A Real Recovery or a Dead Cat Bounce? 2013 Verde Valley/ Sedona Real Estate Market Forecast

I’m often asked what I think about the market and the rapid recovery of many Arizona markets this year.  My response to the question is usually two more questions.  1.  Do you want my honest opinion and 2.  Do you have a few hours and a bottle of Pepto? 

Where to start.  I think…. with a lovely quote from the Royal Bank of Scotland,

 ““While a host of daunting macroeconomic and geopolitical risks continue to lurk in the background, who are we to stand in the way of artificially engineered markets where fundamentals potentially no longer matter?”

Welp, that pretty much sums it up for me.  Since the fundamentals don’t seem to matter, we can lie our way to a recovery, and that appears to be exactly what we’re doing.  Really, it’s rather sound logic, given the circumstance, and I would give some credit to the academics in the Obama administration for this fantastic feat, if only we hadn’t nearly doubled the nations debt to do so.  Much too heavy a price to pay.  And that’s where the fundamental part comes in. Not winning the economy game?  Well, let’s just print more monopoly money so the players can keep playing.  Lets face it-  as long as you have the ability to ante up, you’re still in the game.

If the majority of Americans THINK markets are recovering/ the economy is getting better, they spend a little more freely.  By simple virtue of consumers spending more of their hard earned dollars, rather than hoarding them in anticipation of a looming financial armaggedon, the economy begins to pick up. And It has.  Remember, about 70% of the nation’s economy is dependent upon what you and I buy or don’t buy each and every day.

Since around March, our office has recieved frantic calls from agents seeking suitable properties for their clients but finding none.  Bidding wars became commonplace-  in some case we had buyers paying 20% more than the asking price on our listings. It felt like 2005 all over again.   It wasn’t just Arizona, all over the country, this pattern kept emerging-  buyers who wanted to buy, but no homes to be found, and when one happened to show up, it was greeted with a storm of offers. The National Association of Realtors even got in the game, and called upon the nations lending institutions to release more of their distressed inventory…..  Be careful what you wish for, and dont worry, it’s coming.

 Now, in nature, pattern formation is frequent and part of the grand design, or it is a symphony of chaos, depending on which world view you hold.   In a society, the same thing can be said, Patterns form by chaos or grand design, and sometimes, a mixture of both.  All of a sudden, real estate markets went from a fantastic glut, driving down prices, to very few homes for sale on the open market. Competition grew, prices began to rise-. Cha- ching- Recovery! Buyers and (especially) Agents are exuberant that the market is finally healing!   A feeding frezy ensues.   Case in point- Phoenix prices have risen 12-30 percent in 2012, depending on which report you read.  In fact, prices have risen so fast in the Phoenix area that Capital Economics has stated in a press release that it will be overvalued in a little less than a year’s time given the current pace.  WHAT?

It’s amazing what market manipulation can do.  Now, I am not saying anyone was pulling anything funny during an election year, or anything like that….surely the powers that be wouldn’t do such a thing, would they?  If you believe that, I have a lovely bridge for sale, please mail check.

The reality is that a large portion of our real estate recovery is nothing more than a signifcant portion of the Nation’s distressed inventory has been swept under the rug, and hidden from the general public’s view.   Negatives on the bank books have been turned into positives via modifications, institutional sales and REO to rental programs.  The inventory has gone underground.  Now, this isn’t all bad, but it isn’t good either.

Foreclosure inventory will arrive on the markets much slower, dragging out the pace of a REAL recovery for years to come.  I liken it to a blowout or a slow leaking tire.  If your tire blows out on the way to grandmothers house, you’ll pull over, call the tow truck and soon be on your merry way.  On the other hand, if you set off on your journey with a slow leak, you never know how far your going to get, if or when it will blow, nor how much help will be available when it finally goes flat in the middle of nowhere.

At this point, it might be nice to look at some of the numbers for the Sedona/Verde Valley Market.

Year     # of Sales        Dollar Volume

1996     1687              197,283,896
1997     1809              248,524,298
1998     1967              282,799,572
1999     2052              325,126,110       “Normal Years”
2000     2127              388,386,493
2001     2043              378,680,420
2002     2244              440,312,261
2003     2624              593,724,521
2004     3175              782,270,183       “Hot Market”
2005     3121              968,669,048
2006     1972              740,066,355        Transitional Year
2007     1261              458,545,123
2008       952              310,587,417
2009     1198              329,796,243        “This Sucks”
2010     1491              347,532,208
2011     1576              328,805,806
2012     1458              326,534,868 (YTD 11/15/2012)      Transitional Year?  

Currently, there are 206 pending contracts in the area. If every single one of them close, our market would experience a mere 5.5% increase in sales from last year. If 80% of them close ( far more likely) we only see a net gain of 3% sales year over year.  Tell me, is that any kind of recovery to get excited about??    Look again at the above numbers.  We cant even match sales numbers of 15 years ago, and our local population has about doubled during in that time frame!!

The numbers you dont see above are the decrease in inventory.  The height of inventory in our area during the worst years hovered around 3000- 3200 listings and it was split roughly equally between homes and land for sale.  Today, we have a total of 1900 active listings-  about 800 homes and 1100 land listings.  In otherwords, the supply of homes has dropped about 50% and available land for sale has dropped about 30%.

So, if sales havent really increased, and if inventory has dropped significantly causing scarcity, is the recovery real, or merely a dead cat bounce?

In 2009 and 2010, a full 57% of area sales were distressed sales.  In 2011,  That number dropped to 53.6%.  In 2012, we are on track for distressed sales to be 39% of recorded sales.

Year    Total Residential Sales   #REO Sales   #Short Sales   Total Vacant Land Sales   #REO Sales   #Short Sales

2011              1431                       592               176                     159                            44                         3

2012              1439                       350               130                     172                            51                         4

It’s a significant improvement, but distress sales continue to dominate the market, and will likely be a signifcant portion of our market for years to come.  For the first 3 quarters, we have watched foreclosure inventory wane, but have noticed a troubling and significant increase in the last 90 days. The national default rate has been increasing the last couple of months as well.  Couple that with traditional sellers who have been waiting (and waiting) for conditions to turn positive, and the inventory shortage we are currently experiencing is not likely to last too long.  Some other points to consider:

  • Some of the big banks are 80% done with borrower relief required by the 25 Billion dollar settlement signed on 4/5/12.
  • For the last 6 months, banks have also been busy scurrying to align their foreclosure procedures required by the settlement (read- not foreclosing)
  • 360,000 foreclosures are sitting on the sidelines right now.
  • 1.1 million loans are seriously delinquent in the US right now
  • 2.6 million mortgages have been modified since 2008.  Estimations are that 30-50% of them will re-default and become future foreclosures.
  • Lending was at a 16 year low for new mortgages in 2011
  • 43% of sales in PHX are cash sales to investors (Prices go up too much, their out of the market)
  • Nationally, the default rate is currently 6.88 %(and ticking upward), normal default rates are between 1-2%
  • 40% of Americans do not have credit good enough to secure a home loan.

Bottom line?  Since Sept 2010, banks have been under a heavy burden of regulation and scrutiny and not foreclosing. This has greatly decreased what inventory has been brought to the market.   Now that the settlement is over and the banks have put systems in place to comply with new laws, we are likely to see an increase in foreclosure inventory. I dont think it will be a blowout, but rather a slow leaking tire over the next several years.  What will happen in 2013 is 100% dependent on two things- # 1- the amount of inventory coming to the market, as it is obvious an environment to signifcantly improve the number of sales locally probally wont develop in 2013.  #2 Stupid government decisions. Enuff said.

