Sedona-Verde Valley Real Estate Market Watch....

Signs of the Bottom Beginning to Appear- First Quarter, 2008 Sedona/ Verde Valley Real Estate Market Update

Grigaitis-Svercl — Fri, 25 Apr 2008 07:27:00 GMT

    The Sedona Verde Valley real estate market, which can usually rely on robust spring sales, failed to perform in the first quarter. The first quarter of 2008 saw lackluster sales throughout the entire Verde Valley. Even though a visible up tick in buyer traffic has been noted and commented on by agents throughout the area, only 203 properties closed escrow during the first quarter. The last quarter of 2007 saw 234 closed sales, which represents an overall 15% drop in activity, quarter to quarter. But it is always darkest just before dawn.

    As of April 9, there are 3093 available listings in Sedona and the Verde Valley and 169 properties under contract.  We can safely assume that roughly 80% (135) of these contracts will successfully close in this quarter, and certainly more properties will go to contract and close during this quarter. After all, we have 81 more days! We have also seen inventory drop approx 5 % over the past few months and the first 18 days of the second quarter of 2008 already saw 43 recorded sales.
    I am going to go out on a big limb here and say that the first quarter of 2008 just may register as the bottom of the market in the Verde Valley in terms of sales activity, provided there are no more major disruptions to the national economy.
    Pricing is another story. While prices have already adjusted 20-30% in some areas of the Verde Valley, foreclosures in the area continue to present stiff competition for anyone trying to sell area real estate. Couple this with a huge tightening of lending standards, continued foreclosure inventory and lackluster economies in real estate markets where our buyers are relocating from, we have a recipe for a continuing buyers market for several more months.
    Here is what the last few years look like by quarterly recorded sales data in the Sedona Verde Valley Multiple Listing Service:

1st quarter 2005            727 closed sales
2nd quarter 2005            966 closed sales
3rd quarter 2005            786 closed sales
4th quarter 2005            591 closed sales
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

    The second quarter of 2007 is when investors of mortgage securities began to become aware of the existence of "risk" in their mortgage portfolios, and subsequently lead to what the press has termed the mortgage meltdown....and it has had an enormous effect on the number of sales in our local market, and will continue to provide us with a lackluster market unless the Federal governments 400 billion dollar bailout unclogs the credit system and money starts to flow freely once again.
    What exactly happened in the "mortgage meltdown?" It's pretty simple. Money was flowing freely in the economy and it was very inexpensive for banks to obtain it to loan it to you and I.  Banks made loans like crazy and kept relaxing their lending standards. The banks then packaged up hundreds of these loans together into mortgage securities and the like, and sold them to portfolio investors all over the world. The unprecedented amount of mortgage money pumped into the economy, and the extreme ease of obtaining it, lead to a national frenzy of real estate sales, which drove prices up artificially in many locations. When the pricing in a given market reached a point that the market could no longer bear, a cooling became inevitable in super hot markets, and the disturbance was just like a cold front plundering through Kansas on a hot summer day.....dark storm clouds slowly gathered and then sent tornadoes rippling through the financial markets of the entire world.
    What is THE pricing point that lead to the contraction in home values? It is generally a combination of factors depending on the market. In some markets the average price of the average home simply exceeded what the average person could buy. In other words, average incomes in the area no longer supported the purchase of the average house. In other markets, the pricing point may have been a matter of average purchase price vs. average rents. If the rent will no longer cover the house payment, smart investors look to locations where rents can and will cover the payments. Suddenly, fewer sales will occur and prices will be lowered a little bit to entice buyers. Homes that cannot be rented for the amount of the mortgage payment and are taking longer to sell begin to put pressure on builders and investors and those who just need to move. Prices go down a little more. Breaking point is reached and foreclosures begin to occur. Banks, seeing the foreclosures, begin to tighten lending standards, again reducing the pool of available buyers.
    Investors, who bought the loans that are now foreclosing, become scared, and no longer want to buy the loans the banks are selling. Banks, no longer able to sell the bulk of their loans, can't get new funds to loan to you and I, and they tighten their standards even further, or, close their doors. When REALLY big banks, such as Bear Stearns begin to fall, the Federal government comes to the rescue....
    Storms only last so long. Soon people begin to realize that the BEST conditions for buying real estate in well over 35 years exist right now. The media follows the philosophy of ,"If it bleeds, it reads." Here are a few facts nightly news reports typically neglect to mention.

2008 is the best year to buy a home in 35 years.
1973 was the last time mortgage rates were this low in a buyer’s market. We had rates this low in 2001 and 2002, but those were strong seller’s markets with little inventory. The last two big buyer’s markets, in the early ‘80s and early ‘90s had much higher rates. Low rates and good inventory make 2008 the best year to buy in decades!

six million Americans are expected to buy a home this year. Six million people in the game make up a pretty big game. That’s a level of sales equal to the one we experienced in 1998—which was by all accounts, a pretty good year.

There is still over $23 trillion of value in US. Home ownership continues to be the basis of our wealth in this country.

The housing market cannot help but grow. Our country’s tremendous wealth, liquidity, entrepreneurship and population growth will continue to drive our economy. 70-100 million people will be added to our market in the next 40 years and approx one million new "households" are formed each year.

Real estate is cyclical. The biggest fear in good times is that the fair weather won’t last forever—because it doesn't’t. But the reality of a cyclical real estate market also provides its brightest hope in bad times—foul weather won’t last forever either. What’s happening today is a market correction, severe in some places, but it’s not the end of the world. People are still buying and selling homes. The markets will stabilize.

First-time buyers have a real advantage in today’s market. First-time buyers can buy at a reduced price without having to sell at a reduced price. Higher limits on lower cost conforming loans also help first-time buyers purchase more home for their money. Today’s ‘starter’ homes can be pretty impressive.

First-time buyers lose money while they wait on the sidelines. First, renters typically pay more state and federal income taxes than homeowners with a mortgage deduction. Renters are also losing the wealth they could be accumulating as they pay down their mortgage and as their home increases in value over time (as it surely will). Lastly, renters who wait to buy will lose money if interest rates increase by the time they finally act. Higher payments from higher interest rates represent money buyers could have kept if they had bought earlier. Conversely, if they were willing to spend that amount of money earlier, they could have bought more home.

So what the heck are you waiting for? You cannot ask for better conditions to buy Sedona real estate or Verde Valley real estate, and we are already on track to have significantly higher sales than the last two quarters. While this does not mean that prices will begin to skyrocket by any means, it does mean they will likely stabilize in the very near future, if they haven't already.

So if your are in the market to purchase or sell Sedona real estate, Cottonwood real estate, Camp Verde Real Estate or a home or land in any other Verde Valley community, I invite you to call on our expertise to help you find and negotiate the best deal possible. My husband and I have over 15 years combined experience buying, selling and investing in Verde Valley real estate and we welcome the opportunity to help you weather the storm successfully!

Sunset over the Kona Coast, Hawaii

New Old Wives Tales....

Grigaitis-Svercl — Sun, 23 Mar 2008 10:37:53 GMT

These may have been put out by Proctor and Gamble, maybe Johnson and Johnson....which ever is the conglomerate that makes all of these fine products. If you know of these to work or not, let us know by posting comments to this article!

Drinking two glasses of Gatorade can relieve headache pain almost immediately--without the unpleasant side effects caused by traditional pain "reliever.”

Did you know that Colgate toothpaste makes an excellent salve for burns?

Before you head to the store for a high-priced inhaler filled with mysterious chemicals, try chewing on a couple of curiously strong Altoids peppermints. They'll clear up your stuffed nose.

Achy muscles from a bout with the flu? Mix 1 Tablespoon of horseradish in ½ cup of olive oil. Let stand 30 minutes, then apply it as a massage oil, for instant relief for aching muscles.

