Step by Step – Inch by Inch!
Valley Achieves its First Monthly
Year over Year Sales Increase since September 2005!
As we projected, June 2008 achieved a year over year sales increase of 7% compared with June of 2007. This may not seem like such big news on the surface, but the valley has not had a year over year monthly sales increase since September of 2005 – almost 3 years!
To add to the good news, the valley’s listing count dropped for the fourth consecutive month as well, albeit fractionally (less than 1%). But hey, we’ll take all the positive news we can. We currently have an 8 month supply of homes on the market, which keeps us in the buyer’s market realm, but our supply has been reduced from last month. (Broker note: A 6 month supply is considered a balanced market. As an example, if our single family detached listing count was at 30,000 (normal) and we had 5000 sales the previous month, then we would have a 6 month supply – figured by dividing the number of listings by the last month’s sales)
Three years ago we were reporting that the monumental price increases that were good for sellers would make it more difficult for buyers to buy homes. That was a half truth. The truth was that many more buyers could buy homes, but what was overlooked (by almost everyone) was that these buyers could not possibly “afford” the soon-to-be-adjusted payments.
Interestingly enough, if today we had in place the more stringent loan qualifying standards that we had prior to our boom years, we would not be in the difficulties we are now. Back then if buyers were not able to qualify, they could not buy. If they could not buy, prices would not have risen to the heights of insanity that they did. Buyers would realize they would have to save more money for a down payment or improve their credit scores or find a less expensive home.
There is of course much speculation as to the root cause of our current real estate woes, but I offer to you several thought provoking articles by economist Thomas Sowell, Senior Fellow of The Hoover Institute, Stanford University:
http://jewishworldreview.com/cols/sowell072208.php3
http://jewishworldreview.com/cols/sowell072308.php3
Speaking of price, the Valley’s median sales price dropped 3% from the month of June and is hovering around the $205,000 mark. The Valley median sales price for single family detached residences has dropped 25% since June of 2007.
Looking to the future, prospects for most Valley property sales will increase if mortgage money becomes more available. Last week Congress passed a broad package of housing legislation aimed at getting the nation’s housing market unglued and helping folks who are having foreclosure issues. Forgive my skepticism, but I’m not sure I want the folks who participated in creating this debacle to try and help us out of it. It’s a scary thought! (View the Article)
The legislation is too new as of this writing to determine just how much help will be available to the higher end homes the Valley.
The North Scottsdale Report
North Scottsdale single family detached home sales increased 14% over June’s sales numbers, but decreased 10% from June of 2007. The North Scottsdale absorption rate decreased from a 15 month supply in June to a 13 month supply currently. We’re heading in the right direction.
North Scottsdale home values have dropped like never before and we trust ever again. The June median sales price of a North Scottsdale home was $550,000 a 25% decrease from June of ’07 when it stood at $735,000.
Listed below is a quick look into the North Scottsdale Market by zip code. Click here for our Scottsdale zip code map to get your bearings.
| Zip Code | Current # Listings | 1 Mon Change | Absorption Rate | June Sales | 1 Year Change | Median Sales Price | 1 Year Change |
| 85254 | 421 | -02% | 7 Months | 64 | -14% | $413,000 | -17% |
| 85255 | 946 | -02% | 13 “ | 74 | NC | $636,000 | -20% |
| 85258 | 239 | -06% | 10 “ | 23 | +30% | $549,000 | -33% |
| 85259 | 415 | -02% | 11 “ | 39 | -42% | $605,000 | -39% |
| 85260 | 391 | -02% | 12 “ | 33 | -52% | $501,000 | -10% |
| 85262* | 1164* | -03% | 25 “ | 47* | -35% | $735,000* | -16% |
| Totals | 3576 | -02% | 13 “ | 280 | -26% | $550,000 | -25% |
| * = Combines with Zip Code 85266, NC = No Change | |||||||
One bright spot in the North Scottsdale reporting involves zip code 85254. This zip code, due no doubt to its affordability has but a 7 month supply of homes on the market (absorption rate) – which means its close to rising out of the buyer’s market range. South Scottsdale and Tempe are right on the neutral border – each with a 6 month supply of homes.
Click Here For More Sales Stats with Charts!