This doesn’t mean that buyers shouldnt buy-  it simply means you need to keep a calm cool head, not rush into a frenzied decision or buy into any hype, and consider your options very carefully.  Know that more homes will soon be available and bidding wars will probably become less likely. Heck, builder might even start to build- wouldn’t it be nice to see houses constructed this decade!!!  Please dont assume anything I am saying here is a big red stop light, but don’t believe anyone who tells you it is green, pedal to the medal, either.  Nope-  its yellow, proceed with caution.

Know that even though prices have went up considerably this year, it’s not real likely their going  to skyrocket anytime soon (Don’t feel rushed) and the positive correction we have experienced this year did nothing more than correct some of the severe over-correction that occured in 2009-2011.  In otherwords, yes, a 200,000 house that was selling 6 months ago for 70,000, will now cost you 100,000-110,000.  Still, a HELLUVA of a deal!!!  If you can buy it for less than you can build it-  pass go and collect 200. Know that if your thinking of building, your builder will probably be very accomodating in a plethora of ways.

For sellers who need to sell, it means be patient, price fairly and expect a little more competition next year.   Hope that our government doesnt do anything amazingly stupid.  Adopt the philosophy of RBS as quoted above and enjoy an artificially created market where fundamentals no longer apply, courtesy of a two year long chokehold on the banking sector and an indefinite supply of monopoly money. And hopefully the little man with the moustache will add a few “get out debt” cards to the community chest..

Holly Grigaitis, Designated Broker, President

www.facebook.com/optionsaz

FINALLY! Some Good News for Arizona Real Estate!

Hello!

I wanted to share with you some of what we are now seeing in the marketplace. I wont paint a rosy picture, because that’s not what I see, but there are benefits developing for real estate sellers in Arizona.

Housing inventory is down in markets all across the country (including ours) and Cash investors are LEAPING on auction, foreclosure and short sale property. Unemployment is down. The DOW is flirting with 13,000. The multi-state settlement of the banks vs the attorney generals is over. Interest in vacant land is starting to pick up across Northern Arizona. We have closed more land sales and wrote more contracts in the last 3 months, than we have in any of the past 3 years! We have had lots of multiple offers and homes selling well above asking price.

Things are looking better all over, at least, on the surface, but regardless, real estate owners will benefit.

The next 12 to 18 months could see double digit appreciation in some markets. I know, bold statement, but I truly believe it is possible with what I see right now. Here’s why. Since the beginning of the foreclosure crisis, there has been a myriad of federal, state, local programs that tried to avert diasaster, but failed. But the robo-signing scandal that broke in late 2010, put a near choke hold on new foreclosure activity across the country. For the past year and a half, a majority of the foreclosures that were brought to the markets, were already in the pipeline before Sept 2010. That pipeline is finally nearly empty. So, inventories are LOW, to the point where the market of PHX, and Las Vegas are now SELLERS markets! What?

Think about it. Most sellers don’t want to sell for the trash bin bucket prices it would take to get the job done. They aren’t selling. 47% of homowners in Arizona owe more than their home is worth. They aren’t selling. Now, the banks aren’t selling. Who is? My point exactly. If no one is selling, buyers have little to chose from. They come into competition with each other and bid the prices up. Stability comes first, then appreciation begins- sometimes quickly, depending on the shortage at hand. I see a near feeding frenzy on the horizon in some markets.

Since the multi-state is settled, but not finalized, it could take anywhere from 6-12 months before the banks begin to push inventory through the process. They will be reviewing all of their files to see if some of them are candidates for the relief promised by the multi-state. These six to twelve months may be all the market needs to see prices go up 10% plus. Also, there is talk in government circles that is gaining considerable momentum of selling pools of soured mortages to huge instituitional investors to convert to rentals for a period of X number of years. This would take a lot of soon to be foreclosed homes out of the equation. Now, I have yet to understand how the logistics of this are REALLY going to work, for the likes of Fannie, Freddie,the FHA, not to even mention the investor! But nonetheless, an inventory shortage would be great for ALL sellers, including the banks, Fannie, Freddie and the FHA……. Hmmmmm…………

Now. The explanation of the “on the surface.” Make no mistake. The banks have a LOT of inventory to work through. At least 6 million homeowners are in default or in foreclosure right now. That’s 120,000 homes per state. But there will not be a huge, fast, quick dump on the market while they figured out who can be helped, and who can’t, to rent, or not rent. So, the inventory will reach the market at a much slower rate for the next few years than it has in the past, which should keep appreciation and depreciation in check after a potential meteoric rise. We need a meteoric rise after the earth shattering thud we experienced.

So, don’t be surprised if you hear how markets are shooting up, in this all too important election year…. And don’t be at all surprised if it is all over and done with shortly after the election is over…. We have a lot of healing to do yet, and it will take years to get there. But know that this year is looking VERY promising for those who want to sell!

Much New News!

 

Much New News!

It’s been well over a year since our last newsletter to you, maybe even a year and a half. so, I have much news to share!  First and most importantly-  please notice our new company!

In September 2010, Ken and I left Mingus Mountain Real Estate to open our own brokerage, Options &  Opportunities, LLC. After 14 years in the business, and after starting 2 other brokerages in partnerships, the time to open our own brokerage just finally seemed right.

Many folks (OK, most folks)  thought we were  absolutely nuts,  opening a real estate brokerage amidst the worst housing market since the great depression.  But then, I have   always been a bit of a odd duck and admire contrarians– so when everyone zigs, my instinct is to zag.  We have grown considerably since opening our doors and have been blessed to flourish through a market that has been been nothing but beat and battered for  the past 5 years. Unfortunately, there seems to be little meaningful relief in sight.

But somehow, this market is more familiar, and actually makes a lot more sense than the overheated market we experienced in 2004-2007.  That market simply was not sustainable, but this market, this market right here and now presents ENDLESS options and opportunities for real estate buyers, sellers and investors.  Yes, I said sellers too, but more about that later.

Mark my words:  the next generation of real estate tycoons is being formed right now.   If this a game you have ever thought of playing, the time to strap on your training wheels and learn to drive is here.

Our brokerage experienced meteoric growth in our first year of operation. It became necessary for us to hire additional staff and form a team to serve our clientele.  We now have a team of 3 licensed agents on salary who help attend to all the details in our day to day operations.  We always thought our clients had a nice benefit in hiring us, as they received service from 2 agents, for the price of hiring one.  Now, our clients have the ability to hire 5 for the price of one!

All of our staff members are familiar with our listings and contracts and they will be able to assist you at any time, should Ken or I not be available.   Our staff members are: Roberta Welborn, Kathy Little, and Denise Lerette.  They are here to help us, help you, so don’t be shy in asking for their assistance– they work for you too!  Our staff members come with a wealth of real estate industry experience.  Roberta assisted her husband in his construction business, Wellborn Construction, for many years before obtaining her real estate license and working as an indepenent agent in 2004-2006.   In addition to her prior experience, she has served as our office manager for nearly 3 years now. She’s a huge help and knows the ropes of our operations.

Kathy Little came to us with an extensive background in title and escrow in California and Arizona.  After 15 years working for various title companies, Kathy is well versed in this critical segment of a successful sale.  It’s tremendously helpful to have our own in house title expert, helping us clear up title issues long before they can stall a successful sale or purchase.

Denise Lerette is the newest addition to our staff.  For the past decade she has been running her own successful real estate business here in the Verde Valley, and she also has a background in merchandising and marketing.  We feel very fortunate to have an agent of her caliber assisting us with our clientele.  Denise also grew up in Northern Arizona, so she knows just about everything about our area from first hand experience.   We have put together a team with vast and diverse experience in the real estate industry, and they are helping us serve our clients better than ever!

We have also been fortunate enough to attract agents from other Verde Valley brokerages. We are very happy to have Ken Robertson, formerly of Russ Lyon Sotheby’s, and Ila Groth, formerly of Mingus Mountain Real Estate working with us!