Sore Throat?? Just mix 1/4 cup of vinegar with 1/4 cup of honey and take 1 Tablespoon six times a day. The vinegar kills the bacteria.

Cure urinary tract infections with Alka-Seltzer. Just dissolve two tablets in a glass of water and drink it at the onset of the symptoms. Alka-Seltzer begins eliminating urinary tract infections almost instantly--even though the product was never been advertised for this use.

Eliminate puffiness under your eyes.....All you need is a dab of Preparation H, carefully rubbed into the skin, avoiding the eyes. The hemorrhoid ointment acts as a vasoconstrictor, relieving the swelling instantly.

Honey remedy for skin blemishes......Cover the blemish with a dab of honey and place a band-aid over it. Honey kills the bacteria, keeps the skin sterile and speeds healing. Works overnight.

Listerine therapy for toenail fungus....Get rid of unsightly toenail fungus by soaking your toes in Listerine mouthwash. The powerful antiseptic leaves your toenails looking healthy again.

Easy eyeglass protection....To prevent the screws in eyeglasses from loosening, apply a small drop of Clear nail polish to the threads of the screws before tightening them.

Balm for broken blisters.....To disinfect a broken blister, dab on a few drops of Listerine.....a powerful antiseptic.

Coca-Cola cure for rust. Forget rust removers. Just saturate an abrasive sponge with Coca Cola & scrub the rust. Phosphoric acid is what gets the job done.

Cleaning liquid doubles as bug killer....If bees, wasps, hornets or yellow jackets get in your home and you can't find the insecticide, try a spray of Formula 409. Insects drop to the ground instantly.

Smart splinter remover.....just pour a drop of Elmer’s Glue all over the splinter, let dry, and peel the dried glue off the skin. The splinter sticks to the dried glue.

Hunt's tomato paste boil cure....cover the boil with Hunt's tomato paste as a compress. The acid in the tomatoes will soothe the pain and bring the boil to a head.

Use Heinz vinegar to heal bruises...Soak a cotton ball in white vinegar and apply it to the bruise for 1 hour. The vinegar reduces the blueness and speeds up the healing process.

Kill fleas instantly. Dawn dish washing liquid does the trick. Add a few drops to your dog's bath and shampoo the animal thoroughly. Rinse well to avoid skin irritations. Goodbye fleas…

Rainy day cure for dog odor...Next time your dog comes in from the rain, simply wipe down the animal with any dryer sheet, instantly making your dog smell springtime fresh.

Eliminate ear mites....All it takes is a few drops of Wesson corn oil in your cat's ear. Massage it in, then clean with a cotton ball. Repeat daily for 3 days. The oil soothes the cat's skin, smothers the mites, and accelerates healing.

Vaseline cure for hair balls.. To prevent hair balls, apply a dollop of Vaseline petroleum jelly to your cat's nose. The cat will lick off the jelly, lubricating any hair in its stomach so it can pass easily through the digestive system.

Quaker Oats for fast pain relief....It's not for breakfast anymore! Mix 2 cups of Quaker Oats and 1 cup of water in a bowl and warm in the microwave for 1 minute, cool slightly, and apply the mixture to your hands for soothing relief from arthritis pain.

2008- The Year to Invest

Grigaitis-Svercl — Sun, 23 Mar 2008 10:41:36 GMT

                                       Mountain Goat, British Columbia, Canada

    Have you ever said to yourself or maybe someone else, " I could of bought that for a fraction of what it sells for today......."
    Well, guess what? Now is one of those times when your going to wish you had bought real estate, mark my words. If you don't, several years from now you may well kick yourself for not getting off your duff.

    Apparently, I am not the only who thinks this is going to be an incredible year to buy real estate. Check out this Recent Article from Realty Times. Though this article is geared towards investors looking for rental property, anyone in the market to buy property should wake up to the opportunities that exist in many markets across the nation, and Arizona is definitely no exception. An oversupply of inventory, low prices ( in some areas in the Verde Valley, land is 30% or more below the 2005 highs), coupled with low interest rates, have created a unprecedented buyers market, where countless opportunities exist to obtain a great house for a great price, with excellent financing options.
    Yes, lending standards have tightened considerably, and lenders are currently operating with an overabundance of caution.   But lenders were more or less giving loans to anyone who could fog a mirror, in the midst of the boom years. Some of the old rules apply once again, such as decent credit, a down payment of some sort and verifiable income.  You need to have at least one of these 3 items in order to qualify for a home loan and lenders are putting a lot of weight on a consumers credit score.
    Contrary to popular belief, zero down, 3% down and 5% down loans still exist.  Ken and I recently closed a zero down loan on a condominium in Sawmill Cove. FHA is also talking of reducing the 3% required down payment to 1.5%. This will help many cash strapped households achieve homeownership. FHA loan limits in Yavapai County have also just been raised from 295,830 to 390,000, which will allow 3% down loans on homes in this price range and buyers will also be able to carry more debt with an FHA loan as opposed to a conventional loan.
    Currently, mortgage rates are anything but stable. A few weeks ago rates bottomed out in the mid 5's, bounced into the mid 6's a few weeks later, and are currently around 5.8%...that could change within the hour as the financial world shutters and coughs in reaction to the volatility on the Stock Market.    In recent weeks interest rates have literally been changing a few times a day, as investors react to market conditions and economic reports. Some economists are theorizing that rates could be going up substantially in the future, others forecast a return to rates in the 5's again. One thing is certain, lending standards will not be loosening in the immediate future.
    No one can pinpoint when the best time to buy is.   What we can tell you is that incredible conditions exist right now for buyers, and an oversupply of homes and land in the Verde Valley and Sedona ensures buyers will find great buys on Sedona Real estate and Verde Valley real estate.  If you are one of those people who have been sitting on the sidelines waiting to see what is going to happen, realize that Market Timers Often Fail, and the reality is that in 2007, more than 5 million homes exchanged hands across the nation.
    If you have any questions about Sedona / Verde Valley real estate, please e-mail us at hollywoodaz@commspeed.net or visit our website. If you are reading this article in print, and wish to read the articles referenced here, please go to: HTTP://blog.verdevalleyrealestate.com/2008/02/28/prices-might-go-down-a-little-more-but-interest-rates-may-rise-significantly.aspx.
    Remember, all current issues of the real estate insider are now on-line and you can now receive the real estate insider as a monthly e-mail, photos and all! You can also post comments and vote for your favorite articles. So help us save a few trees, and sign up to receive our electronic version. Please drop us a quick e-mail to let us know you have subscribed to blog.verdevalleyrealestate.com, so we can remove you from the print mailing list.  We look forward to your questions and comments on line!
    Next month we will give you a report on how our local real estate market faired in the first quarter of 08. See you then!

Homer, Alaska, resident

Reflections on Government

Grigaitis-Svercl — Mon, 18 Feb 2008 21:10:05 GMT

Proof Positive the grass really is greener on the other side of the fence.

Great Minds on Government- A Little Tax Season Cheer!

