The instructor made a comment that there wasn’t much to comment on regarding the current state of real estate.  In some ways, his statement is really true. During this past six months, we have been experiencing real estate that seems to be "more of the same".  Decreasing inventory. Decreasing prices.  Increasing sales.

Just to make sure, I took a look at the latest Cromford Report data for Scottsdale.

Sure enough.

Active listings have dropped by about 30% since the beginning of the year and have been holding steady at just above 3,000 properties since June.

Price per square foot is still decreasing for both home listings and sales, but at a small steady rate.  No significant drops. No sign of appreciation either.

Sales per month peaked in the summer months, yet remain stronger than where Scottsdale monthly home sales started at the beginning of the year.

Even foreclosure activity has remained fairly consistent over the past six months.

When I look for real estate issues to write about, I am usually looking for change.  Hearing this instructor’s observation about "business as usual" caught my attention.  After all, the real estate drama that we’ve experienced over the past five years, just a bit "sameness" gives us a chance to see what today’s "normal" looks like, and maybe even breath a collective sigh of relief.  Not to say that short sales and foreclosures are behind us, but quite possibly, we are entering a more stable market for the foreseeable future.

The National Association of Realtors published this helpful guide for comparing the program that was expiring on November 30th with the one which was just signed by President Obama yesterday.

NAR Issue Brief: Homebuyer Tax Credit

A couple of the highlights include:

• Purchase contracts must be written by April 30, 2010.
• Move-up home buyers are eligible for a $6500 tax credit, providing they meet income limits and occupancy rules.
• First-time home buyers are still eligible for a $8000 tax credit, with income limits.
• Qualifying home prices are capped at $800,000.

I suspect that there are a few home buyers that are breathing a sigh of relief, knowing that they still have time to find a home, make an offer, and close before the extended 2010 deadline. 

And there’s the potential to release a whole new wave of homes for sale.  Homes that have been lived in, where the owners have taken care of them, and will disclose the history of the home to the buyer.  I’ve listed six houses like this in just the past two weeks, and I suspect that I will be hearing from a few more folks who’ve been sitting on the fence, deciding whether the time was right to sell and buy up.

I do have questions:

1. Are move-up home buyers immediately eligible? 
2. What if they have an accepted contract scheduled to closed between today and December 1st? 

UPDATE:

Here’s a link to the actual language of  H.R. 3548: Worker, Homeownership, and Business Assistance Act of 2009.  The bill appears to extend the dates, so that it appears that a seller who has lived in the current home for five consecutive years, out of the past eight, could get the tax credit for a home purchase as early as Monday.  You will find the Extension and Modification of First-Time Homebuyer Tax Credit in Section 11.

Photo Credit: Randy Son Of Robert

By the way, all Scottsdale homes are not serviced by the City of Scottsdale.  The American Water serves a band of homes in the area surrounding McDonald Drive.  Another small percentage of homes in North Scottsdale are either on wells, or have water hauled in by truck and stored on the property.

As a Scottsdale home seller, you are obligated to share this information in the Residential Seller’s Property Disclosure Statement you complete when you list your house.

Of the 4,462 homes on the market in Scottsdale today, 4% have water sources other than the city, so while the number is few, you would definite want to know the quality, availability, and cost of water before completing your hyome purchase.  If you do buy a bank-owned home, or the seller disclosure is not provided for some other reason, BE SURE to do your research ahead of time.

I haven’t done a market report on Scottsdale 85258, home to the “Ranches”…. McCormick, Gainey, and Scottsdale.  In January, I posted this same chart in the post: McCormick Ranch Real Estate – Least Distressed Area of Scottsdale.

A few changes have occurred in past ten months, while some metrics stayed the same.

What you will see when you compare now and then:

1. The percentage of homes on the market that are foreclosures or short sales remain under 25% and in approximately the same ratio, with more short sales than foreclosures.
2. The percentage of sold properties that are short sales or foreclosures are about the same, approaching 33%.  However, foreclosures now make up a greater portion of those sales.  Even more importantly, 67% of the homes sold today in this part of Scottsdale are traditional sale, with no bank involvement.
3. The biggest differences you will see are in price. 
   • Homes were being listed at an average of $200-300 per square foot at the beginning of the year.  Now, that range is $175-250/sf.
   • Sold prices are averaging in the $150-200 per square foot range, while earlier this year, they were $175-275.  The biggest change has been in the short sales.

What is missing here are the number of sales that are being used to calculate these statistics.  I’ll be taking a look at those figures in the future.