So really, just how well can a small, new brokerage be with only SEVEN Realtors?  Well, in the short amount of time we have been open, our little company has racked up enough sales in Sedona  and the Verde Valley to join the ranks of the top five companies in the Verde Valley within the first 6 months.  In fact, in little over a year, we have become the number one independent brokerage in the Verde Valley!

We are extremely pleased with how successful our launch has been, and we look forward to growing a quality brokerage for our clients AND our agents!

Our office is located on Main Street in the Cottonwood Financial Center. Please call for an appointment-prior to dropping by: The nature of our business takes us and our staff out of the office frequently, and we may be working remotely from other locations. Also, we will soon be opening an office in Scottsdale in the near future, so we will be busy going up and down the hill often!

As many of you may already know, Ken and I have won several contracts with various financial institutions to liquidate foreclosed homes.  As a result of representing these institutions, our market area has expanded dramatically.  In addition to the Verde Valley, we now represent clients and properties in Flagstaff, Prescott, Payson, and the Phoenix Metro area.  Our office is a member of the local REALTOR® associations in all these communities, which is of tremendous benefit to our traditional clients, as additional MLS exposure is now available, including the Phoenix, Flagstaff, Prescott and Payson Multiple Listing Service.   Please let us know if we can be of service in these markets!

I mentioned earlier that there seems to be little relief in sight from the current depressed market conditions– Currently, there are only 2 counties in Arizona where the foreclosure rate is still going up– that’s good news, so one would think.  But the fact remains that we are in an election year, which often results in little change.   Also, we know from first hand experience, that some banks are foreclosing on properties today, where the borrower hasn’t made a payment in 3-4 years.

Let that marinate for a moment….if banks are only NOW foreclosing on properties where payments haven’t been made for 3-4 years,  how many more foreclosures are just waiting in the wings?  Sobering thought, isn’t it?

I said there are only 2 counties in Arizona where the foreclosure rate is currently going up-    Yavapai and Mohave.  But, maybe, we can help reverse the trend in Yavapai County.

Allow me to elaborate.  Short Sales can help reverse that trend.  Short Sales can help our values and our neighborhoods recover.  Short Sales can allow the homeowner to leave their home by choice, rather than force.  Short sales can be less damaging to the owners credit and help them heal quicker from financial problems.

So…what is it?  A short sale is when a seller sells a home for less than is owed on the home;  The bank agrees to accept less than is owed on the property.  Successful short sales are now a much greater possibility.  So many changes have occurred in the mortgage industry-  banks now see them as a much more viable mode of disposition for their soured real estate loans.

Just a few short years ago, Ken and I routinely recommended real estate sellers not put themselves through the misery of a failed short sale transaction. With a success rate of less than 20% and up to a YEAR, just to get a response from the bank, short sales were the joke of the real estate industry.  My, have things changed.  And I mean changed!! 

Did you know short sales now have a success rate that is nearly equal to a traditional sale?  Yep.  Did you know your bank MIGHT be willing to PAY some homeowners up to 35,000 to cooperate with a short sale?  Yep again.  We have seen, and experienced it first hand.  We just closed a short sale that was approved in 20 days, was only a 45 days  escrow altogether, AND the former homeowner took home a check for 25,000 dollars at closing.  REALLY.  We have had approvals in as little as 5 days.

I could talk forever about the why’s of these industry changes, but really, all you need to know is the HOW.  Call us, that’s how!

Please call our office or Visit our website:

928-284-9367

http://www.optionsaz.com/

www.verdevalleyrealestate.com

https://twitter.com/#!/OptionsAZ

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2009-2010 Sedona/ Verde Valley Real Estate Market Update: Short Sale Explosion Ahead

I know it has been a long time since I have written a market update, or a newsletter for that matter!  Truth be told, Ken and I have been absolutely inundated with foreclosure/REO listings and sales…. And since, nearly ALL REO business is done on-line, we have literally eaten nearly every meal in front of the computer screen for the last 12 months. Crazy, crazy times-  what a wonderfully, horrible problem to have (Read:  Were hiring!).  But we do have much news to share with you now and in the coming months- so be on the lookout for updates to our blog, and updates in your mailbox.

As you may already know, 2009 was a mixed year for area real estate:  To sum it up, sales were up a little, and prices were down a lot!.  Here’s a quick snap shot of the activity in our area for the past several years.

Year     # of Sales        Dollar Volume

1996     1687              197,283,896
1997     1809              248,524,298
1998     1967              282,799,572
1999     2052              325,126,110
2000     2127              388,386,493
2001     2043              378,680,420
2002     2244              440,312,261
2003     2624              593,724,521
2004     3175              782,270,183
2005     3121              968,669,048
2006     1972              740,066,355
2007     1261              458,545,123
2008       952              310,587,417

2009     1192                328,421,118

Sedona Verde Valley Sales by Quarter 2006-Current

1st quarter  2006            567 closed sales
2nd quarter 2006            570 closed sales
3rd quarter  2006            561 closed sales
4th quarter  2006            358 closed sales
1st quarter  2007            314 closed sales
2nd quarter 2007            406 closed sales
3rd quarter  2007            304 closed sales
4th quarter  2007            234 closed sales
1st quarter  2008            203 closed sales
2nd quarter 2008            280 closed sales
3rd quarter  2008            242 closed sales
4th quarter  2008            222 closed sales
1st quarter 2009             180 closed sales                                                                                                                                                                     2nd quarter 2009            333 closed sales                                                                                                                                                                    3rd quarter 2009             337 closed sales                                                                                                                                                                      4th quarter 2009             347 closed sales                                                                                                                                                                       1st quarter 2010              346 closed sales

What’s important to note here is that while sales were up significantly in 2009, we are still not even close to “pre-bubble” activity, and no where near what would be considered normal activity for our area, but at least we are FINALLY heading in the right direction.

I began my real estate career in late 1997. The market was considered to be “normal” at that time– Agents counseled buyers to plan on owning their home for at LEAST 3-5 years before they would be able to resell and BREAK EVEN.   Just a few short years later, real estate owners became day traders as low interest loans and easy qualification fueled a drunken party of reckless investing, and unsustainable appreciation –  what a long, strange trip its been.

Out of the 1192 sales that occurred in Sedona and The Verde Valley in 2009, 1038 were home sales (of this, 530 were distressed sales:  438 Foreclosures, 92 Short Sales)138 (of this, 48 Were distress sales:  45 Foreclosures 3 Short Sales) were land sales and a whopping 16 commercial sales occurred during the calendar year in the Verde Valley.  If you have real estate to sell in the Verde Valley, you better hope it has a HOUSE on it, and know that half of your competition is a home in distress!

Finally it would appear as if our nation’s financial system ( Read: Wall Street) has some semblance of stability once again-  14 months ago, the economy was literally teetering on the edge of a great abyss, but large injections of cash from the Fed were the paddles that shocked the system, and brought it back from seeing the great white light.  Whether you agree with the bailout or not, the landscape today would certainly be a lot different without it.

Credit has loosened-  yes, it has.  Banks want to lend, they are just not finding enough credit-worthy individuals!  Before you chortle, remember, it was only 10 short years ago when you HAD to have 2 years of consistent job history, good credit history AND a low debt to income ratios to buy a house….  We have all been severely spoiled the last decade with banks doling out loans like drugs to an addict.

The National economy is slowly recovering and Arizona’s economy and real estate market will slowly recover as well, but while the country sees a more measurable improvement, AZ and a few other states will lag far behind and suffer a much longer convalescence.  Here’s why.