1) Suppose you were an idiot. And suppose you were a member of Congress. But I repeat myself. Mark Twain

2) I contend that for a nation to try to tax itself into prosperity is like a man standing in a bucket and trying to lift himself up by the handle. Winston Churchill

3) A government which robs Peter to pay Paul can always depend on the support of Paul. George Bernard Shaw

4) A liberal is someone who feels a great debt to his fellow man, which debt he proposes to pay off with your money. G. Gordon Liddy

5) Democracy must be something more than two wolves and a sheep voting on what to have for dinner. James Bovard, Civil Libertarian (1994)

6) Foreign aid might be defined as a transfer of money from poor people in rich countries to rich people in poor countries. Douglas Casey, Classmate of Bill Clinton at Georgetown University

7) Giving money and power to government is like giving whiskey and car keys to teenage boys. P.J. O'Rourke, Civil Libertarian

8) Government is the great fiction, through which everybody endeavors to live at the expense of everybody else. Frederic Bastiat, French Economist (1801-1850)

9) Government's view of the economy could be summed up in a few short phrases: If it moves, tax it. If it keeps moving, regulate it. And if it stops moving, subsidize it. Ronald Reagan (1986)

10) I don't make jokes. I just watch the government and report the facts. Will Rogers

11) If you think health care is expensive now, wait until you see what it costs when it's free. P.J. O'Rourke

12) If you want government to intervene domestically, you're a liberal. If you want government to intervene overseas, you're a conservative. If you want government to intervene everywhere, you're a moderate. If you don't want government to intervene anywhere, you're an extremist. Joseph Sobran, Former Editor of the National Review (1995)

13) In general, the art of government consists in taking as much money as possible from one party of the citizens to give to the other. Voltaire (1764)

14) Just because you do not take an interest in politics doesn't mean politics won't take an interest in you. Pericles (430 B.C.)

15) No man's life, liberty, or property is safe while the legislature is in session. Mark Twain (1866)

16) Talk is cheap ... except when Congress does it. Unknown

17) The government is like a baby's alimentary canal, with a happy appetite at one end and no responsibility at the other. Ronald Reagan

18) The inherent vice of capitalism is the unequal sharing of the blessings. The inherent blessing of socialism is the equal sharing of misery. Winston Churchill

19) The only difference between a tax man and a taxidermist is that the taxidermist leaves the skin. Mark Twain

20) The ultimate result of shielding men from the effects of folly is to fill the world with fools. Herbert Spencer, English Philosopher (1820-1903)

21) There is no distinctly native American criminal class save Congress. Mark Twain

22) What this country needs are more unemployed politicians. Edward Langley, Artist (1928 - 1995)

23) A government big enough to give you everything you want, is strong enough to take everything you have. Thomas Jefferson

24) They're all liars. Bob Thorne

Love According to Little People

Grigaitis-Svercl — Mon, 18 Feb 2008 21:09:57 GMT

Grizzly Cub, Yukon Territory

This is a copy of an email I received several years ago from a customer. Supposedly, A group of professional people posed the question "What does love mean?" to a group of kindergarteners and elementary school kids. The answers they got were insightful, to say the least!

"When my grandmother got arthritis, she couldn't bend over and paint
her toenails anymore. So my grandfather does it for her all the time,
even when his hands got arthritis too. That's love." Rebecca - age 8

When someone loves you, the way they say your name is different. You
know that your name is safe in their mouth." Billy - age 4

"Love is when a girl puts on perfume and a boy puts on shaving cologne
and they go out and smell each other." Karl - age 5

"Love is when you go out to eat and give somebody most of your French
Fries without making them give you any of theirs." Chrissy - age 6

"Love is what makes you smile when you're tired." Terri - age 4

Love is when my mommy makes coffee for my daddy and she takes a sip
before giving it to him, to make sure the taste is OK." Danny - age 7

"Love is when you kiss all the time. Then when you get tired of
kissing, you still want to be together and you talk more. My Mommy and
Daddy are like that. They look gross when they kiss" Emily - age 8

"Love is what's in the room with you at Christmas if you stop opening
presents and listen," Bobby - age 7 (Wow!)

"If you want to learn to love better, you should start with a friend
who you hate," Nikka - age 6

"There are two kinds of love. Our love. God's love. But God makes both
kinds of them." Jenny - age 8

"Love is when you tell a guy you like his shirt, then he wears it
everyday." Noelle - age 7

"Love is like a little old woman and a little old man who are still
friends even after they know each other so well." Tommy - age 6

"During my piano recital, I was on a stage and I was scared. I looked
at all the people watching me and saw my daddy waving and smiling. He
was the only one doing that. I wasn't scared anymore," Cindy - age 8

"My mommy loves me more than anybody. You don't see anyone else kissing
me to sleep at night." Clare - age 6

Love is when Mommy gives Daddy the best piece of chicken." Elaine-age 5

"Love is when Mommy sees Daddy smelly and sweaty and still says he is
handsomer than Robert Redford." Chris - age 7

"Love is when your puppy licks your face even after you left him alone
all day." Mary Ann - age 4

"I know my older sister loves me because she gives me all her old
clothes and has to go out and buy new ones." Lauren - age 4

"When you love somebody, your eyelashes go up and down and little stars
come out of you." Karen - age 7

"Love is when Mommy sees Daddy on the toilet and she doesn't think it's
gross." Mark - age 6

"You really shouldn't say 'I love you' unless you mean it. But if you
mean it, you should say it a lot. People forget," Jessica - age 8

DON'T WAIT, Buy in 2008!

Grigaitis-Svercl — Sun, 23 Mar 2008 10:42:20 GMT

    As I had said in the 2008 Sedona Verde Valley Market Forecast, 2008 will be an amazing year for real estate buyers, and that buyers should look to areas and communities approaching build out. Sedona, AZ is one of those communities buyers and long term real estate investors should be studying right now. Sedona, Arizona currently has about a 6 year supply of vacant land on the market and offered for sale today, given the current rate of absorption. Sedona also has only about 2-3% of bare land inventory left.

    Many of the other communities in the Verde Valley have a little more land left, but not much more. About five years ago a study was done in the area and indicated the entire Verde Valley had only about a twenty year supply of vacant land for development. Currently, the Verde Valley communities have a 10-12 year supply of vacant land on the market RIGHT NOW, given the current rate of absorption. While this is not news land sellers want to hear in 2008, buyers should open their eyes to the tremendous potential of these combined factors, coupled with one of the tried and true tenets of real estate investing....Time.

    I am not the only one who thinks 2008 will be a great year to buy...here are a few articles that present some very compelling reasons to buy real estate in 2008.

Buying a Home isn't Stupid... Get a different perspective on the "real estate and mortgage meltdown" hype by the sky is falling media. The fact is, most Americans lost more money on the car parked in the garage in 2007 than they lost through declining real estate values.

Could Current Conditions Mean Another Boom is on the Horizon? National Sales were up in the month of November and interests rates are around 5.5% for a 30 year fixed mortgage. Are buyers beginning to see the opportunities in the real estate market?

Its a Great Time to Buy Arizona Real Estate! Top ten reasons why now is an excellent time to buy real estate in Arizona.

The Ugly House People Place a Big, Fat, BUY Recommendation on Phoenix Arizona Homevestors has announced its top ten markets to buy in for 2008 as they are showing signs of turning around. Phoenix, Arizona is on the list.

Real estate continues to be an amazing long-term investment, especially when comparing homeowners versus renters. The Federal Reserve reported that wealth accumulation for renters from 1995–2004 was $4,000, but for homeowners it was $184,000 for the same time period. Homeowners had immense gains during this time, and most will weather a small equity loss just fine!

So if you are waiting to buy Arizona real estate, don't. We have an amazing buyers market right now, and no one knows how long it will last!

2008 Sedona Verde Valley Real Estate Market Forecast-- Real Estate Insider- January 2008

Grigaitis-Svercl — Fri, 04 Jan 2008 13:49:39 GMT

Back in late November, Ken and I attended a economic forum whose sole purpose is attempting to forecast the climate of the Phoenix and Arizona housing market for the coming year. Lead by Elliott Pollack, a nationally renowned economist who resides in the Phoenix area and currently serves as the economics department for Maricopa County, the forum also contained speakers from some of the leaders in the industry such as Cushman and Wakefield, Capital Pacific Homes, Grubb & Ellis, Land Advisors, The Alter Group and CB Richard Ellis. To follow is a synopsis of their thoughts for the Phoenix housing market and the national economy in 2008.

