatly appreciated.  My email is davidelton@cox.net.  Or please call me direct at 480-226-3711