  1. Arizona, along with CA, NV, FL are among 5 states that are responsible for 60% of the nation’s foreclosures-  we can expect foreclosures to be in  the forefront of the marketplace through 2011, and likely, beyond.  There are       currently about 1200 foreclosures scheduled to occur in Yavapai County in the next 90 days alone,.  That’s on top of the 1700+ foreclosures that are currently on the market, or will be very soon.
  2. Arizona went from number 2 in the Nation in job creation in 2005-2006, to 50th in 2009.  Ohio and Michigan are creating more jobs than AZ!  As a result, retail sales in AZ dropped a whopping 14% from 2008 to 2009, and an unbelievable total of 25% since the start of the recession.  Construction permits in Maricopa County are down 92.8%, and not too far off that number in Yavapai County-   Yavapai County issued 604 residential single family building permits in 2008 ( numbers are not yet available for 2009) – 4329 were issued in 2005, 3665 in 2004 .
  3. Relocation to the state is down.  As retirees across the nation have faced dwindling home equity and depleted 401K’s, Arizona has lost her steady stream of new residents.  Growth, which was still a healthy 3.1% in 2007, has dwindled to about 1.3%-  AZ typically experiences about a 1% growth rate when we look only at births vs. deaths.

Everywhere the Arizona economy was strong:  Semiconductors, Construction, Tourism and Retirement/relocation, got slaughtered during the downturn, and it will likely be a few more years before we really notice a true recovery-  People need to move here again.  Distressed inventory AND excess inventory needs to be sold and cleared out of the pipeline.

So, have we seen a change in 2010?  Not yet.  As of 5/23,  our local association has closed 566 deals-  We are right on track to finish the year with a number of sales equal to 2009 numbers, but whether we will meet, beat  or lag behind of last years sales in the area, will depend largely on the fall out from the expiration of the tax credit, which may have “robbed” sales from the 3rd and 4th quarter.  It is still just too early to tell what impact the tax credit will have had on this years numbers.

There is, however, a HUGE change in the national marketplace that is already in the wind and gaining steam with an amazing pace, and, it has the potential to help stabilize markets across the country much quicker than previously expected.  Thanks to some serious arm twisting of the Fed in the form of HAFA (Home Affordable Foreclosure Alternatives) and other changes in the marketplace, the banks are FINALLY starting to realize it is in their best interest to begin cooperating with homeowners who are upside down or in distress and accept Short Sales and Deeds in Lieu, rather than foreclosing.  Yes, really!   Homeowners may now be able to do a short sale or a deed in lieu WITHOUT destroying their credit.  Yes really! It may now be possible for investors to do short sales!  Yes, really!   You might be able to do a short sale and BUY a new home the very NEXT DAY!  Yes, really!!!!!!!

If you are underwater on your mortgage, or you know someone who is, please get in touch with us so we can help  take advantage of new bank philosophies and policies or, be sure to catch future updates from us in the mail or on our blog!

2009 2nd QTR Sedona/Verde Valley Real Estate Market Update

Wow-  What a busy couple of months, especially in comparison to what we have seen over the last several quarters.  Sales during the second    quarter  were up 80% over the first quarter of this year-  and that makes for a very healthy bounce off the bottom!  Still, this HUGE jump in activity is not  significant enough to say that the local real estate market is back in business, but we appear to be nearly ready to move the market out of  the ICU, and     upgrade its condition from critical to serious.  Here is how the past several quarters have broke down.

 

1st quarter  2006            567 closed sales
2nd quarter 2006            570 closed sales
3rd quarter  2006            561 closed sales
4th quarter  2006            358 closed sales
1st quarter  2007            314 closed sales
2nd quarter 2007            406 closed sales
3rd quarter  2007            304 closed sales
4th quarter  2007            234 closed sales
1st quarter  2008            203 closed sales
2nd quarter 2008            280 closed sales
3rd quarter  2008            242 closed sales
4th quarter  2008            222 closed sales
1st quarter 2009             180 closed sales

2nd quarter 2009           333 closed sales

Note that were need to go back to 2007, to find a  similar number of sales in a given quarter.  That’s VERY nice to see!  We still need to see between 400-500 sales per quarter before our market feels normal once again, however,  the area is approaching the level of sales activity we saw as the stock market took its first huge hit in late summer of 2006, when investors 1st  became aware that maybe their mortgage backed securities, weren’t the safe haven investments they thought them to be.  The fear that has paralyzed the market for  the past 2 years appears to be     finally waning, as bargain properties in the valley, simply become irresistible to buyers who have been sitting on the sidelines.

How about a flat as a pancake lot in Lake Montezuma for 4,750$… Or maybe a 1300 sq ft SITE BUILT house for 42,000? Maybe a home in Sedona for about 100$/PSF? A new home with granite countertops in Mountain Gate for less than 43$/PSF, you say?  This is a small sample of what we have seen.

Some of the deals out there are absolutely amazing!

It appears as if the market will continue to gain steam in the third quarter as well.  As of 7/24, we had 253 pending contracts in Sedona and the Verde Valley.  Inventory in the local MLS has also dropped a full 20% off the highs we’ve been experiencing.

Some local markets /segments of markets are showing strong signs of price stabilization, while others are continuing to decline.  Foreclosure sales continue to be the main culprit for the declining values in home sales, while lack of sales continues to be the culprit for falling land values.

Currently, there are about 1300 land listings on the market, and 56 pending contracts.  But wait, it gets worse.  Out of those contracts, 42 are part of a bulk sale of a Sedona Subdivision-  only 14 lots are currently pending escrow right now in the Verde Valley-  A little over 1% of the available inventory,  Yep, land owners currently have about a 1 in 100 chance of seeing a sale right now.  A grand total of 53 parcels sold in the first six months of 2009,  11 parcels sold during the 1st quarter, and 42 parcels during the second quarter.  While this represents a near quadrupling of sales quarter to quarter, the activity is still amazingly anemic.  A 17 acre parcel off Bill Gray Road in Sedona, is currently offered for less than 19K per acre, a far cry from what it sold for a few short years ago….And no one has bought it after 3 weeks on the market!  A few parcels of irrigated land have sold for around 60k an acre, when it used to go for 120-150k an acre.

The huge lack of activity in the land market is largely due to builders, who are no longer in the mode of acquiring inventory for spec homes and the great lack of available banks willing to lend on it.   Many builders have little to no motivation to build homes right now, as many of the  foreclosures are selling for less than they cost to build.  There is no motivation to build if there is no profit, and therefore, there is little demand to buy land.

Out of the 288 homes that sold during the second quarter,  118 were foreclosed homes-  a little over 40%.  An additional 20 sales, or 7 % of the sales during the second quarter were short sales.  A market where nearly 50% of the sales are distress sales. makes for  a very tough, and extremely competitive market for traditional real estate sellers, and this is likely to be the case for the next 12-24 months in the area, as foreclosure inventory is absorbed by first time homebuyers and new residents to the area.

Luckily, there are some great incentives for buyers to enter the market.  The $8,000 tax credit for first time homebuyers ( anyone who has not owned a home in the last 3 years) has done much to stimulate our local market.  It is schedule to expire 11/30/09 ( though I would not be surprised at all if there was a last minute extension), and buyers are standing up and taking notice.  This has a trickle up effect, and allows move up buyers to buy, and so on.  Finally, government got something right!

If we can be of any assistant helping you intelligently buy or sell during these crazy times, please don’t hesitate to get in contact with us

 

1st Quarter 2009 Sedona/Verde Valley Real Estate Market Update

1st Quarter 2009 Sedona/Verde Valley Real Estate Market Update

Volatile, chaotic, spasmodic and full of mixed messages. These are just a few term that characterize our  real estate markets  current state.  Sellers, this is a good thing– I’ll explain in a few moments.

The 1st Quarter closed with the fewest number of sales we have seen in our 3 year long downturn, despite an obvious increase in buyer traffic.  Here is how the past few quarters breakdown:

1st quarter  2006            567 closed sales
2nd quarter 2006            570 closed sales
3rd quarter  2006            561 closed sales
4th quarter  2006            358 closed sales
1st quarter  2007            314 closed sales
2nd quarter 2007            406 closed sales
3rd quarter  2007            304 closed sales
4th quarter  2007            234 closed sales
1st quarter  2008            203 closed sales
2nd quarter 2008            280 closed sales
3rd quarter  2008            242 closed sales
4th quarter  2008            222 closed sales
1st quarter 2009             180 closed sales

We have just experienced our worst quarter ever in terms of the number of sales, but this bleak news is coupled with some excellent news.