      2008 is expected to be a tough year for the American consumer, though Phoenix and Arizona are in a relatively good position and will again outperform the nation in job growth and will continue to lead the states in population growth. Because 2008 is expected to be a tough year for the American consumer, it will also be a tough year for the American economy. While troubles in the housing sector will spill over into other sectors of the economy, the psychology of our nation as a whole will have a huge effect this coming year, and will probably have a larger effect than the true fundamentals of the underlying economy.

    So how does your and your neighbors "mood" effect the economy?  For the plain simplistic reason that you may not be feeling as wealthy as you have in the past few years, and that may make you less likely to spend your money on big ticket items and luxuries. Shrinking real estate prices in many locations across the country equates to many as a reduction in net worth, which translates into a reduction in spending and holding off on major purchases.

    So what...big deal, right?   Absolutely. In 2006, one out of every seven dollars floating about in the American economy was a equity dollar, spent by a consumer who took it out of their home in the form of an equity line or other refinancing product. The slowing or dead stop of appreciation and tighter lending guidelines in many parts of the country have officially turned off the lights and cut the power to the music of the great refinancing party. The boom those dollars added to our economy are now gone, and when we remember the fact that approximately 70% of our American economy is based on the daily activities of each and every American, we have a recipe for a slow, stagnant year for the economy.  In our economy, it truly is a matter of buy or die.

    The chance of a recession in 2008 is about 50-50.....So go out today and buy yourself a ridiculously high priced cup of coffee, see a movie and order out for dinner. Buy yourself a new stove, car or....a nice new house! The American economy is counting on you!

    Arizona's peak housing market, in terms of sales and prices occurred July 2005- January of 2006 (about the same for the Verde Valley). A normal supply for the Phoenix area is about 30,000 homes. Currently, there are about 55,000 homes on the market in the phoenix area, 20,000 of which are currently vacant and unoccupied. Pricing has cooled substantially in some areas, while going up 2-3% in select zip codes. Pollack estimates that currently, 106,000 homeowners and investors in the phoenix area are upside down in their homes, owing more on them than they are currently worth.

    There is only one factor which will matter in the 2008 Phoenix real estate market, Inventory and how much additional inventory debuts on the market in the coming year. It all boils down to supply and demand.  The same can be said for the Sedona / Verde Valley real estate market.

    Due to the great amount of speculation which occurred during the boom years, additional inventory for Phoenix in 2008 is a completely unknown amount. Pollack estimates that the Phoenix area in 2008 could have anywhere from 30-50,000 extra housing units floating about in the market, which will certainly mean hard times for many small scale builders in the area.   Currently, the Phoenix Metro area has a 14 month supply of homes, which means it will take a over a year to sell all the homes currently on the market today (Sedona and the Verde Valley currently have a 23 month supply).   The peripheries of Phoenix have been hit the hardest, both with substantial reductions in pricing and lots of excess inventory currently available. These are the areas in Phoenix where vast amounts of speculation and new construction took place during the boom years.  In other words, buyers should look for and will find a lot of incredible bargains in areas where a lot of new construction exists, which is mostly on the peripheries of the Phoenix Metro area.

    Residential raw land prices have plunged on the peripheries of Phoenix. In fact, a few of the panel members said their companies were valuing some of their raw land holdings at zero dollars...because it will cost more dollars to develop the raw land than the individual lots can be sold for.

    Pollack and other panel members agreed that it will be 3-6 years before the Phoenix housing market begins to once again resemble a normal market. Buyers will continue to be in the drivers seat, and call all the shots.

    Pollack and other panel members offered advice to home builders, speculators and investors who purchased at the height of the market in 2005 and the beginning of 2006. Forget your profit....it does not exist. Forget recouping your interest. The only thing you should be concentrating on is the preservation of capital. Period.  Pollack said, "Ask yourself if you want to swallow a moth ball, or a basket ball, and then make your decisions accordingly."

    Builders in the area have already heeded the advice. $50-70,000 discounts on newly constructed homes as well as 20% commissions to brokers are occurring in some areas. Some builders are selling homes below replacement cost, and turning little to no profit.

    Harsh words, but very sound advice, given the current conditions. Panel members also recommended builders cut production of new units in the coming year. New permits in the Phoenix area for 2004 and 2005 were 65,000 each year, and only 45,000 new units were needed. The first 6 months of 2007, the phoenix area saw more new home permits, than home sales.

     Advice to listing brokers of Arizona real estate was "Ask your sellers if they want a 90 day list price or a one year list price, and if they insist on listing higher than those numbers, ask for a 3-5 year listing." In other words, sellers will need to price their home very competitively, if they haven't already.

     Buyers and savvy investors of Arizona real estate get a big green light in 2008, and will find some amazing bargains. While it is impossible for anyone to determine exactly where we are in the "U" of a down market, Pollack said point blank that "fortunes, absolute fortunes will be made by real estate investors buying in Arizona in 2008, 2009 and 2010....fortunes will be made. Market timers looking for the absolute bottom always fail, incredible opportunities exist for real estate buyers and investors right now..... Interest rates are low, plenty of money is available..... financing may tighten considerably in the coming years."

    Arizona received 170,000 NET new residents in 2007, the majority of which settled in the Phoenix Metro area.   Though that number is expected to shrink in 2008 as stalled housing markets in other parts of the country will slow the wave of incoming residents, the valley of the sun still will need to add an average of 45,000 new housing units in the metro area to house all of our new residents. In other words, A whole lot of homes will still be bought and sold in Arizona and the Phoenix area in 2008. Sellers will just have to woo buyers more with upgrades, concessions and, of course, the best trick in any sellers bag....a good, fair price! Internet marketing will also be crucial to a sellers success, as many of Arizona's 2008 real estate buyers are currently freezing, shoveling snow and scraping ice off the windshield in another state.

    Arizona real estate buyers will find their best deals on existing resale homes, because many of them can be bought below replacement cost. That will be the key to finding a good value for home buyers in 2008. If you can buy it for less than it would cost to build today, you will weather the market just fine. Buyers who prefer new construction will find subdivision reps. bending over backwards with enticing concessions, upgrades and deep discounts.

    Traditional, longer term investors will find incredible opportunities: once again you can find rentals that cash flow, a few well priced foreclosures and fixer-uppers and raw land at an extreme discount. Arizona investors should look to the peripheries of the metro areas for bargains on land, in areas that are close to being built out and have a relatively small amount of vacant land left available for development (like Sedona and many pockets of the Verde Valley).   Pollack and other panel members expect builders to be dumping land inventories in the next 24 months. Although there is a huge oversupply of vacant land in the entire state of Arizona, Northern Arizona is expected to fair better than the metro areas, as many Northern Arizona communities are approaching build out.

    And by the way, interest rates as of today on a 30 yr fixed rate loan just dropped to 5.5% WOW! Buyers! This is no longer a market to be scared of, this is a market to take advantage of! Give Ken and I a call or send us an e-mail a call to help you find some exceptional deals here in Sedona and the Verde Valley!

A Christmas Closing Story-- Real Estate Insider, December 2007

Grigaitis-Svercl — Fri, 04 Jan 2008 13:48:13 GMT

Sunset over Mingus Mountain from Cornville

A Christmas Closing Story
'Twas an hour before closing and the agents were tense,
to close Christmas Eve just didn't make sense.
But the seller was booked on the 6 o'clock flight
and warned everyone "THERE WILL BE A CLOSING TONIGHT!"

The agents agreed because business was dead,
and visions of commission checks danced in their heads.
The loan was approved by the lender's good grace,
Everyone knew 'twas a borderline case.