For now, know that the McCormick Ranch is fairly stable, even though average home prices have dropped considerably.

What I did discover is that Arizona does have a history of earthquakes. 

As I dug a little deeper, I discovered reviewed the maps and read the article, Earthquake Hazard in Arizona.  Faults do exist all over the state, but most  most Arizona earthquakes have occurred in the Flagstaff area, or to the west of Yuma (in California).  

The Arizona Geological Survey web site gives more detail:

Arizona Earthquakes.  Large earthquakes in Arizona are rare, but not unheard of.  See the attached map for the distribution of large historical earthquakes in Arizona.  The Colorado Plateau of northern Arizona is particularly prone to moderate-sized earthquakes.  Dave Brumbaugh of Northern Arizona University maintains a network of seismometers (a device to sense and record the ground acceleration associated with earthquakes) to monitor activity there. 

Yuma, Arizona, situated in the southwestern-most corner of Arizona, is at high-risk from powerful earthquakes from the nearby San Andreas Fault and its splay faults, the Imperial and Algodones faults.   In 1979, rupture along the Imperial fault produced a powerful, magnitude  6.4 event, sending surface waves (Love and Rayleigh waves) racing towards Yuma, 70 miles to the east.  Observers in Yuma reported the ground rising and falling before them, in a manner similar to water wave behavior in oceans and lakes.

So, yes Arizona does have earthquakes, but when you check out the Summary of Earthquakes Causing Damage in Arizona you will see that to date, the Phoenix metropolitan area, including Scottsdale, has been exempt.

Related web sites:

• Arizona Earthquake Information
• Seismic Activity Map for Arizona

The addresses and schedule of the six Scottsdale open houses, along with a brief description of techniques used follow the city’s announcement.

ARIZONA JOINS NATIONAL SOLAR / SUSTAINABLE HOMES TOUR – OCT. 24-25 – VALLEY OF THE SUN

Arizona joins the 2009 National Solar Home Tour, the 14th annual tour coordinated nationally by the American Solar Energy Society (ASEA). The national tour is the world’s largest grassroots solar event with more than 150,000 participants, taking place in nearly every state across the U.S.  This fun event offers open-house tours to show how you can use solar energy and energy efficiency to reduce monthly utility bills, to live more comfortably within your local environment, and to help tackle climate change.

The Arizona tour, “Living with the Sun – Arizona Style” features tours across our State.  Specific information on locations, times, and types of sustainable technology applications can be found on the Arizona Solar Center web site: www.azsolarcenter.com.

The Phoenix Valley the tour will be held on Saturday, October 24th and Sunday, October 25th, from 9 am to 3 pm each day. Most locations on the tour are free. The tour provides an informal way to meet people who are using a whole range of approaches to make living in the desert more comfortable, affordable and environmentally friendly.  The tour will also include several green certified homes under the Scottsdale Green Building Program and national LEED certification program.

New for this year are homeowners who have used some of the latest technologies such as thin film photovoltaic panels, micro inverters, and rain and water capture and re-use systems.  Chuck Skidmore, ASEA chairman explains, “The sun’s energy falls on your roof every day.  It can work for you, or against you. This event is a great way to learn how it can work for you.”

You can also talk with people who have made “going sustainable/solar” more affordable by taking advantage of the latest financing methods, utility rebates, and higher tax credits.  Some systems can now be easily expanded as funds become available over time.  ASES recently noted that solar costs have decreased by close to 30% in the last year and federal incentives have increased significantly.

The tour Guide will be available on-line at www.azsolarcenter.com.   The guide contains all the information you will need for this self-guided tour.  Specific locations, sustainable/solar features, presentation times, and maps will be provided. You can also learn about other Arizona tours and upcoming events.

Scottsdale Solar / Sustainable Homes on Tour

Open Saturday, October 24th, Only

8502 E. Cactus Wren – This 30+ year-old passive and active solar residence shows shows that good ideas, design and applications withstand the test of time.

Open Sunday, October 25th, Only

8243 E. Monte Vista Road – This green remodel includes energy efficiency, rainwater harvesting, resource-efficient construction, and site landscaping as a food garden.

Open Both Saturday and Sunday

11458 E. Christmas Cholla Drive – The Solar Energy Greenhouse is used for growing orchids and utilizes the glass as the collector glazing and embodies a solar thermal collector system composed of 144 movable collector louvers. The greenhouse embodies a compact evaporative cooler and an aquaculture cell, with fish, that provides water with nutrients for the orchids.