Pending contracts are up– WAY up ……and inventory has dropped a full 10% off the highs we have been experiencing.  As of April 10th, we have 214 pending contracts in the Verde Valley-  we have been averaging around 130 for well over a year.

Some micro markets are actually experiencing shortages of  inventory-  For example, If you have site built home with horse privileges that would sell for under 190K, your property would be in high demand.  Site built homes in the Cottonwood area under 150K continue to move at a rapid pace-  many selling under 60 days.

 A full 50% of the sales that occurred in the 1st quarter were foreclosure sales, even though foreclosures represent less than 10 % of the overall  inventory for sale in the Verde Valley at this time.  Foreclosures also represent 50% of the areas currently pending contracts.

The foreclosure market is beginning to get competitive-  bad for buyers, but great for sellers.  Multiple offers and bidding wars are beginning to occur with greater frequency– Well priced foreclosures are selling for full price and are beginning to be bid up over the asking price….At least 2 foreclosures in Cottonwood sold for 20% OVER the asking price!

Price spreads can be very dramatic in some neighborhoods as the market finds its bottom.  Recently, condos in the same neighborhood  that were extremely similar in size and features sold within 30 days of each other with price spreads from 70K-130K…  talk about volatility!  These are all excellent signs of the market beginning to firm up, and take a foothold firmly on the bottom.

The land market is not enjoying the rebound residential sales are currently seeing.  Land sales in Sedona and the Verde Valley continue to be comparable to cold molasses.  Out of the 180 sales in the first quarter, only 11 of those sales were vacant land.  Demand for land can be expected to be extremely anemic as financing for vacant land has all but dried up and homes can currently be purchased for far less than they cost to build.  Builders tend to drive our local land market-  right now, they are out of gas.

 Portions of the Obama administration stimulus plan for housing appears to be finally having some effect.  First time home buyers are beginning to enter the market in healthy numbers in our area, as median incomes are finally matching affordability once again.  Since average household incomes are around 50,500 in Yavapai County, 150K is about the max the average household in the area can afford.  These buyers are absolutely crucial to the health of a local real estate market, as their purchases tend to have a “trickle up”  effect into higher price ranges.  A move up buyer can buy a 250K house,  because an entry level buyer just bought their 150K house, and so on…..These buyers are beginning to turn the spiral upwards once again.

So how do you compete against a foreclosure as a real estate seller?

1.  Make it an easy deal.    Banks sometimes have horrible terms and conditions that turn off many buyers. Whatever you can do to make it easier for a buyer to get into your home, do it!
2.  Make sure your home is in great condition.   Many foreclosures are sold as is and are in need of numerous repairs.  Look around your home through Martha Stewart’s eyes– clean out the clutter and make sure everything is sparkling clean and in great condition.
3.  Consider having your home pre-inspected and complete necessary repairs.   Foreclosures are sold AS-IS, and buyers inherit many of their problems.  Human nature dictates when there is a choice, we will choose the path of least resistance. Make your home the one with the least amount of hassles.
4.  Get creative.  Does the buyer need a fenced backyard or want new carpet?  Consider allowances for upgrades of their choice ( Be sure to ask the buyers lender how to structure the deal before writing the contract).  Offer to pay the HOA dues for 1 year or two.
Foreclosures may be inexpensive, but the deal sometimes comes with significant hassles many buyers just wont tolerate.  Following a few of these tips just might be the ticket to a successful sale!

Verde Valley and Sedona Real Estate Market Statistics for 2008, Real Estate Projections for 2009…

Below are real estate sales statistics for the Sedona real estate market and the Verde Valley real estate market for the calendar year 2008 (1/1/08-12/31/08).  Data was taken from the Sedona – Verde Valley Multiple Listing Service  01/23/09-02/12/09, and info regarding current listings for sale is reflected as of this date.  To compare these numbers to the first 6 months of 2008 go to  http://blog.verdevalleyrealestate.com/2008/08/06/market-update-for-the-1st-and-2nd-quarter-of-2008-for-sedona-and-the-verde-valley.aspx

HOMES

City of Cottonwood Real Estate

Currently Listed                          104
Currently Pending                          2
Sold in 08                                   108
Months supply                            11-12
Avg. Current List Price             $237,809
Avg. List Price- Sold Listings  $190.793
Avg. Sold Price                         $178,370
List/Sales Price %                    93.5
Chance of Sale in 2009            @100%

Verde Village Real Estate

Currently Listed                          121
Currently Pending                          2
Sold in 08                                   131
Months supply                             11
Avg. Current List Price             $190,158
Avg. List Price- Sold Listings  $191,935
Avg. Sold Price                         $183,774
List/Sales Price %                    95.75
Chance of Sale in 2009            @100%

Quail Run/ Springs Real Estate

Currently Listed                           21
Currently Pending                          0
Sold in 08                                       6
Months supply                              42
Avg. Current List Price             $822,596
Avg. List Price- Sold Listings  $681,833
Avg. Sold Price                         $649,073
List/Sales Price %                    95.20
Chance of Sale in 2009            @29.2%

Bridgeport Real Estate

Currently Listed                           14
Currently Pending                          0
Sold in 08                                     14
Months supply                              12
Avg. Current List Price             $420,379
Avg. List Price- Sold Listings  $310,057
Avg. Sold Price                         $261,215
List/Sales Price %                    84.25
Chance of Sale in 2009            @100%

Jerome Real Estate

Currently Listed                           11
Currently Pending                          0
Sold in 08                                       1
Months supply                              132
Avg. Current List Price             $460,182
Avg. List Price- Sold Listings  $297,000
Avg. Sold Price                         $290,000
List/Sales Price %                    97.64
Chance of Sale in 2009            @9.1%

Clarkdale Real Estate

Currently Listed                           61
Currently Pending                          1
Sold in 08                                     26
Months supply                              28
Avg. Current List Price             $304,615
Avg. List Price- Sold Listings  $240,723
Avg. Sold Price                         $227,392
List/Sales Price %                    94.46
Chance of Sale in 2009            @42.6%

Cornville Real Estate

Currently Listed                         133
Currently Pending                          3
Sold in 08                                     62
Months supply                              25.7
Avg. Current List Price             $393,055
Avg. List Price- Sold Listings  $345,359
Avg. Sold Price                         $320,556
List/Sales Price %                    92.82
Chance of Sale in 2009            @46.6%

Camp Verde Real Estate- North of I 17

Currently Listed                           23
Currently Pending                          0
Sold in 08                                     17
Months supply                              16.2
Avg. Current List Price             $381,789
Avg. List Price- Sold Listings  $243,129
Avg. Sold Price                         $220,871
List/Sales Price %                    90.84
Chance of Sale in 2009            @73.9

Camp Verde Real Estate

Currently Listed                           60
Currently Pending                          2
Sold in 08                                       27
Months supply                              26.6
Avg. Current List Price             $249,052
Avg. List Price- Sold Listings  $241,895
Avg. Sold Price                         $227,525
List/Sales Price %                    94.06
Chance of Sale in 2009            @45%

S. Camp Verde (Quarterhorse/Salt Mine)

Currently Listed                           54
Currently Pending                          1
Sold in 08                                     25
Months supply                              37.3
Avg. Current List Price             $459,307
Avg. List Price- Sold Listings  $401,728
Avg. Sold Price                         $368,685
List/Sales Price %                    91.77
Chance of Sale in 2009            @46.3%