The buyers divorced, remarried again,
Divorced once more, and now were just friends.
The loan package complete to the closer was carried,
With instructions to close before they remarried.

The title policy arrived via UPS,
From page One through Sixteen, a terrible MESS!
An improper legal, 3 judgments, a lien,
But a few lines on page seven,
looked pretty clean.

The title was cleared and the closing was set,
But to finish today was not a sure bet.
The closer dashed in waving her HUD,
It was covered with whiteout, coffee and crud.

But down in the corner you barely could see,
that the buyer still owed a buck thirty-three.
So the closer extracted a bill from her compact,
And the agents agreed to the rest on the contract.

To add some interest, the seller revealed,
to everyone's horror - the well wasn't sealed.
And oh yes, he wanted to change the disclosure,
His mother just died of RADON EXPOSURE!

Everything else in his house was O.K,
(his cracked floors and walls were always that way)
About that time the buyer chimed in,
"we'd like to continue, but before we begin,

I noticed these papers - I'm likely to blame,
But I gave my agents the wrong legal name,
And one more thing I had hoped to avoid,
Does it really matter if I'm self-employed?"

About this time the closer exploded.
She pulled out a gun and said it was loaded.
Everyone froze and sat there amazed,
She frothed at the mouth and her eyes were both glazed.

More rapid than eagles, her curses they came;
she bristled and spouted and called them BAD names.

"THE CLOSING IS OFF, DO I MAKE MYSELF CLEAR??
MERRY CHRISTMAS TO ALL - NOW GET OUT OF HERE!"

Near the Confluence of the Verde River and Oak Creek

15 Things to spice up your visit your local Wal-Mart next time you go shopping:

1. Get 24 boxes of condoms or pregnancy tests & randomly put them in people's carts when they aren't looking.

2. Set all the alarm clocks in Housewares to go off at 5 minute intervals.

3. Make a trail of tomato juice on the floor leading to the rest rooms.

4. Walk up to an employee and tell him/her in an official tone, Code 3 in Housewares...and see what happens.

5. Go to the Service Desk and ask to put a bag ofM&M's on layaway.

6. Move a 'CAUTION - WET FLOOR' sign to a carpeted area.
7. Set up a tent in the camping department and tell other shoppers you'll invite them in if they bring pillows from the

bedding department.

8. When a clerk asks if they can help you, begin to cry and ask: Why can't you people just leave me alone?
9. Look right into the security camera, use it as a mirror and pretend to pick your nose.

10. While handling guns in the hunting department, ask the clerk if he knows where the anti-depressants are.

11. Dart around the store suspiciously and pretend to put things in your pockets.

12. In the auto department, practice your "Madonna look" using different size funnels.

13. Hide in a clothing rack and when people browse through, say "PICK ME! PICK ME!"

14. When an announcement comes over the loud speaker, assume the fetal position and scream "NO! NO! It's those voices again!!!"

15. Go into a fitting room, shut the door and wait a while and then yell loudly "Hey! You're out of toilet paper in here!!"

Ken and I want to wish your and your the most joyous of holiday seasons and the happiest of New Years. be sure to take a moment out to say thanks for all the good things in your life. Ine of the things we will be thankful for this year is all of you and your continuing loyalty and support. Take care and God bless! See you in 2008!

Verde Santa Fe Golf Course

2007 Market Update -- Real Estate Insider- November 2007

Grigaitis-Svercl — Fri, 04 Jan 2008 13:48:31 GMT

Fall Foliage on Mingus Mountain

I really did not want to write another issue about our area real estate market, but I wanted to let you all know that we are actually seeing the very first signs of a recovery in our area. Now, before I go and get everyone excited, allow me to say this: the recent changes may just be a fluke, an aberration and may simply be attributed to the time of year (winter visitors, holidays), but whatever the reason, real estate sales activity is FINALLY picking up.

Just how bad was this past year? Ask just about any agent in our area! In 2005, at the height of our market, there were 977 agents in our local association. We are now at 834 agents. 143 agents have left this business since the height of our real estate market. Sedona Verde Valley Association of Realtors sales statistics for agents in our area look something like this for 2007, year to date.

# of agents who have not had a single sale ALL YEAR in our MLS in 2007, YTD- 306
# of agents who have sold only 1 property this year- 112
# of agents who have only sold 2 properties this year- 104
# of agents who have only sold 3 properties this year- 60
# of agents who have only sold 6 or less properties this year - 705
# of agents that sold less than 1 million in total transactions so far this year- 583
# of agents that have sold less than 2 million in total transactions this year- 709
# of agents who have sold 11 or more properties this year- 63
# of agents who have sold 20 or more properties this year- 11. Fortunately, this is the category Ken and I fall into for this year...but we had to work 3 times as hard to make it happen. So if we look dog tired...we are!

If we figure that the average commission paid was 3% per agent and that the typical split with their broker was 80%, well over half of the agents in our association have made less than 24,000 this year selling real estate, BEFORE EXPENSES! Certainly doesn't seem like a very glamorous business, does it? We can certainly expect that many more agents will be getting out of the business...if they can make more money at Home Depot, why wouldn't they?

I have heard a rumor that our association is already planning our 2008 budget to have 150 or so less agents. I have a feeling that number may be much higher if a shift in activity does not occur VERY soon. And unfortunately, we are already losing GOOD reputable agents...either via economic forces or as a result of overall negativity in the market. I had told someone over the summer that I was surprised I am not wearing much smaller pants this year, after all the various people who have taken a chunk out of my posterior this year! Buyers are unhappy because they wonder if they paid too much... and sellers are unhappy because they could of gotten so much more.... Agents are the messengers of market conditions....And we all know who is the first to get shot! It has been really, really ugly out there overall.

So... if you know a few of the GOOD REALTORS in our area, give them ALL a call and say "Hi," or "Thank You"...write them a letter of recommendation, if they have done a good job for you in the past.   Let them know that you are trying to refer business to him or her, or that you are planning to sell or buy soon and that you plan on using him or her as your agent. Little bits of encouragement at such a difficult time like this can mean the world! Tell your friends, business acquaintances and family members who may be interested in buying or selling that you know a great agent they should call.....Kind words or referrals from a former or future client will mean the world right now to any agent battling this market, and your efforts may just help keep a few more good agents in this business!

THE GOOD NEWS- Inventory seems to be stabilizing, and has even dropped about 1%. In the September market update, I had told you that the number of active listings was 3024. That number had increased to over 3170 listings, and today, we have a total of 3130 active listings available via the Sedona Verde Valley Multiple Listing Service. But what makes me think we maybe seeing a slight turn of the tide is the fact that the number of pending sales is picking up and our office, which has felt more like a graveyard than a real estate office since mid-summer, is now coming alive again with the hustle and bustle of buyer traffic. Our office is not the only office experiencing a recent pick up...it appears to be market wide. The worst may be over, or it may be simply a function of the time of year.    The drop in number of listings may simply be people pulling their properties off the market for the holidays, hoping to try again in the spring. The recent influx of area buyer activity may be due to our winter visitors, who start streaming in a few weeks before the holidays. The good news is, many will come and go in the next few months, and some will most definitely purchase property before returning home!!!!

In a few more weeks, I will be attending the annual market forecast seminar for 2008, hosted by Renowned Arizona Economist, Elliot Pollack. Maybe he, and other industry leaders can offer us some additional good news about the prospects for 2008. Until then, have a truly wonderful Thanksgiving.  Be thankful for your health, the love of your family and friends and all the other things that truly matter in life. The market is merely in a cycle, and good times lie ahead,.... adversity can only make us stronger.

More on our Blog-- Real Estate Insider- November 2007

Grigaitis-Svercl — Fri, 04 Jan 2008 13:48:49 GMT

I highly doubt this was the intended purpose for this power chair!