Buyers Take Note: Why Waiting
on the Fence May be Injurious to
Your Financial and Personal Health.
For those buyers on the fence waiting for values to drop further, you need to understand the risks of loss involved in waiting. One of the major risks of waiting is that interest rates are now in the process of increasing. Mortgage rates have risen a dramatically just in the last week. With inflation increasing at a healthy clip again, there’s no telling what we may be looking at in the future. A 30 year fixed rate loan is a great harbinger vs inflation. (More Info)
As an example, you could save say $10,000 by a further reduction in home values by waiting, but if the interest rate increases by a half percent on a $300,000 loan during that time, you would spend an additional $125 each month. So as time goes on, the waiting advantage diminishes.
The other negative factor in waiting is the loss of the mortgage interest rate reduction. Let’s take the same loan of $300,000 at 6.5% interest. That comes to “real” cash savings of $5880 or $490 per month assuming a 28% tax bracket. If the above examples were combined, the annual “loss” of not owning a home is close to $8,000.00 – per year.
There’s another large risk in not buying at this time: Selection. Right now is perhaps the greatest selection of homes available that we will see in a long time. And getting the home of your dreams will emphatically trump your risks of making “more” money by waiting for further house drops.
So, in the now famous words spoken in the movie Indiana Jones and the Last Crusade as the ancient knight says to Indy as he’s desperately trying to choose the right cup to save his father’s life, “Choose wisely.”
Mike’s Link of the Month:
www.BankRate.com
My link of the month, www.Bankrate.com is an excellent consumer resource for prospective mortgage borrowers and money investors- and much more!
Not only does Bankrate provide rate comparisons between actual lenders for primary home mortgages, but also for car loans and home equity loans. The site also provides comparisons for CD’s and Investments, retirement accounts, credit cards, debt management, checking and savings, college finance and taxes.
As an example of a recent comparison for a new first mortgage (end of July) I found that while Bank of America was offering a 30 year fixed rate loan at an Annual Percentage Rate (APR) of 7.289%, Hart West was offering the very same product for 6.394% (APR).
On a recent transaction I handled for a client, the lender that he selected was found on Bankrate. This lender is well known in the financial software arena. Some years ago this company began brokering mortgages. My client seemed to like them a lot. Indeed my own communication with that lender representative was fine – and they closed the loan on time. If it weren’t for the fact that in the end they did not get the rate they thought had been agreed to, I would be hard pressed to tell folks not to use them. But even though they got the loan, the borrowers were disillusioned, and I’m sure would not recommend them.
Bankrate also provides a rating system as to the soundness of each financial institution that you’re considering investing in CD’s with. My wife and I had checked into various CD rates recently to find one large institution with an aggressively higher interest rate for a 9 month CD. All of the lenders were backed by the Federal Government for up to $100,000, but this particular lender had a very poor Bankrate rating. We did not buy into that lender. It turns out that several weeks later, the lender made international news – the Feds closed their doors. The lender was Indymac.
Bankrate.com should be viewed as a means to get information and perhaps certain types of financial transactions, but honestly, my advice to my clients about getting a mortgage is to lean heavily on the advice of your Realtor professional. We work with lenders. We have a very good idea who will deliver on time at the end of the day, and who will deliver what was agreed to.
Part of my service as a Realtor professional is to give my clients reputable options for tradesmen or entities that have a proven track record. If my referrals do a great job for my clients, it reflects well on me.
DO YOU KNOW A GOOD????
August’s Vendor Promotion
I have been blessed in my real estate career to be associated with some of the finest individuals in professional trades. Whether lenders, title company folks, plumbers, electricians, house movers, you name it, with few exceptions, I have it covered. They are very honest, ethical, and reasonable – perhaps to a fault for some.
One of the trades that have presented more challenges to me in the past has been the painting trade. Several painters I’ve worked with have been wonderful and hard working, but they moved. Another individual was great – for awhile, and then became undependable and I could no longer use them.
But I found a gem!
This month’s Vendor Promotion is Bob Shearer of Bob Shearer Painting. Bob is a wise painting veteran that has done a great job for several homes and clients I’m working with. I cannot say enough good things about him. He’s very fair, honest and capable. He’s got my stamp of approval. Bob can be reached at 602-717-0801. As usual, tell him Mike Bodeen sent you.
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