Verde Lakes Real Estate

Currently Listed                           34
Currently Pending                          1
Sold in 08                                     14
Months supply                              29.1
Avg. Current List Price             $163,482
Avg. List Price- Sold Listings  $111,866
Avg. Sold Price                         $99,593
List/Sales Price %                    89.01
Chance of Sale in 2009            @41.2%

Rimrock Real Estate

Currently Listed                            47
Currently Pending                          1
Sold in 08                                      17
Months supply                             199.9
Avg. Current List Price             $222,804
Avg. List Price- Sold Listings  $157,106
Avg. Sold Price                         $150,466
List/Sales Price %                    95.77
Chance of Sale in 2009            @36.2%

Lake Montezuma Real Estate

Currently Listed                           64
Currently Pending                          1
Sold in 08                                     22
Months supply                             34.9
Avg. Current List Price             $206,503
Avg. List Price- Sold Listings  $184,683
Avg. Sold Price                         $172,168
List/Sales Price %                    93.22
Chance of Sale in 2009            @34.3%

Oak Creek Canyon Real Estate

Currently Listed                             4
Currently Pending                          0
Sold in 08                                       4
Months supply                              12
Avg. Current List Price             $631,975
Avg. List Price- Sold Listings  $565,500
Avg. Sold Price                         $517,000
List/Sales Price %                    91.42
Chance of Sale in 2009            @100%

Uptown Sedona Real Estate

Currently Listed                           49
Currently Pending                          0
Sold in 08                                     22
Months supply                              26.7
Avg. Current List Price             $911,994
Avg. List Price- Sold Listings  $614,202
Avg. Sold Price                         $569,659
List/Sales Price %                    92.75
Chance of Sale in 2009            @44.9%
West Sedona Real Estate

Currently Listed                          208
Currently Pending                          4
Sold in 08                                   129
Months supply                             19.3
Avg. Current List Price             $810,862
Avg. List Price- Sold Listings  $555,016
Avg. Sold Price                         $517,878
List/Sales Price %                    93.31
Chance of Sale in 2009            @62%
Red Rock Loop/Bill Gray Road

Currently Listed                           33
Currently Pending                          0
Sold in 08                                       9
Months supply                          43.9
Avg. Current List Price             $1,958,748
Avg. List Price- Sold Listings  $544,069
Avg. Sold Price                         $490,063
List/Sales Price %                    90.07
Chance of Sale in 2009            @27.3%
Little Horse Park (Along 179)

Currently Listed                            59
Currently Pending                          0
Sold in 08                                     29
Months supply                            24.4
Avg. Current List Price             $831,339
Avg. List Price- Sold Listings  $884,690
Avg. Sold Price                         $777,548
List/Sales Price %                    87.89
Chance of Sale in 2009            @49.2%

Village of Oak Creek Real Estate

Currently Listed                          132
Currently Pending                          2
Sold in 08                                     49
Months supply                             32.3
Avg. Current List Price             $382,907
Avg. List Price- Sold Listings  $389,173
Avg. Sold Price                         $359,233
List/Sales Price %                    92.31
Chance of Sale in 2009            @37.1%

Big Park Real Estate

Currently Listed                          145
Currently Pending                          1
Sold in 08                                     60
Months supply                             28.9
Avg. Current List Price             $810,598
Avg. List Price- Sold Listings  $571,200
Avg. Sold Price                         $530,423
List/Sales Price %                    92.86
Chance of Sale in 2009            @41.4%
Totals for Sedona/ Verde Valley- Homes

Currently Listed  1384
Currently Pending  21
Sold in 08
Years supply   @1.8
Chance of sale in 2009 @19.9%

 LAND

City of Cottonwood Real Estate

Currently Listed  168
Currently Pending  1
Sold in 08   11
Months supply   183
Avg. Current List Price             $217,230
Avg. List Price- Sold Listings  $161,164
Avg. Sold Price                         $139,018
List/Sales Price %                    86.26
Chance of Sale in 2009            @6.5%

Verde Village Real Estate

Currently Listed                           32
Currently Pending                          0
Sold in 08                                       6
Months supply                              64
Avg. Current List Price             $61,125
Avg. List Price- Sold Listings  $56,300
Avg. Sold Price                         $47,167
List/Sales Price %                    83.78
Chance of Sale in 2009            @18.7%

Quail Run/ Springs Real Estate

Currently Listed                           43
Currently Pending                          0
Sold in 08                                       4
Months supply                              129
Avg. Current List Price             $468,620
Avg. List Price- Sold Listings  $190,750
Avg. Sold Price                         $168,500
List/Sales Price %                    88.34
Chance of Sale in 2009            @9.3%

Bridgeport Real Estate

Currently Listed                           12
Currently Pending                          0
Sold in 08                                       4
Months supply                              36
Avg. Current List Price             $119,708
Avg. List Price- Sold Listings  $85,513
Avg. Sold Price                         $69,250
List/Sales Price %                    80.98
Chance of Sale in 2009            @33.3%

Jerome Real Estate

Currently Listed                              3
Currently Pending                          0
Sold in 08                                       1
Months supply                              36
Avg. Current List Price             $108,000
Avg. List Price- Sold Listings  $89,900
Avg. Sold Price                         $70,000
List/Sales Price %                    77.86
Chance of Sale in 2009            @33%

Clarkdale Real Estate

Currently Listed                           24
Currently Pending                          0
Sold in 08                                       6
Months supply                              48
Avg. Current List Price             $409,877
Avg. List Price- Sold Listings  $133,100
Avg. Sold Price                         $112,083
List/Sales Price %                    84.21
Chance of Sale in 2009            @25%

Cornville Real Estate

Currently Listed                          123
Currently Pending                          0
Sold in 08                                      12
Months supply                              123
Avg. Current List Price             $458,862
Avg. List Price- Sold Listings  $189,675
Avg. Sold Price                         $167,079
List/Sales Price %                    88.09
Chance of Sale in 2009            @9.8%

Camp Verde Real Estate – North of I-17

Currently Listed                           28
Currently Pending                          0
Sold in 08                                       9
Months supply                              37.3
Avg. Current List Price             $304,400
Avg. List Price- Sold Listings  $164,867
Avg. Sold Price                         $154,043
List/Sales Price %                    93.44
Chance of Sale in 2009            @32.1

Camp Verde Real Estate

Currently Listed                           20
Currently Pending                          0
Sold in 08                                       1
Months supply                              37.3
Avg. Current List Price             $369,782
Avg. List Price- Sold Listings  $349,900
Avg. Sold Price                         $325,000
List/Sales Price %                    92.88
Chance of Sale in 2009            @5%

S. Camp Verde (Quarterhorse/Salt Mine)

Currently Listed                           35
Currently Pending                          0
Sold in 08                                       7
Months supply                              37.3
Avg. Current List Price             $468,246
Avg. List Price- Sold Listings  $119,543
Avg. Sold Price                         $99,571
List/Sales Price %                    83.29
Chance of Sale in 2009            @20%

Verde Lakes Real Estate

Currently Listed                           50
Currently Pending                          0
Sold in 08                                       3
Months supply                             199.9
Avg. Current List Price             $66,633
Avg. List Price- Sold Listings  $44,167
Avg. Sold Price                         $38,500
List/Sales Price %                    87.17
Chance of Sale in 2009            @6%

Rimrock Real Estate

Currently Listed                          228
Currently Pending                          0
Sold in 08                                       8
Months supply                             342
Avg. Current List Price             $156,926
Avg. List Price- Sold Listings  $95,488
Avg. Sold Price                         $78,250
List/Sales Price %                    81.95
Chance of Sale in 2009            @3.5%

Lake Montezuma Real Estate

Currently Listed                          102
Currently Pending                          0
Sold in 08                                       9
Months supply                            135.9
Avg. Current List Price             $59,421
Avg. List Price- Sold Listings  $37,356
Avg. Sold Price                         $27,056
List/Sales Price %                    72.43
Chance of Sale in 2009            @8.8%