    Last month I had mentioned our new blog and how we would be posting all of our newsletter issues there, from now on. What I probably should of done, was give you directions on how to subscribe, and then, BE SURE, I GIVE YOU THE CORRECT ADDRESS! Put a big fat L on my forehead! OK- here goes!

1. Go to http://blog.verdevalleyrealestate.com   No WWW needed, oops! You will not be able to access the site with www. Sigh, like I said, we are determined to stay on top of current trends....I didn't say we WERE on top of them....but we are working on that!
2. On the left side of the screen you will see a box under the word SUBSCRIBE, enter your email address.
3. Click the checkbox next to the word blog, if you want to be notified whenever a new newsletter or other articles are posted.
4. Click subscribe and your almost done!
5. You will get a generic e-mail asking you to confirm your subscription. Click to confirm.
6. Another window will open up confirming your subscription. If you click to continue, you will be brought right back to the blog....Enjoy!

I sincerely hope you will subscribe and post comments or questions from time to time....one of the wonderful things about blogs is that you can start an on-line community and create a wealth of local knowledge all people can benefit from. Please log on and fire over your real estate questions and thoughts...share a rumor about a new franchise coming to town. Feel free to post community events as well! This blog is for you..please use it! At least drop in and say Hi once in awhile!

Washington Post Style Invitational -- Real Estate Insider- October 2007

Grigaitis-Svercl — Fri, 04 Jan 2008 13:49:16 GMT

The Washington Post occasionally has contests for its readership. One of the more recent ones was to take a common everyday item and assign it a sex, and explain why. Here are some of the best answers.

ZIPLOC BAGS - male, because they hold everything in, but you can always see right through them.

SHOE - male, because it is usually unpolished, with its tongue hanging out.

COPIER - female, because once turned off, it takes a while to warm up.

TIRE - male, because it goes bald and often is over inflated.

HOT AIR BALLOON - male, because to get it to go anywhere you have to light a fire under it ... And, of course, there's the hot air part.

SPONGES - female, because they are soft and squeezable and retain water.

SUBWAY - male, because it uses the same old lines to pick people up.

HOURGLASS - female, because over time, the weight shifts to the bottom.

HAMMER - male, because it hasn't evolved much over the last 5,000 years, but it's handy to have around for squashing bugs.

REMOTE CONTROL -female ! .... Ha! You thought I'd say male. But consider; it gives men pleasure, he'd be lost without it, and while he doesn't always know the right buttons to push, he keeps trying.

Fun Stuff Real Estate Insider- October 2007

Grigaitis-Svercl — Fri, 04 Jan 2008 13:27:54 GMT

With all the dreary news about the real estate market, I figure it was high time to put some fun stuff in the newsletter, It has been awhile! These I got from my Dad (Hi, Dad!...Love You!) via e-mail a few months ago. They are all ordinary words or phrases, rearranged as another definition for the term. Very Clever!

DORMITORY: When you rearrange the letters: DIRTY ROOM

PRESBYTERIAN: When you rearrange the letters: BEST IN PRAYER

ASTRONOMER: When you rearrange the letters: MOON STARER
DESPERATION: When you rearrange the letters: A ROPE ENDS IT

THE EYES: When you rearrange the letters: THEY SEE

GEORGE BUSH: When you rearrange the letters: HE BUGS GORE
THE MORSE CODE: When you rearrange the letters: HERE COME DOTS

SLOT MACHINES: When you rearrange the letters: CASH LOST IN ME

ANIMOSITY: When you rearrange the letters: IS NO AMITY

ELECTION RESULTS: When you rearrange the letters:
LIES - LET'S RECOUNT

SNOOZE ALARMS: When you rearrange the letters: ALAS! NO MORE Z 'S
A DECIMAL POINT: When you rearrange the letters: I’M A DOT IN PLACE

THE EARTHQUAKES: When you rearrange the letters: THAT QUEER SHAKE

ELEVEN PLUS TWO: When you rearrange the letters: TWELVE PLUS ONE

MOTHER-IN-LAW: When you rearrange the letters: WOMAN HITLER

(Sorry all you Mother’s in Law out there, but I didn’t make these up!)

We’re Goin’ Digital!!! Real Estate Insider- October 2007

Grigaitis-Svercl — Fri, 04 Jan 2008 13:27:19 GMT

As our daily lives have been so greatly effected by technology in the last 10 years, so has the real estate industry. Years ago, agents all over the country attended seminars on how to get the phone to ring by writing engaging 3 line ads advertising homes in local newspapers. Putting pictures of the property in print was cost prohibitive and reserved for only the most exquisite listings.

As computers made mass production of print materials more affordable, newspapers began to offer real estate guides, where agents could buy reasonably priced advertising space and include pictures of the properties. These magazines exploded with popularity all over the country and agents bought space and the newspapers and home sellers were happy.

Today, 3 line ads are once again, incredibly important, only these 3 line ads are being written not for newspapers, nor real estate guides, but Google, msn, yahoo and others, in the form of sponsored links. The more things change, the more they become the same.
Today, 8 out of 10 real estate buyers are using the Internet to find property, print is very quickly becoming a dead medium, yet agents have been very slow to uptake technology, understand and utilize it in an efficient manner.

Ken and I have recently started a blog and we will be posting all our newsletters there from this point forward. If you would prefer to get our newsletter this way, simply log on to blog.verdevalleyrealestate.com and sign up to be notified of new posts, While you are doing that, please drop me a line to tell me you want to be removed from the snail mail list. Please! Feel free to post comments or questions on any article!!! The wonderful thing about a blog is the interaction among the people who read it and add to the information presented or dispute it. That’s the fun part! Of course, signing up for the blog will ensure you have up to the minute factoids and tidbits on happenings in our market, as we will post information there, much more often and in much greater detail than what travels to you via snail mail!

I still have a love affair with paper…. As I am sure many of you do too! Therefore I will continue to produce a snail mail version for all of you still half stuck in the paper age, but I do suggest you sign up for the blog! I will also be archiving back issues of this newsletter, in case you want to share some of the better humor with friends! This will take awhile, so be patient!
In addition to up-to-date market conditions and real estate tips, our seller clients will also benefit tremendously.
Blogging is one of the quickest ways to get a website to perform better and climb to the top in search engine rankings, and the more people we can get to our website, the more likely they are to see your home or property on it! Please check it out and feel free to post a comment or question, at anytime!

New Vacant Land Subdivision in Cornville Now Available.

Grigaitis-Svercl — Wed, 10 Oct 2007 09:14:52 GMT

   The vacant land market in Cornville just got a big boost of new inventory, and that is not good news if you are currently trying to sell land in Cornville! However, if you are seeking to buy property in Cornville, It is wonderful news!
   Mingus Panorama Estates just began offering their 1st phase of 32 lots, 69 lots altogether will be available on this 80 acre parcel. Lots will range in size from .8 of an acre to 1.84 acres. Pricing of current lots available range from 119,800 per acre to a high of over 178,000 per acre. All utilities will be available to the lot line and these improvements, along with paving, are expected to be completed some time in the Spring of 08.
Protective Covenants and Association Dues of $349 per year shall apply to each lot. Give a call or send an e-mail if you would like more information!

There is also another new subdivision in Cornville, Rio Bonito Ranch, which started offering a total of 33 lots for sale in late July. Prices in this subdivision range from 144,400 an acre to a high of 186,500 per acre. This subdivision is situated on one of the most gorgeous parcels in all of Cornville, has dedicated Oak Creek Access for all residents and most lots have horse privileges and irrigation rights. Because of thoughtful planning on the developers part, all lots should enjoy FANTASTIC views of Sunsets over the Mingus Mountain range.