10875 E. Bahia Drive – Located within an existing planned community, this recently renovated 11-year old residence incorporates numerous Sustainable strategies while keeping with the homeowner association guidelines.

8151 E. Smokehouse Trail – Completed in 1999, the Edwards Residence in North Scottsdale incorporates many Green Building elements in its construction. Its Southwestern design blends with the surrounding desert with an emphasis on sustainability. The Edwards residence was also the first straw bale home to be permitted in the City of Scottsdale.

25227 N. Roping Road – This currently-under-construction home is designed to optimize the passive and active solar advantages Arizona has to offer. The main building materials are autoclaved aerated concrete block (AAC), rammed earth, wood, steel and glass.

However, any home buyer will tell you, it’s a battle out there. Multiple offers are common in the lower price ranges,  and with the deadline of the $8,000 tax credit coming up quickly, last-minute shoppers are finding that a full-price offer is often not enough.

You see in the chart above that overall Phoenix has been experiencing a seller’s market since May of this year.  You can also see that the steep incline has been tapering off over the last couple of months.

When you look at the next chart showing Months Supply by Price Range, you will see that this year’s trend continues:  The lower the price of the home, the lower the housing inventory.

We are seeing just a bit of change though.  The Seller’s Market that we were experiencing this summer is cooling off in the $250-350K range.

• Homes priced up to $250K have less than five month’s supply.  Seller’s have the upper hand here.  Multiple offers are common.
• Between $250,000 and $400,000, we are seeing a balanced market.
• Over $400K, Buyer still have a lot of negotiating power, depending on how the Seller has priced the home.

If you’d like to go back and see where the market was earlier this year, these two posts will help:

Buyers Market? Sellers Market? Depends. – August 2009 view

Why is Scottsdale real estate market behind the curve? – June 2009 view

With the tax credit possibly coming to an end, the slight changes you are seeing here could continue, even more significantly.  I think most would agree that any movement towards a more balanced market would be a welcome reprieve after the roller coaster ride of the past several years.

Mid Month Pricing Update and Forecast

Each month about this time we look back at the previous month and analyze how pricing has behaved and report on how well our forecasting techniques performed. We also give a forecast for how pricing will move over the next 30 days.

On September 15 we gave a 30 day forecast that average sales $/SF would fall and be within the range $86.48 to $90.00 with a 94% confidence. Our midpoint prediction was $88.24.

As of October 15, the average $/SF for monthly sales across all areas and types was $89.13 up 1.3% from $87.94 on September 15. Note that the latter figure has been adjusted slightly from $87.83 since September 15 due to additions and changes to ARMLS recorded sales data since then. The actual figure of $89.13 is somewhat above the midpoint of our forecast, but still well within the 94% confidence range.

Today the pending listings for all areas & types show an average list $/SF of $88.51. This figure has declined in recent days and is now well below the average list $/SF for homes sold in the last month ($92.02). This suggests that average sales pricing is likely to fall in the next 30 to 40 days. The relationship between these measurements can be seen clearly on the list price per square foot chart.

Our mid-point forecast for November 15 is currently $87.96, which is 2.3% below yesterday’s actual reading, and we have a 94% confidence that it will fall within ± 2% of this mid point, i.e. in the range $86.20 to $89.72.

Since our forecasts have tended to be a little lower than the actual result (all 9 of the last 9 forecasts in fact), we have a hunch that pricing may again turn out to be a little more robust that our model predicts, most probably within the range $87.50 to $91.00.

We have a theory that may explain this phenomenon, but it is only a theory. There are quite a number of aggressively priced short-sales which have status pending but are awaiting lender approval. Since the lender is less likely to approve the most aggressive pricing, these contracts do not close as often as those priced closer to the norm. This tends to make pending listing $/SF a more pessimistic predictor of sales $/SF than in a normal market, because these aggressively priced short sales stay pending for an unusually long time. As short sales increase, this effect get more and more pronounced.

A few of his insights from “The Phoenix Real Estate Market: Out of the Ashes?“

• Re-lists are down.
• Fewer and smaller price reductions.
• Prices have stabilized.
• Inventory and Days-on-Market are down.

As Scott points out, the future remains to be seen, and…

The obvious question is whether or not these gains are sustainable with the ongoing increases in foreclosure rates and the “shadow inventory” on bank balance sheets.

Head on over to read this relavant article and get the full story.

Pretty amazing. Fast. And now I can see how they are moved into tight spaces. Driver loaded the POD in 7 minutes, 24 seconds. And then he was gone!