Oak Creek Canyon Real Estate

Currently Listed                              0
Currently Pending                          0
Sold in 08                                       4
Months supply                             0
Avg. Current List Price             $0
Avg. List Price- Sold Listings  $648,375
Avg. Sold Price                         $497,000
List/Sales Price %                    76.65
Chance of Sale in 2009            @100%

Uptown Sedona Real Estate

Currently Listed                           30
Currently Pending                          0
Sold in 08                                       7
Months supply                             51.4
Avg. Current List Price             $1,135,077
Avg. List Price- Sold Listings  $326,786
Avg. Sold Price                         $312,500
List/Sales Price %                    95.63
Chance of Sale in 2009            @23.3%
West Sedona Real Estate

Currently Listed                          161
Currently Pending                          0
Sold in 08                                     15
Months supply                            128.8
Avg. Current List Price             $522,500
Avg. List Price- Sold Listings  $551,580
Avg. Sold Price                         $500,300
List/Sales Price %                    90.70
Chance of Sale in 2009            @9.3%
Red Rock Loop/ Billy Gray Road

Currently Listed                         110
Currently Pending                          0
Sold in 08                                     10
Months supply                           132
Avg. Current List Price             $1,288,962
Avg. List Price- Sold Listings  $629,585
Avg. Sold Price                         $499,088
List/Sales Price %                    79.27
Chance of Sale in 2009            @9.1%
Little Horse Park (Along 179)

Currently Listed                            45
Currently Pending                          0
Sold in 08                                       8
Months supply                             67.5
Avg. Current List Price             $478,228
Avg. List Price- Sold Listings  $491,675
Avg. Sold Price                         $374,913
List/Sales Price %                    76.25
Chance of Sale in 2009            @17.8%

Village of Oak Creek Real Estate

Currently Listed                           33
Currently Pending                          0
Sold in 08                                       2
Months supply                             198
Avg. Current List Price             $217,121
Avg. List Price- Sold Listings  $267,250
Avg. Sold Price                         $238,500
List/Sales Price %                    89.24
Chance of Sale in 2009            @6.1%

Big Park Real Estate

Currently Listed                           86
Currently Pending                          0
Sold in 08                                     14
Months supply                             73.7
Avg. Current List Price             $429,832
Avg. List Price- Sold Listings  $388,611
Avg. Sold Price                         $350,454
List/Sales Price %                    90.18
Chance of Sale in 2009            @16.3%
Totals for Sedona/ Verde Valley- Land

Currently Listed  1349
Currently Pending  1
Sold in 08   143
Years supply   @9.4
Chance of sale in 2009 @10.6%

Real estate sellers in Sedona and the Verde Valley will continue to face a very tough market in 2009, due to a steady stream of foreclosures and an overall lackluster market.  However, prices are attracting more buyers into the market and we are beginning to see multiple offers and price wars on certain well priced listings.

A home in Verde Village a few days ago was bid up 20% over its asking price  A property in the City of Cottowood experienced the same phenomena.  A listing of ours in the City of Cottonwood just received an offer after a market time of only 10 days.  These are things we expect in a sellers market-  which indicates the tide may be finally be starting to turn in these markets.  While a one year supply of homes is still considered an oversupply ( a”normal” market is a 4-6 month supply),  the supply of homes in these two markets has dropped considerably in the second half of 08.

The 4th quarter of 2008 saw 222 sales in the area, however, over 25% of these sales were foreclosures.  Currently, 48% of the 124 pending contracts in the Verde Valley are foreclosure homes.Inventory of available properties also dropped in the 4th quarter from about 3200 listings, to a current 2840 listings.  We do expect this number to spike up again in the Spring, as many sellers take their homes off the market for the holidays, or wait until Spring to list.  Here is how the 4th quarter and 2008 stack up to the past few years.

Quarter   Year          No# of Sales

1st qtr  2006            567 closed sales
2nd qtr 2006            570 closed sales
3rd qtr  2006            561 closed sales
4th qtr  2006            358 closed sales
1st qtr  2007            314 closed sales
2nd qtr 2007            406 closed sales
3rd qtr  2007            304 closed sales
4th qtr  2007            234 closed sales
1st qtr  2008            203 closed sales
2nd qtr 2008            280 closed sales
3rd qtr  2008            242 closed sales
4th qtr  2008            222 closed sales

Year     # of Sales        Dollar Volume1996     1687              197,283,896
1997     1809              248,524,298
1998     1967              282,799,572
1999     2052              325,126,110
2000     2127              388,386,493
2001     2043              378,680,420
2002     2244              440,312,261
2003     2624              593,724,521
2004     3175              782,270,183
2005     3121              968,669,048
2006     1972              740,066,355
2007     1261              458,545,123
2008       952              310,587,417


The market in the Verde Valley will begin to feel more normal when we hit an average of 400-500 sales per year in the Sedona/ Verde Valley market area.

Verde Valley and Sedona real estate agents had a very tough year in 2008.  In fact, we lost about 100 over the past calendar year-  1/2 of those were in January 09, when annual dues to our MLS service are to be paid.  We now have 636 agents working in the valley.  That is still way too many-  636 agents handling 952 sales means an average of 1.49 sales per agent, per year. or 48,610 dollars in sales per agent- about 1500 bucks in commissions- before their split with a broker.  I cant understand why so many of the “dabblers”  continue to hold a license.

Real estate is a business where 10% of the people, make 90%, and that is especially true in difficult markets.  Out of the 700 or so real estate agents that worked in Sedona and the Verde Valley in 2008, only 417 did one or more deal-  over 250 of them failed to record a sale in the MLS-  which means over 1/3 of our area agents sold nothing in 2008!  Out of the 417 who managed to do a deal, 124 area real estate agents only did one deal for the entire year.  80 agents only sold 2 properties, 317 agent sold 5 or fewer properties, leaving 100 area agents who sold 5 or more properties during 2008.  50 agents managed to sell 10 or more properties.  10 agents managed to sell 20 or more properties.  We were fortunate enough to be in this group.

If you are selling real estate in the Verde Valley in 2009, you would be very wise to chose your agent very carefully, and then listen to his or her advice regarding pricing, repairs etc.  Same goes if you are buying real estate in 2009.  Chose your agent carefully and go out and negotiate a killer deal.  Prices have dropped 20-50 percent throughout the Verde Valley-  find an agent who knows how to help you spend your money wisely!

 

A Billion Here, A Billion There…

An Enlightening View of One Billion

A billion seconds ago it was 1959.
A billion minutes ago Jesus was alive.
A billion hours ago our ancestors were living in the Stone Age.
A billion days ago no-one walked on earth on two feet.
A billion dollars ago was only 8 hours and 20 minutes, at the rate our government is spending it.
While this thought is still fresh in our brain, let’s take a look at New Orleans.  It’s amazing what you can learn with some simple division  A Louisiana Senator, Mary Landrieu (Democrat), asked the Congress for  $250 BILLION  to rebuild New Orleans.     Interesting number….what does it mean?
Well, if you were one of 484,674 residents of New Orleans (every man, woman, child),  you’d each get $516,528.
Or, if you had one of the 188,251 homes in New Orleans , your home gets $1,329,787.  Or, if you are a family of four, your family gets $2,066,012…..

Good Riddance, 2008!!!

Happy New Year!
Good riddance to 2008-  the worst year our real estate market has EVER seen since the Sedona/Verde Valley Association of Realtors has been keeping records.  Less than 1000 sales were recorded across the entire valley last year.  Let’s hope this year will be better…..