As more information becomes available, I will be sure to pass it along!

Bargains Galore....

Grigaitis-Svercl — Sat, 13 Oct 2007 07:25:49 GMT

View of the Verde Valley from the City of Jerome

Some truly amazing real estate bargains are beginning to appear all over the Verde Valley. Investors who are looking for properties to buy and hold for a few years (while a quick fix and flips are out there, right now it makes the most sense to buy with the expectation of being a landlord until inventory in our area improves), can certainly find a lot to choose from!

Even if you are not an investor, and buying a home for your personal residence, it pays to hire a saavy
agent who can recognize a good deal. There is still a multitude of overpriced properties on the market and it pays to take a little time in making your decision. Here are just a few of the amazing bargains that have come along lately.

Two rental units, currently rented for 800 combined. Should be rented for 1100. Both units in VERY good condition, 81,000...and YES, they are still available!

2006 built 2/2 CONDO with 1100sq ft, 2 car garage, stucco exterior and tile roof...158,900! 2 to chose from at this price.

229,800 gets you a 4 bedroom 2 bath home with a whopping 2040 sq ft in Verde Heights.

169,000 will buy an 1820 sq ft site built home in Verde Village! (oh yes, It needs WORK!)

If you have a hundred and ten to spend, you can choose from 3 completely financable doublewides with @ 1400 sq ft each, in Cottonwood. Each should rent between 800-900 dollars.

Maybe you would like to find a home built in 2000, stucco exterior with 3 bedrooms 2 baths and a 2 car garage. If you wanted it for 197,900.....Sorry you are a little too late, this one went pending over the weekend!

If acquiring a bargain in this amazing buyer's market is your goal, make sure your negotiating position is the strongest it can possibly be. Get preapproved, sell the house you need to sell, or at the very least, list it. Offer the seller as short of an escrow as you are able. Many of these people are SO ready to sell, be sure that your offer appeals to them on all levels. If you would like more information on these properties or other available bargains in the area, please e-mail me at hollywoodaz@commspeed.net

September 2007 Market Update- Is the Bottom in Sight? Real Estate Insider- September 2007

Grigaitis-Svercl — Fri, 04 Jan 2008 13:25:15 GMT

Verde Valley Market Update– Is the Bottom in Sight?

To tell you that the Verde Valley real estate market has been slow this year, would be a dramatic understatement. To say that we are currently experiencing the slowest market the Verde Valley has seen in well over 10 years…..would be a much more accurate statement. And yes, prices have dropped since our 2005 highs. But that’s the bad news, and in every cloud, there is always a silver lining…

Forget everything you have been hearing in restaurants, bars or by the coffee pot at work. Forget what you heard on the news about the nation’s real estate market. While it will show you current trends nationally, it has very little bearing on the health of local markets. Ours included.   If you are trying to glean information about the future health of the Verde Valley Real Estate Market on the national news, you are looking at the smallest part of our overall picture. Real estate markets are LOCAL phenomenon's....and it is LOCAL conditions which will affect their health the greatest.

Good information about real estate markets is always derived from facts, local facts, but very few people will look at the facts before making blanket statements. Even our local newspapers have always done a poor job of covering the real estate market in our area. So what is our market currently doing and what is likely to happen here in the coming years? NO ONE can predict the future, but we can look at the present and the recent past, and catch a glimpse of what’s to come.

Below is a chart of the total amount of local real estate sales that have occurred via the Sedona Verde Valley MLS. Nearly all sales Realtors are involved in, will be recorded in this database. It does not include properties sold for sale by owner, which is usually 8-15% of all sales in any given market.

TOTAL YEARLY SALES, SEDONA VERDE VALLEY MULTIPLE LISTING SERVICE

Year     # of Sales        Dollar Volume

1996     1691              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     1396              *Projected

Lets look at the past few years a little closer….
SVVAR CLOSED SALES YEAR TO DATE
SEPT 1, 2005 2243 sold and closed, YTD
SEPT 1 2006 1439 sold and closed, YTD
SEPT 1 2007     931 sold and closed, YTD

What you are seeing above represents a 60% drop in sales activity in our area in a two year period.
The project sales number for this year, located in the 1st chart was derived by taking the number of sales that have occurred so far this year (931 as of 8/31/07) , divided by the number of months, to arrive at a rough rate of consumption, YTD. We can then figure out roughly how many more sales will occur this year and project closed sales for the year, 1396        (even with our expected influx of winter visitors, the holiday season is typically slower in our area for real estate sales...the pace of closing sales we have been experiencing is unlikely to change dramatically).

In other words, this year, 2007, Sedona & The Verde Valley will very likely have the least number of sales we have seen in over 10 years.   The severity and the quickness of this drop in activity, may actually turn out to be beneficial for our market in the long run….I’ll explain that more in a minute!

Even with all the uncertainty in the mortgage markets and in real estate markets across the country, one thing, and one thing only, will effect the future health of our local real estate market more than ANY other. Inventory. Period.

Unfortunately, we are still adding inventory to our market. Simply put, people are putting property on the market, faster than buyers are buying it. In June, there were 2910 active listings in the Verde Valley and 251 properties that were under contract. Today, there are 3024 active listings and 180 properties currently in escrow.

More competition, and fewer sales equals several more months of frustration for many sellers out there, especially if they refuse to open their eyes and ears and realize that their home is competing in an intensely fierce marketplace.

If we do a little more figuring, postulating and speculating, we can assume that out of the 3054 listings         currently active, that approximately 2500 of these listings will fail to sell this calendar year, unless we see a dramatic increase in buyer activity, or a decrease in inventory...and that is not likely to happen….Area builders and developers have a lot of projects currently in the works in our area, in various stages of development. No question about it, new subdivisions aren’t going to help our current inventory overload at all…but this rapid

downturn might.

Early in 06 a large developer backed out of a project in Verde Sante Fe, another backed out of a project in Camp Verde. Several others have been postponed or scrapped. Still others will develop at a slower pace, open fewer phases and build fewer spec homes as survival mode kicks in. Whatever the reason, we may have delays in the production of new inventory…and that is good news!
Because we hit such a huge low this year...there is strong possibility next year will be just a little better. We will probably see a few more sales and a few more buyers, though pricing may continue to slide as stretched sellers and speculators alike seek to sell, and other sellers are forced to follow suit to achieve their goals. Stagnation or very slow improvement can probably be expected in our area, as a lot of new inventory is still planned for our area, and dirt is flying fast at a multitiude of area projects.
We will probably even see the return of a few investors, as some PHENOMENAL deals are beginning to appear. It is almost as if Walmart came in and did a price rollback to the beginning of 05 on a few I have seen come available lately….Remember, homes in Arizona have risen an average of 58% since the year 2000. Though some segments of our market have lost 10-30% of their gains since 05, there is still a healthy net gain for our market overall, and plenty of people who are selling today are putting profits in their pockets. It ain’t all doom and gloom!
Also, don’t forget about the 120,000 NET new people who will move to Arizona next year and all the baby boomers who are reaching retirement in the coming years. Oh and one other thing, ask any old timer in Arizona what characterizes our states economy….booms and busts is what they will tell you. And why should it be different? As a state, we are in our infancy, and our growth spurts sometimes cause growing pains.
Instead of thinking of what could have been, sellers who need to sell, need to think of what could be. What could I do to my home or land to make it more appealing than the competition? What incentives could I offer? What price could I live with? Or , better yet, ….if I drop the price 5%, could I stick the money in a high rate CD and earn 6% and recoup the reduction in less than the year than my house may sit on the market while I wait to get that 5%? YES!!!!!!!!!!!!
If you or someone you know, could use a little creative thinking to help move their property, give us a call! If your thinking the time to buy is, Your right! And we’d love to help! For more information, please visit our website, www.verdevalleyrealestate.com

It's a Brave New World.....Marketing Your Home in the 21st Century

Grigaitis-Svercl — Sat, 13 Oct 2007 06:57:47 GMT

Welcome! Ken and I have started this blog in an effort to provide area property owners and our past, present and future clients with a forum to ask questions, stimulate discussion and obtain reliable information on their Sedona and Verde Valley Real Estate investments. Please subscribe for regular updates.

The internet is quickly changing the way real estate is bought and sold, but unfortunately, many small businesses and REALTORS, are slow to embrace new technology and use it in an efficient manner. In fact, the United States itself is running behind the times in internet usage and proliferation.

Take six minutes out of your day, and watch the video presented at this link. It is such amazing information, you may just want to view it twice. Maybe even 3 times. The first half is about exponential changes in the world population, the second half is about exponential changes computers are ABOUT to make in our world. It is most definitely proof postive that the internet is here to stay and it will continue to change the way the world conducts business.

While most real estate offices across the country have a company website (92% according to 2007 NAR statistics), less than 25% of REALTORS are actually generating business from them. This is because they lack a basic understanding of the internet and the people who are using it to find their new home or land. Since a full 8 out of 10 real estate buyers today are using the internet to find property, Agents who do not have a keen understanding of the internet will be left behind and forgotten. And so will the homes and parcels they have listed.

Ken and I are determined to keep on top of current trends in interent marketing. We currently use QUALITY virtual tours for ALL our listings, regardless of price range. We constantly review and add new internet marketing partners to ensure your home or land in Sedona or the Verde Valley can be found in a multitude of high traffic locations, and not just on a handful of small local websites. For more information, please visit our website at verdevalleyrealestate.com

2007 Real Estate Market Forecast

Grigaitis-Svercl — Sat, 13 Oct 2007 06:56:37 GMT

Every November, I attend a seminar, lead by Elliott Pollack, that attempts to forecast the future of Arizona’s real estate market for the coming year. Elliott Pollack is a well respected economist based in Scottsdale, who lists Maricopa County among his many clients. He is frequently quoted by the Arizona Republic as an authority on State and National Economic Issues. Also present were the VP’s of the largest home builders in the Phoenix area, Pulte (Del Webb) and Trend Homes.

Most of the information contained herein is, of course, geared to the Phoenix metropolitan area, but we can consider ourselves a microcosm of Phoenix, if not a very distant suburb!

Firstly, to understand where we are now, we must understand what got us here in the first place. The past few years, Arizona has simply had a huge shortage of new homes available for purchase, and then, a very short time later, a huge oversupply.

Arizona has over 120,000 new people moving here each year from other states. To house all of these people, Phoenix needs to add 45,000 newly built housing units each year. In 2004 and 2005, 65,000 units were built each year.

The majority of this inventory was absorbed very quickly until the last half of 2005 and beginning of 2006 when many new subdivisions began selling product, which CAUSED the "slowing" of the market. It is no coincidence that Phoenix currently has 44,000 homes on the market. In 2004 and 2005, they overbuilt the area by 40,000 homes.

But it wasn’t the market that slowed, it was simply that the inventory pendulum swung in the other direction, in an incredibly rapid manner. We went from shortage, to massive oversupply in a matter of months. Suddenly, there were more homes than buyers as builders dumped 40,000 extra homes on the market (Think of all the new subdivisions that have recently opened in this area). This also coincided with every "day trader" investor trying to dump their inventory simultaneously, and cash in on the supply shortage price increases.

What happens when a vendor wants to clear out his warehouse of excess supplies? They hold a sale…..and New Construction in Arizona is currently on a blue-light special.

Pulte homes, like many area builders, are not currently acquiring more land and are in the process of attempting to sell excess land inventory. Pulte has over 40,000 lots in their current land inventory, in various stages of development. Willis Martin, the Vice President of Land Acquisitions for Pulte, openly admitted there were several subdivisions that Pulte was "upside down in," meaning they were going to lose money on the projects, rather than turn a profit. "...Take the loss and move on," was Martin’s response on how they would handle these projects.

Phoenix area builders (as well as many local builders) are currently offering huge incentives to buyers as well as their real estate agents. Buyers are cashing in, as builders scramble to unload inventory. 10-20K upgrade packages are now included. You might get a free pool, or a waiver of lot premium. Last minute closing table discounts are becoming common as well as other last ditch efforts to tempt buyers who are willing to walk away from the closing table and their earnest money. Many builders in the Phoenix area have halted all production of spec homes in an effort to reduce inventory.

After reading all of this, would you believe me if I said that the year 2006 was the 3rd best real estate market the Phoenix area has ever seen? It’s true. And the same goes for this area. Sales figures for 2006 in this area are very comparable to 2003...which was an excellent year for real estate in this area, and the 3rd best on record. Please be sure to tell that to everyone you hear grumbling about the market!

Pricing around the area will probably stabilize at some point this year, but just like the Phoenix market, when that will happen here will depend largely on how much new inventory comes on the market. Most likely, area developers will need to under build for a little while, until some excess inventory can be absorbed by the newcomers to the Verde Valley.

Local sellers should be aware that we have returned to normal marketing times in the area, which means home sellers should expect to be on the market for a 3-6 month time frame, and land sellers should count on 6 months to a year. Double these figures if your home or land is in one of the more rural communities of the Verde Valley. Pricing will be quite crucial to achieving your goal in 2007, as you may be directly competing with 50-80 other homes similar in size and price to yours.

Sellers will also have to keep in mind how much less affordable homes are in 2007, and be realistic about the number of buyers who come looking in their price range. In the year 2000, 70% of AZ households could afford the average home in Arizona. Today, that number has dwindled to 28%, and bear in mind, that is the percentage of Arizona households that can afford the AVERAGE (220K) home. That number dwindles exponentially once we inch the sales price above the state median priced homes. Luckily, we are a relocation market.

Buyers can expect to find some EXCELLENT deals in the Verde Valley in 2007, as investors, builders and cash-strapped homeowners seek to sell in a highly competitive arena.

The good news is, Pollack expects that real estate markets will perform very well in rural areas of Arizona for decades to come, fueled by tourism, retirement and second home markets. The baby boomers are coming and long term real estate investors and owners in the Verde Valley will reap the benefits for years to come!!!

National Economy Forecast-2007

Since Arizona’s real estate market depends on folks relocating to warmer climates, it helps to have a picture of what the national economy may look like in the coming years.

The next few years we are expected to have strong employment coupled with increasing wages. According to the Blue Chip Forecast, overall growth will slow from 3.5% to 2.7% as consumer spending slows from previous years. One of the major reasons consumer spending will slow is that people have spent their excess money, along with excess equity. Currently, 1 out of every 7 dollars in the US economy is an EQUITY dollar, money that was put into a consumers pocket by taking it out of their house.

Pollack believes that Oil and Gas prices will remain high and unstable. He explained the world’s oil supply exists in the world’s "Bad Neighborhoods." In 2001, Oil sold for an average of 20$ per barrel. In 2006, it hovered around $70 a barrel. While high gas prices greatly effect businesses by squeezing profits and cutting into budgets set aside for capital expenditures, most households are relatively unaffected. Pollack pointed out that most households spend 5% or less of their monthly budget on energy costs and a 20% increase in oil prices only equated to an additional 1% increase of annual income expenditure.

A recession is not very likely for 2007, (1 in 4 chance according to Pollack), though may occur in 2009-2010. Democrats taking power will have a positive effect on the economy as government will do little to change the status quo as opposing forces, gridlock the legislation until the next round of elections.

Holly Grigaitis-Svercl, Associate Broker

Multi-Million Dollar Producer, Partner

Cottonwood Real Estate