There are reasons to be optimistic about next year.  FINALLY, the media is being positive about the real estate market.  In the past few weeks, I have seen several of the regulars on CNN encouraging buyers to buy.  Even Cramer on “Mad Money,”  openly told his viewers to go out and buy real estate….music to my ears!  He even declared the bottom of the national real estate market will be June 30th of this year….he even has a countdown on the wall of his studio.  Very encouraging!!

The fed officially announced we have been in a recession since Dec 07-Jan 08.  Again, more good news.  Recessions typically last 18 months or so, and although this recession has been deep and robust, it will end, and more and more of the pundits are predicting a turnaround beginning for the nation in mid 2009.

Even the stock market appears to be stabilizing, and maybe, rebounding.  The stock market is forward thinking, and many traders believe that even with the next wave of foreclosures coming soon to a community near you, the market has already accounted for these future losses.

Obama is expected to pass a massive stimulus bill shortly after his inauguration- and half of the original TARP funds remain untouched and ready to be pumped into the economy.

The markets are now “back to basics,” and we can expect a much different, and much more sustainable, economic climate in the years to come.   I believe that 2008 will be looked back upon as the year consumerism died.  Why?  For the past several years there has been an unprecedented amount of money floating through the economy and this money inflated prices on virtually everything, especially home sales.

In 2006, one of every seven dollars in the economy was an equity dollar, a buck somebody took out of there home to fund a vacation, boat, improvements or second home purchase.  Those dollars will now be more carefully counted and accounted for by consumers.  The funny money is gone, and people will once again have to live within their means-  Not good for corporations looking to record amazing profits, but excellent for the long term health of our nation as a whole.   Remember the 70-80’s when everyone watched their pennies, clipped coupons and waited for sales?  Saving money will be in style once again!  Have a wonderful, and very happy new year!

Feel free to give a call or send an e-mail with any questions or comments

2009 Sedona/Verde Valley Market Forecast…

The 2009 economic summit with Elliot Pollack gave no reason for sellers of Arizona real estate to be optimistic in 2009.   Pollack’s predictions for 2009 ranged from “bad to horrific.”  Nice to know we have options.

It is now common knowledge that the United States has been in a recession since Dec 07/Jan 08, but what  exactly is a recession and what makes a depression a  depression?  An old joke says that a recession is when your neighbor loses his job. A depression is when you lose your job.

The technical definition of a recession (and considered insufficient by many economists) is defined as two or more consecutive quarters where the Gross Domestic Product declines.  Simply put, America produces less goods and services than it has in previous years.   Recessions typically last around 12 to 18 months.

A depression is basically a recession that has run amok. In fact, before the great depression of the 1930’s,  all economic downturns were referred to as depressions.  The term recession came about to differentiate smaller declines in economic activity.  A depression is basically a recession that continues for a longer time period and where GDP declines 10 percent or more.

Pollack said the great depression occurred  because of 3 things:

  1. The federal government let banks fail.
  2.  Taxes were increased.
  3. Legislation greatly slowed trade with foreign countries.

Pollack fully backed the decision of Bernanke to inject liquidity into the markets for this very reason.  If the banks fail, we all do, because our economy floats on credit.  Due to government intervention, the worst of the credit crunch is over and the credit markets are slowly showing signs of improvement.  Whether we have a bad or a horrific year will now depend on how banks and consumers react to all the economic intervention by the government.

It appears as if this news is FINALLY beginning to be seen in a positive light.  Very recently, mortgage rates took a huge tumble when the government made announcements regarding the purchase of 100 billion dollars in bonds issued by Fannie and Freddie.  Interest rates are now in the 5’s– and consequently, last week, mortgage applications nationwide jumped a whopping 37% for      conventional loans and 39% for FHA loans!

Even with the recent good news, the national real estate market still has a huge oversupply of nearly one million homes.  Pollack said that one of the best things the government could do, would be to buy a million homes and burn them to the ground.  The oversupply in the Phoenix area is estimated between 45-75,000 units and it will take years for the excess to be absorbed-  According to Pollack, it will likely be 2012, before Phoenix sees a “normal” real estate market.  Here’s why-

  1. Consumers have little savings and high debt and are feeling poor due to ailing real estate prices and 401K’s.  They are likely to continue a pullback on spending in 2009.
  2. This reduction in spending will also continue to slow the flow of new residents to AZ from 120,000 in 2007, to 80,000 in 2008 and 2009- APS states the last time they had such a low number of new accounts was 1954.
  3. Arizona went from being number 1 in the nation in job creation in 2006 to number 48 in 2008.  Cleveland, Ohio is creating more jobs than Phoenix!
  4. Foreclosures will continue.  2009 will be the peak year for sub-prime mortgage resets.

The Arizona real estate market simply will not improve greatly until the excess inventory is absorbed and foreclosures are at an acceptable level.  Both the Phoenix commercial markets and luxury markets are expected to take serious beating in 2009.  Pollack said the commercial market in 2009 will be likened to 1989.   Though the next few years are likely to be rough for Arizona real estate sellers, the longer term prognosis for Arizona is very good.  The real estate bubble burst, and Arizona is once again, affordable.  In fact, Phoenix is now the most affordable city in the Southwest-  72% of Phoenix residents can now afford the average home, which is key to attracting new residents and businesses to the state.

The Sedona real estate market and the Verde Valley real estate market face a similar inventory overload that is stalling the recovery of the Phoenix real estate market, but on a much smaller scale-  While Phoenix experienced a more or less normal year in 2007 in terms of the number of real estate sales, this year, 2008, Sedona and the Verde Valley will see less than 1000 real estate sales throughout the valley, the worst year since the Sedona/Verde  Valley Association of Realtors has been keeping records. Current sales activity will need to increase by around 50% before our market begins to feel “normal” again.

Since we have little industry in the area, we are almost entirely dependent on newcomers to the area to drive the local real estate engine.  Most of our new residents were sidetracked last year by disruptions to the credit and stock markets, or they are still stuck somewhere back East, trying to sell their home, and many of them will remain stuck in this holding pattern in 2009.

But I believe the Verde Valley will fair better than Phoenix in 2009….

  1. Sedona and the Verde Valley do not depend on job creation for the bulk of our new residents-  most of them are retired– and even though some of them lost money on their stocks and real estate, many will still move, only they will downsize in price to one that is more harmonious with their current portfolio.
  2. I would estimate our current oversupply of homes to be between 800-1500 units-  a much more manageable number!
  3. We are starting to see multiple offers and bidding wars. Competition for foreclosed properties can be especially stiff. We have seen several area listings close at 70-80% of asking price….you won’t find these deals often- but they are there, waiting for you and your agent to uncover them.
  4. Since about a week before the election, the air has been a little different out there… buyers are making inquiries, driving neighborhoods and testing the waters with offers.  I have no evidence other than anecdotal, pending contracts have yet to show any increase…. but it just feels different out there…less like a ghost town and more like an awakening.

Investors and real estate buyers– 2009 will be your year to shine.  Pollack referred to 2009 as a “twice in a lifetime opportunity”– the 80’s was the other.  I couldn’t agree more.  Sedona foreclosures, and Verde Valley foreclosures will continue to place great pressure on area pricing.  Sedona real estate is on sale.  Cottonwood real estate is on sale.  The entire Verde Valley is like K-mart-  comb through the aisles to find your blue- light special.

Though the days of rapid appreciation are long gone, the “Back to Basic’s” rules of  investing in real estate apply once again– if there is cash flow, buy it. Don’t buy, if you plan to day-trade.., unless, of course, you steal it…and 2009 may be your year to do exactly that.

Many of the people who got hurt investing in real estate in 05 and 06 forgot the basics-  they didn’t buy it for current cash flow and/or LONG TERM appreciation….and short term real estate investments, like day trading stocks, are reserved for a select few.  With our 20-50% price rollbacks in Sedona real estate prices and Verde Valley real estate prices, buyers are sure to find something that will provide many happy returns!

Please feel free to post a comment or question-  we would love to hear what you think!